Simon v. FIA Card Services, N.A. , 732 F.3d 259 ( 2013 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-3293
_____________
ROBERT MAXWELL SIMON; STACEY HELENE SIMON
Appellants
v.
FIA CARD SERVICES, N.A.; WEINSTEIN & RILEY, P.S.
On Appeal from the United States District Court
for the District of New Jersey
(D. C. No. 3-12-cv-518)
District Judge: Honorable Joel A. Pisano
Argued May 22, 2013
(Opinion filed: October 7, 2013)
Before: RENDELL and GREENAWAY, JR., Circuit Judges
and ROSENTHAL, District Judge*
Andy Winchell, Esq. (Argued)
Law Offices of Andy Winchell
332 Springfield Avenue, Suite 203
Summit, NJ 07901
Counsel for Appellants
Kenneth S. Jannette, Esq.
Susan Power Johnston, Esq. (Argued)
Weinstein & Riley. P.S.
14 Penn Plaza, Suite 1300
New York, New York 10122
Counsel for Appellees

The Honorable Lee H. Rosenthal, of the United States
District Court for the Southern District of Texas, sitting by
designation.
2
OPINION
ROSENTHAL, District Judge:
This appeal arises out of the intersection of the
Bankruptcy Code and the Fair Debt Collection Practices Act.
The issue is whether a debt collector’s letter and notice
requesting an examination under Federal Rule of Bankruptcy
Procedure 2004 and offering to settle a debt, sent in a pending
bankruptcy in contemplation of an adversary proceeding to
challenge dischargeability, can be the basis for liability under
the FDCPA.
A law firm, Weinstein & Riley, P.S., sent the letter and
attached notice at issue on behalf of FIA Card Services, N.A.,
to both appellants, bankruptcy debtors Stacey Helene and
Robert Maxwell Simon, through their bankruptcy counsel.
The District Court dismissed the Simons’ FDCPA suit arising
from the letter and notice under Federal Rule of Civil
Procedure 12(b)(6). The District Court held that the
Bankruptcy Code provided the exclusive remedy for the
alleged violations and precluded the FDCPA claims. The
District Court also held that even if the FDCPA claims were
not precluded, the Simons’ complaint did not allege sufficient
facts to state a claim. The Simons appealed. We will affirm
in part, reverse in part, and remand.
3
I. Background
On December 30, 2010, the Simons filed for
bankruptcy protection under Chapter 7 of the Bankruptcy
Code, 11 U.S.C. §§ 701–84, in the United States Bankruptcy
Court for the District of New Jersey. In re Simon, No. 10-
50052 (Bankr. D.N.J. filed Dec. 30, 2010). The schedules
submitted to the Bankruptcy Court identified an unsecured,
nonpriority claim credit-card debt owed to Bank of America
(now FIA). FIA retained Weinstein & Riley to represent it in
the Simons’ bankruptcy proceeding.
On January 28, 2011, Weinstein & Riley sent the letter
and attached notice to both Mr. and Mrs. Simon through their
bankruptcy counsel. The letter stated that FIA was
considering filing an adversary proceeding under 11 U.S.C. §
523 to challenge the dischargeability of the credit-card debt.
The letter included an offer to forego an adversary proceeding
if the Simons stipulated that the credit-card debt was
nondischargeable or if they agreed to pay a reduced amount
to settle the debt. The letter stated that a Rule 2004
examination to gather information for filing an adversary
proceeding had been scheduled for February 28, 2011, but
that Weinstein & Riley was open to “discuss[ing] with your
client whether the matter can be resolved without conducting
the examination and/or to reschedule it for an informal
telephone conference at a mutually agreeable time prior to the
bar date.” The bottom of the letter set out additional
information about how to challenge the debt “[i]n the event
that this letter is governed by the FDCPA.”
Attached to the letter was a document entitled
“NOTICE OF EXAMINATION IN ACCORDANCE WITH
4
F.R.B.P. 2004 AND LOCAL RULE 2004-1.” The notice
identified the date and time for the Rule 2004 examinations
and the place as Weinstein & Riley’s offices in New York
City or “upon written request, at an alternate location to be
agreed upon by the parties.” The notice included a statement
that the Simons were to bring specified documents to the Rule
2004 examinations.1 The notice stated that “[p]ursuant to
Local Rule 16, no order shall be necessary.” The Simons
alleged, and the appellees acknowledged at oral argument,
that the notice was subject to the requirements for a subpoena
1
The documents the Simons were to bring included: (1)
“[a]ll cancelled checks and checking account statements
maintained by Debtor for the one (1) year period prior to the
date the Debtor filed bankruptcy”; (2) “[a]ll books and
records evidencing Debtor’s income, including payroll
statements, W-2 forms and other documentary evidence of
income, for the years 2008 and 2009”; (3) “[f]ederal tax
returns filed by Debtor for the taxable years 2007, 2008, and
2009”; (4) “[a]ll checks, invoices, receipts of payments and
statements for the Debtor and Debtor’s personal expenses,
including, but not limited to credit card statements, mortgage
or rental payments, utility bills, insurance premiums,
automobile and/or transportation expenses, entertainment and
recreational expenses, clothing expenses, capital gains and
losses, gambling debts, food expenses, or medical and drug
expenses, for the one (1) year period prior to the date the
Debtor filed for bankruptcy”; and (5) “[a]ll financial
statements, inventories, and schedules reflecting Debtor’s
assets, liabilities and net worth, whether prepared by Debtor
or on Debtor’s behalf, for the one (1) year period prior to the
date Debtor filed for bankruptcy.”
5
under Federal Rule of Bankruptcy Procedure 9016 and
Federal Rule of Civil Procedure 45.
At the bottom of the subpoena was a certificate signed
by a Weinstein & Riley attorney. The certificate stated that
“a true and correct copy of the foregoing has been mailed on
January 28, 2011 to the above address.” Two addresses were
listed: the Simons’ home in New Jersey and their bankruptcy
counsel’s office. The Simons allege that they did not receive
a copy at their home address and that Weinstein & Riley did
not in fact send a copy there. The Simons’ bankruptcy
counsel received the copies sent to his office.
The Simons filed a motion in the Bankruptcy Court to
quash the Rule 2004 examination notices on the ground that
they failed to comply with the Bankruptcy Rule 9016 and
Civil Rule 45 subpoena requirements. On February 23, 2011,
the Simons filed an adversary proceeding asserting FDCPA
claims against FIA and Weinstein & Riley. The Bankruptcy
Court quashed the Rule 2004 examination notices. The
Bankruptcy Court later ruled that it lacked subject-matter
jurisdiction over the FDCPA claims and dismissed them
without prejudice.
The Simons then sued FIA and Weinstein & Riley in
the Federal District Court for the District of New Jersey.
They alleged that the letters and subpoenas violated the
FDCPA prohibition on false, deceptive, and misleading debt-
collection practices under 15 U.S.C. § 1692e(5), (11), and
(13). The appellees moved to dismiss on three grounds: (1)
the FDCPA claim was precluded by the Bankruptcy Court’s
earlier dismissal of the adversary proceeding the Simons had
filed; (2) the complaint did not state a claim; and (3) the
6
allegations from which the FDCPA claims arose were
governed exclusively by the Bankruptcy Code.
On July 16, 2012, the District Court dismissed the
FDCPA suit, with prejudice, stating that the “FDCPA claims
[were] precluded by the Bankruptcy Code” and that the
complaint “does not appear to set forth sufficient factual
allegations to state a claim” under the FDCPA. Simon v. FIA
Card Servs., N.A., Civ. No. 12-518, 2012 WL 2891080, at
*4 (D.N.J. 2012).
The Simons timely appealed from the dismissal order.2
II. The Standard of Review
Under Rule 12(b)(6), a motion to dismiss may be
granted only if, accepting the well-pleaded allegations in the
complaint as true and viewing them in the light most
favorable to the plaintiff, a court concludes that those
allegations “could not raise a claim of entitlement to relief.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007). We
review de novo an order granting a Rule 12(b)(6) motion.
Mariotti v. Mariotti Bldg. Prods., Inc., 714 F.3d 761, 765 (3d
Cir. 2013).
2
The District Court had jurisdiction under 28 U.S.C. § 1331.
We have appellate jurisdiction under 28 U.S.C. § 1291.
7
III. Analysis
A. Whether the Complaint Stated Claims Under
the FDCPA
Section 1692e of the FDCPA prohibits debt collectors
from using “any false, deceptive, or misleading representation
or means in connection with the collection of any debt.” The
Simons alleged that the letter and notice violated § 1692e(5),
(11), and (13). Section 1692e(5) states that a debt collector
may not make a “threat to take any action that cannot legally
be taken or that is not intended to be taken.” Section
1692e(13) prohibits a debt collector from making a “false
representation or implication that documents are legal
process.”
The Simons alleged that by sending the letter and
attached notice, Weinstein & Reilly and FIA violated §
1692e(5) and (13) in four ways:
• By intentionally failing to send the letter and subpoena
to the Simons and instead sending the documents to
their attorney, violating Civil Rule 45(b)(1)’s
requirement that subpoenas be served directly on the
individuals subpoenaed.
• By specifying the location for the Rule 2004
examinations as the Weinstein & Riley office in New
York, rather than in New Jersey. The Simons alleged
that this violated Civil Rule 45(a)(2)(B)’s requirement
that a subpoena be issued “from the court for the
district where the deposition is to be taken.”
8
• By failing to include in the subpoena the text of Civil
Rule 45(c) and (d), as Civil Rule 45(a)(1)(A)(iv)
requires.
• By failing to include in the subpoena the method of
recording the Rule 2004 examinations, as Civil Rule
45(a)(1)(B) requires.
Additionally, the Simons allege that Weinstein & Riley
violated the FDCPA by failing to include the “mini-Miranda”
warning required under § 1692e(11). Under that section, a
debt collector must disclose in the initial communication with
the debtor that “the debt collector is attempting to collect a
debt and that any information obtained will be used for that
purpose.” 15 U.S.C. § 1692e(11).
1. The Argument that the FDCPA Did Not
Apply Because There Was No
“Communication” Attempting to Collect
a Debt
The appellees generally contend that the FDCPA
claims should be dismissed on the ground that the letter and
notice sent to the Simons did not “attempt to collect a debt”
under the statute because there was no demand for payment.
Instead, the appellees contend, the letter offered to “discuss a
possible [nondischargeability] claim pursuant to 11 U.S.C. §
523.” Courts have not construed the FDCPA so narrowly.
The FDCPA regulates “debt collection” without
defining that term. The FDCPA states that “to be liable under
the statute’s substantive provisions, a debt collector’s targeted
conduct must have been taken ‘in connection with the
9
collection of any debt,’ e.g., 15 U.S.C. §§ 1692c(a)–(b),
1692d, 1692e, 1692g, or in order ‘to collect any debt,’ id. §
1692f.” Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 459–
60 (6th Cir. 2013). The FDCPA does define three other
relevant terms:
 “Debt” means “any obligation or alleged obligation of
a consumer to pay money arising out of a transaction
in which the money, property, insurance, or services
which are the subject of the transaction are primarily
for personal, family, or household purposes, whether
or not such obligation has been reduced to judgment.”
15 U.S.C. § 1692a(5).
 “Debt collector” means a person “in any business the
principal purpose of which is the collection of any
debts, or who regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to
be owed or due another.” Id., § 1692a(6).
 “Communication” means “the conveying of
information regarding a debt directly or indirectly to
any person through any medium.” Id., § 1692a(2).
The Supreme Court held in Heintz v. Jenkins that a
“debt collector” includes an attorney who “‘regularly’
engage[s] in consumer-debt-collection activity, even when
that activity consists of litigation.” 514 U.S. 291, 299
(1995).3 The Simons’ claims cannot be dismissed on the
3
The Court in Heintz noted that, as originally passed, the
FDCPA exempted attorneys by providing that “debt
collector” did not include “‘any attorney-at-law collecting a
10
ground that Weinstein & Riley’s actions did not amount to
“debt collection” covered by the FDCPA.
Nor can the Simons’ FDCPA claims be dismissed on
the ground that the letter and notice were not
“communications” under the statute. In Allen ex rel. Martin
v. LaSalle Bank, N.A., 629 F.3d 364 (3d Cir. 2011), we
addressed whether a letter sent by a bank’s attorneys met the
FDCPA requirement for a “communication.” Id. at 368 n.5
(citing 15 U.S.C. § 1692a(2)). The bank argued that the letter
was not an actionable FDCPA “communication” because it
did not make a demand for payment. We rejected that
argument and noted that a “communication” need only
convey “‘information regarding a debt’ and is not limited to
specific requests for payment.” Id. (quoting § 1692a(2)).
Opinions from other circuits provide further support
for applying the FDCPA to debt collectors’ communications
to debtors even if there is even if there is no explicit demand
for payment. In Gburek v. Litton Loan Servicing LP, the
Seventh Circuit addressed whether two letters to a debtor who
debt as an attorney on behalf of and in the name of a client.’”
514 U.S. at 294 (quoting Pub. L. 95-109, § 803(6)(F), 91 Stat.
874, 875). In 1986, before Heintz was decided, Congress
repealed the attorney exemption. Pub. L. 99-361, 100 Stat.
768. After Heintz, Congress amended § 1692e(11) to exempt
any “formal pleading made in connection with a legal action”
from the FDCPA’s notice requirements. 15 U.S.C. §
1692e(11), as amended Pub. L. 104–208, § 2305(a), 110 Stat.
3009, 3009–425 (1996). Congress did not otherwise limit the
FDCPA’s applicability to lawyers using litigation to collect
debts.
11
had fallen behind on her mortgage payments could be the
basis for FDCPA claims. 614 F.3d 380 (7th Cir. 2010). The
letters, sent by or on behalf of a loan servicer, offered to
discuss ways the debtor could avoid foreclosure and asked for
the debtor’s detailed, current financial information. The
Seventh Circuit held that the letters were sent “in connection
with the collection of [a] debt” under § 1692e. Id. at 385.
The court explained that “[t]he absence of a demand for
payment is just one of several factors that come into play in
the commonsense inquiry of whether a communication from a
debt collector is made in connection with the collection of
any debt.” Id. Noting that the debtor was in default, no
forbearance agreement was in place, and the letters offered to
discuss foreclosure alternatives and requested financial
information, the court concluded that the first of the letters
was the “opening communication in an attempt to collect [the
debtor’s] defaulted home loan — by settlement or otherwise.
Though it did not explicitly ask for payment, it was an offer
to discuss [the debtor’s] repayment options, which qualifies
as a communication in connection with an attempt to collect a
debt.” Id. at 386.
The Sixth Circuit adopted the Seventh Circuit’s
approach in Grden v. Leikin Ingber & Winters PC, 643 F.3d
169 (6th Cir. 2011). In Grden, a law firm filed a state-court
debt-collection action. The firm sent the debtor a letter with
an attachment that appeared to be a default-judgment motion.
The debtor had not missed the deadline for answering the
complaint. When the debtor called the law firm, it allegedly
provided him with an incorrect account balance. The debtor
filed an FDCPA claim. The law firm moved for summary
judgment on the ground that the letter with the attachment
and telephone call were not communications that attempted to
12
collect a debt. The Sixth Circuit held that “for a
communication to be in connection with the collection of a
debt, an animating purpose of the communication must be to
induce payment by the debtor.” Id. at 173 (citing Gburek,
614 F.3d at 385). “[A] letter that is not itself a collection
attempt, but that aims to make . . . such an attempt more
likely to succeed, is one that has the requisite connection.”
Id. The letter and document appearing to be a default-
judgment motion gave rise to an FDCPA claim. The
telephone call, however, did not give rise to an FDCPA claim
because the debtor had initiated the call, and the statements
by the person answering were “merely a ministerial response
to a debtor inquiry, rather than part of a strategy to make
payment more likely.” Id.
Other circuits considering related questions have
similarly held that the FDCPA applies to litigation-related
activities that do not include an explicit demand for payment
when the general purpose is to collect payment. See, e.g.,
McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637
F.3d 939, 952 (9th Cir. 2011) (“The district court correctly
held that [the defendant’s] service of false requests for
admission violated the FDCPA as a matter of law.”); Sayyed
v. Wolpoff & Abramson, 485 F.3d 226, 228, 230–32 (4th Cir.
2007) (holding that the FDCPA applied to allegedly
erroneous statements made in interrogatories and a summary
judgment motion during the course of a state-court debt-
collection suit).
Given Allen’s broad gloss on “communication” and the
consistent analysis from other circuits described above, we
reject the appellees’ argument that the letter and subpoena
Weinstein & Riley sent each appellant was not a
13
“communication” from a “debt collector” made “in
connection with the collection of [a] debt.” The letters stated
that the Simons had defaulted on their credit obligations; FIA
was considering filing adversary proceedings under 11 U.S.C.
§ 523 to challenge the dischargeability of their debt; Rule
2004 examinations were scheduled to gather information
about dischargeability; and the Simons were to bring personal
financial information and documents to the Rule 2004
examinations. The letters offered the Simons a way to avoid
the Rule 2004 examinations and adversary proceedings by
paying a reduced amount to settle the debt or by stipulating
that the debt was nondischargeable. The letter and notice
were an attempt to collect the Simons’ debt through the
alternatives of settlement — including by partial payment —
or gathering information to challenge dischargeability. The
absence of an explicit payment demand does not take the
communication outside the FDCPA.4
4
The appellees argue that the Simons’ FDCPA claims fail
because the complaint did not sufficiently allege facts
showing that they were “consumers” under the FDCPA. A
“consumer” means “any natural person obligated or allegedly
obligated to pay any debt.” 15 U.S.C. § 1692a(3). Because
the asserted failure to plead “consumer” status was raised as a
basis to dismiss for the first time on appeal, we need not
address it. We do note that had the District Court been given
the opportunity to address this claim and dismissed on this
basis, the dismissal likely would have been with leave to
amend. See Free Speech Coal., Inc. v. Att’y Gen., 677 F.3d
519, 545 (3d Cir. 2012) (“Leave to amend should be freely
given when justice so requires, including for a curative
amendment unless such an amendment would be inequitable
or futile.”).
14
2. The Arguments that the Complaint Did
Not Allege an FDCPA Claim
a. The FDCPA Claims Based on Alleged
Violations of Bankruptcy Rule 9016
and Civil Rule 45
The District Court found that several of the Simons’
specific FDCPA allegations were contradicted by the
language of the subpoenas Weinstein & Riley sent.5 The
District Court rejected the Simons’ § 1692e(5) and (13)
claims that the appellees violated the FDCPA because the
subpoenas failed to disclose the method for recording the
examination. The District Court noted that the statement in
both subpoenas that “a certified court reporter or any other
Notary Public or officer authorized by law to take
The appellees also raise for the first time on appeal the
sufficiency of the Simons’ allegations that Weinstein & Riley
or FIA was a “debt collector” under the FDCPA. While
attorneys such as Weinstein & Riley, who regularly use
litigation to collect consumer debts owed to others are “debt
collectors,” Heintz, 514 U.S. 291, original creditors are not,
see Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 403 (3d
Cir. 2000). Although this issue was not raised below and is
not properly before us, whether FIA is a “debt collector” or a
creditor may be an issue addressed on remand.
5
The Simons attached the letter and notice directed to each
of them to their complaint. The letter and notice was properly
considered by the District Court under Rule 12(b)(6) and are
before us on appeal. Guidotti v. Legal Helpers Debt
Resolution, L.L.C., 716 F.3d 764, 772 (3d Cir. 2013).
15
depositions” would be used for the Rule 2004 examinations
was sufficient. Simon, 2012 WL 2891080, at *5. We will
affirm this conclusion, but on a different ground. Cardona v.
Bledsoe, 681 F.3d 533, 535 n.4 (3d Cir. 2012) (“We may
affirm a district court for any reason supported by the record.”
(alteration and internal quotation marks omitted)). We find
that the failure to specify the recording method in the
subpoena did not violate Bankruptcy Rule 9016 or Civil Rule
45.
Bankruptcy Rule 9016 provides that Civil Rule 45
applies to subpoenas issued in bankruptcy cases. Civil Rule
45(a)(1)(B) requires that “[a] subpoena commanding
attendance at a deposition must state the method for recording
the testimony” and applies to subpoenas for depositions.
Courts have recognized that a Rule 2004 examination differs
from a deposition, serving different purposes and subject to
different procedures.6 See, e.g., In re J & R Trucking, Inc.,
6
Rule 2004 examinations, “typically implemented in the
pre-litigation stage of a bankruptcy case, are subject to few of
the procedural safeguards normally applicable to discovery
under the Federal Rules of Civil Procedure.” In re Bakalis,
199 B.R. 443, 447 (Bankr. E.D.N.Y. 1996); see also In re
Bennett Funding Grp., Inc., 203 B.R. 24, 28 (Bankr.
N.D.N.Y. 1996) (“As [Rule] 2004 is meant to give the
inquiring party broad power to investigate the estate, it does
not provide the procedural safeguards offered by [Bankruptcy
Rule] 7026. For example, under a [Rule] 2004 examination, a
witness has no general right to representation by counsel, and
the right to object to immaterial or improper questions is
limited.” (citations omitted)); In re Coffee Cupboard, Inc.,
128 B.R. 509, 516 (Bankr. E.D.N.Y. 1991) (“These
16
431 B.R. 818, 821 (Bankr. N.D. Ind. 2010) (“Although a Rule
2004 examination is obviously an investigatory device and it
is conducted under oath, it should not be confused with
discovery or a discovery deposition.”). Bankruptcy Rule
2004(c) provides that “the attendance of an entity for
examination . . . may be compelled as provided in Rule 9016
for the attendance of a witness at a hearing or trial.” Civil
Rule 45 does not require a subpoena for attendance at a
hearing or trial to include a notice of the recording method.
Civil Rule 45(a)(1)(B) and Bankruptcy Rule 9016 did not
require the subpoenas Weinstein & Reilly sent to state the
method for recording the Rule 2004 examinations.
Accordingly, we will affirm the dismissal of the § 1692e(5)
and (13) claims because there was no failure to comply with
the rules.
examinations have been likened and countenanced as fishing
expeditions and inquisitions where procedural safeguards of
witnesses are at a minimum.” (citations and internal quotation
marks omitted)); In re Wilcher, 56 B.R. 428, 434 (Bankr.
N.D. Ill. 1985) (“The proper mode of discovery which
ordinarily must be utilized against a third party who may be
liable to the bankruptcy estate for various wrongful acts is
contained in the Federal Rules of Civil Procedure, which
provide numerous procedural safeguards against unfairness to
the party from which discovery is sought. . . . By contrast,
the procedural safeguards provided by Bankruptcy Rule 2004
are minimal.”). At least one court has found that the
Bankruptcy Rules do not “require [Rule 2004] examinations
to be transcribed or transcripts to be filed.” In re Thow, 392
B.R. 860, 867 (Bankr. W.D. Wash. 2007).
17
The District Court also dismissed the Simons’ claims
that the appellees violated § 1692e(5) and (13) of the FDCPA
by issuing the subpoenas from the District of New Jersey for
Rule 2004 examinations to be held in the Southern District of
New York. See Fed. R. Civ. P. 45(a)(2)(A) (providing that a
subpoena must issue “from the court for the district where the
hearing or trial is to be held”). The District Court dismissed
this FDCPA claim on the basis that there was no underlying
rule violation, finding that the subpoenas did not “compel”
the Simons to appear only in New York, as they alleged. The
subpoenas stated that the examinations could take place
“upon written request, at an alternate location to be agreed
upon by the parties.” The Simons did not address on appeal
the District Court’s ground for dismissing this claim, and we
find no basis for reversal. We will affirm the dismissal of this
claim.
The District Court did not find, and the appellees do
not argue, that the subpoenas met Civil Rule 45’s
requirements that they be served directly on the individuals
subpoenaed and include the text of Civil Rule 45(c) and (d).
See Fed. R. Civ. P. 45(b)(1); (a)(1)(A)(iv). The District Court
instead dismissed the § 1692e(5) and (13) claims arising from
the violations of Civil Rule 45 on the basis of preclusion. The
District Court dismissed the remaining FDCPA claim under
§ 1692e(11) on the basis that it failed to state a claim. This
FDCPA claim, unlike the § 1692e(5) and (13) claims, does
not depend on an underlying alleged violation of the
Bankruptcy Rules.
18
b. The FDCPA Claim Based on the
Failure to Include the “Mini-Miranda”
Warning
The District Court found that the letter sent to the
Simons’ bankruptcy counsel did not violate the FDCPA
because it “‘simply advised the attorney for the debtor that
the Defendant debt collection agency believed that the debt
might be non-dischargeable and it would like to settle the
matter if the attorney for the debtor did not believe that there
was a defense to the claim under 11 U.S.C. § 523(a)(2).’”
Simon, 2012 WL 2891080, at *5 (quoting Villegas v.
Weinstein & Riley, P.S., 723 F. Supp. 2d 755, 760–61 (M.D.
Pa. 2010)). The Villegas court first held that the FDCPA does
not apply to a debt collector’s communications to a debtor’s
attorney. The court then held that to the extent that the
FDCPA applies to such communications, they should be
analyzed under a “competent lawyer” standard, not the “least
sophisticated debtor” standard that ordinarily applies to a debt
collector’s communications with a debtor. See Lesher v. Law
Offices of Mitchell N. Kay, PC, 650 F.3d 993, 997 (3d Cir.
2011) (“[W]e analyze communications from lenders to
debtors from the perspective of the least sophisticated
debtor.” (internal quotation marks omitted)). The Villegas
court concluded that under the “competent lawyer” standard,
a letter advising the debtor’s bankruptcy counsel of the desire
to settle a potential adversary complaint did not violate the
FDCPA. Villegas, 723 F. Supp. 2d at 760.
The Simons contend that Villegas is not persuasive
because of our decision in Allen, 629 F.3d at 364. Allen was
a mortgage foreclosure lawsuit filed on a bank’s behalf
against a borrower. At the request of the borrower’s attorney,
19
the bank’s attorney sent a letter quoting the amounts needed
to pay off the loan, fees, and costs. Another letter sent the
same day itemized the attorney’s fees and costs referred to in
the previous letter. The borrower filed a class action under §
1692f(1) of the FDCPA against the bank and the law firm,
alleging that the letters misstated the charges the borrower
owed and that the charges were neither authorized by contract
nor permitted by law. The defendants moved to dismiss on
the basis that the FDCPA does not cover a debt collector’s
communication to a debtor’s attorney. The district court
rejected this argument but granted the motion to dismiss
because a competent attorney would have recognized the
charges as incorrect. We reversed. Noting that the FDCPA
defines “communication” broadly to include “the conveying
of information regarding a debt directly or indirectly through
any medium,” 15 U.S.C. § 1692a(2), we held that “[a]
communication to a consumer’s attorney is undoubtedly an
indirect communication to the consumer.” Id. at 368. We
also held that the “competent attorney” standard did not apply
to the debtor’s § 1692f(1) claim because “[t]he only inquiry
under § 1692f(1) is whether the amount collected was
expressly authorized by the agreement creating the debt or
permitted by law.” Id. This inquiry did not turn on the
reader’s sophistication.
Allen did not articulate a competent-attorney standard
for FDCPA claims arising out of communications to a
consumer’s attorney. But Allen’s reasoning supports
rejecting the “competent attorney” standard for the §
1692e(11) claim at issue here. The inquiry under § 1692e(11)
is whether the “mini-Miranda” disclosure was required in the
Weinstein & Reilly communications and, if so, provided.
20
The sophistication of the party receiving the communication
is irrelevant to that inquiry.
Allen also supports rejecting the “competent attorney”
standard for the only part of the remaining § 1692e(5) and
(13) claims that the parties have raised on appeal. These
FDCPA claims are based on the allegations that the
subpoenas failed to comply with Civil Rule 45, as
incorporated by Bankruptcy Rule 9016 in two respects:
because they were not served on the Simons directly, as
required by Civil Rule 45(b)(1); and they did not include the
text of Civil Rule 45(c)–(d), as required by Civil Rule
45(a)(1)(A)(iv). Each claim requires two inquiries. The first
inquiry is whether the subpoenas failed to comply with the
rules, as alleged. The second is whether the alleged failures
to comply also violated § 1692e(5) or (13) of the FDCPA.
See LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1192
(11th Cir. 2010) (“[W]e do not hold that all debt collector
actions in violation of state law constitute per se violations of
the FDCPA. Rather, the conduct or communication at issue
must also violate the relevant provision of the FDCPA.”).
The District Court did not reach the second inquiry, and the
parties do not address it on appeal. Instead, the District
Court, and the parties on appeal, focused on whether the
subpoenas violated the Rules, and did not discuss whether, if
so, that is enough to state a claim under the FDCPA. The
sophistication of the party receiving Weinstein & Riley’s
communications is irrelevant to determining the subpoena’s
compliance with Civil Rule 45 and Bankruptcy Rule 9016,
which is the only inquiry before us on appeal. The
“competent attorney” standard is not relevant to this inquiry.
The District Court dismissed these two remaining § 1692e
claims on the basis of preclusion by the Bankruptcy Code,
21
without reaching the question whether, if the subpoenas
violated Civil Rule 45 and Bankruptcy Rule 9016, that was
enough to violate the FDCPA. We will reverse the preclusion
ruling without resolving whether the alleged failures to
comply with Civil Rule 45, as incorporated by Bankruptcy
Rule 9016, also state claims under § 1692e(5) and (13) of the
FDCPA.
c. The Allegations that State an FDCPA
Claim
In sum, we affirm the dismissal of the Simons’ §
1692e(5) and (13) claims based on alleged violations of Civil
Rule 45 and Bankruptcy Rule 9016 for failing to identify the
recording method in the Rule 2004 examination subpoenas
and for issuing the subpoenas from a district other than where
the Rule 2004 examinations were to be held.
The remaining FDCPA claims are the § 1692e(5) and
(13) claims for violating Civil Rule 45(b)(1) by failing to
serve the subpoenas directly on the individuals subpoenaed
and Rule 45(a)(1)(A)(iv) by failing to include the text of Civil
Rule 45(c)-(d), and the § 1692e(11) claim for failing to
include the mini-Miranda warning in the letters and
subpoenas. We now consider whether the Bankruptcy Code
precludes those claims.
B. The Relationship Between the Bankruptcy Code
and the FDCPA
22
Appellees argue that if any of the Simons’ claims
survive dismissal, the Bankruptcy Code and Rules precludes
them. The Simons contend that there is no basis to find that
the Bankruptcy Code and Rules preclude their FDCPA
claims. We have not previously addressed whether, or to
what extent, an FDCPA claim can arise from a debt
collector’s communications to a debtor in a pending
bankruptcy proceeding. The appellate and trial courts have
reached varying and sometimes inconsistent conclusions
about whether and when the Bankruptcy Code precludes
FDCPA claims arising from communications to a debtor sent
in the bankruptcy context. Compare Simmons v. Roundup
Funding, LLC, 622 F.3d 93 (2d Cir. 2010); Walls v. Wells
Fargo Bank, N.A., 276 F.3d 502 (9th Cir. 2002); and B-Real,
LLC v. Chaussee (In re Chaussee), 399 B.R. 225 (9th Cir.
B.A.P. 2008) (finding that FDCPA claims were precluded by
the Bankruptcy Code), with Randolph v. IMBS, Inc., 368 F.3d
726 (7th Cir. 2004) (finding the FDCPA claims not
precluded).7
7
District court and bankruptcy court decisions addressing
the relationship between the FDCPA and Bankruptcy Code
and Rules have proliferated over the last decade. Published
decisions finding that FDCPA claims were not precluded by
the Bankruptcy Code include Gamble v. Fradkin & Weber,
P.A., 846 F. Supp. 2d 377, 381–83 (D. Md. 2012)
(postdischarge collection); Rios v. Bakalar & Assocs., P.A.,
795 F. Supp. 2d 1368, 1369–70 (S.D. Fla. 2011)
(postdischarge collection); Clark v. Brumbaugh & Quandahl,
P.C., LLO, 731 F. Supp. 2d 915, 919–21 (D. Neb. 2010)
(automatic stay and discharge injunction violations); Kline v.
Mortg. Elec. Sec. Sys., 659 F. Supp. 2d 940, 949–51 (S.D.
Ohio 2009) (inflated proof of claim); Bacelli v. MFP, Inc.,
23
729 F. Supp. 2d 1328, 1336–37 (M.D. Fla. 2010) (automatic
stay and discharge injunction violations); Evans v. Midland
Funding LLC, 574 F. Supp. 2d 808, 816–17 (S.D. Ohio 2008)
(postdischarge collection); Dougherty v. Wells Fargo Home
Loans, Inc., 425 F. Supp. 2d 599, 604–06 (E.D. Pa. 2006)
(postdischarge collection); Marshall v. PNC Bank, N.A. (In re
Marshall), 491 B.R. 217, 224–27 (Bankr. S.D. Ohio 2012)
(postdischarge collection); Atwood v. GE Money Bank (In re
Atwood), 452 B.R. 249, 251–53 (Bankr. D.N.M. 2011)
(automatic stay violation); Price v. Am.’s Servicing Co. (In re
Price), 403 B.R. 775, 790 n.14 (Bankr. E.D. Ark. 2009)
(inflated proof of claim); Gunter v. Columbus Check
Cashiers, Inc. (In re Gunter), 334 B.R. 900, 903–05 (Bankr.
S.D. Ohio 2005) (postdischarge collection); and Molloy v.
Primus Auto. Fin. Servs., 247 B.R. 804, 820–21 (C.D. Cal.
2000) (postdischarge collection).
Published decisions finding that FDCPA claims were
precluded by the Bankruptcy Code include Jenkins v. Genesis
Fin. Solutions (In re Jenkins), 456 B.R. 236, 240 (Bankr.
E.D.N.C. 2011) (proof of claim for time-barred debt);
McMillen v. Syndicated Office Sys., Inc. (In re McMillen),
440 B.R. 907, 911–13 (Bankr. N.D. Ga. 2010) (inflated proof
of claim); B-Real, LLC v. Rogers (In re Rogers), 405 B.R.
428, 430–34 (M.D. La. 2009), rev’g, 391 B.R. 317, 325–26
(Bankr. M.D. La. 2008) (proof of claim for time-barred debt);
Gilliland v. Capital One Bank (In re Gilliland), 386 B.R. 622,
623–24 (Bankr. N.D. Miss. 2008) (inflated proof of claim);
Williams v. Asset Acceptance, LLC (In re Williams), 392 B.R.
882, 885–87 (Bankr. M.D. Fla. 2008) (time-barred proof of
claim); Middlebrooks v. Interstate Credit Control, Inc., 391
B.R. 434, 436–37 (D. Minn. 2008) (proof of claim for time-
24
barred debt); Pariseau v. Asset Acceptance, LLC (In re
Pariseau), 395 B.R. 492, 493–94 (Bankr. M.D. Fla. 2008)
(false proof of claim); Rice–Etherly v. Bank One (In re Rice–
Etherly), 336 B.R. 308, 311–13 (Bankr. E.D. Mich. 2006)
(inflated proof of claim); Necci v. Universal Fid. Corp., 297
B.R. 376, 379–81 (E.D.N.Y. 2003) (postdischarge collection);
Cooper v. Litton Loan Servicing (In re Cooper), 253 B.R.
286, 291–92 (Bankr. N.D. Fla. 2000) (inflated proof of
claim); and Gray–Mapp v. Sherman, 100 F. Supp. 2d 810,
813–14 (N.D. Ill. 1999) (inflated proof of claim); see also
Jacques v. U.S. Bank N.A. (In re Jacques), 416 B.R. 63, 74–
81 (Bankr. E.D.N.Y. 2009) (proof of claim for time-barred
debt); Wan v. Discover Fin. Servs., Inc., 324 B.R. 124, 127
(N.D. Cal. 2005) (failure to follow FDCPA debt-verification
procedures). Cf. Adair v. Sherman, 230 F.3d 890, 896 (7th
Cir. 2000) (finding that issue preclusion prevents relitigation
through the FDCPA of the amount of a debt after a
bankruptcy court confirmed the proof of claim for the debt in
an earlier bankruptcy proceeding). Many unpublished
decisions also address whether the Bankruptcy Code and
Rules preclude FDCPA claims.
Similar issues have arisen in cases involving
bankruptcy debtors asserting violations of the Real Estate
Settlement Practices Act (RESPA), 12 U.S.C. §§ 2605 et seq.,
and Regulation X, 24 C.F.R. § 3500. See, e.g., Conley v.
Cent. Mortg. Co., 414 B.R. 157, 159–61 (E.D. Mich. 2009)
(RESPA applies in bankruptcy); Laskowski v. Ameriquest
Mortg. Co. (In re Laskowski), 384 B.R. 518, 528 (Bankr.
N.D. Ind. 2008) (RESPA applies in bankruptcy); Figard v.
PHH Mortg. Corp. (In re Figard), 382 B.R. 695, 710–12
(Bankr. W.D. Pa. 2008) (RESPA applies in bankruptcy);
25
The Ninth Circuit has taken a broad approach, holding
that a debt collector’s communications to a consumer debtor
in the context of a bankruptcy proceeding cannot be the basis
for an FDCPA claim. In Walls v. Wells Fargo Bank, N.A.,
276 F.3d 502, a debtor sued a bank for attempting to collect a
debt that had been discharged in bankruptcy. The Ninth
Circuit concluded that the debtor’s FDCPA claim was barred
because it was “based on an alleged violation of § 524” and
consideration of it “necessarily entails bankruptcy-laden
determinations.” Id. at 510. To decide the FDCPA claim, the
district court would first need to address issues typically
decided by a bankruptcy court. These issues included
whether the debtor’s payments were “voluntary” under §
524(f) and whether she was required to enter a reaffirmation
agreement under § 524(c). Id. The Ninth Circuit also found
that the bankruptcy court’s contempt power allowed the
debtor to enforce the discharge injunction, removing the need
to invoke the FDCPA.
In dismissing the FDCPA claim, the Ninth Circuit
observed that a “‘ mere browse through the complex, detailed,
and comprehensive provisions of the lengthy Bankruptcy
Payne v. Mortg. Elec. Registration Sys., Inc. (In re Payne),
387 B.R. 614, 634 (Bankr. D. Kan. 2008) (RESPA applies in
bankruptcy); Holland v. EMC Mortg. Corp. (In re Holland),
374 B.R. 409, 440–43 (Bankr. D. Mass. 2007) (RESPA
applies in bankruptcy); Rodriguez v. R & G Mortg. Corp. (In
re Rodriguez), 377 B.R. 1, 7–8 (Bankr. D.P.R. 2007) (RESPA
applies in bankruptcy); Ameriquest Mortg. Co. v. Nosek (In re
Nosek), 354 B.R. 331, 338–39 (D. Mass. 2006) (RESPA does
not apply in bankruptcy); see also Jacques, 416 B.R. at 70–74
(declining to decide the issue).
26
Code . . . demonstrates Congress’s intent to create a whole
system under federal control which is designed to bring
together and adjust all of the rights and duties of creditors and
embarrassed debtors alike.’” Id. (quoting MSR Exploration,
Ltd. v. Meridian Oil, Inc., 74 F.3d 910, 914 (9th Cir. 1996)).
The Walls court concluded that allowing an FDCPA claim
based on a violation of the Bankruptcy Code’s discharge
injunction would “circumvent the remedial scheme of the
Code under which Congress struck a balance between the
interests of debtors and creditors by permitting (and limiting)
debtors’ remedies for violating the discharge injunction to
contempt.” Id.8
In In re Chaussee, 399 B.R. 225, the Ninth Circuit
Bankruptcy Appellate Panel similarly concluded that filing
allegedly time-barred proofs of claim in a pending bankruptcy
case was not actionable under the FDCPA. Relying on Walls
and MSR Exploration, the court found that “where the Code
and Rules provide a remedy for acts taken in violation of their
terms, debtors may not resort to other state and federal
remedies to redress their claims lest the congressional scheme
behind the bankruptcy laws and their enforcement be
frustrated.” Id. at 236–37.
8
The District Court noted that in In re Joubert, 411 F.3d
452 (3d Cir. 2005), we cited approvingly the Ninth Circuit’s
holding in Walls that 11 U.S.C. § 105(a) does not create an
implied private right of action to remedy violations of the
discharge injunction. Simon, 2012 WL 2891080, at *2 (citing
In re Joubert, 411 F.3d at 456). As the District Court
acknowledged, however, we have not ruled whether the
Bankruptcy Code precludes FDCPA claims.
27
In addition to this categorical basis, the Chaussee court
also found that an FDCPA claim based on a proof of claim
filed in a pending bankruptcy would create direct conflicts
with the Bankruptcy Code. The Chaussee court explained:
[a]ttempting to reconcile the debt validation
procedure contemplated by FDCPA with the
claims objection process under the
[Bankruptcy] Code results in the sort of
confusion and conflicts that persuades us that
Congress intended that FDCPA be precluded in
the context of bankruptcy cases. We fail to
understand how [a debt collector] could comply
with FDCPA § 1692g and its various notice and
informational requirements because those
provisions conflict with the Code and Rules.
Id. at 239. The FDCPA requires a debt collector to include a
notice of the debtor’s rights within five days of the initial
communication to the debtor. 15 U.S.C. § 1692g(a). The
Bankruptcy Code’s automatic stay provision prevents
collection steps after a bankruptcy case is filed. A debt
collector could not satisfy the FDCPA by including the notice
of rights in a proof of claim, because “a communication in the
form of a formal pleading” is not an “initial communication”
under the FDCPA. If a debt collector had to send the notice
of rights to a debtor in a pending bankruptcy case to avoid an
FDCPA claim, that communication could violate the
automatic stay. To omit the notice in order to avoid violating
the stay could violate the FDCPA. This conflict was a
specific, and narrower, basis for finding that the FDCPA
claim could not proceed.
28
The Second Circuit reached a similar result in
Simmons v. Roundup Funding, LLC, 622 F.3d 93, but without
taking a broad analytical approach. The debtors in Simmons
filed an FDCPA claim alleging that the defendant debt
collector had filed an inflated proof of claim in their
bankruptcy proceeding. The Second Circuit held that the
debtors had no FDCPA claim, stating that “[t]here is no need
to protect debtors who are already under the protection of the
bankruptcy court, and there is no need to supplement the
remedies afforded by bankruptcy itself.” Id. at 96. The
Bankruptcy Code provided both a mechanism to challenge
proofs of claim and remedies if they were improperly filed,
including by revoking fraudulent proofs of claim and by
invoking the bankruptcy court’s contempt power. Id. But the
Second Circuit noted that while some courts “have ruled more
broadly that no FDCPA action can be based on an act that
violates any provision of the Bankruptcy Code, because such
violations are dealt with exclusively by the Bankruptcy
Code[,] . . . we are not compelled to consider [that rule] in
this case.” Id. n.2 (citations omitted).
The Seventh Circuit in Randolph v. IMBS, Inc., 368
F.3d 726, took a different approach. In Randolph, the court
considered consolidated appeals involving FDCPA claims
arising from attempts to collect debts that violated the
automatic stay. The district courts dismissed the FDCPA
claims on the ground that they were “precluded” or
“preempted” by the Bankruptcy Code. The Seventh Circuit
reversed, explaining that “[w]hen two federal statutes address
the same subject in different ways, the right question is
whether one implicitly repeals the other.” Id. at 730. Repeal
requires either an “irreconcilable conflict between the statutes
or a clearly expressed legislative decision that one replace the
29
other.” The court emphasized that repeal by implication “is a
rare bird indeed.” Id. The Seventh Circuit found no
irreconcilable conflict between the FDCPA prohibitions and
the Bankruptcy Code’s discharge injunction and automatic
stay provisions, and no clearly expressed congressional
statement that the Code preclude FDCPA claims arising in
bankruptcy. Although the Bankruptcy Code and FDCPA
provisions at issue in Randolph overlapped, the court found
that because “[i]t is easy to enforce both statutes, and any
debt collector can comply with both simultaneously,” the
FDCPA claim could proceed. Id. at 730.
We will follow the Seventh Circuit’s approach. When,
as here, FDCPA claims arise from communications a debt
collector sends a bankruptcy debtor in a pending bankruptcy
proceeding, and the communications are alleged to violate the
Bankruptcy Code or Rules, there is no categorical preclusion
of the FDCPA claims. When, as is also the case here, the
FDCPA claim arises from communications sent in a pending
bankruptcy proceeding and there is no allegation that the
communications violate the Code or Rules, there is even less
reason for categorical preclusion. The proper inquiry for both
circumstances is whether the FDCPA claim raises a direct
conflict between the Code or Rules and the FDCPA, or
whether both can be enforced.
This approach is consistent with Supreme Court
precedents recognizing a presumption against the implied
repeal of one federal statute by another. “‘[W]hen two
statutes are capable of coexistence, it is the duty of the courts,
absent a clearly expressed congressional intention to the
contrary, to regard each as effective.’” J.E.M. Ag Supply, Inc.
v. Pioneer Hi-Bred Intern., Inc., 534 U.S. 124, 143–44 (2001)
30
(quoting Morton v. Mancari, 417 U.S. 535, 551 (1974)).
“Redundancies across statutes are not unusual events in
drafting, and so long as there is no ‘positive repugnancy’
between two laws, a court must give effect to both.” Conn.
Nat’l Bank v. Germain, 503 U.S. 249, 253 (1992) (citation
and internal quotation marks omitted). Nor is “a statute
dealing with a narrow, precise, and specific subject . . .
submerged by a later enacted statute covering a more
generalized spectrum.” Radzanower v. Touche Ross & Co.,
426 U.S. 148, 153 (1976). The Supreme Court has repeatedly
held that “‘[r]epeals by implication are not favored and will
not be presumed unless the intention of the legislature to
repeal [is] clear and manifest.’” Hawaii v. Office of
Hawaiian Affairs, 556 U.S. 163, 175 (2009) (quoting Nat’l
Assn. of Home Builders v. Defenders of Wildlife, 551 U.S.
644, 662 (2007)) (second alteration in original); see also
Branch v. Smith, 538 U.S. 254, 273 (2003); Posadas v. Nat’l
City Bank of N.Y., 296 U.S. 497, 503 (1936). Courts should
“not infer a statutory repeal unless the later statute expressly
contradicts the original act or unless such a construction is
absolutely necessary in order that the words of the later
statute shall have any meaning at all.” Nat’l Ass’n of Home
Builders, 551 U.S. at 662 (alterations and internal quotations
marks omitted); see also Branch, 538 U.S. at 273 (“An
implied repeal will only be found where provisions in two
statutes are in irreconcilable conflict, or where the latter Act
covers the whole subject of the earlier one and is clearly
intended as a substitute.” (internal quotation marks omitted)).
In contrast to its consistently strict application of the
presumption against finding an implied repeal of one federal
statute by another, the Supreme Court has shown a greater
willingness to find that federal statutes and regulations
31
preempt state-law causes of action. See, e.g., Gade v. Nat’l
Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 98 (1992) (applying
conflict preemption because “compliance with both federal
and state regulations is a physical impossibility or where state
law stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress”
(citations and internal quotation marks omitted)); see also
Kurns v. R.R. Friction Prods. Corp., — U.S. —, 132 S. Ct.
1261, 1266 (2012) (applying field preemption “‘when the
scope of a [federal] statute indicates that Congress intended
federal law to occupy a field exclusively’” (quoting
Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995)
(alterations in original))); Arizona v. United States, — U.S. —
, 132 S. Ct. 2492, 2501 (2012) (“The intent to displace state
law altogether can be inferred from a framework of regulation
so pervasive . . . that Congress left no room for the States to
supplement it or where there is a federal interest . . . so
dominant that the federal system will be assumed to preclude
enforcement of state laws on the same subject.” (citation and
internal quotation marks omitted)).
In Walls, the Ninth Circuit cited MSR Exploration, a
preemption decision, to support finding that the Code
precluded the FDCPA claims. 276 F.3d at 510 (citing MSR
Exploration, 74 F.3d at 914). But as the Seventh Circuit
correctly noted, the Ninth Circuit’s reliance on a precedent
involving federal statutory preemption of a state-law claim to
decide whether a federal statute precludes a federal-law claim
is misplaced. Randolph, 368 F.3d at 733; see also J.E.M.,
534 U.S. at 144 (rejecting the argument that “when [federal]
statutes overlap and purport to protect the same commercially
valuable attribute of a thing, such ‘dual protection’ cannot
exist”).
32
We also note that the Supreme Court has applied a
federal statute to bankruptcy suits despite the existence of
another, bankruptcy-specific, federal statute covering the
same ground. In Connecticut National Bank v. Germain, 503
U.S. 249 (1992), the Court considered the appealability of a
district court’s interlocutory order in a bankruptcy appeal.
The issue was the relationship between 28 U.S.C. §§ 1292
and 1291, which give appellate courts jurisdiction over
district-court orders and final judgments, and 28 U.S.C. §
158(d), which gives appellate courts jurisdiction over appeals
from district courts’ final judgments in bankruptcy cases but
is silent about jurisdiction over other appeals from orders.
The bankruptcy trustee argued that appellate jurisdiction over
interlocutory bankruptcy orders could not be proper under 28
U.S.C. § 1292, because applying the general appellate
jurisdiction statutes (§§ 1291 and 1292) to bankruptcy would
make the bankruptcy appellate jurisdiction statue (§ 158(d))
superfluous. The trustee argued that interlocutory orders
were not appealable beyond the district court because §
158(d) did not give courts of appeals jurisdiction. While
acknowledging that § 158(d) made § 1291 redundant in
bankruptcy cases, the Supreme Court rejected the view that
the courts of appeals lacked appellate jurisdiction under §
1292. “Because giving effect to both §§ 1291 and 158(d)
would not render one or the other wholly superfluous, we do
not have to read § 158(d) as precluding courts of appeals, by
negative implication, from exercising jurisdiction under §
1291 [or § 1292] over district courts sitting in bankruptcy.”
Germain, 503 U.S. at 253.
In Things Remembered, Inc. v. Petrarca, 516 U.S. 124(1994), the Court again considered whether a general
33
jurisdictional statute could apply when a more specific
bankruptcy jurisdiction statute addressed the same subject.
After filing for bankruptcy protection, a debtor removed a
state-court suit to federal court under both the bankruptcy
removal statute, 28 U.S.C. § 1452(a), and the general federal
removal statute, 28 U.S.C. § 1441(a). In considering the
state-court plaintiff’s remand motion, the bankruptcy court
held that although the removal was untimely under the
bankruptcy removal statute and Federal Rule of Bankruptcy
Procedure 9027, removal was timely under the general federal
removal statute and § 1446. The bankruptcy court concluded
that, as a result, removal was proper and there was federal
jurisdiction over the suit. On appeal, the district court
reversed, finding removal under both the general and
bankruptcy removal statutes to be untimely. The Sixth
Circuit Court of Appeals dismissed the subsequent appeal for
lack of appellate jurisdiction under §§ 1447(d) and 1452(b).
The Supreme Court affirmed the Sixth Circuit’s dismissal.
The Supreme Court found that § 1447(d) barred appellate
review of remand orders regardless of whether the case was
removed under the general removal statute or under the
bankruptcy removal statute. The Court explained that
“[t]here is no express indication in § 1452 that Congress
intended that statute to be the exclusive provision governing
removals and remands in bankruptcy. Nor is there any reason
to infer from § 1447(d) that Congress intended to exclude
bankruptcy cases from its coverage.” Things Remembered,
Inc., 516 U.S. at 129. This conclusion was not affected by
“[t]he fact that § 1452 contains its own provision governing
certain types of remands in bankruptcy.” Id. Because
“[t]here is no reason §§ 1447(d) and 1452 cannot comfortably
coexist in the bankruptcy context,” the Court explained that it
was required to “give effect to both.” Id.
34
The Supreme Court has also been reluctant to limit the
FDCPA because other, preexisting rules and remedies may
also apply to the conduct alleged to violate the Act. In
Heintz, 514 U.S. at 291, an attorney sued in state court to
recover money allegedly owed to the firm’s client. The state-
court defendant sued the attorney in federal court, alleging an
FDCPA violation for the attorney’s effort to collect an
amount not “authorized by the agreement creating the debt,”
15 U.S.C. § 1692f(1), and for making a false representation of
the amount of the debt, § 1692e(2)(A). As noted above, the
case eventually reached the Supreme Court, which held that
the term “debt collector” includes an attorney who regularly,
through litigation, attempts to collect consumer debts. The
creditor’s attorney argued that applying the FDCPA to
litigation activity would create “harmfully anomalous results
that Congress simply could not have intended.” Heintz, 514
U.S. at 295. The attorney argued that § 1692c(c), which
provides that a debt collector may not “communicate further”
with a debtor who requests that the collector “cease further
communication,” would prevent an attorney from suing a
debtor, initiating settlement discussions, or filing dispositive
motions. The Court refused to read the FDCPA as
prohibiting suits to collect debts. “[I]t is easier to read §
1692c(c) as containing some such additional, implicit,
exception than to believe that Congress intended, silently and
implicitly, to create a far broader exception, for all litigating
attorneys, from the Act itself.” Id. at 297. The Court noted
that many litigation activities would be authorized under the
exception that a debt collector may “‘notify the consumer that
the debt collector or creditor may invoke’ or ‘intends to
invoke’ a ‘specified remedy’ (of a kind ‘ordinarily invoked by
[the] debt collector or creditor’).” Id. at 296 (quoting 15
35
U.S.C. § 1692c(c)(2), (3)). The Supreme Court held that the
FDCPA applied despite the availability during litigation of
judicial oversight, due-process protections, detailed
procedural rules, and remedies to curtail and punish improper
actions by creditors’ attorneys.9 As the Seventh Circuit
observed on remand, “[t]here is no stated exclusivity in the
FDCPA as the means to redress collections errors. State law
sanctions (the equivalent of Fed. R. Civ. P. 11) apply to
defendants in their capacity as lawyers, and do so jointly with
9
In Heintz, the Supreme Court stated that it was abrogating
Green v. Hocking, 9 F.3d 18 (6th Cir. 1993), a Sixth Circuit
decision finding that an attorney could not be subject to the
FDCPA for actions he took in the course of litigation. 514
U.S. at 294. The Sixth Circuit had found that applying the
FDCPA to litigation conduct would “contravene[] the
elaborate control on lawyers’ conduct through the Rule 11
process.” Green, 9 F.3d at 22. The appeals court noted that
the trial court had discretion to order sanctions under Rule 11
because a “basic inquiry would have shown that [the factual
basis for the suit] was inaccurate.” Id. It explained that the
mandatory relief imposed by the FDCPA would encroach on
a trial court’s discretion under Rule 11 “to regulate its
forum.” Id. The court concluded that it was “unwilling to
impose a system of strict liability that conflicts with the
current system of judicial regulation.” Id. The Sixth
Circuit’s position in Green is almost identical to the positions
advocated by the appellees in this case and adopted by the
Second Circuit, in Simmons, and Ninth Circuit, in Walls. We
decline to adopt in the bankruptcy context the same positions
that, in the general litigation context, failed to persuade the
Supreme Court.
36
the Act.” Jenkins v. Heintz, 124 F.3d 824, 834 (7th Cir.
1997).
The appellees contend that another Supreme Court
decision, Kokoszka v. Belford, 417 U.S. 642, 651 (1974),
compels the conclusion that the FDCPA’s scope ends where
the Bankruptcy Code’s begins. Kokoszka addressed whether
the Consumer Credit Protection Act’s (CCPA) limits on wage
garnishment would exempt from bankruptcy protection part
of a debtor’s income tax refund.10 To be exempt, a refund
would have to be classified as “earnings.” The Court found
that “earnings” “did not include a tax refund, but [was]
limited to ‘periodic payments of compensation and [did] not
pertain to every asset that is traceable in some way to such
compensation.’” Id. at 651 (quoting In re Kokoszka, 479 F.3d
990, 997 (2d Cir. 1973)).11 As a result, tax refunds were not
10
Section 1673(a) and (a)(1) of the CCPA provide that “the
maximum part of the aggregate disposable earnings of an
individual for any workweek which is subjected to
garnishment may not exceed . . . 25 per centum of his
disposable earnings for that week.”
11
The CCPA defines “earnings” as “compensation paid or
payable for personal services, whether denominated as wages,
salary, commission, bonus, or otherwise, and includes
periodic payments pursuant to a pension or retirement
program.” 15 U.S.C. § 1672(a) (1968). It defines
“disposable earnings” as “that part of the earnings of any
individual remaining after the deduction from those earnings
of any amounts required by law to be withheld.” Id. §
1672(b) (1968). “Garnishment” means “any legal or
equitable procedure through which the earnings of any
37
covered by the CCPA garnishment provisions. In interpreting
those provisions, the Court looked to the CCPA’s purpose
and legislative history. The Court explained that in enacting
the CCPA, Congress sought to reduce the need for
bankruptcy but did not seek to regulate the bankruptcy
process:
An examination of the legislative
history of the Consumer
Protection Act makes it clear that,
while it was enacted against the
background of the Bankruptcy
Act, it was not intended to alter
the clear purpose of the latter Act
to assemble, once a bankruptcy
petition is filed, all of the debtor’s
assets for the benefit of his
creditors. Indeed, Congress’
concern was not the
administration of a bankrupt’s
estate but the prevention of
bankruptcy in the first place by
eliminating “an essential element
in the predatory extension of
credit resulting in a disruption of
employment, production, as well
as consumption” and a consequent
increase in personal bankruptcies.
. . . [I]f, despite its protection,
bankruptcy did occur, the debtor’s
individual are required to be withheld for payment of any
debt.” Id. § 1672(c) (1968).
38
protection and remedy remained
under the Bankruptcy Act.
Id. at 650–51 (citations and footnotes omitted).
The appellees argue that because Congress passed the
FDCPA as an amendment to the CCPA,12 the Supreme
Court’s conclusion about the CCPA’s garnishment provisions
applies with equal force to the FDCPA. We disagree. As the
Seventh Circuit recognized in Randolph, the Supreme Court’s
broad pronouncements about the CCPA’s relationship to the
Bankruptcy Code were at minimum dicta and at most a gloss
on the CCPA’s ambiguous definitions of “earnings” and
“garnishment.” Randolph, 368 F.3d at 731 (finding that the
Supreme Court’s discussion in Kokoszka on the relationship
between the CCPA and Bankruptcy Act was “not expressed
as a holding”). Unlike the CCPA’s garnishment provisions,
the FDCPA “regulates how debt collectors interact with
debtors, and not what assets are made available to which
creditors and how much is left for debtors (the principal
subjects of the Bankruptcy Code).” Id. As a result, the
Supreme Court’s conclusions in Kokoszka about the
relationship between the Bankruptcy Code and the CCPA’s
garnishment provisions do not apply to the relationship
between the Code and the FDCPA.
Finding no broad categorical preclusion, we turn to the
narrower question of whether the Simons’ specific allegations
present such a conflict with the Bankruptcy Code and Rules
as to preclude their FDCPA claims.
12
Pub. L. 95-109; 91 Stat. 874, codified as 15 U.S.C. § 1692–
1692p.
39
C. The Relationship Between the FDCPA §
1692e(5) and (13) Claims and the Bankruptcy
Code and Rules
The Simons’ remaining claims under § 1692e(5) and
(13) of the FDCPA are based on alleged violations of
subpoena requirements. Bankruptcy Rule 2004 permits a
court, “[o]n motion of any party in interest . . . [to] order the
examination of any entity.” Fed. R. Bankr. P. 2004(a). The
Bankruptcy Rules specify how a creditor is to issue notice of,
and conduct, a Rule 2004 examination. A Rule 2004
examination may be used to cover a wide range of subjects
relating “to the acts, conduct, or property or to the liabilities
and financial condition of the debtor, or to any matter which
may affect the administration of the debtor’s estate, or to the
debtor’s right to a discharge.” Fed. R. Bankr. P. 2004(b); see
also In re Enron Corp., 281 B.R. 836, 840 (Bankr. S.D.N.Y.
2002) (“[C]ourts have recognized that Rule 2004
examinations are broad and unfettered and in the nature of
fishing expeditions.”). “The court may for cause shown and
on terms as it may impose order the debtor to be examined
under this rule at any time or place it designates, whether
within or without the district wherein the case is pending.”
Fed. R. Bankr. P. 2004(d). If the party to be examined is a
debtor, and the debtor lives more than 100 miles from the
place of examination, “the mileage allowed by law to a
witness shall be tendered for any distance more than 100
miles from the debtor’s residence at the date of the filing of
the first petition commencing a case under the Code or the
residence at the time the debtor is required to appear for the
40
examination, whichever is the lesser.” Fed. R. Bankr. P.
2004(e). The District of New Jersey Local Bankruptcy Rules
state that “[i]f a party from whom an examination or
document production is sought under Fed. R. Bankr. P. 2004
agrees to appear for examination or to produce documents
voluntarily, no subpoena or Court order is required.” D.N.J.
LBR 2004-1(a). But a party that serves a subpoena for a Rule
2004 examination and document production may compel
performance under Bankruptcy Rule 9016 and Civil Rule 45.
See Fed. R. Bankr. P. 2004(c) (“The attendance of an entity
for examination and for the production of documents, whether
the examination is to be conducted within or without the
district in which the case is pending, may be compelled as
provided in Rule 9016 for the attendance of a witness at a
hearing or trial. . . .”); see also Fed. R. Bankr. P. 9016 (“Rule
45 F. R. Civ. P. applies in cases under the Code.”).
To be valid, a subpoena must comply with Civil Rule
45’s requirements. As the appellees point out, even if the
Simons are correct that the Rule 2004 examination subpoenas
at issue did not comply with Bankruptcy Rule 9016 and Civil
Rule 45, the Simons have remedies for such noncompliance
available under the Code and Rules. Under Civil Rule
45(c)(2)(B)–(c)(3), a subpoena recipient may object or move
to quash or modify a subpoena for several reasons, including
that it fails to comply with Bankruptcy Rule 9016 and Civil
Rule 45. In addition, a subpoena recipient may seek
sanctions under the bankruptcy court’s civil contempt power.
See In re Joubert, 411 F.3d 452, 455 (3d Cir. 2005) (stating
that 11 U.S.C. § 105 provides bankruptcy courts with a
contempt remedy); see also Bessette v. Avco Fin. Servs., Inc.,
230 F.3d 439, 445 (1st Cir. 2000) (“[Section] 105 provides a
bankruptcy court with statutory contempt powers, in addition
41
to whatever inherent contempt powers the court may have.
Those contempt powers inherently include the ability to
sanction a party.” (citations omitted)).
The appellees have not shown, however, why the
availability of these bankruptcy remedies would preclude the
Simons’ FDCPA claims for violating Civil Rule 45 and
Bankruptcy Rule 9016 subpoena rules by failing to serve the
subpoenas directly on the individuals subpoenaed and failing
to include the text of Civil Rule 45(c)–(d) in the subpoenas.
The Simons moved to quash the subpoenas in the Bankruptcy
Court. The Bankruptcy Court found the subpoenas defective
and quashed them. No conflict exists between these
Bankruptcy Code or Rule obligations and the obligations the
Simons seek to impose under the FDCPA. A creditor may
comply with the obligations of Bankruptcy Rule 9016 and
Civil Rule 45 on the one hand and with the FDCPA on the
other. Nor is there a conflict between the remedies for
noncompliance available in a bankruptcy court and the
remedies available under the FDCPA. The fact that the
bankruptcy court has other means to enforce compliance with
the subpoena rules does not conflict with finding liability or
awarding damages under the FDCPA for violations based on
a debt collector’s failure to comply with the subpoena rules.
As a result, we reverse the dismissal of the Simons’
remaining FDCPA claims under § 1692e(5) and (13).
D. The Relationship Between the FDCPA §
1692e(11) Claim and the Bankruptcy Code and
Rules
The Simons’ claim under § 1692e(11) of the FDCPA
leads to a different result. The Simons alleged that the
42
appellees are liable under the FDCPA because the letters and
Rule 2004 examination subpoenas failed to disclose that they
were sent by a debt collector attempting to collect a debt and
that “any information obtained [would] be used for that
purpose.” 15 U.S.C. § 1692e(11). The Bankruptcy Code’s
automatic stay provision forbids “any act to collect, assess, or
recover a claim against the debtor that arose before the
commencement” of the bankruptcy proceeding. 11 U.S.C. §
362(a)(6). Several courts have held that sending a §
1692e(11) notice violates the automatic stay. See, e.g., Maloy
v. Phillips, 197 B.R. 721, 723 (M.D. Ga. 1996); Divane v. A
& C Elec. Co., Inc., 193 B.R. 856, 859 (N.D. Ill. 1996);
Hubbard v. Nat’l Bond & Collection Assoc., Inc., 126 B.R.
422, 428–29 (D. Del. 1991). If, as the Simons argue, a
§ 1692e(11) claim could arise from the fact that the Weinstein
& Riley letters and subpoenas did not include the “mini-
Miranda” notice, the firm would violate the automatic stay
provision of the Bankruptcy Code by including the notice or
violate the FDCPA by not including the notice. This conflict
precludes allowing a claim under § 1692e(11) for failing to
include the “mini-Miranda” notice in the letters and Rule
2004 examination subpoenas sent to the Simons through their
bankruptcy counsel.13
IV. Conclusion
13
We do not reach the question whether the subpoenas (but
not the letters) are exempt from the § 1692e(11) notice
requirements as “formal pleading[s] made in connection with
a legal action.” 15 U.S.C. § 1692e(11). That is, we do not
decide whether a Rule 2004 subpoena is an initial
communication under § 1692e(11).
43
We will affirm in part and reverse in part the District
Court’s dismissal of the Simons’ claims. We will affirm the
dismissal of the Simons’ § 1692e(5) and (13) claims for
allegedly violating the Civil Rule 45 and Bankruptcy Rule
9016 subpoena rules by failing to identify the recording
method in the Rule 2004 examination subpoenas and by
issuing the subpoenas from a district other than where the
examinations were to be held. We will affirm the dismissal
of the Simons’ § 1692e(11) claim because the mini-Miranda
requirement conflicts with the automatic stay provision of the
Bankruptcy Code. We will reverse the dismissal of the
Simons’ remaining § 1692e(5) and (13) claims for allegedly
violating Civil Rule 45 and Bankruptcy Rule 9016 by failing
to serve the subpoenas directly on the individuals subpoenaed
and failing to include the text of Civil Rule 45(c)–(d) in the
subpoenas, and we will remand.
44