Midland Funding, LLC v. Johnson

A debtor sued Midland Funding, a debt collector, for filing a time-barred proof of claim in the debtor’s bankruptcy, alleging that the filing violated sections 1692e and 1692f of the Fair Debt Collection Practices Act (FDCPA). The questions presented in the Supreme Court were whether the FDCPA prohibits the knowing filing of a time-barred proof of claim and, if so, whether the Bankruptcy Code precludes the application of the FDCPA to this conduct. We represented Public Citizen, the Legal Aid Society of the District of Columbia, the National Association of Consumer Advocates, and the National Consumer Law Center as amici curiae. Amici’s brief explained why the lower courts have consistently held that the filing of suits over stale debts, which is analogous to the filing of time-barred proofs of claim in bankruptcy, violates the FDCPA. It also urged the Court to reject the debt collector’s contention that whether the filing of a time-barred proof of claim is misleading or deceptive under section 1692e should be assessed from the perspective of a competent attorney or bankruptcy trustee, not from the perspective of the least-sophisticated consumer.

The Court held that the filing of a proof of claim in bankruptcy that is obviously time-barred is not a false, deceptive, misleading, unfair, or unconscionable practice under the FDCPA. It held that the audience for a proof of claim in bankruptcy includes a trustee, and thus a section 1692e violation for misleading debt collection practices must be assessed in light of this audience. However, it declined to address “the appropriate standard in ordinary civil litigation,” that is, whether a section 1692e violation should be assessed only from the consumer’s perspective or from the perspective of a competent attorney. In addition, although the Court held that the filing of an obviously time-barred claim in bankruptcy is not an unfair or unconscionable practice under the FDCPA, it expressly reserved the question whether similar conduct in ordinary civil litigation would violate the statute.