State Law Litigation Privilege Does Not Absolve Debt Collector From Liability Under The FDCPA

In _Ogbin v. Fein, Such, Kahn & Shepard, P.C._, No. 09-2829, (3rd Cir. Feb. 22, 2011 unpublished), the Third Circuit vacated in part and remanded a District Courts’ dismissal of a class action complaint asserting a violation of 15 U.S.C. § 1692(f)(1) of the Fair Debt Collection Practices Act (FDCPA). In _Ogbin_, mortgagors claimed that the law firm violated § 1692(f)(1) of the FDCPA on the ground that payoff letters sent to the mortgagor’s attorney, at mortgagor attorney’s request during the pendency of the foreclosure proceedings, contained charges in excess of what was actually owed. The complaint also asserted claims of negligence and intentional misrepresentation. The District Court granted the servicer’s law firm’s motion to dismiss the FDCPA, intentional misrepresentation and negligence claims as barred under New Jersey’s litigation privilege and the mortgagors appealed. In reversing the dismissal of the FDCPA claim, the Appellate Court relied on its decision in Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364 (3d Cir. 2011), where the it held that New Jersey’s common law litigation privilege does not absolve a debt collector from liability under the FDCPA and refused to find that the FDCPA implied a common law privilege. And so in Ogbin, the court held that the FDCPA does not contain an exemption from liability for common law privileges and common law immunities can not trump the FDCPA’s clear application to the litigating activities of attorneys. Accordingly, communications sent to a debtor’s attorney attempting to collect an amount not expressly authorized by the agreement creating the debt or permitted by law are actionable under § 1692f(1) of the FDCPA. The court did, however, affirm the dismissal of the mortgagor’s common law negligence and intentional misrepresentation claims as precluded by litigation privilege.

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