Mrs. Warren’s husband died, owing a debt on a credit card to BB&T. Despite the credit card only being in the deceased husband’s name, BB&T, through its attorneys, Sessoms & Rogers, attempted on numerous occasions to collect the debt from Mrs. Warren.
She eventually brought a Complaint against Sessoms & Rogers, seeking actual damages, statutory damages and attorneys’ fees. S&R made an Offer of Judgment under Rule 68, offering $250.00 in actual damages or an amount to be determined by the Court, $1,001.00 in statutory damages and reasonable attorney’s fees. Mrs. Warren rejected this offer.
S&R brought a motion to dismiss under Rule 12(b)(1, arguing that the district court lacked subject matter jurisdiction because the matter had been mooted by the Offer in Judgment, and also under Rule 12(b)(6) because the alleged violations were "minor technical violations" resulting from its bona fide error. Mrs. Warren opposed the motion, arguing that the actual damages offered were still open and she had the right to a jury trial. The district court, in a 2-paragraph order, dismissed the case on the basis that there was not a "material violation" of the FDCPA.
The 4th Circuit rejected this holding find that for a Offer of Judgment to moot an action "the plaintiff must know unequivocally what is being offered in order to be responsible for refusing such offer." Id. When a Rule 68 offer unequivocally offers a plaintiff all of the relief "she sought to obtain," Friedman’s, Inc. v. Dunlap, 290 F.3d 191, 197 (4th Cir. 2002) the offer renders the plaintiff’s action moot. That S&R offered Mrs. Warren the maximum allowable statutory damages did not mean that it had offered the maximum allowable actual damages, which are not capped at all. 15 U.S.C. § 1692k(a)(1).
The Offer in Judgment was not unequivocal as it was left subject to a determination by the district court. That S&R conditioned the actual damages on an amount determined by the Court, without allowing for the possibility that a jury trial might result in an award of more that $250.00. To hold otherwise would allow the "savvy defendant in an FDCPA case [to] avoid submitting the contested issue of actual damages to a jury by offering to substitute the district court as fact finder." Accordingly, this Offer in Judgment did not moot Mrs. Warren’s case.
As to the 12(b)(6) Motion to Dismiss, the Court of Appeal held that while violations under § 1692e(2) as "false representations of the character, amount or legal status of any debt" must be material, in this case Mrs. Warren was instead asserting that S&R had failed to disclose that it was a "debt collector." This omission is specifically prohibited and has no requirement of materiality.
While the complaint by Mrs. Warren did not specifically allege that S&R knowingly violated the FDCPA, it did state the S&R had, in response to a letter notifying it that she was represented by an attorney, replied thanking her for her recent letter. Drawing all reasonable inferences in Mrs. Warren’s favor, this was enough to support an allegation that the violations were made "knowingly."
The Court also rejected the argument that the violations by S&R had to have been made "willfully." While S&R is entitled to a defense of "bona fide error", the 4th Circuit state that S&R can attempt to prove such a defense at trial, but it would turn "the defense on its head in this case" if Mrs. Warren was required to plead and prove that S&R acted willfully.