US Supreme Court Declines to Reconsider Tenth Circuit Ruling that Fax Sent by Debt Collector to Consumer's Employer is Not a "Communication" under the FDCPA

In a controversial decision, Marx v. General Revenue Corp., ___ F.3d ___, 2011 WL 6396478 (10th Cir. 2011) (full text available here) the U.S. Court of Appeals for the Tenth Circuit in December 2011 held that a fax sent to a consumer's employer by a debt collector was not a "communication" under the Fair Debt Collection Practices Act (FDCPA). The consumer appealed the Marx decision to the United States Supreme Court, and on May 29, 2012, the Supreme Court granted certiorari (that is, the court agreed to hear the appeal).

However, the Supreme Court limited its consideration to a different issue raised by the Marx decision, cost-shifting, and declined to re-consider the Tenth Circuit's conclusion that the debt collector's fax was not a communication. Therefore, the Marx decision, we believe, is at this time the highest court decision to consider this Foti-type issue.[1]

In the Marx case, Olivea Marx had defaulted on her student loan, and debt collector General Revenue Corporation (GRC) sent a fax to her employer. GRC was attempting to verify Ms. Marx's employment so that it could begin wage garnishment proceedings.

The fax was described by the court as GRC's "standard employment verification form," and displayed GRC's name, logo, address and phone number, and had an ID number representing GRC's internal account number for Ms. Marx. The form indicated that its purpose was to verify employment, and to request employment information. Blanks were left to fill in the individual's employment status, date of hire, corporate payroll address and position, and to note whether the person worked full- or part-time.

The court noted that the FDCPA provides in § 1692c(b) that "a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer." A communication is defined by the FDCPA as the "conveying of information regarding a debt directly or indirectly to any person through any medium." § 1692a(2).

"The facsimile in question is not a 'communication' under the FDCPA," stated the court. "A third-party 'communication,' to be such, must indicate to the recipient that the message relates to the collection of a debt; this is simply built into the statutory definition of communication. This fax cannot be construed as 'conveying' information 'regarding a debt.' Nowhere does it expressly reference a debt; it speaks only of 'verifying employment.' Nor could it reasonably be construed to imply a debt."

The court continued, "In order to substantiate the claim that the facsimile 'conveys' information, 'regarding a debt' either 'directly or indirectly,' Ms. Marx had the burden of proving such a conveyance; the standard is not whether the facsimile could have had such an implication." [Emphasis in original].

The court did not agree with Ms. Marx that the existence of the debt was implied by the ID/account number on the fax, thereby making the document a communication. The court stated that, "absent any evidentiary showing that Ms. Marx's employer either knew or inferred that the facsimile involved a debt, the facsimile does not satisfy the statutory definition of a "communication."

In a separate part of the decision, which directly takes on the dissenting opinion, the court stated, "The substance of the supposed infraction here is manifestly not the sort of conduct the FDCPA is meant to quell," then goes on to reference a number of cases involving severe debtor harassment. "Here, however," the court continued, "we have a single fax, innocuous, nondescript and harmless, which GRC sent only to gather information needed to weigh a statutory right of garnishment… Ms. Marx was unable to testify that anyone at her office had any idea what the fax concerned… and the plaintiff conceded on the stand that she has no evidence that her employer suspected that the fax concerned a debt." (Ed. note: query how fair it is to expect Ms. Marx to obtain and present such evidence; to do so, would she not need to tip her hand to her employers and co-workers, thereby suffering the potential embarrassment, harassment, potential denial of promotion, etc. that the FDCPA was designed to prevent?).

Having made the determination that the fax was not a "communication," the court said it need not decide whether GRC violated the FDCPA's prohibition against communications with third parties.

We address in a separate blog post (Supreme Court to Hear Fee Shifting Case) the cost-shifting issue raised by the Tenth Circuit in Marx set to be heard by the United States Supreme Court.



[1] "Foti" comes from a New York federal district court case named Foti v NCO Financial, 424 F. Supp.2d 643 (S.D.N.Y. 2006) and has become shorthand for a line of cases dealing with what exactly a debt collector may or may not say when leaving a message on a voice mail or answering machine.

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