The U.S. Court of Appeals for the Second Circuit has held that a law firm regularly collecting debts on behalf of clients is a “debt collector” under the federal Fair Debt Collection Practices Act and is subject to its terms.
The decision could alter the tactics used by law firms that litigate a large number of landlord-tenant disputes seeking eviction, by imposing different federal standards on their practices.
In Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti, No. 01-9085, the circuit overturned a lower court opinion by Southern District Judge Miriam Goldman Cedarbaum.
The district court had ruled that the law firm did not fit the statutory definition because it earned very little revenue from its debt collection practices. The lower court held that the insubstantial earnings ? less than .05 percent of its revenue ? meant that debt collection was not the “principal purpose” of Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti’s enterprise as defined by the federal statute.
In an opinion written by Southern District Court Judge Laura Swain, sitting by designation, the three-judge panel looked elsewhere in the act and classified Hutton as a debt collector. Judges Barrington Parker and Reena Raggi joined in the decision.
The circuit court found that Hutton Ingram “regularly” engaged in debt collection because of the many eviction notices it sent on behalf of its clients.
