In-depth Fair Debt Collection Practices Act (FDCPA) decisions are relatively rare — many of the cases either get dismissed on procedural grounds or settle prior to a court offering an opinion. This, in part, is why the Sixth Circuit’s recently published opinion in Buchanan v. Northland Group, Inc. is so interesting; the opinion offers a deep, fact-based look at an FDCPA case from the Western District of Michigan. It’s also noteworthy that Judge Sutton, who wrote the opinion, delivers a decision on a typically dense topic that is easy to read, boiling down the most important issues written in his characteristic folksy style.

As for the case itself, Esther Buchanan brought suit on behalf of herself and a class of those similarly situated. At issue was a letter Northland Group (collecting on behalf of LVNV) sent her stating how much she owed on a past-due debt and this phrase: “The current creditor is willing to reduce your balance by offering you a settlement.” Buchanan claimed this violated the FDCPA. Judge Sutton’s opinion starts by setting up the central issue of the case:

Northland Group made a “settlement offer” to Esther Buchanan to resolve an unpaid debt without disclosing that the statute of limitations had run on the debt. Claiming that the letter falsely implied that Northland could enforce the debt in court, Buchanan filed a class action on behalf of herself and other similarly situated debtors under the Fair Debt Collection Practices Act. Northland filed a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, prompting this question: Could this offer plausibly mislead an unsophisticated consumer into thinking her lender could enforce the debt in court?

Northland moved to dismiss, claiming that its letter couldn’t plausibly mislead an unsophisticated consumer as a matter of law. As Judge Sutton pointed out, Buchanan responded by claiming “the case implicated a question of fact—Was the letter misleading?—and required discovery, including with respect to the proposed testimony of Dr. Timothy E. Goldsmith, a professor of psychology who has studied consumers’ attitudes toward time-barred debt and their understanding of communications like this one.” The district court rejected Buchanan’s argument and granted the motion to dismiss.

A divided Sixth Circuit panel reversed, as Judge Sutton explained, for three reasons. First, Judge Sutton pointed out that whether a letter is misleading is generally a question of fact that should be determined by a jury. Although he acknowledged the possibility of kicking a claim like this out at the pleading stage, he noted that the presumption is in favor of resolving claims at summary judgment at the earliest: “Through it all, the hurdle to proceed from pleading to discovery remains a low one, requiring only that the plaintiff plead a plausible theory of relief.” Second, and to the first point, Buchanan submitted evidence in support of her claims, which gave further credence to her argument that “her theory is sufficiently plausible that she deserves an opportunity to show how.” Third and finally, Judge Sutton wrote that her theory of being misled was at least facially plausible given that, according to most formal and informal meanings of the word “settlement,” its usage could be read to falsely imply that an underlying debt is enforceable in court. Judge Kethledge dissented, primarily because “the mere fact of [a] collection letter is itself no reason to think that a lawsuit might follow close behind.”

As a simple takeaway, dunning letters — depending on the underlying state law — should not use language that could be read to create a legal obligation to pay where one doesn’t otherwise exist. Beyond this, those in the debt collection industry should give this opinion a close scrub to make sure their efforts square with any other more nuanced takeaways from the opinion.