Third Circuit Goes Existential in Debt-Collection Case

PHILADELPHIA (CN) – A company trying to distinguish itself from the one it hired to collect credit card debts faced an uphill battle at the Third Circuit on Thursday in its bid to evade a lawsuit.

“Why wouldn’t outsourcing of illicit behavior be the evil Congress is directing the FDCPA at,” asked U.S. Circuit Judge Thomas Hardiman, using an abbreviation for the Fair Debt Collection Practices Act. “Some people collect stamps, some collect baseball cards. Your client collects debts.”

Hardiman directed the question this morning at Crown Asset Management, which faces a lawsuit in Pennsylvania from Mary Barbato over credit card debt the company purchased in 2012 and referred the following year for collection to Turning Point Capital Inc.

After U.S. District Judge William Nealon declined to enter summary judgment in the case last year, Crown Asset appealed to the Third Circuit in Philadelphia for a reversal.

“There is not a company that is both a creditor and a debt collector,”

Michael Rosenkoff, an attorney for Crown with the firm Gingo Palumbo, told the three-judge appellate panel this morning.

U.S. Circuit Judge Stephanos Bibas pushed back, however, on how Rosenkoff would describe his client’s “principal purpose,” if debt collection.

“You need to persuade us on what the definition of a debt collector is,” U.S. Circuit Judge Cheryl Ann Krause chimed in.

Daniel Edelman, representing Barbato for the firm Edelman, Combs, Latturner & Goodwin, said Crown is liable because at least 50 percent of its business involves debt collecting.

Judge Hardiman reminded Edelman that Crown outsourced its debt collection, meaning that the overtures that Barbato faced were not dictated by Crown.

Judge Krause pressured Edelman to determine what he thought would make Crown at all liable for the FDCPA violations.

“If Crowns source of revenue is debt, that should be sufficient,” Edelman responded.

On rebuttal, Rosenkoff pleaded with the judges to remember that his client did not make any calls or send any letters to Barbato.

The panel reserved decision on the case.

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