Barry Stimpson v. Midland Credit Mgmt., Inc.
944 F.3d 1190
| 9th Cir. | 2019Background
- In 2006 Stimpson opened an HSBC credit card, last paid on December 12, 2008; Midland later purchased the account. Nevada law was specified in the credit agreement.
- Under Nevada law the six-year statute of limitations expired December 12, 2014; Midland sent a collection letter in March 2017 stating balance $1,145.60 with payment-offer options and an "Offer Expiration Date."
- The letter included: "The law limits how long you can be sued on a debt... Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau." It also touted benefits of payment (discount, "no more communication," "peace of mind").
- Stimpson sued in Idaho state court on behalf of a putative class alleging the letter violated the FDCPA by collecting time-barred debt without disclosing that partial payment can revive the statute of limitations.
- The district court granted summary judgment for Midland; on appeal the Ninth Circuit reviewed whether the letter was false, deceptive, or misleading under 15 U.S.C. § 1692e using the "least sophisticated debtor" objective standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the statute-of-limitations disclosure was misleading | Stimpson: "we will not sue" could be read as Midland's voluntary choice, not that debt is time-barred | Midland: disclosure follows sentence about law limiting suits; a reasonable least-sophisticated debtor would infer the debt is time-barred; CFPB required similar language | Not misleading — least-sophisticated debtor would understand the debt is time-barred; summary judgment for Midland |
| Whether omission of a warning that partial payment can revive the SOL was deceptive | Stimpson: failure to warn is misleading because Idaho law can revive SOL by payment; choice-of-law dispute could harm debtor | Midland: FDCPA does not require debt collectors to provide legal advice about revival statutes; CFPB declined to mandate such disclosure | No FDCPA duty to warn about revival; omission not deceptive |
| Whether promotional statements (discounts, "no more communication," "peace of mind") were misleading | Stimpson: these encourage payment and could mislead debtors into thinking they must pay or face enforcement | Midland: lawful to seek payment of an existing debt even if unenforceable in court; letter explicitly disclaimed the right to sue | Not deceptive — statements are accurate when read with the disclosure that Midland will not sue |
| Whether attempting to collect time-barred debt is per se deceptive | Stimpson: persuading payment of time-barred debt is inherently misleading | Midland: collecting a lawful outstanding debt is permitted so long as collection methods are not deceptive or threatening | Not per se deceptive; collection of time-barred debt is permissible absent deceptive or false representations |
Key Cases Cited
- Midland Funding, LLC v. Johnson, 137 S. Ct. 1407 (2017) (state SOL can bar judicial remedy but creditor still has right to payment)
- Gonzalez v. Arrow Fin. Servs., LLC, 660 F.3d 1055 (9th Cir. 2011) ("least sophisticated debtor" objective standard for § 1692e)
- Buchanan v. Northland Grp., Inc., 776 F.3d 393 (6th Cir. 2015) (similar SOL disclosure permissible; collectors may offer settlements without implying enforceability)
- Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir. 2011) (debt not extinguished by expiration of limitations period)
- Tatis v. Allied Interstate, LLC, 882 F.3d 422 (3d Cir. 2018) (collecting time-barred debt can imply legal enforceability and trigger FDCPA liability)
- Donohue v. Quick Collect Inc., 592 F.3d 1027 (9th Cir. 2010) (application of least-sophisticated-consumer test under FDCPA)