Michael Kaiser v. Cascade Capital, LLC
989 F.3d 1127
| 9th Cir. | 2021Background:
- Kaiser bought a car on a retail installment contract, defaulted, car was repossessed and sold, and a deficiency remained unpaid.
- Years later (4–6 years after default) Cascade Capital retained law firm GAT, sent a letter stating it had authority to file suit, and sued to collect the deficiency.
- Oregon law had two potential statutes of limitations: a 4-year UCC Article 2 limitation for sales of goods and a 6-year general contract statute; the state trial court held the 4-year rule applied, so Kaiser’s debt was time barred.
- Kaiser filed a federal putative class action under the FDCPA alleging Cascade’s letter and lawsuit threatened/attempted collection of time-barred debt; the district court dismissed, reasoning the state-law uncertainty meant no FDCPA violation.
- The Ninth Circuit reversed: filing/threatening suit on time-barred debt violates the FDCPA under a strict-liability standard, but the statutory bona fide error defense may still apply to good-faith mistakes about state limitations law.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether suing or threatening suit on a time-barred debt violates the FDCPA | Kaiser: Such conduct is misleading and unfair under §§1692e and 1692f | Cascade: No violation if debt’s time-barred status was unclear under state law | Yes; suing and threatening suit on time-barred debt violates the FDCPA (threats at least misleading) |
| Whether FDCPA requires knowledge ("knew or should have known") that debt was time barred | Kaiser: No; FDCPA is strict liability for misleading/unfair practices | Cascade: Liability requires that collector knew or should have known the suit was time barred | Rejected; FDCPA is strict liability here—no separate "knew or should have known" element |
| Whether the collection letter amounted to a threat to sue under the least- sophisticated-debtor standard | Kaiser: Letter implied authority to file suit and suggested court could order interest, so it threatened suit | Cascade: Letter had a disclaimer that no attorney personally reviewed the account; no explicit threat | Held: The least sophisticated debtor could read the letter as threatening suit; disclaimer insufficient to dispel implication |
| Whether the FDCPA bona fide error defense can cover mistakes about a state statute of limitations | Kaiser: Mistakes about time-bar status can be bona fide errors | Cascade: Mistakes of law (per Baker/Jerman) cannot support the defense | Held: Mistakes about a debt’s time-barred status (a collateral state-law question) can qualify as bona fide errors; district court should consider the defense on remand |
Key Cases Cited
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010) (limits bona fide error defense for mistakes about the FDCPA itself)
- Stimpson v. Midland Credit Mgmt., Inc., 944 F.3d 1190 (9th Cir. 2019) (disclosing a debt is time barred can remove any misleading implication of enforceability)
- Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162 (9th Cir. 2006) (FDCPA uses a strict-liability approach for misleading/unfair practices)
- McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939 (9th Cir. 2011) (litigation conduct can violate the FDCPA even absent procedural sanctions)
- Holzman v. Malcolm S. Gerald & Assocs., Inc., 920 F.3d 1264 (11th Cir. 2019) (suing on time-barred debt violates the FDCPA)
- McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014) (legal enforceability is a central fact; misrepresentations about enforceability violate the FDCPA)