## Facts

- Timothy McCollough incurred a credit-card debt, last paid in 1999; the account was charged off in 2000 and later sold to CACV of Colorado, Ltd.
- In 2005, CACV sued McCollough in Montana state court; McCollough responded pro se that the statute of limitations had expired, and CACV dismissed the case.
- Collect America retained Johnson, Rodenburg & Lauinger, LLC (JRL), a debt-collection law firm, to collect the debt; its contract placed on JRL responsibility to determine whether collection was appropriate.
- JRL calculated that Montana’s limitations period had expired in 2005 but sought tolling information; CACV incorrectly reported a partial payment in 2004.
- Based on the incorrect 2004-payment information, JRL filed a 2007 state-court collection action and requested attorney’s fees without evidence of contractual or statutory authorization.
- McCollough again asserted the statute-of-limitations defense and told JRL his last payment was in 1999; CACV later informed JRL that the reported 2004 payment was an error and did not occur.
- Despite notice that the suit was time-barred, JRL continued litigating and served discovery requests for admissions asking McCollough to admit, among other things, that he made a 2004 payment, never disputed the debt, and that the complaint was completely true.

## Issues

1. Whether filing and continuing litigation to collect a debt known (or shown) to be time-barred constitutes false, misleading, or unfair debt-collection conduct under the FDCPA.
2. Whether demanding attorney’s fees without a contractual or statutory basis violates the FDCPA.
3. Whether misleading discovery requests in collection litigation can violate the FDCPA under the least-sophisticated-debtor standard.
4. Whether the FDCPA’s bona fide error defense applied where the collector relied on inaccurate client information despite contrary indicators and later confirmation of the error.
5. Whether the evidence supported liability and damages under Montana law for unfair trade practices, malicious prosecution, and abuse of process, including emotional-distress and punitive damages.

## Decision

- The Ninth Circuit affirmed the district court’s judgment for McCollough.
- The court upheld summary judgment for McCollough on multiple FDCPA violations arising from prosecuting a time-barred claim and related litigation conduct.
- The court held JRL could not invoke the FDCPA bona fide error defense on this record.
- The court affirmed the jury’s verdict and damages for violations of Montana’s consumer-protection statute and for malicious prosecution and abuse of process, including emotional-distress and punitive damages.

## Legal Principles

- Pursuing a collection lawsuit on a debt that is time-barred, particularly after the collector is on notice that limitations has expired, can constitute deceptive or unfair debt-collection conduct prohibited by 15 U.S.C. §§ 1692e and 1692f.
- Seeking attorney’s fees in collection litigation without a legal or contractual basis can misrepresent the character, amount, or legal status of the debt and violate the FDCPA.
- Litigation discovery tools used in debt collection can qualify as regulated conduct; discovery requests that are false or misleading may violate the FDCPA when evaluated from the standpoint of the least sophisticated debtor.
- The FDCPA bona fide error defense requires proof of unintentional violation, a bona fide error, and procedures reasonably adapted to avoid the error; “procedures” amounting to reliance on client data, without meaningful verification in the face of warning signs, are insufficient.
- Under Montana law, continuing a time-barred lawsuit without probable cause and with improper purpose can support malicious prosecution and abuse of process, and such conduct can justify emotional-distress and punitive damages when the requisite malice or fraud standard is met.

## Conclusion

The Ninth Circuit affirmed liability and substantial damages where a debt-collection law firm filed and persisted in a time-barred collection suit, demanded unauthorized attorney’s fees, and used misleading discovery after learning key tolling facts were false; the firm’s reliance on client misinformation did not satisfy the FDCPA’s bona fide error defense and also supported Montana statutory and tort liability.


McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939 (9th Cir. 2011)