January 17, 2017
TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH
Midland Funding filed a proof of claim in respondent
Johnson's Chapter 13 bankruptcy case, asserting that
Johnson owed Midland credit-card debt and noting that the
last time any charge appeared on Johnson's account was
more than 10 years ago. The relevant statute of limitations
under Alabama law is six years. Johnson objected to the
claim, and the Bankruptcy Court disallowed it. Johnson then
sued Midland, claiming that its filing a proof of claim on an
obviously time-barred debt was "false, "
"deceptive, " "misleading, "
"unconscionable, " and "unfair" within
the meaning of the Fair Debt Collection Practices Act, 15
U.S.C. §§1692e, l692f. The District Court held that
the Act did not apply and dismissed the suit. The Eleventh
The filing of a proof of claim that is obviously time barred
is not a false, deceptive, misleading, unfair, or
unconscionable debt collection practice within the meaning of
the Fair Debt Collection Practices Act. Pp. 2-10.
(a) Midland's proof of claim was not "false,
deceptive, or misleading." The Bankruptcy Code defines
the term "claim" as a "right to payment,
" 11 U.S.C. §101(5)(A), and state law usually
determines whether a person has such a right, see
Travelers Casualty & Surety Co. of America v. Pacific
Gas & Elec. Co., 549 U.S. 443, 450-451. The relevant
Alabama law provides that a creditor has the right to payment
of a debt even after the limitations period has expired.
Johnson argues that the word "claim" means
"enforceable claim." But the word
"enforceable" does not appear in the Code's
definition, and Johnson's interpretation is difficult to
square with Congress's intent "to adopt the broadest
available definition of 'claim, '" Johnson
v. Home State Bank, 501 U.S. 78, 83. Other Code
provisions are still more difficult to square with
Johnson's interpretation. For example, §502 (b)(1)
says that if a "claim" is "unenforceable"
it will be disallowed, not that it is not a
"claim." Other provisions make clear that the
running of a limitations period constitutes an affirmative
defense that a debtor is to assert after the creditor makes a
"claim." §§502, 558. The law has long
treated unenforceability of a claim (due to the expiration of
the limitations period) as an affirmative defense, and there
is nothing misleading or deceptive in the filing of a proof
of claim that follows the Code's similar system.
Indeed, to determine whether a statement is misleading
normally "requires consideration of the legal
sophistication of its audience, " Bates v. State Bar
of Ariz., 433 U.S. 350, 383, n. 37, which in a Chapter
13 bankruptcy includes a trustee who is likely to understand
that a proof of claim is a statement by the creditor that he
or she has a right to payment that is subject to
disallowance, including disallowance based on untimeliness.
(b) Several circumstances, taken together, lead to the
conclusion that Midland's proof of claim was not
"unfair" or "unconscionable" within the
terms of the Fair Debt Collection Practices Act.
Johnson points out that several lower courts have found or
indicated that, in the context of an ordinary civil action to
collect a debt, a debt collector's assertion of a claim
known to be time barred is "unfair." But those
courts rested their conclusions upon their concern that a
consumer might unwittingly repay a time-barred debt. Such
considerations have significantly diminished force in a
Chapter 13 bankruptcy, where the consumer initiates the
proceeding, see §§301, 303(a); where a
knowledgeable trustee is available, see §1302(a); where
procedural rules more directly guide the evaluation of
claims, see Fed. Rule Bkrtcy. Proc. 3001(c)(3)(A); and where
the claims resolution process is "generally a more
streamlined and less unnerving prospect for a debtor than
facing a collection lawsuit, " In re Gate-wood,
533 B. R. 905, 909.
Also unpersuasive is Johnson's argument that there is no
legitimate reason for allowing a practice like this one that
risks harm to the debtor. The bankruptcy system treats
untimeliness as an affirmative defense and normally gives the
trustee the burden of investigating claims to see if one is
stale. And, at least on occasion, the assertion of even a
stale claim can benefit the debtor.
More importantly, a change in the simple affirmative-defense
approach, carving out an exception, would require defining
the exception's boundaries. Does it apply only where a
claim's staleness appears on the face of the proof of
claim? Does it apply to other affirmative defenses or only to
the running of the limitations period? Neither the Fair Debt
Collection Practices Act nor the Bankruptcy Code indicates
that Congress intended an ordinary civil court applying the
Act to determine answers to such bankruptcy-related
questions. The Act and the Code have different purposes and
structural features. The Act seeks to help consumers by
preventing consumer bankruptcies in the first place, while
the Code creates and maintains the "delicate balance of
a debtor's protections and obligations, "
Kokoszka v. Belford, 417 U.S. 642, 651. Applying the
Act in this context would upset that "delicate
Contrary to the argument of the United States, the
promulgation of Bankruptcy Rule 9011 did not resolve this
issue. Pp. 5-10.
823 F.3d 1334, reversed.
BREYER, J., delivered the opinion of the Court, in which
ROBERTS, C. J., and Kennedy, Thomas, and Alito, JJ., joined.
Sotomayor, J., filed a dissenting opinion, in which GINSBURG
and KAGAN, JJ., joined. GORSUCH, J., took no part in the
consideration or decision of the case.
Fair Debt Collection Practices Act, 91 Stat. 874, 15 U.S.C.
§1692 et seq., prohibits a debt collector from
asserting any "false, deceptive, or misleading
representation, " or using any "unfair or
unconscionable means" to collect, or attempt to collect,
a debt, §§1692e, l692f. In this case, a debt
collector filed a written statement in a Chapter 13
bankruptcy proceeding claiming that the debtor owed the debt
collector money. The statement made clear, however, that the
6-year statute of limitations governing collection of the
claimed debt had long since run. The question before us is
whether the debt collector's filing of that statement
falls within the scope of the aforementioned provisions of
the Fair Debt Collection Practices Act. We conclude that it
March 2014, Aleida Johnson, the respondent, filed for
personal bankruptcy under Chapter 13 of the Bankruptcy Code
(or Code), 11 U.S.C. §1301 et seq, in the
Federal District Court for the Southern District of Alabama.
Two months later, Midland Funding, LLC, the petitioner, filed
a "proof of claim, " a written statement asserting
that Johnson owed Midland a credit-card debt of $1, 879.71.
The statement added that the last time any charge appeared on
Johnson's account was in May 2003, more than 10 years
before Johnson filed for bankruptcy. The relevant statute of
limitations is six years. See Ala. Code §6-2-34 (2014).
Johnson, represented by counsel, objected to the claim;
Midland did not respond to the objection; and the Bankruptcy
Court disallowed the claim.
Johnson brought this lawsuit against Midland seeking actual
damages, statutory damages, attorney's fees, and costs
for a violation of the Fair Debt Collection Practices Act.
See 15 U.S.C. § 1692k. The District Court decided that
the Act did not apply and therefore dismissed the action. The
Court of Appeals for the Eleventh Circuit disagreed and
reversed the District Court. 823 F.3d 1334 (2016). Midland
filed a petition for certiorari, noting a division of opinion
among the Courts of Appeals on the question whether the
conduct at issue here is "false, " "deceptive,
" "misleading, " "unconscionable, "
or "unfair" within the meaning of the Act. Compare
ibid. (finding the Fair Debt Collection Practices
Act applicable) with In re Dubois, 834 F.3d 522 (CA4
2016) (finding the Act inapplicable); Owens v. LVNV
Funding, LLC, 832 F.3d 726 (CA7 2016) (same); and
Nelson v. Midland Credit Management, Inc., 828 F.3d
749 (CA8 2016) (same). We granted the petition. We now
reverse the Court of Appeals.
the majority of Courts of Appeals that have considered the
matter, we conclude that Midland's filing of a proof of
claim that on its face indicates that the limitations period
has run does not fall within the scope of any of the five
relevant words of the Fair Debt Collection Practices Act. We
believe it reasonably clear that Midland's proof of claim
was not "false, deceptive, or misleading."
Midland's proof of claim falls within the Bankruptcy
Code's definition of the term "claim." A
"claim" is a "right to payment." 11
U.S.C. §101(5)(A). State law usually determines whether
a person has such a right. See Travelers Casualty &
Surety Co. of America v. Pacific Gas & Elec. Co.,
549 U.S. 443, 450-451 (2007). The relevant state law is the
law of Alabama. And Alabama's law, like the law of many
States, provides that a creditor has the right to payment of
a debt even after the limitations period has expired. See
Ex parte HealthSouth Corp., 974 S. 2d 288, 296 (Ala.
2007) (passage of time extinguishes remedy but the right
remains); see also, e.g., Sallaz v. Rice, 161 Idaho
223, __, 384 P.3d 987, 992-993 (2016) (similar); Notte v.
Merchants Mut. Ins. Co., 185 N. J. 490, 499-500, 888
A.2d 464, 469 (2006) (similar); Potterton v. Ryland
Group, Inc., 289 Md. 371, 375-376, 424 A.2d 761, 764
(1981) (similar); Summers v. Connolly, 159 Ohio St.
396, 400-402, 112 N.E.2d 391, 394 (1953) (similar);
DeVries v. Secretary of State, 329 Mich. 68, 75, 44
N.W.2d 872, 876 (1950) (similar); Fleming v. Yeazel,
379 111. 343, 344-346, 40 N.E.2d 507, 508 (1942) (similar);
Fidelity & Cas. Co. of N.Y. v. Lackland, 175 Va.
178, 185-187, 8 S.E.2d 306, 309 (1940) (similar);
Insurance Co. v. Dunscomb, 108 Tenn. 724, 728-731,
69 S. W. 345, 346 (1902) (similar); but see, e.g.,
Miss. Code Ann. §15-1-3(1) (2012) (expiration of the
limitations period extinguishes the remedy and the right);
Wis.Stat. §893.05 (2011-2012) (same).
argues that the Code's word "claim" means
"enforceable claim." She notes that this Court once
referred to a bankruptcy "claim" as "an
enforceable obligation." Pennsylvania Dept. of
Public Welfare v. Davenport, 495 U.S. 552, 559 (1990).
And, she concludes, Midland's "proof of claim"
was false (or deceptive or misleading) because its
"claim" was not enforceable. Brief for Respondent
22; Brief for United States as Amicus Curiae 18- 20
(making a similar argument).
do not find this argument convincing. The word
"enforceable" does not appear in the Code's
definition of "claim." See 11 U.S.C. §101(5).
The Court in Davenport likely used the word
"enforceable" descriptively, for that case involved
an enforceable debt. 495 U.S., at 559. And it is difficult to
square Johnson's interpretation with our later statement
that "Congress intended ... to adopt the broadest