Michael Kaiser v. Cascade Capital , LLC; Gordon, Aylworth & Tami P.c.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
M ICHAEL KAISER; M ARGARET J.
LOEWEN , on behalf of themselves
and others similarly situated,
Plaintiffs-Appellants,
v.
CASCADE C APITAL , LLC; GORDON,
AYLWORTH & TAMI P.C.,
Defendants-Appellees.
No. 19-35151
D.C. No.
3:16-cv-00744-
AC
OPINION
Appeal from the United States District Court
for the District of Oregon
Michael W. Mosman, District Judge, Presiding
Argued and Submitted November 16, 2020
Seattle, Washington
Filed March 9, 2021
Before: Ronald M. Gould and Michelle T. Friedland,
Circuit Judges, and Stephen R. Bough,* District Judge.
Opinion by Judge Friedland
* The Honorable Stephen R. Bough, United States District Judge for
the Western District of Missouri, sitting by designation.

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2 KAISER V. C ASCADE CAPITAL
SUMMARY**
Fair Debt Collection Practices Act
The panel reversed the district court’s dismissal for
failure to state a claim and remanded for further proceedings
in plaintiff’s action alleging that defendants violated the Fair
Debt Collection Practices Act (“FDCPA”) by sending a
collection letter threatening litigation over time-barred debt
and filing a lawsuit seeking to collect time-barred debt.
Joining other circuits, the panel held that the FDCPA
prohibits filing or threatening to file a lawsuit to collect debts
that were defaulted on so long ago that a suit would be
outside the applicable statute of limitations. The panel held
that these prohibitions regarding time-barred debts apply
even if it was unclear at the time a debt collector sued or
threatened suit whether a lawsuit was time barred under state
law. The panel concluded that plaintiff’s debt was time
barred under Oregon’s four-year statute of limitations.
Accordingly, plaintiff’s complaint stated a claim for relief
under the FDCPA.
The panel emphasized, however, that debt collectors can
avoid liability by successfully asserting the FDCPA’s
affirmative defense for bona fide errors. The panel held that
a mistake about the time-barred status of a debt under state
law could be such an error. The panel left it to the district
court to consider in the first instance whether a bona fide
error defense, if raised on remand, could succeed in this case.
** This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.

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KAISER V. C ASCADE CAPITAL 3
COUNSEL
Mark G. Passannante (argued), Broer & Passannante PS,
Portland, Oregon; Bret Knewtson, Hillsboro, Oregon; for
Plaintiffs-Appellants.
Kelly F. Huedepohl (argued), Gordon Rees Scully
Mansukhani, LLP, Portland, Oregon, for Defendants-
Appellees.
OPINION
FRIEDLAND, Circuit Judge:
The Fair Debt Collection Practices Act (“FDCPA”)
prohibits debt collection practices that are misleading,
unfair, or unconscionable. Those prohibited practices
include filing or threatening to file a lawsuit to collect debts
that were defaulted on so long ago that a suit would be
outside the applicable statute of limitations. The parties ask
us to decide whether the FDCPA’s prohibitions regarding
such “time-barred debts” apply even if it was unclear at the
time a debt collector sued or threatened suit whether a
lawsuit was time barred under state law.
We hold that they do. The FDCPA takes a strict liability
approach to prohibiting misleading and unfair debt
collection practices, so a plaintiff need not plead or prove
that a debt collector knew or should have known that the
lawsuit was time barred to demonstrate that the debt
collector engaged in prohibited conduct. Because the district
court held the opposite, we reverse and remand for further
proceedings.

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4 KAISER V. C ASCADE CAPITAL
We emphasize, however, that debt collectors could avoid
liability by successfully asserting the statute’s affirmative
defense for bona fide errors. A mistake about the time-
barred status of a debt under state law may be such an error.
We leave it to the district court to consider in the first
instance whether a bona fide error defense, if raised on
remand, could succeed in this case.
I.
Plaintiff Michael Kaiser purchased a car under a retail
installment sale contract.1 He defaulted on his payments,
and his car was repossessed and sold. The proceeds from the
sale failed to cover the outstanding balance under the
contract, and Kaiser did not pay the remaining amount due.
Years later, the creditor, Defendant Cascade Capital, LLC,
sought to collect that deficiency balance. It hired a law firm,
Defendant Gordon, Aylworth & Tami, P.C. (“GAT”), to
represent it. GAT sent Kaiser a letter that stated the firm
“ha[d] been retained with the authority to file a lawsuit”
against him and demanded payment of the outstanding debt.2
Kaiser failed to pay, and Defendants (collectively,
“Cascade”) sued him in Oregon state court.
The collection attempts—both the letter and the
lawsuit—occurred between four and six years after Kaiser’s
default. Kaiser responded to Cascade’s state court lawsuit
by arguing that the debt was time barred under Oregon’s
four-year statute of limitations for sale-of-goods contract
1 A retail installment sale contract permits a consumer to pay the
purchase price of a car over multiple installments. See Or. Rev. Stat.
§ 83.510(11). The car itself serves as collateral to secure payment. See
id.
2 The letter is reproduced at the end of this opinion.

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KAISER V. C ASCADE CAPITAL 5
claims, Or. Rev. Stat. § 72.7250. Cascade countered that
Oregon’s six-year statute of limitations for other contract
claims, Or. Rev. Stat. § 12.080, applied instead. The state
court ruled for Kaiser.
Kaiser then filed this putative class action in the United
States District Court for the District of Oregon.3 He alleged
that Cascade violated the FDCPA by threatening litigation
over time-barred debt in its collection letter and by filing a
lawsuit to collect time-barred debt. The district court
dismissed for failure to state a claim, reasoning in part that
Cascade did not violate the FDCPA because the state statute
of limitations had been unclear when Cascade attempted to
collect the debt.4 Kaiser timely appealed.
II.
We review de novo an order granting a motion to
dismiss, taking all factual allegations as true. Naruto v.
Slater, 888 F.3d 418, 421 (9th Cir. 2018). We also review
de novo a district court’s interpretation of a federal statute.
United States v. Pacheco, 977 F.3d 764, 767 (9th Cir. 2020).
When the application of a federal statute depends on
state law, “federal authorities must apply what they find to
3 Kaiser was joined as a named plaintiff by Margaret J. Loewen.
Loewen’s allegations were substantially identical to Kaiser’s, except that
she alleged that Cascade voluntarily dismissed its suit against her before
the state court reached a judgment. Because this factual difference does
not affect our analysis, we refer only to Kaiser in the opinion.
4 Kaiser’s operative Complaint also included another claim, which
the district court dismissed as both procedurally improper and
substantively deficient. Kaiser does not contest the procedural basis for
the dismissal, so we treat that claim as properly dismissed and do not
address its substance.

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6 KAISER V. C ASCADE CAPITAL
be the state law.” Comm’r v. Bosch’s Est., 387 U.S. 456,
465 (1967). Absent controlling precedent from the state
supreme court, a federal court must “predict how the highest
state court would decide the [state law] issue using
intermediate appellate court decisions, decisions from other
jurisdictions, statutes, treatises, and restatements as
guidance.” Judd v. Weinstein, 967 F.3d 952, 955–56 (9th
Cir. 2020) (quoting Lewis v. Tel. Emps. Credit Union,
87 F.3d 1537, 1545 (9th Cir. 1996)). We review de novo a
district court’s interpretation of state law. Feldman v.
Allstate Ins. Co., 322 F.3d 660, 665 (9th Cir. 2003).
III.
A.
We first address whether Kaiser’s debt was time barred
under Oregon law. The status of the debt turns on which
statute of limitations would govern a lawsuit to collect the
debt. The applicable statute of limitations depends on
whether a lawsuit to recover the deficiency balance on
Kaiser’s retail installment contract would more closely relate
to the portion of the contract for the underlying sale of the
car or the portion of the contract creating the security interest
in the car. If the lawsuit would more closely relate to the
sale portion, then a four-year statute of limitations would
apply; otherwise, a six-year statute of limitations would.
Compare Or. Rev. Stat. § 72.7250 (requiring claims of
breach of contract for a sale of goods to be brought within
four years), with id. § 12.080 (requiring other contract claims
to be brought within six years).5
5 Once we determine the applicable statute of limitations, we must
apply that interpretation of Oregon law to the parties’ dispute here—even

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KAISER V. C ASCADE CAPITAL 7
The Oregon Supreme Court has made a statement in
passing that helps inform this decision: “[A]n action [by a
creditor] for part of the purchase price is more closely related
to the sale portion of the contract than it is to the security
portion.” Chaney v. Fields Chevrolet Co., 503 P.2d 1239,
1241 (Or. 1972); see also 68A Am. Jur. 2d Secured
Transactions § 565, Westlaw (database updated Feb. 2021)
(“[T]he action of the creditor to recover a deficiency
judgment from a credit buyer of goods is in substance an
action to recover the balance of the purchase price and is
therefore subject to the statute of limitations applicable to
such actions.”). Because no subsequent authority
contradicts or casts doubt on that statement in Chaney, we
predict that the Oregon Supreme Court would hold that the
four-year statute of limitations would apply to a suit to
collect on Kaiser’s debt.6
Two other considerations support this prediction. First,
the four-year statute of limitations for breaches of contract
for a sale of goods originated from Oregon’s codification of
if the state law was previously unclear. When Oregon courts interpret
statutes, they apply a newly announced interpretation of a statute
retrospectively to the dispute that prompted it. See Halperin v. Pitts,
287 P.3d 1069, 1077 & n.4 (Or. 2012) (declining to give prospective-
only effect to statutory interpretation and expressing constitutional
doubts about the court’s power to give purely prospective effect to
rulings). Our own practice is the same. See Rivers v. Roadway Express,
Inc., 511 U.S. 298, 312–13 (1994) (“A judicial construction of a statute
is an authoritative statement of what the statute meant before as well as
after the decision of the case giving rise to that construction.”).
6 The Oregon state court concluded the same when it granted
judgment for Kaiser in Cascade’s suit. Although Kaiser prevailed in
state court on his statute-of-limitations defense, he does not assert issue
preclusion here, and we decline to address it sua sponte. See Herrera v.
Wyoming, 139 S. Ct. 1686, 1701 n.5 (2019).

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Article 2 of the Uniform Commercial Code (“U.C.C.”). See
Or. Rev. Stat. § 72.7250. Oregon applies Article 2 to sales
transactions with a security element unless the “collateral is
transferred by a debtor to a creditor solely as security.” All-
States Leasing Co. v. Ochs, 600 P.2d 899, 907 n.9 (Or. Ct.
App. 1979). No collateral was transferred to a creditor solely
as security here, so we expect Oregon would extend the
Article 2 statute of limitations to a suit to collect Kaiser’s
debt.
Second, our prediction aligns with Oregon’s preference
for interstate uniformity when interpreting the U.C.C. See
Or. Rev. Stat. § 71.1030(1)(c) (explaining that one purpose
of the U.C.C. is “[t]o make uniform the law among the
various jurisdictions”); Schultz v. Bank of the W., C.B.C.,
934 P.2d 421, 424 (Or. 1997) (examining other states’
judicial decisions to interpret the U.C.C.). A clear majority
of other states apply the Article 2 statute of limitations for
sales of goods to actions to recover deficiency balances after
repossession of the good. See, e.g., Suntrust Bank v.
Venable, 791 S.E.2d 5, 7–9 (Ga. 2016) (describing and
adopting the majority view); Coastal Fed. Credit Union v.
Brown, 790 S.E.2d 417, 420–22 (S.C. Ct. App. 2016)
(same); see also Assocs. Disc. Corp. v. Palmer, 219 A.2d
858, 860–61 (N.J. 1966) (holding the same, and cited by
Chaney, 503 P.2d at 1240–41). Given this, we have great
confidence that the Oregon Supreme Court would hold the
four-year statute of limitations would apply to a suit on
Kaiser’s debt.
Accordingly, we proceed on the understanding that
Kaiser’s debt was time barred at the time Cascade attempted
to collect it.

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KAISER V. C ASCADE CAPITAL 9
B.
We now address the legality of Cascade’s conduct under
the FDCPA given that the debt was time barred. We join our
sister circuits in holding that attempts to collect on time-
barred debt through a lawsuit or threat of suit violate the
FDCPA. Whether Cascade may have been unsure of the
legal status of the debt under Oregon state law does not affect
this conclusion—though, as we explain, it affects Cascade’s
ability to assert a bona fide error defense to liability.
1.
The FDCPA prohibits debt collectors from using any
“unfair or unconscionable means to collect or attempt to
collect any debt.” 15 U.S.C. § 1692f.7 It also prohibits using
“any false, deceptive, or misleading representation” to
collect a debt, including any “false representation of the
character, amount, or legal status of any debt” and any
“threat to take any action that cannot legally be taken.” Id.
§ 1692e, (2)(A), (5). We hold that lawsuits to collect time-
barred debts are both unfair and misleading, violating
§ 1692f and § 1692e respectively, and threats to sue on time-
barred debts are at least misleading, violating § 1692e.8
7 Cascade has not contested the sufficiency of Kaiser’s allegations
that it is a “debt collector” subject to the FDCPA. See 15 U.S.C.
§ 1692a(6) (“The term ‘debt collector’ means any person who uses any
instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debts.”); McAdory v.
M.N.S. & Assocs., LLC, 952 F.3d 1089 (9th Cir. 2020) (holding that a
creditor can also be a debt collector), cert. denied, 141 S. Ct. 627 (2020).
8 We need not decide whether filing or threatening suit on time-
barred debt violates other sections of the FDCPA because even a single

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Suing to collect on an unenforceable debt is patently
unfair to the consumer. Empirical evidence gathered by the
Federal Trade Commission indicates that the vast majority
of suits on time-barred debt will lead to default judgments,
even though the debts are unenforceable, “because 90% or
more of consumers sued in these actions do not appear in
court to defend.” Fed. Trade Comm’n, The Structure and
Practices of the Debt Buying Industry 45 (2013). Even the
rare consumer who understands that the statute of limitations
could be raised as a defense is likely to “give in rather than
fight the lawsuit because she must still expend energy and
resources and subject herself to the embarrassment of going
into court.” Phillips v. Asset Acceptance, LLC, 736 F.3d
1076, 1079 (7th Cir. 2013) (quoting Kimber v. Fed. Fin.
Corp., 668 F. Supp. 1480, 1487 (M.D. Ala. 1987)).
Both suing and threatening to sue on time-barred debts
also misrepresent the legal enforceability of those debts, and
thus are false or misleading under 15 U.S.C. § 1692e. Suing
or threatening to sue on a debt implicitly represents that the
debt is legally enforceable, at least absent a clear disclaimer
to the contrary. “Whether a debt is legally enforceable is a
central fact about the character and legal status of that debt.
A misrepresentation about that fact thus violates the
FDCPA.” McMahon v. LVNV Funding, LLC, 744 F.3d
1010, 1020 (7th Cir. 2014). In embracing this conclusion,
we join the unanimous consensus of our sister circuits. See,
e.g., Holzman v. Malcolm S. Gerald & Assocs., Inc.,
920 F.3d 1264, 1270 (11th Cir. 2019) (“There is no question
that these provisions [of 15 U.S.C. § 1692e] prohibit a debt
violation supports a claim for relief. See Tourgeman v. Collins Fin.
Servs., Inc., 755 F.3d 1109, 1125 & n.14 (9th Cir. 2014).

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KAISER V. C ASCADE CAPITAL 11
collector from suing or threatening to sue on a time-barred
debt, and federal courts have uniformly so held.”).9
This conclusion is consistent with our opinion in
Stimpson v. Midland Credit Management, Inc., 944 F.3d
1190 (9th Cir. 2019). In Stimpson, a debt collector sent a
collection letter regarding a time-barred debt, but the letter
disclosed the time bar, thereby eliminating any implicit
representation of legal enforceability. See id. at 1196. We
held that “[t]he natural conclusion [from the disclosure in the
letter] is that the debt is time barred. Nothing in the letter
falsely implies that [the debt collector] could bring a legal
action against Stimpson to collect the debt.” Id. at 1197. As
Cascade points out, we did explain that “there is nothing
inherently deceptive or misleading in attempting to collect a
valid, outstanding debt, even if it is unenforceable in court.”
Id. at 1200. But that explanation did not address letters that
fail to reveal that a debt is time barred. Indeed, we
distinguished the effective disclosure in Stimpson from
9 See also Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679,
683 (7th Cir. 2017) (“[A] debt collector also violates the Act by
threatening to sue to collect such a [time-barred] debt.”); Daugherty v.
Convergent Outsourcing, Inc., 836 F.3d 507, 512 (5th Cir. 2016) (“[A]
debt collector violates the FDCPA when it uses language in its collection
letter that would mislead an unsophisticated consumer into believing that
the debt is legally enforceable.” (quotation marks, citation, and alteration
omitted)); Nelson v. Midland Credit Mgmt., Inc., 828 F.3d 749, 751 (8th
Cir. 2016) (“Even if—as here—the debt collector does not make express
misrepresentations, the FDCPA bars a debt collector from filing or
threatening a lawsuit to collect a time-barred debt.”); Buchanan v.
Northland Grp., Inc., 776 F.3d 393, 398–99 (6th Cir. 2015) (holding that
misleading statements about the enforceability of a debt in court violate
the FDCPA); Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 33 (3d Cir.
2011) (per curiam) (holding that the FDCPA prohibits a debt collector
from “initiat[ing] or threaten[ing] legal action in connection with its debt
collection efforts” for time-barred debt).

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12 KAISER V. C ASCADE CAPITAL
hypothetical language that “could falsely imply that the
underlying debt is enforceable in court.” Id. at 1197
(quotation marks, citation, and alteration omitted). Stimpson
thus supports the rule that if a debt collector’s letter falsely
represents, even by implication, that a debt is legally
enforceable, it violates the FDCPA.10
2.
Cascade argues that unless a debt collector “‘knew or
should have known’ that the litigation was time barred,” its
filing of litigation or threating litigation cannot violate the
FDCPA. It further argues that, because of the uncertainty it
perceived about which statute of limitations applied to
Kaiser’s debt, it could not have known the debt was time
barred, and thus its collection efforts did not violate the
FDCPA. We reject this argument.
The FDCPA makes debt collectors strictly liable for
misleading and unfair debt collection practices. Clark v.
Cap. Credit & Collection Servs., Inc., 460 F.3d 1162, 1175–
76 (9th Cir. 2006).11 A “knew or should have known”
10 Stimpson reflects an understanding that a debt may continue to
exist as a moral obligation even after it becomes legally unenforceable.
See id. at 1199–1200. Consistent with that understanding, under Oregon
law, time-barred debts can sometimes be revived through partial
payments. In re Culver’s Est., 554 P.2d 541, 543 (Or. Ct. App. 1976).
But even where a consumer’s debt continues to exist, the FDCPA still
prohibits misleading statements about the legal enforceability of the
debt. See 15 U.S.C. § 1692e(2)(A). After the statute of limitations has
expired, a debt collector may not “imply[] that a time-barred debt
remains legally enforceable.” Stimpson, 944 F.3d at 1200.
11 “Congress took care to require an element of knowledge or intent
in certain portions of the FDCPA where it deemed such a requirement
necessary.” Clark, 460 F.3d at 1176 n.11 (quoting Kaplan v. Assetcare,

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KAISER V. C ASCADE CAPITAL 13
standard would create a scienter element for a violation,
which is incompatible with strict liability. S.E.C. v. CMKM
Diamonds, Inc., 729 F.3d 1248, 1256 (9th Cir. 2013)
(rejecting a proposed “knew or should have known” standard
in the context of strict liability under the Securities Act of
1933). As a result, the plain text of the FDCPA cannot
support a “knew or should have known” standard.
Cascade makes three principal arguments to the contrary,
none of which persuades us.12 First, Cascade invokes a
notice of proposed rulemaking by the Consumer Financial
Protection Bureau (“CFPB”) regarding time-barred debt.
The CFPB’s proposed regulation would have prohibited
suing or threatening to sue on time-barred debt “only if the
debt collector knows or should know that the applicable
statute of limitations has expired.” Debt Collection Practices
(Regulation F), 84 Fed. Reg. 23,274, 23,329 (proposed May
21, 2019).
The CFPB recently issued a final rule on this subject,
however, which adopts a strict liability approach instead.
Debt Collection Practices (Regulation F), 86 Fed. Reg. 5766,
5781 (Jan. 19, 2021) (“The Bureau is not finalizing the
proposed knows-or-should-know standard and is instead
finalizing a strict liability standard.”). The final rule
concludes, as we have, that the text of the FDCPA and
Inc., 88 F. Supp. 2d 1355, 1362 (S.D. Fla. 2000)). But there is no such
element in the provisions at issue here.
12 Although Cascade also has gestured at a possible First
Amendment challenge to the FDCPA’s strict liability standard, it has
forfeited any constitutional argument by failing to raise the issue
“specifically and distinctly” in its brief. Christian Legal Soc’y Chapter
of Univ. of Cal. v. Wu, 626 F.3d 483, 485 (9th Cir. 2010) (quoting
Brownfield v. City of Yakama, 612 F.3d 1140, 1149 n.4 (9th Cir. 2010)).

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14 KAISER V. C ASCADE CAPITAL
existing caselaw support a strict liability standard. Id. The
final rule also explains how that standard applies to the
precise situation we face here: a debt collector that brings a
lawsuit will have violated the FDCPA “if a court ultimately
determines that the debt was time barred,” even if the debt
collector previously believed in good faith that the statute of
limitations had not expired. Id. at 5779.13
Second, Cascade cites a Sixth Circuit case, which itself
cited the CFPB’s proposed regulation as “persuasive
authority.” Van Hoven v. Buckles & Buckles, P.L.C.,
947 F.3d 889, 898 (6th Cir. 2020). In Van Hoven, the Sixth
Circuit held that material misrepresentations about state law
“must be objectively baseless, not just later proved wrong,
to be actionable under the [FDCPA].” Id. at 896. As an
initial matter, it is not clear Van Hoven helps Cascade,
because the opinion also observed that “suing on a time-
barred debt is objectively baseless.” Id. But to the extent
this observation was intended to reach only situations in
which the state courts have conclusively settled which
statute of limitation applies to a category of debts, we decline
to adopt the objective baselessness standard. That
standard—in addition to being inconsistent with the CFPB’s
13 The final rule has only prospective effect, and so it does not
control the disposition in this case. See Debt Collection Practices
(Regulation F), 86 Fed. Reg. at 5838 (“The Bureau notes that debt
collectors may, but are not required to, comply with the final rule’s
requirements and prohibitions before the effective date [November 30,
2021].”). Our holding follows directly from the statute, not from any
legal requirement contained in the final rule. Because our reading of the
statutory text leads us to the same conclusion as the final rule, we do not
decide what level of deference, if any, a court should afford the rule. See
County of Amador v. U.S. Dep’t of the Interior, 872 F.3d 1012, 1021–22
(9th Cir. 2017) (“[W]e need not decide whether Chevron deference (or
any other level of deference) is appropriate, because we reach the same
conclusion as [the agency] when we review the . . . issue de novo.”).

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KAISER V. C ASCADE CAPITAL 15
final rule and our caselaw—appears to conflict even with the
Sixth Circuit’s prior caselaw on strict liability. See Wise v.
Zwicker & Assocs., P.C., 780 F.3d 710, 713 (6th Cir. 2015)
(stating that a debt collector could violate the FDCPA by
seeking fees to which it was not entitled, “even if there was
no clear prior judicial statement that it was not entitled to
collect the fees” under state law because “a plaintiff does not
need to prove knowledge or intent”); see also Stratton v.
Portfolio Recovery Assocs., LLC, 770 F.3d 443, 448 (6th Cir.
2014) (“The FDCPA is a strict-liability statute.”).
Third, Cascade suggests that because its litigation
conduct was not sanctionable under the rules of civil
procedure, it did not violate the FDCPA. Precedent also
forecloses this argument. In McCollough v. Johnson,
Rodenburg & Lauinger, LLC, 637 F.3d 939 (9th Cir. 2011),
we held that litigation conduct can sometimes violate the
FDCPA even without a violation of the rules of civil
procedure, let alone a sanctionable violation of those rules.
Id. at 951. Whether Cascade’s conduct would be
sanctionable is thus irrelevant.
3.
These principles dictate that Kaiser’s operative
Complaint stated a claim for relief under the FDCPA. Kaiser
alleged that Cascade filed litigation to collect on a time-
barred debt, which supports a claim for a violation of both
the FDCPA’s prohibition on misleading debt collection
practices and its prohibition on unfair debt collection
practices. 15 U.S.C. §§ 1692e, 1692f.
Evaluating the language in Cascade’s collection letter,
we also conclude that Kaiser has also stated a claim for relief
by alleging that the letter threatened to sue on the time-
barred debt, and thereby made a false or misleading

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16 KAISER V. C ASCADE CAPITAL
statement in violation of § 1692e. The collection letter
Kaiser received does not explicitly threaten to sue on the
debt. “Nevertheless, a threat need not be express: it can be
implied” when interpreting a letter “as a whole.” Gonzales
v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1064 (9th Cir.
2011).
We interpret communications from debt collectors, as a
matter of law, through the eyes of the “least sophisticated
debtor.” Id. at 1061. The least sophisticated debtor has
“below average sophistication or intelligence,” but possesses
“a basic level of understanding and willingness to read with
care.” Id. at 1062 (first quoting Duffy v. Landberg, 215 F.3d
871, 874 (8th Cir. 2000); then quoting Rosenau v. Unifund
Corp., 539 F.3d 218, 221 (3d Cir. 2008)). A plaintiff cannot
prevail by asserting a “bizarre” or “idiosyncratic”
interpretation. Id.
Two aspects of Cascade’s letter persuade us that the least
sophisticated debtor would read the letter as threatening to
sue. First, the letter opens by stating that “[GAT] ha[d] been
retained with the authority to file a lawsuit against [Kaiser]
for a debt owed . . . to Cascade.” That representation clearly
contemplates the possibility of litigation to collect on the
balance of the debt; otherwise, there would no reason to
grant the firm “the authority to file a lawsuit.” See, e.g.,
United States v. Nat’l Fin. Servs., Inc., 98 F.3d 131, 137 (4th
Cir. 1996) (rejecting a debt collector’s argument
distinguishing between a statement that “a suit ‘will be’
filed” and a statement that the attorney had “the authority to
do so”). Second, the letter asserts that interest will not accrue
on Kaiser’s debt “unless and until so ordered by a court of
competent jurisdiction.” To the least sophisticated debtor,
“the phrase . . . suggests that, under some set of
circumstances applicable to the recipient,” a court could

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KAISER V. C ASCADE CAPITAL 17
order interest to accrue on the unpaid balance. Gonzales,
660 F.3d at 1063.
Cascade emphasizes the letter’s statement that “no
attorney has personally reviewed the particular
circumstances of [Kaiser’s] account,” but we do not believe
this disclaimer dispels the letter’s implied threat of litigation.
This boilerplate language, known as a Greco disclaimer, is
primarily relevant to the FDCPA’s separate prohibition on
“[t]he false representation or implication that any individual
is an attorney or that any communication is from an
attorney.” 15 U.S.C. § 1692e(3). The Second Circuit has
held that this disclaimer can undo an implicit representation,
created by use of a law firm’s stationery, that an attorney has
been meaningfully involved in the collection process. Greco
v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360, 364–65
(2d Cir. 2005). Even assuming the Greco disclaimer is
relevant to Kaiser’s claim, here it is insufficient to overcome
the impression the least sophisticated debtor could draw
from the other sentences in this letter. In particular, no
“bizarre” or “idiosyncratic” interpretation would be required
for a consumer who reads that a law firm “ha[d] been
retained with the authority to file a lawsuit” to conclude that
the letter threatened litigation. Cascade’s conduct therefore
was misleading under § 1692e of the FDCPA.
C.
Cascade may nonetheless be able to avoid liability
through the FDCPA’s affirmative defense for bona fide
errors. To successfully invoke the defense, a debt collector
must “show[] by a preponderance of evidence that the
violation was not intentional and resulted from a bona fide
error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.” 15 U.S.C.
§ 1692k(c). As a matter of first impression, we hold that a

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18 KAISER V. C ASCADE CAPITAL
mistake about the time-barred status of a debt under state law
could qualify as a bona fide error within the meaning of the
FDCPA.
1.
We have previously held, in a case involving a mistake
of law about the FDCPA’s own requirements, that such “a
mistake about the law is insufficient by itself to raise the
bona fide error defense.” Baker v. G.C. Servs. Corp.,
677 F.2d 775, 779 (9th Cir. 1982). That question is
analytically distinct, however, from whether a mistake about
the statute of limitations that applies to the debt under state
law could support a bona fide error defense. Baker was
never presented with the latter question, so it does not
control our disposition here.
2.
Instead, our analysis is guided by the Supreme Court’s
decision in Jerman v. Carlisle, McNellie, Rini, Kramer &
Ulrich LPA, 559 U.S. 573 (2010). In Jerman, the Supreme
Court adopted the rule announced in Baker that mistakes
about the meaning of the FDCPA itself cannot be bona fide
errors. Id. at 604–05. Although the Court expressly declined
to decide whether the defense could encompass mistakes of
state law, id. at 580 n.4, its reasoning is informative here.14
14 Our sister circuits that have considered the question (all before the
Supreme Court’s decision in Jerman) have reached conflicting results.
Compare Picht v. Jon R. Hawks, Ltd., 236 F.3d 446, 451 (8th Cir. 2001)
(holding that “a mistake in legal judgment in interpreting and applying”
a state statute cannot support a bona fide error defense), with Johnson v.
Riddle, 305 F.3d 1107, 1121–24 (10th Cir. 2002) (holding that a mistake
of state law could be a bona fide error). At least one other circuit has

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KAISER V. C ASCADE CAPITAL 19
The Court offered three principal reasons for excluding
mistakes about the FDCPA’s meaning from the bona fide
error defense: (1) background legal principles regarding
mens rea; (2) the statutory text; and (3) coherence with
another safe-harbor provision in the FDCPA. Considering
each, we conclude that mistakes about the status of a debt
under a state statute of limitations are substantively different
from mistakes about the requirements of the FDCPA itself
and therefore can be bona fide errors.
First, Jerman relied on the presumption that “ignorance
of the law will not excuse any person, either civilly or
criminally.” Id. at 581 (quoting Barlow v. United States,
32 U.S. (7 Pet.) 404, 411 (1833)). “This maxim . . . normally
applies where a defendant has the requisite mental state in
respect to the elements of the crime but claims to be
‘unaware of the existence of a statute proscribing his
conduct.’” Rehaif v. United States, 139 S. Ct. 2191, 2198
(2019) (quoting 1 Wayne R. LaFave & Austin W. Scott, Jr.,
Substantive Criminal Law § 5.1(a) (1986)). In Jerman, for
example, the debt collector’s mistake was as to the
requirements of the very law it had violated; hence, the Court
held that this “mistaken interpretation of the legal
requirements of the FDCPA” could not support a bona fide
error defense. 559 U.S. at 577.
By contrast, the ignorance-of-the-law “maxim does not
normally apply where a defendant ‘has a mistaken
impression concerning the legal effect of some collateral
matter and that mistake results in his misunderstanding the
full significance of his conduct.’” Rehaif, 139 S. Ct. at 2198
(quoting 1 LaFave & Scott, Substantive Criminal Law
assumed arguendo that the defense is available for mistakes of state law.
Ruth v. Triumph P’ships, 577 F.3d 790, 804 (7th Cir. 2009).

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20 KAISER V. C ASCADE CAPITAL
§ 5.1(a)). In such cases, “where the defendant is ignorant of
an independently determined legal status or condition that is
one of the operative facts of the crime . . . the mistake of the
law is for practical purposes a mistake of fact.” United
States v. Fierros, 692 F.2d 1291, 1294 (9th Cir. 1982); see
also United States v. Currier, 621 F.2d 7, 9 n.1 (1st Cir.
1980) (describing earlier cases in which “an apparent
‘mistake of law’ was actually a ‘mistake of fact’ [and
therefore could be asserted as a defense] in that the mistake
pertained to a question of status which was determined by a
law other than the one under which the defendant was
prosecuted”). Thus, when a crime has a mens rea
requirement, a defendant must have that mens rea as to such
“a ‘collateral’ question of law.” Rehaif, 139 S. Ct. at 2198.15
Cascade has allegedly violated the prohibition against
misrepresenting the legal enforceability of the debt,
15 U.S.C. § 1692e, and the prohibition against “unfair”
collection tactics, id. § 1692f. These allegations necessarily
implicate a legal element entirely collateral to the FDCPA:
the time-barred status of the debt under state law. This
collateral legal element falls outside the ignorance-of-the-
law maxim described in Jerman.
As we have explained, the FDCPA offenses at issue lack
a mens rea requirement because the statute imposes strict
liability. But the bona fide error defense is the statute’s
“narrow exception to strict liability.” Clark, 460 F.3d
at 1177. It relieves liability for certain “unintentional”
violations, thereby functioning similarly to a mens rea
15 For example, a defendant charged with knowingly receiving
stolen goods must know the goods were stolen, because the goods’ legal
status (i.e., that they were stolen) is a collateral question of law. See
Liparota v. United States, 471 U.S. 419, 425 n.9 (1985).

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KAISER V. C ASCADE CAPITAL 21
requirement. See Vangorden v. Second Round, Ltd. P’ship,
897 F.3d 433, 441 n.5 (2d Cir. 2018) (explaining that a
dispute over mens rea is appropriately considered through
the bona fide error defense). These background legal
principles therefore suggest the defense should be available
for mistakes about the time-barred status of the debt.
Second, Jerman observed that nothing in the FDCPA’s
text explicitly immunizes a debt collector from a mistake of
law, and that Congress has not “expressly included mistakes
of law in any of the numerous bona fide error defenses”
using similar wording “elsewhere in the U.S. Code.”
559 U.S. at 583–86, 593 (emphasis omitted). The Court
further reasoned that the statute’s use of the phrase
“procedures reasonably adapted to avoid any such error” is
“more naturally read to apply to processes that have
mechanical or other such ‘regular orderly’ steps to avoid . . .
errors like clerical or factual mistakes.” Id. at 587. These
observations, standing alone, might suggest that mistakes
about a debt’s legal status cannot be bona fide errors.
But, as we have explained, a mistake about the time-
barred status of a debt is a mistake regarding a collateral
legal element of an offense, which we treat as a mistake of
fact. See Rehaif, 139 S. Ct. at 2198; Fierros, 692 F.2d
at 1294. And unlike the FDCPA itself, state statutes of
limitations are not “comprehensive and complex federal
statute[s] . . . that impose[] open-ended prohibitions.” Id.
As a result, debt collectors are likely more able to apply
“regular orderly” processes to determine the applicable
statute of limitations and “maintain procedures to avoid legal
errors,” because the required legal reasoning is more often
“mechanical or strictly linear” than the legal reasoning
involved in interpreting the FDCPA. Id. Interpreting the
FDCPA’s bona fide error defense to include mistakes about

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22 KAISER V. C ASCADE CAPITAL
the time-barred status of a debt is thus consistent with the
statutory text.
Finally, Jerman relied on the fact that the FDCPA
contains a safe-harbor provision for debt collectors that act
in good faith in conformity with an advisory opinion by the
federal agency responsible for FDCPA enforcement. Id. at
588 (citing 15 U.S.C. § 1692k(e)). Such a provision, the
Court reasoned, would have little use if debt collectors could
rely on the bona fide error provision for mistakes of federal
law. 559 U.S. at 588. This reasoning seems inapplicable
here, because it is unlikely that Congress expected any
federal agency to provide advisory opinions addressing state
statutes of limitations. See, e.g., Advisory Opinions Pilot,
85 Fed. Reg. 37,331, 37,331 (June 22, 2020) (describing the
CFPB’s function as “issuing guidance implementing Federal
consumer financial law”). Without “a separate provision
that, by its plain terms, is more obviously tailored to the
concern at issue,” the bona fide error defense is the most
natural way to address good-faith mistakes regarding state
statutes of limitations. Jerman, 559 U.S. at 588.
Accordingly, we conclude that mistakes about the time-
barred status of a debt can be bona fide errors.
IV.
Because we conclude that Kaiser has stated a claim for
relief under the FDCPA, we reverse the district court’s
dismissal of this action. On remand, Cascade may attempt
to invoke the bona fide error defense. We express no opinion
on its likelihood of success on such a defense.
REVERSED AND REMANDED.

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KAISER V. C ASCADE CAPITAL 23
APPENDIX

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