Opinion
No. C09-1681 BZ.
December 18, 2009
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
On April 16, 2009, plaintiff Celeste Robertson filed a complaint alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Rosenthal Fair Debt Collection Practices Act ("RFDCPA") and seeks statutory damages, attorneys' fees and costs. Now before me is plaintiff's motion for summary judgment.
All parties have consented to my jurisdiction pursuant to 28 U.S.C. § 636(c).
Defendant Richard J. Boudreau Associates, LLC mailed three dunning (debt collection) letters to plaintiff in an effort to collect a debt allegedly due to Roundup Funding, LLC. Defendant admits sending the letters. The only issue in dispute is whether the letters comply with the FDCPA and the RFDCPA.
The parties have agreed that plaintiff is a "consumer" and defendant is a "debt collector" for purposes of the FDCPA. Joint Statement of Facts ¶ 8-10. Defendant does not dispute that the letters were "communications" as defined by section 1692a(2) and that the first letter was an "initial communication" as defined by Section 1692g(a).
I. Standard
Rule 56 of the Federal Rules of Civil Procedure provides for summary judgment when there is no genuine issue as to any material fact and the court can determine that the party is entitled to a judgment as a matter of law. A genuine issue of material fact exists if a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court does not make credibility determinations or weigh conflicting evidence, and views the evidence in the light most favorable to the nonmoving party. T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630-631 (9th Cir. 1987) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
Once the moving party meets its initial burden, the non-moving party "may not rely merely on allegations or denials in its own pleading," but must go beyond the pleadings and "by affidavits or as otherwise provided in [Rule 56,] set out specific facts showing a genuine issue for trial." Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. at 324 (1986); Valandingham v. Bojorquez, 866 F.2d 1135, 1137 (9th Cir. 1989). In its inquiry, the court must view any inferences drawn from the underlying facts in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The Ninth Circuit has held that whether a communication violates the FDCPA is appropriately disposed of on summary judgment. See Terran v. Kaplan, 109 F.3d 1428, 1432 (9th Cir. 1997) and cases cited therein. "Whether a communication would `confuse a least sophisticated debtor,' thereby violating the FDCPA, is a question of law." Schwarm v. Craighead, 552 F. Supp.2d 1056, 1074 (E.D.Cal. 2008) (ruling on cross motions for summary judgment for violations of Section 1692e inter alia) citing Terran, 109 F.3d at 1431. The facts are undisputed in this case and the issue of whether the letters violate the FDCPA is therefore ripe for adjudication.
II. Plaintiff's Section 1692e Claim
Section 1692e generally prohibits "false deceptive, or misleading representation[s] in connection with the collection of any debt." 15 U.S.C. § 1692e. Specifically, Section 1692e(3) prohibits "the false representation or implication that any individual is an attorney or that any communication is from an attorney." Section 1692e(5) prohibits "[t]he threat to take any action that cannot legally be taken or that is not intended to be taken." Section 1692e(10) prohibits the "use of any false representation or deceptive means to collect or attempt to collect any debt or obtain information concerning a consumer." Plaintiff claims that the letters violate all three specific provisions in addition to the general prohibition on deceptive practices.
A communication is misleading if it would tend to mislead the "least sophisticated consumer." Swanson v. Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1225 (9th Cir. 1988). Plaintiff contends that the letters are deceptive for two reasons. First, the letters deceptively imply that they are from an attorney. "A debt collector violates this section of the FDCPA when a letter appears to be sent by an attorney without the attorney's having both reviewed the debtor's file and gained some knowledge about the specific debt." Irwin v. Mascott, 112 F. Supp.2d 937, 949 (N.D.Cal. 2000). Each of the letters contains the explicit admonition that no attorney had reviewed plaintiff's file. Second, plaintiff contends that the letters are deceptive because they threaten litigation even though none of defendant's attorneys are admitted to practice in California.
I find that all three of the letters deceptively imply attorney involvement. Each letter is printed on defendant's letterhead, which states "Attorneys at Law" and is signed "Richard J. Boudreau Associates, LLC." Although using attorney letterhead alone may not violate the FDCPA, the legal language in each letter crosses the line. The first letter opens with "This law firm has been retained" (emphasis added) which is language that suggests that it is from an attorney hired to do legal work. The first and second letters also state that the law firm's "review will determine whether there is a valid legal dispute regarding the debt. . . ." (Emphasis added). The third letter contains language such as "valid legal defense," "cost of litigation," and "non-litigious resolution."
The disclaimer in the middle of each letter that "no attorney with this firm has personally reviewed the particular circumstances of your account" is contradicted and overshadowed by the rest of the language in each letter, which would suggest to the least sophisticated consumer that the letter was from an attorney. Defendant's reliance on the words "amicable, voluntary resolution" is inadequate in light of each of the phrases quoted above that imply impending legal action. The only amicable resolution mentioned in the letter is payment of the amount demanded. The least sophisticated consumer could well assume that if she doesn't pay that amount, she will be sued.
Defendant's reliance on Greco is unpersuasive. Greco v. Trauner, Cohen Thomas, L.L.P., 412 F.3d 360 (2d Cir. 2005). In that case, the Second Circuit held that an unsigned dunning letter printed on attorney letterhead was in compliance with the FDCPA. First, Greco is not controlling in this jurisdiction. More importantly, the brief Greco letter does not contain any of the threatening language in defendant's letters and appended a statement of the debtor's rights that fairly tracked the FDCPA. The Greco letter does not use language like "litigation" or "any valid legal defense" or any of the inconsistent language this letter contains, as discussed below. Finally, in Greco, the defendant sent only one letter, whereas in this case defendant sent three successive letters to plaintiff.
This case is closer to Dunn v. Derrick E. McGavic, P.C., 2009 WL 2828423 (D.Or. 2009). In Dunn, the defendant law firm sent an unsigned dunning letter on law firm letterhead. The specific language of that letter is similar to the language used in this case, although that threat of litigation was more explicit. The court ultimately granted plaintiff's motion for judgment on the pleadings finding that the letter falsely represented attorney involvement and threatened immediate litigation in contravention of the debtor's rights.
To find a violation of Section 1692e(5), I must determine "(1) whether the debt collector threatened legal action, and, if so, (2) whether such action could legally be taken or whether the debt collector intended to take such action." Irwin, 112 F. Supp. 2d at 950 (quoting Newman v. Checkrite, 912 F. Supp. 1354, 1379 (E.D. Cal. 1995)). Here, the third letter contains several references to litigation, chiefly that defendant will consider "whether the cost of litigation would exceed the likely recovery, if litigation were to be commenced."
Language of a debt collection letter can constitute a threat when it "create(s) the impression that legal action by defendant is a real possibility." Baker v. G. C. Services Corp., 677 F.2d 775, 779 (9th Cir. 1982). Thus, "an explicit statement or threat of legal action" is not required to establish a violation of Section 1692e(5). See Kreek v. Phycom Corp., 2007 WL 1229315 at *4 (N.D. Cal.) (analyzing a letter stating: "if you do not telephone, the Physician will consider using a collection agency or civil action to pursue the debt.") (emphasis added); see also Palmer v. Stassinos, 348 F. Supp. 2d 1070, 1085 (N.D. Cal. 2004) (analyzing a letter stating: "Failure [to remit payment in full] . . . may necessitate using other remedies to collect.") (emphasis added).
Defendant here has used prospective language similar to that found threatening in Kreek and Palmer. Further, the letter in this case was on attorney letterhead and signed by the law firm. At oral argument, both parties argued that the sending of three letters as opposed to one supported their respective positions. Defendant argued that the letters show a dedicated interest in a "voluntary, amicable resolution" while plaintiff posited that reading the letters in context reveals an increasingly threatening debt collection process. I find that the letters became increasingly aggressive as they progressed. For the least sophisticated debtor, the third letter would convey a "real possibility" of legal action when read in conjunction with the first two. Because defendant had no ability to commence litigation against plaintiff in California, none of its lawyers being admitted here, the letter violates Section 1692e(5).
III. Plaintiff's Section 1692g Claim
Plaintiff contends that the August 18, 2008 letter violated section 1692g(a) of the FDCPA. Section 1692g(a) provides:
(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing —
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.15 U.S.C.A. § 1692g(a). "Validation requirements are strictly construed under the least sophisticated consumer standard."Irwin, 112 F. Supp. 2d at 953 (citing Baker, 677 F.2d at 778) (internal quotation marks omitted). Here, plaintiff does not contend that the validation notice itself is defective, but instead contends that the notice is overshadowed by contradictory language.
I find that the initial communication overshadowed the otherwise proper validation notice. The August 18 letter states first that:
"unless payment in full is made or you arrange through this firm for the repayment of this debt in a manner acceptable to our client, we will conduct a review of your account. Our review will determine whether there is a valid legal dispute regarding this debt, and assuming none, the most effective means to secure repayment."
This language implies to the least sophisticated consumer that the consumer has only one option, to pay or arrange to pay the debt in full. This implication directly contradicts a debtor's statutory right to dispute the validity of the debt within thirty days of receipt, and suggests that defendant alone will determine if there is any valid dispute, without plaintiff's input. Plaintiff's legal right to dispute the debt, under Section 1692g, is not mentioned until the next paragraph. Stating inconsistent information in separate paragraphs does not provide the level of consumer protection Congress mandated. Defendant cannot imply in one paragraph that plaintiff has no right to dispute the debt and then cure that violation in the next paragraph by stating that plaintiff has such a right.
Plaintiff seeks maximum statutory damages, which are available without proof of actual damages. Baker v. G.C. Servs. Corp., 677 F.2d 775, 781 (9th Cir. 1982). Under the FDCPA, a plaintiff may recover statutory damages "not exceeding $1,000[,]" 15 U.S.C. section 1692k(a)(2)(A), and under the RFDCPA, a plaintiff may recover statutory damages "not less than one hundred dollars ($100) nor greater than one thousand dollars ($1,000)." Cal. Civ. Code § 1788.30(b). Such damages may be awarded cumulatively under both statutes. See 15 U.S.C. § 1692(n) (The federal law "does not exempt any person . . . from complying with the laws of any State with respect to debt collection practices"); Cal. Civ. Code § 1788.32 ("The remedies provided herein are intended to be cumulative and are in addition to any other procedures, rights, or remedies under any other provision of law."). I find that plaintiff is entitled to $1000 under the FDCPA and $1000 under the RFDCPA.
If plaintiff seeks to recover reasonable attorneys' fees and costs for this action, she shall file a motion that complies with the Civil Local Rules by January 13, 2010. Plaintiff's motion for summary judgment is GRANTED. All future dates are VACATED.