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concluding a notice including the Massachusetts Regulation language "goes beyond the requirements of the FDCPA by allowing for any debtor to refuse calls at work for any reason"
Summary of this case from Rocha v. Zwicker & Assocs.Opinion
1:03-cv-1126 RLY-WTL.
November 12, 2004
ENTRY ON PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT
Plaintiff Renee L. Roudebush's ("Roudebush's") complaint against Defendant Collecto, Inc. ("Collecto") alleges violations of § 1692g of the Fair Debt Collection Practices Act ("FDCPA"). 15 U.S.C. § 1692 et seq. This matter comes before the court on the parties' cross-motions for summary judgment. The court exercises jurisdiction over this case pursuant to § 1692k(d) of the FDCPA and 28 U.S.C. § 1331. For the following reasons, Roudebush's motion for summary judgment is denied and Collecto's cross-motion for summary judgment is granted in part and denied in part.
I. Summary Judgment Standard
A party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is material if it is outcome determinative. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine "only when a reasonable jury could find for the party opposing the motion based on the record as a whole." Pipitone v. United States, 180 F.3d 859, 861 (7th Cir. 1999).
In determining whether a genuine issue of material fact exists, the court must view the record and all reasonable inferences in the light most favorable to the non-moving party. National Soffit Escutcheons, Inc. v. Superior Systems, Inc., 98 F.3d 262, 265 (7th Cir. 1996). The moving party bears the burden of demonstrating the "absence of evidence on an essential element of the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The moving party may not, however, simply rest on the pleadings, but must demonstrate by specific factual allegations that a genuine issue of material fact exists for trial. National Soffit Escutcheons, Inc., 98 F.3d at 265.
II. Background
Roudebush's complaint is based on a dunning letter that Collecto, a debt collection agency, mailed her, seeking payment of a debt that Roudebush allegedly owed for telephone services provided by SBC. (Complaint ¶ 5; Exhibit A). Roudebush claims that the letter violated § 1692g of the FDCPA because it did not give her adequate notice of her right to have Collecto prove the validity of the debt. (Complaint ¶ 7). A motion for class certification that was initially filed with this action has since been withdrawn.
Under the FDCPA, a debt collector must provide an effective validation notice to a debtor within five days of the debt collector's first contact with the debtor. 15 U.S.C. § 1692g(a). The validation notice must explain to the debtor that he or she has thirty days to dispute the validity of the alleged debt. Id. at (3), (4). Further, the validation notice must effectively convey the debtor's rights in order for it to satisfy the FDCPA. If the debtor decides to dispute the debt, the debt collector must "obtain verification of the debt or a copy of the judgment against the consumer" and mail a copy of the verification to the debtor. Id. at (4).
The standard for analyzing alleged violations of the FDCPA is an objective one, based on a hypothetical "unsophisticated consumer." See, Avila v. Rubin, 84 F.3d 222, 227 (7th Cir. 1996); Gammon v. GC Services Ltd. P'ship, 27 F.3d 1254 (7th Cir. 1994). The unsophisticated consumer is "presumed to possess a rudimentary amount of information about the world and a willingness to read a collection letter with some care." Gammon, 27 F.3d at 1257 (quoting Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993)). This consumer is not "the very last rung on the sophistication ladder," id., but he or she is "uninformed, naive, or trusting." Id.
III. The Motions for Summary Judgment
Roudebush concedes that Collecto's dunning letter contained a validation notice with the statutorily-required language, but she argues that the notice was not effectively conveyed, thus it violated the FDCPA. (Complaint ¶ 8). Roudebush cites two problems with the validation notice. First, she contends that the notice, which was located on the back of the letter, was overshadowed because it appeared in the midst of other notices and was under a misleading heading. (Plaintiff's Memorandum in Support of Motion for Summary Judgment ("Plaintiff's Memo") at 5-6). Second, she argues that the validation notice was overshadowed by language in the dunning letter that demanded immediate payment, in contradiction to the validation notice's explanation that she had thirty days to contest the validity of the debt. (Plaintiff's Memo at 7).
Roudebush filed a copy of the dunning letter as Exhibit A to her memorandum in support of summary judgment. Based on the standards outlined above, the letter, and an affidavit from Roudebush stating that the letter confused her, she claims that there is no genuine issue as to any material fact. Thus, she moves for summary judgment on her claim that the validation notice was ineffective and therefore a violation of the FDCPA.
In response to Roudebush's motion for summary judgment, Collecto claims that the validation notice on the back of the letter was not overshadowed by the heading it came under. Collecto also claims that the validation notice was not overshadowed by the language on the front of the letter because there is language that reconciles the request for payment "today" with the thirty day statutory requirement. (Collecto's Brief in Opposition to Plaintiff's Motion for Summary Judgment/Brief in Support of its Cross-Motion for Summary Judgment ("Collecto's Brief") at 3-4). As such, Collecto argues that Roudebush's claim is without merit and has filed a cross-motion for summary judgment.
A. The Weight of Roudebush's Affidavit
As an initial matter, the court notes that Roudebush's affidavit has limited weight in this proceeding. Whether Roudebush herself was confused by the letter is relevant only to the extent that she is a representative unsophisticated consumer.
The Seventh Circuit recently addressed this issue in Chuway v. National Action Financial Services, Inc., where the court explained that a plaintiff's testimony regarding her confusion is acceptable if it is admitted in conjunction with a letter that is evidently confusing on its face. 362 F.3d 944, 948 (7th Cir. 2004) (explaining that the Chuway letter was confusing even to consumers as sophisticated as the members of the bench hearing the case). However, the Chuway court went on to caution that "if it is unclear whether the letter would confuse intended recipients of it, then to make out a prima facie case the plaintiff has to go further and present evidence (beyond her own say-so) of confusion. . . ." Id. Courts have suggested, for example, consumer surveys as a type of further evidence that could be presented. See, e.g., Walker v. National Recovery, Inc., 200 F.3d 500, 503 (7th Cir. 1999).
The Seventh Circuit clarified its Chuway holding in Taylor v. Cavalry Investment, L.L.C., where the court explained that there is a triable issue when a judge reading a collection letter "reasonably concludes that it could confuse a substantial number of recipients." 365 F.3d 572, 575 (7th Cir. 2004). For reasons discussed below, the letter sent to Roudebush could have confused a substantial number of recipients. As such, Roudebush's affidavit, in combination with the letter itself, presents sufficient evidence to advance her case past summary judgment.
B. The Headings
The court first considers Collecto's use of headings on the back side of the letter. The front of the letter explains to the alleged debtor: "If you dispute this debt please see the reverse side of this notice for important rights." When the debtor looks to the reverse side of the letter, there are two headings. The heading at the top of the page appears in the largest font used in the entire letter, in all capital letters, and in bolded text. It reads " FOR MEDICAL USE ONLY." Further down the page, approximately a quarter of the way from the bottom, is the only other heading. It too is in all capital letters and bolded text, but the size of the font is much smaller than the "for medical use only" heading. This second heading reads " NOTICE OF IMPORTANT RIGHTS." Strangely, the validation notice appears under the "medical use only" heading and not under the "notice of important rights" heading. There is a gap of white space between the medical questionnaire at the top of the page and the validation notice in the middle of the page, but there is no interceding heading to notify the reader that the topic addressed has changed from "medical use only." Roudebush's affidavit explains that because her bill was for telephone service, she was confused as to whether the rights listed under the "medical use only" heading applied to her.
Collecto argues that the Gammon court's requirement that the unsophisticated consumer read collection letters with "some care" requires the consumer to read the entire letter. (Collecto's Brief at 4-5). Thus, even if a heading ("medical use only") indicates a topic that is irrelevant to the individual consumer's debt (here, a phone bill), the consumer is expected to keep reading. (Collecto's Brief at 4-5). The heart of Collecto's argument is that when an
unsophisticated consumer turned the letter over and was presented with a "medical questionnaire" that consumed only 1/3 of the back page, followed by a large space, and then followed by a listing of rights that takes up the remainder of the page, even an unsophisticated consumer would have no trouble finding the "important rights" referenced on the front page. The consumer, after all, is looking for a statement of rights, not a questionnaire.
( Id.)
Collecto's argument overstates the unsophisticated consumer standard. The requirement that the consumer read with "some care" is a weaker requirement than Collecto's proposed one, which would require the consumer to read the entire letter even if headings indicate that segments of the letter are irrelevant to his or her case. Collecto's argument simply overlooks the odd placement of the second heading. It may be reasonable for a consumer, unsophisticated or otherwise, to presume that the notice of one's right to have one's debt verified would appear in the section of a letter labeled "notice of important rights." Furthermore, Roudebush's statement that she was uncertain whether rights listed under the "medical use only" heading applied to her could be typical of unsophisticated consumers, in light of the fact that her bill was for phone service.
The question that remains before the court is whether an unsophisticated consumer with a phone service debt can be expected to read through the text that appears above the "notice of important rights" heading and below the "medical use only" heading of Collecto's letter. This question presents an issue of material fact. Consequently, both motions for summary judgment are denied as to this point.
In arguing that the "medical use only" heading does not overshadow the validation notice, Collecto relies on a case that dealt with a Collecto letter very similar to the one in question here, Moran v. Collecto, Inc. d/b/a Collection Company of America, No. 8:02CV137 (D. Neb. March 4, 2003). According to Collecto, the Moran court held that "the medical questionnaire on the back of the letter did not overshadow the validation notice." (Collecto's Sur-Reply at 9-10). Collecto overlooks some key aspects of the Moran case. First, Moran mainly dealt with subsection c of the FDCPA, not subsection g. The Moran court specifically rejected plaintiff Moran's attempt to analogize her § 1692c claim to a § 1692g claim, noting that "[i]mportant differences exist between sections 1692c and 1692g . . . In particular, debt collectors are required to give notification of rights under 1692g, whereas information about section 1692c is not mandatory." Moran at *7, n 4 (emphasis in original). The Moran court also specifically distinguished its reasoning from the Seventh Circuit's, because the Seventh Circuit allows for extrinsic evidence of confusion, such as consumer surveys. See, Moran at *9, n 7.
In the Seventh Circuit, whether language in a dunning letter overshadows a validation notice is a question of fact. See, Taylor v. Cavalry Investment, L.L.C., 365 F.3d 572, 575 (7th Cir. 2004); Walker v. National Recovery, Inc., 200 F.3d 500, 503 (7th Cir. 1999) ("Whether a given message is confusing is, we held in Gammon, Bartlett, and Johnson, a question of fact, not of law or logic). Other Circuits have held that it is a question of law. See, e.g., Wilson v. Quadramed Corp., 225 F.3d 350, 353, n. 2 (3d Cir. 2000). The Moran court only addressed the question of "FDCPA liability as a matter of law." Moran at *5. Consequently, this court gives little weight to the conclusions reached in Moran.
C. The Reconciling Language
Roudebush's second argument for summary judgment is that language in Collecto's letter overshadows the validation notice and thus would confuse an unsophisticated consumer. The questionable sentence from the front page of the letter reads: "You will be eligible to re-establish phone service with SBC and keep a clean credit history by paying this balance in full today." (Emphasis added). As Collecto points out, this sentence is accompanied by reconciling language both in the next paragraph and on the back of the letter. (Collecto's Sur-Reply at 14-15).
The validation notice here falls well within the standard outlined in Johnson v. Revenue Management Corp., which said that a demand for immediate payment does not violate the FDCPA when it is "accompanied by additional reconciling language, such as that payment is due `immediately' only when the payment is uncontested." 169 F.3d 1057, 1059 (7th Cir. 1999). The relevant language on the back of Collecto's letter reads:
Unless you dispute the validity of this debt, or any portion thereof, within thirty days after receipt of this notice, we shall assume the debt to be valid. If you notify us in writing of your dispute within this thirty-day period, we will obtain verification of the debt, or a copy of a judgment against you, and a copy of such verification or judgment will be mailed to you. . . .
This text fulfills the requirement for reconciling language. As long as the consumer reads the validation notice, he or she will be clearly informed of his or her rights. See, Taylor v. Cavalry Investment, L.L.C., 365 F.3d 572, 575 (7th Cir. 2004) (finding that a letter encouraging debtors to "act now to satisfy this debt" was merely puffery and did not overshadow the notice of the debtor's thirty day statutory entitlement to verification). Whether the debtor will read the notice, given its location, is a question addressed in the court's discussion of Collecto's use of headings.
D. Local Rule 56.1
In her Reply in Support of Summary Judgment, Roudebush argues that, because of Collecto's failure to comply with Local Rule 56.1, summary judgment should be granted in her favor. Local Rule 56.1 requires a party opposing summary judgment to include in its brief a "section labeled `Statement of Material Facts in Dispute' which responds to the movant's asserted material facts." S.D.Ind.L.R. 56.1(b). True, Collecto's brief does not comply with this rule. However, it is apparent to the court that the only facts in dispute are those facts surrounding the question of whether the dunning letter is confusing to an unsophisticated consumer. Roudebush's briefs reveal that this is also apparent to her counsel. As such, Collecto's failure to comply with Local Rule 56.1 has resulted in no prejudice to Roudebush or inconvenience to the court. Summary judgment will not be granted based on Collecto's technical violation of the rule. See, Harmon v. OKI Systems, 115 F.3d 477, 481 (7th Cir. 1997) (explaining that the decision of how strictly to apply rule 56.1 is within the district court's discretion).
E. Roudebush's § 1692c(a)(3) claim
Finally, in Roudebush's Reply in Support of Motion for Summary Judgment, she raises a new issue for the first time. She accuses Collecto of violating § 1692c(a)(3) of the FDCPA, which addresses how consumers can deal with debt collection calls at their places of employment. Collecto's notice tells debtors that
[y]ou have the right to make a written or oral request that telephone calls regarding your debt not be made to you at your place of employment. Any such oral request will be valid for only ten days unless you provide written confirmation of the request postmarked or delivered within seven days of such request.
Roudebush claims that this language misrepresents a consumer's rights, because under § 1692c(a)(3), a debt collector cannot contact debtors at work if the debt collector "knows or has reason to know" that the employer prohibits such contact. Under the FDCPA, the debtor is not required to make an oral or written request; if the debt collector knows that the employer prohibits the contact, the debt collector is simply obligated not to call the debtor at work.
The court finds that Collecto's workplace notice actually goes beyond the requirements of the FDCPA by allowing for any debtor to refuse calls at work for any reason. The FDCPA only protects those employees whose employers do not allow such calls. In this instance, Collecto is extending an additional right to its target debtors, above and beyond those mandated by the FDCPA. Furthermore, Collecto is not required by the FDCPA to inform debtors of their rights under § 1692c(a)(3). See, White v. Goodman, 200 F.3d 1016, 1020 (7th Cir. 2000). Collecto is not in violation of § 1692c(a)(3).
IV. Conclusion
For the foregoing reasons, the court finds that there is a genuine issue of material fact as to whether an unsophisticated consumer would find Collecto's letter confusing, thus rendering the validation notice ineffective. This issue is limited to the placement of the headings on the back of the letter, regarding which both Roudebush and Collecto have presented cases that a reasonable jury could decide in their favor.
Because there is an issue of fact regarding whether the headings make the validation notice confusing, and because the court considers Collecto's Rule 56.1 violation to be a mere technicality, Roudebush's motion for summary judgment is denied.
There is no genuine issue of material fact, however, regarding the language that reconciles the "today" and "thirty day" time periods. Therefore, Collecto's motion for summary judgment is granted as it relates to the reconciling information and the § 1692c(a)(3) claim. Collecto's motion is denied as it relates to the headings on the back of the letter.