Sanchez v. John Lee Jackson et al
Filing
31
MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 11/21/2016. Mailed notice(gel, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JOANNA SANCHEZ, individually and
on behalf of all others similarly situated,
Plaintiff,
Case No. 16-cv-6144
v.
Judge John Robert Blakey
JOHN LEE JACKSON and
UNIVERSAL FIDELITY, LP,
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Joanna Sanchez (“Plaintiff”) alleges that Defendants John Lee
Jackson (“Jackson”) and Universal Fidelity, LP (“Universal”) (collectively,
“Defendants”) violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§§ 1692, et seq., by failing to provide a proper debt validation notice to Plaintiff.
First Am. Comp. [18]. On September 15, 2016, Defendants filed a motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6). Defs.’ Mot. Dismiss [21]. For
the reasons explained below, Defendants’ motion is denied.
I.
Background
Plaintiff sets forth the following relevant facts, which the Court accepts as
true for the purposes of Defendants’ Motion to Dismiss. Sometime before the spring
of 2016, Plaintiff, an Illinois resident, incurred a consumer debt from a Montgomery
Ward credit account. First Am. Compl. [18] ¶ 10. Plaintiff did not pay the debt and
it went into default. Id. ¶ 11.
1
Universal is a debt collection agency with its principal place of business in
Houston, Texas. 1 Id. ¶¶ 8-9. On or about March 22, 2016, Universal sent a notice
to Plaintiff regarding her outstanding debt. 2
In addition to its own collection efforts, Universal also retained Jackson, an
independent Texas attorney, to assist in the collection of outstanding debts. First
Am. Compl. [18] Ex. B. On or about May 9, 2016, Jackson sent a one-page, twosided collection letter to Plaintiff.
The letter constituted Jackson’s initial
Id.
communication with Plaintiff. First Am. Compl. [18] ¶ 16. The letterhead provided
Jackson’s name and address and identified Jackson as an “ATTORNEY ON
RETAINER FOR UNIVERSAL FIDELITY LP.” First Am. Compl. [18] Ex. B. In
the body of the letter, Jackson stated the following:
I am an Attorney and I am on retainer with Universal
Fidelity LP. I am not an employee of Universal
Fidelity LP and only advise them of corporate law and
therefore advise them on legal matters. This letter is
being sent to you because I am involved in the
collection strategy of the outstanding accounts
owed to them. You will not be sued by Universal
Fidelity LP or by me, this is just a collection letter to
request you pay this account owed to Montgomery Ward.
Their records indicate that you are indebted to them for
the amount of $182.94. Universal Fidelity LP offers
Although Plaintiff’s First Amended Complaint [18] is unclear, the Court presumes that
Montgomery Ward either assigned Plaintiff’s debt to Universal or retained Universal for assistance
in the debt collection process.
1
This fact does not appear in Plaintiff’s First Amended Complaint [18]. Instead, Plaintiff raises it
for the first time in her response to Defendants’ motion, in conjunction with a request to further
amend her complaint to include the March 22, 2016 letter as an exhibit. See Pl.’s Resp. Defs.’ Mot.
Dismiss [24] 7 n. 1. Because this fact provides factual clarity to the present controversy, the Court
grants Plaintiff leave to amend her operative complaint for the limited purpose of incorporating the
March 22, 2016 notice. See Fed. R. Civ. P. 15(a)(2) (“The court should freely give leave [to amend]
when justice so requires.”).
2
2
convenient payment options to help you satisfy this claim.
I have received the files from Universal Fidelity LP
Electronically [sic] and conducted a cursory review and
approved the release of these letters. Do not consider this
letter a notification of intent to sue: since I do not have
the legal authority to sue and Universal Fidelity LP will
not sue you, this is a request for payment only: I have not,
nor will I, review the detail of your account status.
Id. (emphasis added) (other emphasis removed). The bottom of Jackson’s letter
stated, “This is an attempt to collect a debt and any information obtained
will be used for that purpose.
This communication is from a debt
collector.” Id. (emphasis in original). The bottom of the letter also provided a
payment slip addressed to Universal. Id.
3
Figure 1. Front of May 9, 2016 Letter from Jackson (Redacted)
4
The reverse side of Jackson’s letter stated, in relevant part (and in all caps),
the following:
UNLESS YOU NOTIFY UNIVERSAL FIDELITY LP,
WITHIN 30 DAYS AFTER RECEIVING YOUR
INITIAL NOTICE THAT YOU DISPUTE THE
VALIDITY OF THIS DEBT OR ANY PORTION
THEREOF, UNIVERSAL FIDELITY LP WILL
ASSUME THIS DEBT IS VALID. IF YOU NOTIFY
UNIVERSAL FIDELITY LP IN WRITING WITHIN 30
DAYS FROM RECEIVING YOUR INITIAL NOTICE,
UNIVERSAL
FIDELITY
LP
WILL
OBTAIN
VERIFICATION OF THE DEBT OR OBTAIN A
COPY OF A JUDGEMENT [SIC] AND MAIL YOU A
COPY
OF
SUCH
JUDGEMENT
[SIC]
OR
VERIFICATION. IF YOU MAKE A REQUEST TO
UNIVERSAL FIDELITY LP IN WRITING WITHIN 30
DAYS AFTER RECEIVING YOUR INITIAL NOTICE,
UNIVERSAL FIDELITY LP WILL PROVIDE YOU
WITH THE NAME AND ADDRESS OF THE
ORIGINAL CREDITOR, IF DIFFERENT FROM THE
CURRENT CREDITOR.
Id. (emphasis added). Plaintiff did not receive any further communication from
Jackson aside from the May 9, 2016 correspondence. First Am. Compl. [18] ¶ 23.
On June 16, 2016, Plaintiff filed a class action suit in this Court. Compl. [1].
On August 25, 2016, Plaintiff filed her First Amended Complaint [18]. In her sole
count, Plaintiff alleges that Defendants violated § 1692g(a) of the FDCPA.
Generally, § 1692g(a) provides that “in either the initial communication with a
consumer in connection with the collection of a debt or another written notice sent
within five days of the first, a debt collector must provide specific information to the
consumer.” Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 320-31 (7th
Cir. 2016). Specifically, § 1692g(a) states:
5
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. § 1692g(a). Plaintiff alleges that Jackson (and vicariously, Universal)
violated this provision by failing to provide an adequate debt validation notice in
conjunction with his May 9, 2016 letter. First Am. Compl. [18] ¶ 32. Although, as
described above, Jackson’s letter included a validation notice referencing Universal,
Plaintiff maintains that Jackson cannot rely on another debt collector and instead
must include his own disclosure referencing himself. Id. ¶¶ 20-24. In other words,
Plaintiff asserts that § 1692g(a) required Jackson to notify Plaintiff of her right to
contact Jackson directly to dispute or verify her debt.
Id.
Defendants’
disagreement with this statutory interpretation forms the basis of their Motion to
Dismiss. Defs.’ Mot. Dismiss [21].
6
II.
Legal Standard
A motion to dismiss under Rule 12(b)(6) “challenges the sufficiency of the
complaint for failure to state a claim upon which relief may be granted.” Gen. Elec.
Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). To
survive a motion to dismiss, the claim must first comply with Rule 8 of the Federal
Rules of Civil Procedure by providing “a short and plain statement of the claim
showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), such that the
defendant is given “fair notice” of what the claim is “and the grounds upon which it
rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v.
Gibson, 355 U.S. 41, 47 (1957)). Second, the complaint must contain “sufficient
factual matter” to “state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). That is, the
allegations must raise the possibility of relief above the “speculative level.”
E.E.O.C. v. Concentra Health Servs. Inc., 496 F.3d 773, 776 (7th Cir. 2007). A claim
has facial plausibility “when the pleaded factual content allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). The plausibility standard
“is not akin to a ‘probability requirement,’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Williamson v. Curran, 714 F.3d
432, 436 (7th Cir. 2013). The “amount of factual allegations required to state a
plausible claim for relief depends on the complexity of the legal theory alleged,” but
“threadbare recitals of the elements of a cause of action, supported by mere
7
conclusory statements, do not suffice.” Limestone Dev. Corp. v. Vill. of Lemont, 520
F.3d 797, 803 (7th Cir. 2008). In evaluating the complaint, the Court accepts all
well-pleaded allegations as true and draws all reasonable inferences in favor of
Plaintiff. Iqbal, 556 U.S. at 678.
III.
Analysis
The Court begins with the principle that “the FDCPA regulates only the
conduct of ‘debt collectors.’” Ruth v. Triumph Partnerships, 577 F.3d 790, 796 (7th
Cir. 2009) (emphasis added); see also Schlosser v. Fairbanks Capital Corp., 323 F.3d
534, 536 (7th Cir. 2003) (“Creditors, ‘who generally are restrained by the desire to
protect their good will when collecting past due accounts,’ are not covered by the
Act. Instead, the Act is aimed at debt collectors, who may have ‘no future contact
with the consumer and often are unconcerned with the consumer’s opinion of
them.’”) (quoting S. Rep. 95-382, at 2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695,
1696).
Therefore, Plaintiff’s complaint must be dismissed “if it fails to raise a
plausible inference that defendants were ‘debt collectors’ within the meaning of the
FDCPA.” Stone v. Washington Mut. Bank, No. 10-cv-6410, 2011 WL 3678838, at *8
(N.D. Ill. Aug. 19, 2011). With certain exceptions not applicable here, the FDCPA
defines “debt collector” as
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, or who
regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or
due another.
15 U.S.C. § 1692a(6).
8
Here, Defendants concede that Universal falls under this definition, but
contend that Jackson, Universal’s attorney agent, does not.
The first question,
therefore, is whether, as a matter of law, attorneys may qualify as “debt collectors.”
In Heintz v. Jenkins, the Supreme Court held that the FDCPA “applies to attorneys
who ‘regularly’ engage in consumer-debt-collection activity.”
514 U.S. 291, 299
(1995). In doing so, the Court noted that the original version of the statute enacted
in 1977 contained an express exemption for lawyers “‘collecting a debt as an
attorney on behalf of and in the name of a client.’” Id. at 294 (quoting Pub. L. 95109, § 803(6)(F), Sept. 20, 1977, 91 Stat. 874, 875).
The Court further noted,
however, that in 1986, Congress repealed this exemption in its entirety. Id. (citing
Pub. L. 99-361, 100 Stat. 768). From this, the Court inferred, “Congress intended
that lawyers be subject to the Act whenever they meet the general ‘debt collector’
definition.” Id. at 294-95.
Here, drawing all reasonable inferences in favor of Plaintiff, the pleadings
sufficiently allege that Jackson “regularly engages” in consumer debt collection.
Plaintiff alleges that, besides Jackson’s May 9, 2016 letter to Plaintiff, Jackson sent
similar letters to “multiple consumers in Illinois.”
First Am. Compl. [18] ¶ 34.
Jackson’s letter also acknowledged his role in the collection of “outstanding
accounts”—plural—owed to Universal; that he received and reviewed multiple debt
files; and that he approved the release of numerous collection letters. Id. Ex. B.
Most importantly, the bottom of Jackson’s letter included a bolded disclaimer that
“This communication is from a debt collector.”
9
Id. (emphasis in original).
Indeed, despite their objection to classifying Jackson as a “debt collector,”
Defendants’ pleadings are silent as to whether Jackson “regularly engages” in debtcollection activity. These facts, combined with the Court’s “judicial experience and
common sense,” are sufficient to meet the FDCPA’s general “debt collector”
definition at this stage. See Iqbal, 556 U.S. at 679.
Defendants counter that, in this instance, Jackson merely acted as an agent
“on behalf of” Universal, Mem. Supp. Defs.’ Mot. Dismiss [22] 4, an assertion
confirmed by Jackson’s letter.
See First Am. Compl. [18] Ex. B (stating that
Jackson was “not an employee” of Universal but rather “on retainer” to help
implement “the collection strategy of the outstanding accounts owed to them”). The
next issue, therefore, is whether debt-collector attorneys are subject to the FDCPA
even when serving as agents of debt-collector clients.
The Court answers this
question in the affirmative. See Hernandez v. Williams, Zinman & Parham PC, 829
F.3d 1068, 1071 n. 1 (9th Cir. 2016) (holding that FDCPA applies to attorneys who
regularly engage in debt-collection activity “even if the attorney is acting on behalf
of a debt-collector client.”) (citing Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507,
1513 (9th Cir. 1994)).
This finding is consistent with Congress’ repeal of the FDCPA’s exemption for
lawyers “collecting a debt as an attorney on behalf of and in the name of a client,”
Pub. L. 95-109, § 803(6)(F), Sept. 20, 1977, 91 Stat. 874, 875, and has been
indirectly endorsed by the Seventh Circuit. In Marquez v. Weinstein, Pinson &
Riley, P.S., several plaintiffs alleged FDCPA violations against multiple co-
10
defendants: an attorney, his law firm, and its debt-collection agency client. No. 14cv-00739, 2015 WL 4637952, at *1 (N.D. Ill. Aug. 4, 2015). The plaintiffs alleged
that, in an attempt to collect outstanding student loan debts, the attorney and law
firm filed misleading and deceptive civil complaints against the plaintiffs “on behalf
of” the debt-collection agency. Id.; see 15 U.S.C. § 1692e (prohibiting a debt collector
from using “any false, deceptive, or misleading representation or means in
connection with the collection of any debt”). The district court disagreed that the
filings at issue violated the FDCPA and dismissed the complaint. Id. at 5. The
Seventh Circuit reversed and found the complaints “misleading and deceptive as a
matter of law,” despite the fact that, as here, the attorney and law firm merely
acted as agents of their debt collector client. 836 F.3d 808, 815 (7th Cir. 2016).
Having concluded that Jackson qualifies as an independent “debt collector”
subject to FDCPA regulation—even in light of his representation of Universal—the
Court turns to whether his May 9, 2016 letter constitutes an “initial
communication.” See 15 U.S.C. § 1692g(a) (only requiring debt validation notice
within five days of “initial communication” with a consumer). This issue is clouded
by Plaintiff’s acknowledgment that, more than thirty days before Jackson’s letter,
Universal sent its own collection notice to Plaintiff. Courts in this district are split
as to whether § 1692g applies only to the first debt collector to make contact with a
debtor, or rather to each successive debt collector in line. The trend, however, has
been towards the latter. Compare Thomas v. Law Firm of Simpson & Cybak, No.
00-cv-8211, 2001 WL 1516746, at *3-4 (N.D. Ill. Nov. 28, 2001), rev’d on other
11
grounds, 392 F.3d 914 (7th Cir. 2004) (finding that because initial communication
with the plaintiff was made by the debt collection agency and not its retained
lawyer, lawyer’s failure to provide debt notification did not violate FDCPA);
Weinstein v. Fink, No. 99-cv-7222, 2001 WL 185194, at *7 (N.D. Ill. Feb. 26, 2001)
(same) with Janetos v. Fulton Friedman & Gullace, LLP, No. 12-cv-1473, 2013 WL
791325, at *6 (N.D. Ill. Mar. 4, 2013) (Ҥ 1692g applies to the initial communication
in connection with the collection of a debt by each successive debt collector”);
Francis v. Snyder, 389 F.Supp.2d 1034, 1040 n. 2 (N.D. Ill. 2005) (same).
In Janetos, as in the present case, the plaintiffs filed a class action lawsuit
against a debt collection agency and the law firm that managed the agency’s
collection litigation. 2013 WL 791325, at *1. The plaintiffs, like Plaintiff here,
alleged that in an attempt to collect debts on behalf of the collection agency, the law
firm mailed individual collection letters that violated the FDCPA’s debt notice
provision. Id. According to the Janetos plaintiffs, the law firm’s collection letters
failed to clearly identify which entity—the law firm or the collection agency—
actually owned the purported debt. Id. at *4; see 15 U.S.C. § 1692g(a)(2) (requiring
debt collector to provide “the name of the creditor to whom the debt is owed”).
Moreover, one collection letter pertained to a debt previously extinguished in state
court. Id. The defendants asserted that, because the collection agency initiated its
own collection efforts several years before the law firm, § 1692g did not apply to the
firm’s letters. Id. That is, the defendants claimed that the firm’s letters constituted
12
the initial communication from the firm, not the initial communication with respect
to the purported debts. Id.
The district court acknowledged that Ҥ 1692g is not clear on its face whether
‘the initial communication’ requirements apply once to each debt or once to each
debt collector who attempts to collect a debt.” Id. at *5. Nevertheless, given “the
FDCPA’s purpose of curbing abusive debt collection practices,” the court declined “to
read a loophole into § 1692g that would exempt successive debt collectors from
sending a validation notice.”
Id.
The court reasoned that § 1692g “is not
superfluous when a new debt collector enters the picture” because it “helps to
ensure that any mistakes”—such as the attempted collection of a previouslyextinguished debt—“are promptly resolved.”
Id.
The court further found that
requiring each debt collector to comply with § 1692g was “not a heavy burden” and
consistent with the Federal Trade Commission’s interpretation of the statute. Id.;
see Federal Trade Commission Statements of General Policy or Interpretation, Staff
Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097-02,
50100 (December 13, 1998) (explaining that under § 1692g, an “attorney debt
collector must provide the required validation notice, even if a previous debt
collector (or the creditor) has given such notice”).
Although
the
district
court
found
§
1692g
applicable
to
initial
communications made by successive debt collectors, it held in a subsequent ruling
that, on grounds not pertinent here, the plaintiffs failed to meet their burden of
proof and granted summary judgment to the defendants. No. 12-cv-1473, 2015 WL
13
1744118, at *9 (N.D. Ill. Apr. 13, 2015). The Seventh Circuit reversed and held that
the plaintiffs were “entitled to a finding of liability for violations of § 1692g(a)(2).”
825 F.3d 317, 326 (7th Cir. 2016). The Seventh Circuit did not specifically address
the district court’s predicate ruling that § 1692g applies to each debt collector who
attempts to collect a debt. But it defies logic that the court would grant relief for
violations of § 1692g if it doubted the applicability of the provision to the
communications at issue. Consequently, this Court adopts the interpretation of
§ 1692g found in the Janetos line of cases and finds that § 1692g applies to the
initial communication made in connection with the collection of a debt by each
successive debt collector. Applied here, this includes Jackson’s May 9, 2016 letter to
Plaintiff.
The Court however, cannot rest there, because this case presents the added
wrinkle that Jackson’s letter to Plaintiff did include a debt notice—Universal’s.
The letter informed Plaintiff to notify Universal in order to dispute or verify her
debt, but said nothing of notifying Jackson. Defendants argue that this satisfies
§ 1692g(a). The Court therefore, must also determine whether an attorney debt
collector acting as an agent on behalf of another debt collector must provide his own
debt notice in addition to, or in lieu of, that of his client.
Once again, the Court answers this question in the affirmative. In doing so,
the Court begins, as it must, with an examination of the FDCPA’s statutory text.
See BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) (“The preeminent
canon of statutory interpretation requires us to presume that the legislature says in
14
a statute what it means and means in a statute what it says there. Thus, our
inquiry begins with the statutory text[.]”) (internal quotations and citations
omitted). If the “statutory language is unambiguous, in the absence of ‘a clearly
expressed legislative intent to the contrary, that language must ordinarily be
regarded as conclusive.’”
United States v. Turkette, 452 U.S. 576, 580 (1981)
(quoting Consumer Product Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108
(1980)). When a statute is unambiguous, “our inquiry starts and stops with the
text.”
United States v. Marcotte, 835 F.3d 652, 656 (7th Cir. 2016) (internal
quotations omitted).
To repeat, § 1692g(a) provides that
[w]ithin 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
15 U.S.C. § 1692g(a) (emphasis added). The statutory text identifies the subject of
the provision—“debt collector”—five times.
In the first instance, the term is
preceded by an indefinite article: “a debt collector shall . . . .” See Louden Mach. Co.
v. Strickler, 195 F. 751, 757 (7th Cir. 1912) (“The word ‘a’ is primarily the indefinite
article.”). Indefinite articles point to “nonspecific objects, things, or persons that are
not distinguished from the other members of a class.” The Chicago Manual of Style
§ 5.70 (16th ed. 2010). Typically, they are used “to introduce new concepts into a
discourse.” New Oxford American Dictionary 882 (3d ed. 2010). In contrast, the
remaining references to “debt collector” found in subparts (3) through (5) are
preceded by the definite article: “the debt collector . . . .”
See Vulcan Const.
Materials, L.P. v. Fed. Mine Safety & Health Review Comm’n, 700 F.3d 297, 310
(7th Cir. 2012) (referring to “the” as the definite article). Definite articles point to a
particular member of a class; their use implies “that the thing mentioned has
already been mentioned.” New Oxford American Dictionary 455 (3d ed. 2010).
By arguing that the debt validation notice in Jackson’s May 9, 2016 letter
satisfies § 1692g(a), Defendants necessarily posit that “the debt collector”
referenced in subparts (3) through (5) means Universal, not Jackson:
Statutory Text
a debt collector shall . . . send the
consumer
a
written
notice
containing—
...
(3) a statement that unless the
consumer, within thirty days after
receipt of the notice, disputes the
validity of the debt, or any portion
Jackson’s May 9, 2016 Letter
UNLESS
YOU
NOTIFY
UNIVERSAL
FIDELITY
LP,
WITHIN
30
DAYS
AFTER
RECEIVING
YOUR
INITIAL
16
thereof, the debt will be assumed to NOTICE THAT YOU DISPUTE THE
be valid by the debt collector;
VALIDITY OF THIS DEBT OR ANY
PORTION THEREOF, UNIVERSAL
FIDELITY LP WILL ASSUME
THIS DEBT IS VALID.
(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
IF YOU NOTIFY UNIVERSAL
FIDELITY
LP
IN
WRITING
WITHIN
30
DAYS
FROM
RECEIVING
YOUR
INITIAL
NOTICE, UNIVERSAL FIDELITY
LP WILL OBTAIN VERIFICATION
OF THE DEBT OR OBTAIN A COPY
OF A JUDGEMENT [SIC] AND
MAIL YOU A COPY OF SUCH
JUDGEMENT
[SIC]
OR
VERIFICATION.
(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.
IF YOU MAKE A REQUEST TO
UNIVERSAL FIDELITY LP IN
WRITING WITHIN 30 DAYS AFTER
RECEIVING
YOUR
INITIAL
NOTICE, UNIVERSAL FIDELITY
LP WILL PROVIDE YOU WITH
THE NAME AND ADDRESS OF
THE ORIGINAL CREDITOR, IF
DIFFERENT FROM THE CURRENT
CREDITOR.
A holistic reading of § 1692g(a), however, reveals that the term “the debt
collector” found in subparts (3) through (5) refers back to “a debt collector” identified
at the onset of the statutory provision.
See Oxford English Dictionary Online,
www.oed.com (last visited November 15, 2016) (stating that the word “the”
“[m]ark[s] an object as before mentioned or already known, or contextually
particularized (e.g. ‘We keep a dog. We are all fond of the dog’).”) (first emphasis
added); Merriam-Webster Dictionary Online, www.merriam-webster.com (last
17
visited November 15, 2016) (defining “the” as “a function word to indicate that a
following noun . . . has been previously specified by context or by circumstance”).
As discussed above, the Court interprets § 1692(g)(a)’s initial reference to “a
debt collector” to apply to each successive debt collector (as that term is defined by
the FDCPA) who makes an initial communication with a debtor, not merely the first
debt collector in line. By extension, therefore, the subsequent reference to “the debt
collector” in subparts (3) through (5) refers to the particular debt collector making
the notification mandated in subsection (a). Applied to the present case, this means
Jackson, not Universal.
This interpretation preserves the efficacy of the other sections of § 1692g. See
Sturgeon v. Frost, 136 S. Ct. 1061, 1070 (2016) (Statutory language “cannot be
construed in a vacuum. It is a fundamental canon of statutory construction that the
words of a statute must be read in their context and with a view to their place in the
overall statutory scheme.”).
For example, subsection (b) of § 1692g—which
continues the use of the definite article—provides that
[i]f the consumer notifies the debt collector in writing
within the thirty-day period described in subsection (a) of
this section that the debt, or any portion thereof, is
disputed, or that the consumer requests the name and
address of the original creditor, the debt collector shall
cease collection of the debt, or any disputed portion
thereof, until the debt collector obtains verification of
the debt or a copy of a judgment, or the name and address
of the original creditor, and a copy of such verification or
judgment, or name and address of the original creditor, is
mailed to the consumer by the debt collector.
18
15 U.S.C. § 1692g(b). The purpose of subsection (b) is to impose, upon a debtor’s
request, a cessation of collection activities “until the debt collector verifies the
accuracy of the amount claimed.” Smith v. Transworld Sys., Inc., 953 F.2d 1025,
1031 (6th Cir. 1992) (internal quotations omitted).
Because subsection (b) continues the use of the definite article, “the debt
collector” referenced throughout that subsection is the same as “the debt collector”
identified in subparts (3) through (5) of subsection (a). Again, under Defendants’
reading, that “debt collector” is the collection agency client (here, Universal), not the
attorney agent (Jackson). Taking this premise to its logical conclusion, however,
creates a “substantial loophole” around § 1692g(b)’s verification requirement that
“would undermine the very protections the statute provides.” Hernandez, 829 F.3d
at 1075. If “the debt collector” in subsection (b) refers to Universal, then nothing in
the statute would prevent Jackson from continuing efforts to collect, even after a
debtor submitted a validation request to the collection agency. Such a loophole runs
counter to the plain text and “would render § 1692g almost a nullity.” Hernandez,
829 F.3d at 1077; see N.Y. State Dep’t of Soc. Servs. v. Dublino, 413 U.S. 405, 419-20
(1973) (“We cannot interpret federal statutes to negate their own stated purposes.”).
One may argue that common law agency restrictions would mitigate this
potential statutory enforcement gap. An agent, of course, owes a fiduciary duty to
act within the scope of his principal’s authority. See Credit Gen. Ins. Co. v. Midwest
Indem. Corp., 916 F. Supp. 766, 775 (N.D. Ill. 1996). Congress, however, enacted
the statutory rigors of the FDCPA because it determined that “[e]xisting laws and
19
procedures” were “inadequate to protect consumers” from the continued “use of
abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15
U.S.C. § 1692. Indeed, the Senate Report on the FDCPA viewed the statute as
“comprehensive legislation” which “fully addresse[d] the problem of collection
abuses” and was “primarily self-enforcing.”
S. Rep. 95-382, at 5-6 (1977), 1977
U.S.C.C.A.N. 1695, 1699-700. The Court declines Defendants’ invitation to rely on
a common law enforcement regime that Congress has already deemed inadequate.
Furthermore, Defendants’ interpretation of § 1692g would introduce needless
confusion to the debt verification process. Under the plain language of § 1692g(b), a
debtor’s dispute or verification notice sent to an independent attorney agent would
not suffice to halt collection activities by the collection agency client.
Faced,
however, with correspondence from a debt-collector attorney containing a
notification provision referencing only the debt-collector client, it would not be per
se unreasonable for a debtor to mistakenly believe that sending a validation request
to the attorney sufficiently invoked the FDCPA’s statutory protections.
This is
particularly true in this case, where Jackson’s May 9, 2016 letter: (1) stated that he
was “on retainer” to “advise [Universal] of corporate law” and assist “in the
collection strategy of the outstanding accounts owed to them”; (2) stated that
Jackson received and reviewed Universal’s debt files and approved the release of
the collection letters; and (3) contained only two addresses, with one address—
Jackson’s—located in the letterhead below the words “ATTORNEY ON RETAINER
20
FOR UNIVERSAL FIDELITY LP,” and the other—Universal’s P.O. Box—located
within the payment slip.
Courts
evaluate
FDCPA
communications
through
the
eyes
of
the
“unsophisticated consumer.” Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645
(7th Cir. 2009); see also Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997). While
this assumes that the debtor possesses “rudimentary knowledge about the financial
world” and is “capable of making basic logical deductions and inferences,” Pettit v.
Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000), it also
assumes that he or she is “uninformed, naive, [and] trusting.” Veach v. Sheeks, 316
F.3d 690, 693 (7th Cir. 2003) (internal quotations omitted). Viewed through this
lens, it would be unfair to require debtors to decipher the legal intricacies of a
principal-agent relationship before qualifying for the FDCPA’s safe harbor.
Finally, the Court’s findings are consistent with the FDCPA’s legislative
intent. The Senate Report on the statute states that a “significant feature” of the
legislation was its “provision requiring the validation of debts.” S. Rep. 95-382, at 4
(1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1699. Congress believed the validation
provision would “eliminate the recurring problem of debt collectors dunning the
wrong person or attempting to collect debts which the consumer has already paid.”
Id. Because of this “broad remedial purpose,” Blakemore v. Pekay, 895 F. Supp. 972,
984 (N.D. Ill. 1995), the statute “is liberally construed in favor of consumers.”
Ramirez v. Apex Fin. Mgmt., LLC, 567 F. Supp. 2d 1035, 1040 (N.D. Ill. 2008); Ross
v. Commercial Fin. Servs., Inc., 31 F. Supp. 2d 1077, 1079 (N.D. Ill. 1999). This goal
21
is furthered by applying all of § 1692g’s requirements to attorneys like Jackson and
providing an additional avenue for debtors to obtain debt verification. Moreover,
because “the current practice of most debt collectors is to send similar information
to consumers, this provision will not result in additional expense or paperwork.” S.
Rep. 95-382, at 4. Indeed, Jackson could have easily satisfied his obligations by
simply replacing references to Universal in his collection letter’s notification
provision with references to himself.
Moreover, as an attorney agent, any
validation requests returned to Jackson could be quickly answered through
coordination with his collection agency client. To extent this is not the case, such
costs are the reasonable price to be paid in exchange for the economic benefits
conferred by debt collection.
In sum, the Court finds that, as a matter of law, attorneys may qualify as
“debt collectors” under the FDCPA if they regularly engage in consumer-debtcollection activity. This is true even when an attorney serves as an agent on behalf
of a debt collector client. Moreover, the notification provisions of § 1692g apply to
the initial communication made in connection with the collection of a debt by each
successive debt collector.
Finally, an attorney debt collector making this
notification must provide his own debt notice in addition to, or in lieu of, that of his
client.
22
IV.
Conclusion
Defendants’ Motion to Dismiss [21] is denied.
The Court grants Plaintiff
leave to amend her operative complaint for the limited purpose of incorporating
Universal’s March 22, 2016 notice to Plaintiff. The status hearing previously set for
December 7, 2016 stands. At that time, the parties shall be prepared to discuss
additional case management dates.
Date: November 21, 2016
ENTERED:
____________________________
John Robert Blakey
United States District Judge
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