Scheuer v Jefferson Capital Systems, LLC

Filing 29

OPINION and ORDER Granting Defendant's 18 MOTION to Dismiss, Denying as Moot Plaintiff's 14 MOTION for Class Certification, and Dismissing 13 Amended Complaint With Prejudice. Signed by District Judge Matthew F. Leitman. (Monda, H)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DONNA M. SCHEUER,
f/k/a DONNA M. MILLARD,
Plaintiff,

Case No. 14-cv-11218
Hon. Matthew F. Leitman

v.
JEFFERSON CAPITAL
SYSTEMS, LLC,
Defendant.
_________________________________/
OPINION AND ORDER (1) GRANTING DEFENDANT’S MOTION TO
DISMISS (ECF #18); (2) DENYING AS MOOT PLAINTIFF’S MOTION
FOR CLASS CERTIFICATION (ECF #14); AND (3) DISMISSING
COMPLAINT WITH PREJUDICE
INTRODUCTION
In this action, Plaintiff Donna M. Scheuer (“Scheuer”) alleges that
Defendant Jefferson Capital Systems, LLC (“Jefferson”) violated the Fair Debt
Collection Practices Act (the “FDCPA”), 15 U.S.C. § 1692 et seq., and the
Michigan Collection Practices Act (the “MCPA”), M.C.L. § 445.251 et seq., when
it sent her a collection notice containing purportedly false statements. However,
the statements in question would not have misled nor deceived the “least
sophisticated debtor,” nor would the statements have been material to such a

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debtor. Accordingly, the statements are not actionable under the FDCPA or the
MCPA.
FACTUAL BACKGROUND
Scheuer bases her claims on a letter she received from Jefferson dated
March 7, 2014. (See the “Letter,” attached to the Amended Complaint as Ex. 1,
ECF #13-1.) The Letter stated that a debt of $235.98 owed by Scheuer “is with
[Jefferson’s] office for collection and servicing.” (Letter at 2, Pg. ID 174.) The
Letter further identified Jefferson as Scheuer’s “[c]urrent [c]reditor,” and it
described the debt in question as “FINGERHUT DIRECT MARKETING.” (Id.)
The Letter asked Scheuer to “consider the following opportunities to satisfy
this balance”:
1.

Opportunity #1 – 50% Discount
Pay this account with a lump sum payment of $117.99 which is
a 50% discount off the amount due. This arrangement will
settle the account with Jefferson Capital.

2.

Opportunity #2 – 40% Discount
Pay three payments of $47.17 and settle the account for
$141.59.

3.

Opportunity #3 – Monthly Payments
Jefferson Capital will also accept payments of $19.66 a month
over the next twelve months. These payments will apply
toward the amount due of $235.98.

(Id.)

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The Letter explained that Scheuer could exercise these options by (1) calling
the toll-free phone number provided in the Letter, (2) sending a “MONEY GRAM”
made “[p]ayable to: Jefferson Capital Systems, LLC,” or (3) sending payment to a
specific P.O. Box address in St. Louis, Missouri. (Id.)
At the bottom of the Letter, in bold capital letters, Jefferson disclosed that
“THIS COMMUNICATION IS FROM A DEBT COLLECTOR AND IS AN
ATTEMPT TO COLLECT A DEBT.” (Id.) In additional bold capital letters,
Jefferson advised Scheuer to “SEE REVERSE SIDE FOR IMPORTANT
INFORMATION REGARDING YOUR RIGHTS UNDER FEDERAL, STATE,
AND LOCAL LAWS.” (Id.)
The reverse side of the Letter provided, in relevant part, that “JEFFERSON
CAPITAL COMPLIES WITH A FEDERAL LAW CALLED THE [FDCPA]
THAT PROVIDES CONSUMERS WITH CERTAIN RIGHTS. THE [FDCPA]
… REQUIRE[S] THAT … COLLECTORS MAY NOT USE FALSE OR
MISLEADING STATEMENTS….” (Id. at 4, Pg. ID 176.) The reverse side of the
Letter also informed Scheuer that “[b]ecause of the age of your debt, we will not
bring any kind of legal proceeding against you … to collect on the debt.” (Id.)
The reverse side further assured Scheuer that if she made a partial payment toward

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the debt, Jefferson would not deem that payment to re-start the already-expired
statute of limitations on an action to collect the debt. (Id.)1

1

The reverse side of the Letter provided, in full:
Notice of Important Information: Consumers have rights under
federal, state, and local laws including, but not limited to those rights
listed below:
Asking Us to Cease Communication: You have the right to ask us
to stop communicating with you about this debt. To do so, please
write to us at 16 McLeland Road Dept. C, Saint Cloud, MN 56303.
After you notify us, we will stop communication with you, except: (1)
to advise you that we intend to pursue specific remedies permitted by
law; or (2) to advise you that our efforts are being terminated.
Complaints: If you have a complaint about the way we are collecting
this debt, please write to us at 16 McLeland Road Dept. C Saint
Cloud, MN 56303 or call us toll-free at 1-888-718-0048 between 9
AM and 5 PM Central Time, Monday through Friday.
JEFFERESON CAPITAL COMPLIES WITH A FEDERAL LAW
CALLED THE FAIR DEBT COLLECTION PRACTICES ACT
(“FDCPA”) THAT PROVIDES CONSUMER WITH CERTAIN
RIGHTS.
THE FEDERAL FAIR DEBT COLLECTION
PRACTICES ACT (ENFORCED BY THE FEDERAL TRADE
COMMISSION) AND THE CALIFORNIA STATE ROSENTHAL
FAIR DEBT COLLECTION PRACTICES ACT REQUIRE THAT,
EXCEPT UNDER UNUSUAL CIRCUMSTANCES, COLLECTORS
MAY NOT CONTACT YOU BEFORE 8:00 A.M. OR AFTER 9:00
P.M. THEY MAY NOT HARASS YOU BY USING THREATS OF
VIOLENCE OR ARREST OR BY USING OBSCENE LANGUAGE.
COLLECTORS MAY NOT USE FALSE OR MISLEADING
STATEMENTS OR CALL YOU AT WORK IF THEY KNOW OR
HAVE REASON TO KNOW THAT YOU MAY NOT RECEIVE
PERSONAL CALLS AT WORK. FOR THE MOST PART,
COLLECTORS MAY NOT TELL ANOTHER PERSON, OTHER
THAN YOUR ATTORNEY OR SPOUSE ABOUT YOUR DEBT.
COLLECTORS MAY CONTACT ANOTHER PERSON TO

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Jefferson included with the Letter a remittance insert for Scheuer to return
along with any payment she made by mail. (See id. at 3, Pg. ID 175.) The
remittance insert was addressed to “Jefferson Capital Systems, LLC” at the St.
Louis post office box identified in the text of the Letter. (See id.) The insert
contained payment instructions.

It directed Scheuer to “include your JCS

Reference Number … on the check or money order payable to: Jefferson Capital.”
(Id. at 3, Pg. ID 175.)

CONFIRM YOUR LOCATION OR ENFORCE A JUDGMENT.
FOR MORE INFORMATION ABOUT DEBT COLLECTION
ACTIVITIES OR TO CONTACT THE FTC ABOUT THE WAY
WE ARE COLLECTING THIS DEBT, PLEASE CONTACT THE
FTC ONLINE AT www.ftc.gov OR WRITE THE FTC AT
FEDERAL TRADE COMMISSION, CONSUMER RESPONSE
CENTER, 600 PENNSYLVANIA AVE., N.W. WASHINGTON D.C.
20580. YOU MAY ALSO CONTACT THE FEDERAL TRADE
COMMISSION AT 1-877-FTC-HELP.
If the difference between your total balance and settled amount
represents $600 or more in principal, such amount will be reported on
Form 1099-C in January of next year; and a copy of the form will be
provided to you and the IRS. You are responsible for any tax liability
associated with this transaction. If you have questions about the tax
implications, please contact your tax advisor.
Time-Barred Debt: This information is not legal advice. Because of
the age of your debt, we will not bring any kind of legal proceeding
against you, such as a lawsuit or arbitration, to collect on the debt;
further, if you make a payment on this debt it will not be deemed by
us to revive, toll, or restart the statute of limitations on this debt. If we
transfer this debt to a new owner or assign any rights related to this
debt, the new owner, successor or assign will be required in writing to
do the same.
(Id.) (emphasis in original).

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SCHEUER’S CLAIMS AND THE PROCEDURAL HISTORY OF
THIS ACTION
Scheuer filed her Amended Complaint in this action on March 24, 2014.
(See Amended Complaint, ECF #13.) She alleges – on behalf of a purported class
of consumers who received communications like the Letter from Jefferson – that
the Letter contained certain false, misleading, and deceptive statements. The short
“Factual Allegations” section of Scheuer’s Amended Complaint, in its entirety,
provides as follows:
26.
On or about March 7, 2014, 2014, Defendant JCS sent a letter
to Plaintiff specifically and Michigan Consumers Please see Exhibit
1. The letter provided Ms. [Scheuer] notice of her dispute and
validation rights under the FDCPA with a notice that stated:
“THIS COMMUNICATION IS FROM A DEBT
COLLECTOR AND IS AN ATTEMPT TO
COLLECT A DEBT ANY INFORMATION
OBTAINED WILL BE USED FOR THAT
PURPOSE.”
27.
This is the only letter that Ms. Scheuer has received from JCS.
Please see Exhibit 2, Affidavit of Ms. Scheuer.
28.
JCS is writing to “Dear Donna [Scheuer]” and states in the first
line of its letter that:
“The above referenced account is with our office for collection and
servicing.”

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29.
The ”Jefferson” letter indentifies [sic] JEFFERSON
CAPITAL SYSTEMS LLC as “Your Current Creditor.”
30.
The letter did not provide Ms. [Scheuer] notice of her dispute
and validation rights under the FDCPA but stated:
THIS COMMUNICATION IS FROM A DEBT
COLLECTOR AND IS AN ATTEMPT TO
COLLECT A DEBT ANY INFORMATION
OBTAINED WILL BE USED FOR THAT
PURPOSE.
31.
As part of its business purchasing debt portfolios, the subject
debt has been purchased by JCS as a junk, charged off debt in default
and JCS is therefore a debt collector at the time it purchased the debt
and now.
32.
Defendant JCS is communicating to the Plaintiff specifically
and the Michigan Consumer Class generally that it is both the debt
collector and the creditor. However, a debt collector cannot be both a
‘creditor’ and a ‘debt collector,’ as defined in the FDCPA, because
those terms are mutually exclusive.” Bridge v. Ocwen Federal Bank,
FSB, 681 F. 3d 355 - Court of Appeals, 6th Circuit 2012. ("Congress
has unambiguously directed our focus to the time the debt was
acquired in determining whether one is acting as a creditor or debt
collector under the FDCPA."); Schlosser v. Fairbanks Capital
Corp.,_323 F.3d 535, 536 (7th Cir. 2003) (noting that "the Act treats
assignees as debt collectors if the debt sought to be collected was in
default when acquired by the assignee, and as creditors if it was
not").

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33.
It is a violation of the FDCPA and MCPA for Defendant to
represent itself to Plaintiff and the Class as both the collector and the
creditor when it obtains a debt that was acquired in default.
(Id. at ¶¶26-33) (emphasis in original).
The Amended Complaint contains two claims for relief – one under the
FDCPA and one under the MCPA. Scheuer’s claims, in their entirety,2 are as
follows:
Count 1 – Fair Debt Collection Practices Act
Defendants have [sic] violated the FDCPA. Defendants’ [sic]
violations of the FDCPA include, but are not necessarily limited to,
the following:
a.

Defendant violated 15 U.S.C. [§] 1692e by using false,
deceptive and misleading representations and means in
connection with the collection or attempted collection of a debt
using [the Letter] …; and

b.

Defendant collected on the debt and violated 15 U.S.C. [§]
1692e(10) while claiming to be both the debt collector and the
creditor at the same time in connection with the collection of a
debt that was in default at the time Jefferson purchased the
debt…; and

c.

Defendant collected on the debt and violated 15 U.S.C. [§]
1692g(a)(2) by falsely claiming to be [the] creditor who
services the debt in [the Letter]; and

2

As part of these claims, Scheuer incorporates the other allegations in her
Amended Complaint. The sole factual allegations in the Amended Complaint are
set forth above in text.

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d.

Defendant violated 15 U.S.C. [§] 1692e(2)(A) with the
falsification of the character, amount, or legal status of the
alleged [debt] [in the Letter].
[…]
Count 2 – Michigan Collection Practices Act

Defendants have [sic] violated the MCPA. Defendant’s violations of
the MCPA include, but are not necessarily limited to, the following:
a.

Defendant violated MCLA [§] 445.252(n) by using a harassing,
oppressive, or abusive method to collect a debt, using [the
Letter] as mentioned above;

b.

Defendant violated MCLA [§] 445.252(e) [by m]aking an
inaccurate, misleading, untrue, or deceptive statement or claim
in a communication to collect a debt or concealing or not
revealing the purpose of a communication when it is made in
connection with collecting a debt [in the Letter];

c.

Defendant has violated MCLA [§] 445.252(f) [by
m]isrepresenting in a communication with a debtor [one] or
more of the following:
i.
ii.

d.

The legal status of a legal action being taken or
threatened.
The legal rights of the creditor or debtor [in the Letter].

Defendant has violated MCLA [§] 445.252(q) by failing to
implement a procedure designed to prevent a violation by an
employee such as continuing to contact a represented debtor.

(Id. at ¶¶47-49) (paragraph numbers omitted).
In lieu of filing an Answer, on May 22, 2014, Jefferson filed a Motion to
Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (See
Jefferson’s Motion, ECF #18.) Jefferson argued that it could not be liable as

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alleged by Scheuer because it was, in fact, both a “creditor” and a “debt collector,”
as it indicated in the Letter, and because it was legally required to identify itself as
such in the Letter. (See Jefferson’s Brief, ECF #19 at 1-2, Pg. ID 219-20.)
In response, Scheuer argued at great length that, as a matter of law, Jefferson
could not have been both a “creditor” and a “debt collector;” that Jefferson’s
statements to that effect in the Letter were thus false; and that Jefferson’s false
statements gave rise to liability under the FDCPA and MCPA. (See Scheuer
Response, ECF #22-1 at 5-16, Pg. ID 244-55.)

Scheuer submitted her own

affidavit in support of her response. (See Scheuer Aff., ECF #22-2 at 20, Pg. ID
279.) In her affidavit, Scheuer does not deny owing the debt identified in the
Letter. (See id.) Instead, she notes that the Letter “states that Jefferson is my
current creditor and also a debt collector,” and she says that she is “confused as to
what that means to me or what I am supposed to do with that.” (Id. at ¶4.) Scheuer
does not explain how Jefferson’s statement confused her. (See id.)
The Court held a hearing on Jefferson’s motion on July 23, 2014. During
the hearing, the Court identified, and focused closely upon, an issue that the parties
had not substantially addressed in their papers: namely, whether the statements by
Jefferson, even if false, were sufficiently material to give rise to liability under the
FDCPA. At the conclusion of the hearing, the Court determined that it would be

10

appropriate to permit the parties to file supplemental briefs on the materiality issue,
and both parties have now filed such briefs. (See ECF #26-27.)
GOVERNING LEGAL STANDARD
Rule 12(b)(6) provides for dismissal of a complaint when a plaintiff fails to
state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “To
survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678, (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)). A claim is facially plausible when a plaintiff pleads factual
content that permits a court to reasonably infer that the defendant is liable for the
alleged misconduct. Id. (citing Twombly, 550 U.S. at 556). When assessing the
sufficiency of a plaintiff’s claim, a district court must accept all of a complaint's
factual allegations as true. See Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 512
(6th Cir. 2001). “Mere conclusions,” however, “are not entitled to the assumption
of truth. While legal conclusions can provide the complaint's framework, they
must be supported by factual allegations.” Iqbal, 556 U.S. at 664. A plaintiff must
therefore provide “more than labels and conclusions,” or “a formulaic recitation of
the elements of a cause of action” to survive a motion to dismiss. Twombly, 550
U.S. at 556. “Threadbare recitals of the elements of a cause of action, supported
by mere conclusory statements, do not suffice.” Id.

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ANALYSIS
A. Sections 1692e and 1692g(a) of the FDCPA and the Least Sophisticated
Debtor Standard
Congress enacted the FDCPA “to address the widespread and serious
national problem of debt collection abuse by unscrupulous debt collectors.”
Currier v. First Resolution Inv. Corp., --- F.3d ---, 2014 WL 3882745 at *2 (6th
Cir. Aug. 8, 2014) (citing S. Rep. No. 95-382, at 2 (1977)). Congress intended “to
eliminate abusive debt collection practices by debt collectors, to insure that those
debt collectors who refrain from using abusive debt collection practices are not
competitively disadvantaged, and to promote consistent State action to protect
consumers against debt collection abuses.” 15 U.S.C. § 1692(e).
Scheuer brings claims under two sections of the FDCPA: 1692e and
1692g(a).

Section 1692e prohibits a debt collector from “us[ing] any false,

deceptive, or misleading representation or means in connection with the collection
of any debt.” 15 U.S.C. § 1692e. Section 1692e expressly prohibits a debt
collector from, among other things, falsely representing “the character, amount, or
legal status of any debt” and from using “any false representation or deceptive
means to collect or attempt to collect any debt or to obtain information concerning
a consumer.” 15 U.S.C. §§ 1692e(2)(A), 1692e(10).
Section 1692g(a) “requires [a] debt collector[] to issue a ‘validation notice,’
either in the initial communication with a consumer or within five days of that
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initial communication, that informs the consumer of certain rights including the
right to make a written request for verification of the debt and to dispute the
validity of the debt.” Fed. Home Loan Mtg. Corp. v. Lamar, 503 F.3d 504, 508
(6th Cir. 2007) (quoting Jacobson v. Healthcare Fin. Svcs., Inc., 434 F.Supp.2d
133, 139 (E.D. N.Y. 2006), vacated on other grounds, 516 F.3d 85 (2d Cir. 2008)).
Congress enacted section 1692g(a) “to ensure that debt collectors gave consumers
adequate information concerning their legal rights.” Id. at 509 (quoting Swanson v.
S. Or. Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir. 1988)). Section 1692g(a)
establishes certain information that a debt collector must include in a validation
notice, including, as relevant here, “the name of the creditor to whom the debt is
owed.” 15 U.S.C. § 1692g(a)(2).3
In order to prevail on her claims under sections 1692e and 1692g(a), Scheuer
must show that Jefferson’s allegedly-false statements would have deceived or

3

Scheuer alleges that the Letter was the first and only communication she ever
received from Jefferson. (See Am. Compl. at ¶27; Scheuer Aff. at ¶2.) However,
Jefferson maintains that it sent Scheuer a prior communication “contain[ing] all of
the notifications required by [s]ection 1692g(a) in 2010.” (Jefferson’s Br. at 3, Pg.
ID 221.) If Jefferson is correct, then section 1692g(a) would not appear to apply to
the Letter. For the purposes of this Motion, and taking Scheuer’s allegations as
true, the Court will assume without deciding that the Letter was a “validation
notice” to which the requirements of section 1692g(a) applied. Had Scheuer’s
1692g(a) claim survived Jefferson’s Motion (it does not, for the reasons discussed
below), the Court would have afforded Jefferson an opportunity to establish that
section 1692g(a) did not apply to the Letter.

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misled the “least sophisticated debtor.”

4

See Currier, --- F.3d ---, 2014 WL

3882745 at *2. Under this objective test, an FDCPA plaintiff must demonstrate
that “there is a reasonable likelihood that an unsophisticated consumer who is
willing to consider carefully the contents of a communication might yet be misled
by them.” Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 172 (6th Cir.
2011) (citing Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 592 (6th Cir.
2009)). The Sixth Circuit has applied the “least sophisticated debtor” test to claims
under both section 1692e and 1692g(a). See, e.g., Barany-Snyder v. Weiner, 539
F.3d 327, 334-35 (applying “least sophisticated debtor” standard to § 1692e claim);
Lamar, 503 F.3d at 509 (applying “least sophisticated debtor” standard to §
1692g(a) claim); Savage v. Hatcher, 109 Fed. App’x 759, 762 (6th Cir. 2004)
(same).
B. The “Least Sophisticated Debtor” Standard That Scheuer Must Satisfy
Protects Both Vulnerable Consumers and Debt Collectors
The least sophisticated debtor standard is “designed to ensure that the
FDCPA protects all consumers” – particularly those who may be “gullible” or
“naïve.” Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433,
438 (6th Cir. 2008) (quoting Lamar, 503 F.3d at 509) (emphasis added); see also

4

Courts use the phrases “least sophisticated debtor” and “least sophisticated
consumer” interchangeably. See, e.g., Brown v. Card Svc. Center, 464 F.3d 450,
454 n. 1 (3d Cir. 2006).

14

Gonzales v. Arrow Fin. Svcs., LLC, 660 F.3d 1055, 1062 (9th Cir. 2011) (least
sophisticated debtor standard “is designed to protect consumers of below average
sophistication or intelligence, or those who are uninformed or naïve”) (internal
quotation marks omitted). The standard recognizes that the FDCPA is designed
“for the protection of … the public – that vast multitude which includes the
ignorant, the unthinking, and the credulous.” Crawford v. LVNV Funding, LLC, --F.3d ---, 2014 WL 3361226 at *2 (11th Cir. July 10, 2014) (quoting Jeter v. Credit
Bureau, Inc., 760 F.2d 1168, 1172-73 (11th Cir. 1985)).
The least sophisticated debtor standard “also protects law-abiding debt
collectors” in several important ways. See Sanford v. Portfolio Recovery Assoc.,
LLC, No. 12-cv-11526, 2013 WL 3798285 at *7 (E.D. Mich. July 22, 2013) (citing
Lamar, 503 F.3d at 510); see also 15 U.S.C. § 1692(e) (FDCPA intended to,
among other things, protect debt collectors who “refrain from using abusive debt
collection practices”). For instance, the standard protects debt collectors from
“liability for … idiosyncratic interpretations of collection notices.” Lamar, 503
F.3d at 510 (quoting Wilson v. Quadramed Corp., 225 F.3d 350, 354-55 (3d Cir.
2000)) (internal punctuation omitted).
Moreover, and of particular importance here, the standard protects debt
collectors from liability where their statements could mislead only the most
sophisticated reader and would not deceive a reader of ordinary or lesser

15

sophistication. In the words of the Sixth Circuit, the standard precludes FDCPA
liability for a communication that could deceive only “a lawyer clos[ely] parsing
[it] like a municipal bond offering.” Miller, 561 F.3d at 595 (quoting Jacobson,
434 F.Supp.2d at 138) (internal quotation marks omitted). Thus, when applying
the least sophisticated debtor standard, a court does not read the subject collection
notice “with the astuteness of a ‘Philadelphia lawyer,’” but instead the court
“give[s] it a common sense appraisal.” Id. (quoting Jacobson, 434 F.Supp.2d at
138).
C. Jefferson’s Statements in the Letter Would Not Mislead the “Least
Sophisticated Debtor”
Scheuer’s FDCPA claims fail because Jefferson’s allegedly false statements
would not deceive the least sophisticated debtor. Indeed, the potential falsity of
Jefferson’s statements would be apparent – if at all – only to a sophisticated
attorney well-versed in the nuances of consumer protection law.
As noted above, Scheuer’s FDCPA claims rest primarily on Jefferson’s selfidentification in the Letter as Scheuer’s “[c]urrent [c]reditor.” (See Am. Compl. at
¶¶29, 33.) According to Scheuer, Jefferson’s self-labeling as a “current creditor” is
materially false – and thus actionable under the FDCPA – because Jefferson is a
“debt collector” (a point Jefferson does not dispute), and courts have held that
under the FDCPA a party cannot be both a “debt collector” and a “creditor” with
respect to the same debt. (See Scheuer’s Resp. at 6-10, Pg. ID 245-49.) But it is
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hardly self-evident that Jefferson could not be Scheuer’s “current creditor” at the
same time that it functioned as a “debt collector.” Indeed, Scheuer’s argument that
Jefferson could not have been a creditor when acting as a debt collector stems not
from the ordinary understanding of the terms “debt collector” and “creditor,” but
instead from a series of federal appellate court decisions construing complex
definitional provisions and exclusions within the FDCPA. (See id. at 13-16, Pg. ID.
242-55) (citing Bridge, supra; FTC v. Check Investors, 502 F.3d 159 (3d Cir.
2003); Schlosser, supra). Those courts explain that “[t]he distinction between a
creditor and a debt collector” – and thus the reason that a party cannot be both a
“debt collector” and a “creditor” under the FDCPA – “lies precisely in the
language of § 1692a(6)(F)(iii).”5 Bridge, 681 F.3d at 359. The “least sophisticated

5

Section 1692a(6) provides in relevant part:
(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, or who
regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another …. The term does
not include(F) any person collecting or attempting to collect any debt owed or
due or asserted to be owed or due another to the extent such activity
… (iii) concerns a debt which was not in default at the time it was
obtained by such person….

In Bridge, the Sixth Circuit explained that pursuant to the exclusion from the
definition of “debt collector” in section 1692a(6)(F)(iii), an entity that attempts to

17

debtor” would not share the appellate courts’ nuanced understanding of section
1692a(6)(F)(iii) and would thus have no reason to question Jefferson’s statement
that it was a “current creditor.”
More importantly, the “least sophisticated debtor” would not have been
misled by Jefferson’s self-identification as Scheuer’s “current creditor” because
Jefferson’s use of that phrase was consistent with its ordinary meaning. The term
“creditor” is commonly understood to mean “one to whom a debt is owed.” See
Stubbs v. Bank of America, 844 F.Supp.2d 1267, 1270 (N.D. Ga. 2012) (quoting
Merriam-Webster’s Dictionary). Here, Scheuer’s own allegations make clear that
Jefferson owns the debt described in the Letter. (See Am. Compl. at ¶31.)
Accordingly, the debt is now “owed to” Jefferson, and, thus, under an ordinary
understanding of the term “creditor,” Jefferson is Scheuer’s “current creditor” –
just as it claimed to be in the Letter. Indeed, even one of the federal court
decisions cited by Scheuer – for the proposition that a party may not be a “debt
collector” and a “creditor” under the FDCPA’s technical definitions of those terms

collect on a debt is either a debt collector or a creditor, “depending on the default
status of the debt at the time it was acquired.” See 681 F.3d at 359 (citing Check
Investors, 502 F.3d at 171-73; Schlosser, 323 F.3d at 536). The Sixth Circuit drew
on the reasoning of Check Investors, in which the Third Circuit carefully parsed
the language of section 1692a(6)(F)(iii) and found that “one attempting to collect a
debt is a ‘debt collector’ under the FDCPA if the debt in question was in default
when acquired,” and it is “a creditor if the debt it is attempting to collect was not in
default when it was acquired.” Check Investors, 502 F.3d at 173.

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– recognizes that party in Jefferson’s precise position is “nominally a creditor.”
Check Investors, 502 F.3d at 173.6 Simply put, Jefferson did not deceive nor
mislead the “least sophisticated debtor” by identifying itself as Scheuer’s “current
creditor.”
Notably, in Miller, supra, the Sixth Circuit squarely rebuffed a claim – much
like Scheuer’s here – that a communication would have deceived the “least
sophisticated debtor” where the alleged falsity of the communication would have
been apparent only to a sophisticated attorney.

Miller arose out of a debt

collector’s attempt to collect on a debt by filing a complaint in state court alleging,
among other things, that it had “acquired, for valuable consideration, all right, title
and interest in” the debt. 561 F.3d at 595. Miller claimed that this statement
violated the FDCPA because it “would dupe the least-sophisticated consumer into
thinking that [the debt collector] enjoyed holder-in-due-course protection.” Id.
The Sixth Circuit squarely rejected this claim because the least sophisticated
consumer would not know anything about holder-in-due-course protection, and
therefore, as a matter of law, the debt collector’s statement could not mislead the
least sophisticated consumer in the way Miller claimed. Id. at 596. (“[N]o reason
exists to think that the least-sophisticated consumer gives any thought to holders in

6

See also Schlosser, 323 F.3d at 536 (a party that collects debts acquired from
another “could logically fall into” either category – debt collector or creditor).

19

due course – by definition, the least-sophisticated consumer lacks any knowledge
of the concept”) (emphasis in original). Just as the least sophisticated consumer
lacks knowledge of holder-in-due course concept at issue in Miller, so too is she
unaware of the nuanced distinctions between a “creditor” and a “debt collector”
under § 1692a(6)(F)(iii) of the FDCPA. Accordingly, under the Sixth Circuit’s
reasoning in Miller, the least sophisticated consumer would not be deceived by
Jefferson’s self-identification as Scheuer’s “current creditor,” and Scheuer’s claim
based upon that self-identification fails as a matter of law.
Scheuer also argues that the text of the Letter would have misled the least
sophisticated debtor concerning whom to pay in order to satisfy the debt. (See
Transcript, ECF #28 at 13, 21.) But the Letter, “read in its entirety, carefully and
with some elementary level of understanding,” Lamar, 503 F.3d at 510, would
leave no doubt in the mind of the least sophisticated debtor that she must pay
Jefferson in order to satisfy the debt. Indeed, the Letter states that Scheuer’s debt
is owed to Jefferson and directs Scheuer to pay Jefferson:
 The Letter states that making a payment equal to 50% of the amount
due “will settle the account with Jefferson Capital.”
 The Letter indicates that “Jefferson Capital will also accept payments
of $19.66 a month over the next twelve months.”
 The Letter indicates that Scheuer may send a “MONEY GRAM”
made “[p]ayable to: Jefferson Capital Systems, LLC.”

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 The remittance insert included with the Letter states that Scheuer may
send a check or money order made “payable to: Jefferson Capital.”
 The remittance insert is pre-addressed to “Jefferson Capital Systems,
LLC” at the St. Louis P.O. Box address identified in the Letter.
(Letter at 2-3, Pg. ID 16-17) (emphasis added). Moreover, Scheuer has identified
no party other than Jefferson to whom an unsophisticated debtor might reasonably
think her debt was owed.7 In this context, Jefferson’s self-identification as “current
creditor” simply was not misleading.
Finally, Scheuer argues that an unsophisticated consumer would have been
misled by Jefferson’s statement that it was “servicing” Scheuer’s debt at the same
time it was her “current creditor.” But Scheuer has made no persuasive showing as
to why a “creditor,” as Jefferson claimed to be, could not “service” the debts it
owns – or, more importantly, why a consumer would be confused by a creditor’s
statement that it was “servicing” its own debt.

7

Scheuer asserts that the least sophisticated debtor might be confused by the
statement “Debt Description: FINGERHUT DIRECT MRKTING.” (See Tr. at
13.) However, nothing in the Letter indicated that Scheuer owed any money to
“FINGERHUT DIRECT MRKTING” – the Letter did not identify “FINGERHUT
DIRECT MRKTING” as a creditor; it did not state that “FINGERHUT DIRECT
MRKTING” owned Scheuer’s debt; and it did not instruct Scheuer to send money
to “FINGERHUT DIRECT MRKTING.” In contrast, and as listed above, the
Letter said at least five different ways that Scheuer owed money to Jefferson.

21

D. The Statements Identified by Scheuer Are Not Material
Even if Jefferson’s statements were in some way false or misleading,
Scheuer still cannot prevail on her FDCPA claims because she has not shown that
the alleged misstatements were material. “[M]ateriality is an ordinary element of
any federal claim based on a false or misleading statement,” Miller, 561 F.3d at
596-97 (quoting Hahn v. Triumph P’ships LLC, 557 F.3d 755, 757 (7th Cir. 2009),
and the Sixth Circuit has repeatedly held that, in order to violate the FDCPA, “a
statement must be materially false or misleading.” Wallace v. Washington Mutual
Bank, F.A., 683 F.3d 323, 326 (6th Cir. 2012) (emphasis in original) (citing Miller,
561 F.3d at 596-97).

A misstatement is material under the FDCPA if it

“frustrate[s] a consumer’s ability to intelligently choose his or her response.”
Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1034 (9th Cir. 2010).
Despite numerous opportunities, Scheuer has failed to explain how
Jefferson’s alleged misstatements would impair an unsophisticated debtor’s ability
to respond to the Letter. When asked at oral argument to describe how the Letter
might materially mislead, Scheuer merely restated the legal premises that are the
basis of her Amended Complaint, and she failed to offer a single example of how
Jefferson’s statements could actually impair an unsophisticated debtor’s ability to
respond to the Letter:
Q: I want to be as specific as possible. Point me to the exact words in
the letter…. Which words are the materially misleading words?
22

A: I believe the first line that we pointed to, your Honor – the above
account is with our office for collection and servicing.
Q: What is misleading about that?
A: That it’s not there for servicing. Actually those two are mutually
exclusive. They can’t be both. If you’re servicing, you are the
creditor. You are the collector if you are the debt collector or
collection.
Q: Let me stop you there…. [W]hen [Scheuer] looks at that … how
does that mislead her?
A: Well, which is it?
[…]
Q: Pretend … [t]he letter arrives at the home of the least sophisticated
consumer, this exact letter. … How is that consumer misled by the
contents of this letter?
A: … [I]t doesn’t necessarily have to be misled. It also can cause
confusion by deceptive behavior. So it is confusing to the least
sophisticated consumer to say you are one thing when you are really
the other, or to say you are both….
[…]
Q: … I understand material to mean one that impacts her decision
making responding to the letter. And that is kind of where I am stuck.
How this – how this causes her a problem in figuring out her next
step.
A: I don’t know how that would – the way that you framed it….
[…]
Q: All right. I asked this question several times. I just want to try one
more time. The letter arrives at the door step of the least sophisticated
consumer. And for purposes of my question, I want you to assume
that it’s false in all the ways you identified. How does it mislead that
consumer to take one course of action or another?

23

A: She is being collected on a debt she doesn’t owe the person that is
contacting her. There is nothing more material than that. She is now
under jeopardy. She is facing a debt collector saying not only are they
collecting but they are also servicing….
(Tr. at 17-19, 22, 25, 29-30.)8
Scheuer missed the point when, in response to the Court’s questions about
materiality, she repeated her legal argument that Jefferson’s self-identification as a
“debt collector” and “creditor” (or servicer) was inconsistent with the FDCPA.
Even if Jefferson’s use of those terms did not square with their definitions under
the FDCPA, Scheuer must demonstrate that the inaccuracy somehow impaired the
ability of an unsophisticated consumer to respond to the Letter. Scheuer has never
been able to do that.
Scheuer’s failure to show how an unsophisticated consumer’s ability to
respond would have been impaired easily distinguishes this case from those in
which courts have found a misstatement to be material. For instance, in Wallace,
683 F.3d at 323, the Sixth Circuit considered whether an attorney representing
Washington Mutual Bank (“WaMu”) made a material misrepresentation when the

8

In the last answer quoted above in text, counsel for Scheuer said that Jefferson
materially misled Scheuer by “collecting on a debt she doesn’t owe” to Jefferson.
But Scheuer’s Amended Complaint acknowledges that Jefferson purchased her
debt and, thus, that the debt is owed to Jefferson. (See Am. Compl. at ¶31.)
Likewise, Scheuer’s affidavit does not deny that she owes the debt and/or that
Jefferson owns the debt. (See Scheuer Aff.) There is simply no claim in this action
that Scheuer does not owe the debt and/or does not owe it to Jefferson.

24

attorney filed a foreclosure action against mortgagor Betty Wallace (“Wallace”)
claiming that WaMu was Wallace’s creditor. Id. WaMu did not own Wallace’s
mortgage at the time that it filed the foreclosure action, although it expected to
soon receive an assignment of the mortgage from Wells Fargo. Id. at 325. The
Sixth Circuit offered the following explanation as to why the attorney’s false
statement was material:
[Wallace] alleges that identifying Washington Mutual as the holder of
the note caused her confusion and delay in trying to contact the proper
party concerning payment on her loan and resolution of the problem.
She alleges that she called Washington Mutual, the purported owner
of the mortgage, to try to obtain information about her home loan and
was told she had to have a ten-digit account number for her loan, not
the account number she had from Wells Fargo. [Wallace] also alleges
that her daughter ultimately contacted an attorney, as well as the Ohio
Attorney General’s Office, in an attempt to stop the sale of
[Wallace]’s home and get the loan reinstated. Given these allegations,
[Wallace] has sufficiently alleged a material misrepresentation that
would confuse or mislead an unsophisticated consumer.
Id. at 327-28 (internal citation omitted).
In sharp contrast to Wallace, Scheuer has not identified any specific ways in
which she was misled.

Instead, she offers only a conclusory statement that

Jefferson’s self-identification as “current creditor” and “debt collector” confused
her. (See Scheuer Aff. at ¶4.) And unlike Wallace, Scheuer has not identified any
party other than Jefferson to whom an unsophisticated debtor might reasonably

25

think her debt was owed,9 nor has Scheuer alleged that she took any concrete steps
based upon her alleged confusion. That Scheuer’s allegations of materiality pale in
comparison to those in Wallace underscores that she has failed to state a viable
claim. See, e.g., Clark v. Lender Processing Svcs., 562 Fed. App’x 460, 467 (6th
Cir. 2014) (affirming district court’s dismissal of FDCPA claim on lack-ofmateriality grounds because, among other things, the complaint did not contain
allegations of confusion similar to those in Wallace); Galati v. Manley Deas
Kochalaski LLC, No. 13-cv-2206, 2014 WL 584784 at *4 (N.D. Ohio Feb. 12,
2014) (rejecting plaintiff’s reliance on Wallace to establish materiality where
plaintiff “has not identified any [other] party to whom [she] might owe [her] debt”
and has not “alleged that [she was] confused about who owned [her] debt”).
Scheuer argues that Jefferson’s statements should be deemed material under
Tourgeman v. Collins Fncl. Svcs., Inc., 755 F.3d 1109 (9th Cir. 2014), but that
case, too, is readily distinguishable. In Tourgeman, a debt collector mailed three
collection notices to David Tourgeman (“Tourgeman”) that (1) incorrectly
identified Tourgeman’s original creditor as “American Investment Bank,” when in
fact CIT Online Bank originated his loan, and (2) identified the loan by an

9

As discussed above, the Court does not credit Scheuer’s contention that the least
sophisticated consumer would believe that the debt was owed to “FINGERHUT
DIRECT MRKTING.”

26

incorrect account number. Tourgeman argued that these statements were material
because they:
could lead a consumer to reach any number of incorrect
understandings about the nature of the predicament he or she faces.
For example, the consumer might be concerned that the erroneous
information is indicative of an attempted fraud. Or the consumer
might assume that because the letter seeks to collect a debt that
evidently does not belong to him, the letter can safely be disregarded.
Alternatively, the consumer might be concerned that if he responds to
the letter by paying the amount demanded, he will later receive
another letter from a different debt collector attempting to collect the
same debt.
Id. at 1120. The court agreed that the debt collector’s false statements “could
easily cause the least sophisticated debtor to suffer a disadvantage in charting a
course of action in response to the collection effort.” Id. at 1121 (citing Donohue,
592 F.3d at 1034). As noted above, unlike Tourgeman, Scheuer has failed to
identify a single way in which Jefferson’s allegedly-false statements would
actually affect the course of action chosen by the least sophisticated debtor, and
thus Tourgeman does not support Scheuer’s argument that Jefferson’s statements
were material.
E. The Issues of Deceptiveness and Materiality are Not Questions of Fact for a
Jury in this Case
Scheuer urges this Court to deny Jefferson’s Motion to Dismiss because
“[t]he question[s] as to [deceptiveness and] materiality … [are] factual question[s]”
that must be submitted to a jury. (See Scheuer Supp. Br. at 11, Pg. ID 348.) While

27

some authority suggests that these questions are often ones for the jury, see, e.g.,
McMillan v. Collection Profs. Inc., 455 F.3d 754, 759 (7th Cir. 2006), that is not
always the case. Indeed, Scheuer is simply wrong when she claims that these
questions must be decided by the jury in every FDCPA case. The Sixth Circuit and
other courts of appeals have repeatedly ruled on these issues as a matter of law
where, as here, the allegations and/or evidence were plainly insufficient to
establish deception or materiality. See, e.g., Clark, 562 Fed. App’x at 466-67
(affirming dismissal on materiality grounds); Miller, 561 F.3d at 594-97 (affirming
summary judgment where plaintiff unable to establish deception or materiality);
Gabriele v. Am. Home Mtg. Svcg., Inc., 503 Fed. App’x 89, 95-96 (2d Cir. 2012)
(affirming dismissal on materiality grounds); Hahn, 557 F.3d at 757-58 (affirming
summary judgment where plaintiff unable to establish deception or materiality);
Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 646 (7th Cir. 2009) (affirming
summary judgment where plaintiff unable to establish deception); Donohue, 592
F.3d at 1034 (affirming summary judgment on materiality grounds). Because
Scheuer’s allegations of deception and materiality are deficient as a matter of law,
her FDCPA claims are properly dismissed pursuant to Jefferson’s motion under
Rule 12(b)(6).

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F. Scheuer’s MCPA Claims Also Fail To State a Claim on Which Relief Can
Be Granted
Nearly all of Scheuer’s claims under the MCPA mirror her claims under the
FDCPA. “MCPA claims which ‘simply duplicate … claims under the FDCPA’
need not be addressed separately.” Newman v. Trott & Trott, P.C., 889 F.Supp.2d
948, 967 (E.D. Mich. 2012) (quoting Lovelace v. Stephens & Michaels Assoc., Inc.,
No. 07-cv-10956, 2007 WL 3333019 at *2 (E.D. Mich. Nov. 9, 2007)); see also
Saltzman v. I.C. System, Inc., No. 09-cv-10096, 2009 WL 3190359 at *9 (E.D.
Mich. Sept. 30, 2009); Millsap v. CCB Credit Svcs., Inc., No. 07-11915, 2008 WL
8511691 at *10 (E.D.Mich. Sept. 30, 2008). Accordingly, Scheuer’s claims under
MCPA §§ 445.252(e), (f), and (n) fail for the reasons discussed above.
Scheuer brings only one claim under the MCPA that is not duplicative of her
FDCPA claims, but that claim also fails. Scheuer asserts that Jefferson “fail[ed] to
implement a procedure designed to prevent a violation by an employee.” M.C.L. §
445.252(q). “[H]owever, [Scheuer] has advanced only a general contention, and
has not endeavored to identify any specific defect in [Jefferson’s] procedures that
might have caused or contributed to the alleged violation….” Millsap, 2008 WL
8511691 at *11. Jefferson’s wholly-conclusory allegation is insufficient to state a
claim based upon defective procedures.
Scheuer’s claim under M.C.L § 445.252(q).

29

Accordingly, the Court dismisses

CONCLUSION
For all of the reasons explained above, IT IS HEREBY ORDERED that
Jefferson’s Motion to Dismiss (ECF #18) is GRANTED, and Scheuer’s Amended
Complaint (ECF #13) is DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED THAT Scheuer’s Motion for Class
Certification (ECF #14) is DENIED AS MOOT.

s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE

Dated: September 9, 2014
I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on September 9, 2014, by electronic means and/or
ordinary mail.
s/Holly A. Monda
Case Manager
[phone]

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