Zortman v. J.C. Christensen & Associates, Inc.
Filing
21
AMENDED ORDER (Written Opinion). Signed by Judge Joan N. Ericksen on April 29, 2011. (slf)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Christina Zortman,
Plaintiff,
v.
Civil No. 10-3086 (JNE/FLN)
AMENDED1 ORDER
J.C. Christensen & Associates, Inc.,
Defendant.
Trista M. Roy, Esq., Consumer Justice Center, PA, appeared for Plaintiff Christina Zortman.
Michael A. Klutho, Esq., Bassford Remele, PA, appeared for Defendant J.C. Christensen &
Associates, Inc.
Plaintiff Christina Zortman brings this action under the Fair Debt Collection Practices
Act (FDCPA) against J.C. Christensen & Associates, Inc. (JCC). On November 24, 2010, JCC
filed a motion for judgment on the pleadings, and the Court conducted a hearing on that motion
on January 6, 2011. For the reasons stated below, the Court denies the motion.
I.
BACKGROUND
Zortman incurred a consumer debt with Chase Bank USA N.A. by using a Kohl’s
Department Stores credit card. The debt became delinquent and was transferred or assigned to
JCC. Both Zortman’s home and cellular voicemail systems have automated outgoing messages
that do not identify occupants or potential listeners. Zortman alleges that JCC left messages on
both voicemail systems “disclosing Plaintiff’s debt” and that the messages were heard by
Zortman’s children. Zortman argues that this violated the FDCPA and caused Zortman to suffer
emotional distress, embarrassment, and humiliation.
1
This order corrects a reference in the first paragraph of the original order.
1
II.
DISCUSSION
A court should grant judgment on the pleadings only if the moving party clearly
establishes that there are no material issues of fact and that it is entitled to judgment as a matter
of law. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). A court
evaluates a motion for judgment on the pleadings brought under Rule 12(c) of the Federal Rules
of Civil Procedure under the same standard as a motion brought under Rule 12(b)(6). See
Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). In deciding a motion to dismiss
for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
court must accept the facts alleged in the complaint as true and grant all reasonable inferences in
favor of the plaintiff. Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir. 2009). Although a
complaint is not required to contain detailed factual allegations, “[a] pleading that offers ‘labels
and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’”
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)). “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.’” Id. (quoting
Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
The complaint alleges that JCC violated 15 U.S.C. § 1692c(b) (2006) when it left
messages on Zortman’s voicemail systems that were heard by Zortman’s children. The gist of
JCC’s motion for judgment on the pleadings is that Zortman has no claim because JCC did not
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purposefully or deliberately2 disclose the debt information to a third party. The Court concludes
that Zortman has pleaded an actionable FDCPA claim.
The FDCPA prohibits a debt collector from disclosing a consumer’s debt to third parties:
Except as provided in section 1692b of this title, without the prior consent of the
consumer given directly to the debt collector, or the express permission of a court
of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment
judicial remedy, a debt collector may not communicate, in connection with the
collection of any debt, with any person other than the consumer, his attorney, a
consumer reporting agency if otherwise permitted by law, the creditor, the
attorney of the creditor, or the attorney of the debt collector.
§ 1692c(b). A “communication” is “the conveying of information regarding a debt directly or
indirectly to any person through any medium.” Id. § 1692a(2).
A.
JCC’s appeal to the “Foti problem”
JCC urges the Court to hold that violations of § 1692c(b) require an intent to purposefully
or deliberately make disclosures to a third party. JCC bases this proposition, in part, on a line of
cases, which includes Foti v. NCO Financial Systems, Inc., 424 F. Supp. 2d 643 (S.D.N.Y.
2006), interpreting 15 U.S.C. §§ 1692d(6) and 1692e(11) (2006). Section 1692d(6) generally
requires a “disclosure of the caller’s identity” when a debt collector places a telephone call.
Courts have construed § 1692d(6) as requiring a debt collector to disclose the caller’s name, the
debt collection company’s name, and the nature of the debt collector’s business. Baker v.
Allstate Fin. Servs., Inc., 554 F. Supp. 2d 945, 949-50 (D. Minn. 2008) (collecting cases).
Section 1692e(11) requires the debt collector to disclose “that the debt collector is attempting to
collect a debt and that any information obtained will be used for that purpose” in the initial
2
JCC frames its argument in terms of deliberateness or purposefulness, which the Court
concludes is a particular type of intent. JCC does not distinguish between deliberateness or
purposefulness.
3
communication with the consumer, and it requires the debt collector to disclose “that the
communication is from a debt collector” in later communications.
Beginning by the early 2000s, district courts from around the country began to hold that
debt collectors could violate §§ 1692d(6) and 1692e(11) by leaving voicemail or answering
machine messages without the required disclosures. One of these decisions was Foti, which was
followed by a recent District of Minnesota case on which JCC primarily relies, Mark v. J.C.
Christensen & Associates, Inc., Civil No. 09-100 ADM/SRN, 2009 WL 2407700 (D. Minn. Aug.
4, 2009). Until fairly recently, some debt collectors, including JCC, followed the practice of
leaving semi-anonymous messages for debtors that only stated the caller’s first name and did not
disclose the name of the company or the nature of the call. Apparently, this practice was adopted
out of fear that a message with the §§ 1692d(6) and 1692e(11) disclosures would violate
§ 1692c(b) if overheard by a third party. In Mark, the plaintiff sued JCC and claimed that semianonymous messages on her answering machine violated §§ 1692d(6) and 1692e(11). For
example, JCC left a message for the Mark plaintiff that stated: “Hi Cindy, this is Eva, can you
call me quick when you get this message. My office number is 866-565-1399.” Mark, 2009 WL
2407700, at *1. JCC argued that messages of this type do not violate the FDCPA because they
(1) are not communications; (2) are not harassing, abusive, false, deceptive, or misleading; and
(3) are not material. After rejecting these arguments, the Mark court addressed JCC’s
constitutionality argument. If the semi-anonymous messages violated §§ 1692d(6) and
1692e(11), JCC argued, then debt collectors would be prevented from leaving messages on
answering machines and voicemail systems because compliance with §§ 1692d(6) and 1692e(11)
risks violating § 1692c(b). JCC argued that such a construction amounted to an unconstitutional
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restriction of speech. The Mark court rejected this argument and minimized the risk of violating
§ 1692c(b):
There is no indication that others shared Mark’s answering machine and, more
importantly, no allegation that JCC, when it left the messages, deliberately
intended that they be heard by third parties. The FDCPA was intended to protect
against deliberate disclosures to third parties as a method of embarrassing the
consumer, see Joseph[ v. J.J. Mac Intyre Cos., 281 F. Supp. 2d 1156, 1164 (N.D.
Cal. 2003)], not to protect against the risk of an inadvertent disclosure that could
occur if another person unintentionally overheard the messages left on Mark’s
answering machine. Thus, JCC’s argument that it faced a significant risk of
exposure to liability under § 1692c(b) had it made the required disclosures in the
messages left on Mark’s answering machine is rejected.
Mark, 2009 WL 2407700, at *5. The court then went on to conclude that “even accepting for the
sake of argument JCC’s claim that the FDCPA presents debt collectors with an unavoidable
dilemma that restricts First Amendment rights, the restrictions are constitutional.” Id. at *6.
JCC now argues that that the messages here were “in full compliance with the FDCPA
and as directed by the U.S. District Court for the District of Minnesota in Mark” (Answer ¶ 11),
and that no violation of § 1692c(b) can occur without a purposeful or deliberate disclosure to a
third party (Def.’s Mem. 8). Mark held that certain semi-anonymous messages violated the
FDCPA because the messages did not include certain disclosures; it is a logical error to conclude
that this holding implies that messages with the disclosures will be necessarily in compliance
with the FDCPA.3 Although JCC may appeal to the implications of the reasoning in Mark, it
cannot argue that Mark held that messages like those at issue here do not violate the FDCPA.
Moreover, the language from Mark about purposeful or deliberate intent on which JCC
relies is dictum. In addressing JCC’s constitutionality argument, the Mark court first briefly
considered the risk of liability under § 1692c(b) for debt collectors who leave disclosures. The
3
This logical error is known as denying the antecedent, another example of which is: if A,
then B; not A; therefore, not B.
5
court reasoned that the risk was minimal because of the absence of deliberate or purposeful
intent. Then the court spent the bulk of its analysis on the constitutionality of the FDCPA
assuming the FDCPA presented debt collectors with an “unavoidable dilemma” when leaving
messages on answering machines and voicemail systems. It concluded that such a restriction
would be constitutional. This Court therefore concludes that the commentary concerning
purposeful or deliberate intent was dictum because it was not necessary to Mark’s holding. Such
reasoning is, however, commonly to be found in cases finding violations of §§ 1692d(6) and
1692e(11) based on innocuous, generic voicemail messages. The discussions have been, in all
cases of which the Court is aware, dicta. Additionally, to the extent that courts have relied on the
Joseph opinion to support such reasoning, that reliance is disproportionate. In Joseph, the court
was addressing both the FDCPA and California’s statutory equivalent to the FDCPA. The
Joseph court observed:
While the Court acknowledges that disclosure during an automated call could
compromise the debtor’s privacy if another party such as a neighbor or relative
inside the home picks up the debtor’s phone and hears the automated call . . . , the
possible compromise of privacy is less likely and more remote than where e.g.,
the debtor indicates the nature of the collection notice on the outside of an
envelope sent by mail for the world to see.
As for third party communications, the legislatures’ concern in enacting
these provisions about privacy violations resulting from deliberate disclosure of
the debtor’s status to third parties such as the debtor’s employer has far less
applicability to phone calls made to the debtor’s phone number at his or her
residence for similar reasons.
281 F. Supp. 2d at 1163-64. Because the Joseph court based its analysis on the “legislatures’
concern,” the observation referred collectively to Congress and the California legislature. It did
not purport to represent a considered analysis of whether § 1692c(b) contains a deliberate intent
element.
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The distance between the situation here and Mark’s reasoning about deliberate and
purposeful intent is further increased on consideration of the fact that this case is not one where a
plaintiff bases the alleged violation of § 1692c(b) on messages in compliance with §§ 1692d(6)
and 1692e(11). Zortman alleges that JCC left messages “disclosing Plaintiff’s debt.” Although
the phrase “disclosing Plaintiff’s debt” is unclear, it is both broader and narrower than the
disclosure requirements of §§ 1692d(6) and 1692e(11). Both sections require debt collectors to
disclose identity information. “Disclosing Plaintiff’s debt” may be broader than these
requirements—nothing in §§ 1692d(6) and 1692e(11) requires a debt collector to state the nature
or amount of the debt. “Disclosing Plaintiff’s debt” may also be narrower—a debt collector
could disclose the debt without disclosing its identity. This complaint does not plead a case
where a message that contained only the disclosure requirements of §§ 1692d(6) and 1692e(11)
is what caused the alleged violation of § 1692c(b).4
B.
Statutory construction
The issue before the Court is one of statutory construction: whether violations of
§ 1692c(b) require purposeful or deliberate intent to make disclosures to a third party. As
discussed above, the Court finds little support for this proposition in the Foti line of cases, and it
will therefore employ basic principles of statutory construction.
“As in all such cases, we begin by analyzing the statutory language,
‘assum[ing] that the ordinary meaning of that language accurately expresses the
legislative purpose.’” Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149,
2156 (2010) (quoting Gross v. FBL Fin. Servs., Inc., 129 S. Ct. 2343, 2350
(2009)). The Supreme Court has “stated time and again that courts must presume
that a legislature says in a statute what it means and means in a statute what it
4
An issue not implicated here but which is important in other § 1692c(b) cases is whether
violations of § 1692c(b) require the debt collector to have conveyed some information about the
debt. There appears to be a split of authority on the issue. Horkey v. J.V.D.B. & Assoc., Inc.,
333 F.3d 769, 775 n.2 (7th Cir. 2003) (acknowledging split). This issue is not before the Court
because Zortman alleges that JCC disclosed the debt in the messages.
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says there.” Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253-54 (1992). “When
the words of a statute are unambiguous, then, this first canon is also the last:
‘judicial inquiry is complete.’” Id. at 254 (quoting Rubin v. United States, 449
U.S. 424, 430 (1981)).
“In ascertaining the plain meaning of the statute, the court must look to the
particular statutory language at issue, as well as the language and design of the
statute as a whole.” Sullivan v. Stroop, 496 U.S. 478, 482 (1990) (quoting K Mart
Corp. v. Cartier, Inc., 486 U.S. 281, 291-92 (1988) (internal marks omitted)).
United States v. I.L., 614 F.3d 817, 820-21 (8th Cir. 2010) (alteration in original).
JCC argues that the phrase “communicate . . . with” denotes a deliberate act and “a
conscious conveying of information.” Based on this, JCC reasons, § 1692c(b) violations require
that a debt collector deliberately or purposefully disclose information to a third party. Such an
interpretation is inconsistent with the ordinary meaning of “to communicate.” A person
communicates when he or she shares with or conveys information to another. See Webster’s
New Collegiate Dictionary 224 (1979). It is therefore possible to communicate with someone in
spite of lacking a deliberate or purposeful intent to convey something to that particular person—
for example, one may communicate with an unintended audience. Further, to the extent that the
FDCPA is ambiguous as to whether “communicate . . . with” requires deliberate or purposeful
intent, any such ambiguity vanishes on consideration of the FDCPA as a whole. The FDCPA is
a strict liability statute, which conflicts with requiring deliberate or purposeful intent. Picht v.
Jon R. Hawks, Ltd., 236 F.3d 446, 451 (8th Cir. 2001). Where Congress wanted to include an
intent element as part of an FDCPA violation, it has done so explicitly: § 1692d(5) prohibits
“[c]ausing a telephone to ring or engaging any person in telephone conversation repeatedly or
continuously with intent to annoy, abuse, or harass any person at the called number.” § 1692d(5)
(emphasis added). The inclusion of an intent element in § 1692d(5) strongly suggests that no
such element is required by § 1692c(b). See Watt v. GMAC Mortg. Corp., 457 F.3d 781, 783
8
(8th Cir. 2006) (“A standard axiom of statutory interpretation is expressio unius est exclusio
alterius, or the expression of one thing excludes others not expressed.”). The bona fide error
defense, pursuant to 15 U.S.C. § 1692k(c) (2006), provides further support for this interpretation.
The defense is a narrow exception to the strict liability imposed by the FDCPA. Section
1692k(c) provides that a debt collector is not “liable in any action brought under this subchapter
if the debt collector shows by a preponderance of evidence that the violation was not intentional
and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably
adapted to avoid any such error.” See Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich,
LPA, 130 S. Ct. 1605, 1608 (2010) (adopting a narrow construction of § 1692k(c) and holding
that “not intentional” does not include violations resulting from mistakes of law). If violations of
the FDCPA required deliberate or purposeful intent, then the bona fide error defense’s “not
intentional” element would tend toward surplusage. The Court is therefore reluctant to read such
a requirement into § 1692c(b): “[C]ourts must be ‘reluctan[t] to treat statutory terms as
surplusage.’ ‘It is our duty “to give effect, if possible, to every clause and word of a statute” . . .
.’” Elwood v. Jeter, 386 F.3d 842, 848 (8th Cir. 2004) (Riley, J., dissenting) (alteration in
original) (quoting Babbitt v. Sweet Home Chapter of Cmtys. for a Great Ore., 515 U.S. 687, 698
(1995); United States v. Menasche, 348 U.S. 528, 538-39 (1955); Montclair v. Ramsdell, 107
U.S. 147, 152 (1883)). Reading § 1692c(b) in light of the FDCPA as a whole, it does not require
deliberate or purposeful disclosures to a third party.
This interpretation is consistent with case law finding violations of § 1692c(b) resulting
from inadvertent disclosures to third parties. See, e.g., Owens v. Brachfeld, No. C 07-4400 JF
(PVT), 2008 WL 5130619, *1 (N.D. Cal. Dec. 5, 2008). It is also consistent with the few
opinions holding that the FDCPA may be violated when a third party overhears an answering
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machine or voicemail message. In Berg v. Merchants Ass’n Collection Division, Inc., 586 F.
Supp. 2d 1336, 1341 (S.D. Fla. 2008), the court found an FDCPA violation where a pre-recorded
message containing debt information was left on a debtor’s voicemail and overheard by the
debtor’s family members and neighbors. Because of the FDCPA’s “fairly broad definition of
communication and the need for direct prior consent for communications with third parties,” the
court rejected the defendant’s assertion “that the plain language of the statute excludes the
Defendant’s communications.” Id.; see also Leahey v. Franklin Collection Serv., Inc., No. 09cv-709-AKK, 2010 WL 5279831, at *3 (N.D. Ala. Feb. 4, 2010) (“Taking all allegations as true,
FCSI left a message on Leahey’s answering machine, which was overheard by his friend without
Leahey’s consent. Therefore, this court cannot hold that Leahey has failed to state a claim upon
which relief may be granted.”); FTC v. Check Enforcement, Inc., No. Civ. A. 03-2115 (JWB),
2005 WL 1677480, at *8 (D.N.J. July 18, 2005) (“Defendants have not rebutted evidence that
they engaged in prohibited communications with third parties in violation of Section 805 of the
FDCPA[, which is codified at 15 U.S.C. § 1692c]. . . . [T]he record indicates that defendants left
messages on home answering machines, which were overheard by family members and other
third parties, to obtain payments from alleged indebted consumers. Thus, defendants have failed
to place material issues of fact upon the record to contradict that they engaged in prohibited
communications with third parties in violation of Section 805 of the FDCPA.”).
Although JCC does not develop the argument fully, JCC suggests that dismissal is
supported by the Federal Trade Commission’s (FTC) interpretation of the FDCPA. Specifically,
JCC cites FTC staff commentary, stating that “[a] debt collector does not violate this provision
when an eavesdropper overhears a conversation with the consumer, unless the debt collector has
reason to anticipate the conversation will be overheard.” FTC Staff Commentary on the FDCPA,
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53 Fed. Reg. 50,097, 50,104 (Dec. 13, 1988). This interpretation is, however, different from that
urged by JCC. JCC argues that deliberate or purposeful intent is required, while the FTC
commentary requires something less than deliberate or purposeful intent—namely, “reason to
anticipate” the disclosure. The distinction is illustrated by the definition of intent in tort law: “[a]
person acts with the intent to produce a consequence if . . . the person acts with the purpose of
producing that consequence; or . . . the person acts knowing that the consequence is substantially
certain to result.” Restatement (Third) of Torts § 1 (2005). The state of mind that JCC suggests
is required (deliberate or purposeful intent) is similar to acting “with the purpose of producing”;
and the state of mind that the FTC staff commentary requires (reason to anticipate) is similar in
kind, if not degree, to substantial certainty. Accordingly, the FTC interpretation does not support
a requirement of deliberate or purposeful intent.
To the extent that JCC argues that the FTC commentary is correct and that § 1692c(b)
violations require a reason-to-anticipate state of mind, that argument does not support dismissal
of this complaint. At least one court, distinguishing Berg, found no violation of a state law
similar to § 1692c(b) because the debt collector had no reason to anticipate that a third party
would hear the disclosures. Hill v. Navy Fed. Credit Union, No. HHDX04CV094042680S, 2010
WL 2764698, *5 (Conn. Super. Ct. June 2, 2010) (“Here . . . no allegation is made that [the debt
collector] knew or reasonably could anticipate that overhearing would occur . . . .”) (interpreting
the Connecticut Creditors’ Collection Practices Act). But here, the pleadings contain allegations
sufficient to allow the conclusion that JCC violated § 1692c(b) regardless of whether § 1692c(b)
requires “reason to anticipate” or some other, similar state of mind. Thus, the Court need not
address whether such a state of mind requirement is consistent with the strict liability nature of
the FDCPA and its bona fide error defense, or what that state of mind would be (e.g., “reason to
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anticipate” or “substantial certainty”). JCC left messages on systems associated with two
numbers. Neither voicemail system identified who might listen to messages left on the systems.
Under these circumstances, the pleadings allow the conclusion that JCC had reason to expect that
someone other than Zortman would hear the voicemail messages sufficient to satisfy any state of
mind requirement that may (or may not) be imposed by § 1692c(b).
Because the FDCPA is a strict liability statute that explicitly includes an intent element
when required, a plaintiff need not plead deliberate or purposeful disclosure to third parties to
state a claim under § 1692c(b). JCC’s motion for judgment on the pleadings is denied.
III.
CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. JCC’s motion for judgment on the pleadings [Docket No. 8] is DENIED.
Dated: April 29, 2011
s/ Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge
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