Schuller v. AllianceOne Receivables Management, Inc.

Filing 28

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that defendant's motion for summary judgment [#13] is GRANTED IN PART and DENIED IN PART as set forth above. IT IS FURTHER ORDERED that plaintiffs motion for summary judgment on liability [#18] is GRA NTED. The trial of this matter remains set on the two-week docket beginning April 11, 2016 and will consider only the amount of damage to which plaintiff is entitled, as that issue was not addressed by the motions. Signed by District Judge Catherine D. Perry on February 4, 2016. (MCB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
CHARLES P. SCHULLER,
Plaintiff,
vs.
ALLIANCEONE RECEIVABLES,
MANAGEMENT, INC.,
Defendant.

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Case No. 4:15 CV 298 CDP

MEMORANDUM AND ORDER
Plaintiff Charles P. Schuller claims that efforts made by defendant
AllianceOne Receivables Management, Inc. to collect debt allegedly owed by
Schuller violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.
He asserts that AllianceOne used unfair, deceptive, and misleading means in
violation of 15 U.S.C. § 1692d-f and that its efforts overshadowed his dispute,
validation, and verification rights in violation of 15 U.S.C. § 1692g. AllianceOne
has filed a motion for summary judgment arguing that its communications with
Schuller did not violate the FDCPA, and it has attached audio recordings of each
disputed phone call between the parties. Schuller has opposed AllianceOne’s
motion and has filed a cross-motion for summary judgment on liability only on his
§ 1692g claim. The facts are largely undisputed. After careful consideration, and
for the reasons discussed below, I will grant summary judgment to Alliance on the

claim under § 1692d-f but will grant summary judgment to Schuller on his §
1692g overshadowing claim. Remaining for trial is the issue of damages to which
Schuller may be entitled on the § 1692g claim.
I.

STANDARDS GOVERNING SUMMARY JUDGMENT

“Summary judgment is proper where the evidence, when viewed in a light
most favorable to the non-moving party, indicates that no genuine issue of material
fact exists and that the moving party is entitled to judgment as a matter of law.”
Davison v. City of Minneapolis, Minn., 490 F.3d 648, 654 (8th Cir. 2007); see Fed.
R. Civ. P. 56(a). Summary judgment is not appropriate if there are factual disputes
that may affect the outcome of the case under the applicable substantive law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material
fact is genuine if the evidence would allow a reasonable jury to return a verdict for
the non-moving party. Id. “The basic inquiry is whether it is so one-sided that one
party must prevail as a matter of law.” Diesel Machinery, Inc. v. B.R. Lee
Industries, Inc., 418 F.3d 820, 832 (8th Cir. 2005) (internal quotation marks and
citation omitted). The moving party has the initial burden of demonstrating the
absence of a genuine issue of material fact. Torgerson v. City of Rochester, 643
F.3d 1031, 1042 (8th Cir. 2011) (citation omitted). If the movant does so, “[t]he
nonmovant must do more than simply show that there is some metaphysical doubt
as to the material facts, and must come forward with specific facts showing that
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there is a genuine issue for trial.” Id. (internal quotation marks and citation
omitted).
II.

BACKGROUND

AllianceOne is a debt collector. In November 2014, certain credit card debt
allegedly owed by Schuller was referred to AllianceOne for collection. On
November 13, 2014, AllianceOne sent a letter to Schuller advising him that his
credit card account had been referred to AllianceOne and he had thirty (30) days to
dispute the debt’s validity. In accordance with 15 U.S.C. § 1692g, the letter
informed Schuller that if he notified AllianceOne in writing within thirty days that
he disputed the debt, AllianceOne would obtain verification of the debt. Schuller
and AllianceOne spoke on the phone three separate times. The conversations that
took place during the second two phone calls are the subject of Schuller’s claims.
The first of the two calls was initiated by an AllianceOne representative,
Michael McDonald, on November 17, 2014. In the call, McDonald told Schuller
that his dispute validation and verification rights letter had been sent on November
12, 2014. McDonald stated that the call was to collect debt and the objective was
to “see if we can work something out” with the account. He told Schuller he was
trying to “work out options” for getting Schuller’s account resolved and more than
once asked Schuller what he was “looking to try to work on the account.” The
remainder of the conversation went as follows:
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McDonald: Figurewise, sir, what are you looking to try and work on the
account.
Schuller:

Well right now I think I can afford to give you guys ten dollars
a month. I think the last time I gave you something it was
something close to that.

McDonald: Ok. Well then if you have your checkbook with you I can set
that up with you right now.
Schuller:

Oh I could write a check and it’ll bounce. There’s no money in
there sir, I told you I have no money.

McDonald: So when would the funds be available for that.
Schuller:

When?

McDonald: Yes sir.
Schuller:

I told you on the first.

McDonald: Ok, well if nothing’s going to take place within this month I
have to mark the file accordingly. Um I can give you my direct
number –
Schuller:

You do what you gotta do, I told you I’ll have money and I can
pay you ten dollars on the first. What else do you want to
know?

McDonald: Well you have a great day then Mr. Schuller, ok?
The second of the two calls at issue was initiated by Schuller on November
20, 2014. He spoke with AllianceOne representative Latrice Robinson, telling her
that he had received a letter from AllianceOne and was following up. Robinson
attempted to defer Schuller until McDonald could call him back, but Schuller
declined and asked to speak to someone immediately who could answer the
question: “when do I have to take care of this debt?” He repeated this question
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several more times. During the phone call he also spoke to someone off the phone
about the call. Robinson introduced herself and AllianceOne and informed
Schuller that “this is an attempt to collect the debt.” She told Schuller that his
account came in on November 12 and when any account comes into AllianceOne,
they look to resolve the balance immediately. In response to Schuller again asking
when he needed to take care of his debt, Robinson stated that AllianceOne was
looking for payment on the account “as soon as possible” and told him the total
amount due was $9454.08. Schuller asked if she meant payment in full, and
Robinson responded, “Correct.” He asked if they wanted it paid immediately, and
she responded, “Correct.” Schuller informed Robinson that he could not pay the
debt and had hired an attorney, and he provided his attorney’s information.
III.

DISCUSSION

To prevail on a claim pursuant to the FDCPA, plaintiff must allege and
prove that “(1) the plaintiff is a ‘consumer’ within the meaning of the statute; (2)
the defendant collecting the debt is a ‘debt collector’ within the meaning of the
statute; [and] (3) the defendant has violated by act or omission a provision of the
FDCPA. Glackin v. LTD Fin. Servs., L.P., No. 4:13-CV-00717 CEJ, 2013 WL
3984520, at *1 (E.D. Mo. Aug. 1, 2013). AllianceOne does not dispute the first
two elements but argues that the third element cannot be proved because the
evidence fails to establish that AllianceOne violated any provision of the FDCPA.
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Schuller’s Claims under Sections 1692d-f
With regard to Schuller’s claims under § 1692d-f, AllianceOne argues that
there is no evidence to support his assertions that the calls were unfair, deceptive,
or misleading. In response, Schuller asserts that AllianceOne’s representative lied
about the date its letter was sent and harassed Schuller about payment throughout
the two conversations. He argues AllianceOne’s “aggressive demands for payment
to an unsophisticated consumer, during his dispute period and without reminding
him of his dispute rights, were unfair.”
15 U.S.C. § 1692d prohibits any conduct “the natural consequence of which
is to harass, oppress or abuse any person in connection with the collection of a
debt.” Section 1692e prohibits use of any false, deceptive, or misleading
representation or means in connection with the collection of a debt. Section 1692f
prohibits the use of unfair or unconscionable means to collect or attempt to collect
any debt.
After careful review of the recorded calls, I conclude there is no disputed
issue of material fact that the representatives’ behavior did not rise to the level of
harassing, oppressive, or abusive under§1692d. Although McDonald was initially
quite persistent, once Schuller indicated he could not pay anything, McDonald said
he would mark the file and give Schuller his phone number. In the second
telephone call, Robinson made efforts to get off the call, and it was Schuller who
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pressed her to answer his questions. As examples of behavior that would violate
1692d, the statute includes the use or threat of use of violence, the use of profane
language, and engaging a person in repeated telephone conversations with the
intent to annoy, abuse, or harass. Although defendant’s representatives’ behavior
may have been persistent, no reasonable juror could find that it violated 1692d.
Schuller asserts that AllianceOne’s “aggressive” efforts to collect payment
during the dispute period without reminding Schuller, during each phone call, of
his dispute rights was unfair in violation of 1692f. However, the record
demonstrates that the representatives were relatively polite, and Schuller has
pointed to no case law supporting an argument that, standing by itself, a failure to
remind a debtor of his dispute rights under these circumstances is a violation of
1692f. In fact, so long as a written notice has already been sent, even §1692g does
not require a debt collector to remind a debtor of his dispute rights during as
subsequent call. Glackin, 2013 WL 3984520, at *2. In light of all of this, I
conclude Schuller has failed to point to sufficient evidence to support a claim
under § 1692f, and AllianceOne is entitled to judgment as a matter of law.1

1

Although not determinative here, it is notable that other courts have held that where facts
alleged in support of a claim under § 1692f also support a claim under a separate provision of the
FDCPA, the § 1692f claim should be dismissed. See, e.g., Baker v. Allstate Fin. Servs., Inc.,
554 F. Supp. 2d 945, 953 (D. Minn. 2008) (“Congress enacted Section 1692f to catch conduct
not otherwise covered by the FDCPA”); Lake v. Consumer Adjustment Co., Inc., No. 4:15-CV01495-JCH, 2015 WL 8770719, at *4 (E.D. Mo. Dec. 14, 2015) (dismissing § 1692f claim where
separate FDCPA provision addressed the same alleged misconduct). Here, Schuller essentially
alleges that the same facts support four separate claims under 1692d-g.

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Finally, Schuller claims McDonald lied, in violation of § 1692e, by telling
Schuller his dispute letter had been sent on November 12, 2014. The letter was
dated November 13, 2014, and an affidavit submitted by AllianceOne’s SVP of
Operations states that it was sent on or about November 13, 2014.
For a representation to be actionable under § 1692e, it must be both false and
material. Lake, 2015 WL 8770719, at *3 (citing Donohoe v. Quick Collect, Inc.,
592 F.3d 1027, 1033 (9th Cir. 2010)). “The materiality requirement is not
concerned with mere technical falsehoods...but instead with genuinely misleading
statements that may frustrate a consumer's ability to intelligently choose his or her
response.” Id. (quoting Campbell v. Credit Prot. Ass'n LP, No.
4:12CV00289AGF, 2013 WL 1282348, at *8 (E.D. Mo. Mar. 27, 2013)). With
regard to his § 1692e claim, Schuller argues, in a single sentence, that
AllianceOne’s false statement regarding the date of the dispute letter was for the
purpose of improving AllianceOne’s chances of obtaining payment. Schuller has
alleged no evidence to show how or why AllianceOne’s misstatement would have
this effect. Nor has he alleged how such a misstatement might “frustrate a
consumer’s ability to intelligently choose his or her response.” In the absence of
additional evidence, AllianceOne’s misstatement regarding the date of the dispute
letter appears to be nothing more than an immaterial, technical falsehood that is not

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actionable. Therefore, I will grant AllianceOne’s motion for summary judgment as
to Schuller’s 1692e claim.
Schuller’s Section 1692g Claim
15 U.S.C. § 1692g(a) requires a debt collector, within five days after its
initial communication with a consumer, to send the consumer a written notice
regarding the debt that, among other things, notifies the consumer of his right to
dispute the validity of the debt, obtain verification of the debt, and request the
name of the original creditor within 30 days of receiving the letter. Section
1692g(b) provides that in those 30 days, unless the debtor disputes the debt or
requests the name of the original creditor, collection efforts may continue but “may
not overshadow or be inconsistent with” the consumer’s rights in § 1692g(a).
For purposes of Schuller’s § 1692g claim, the parties do not dispute the
substance of the telephone conversations at issue but disagree about whether the
conversations constituted a demand for payment by AllianceOne that
overshadowed Schuller’s § 1692g(a) rights. AllianceOne claims that informing
Schuller the company wanted its debts paid immediately or as soon as possible and
attempting to collect payment and set up a payment plan did not confuse or
overshadow Schuller’s rights. Schuller claims that AllianceOne did overshadow
his rights by demanding immediate payment, implying that a partial payment must

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be made within the dispute period, and threatening to “mark [Schuller’s] file
accordingly” if he did not pay some of the debt before November 30.
The 30-day validation period provided in § 1692g is not a grace period; in
the absence of a dispute notice from the debtor, the debt collector is allowed to
demand immediate payment and continue collection activity. Founie v. Midland
Credit Mgmt., Inc., No. 4:14CV816 RWS, 2014 WL 6607197, at *3 (E.D. Mo.
Nov. 19, 2014). “Whether collection activities or communications within the 30day validation period overshadow or are inconsistent with a validation notice is
determined under the ‘unsophisticated consumer’ standard.” Glackin, 2013 WL
3984520, at *3. “[A] debt collector violates the FDCPA if [the] communication
would mislead or confuse” an unsophisticated debtor.” Id. The unsophisticated
debtor is “an individual with below average intelligence but not ‘tied to the very
last rung on the sophistication ladder.’” Id. (quoting Duffy v. Landberg, 215 F.3d
871, 874 (8th Cir. 2000)). The standard also has an “objective element of
reasonableness,” to “protect debt collectors from liability for peculiar
interpretations of collections letters.” Duffy, 215 F.3d at 874.2

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The Eighth Circuit does not appear to have addressed whether the application of the
unsophisticated consumer standard to an overshadowing claim presents a question of law or fact.
However, the facts here are undisputed and both parties treat this as a question of law for the
court. District courts within this circuit have generally held that the issue of overshadowing can
be determined as a matter of law where the facts are undisputed. See, e.g., Bland v. LVNV
Funding, LLC, No. 4:15 CV 425 RWS, 2015 WL 5227414, at *4, n.4 (E.D. Mo. Sept. 8, 2015);
Perry v. Trident Asset Mgmt., L.L.C., No. 4:14-CV-1004-SPM, 2015 WL 417588, at *6 (E.D.
Mo. Feb. 2, 2015); Founie, 2014 WL 6607197, at *3; O'Connor v. Credit Protection Ass'n, LP,

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A communication following a dispute letter may be overshadowing if it (1)
indicates that the time for disputing the debt has passed, (2) misrepresents or
clouds the amount of time remaining to dispute the debt, or (3) contains overt
misinformation, apparent contradiction, or a noticeable lack of clarity concerning
the validation period or the debtor’s rights under § 1692g. See Johnson v. Evans &
Dixon, LLC, Case No. 4:13-CV-671 NAB, slip op. at13 (E.D. Mo. filed April 8,
2014) (citing Durkin v. Equifax Check Servs., Inc., 406 F.3d 410, 416 (7th Cir.
2005).
Recent cases from this district help elucidate when a telephone
communication overshadows the validation notice. In McHugh v. Valarity, LLC,
No. 4:14-CV-858 JAR, 2014 WL 6772469 (E.D. Mo. Dec. 1, 2014), the plaintiff
called the debt collector after receiving previous dispute letters regarding her debt.
During the course of the parties’ call, the debt collector made the following
statements:
Well, once it gets in collections, the balance is really due that day. So
as soon as you can pay [the money] would really be the best.
The best thing for you to do is [pay] the full amount. If you are able
to break it down into two payments or so… we can give you that
option.
Well, if I were you … I think these we have here have been here quite
a bit of time. Some of these have been here long enough. So I would
No. 4:11CV2187SNLJ, 2013 WL 5340927, at *7 (E.D.Mo. Sept. 23, 2013); Owens v. Hellmuth
& Johnson, PLL C, 550 F.Supp.2d 1060, 1065 (D.Minn.2008) (noting split in authority in other
circuits and considering overshadowing as a question of law).

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try paying it off today. If you’re able to, that’s what I would do so it
won’t go to [inaudible] continued action.
The McHugh court held that it was unlikely that a hypothetical
unsophisticated consumer would understand that he could still dispute the debt
once he had made payments arrangements. Therefore, the debt collector’s
statements, made within the dispute period, improperly overshadowed plaintiff’s
dispute and verification rights.
Similarly, in Glackin, on a phone call with defendant debt collector, plaintiff
asked how long she had to take care of the debt. Defendant responded that usually,
when a letter is sent out, they want to make some kind of arrangement or receive
some kind of payment within the same month, so in plaintiff’s case defendant
would want a payment, partial or otherwise, in its office by March 29. The court
held that defendant’s instruction to make a payment or arrange a payment plan on
or before March 29, was confusing because was within the dispute period. The
court noted it was unlikely that an unsophisticated consumer would understand she
could still dispute the debt despite making such payment arrangements. Glackin,
2013 WL 3984520, at *2-*3.
Finally, in Perry v. Trident Asset Management, L.L.C., No. 4:14-CV-1004,
2015 WL 417588 (E.D. Mo. Feb. 2, 2015), plaintiff called the debt collector
defendant to ask about a debt on her credit report. Defendant told plaintiff the
amount of the debt, and plaintiff asked if there was a deadline by which she had to
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pay the amount. The debt collector responded “No ma’am, you can just begin
making monthly payments to it. You can do that at our website or by send[ing] us
a money order.” The plaintiff argued that the debt collector’s statements regarding
making monthly payments constituted a request for immediate payment in
violation of plaintiff’s § 1692g rights. The Perry court denied plaintiff’s and
granted defendant’s motion for summary judgment on this point, holding that
nothing in defendant’s statements indicated plaintiff was required or expected to
take action within any particular timeframe. In fact, defendant explicitly told
plaintiff there was no deadline.
Here, in the first call, defendant’s representative McDonald persistently
asked Schuller what he was “trying to work” on the account and then attempted to
set up an immediate payment and payment plan over the phone. When Schuller
said he could not make a payment until the first of the following month, which was
well within the dispute and validation period, McDonald told Schuller that if
nothing was going to take place in the current month, he would have to mark the
file accordingly. Although the language used by McDonald does not overtly
request a payment by a date certain within the dispute period, unlike the
representative’s language in Perry, it certainly indicates that a payment should be
made within that time and failure to do so would be to risk some undefined
negative consequence. Even if this conversation alone were not enough, in
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combination with representative Robinson’s statements that payment should be
made in full as soon as possible and confirming that defendant wanted payment
“immediately,” it would certainly work to confuse an unsophisticated consumer
about whether he could still dispute the alleged debt. As the McHugh and Glackin
courts held, it is unlikely that an unsophisticated consumer would understand that
he could still dispute the debt despite making immediate payment arrangements as
Schuller was encouraged to do. It seems that the only reason Schuller did not set
up a payment plan during the first phone call was that he had no money to offer.
AllianceOne argues that in order to constitute overshadowing, a clear
demand for payment within the dispute period must be made, but as discussed
above, courts in this district have found that something less than this is still
sufficient to obscure a debtor’s rights. Here, there was a suggestion that it would
be best to make a payment by a date within the dispute period. This was
accompanied by a directed effort to collect such a payment and an implication that
there would be a negative consequence if payment were not made by that date.
Schuller was then specifically told AllianceOne wanted the money immediately. It
seems clear that AllianceOne’s representatives were attempting to toe the line
between permissible and impermissible collection efforts. But “the FDCPA is a
broad remedial statute” whose terms “are to be applied in a liberal manner,” and
with this in mind, I conclude that defendant’s representatives went too far. Weast
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v. Rockport Fin., LLC, No. 4:15CV00336 AGF, 2015 WL 4427281, at *2 (E.D.
Mo. July 17, 2015). The content of the telephone conversations was enough to
overshadow Schuller’s dispute and verification rights under § 1692g.3
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion for summary
judgment [#13] is GRANTED IN PART and DENIED IN PART as set forth
above.
IT IS FURTHER ORDERED that plaintiff’s motion for summary
judgment on liability [#18] is GRANTED.
The trial of this matter remains set on the two-week docket beginning April
11, 2016 and will consider only the amount of damage to which plaintiff is
entitled, as that issue was not addressed by the motions.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 4th day of February, 2016.

3

AllianceOne also argues that in the second phone call Schuller was attempting to bait plaintiff
into violating the FDCPA and that it is clear he was not confused about his rights at that time.
But the unsophisticated consumer is an objective standard, and the fact that the FDCPA may
have been used as a sword instead of a shield in this instance does not change that analysis. See
McHugh, 2014 WL 6772469, at *3.

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