GEBHARDT v. L J ROSS ASSOCIATES, INC.
MEMORANDUM OPINION. Signed by Judge Mary L. Cooper on 6/12/2017. (seb)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LJ ROSS ASSOCIATES, INC.,
CIVIL ACTION NO. 15-2154 (MLC) (DEA)
COOPER, District Judge
This matter arises out of alleged violations of the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. § 1692 et seq. Plaintiff Scott Gebhardt contends that Defendant LJ Ross
Associates, Inc. violated the FDCPA when it called him regarding collection of a debt after it
had received a letter from his counsel demanding that it cease all communications to him and
direct all contact to his attorney.
Plaintiff (dkt. 34) and Defendant (dkt. 33) each filed a motion for summary judgment
seeking judgment in their favor.1 We resolve both motions in this Opinion. We have
considered all the filings, and resolve the matter without oral argument. See L.Civ.R. 78.1(b).
For the following reasons, we will deny Plaintiff’s motion for summary judgment, and
we will grant Defendant’s motion for summary judgment.
The Court will cite to the documents filed on the Electronic Case Filing System (“ECF”) by the
designation of “dkt.” Pincites reference ECF pagination.
Defendant LJ Ross Associates, Inc. is a debt collector. (Dkt. 34-1 at 2; dkt. 35 at 1.) 2
On August 19, 2014, Defendant was referred to collect on an allegedly unpaid debt that
Plaintiff Scott Gebhardt owed to New Jersey City Power and Light. (Dkt. 34-1 at 2; dkt. 35 at
1; dkt. 39-1 at 3.) Defendant attempted to contact Plaintiff by phone regarding the debt. (Dkt.
34-1 at 2; dkt. 35 at 1.)
Plaintiff hired an attorney, who sent a certified letter, dated September 8, 2014, to
Defendant. (Dkt. 34-1 at 2; dkt. 35 at 1.) The letter advised Defendant that Plaintiff had
retained counsel and that all communications should be directed to counsel, not Plaintiff.
(Dkt. 34-1 at 3; dkt. 34-7 at 1; dkt. 35 at 2.) The letter also “SERVE[D] AS NOTICE TO
IMMEDIATELY CEASE AND DESIST CONTACTING OUR CLIENT.” (Dkt. 34-1 at 3;
dkt. 34-7 at 1; dkt. 35 at 2.)
Defendant maintains a post office box for receipt of mail. (Dkt. 34-1 at 3; dkt. 39-1 at
2.) The post office received the letter on September 11, 2014 at 8:47 a.m, and made it
available for Defendant to pick up. (Dkt. 34-1 at 2; dkt. 39-1 at 3). A Defendant employee
signed for the letter at 9:58 a.m. that same day. (Dkt. 34-1 at 3; dkt. 34-8 at 1; dkt. 35 at 1;
dkt. 39-1 at 3.)
On September 11, 2014, at 10:10 a.m., Defendant placed a collection call to Plaintiff.
(Dkt. 34-1 at 3; dkt. 34-9 at 1; dkt. 35 at 2.) Defendant made no further contact with Plaintiff
after this phone call. (Dkt. 34-5 at 4.)
These facts are undisputed and are taken primarily from the parties’ statements and additional
statements of undisputed material facts, L.Civ.R. 56.1, and responses. (Dkt. 34-1; dkt. 35; dkt. 36-1;
dkt. 39-1.) We will designate any additional or disputed facts as appropriate.
An employee for Defendant processed the letter on September 14, 2014 at 5:07 p.m.,
and updated Plaintiff’s account in the computer system, indicating that he was represented by
counsel and that all Defendant employees were to cease communications with him. (Dkt. 35
at 10; dkt. 36-1 at 2.)
On March 26, 2015, Plaintiff filed suit against Defendant alleging various violations of
the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (Dkt. 1.) Two counts remain
at issue: Plaintiff’s allegations that Defendant’s September 11, 2014 phone call violated
§ 1692c(a)(2), prohibiting communications with a represented individual (Count One), and
§ 1692c(c), prohibiting communications after receiving notice to cease all communications
(Count Two). (Id. at 4–5.) In its Answer, Defendant raised multiple affirmative defenses, but
the sole remaining defense at issue is Defendant’s claim that the bona fide error defense,
§ 1692k(c), precludes its liability under the FDCPA. (Dkt. 5 at 5.)
Plaintiff moved for summary judgment (dkt. 34); and Defendant moved for summary
judgment (dkt. 33).
Summary judgment is proper “if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). The non-movant must then present evidence that raises a genuine dispute of
material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). Material facts
are those “that could affect the outcome” of the proceeding, and “a dispute about a material
fact is genuine if the evidence is sufficient to permit a reasonable jury to return a verdict for
the non-moving party.” Lamont v. New Jersey, 637 F.3d 177, 181 (3d Cir. 2011) (internal
citation and quotation omitted). This evidence may include “citing to particular parts of
materials in the record” or a “showing that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot produce admissible evidence
to support the fact.” Fed. R. Civ. P. 56(c).
Communication with a consumer represented by an attorney, 15 U.S.C. §
The FDCPA prohibits a debt collector from communicating with an individual it
knows to have legal representation with respect to the debt. 15 U.S.C. § 1692c(a)(2).
The relevant portion of the statute states that:
(a) Without the prior consent of the consumer given directly to
the debt collector or the express permission of a court of
competent jurisdiction, a debt collector may not communicate
with a consumer in connection with the collection of any debt-(2) if the debt collector knows the consumer is
represented by an attorney with respect to such debt and has
knowledge of, or can readily ascertain, such attorney's name and
address, unless the attorney fails to respond within a reasonable
period of time to a communication from the debt collector or
unless the attorney consents to direct communication with the
15 U.S.C. § 1692c(a)(2).
Both parties ask us to enter judgment in their favor on this issue. The parties do not
dispute that Plaintiff secured legal representation, who sent a letter to Defendant notifying it
of the representation, and that Defendant communicated with Plaintiff after that letter was
received. (Dkt. 34-2 at 7–8; dkt. 33-1 at 11.) The sole contention between the parties, and the
only question for us to resolve with this count, is whether Defendant had the requisite
statutory “knowledge” of the representation when it called Plaintiff.
Plaintiff argues that knowledge can be imputed upon Defendant through the rules of
agency based upon the knowledge of its employees who saw that a letter was received from
an attorney. (Dkt. 34-2 at 8–9; dkt. 36 at 8–9; dkt. 41 at 6.) Defendant, by contrast, argues
that imputing knowledge is insufficient to meet the statutory burden because the statute
requires that a debt collector actually knew of the representation, and that Plaintiff has failed
to demonstrate Defendant’s actual knowledge. (Dkt. 33-1 at 10–11; dkt. 39 at 5–7.)
We agree with Defendant that the statute, as a matter of law, requires the debt collector
to have actual knowledge of an individual’s legal representation prior to making a
communication. We have previously applied § 1692c(a)(2) as requiring actual knowledge by
the debt collector. See, e.g., Maldonado v. Lyons, Doughty, & Veldhuis, P.C., No. 13-1825,
2014 WL 1297612, at *3 (D.N.J. Mar. 31, 2014); Ortiz v. Malcolm S. Gerald & Assocs., Inc.,
No. 11-05959, 2012 WL 1831566, at *3 (D.N.J. May 17, 2012); Vega v. United Recovery
Sys., L.P., No. 11-5995, 2012 WL 458468, at *3 (D.N.J. Feb. 9, 2012). Other courts have
taken the same approach. See, e.g., Schmitt v. FMA Alliance, 398 F.3d 995, 998 (8th Cir.
2005); Jones v. Weiss, Neuren & Neuren, 95 F. Supp. 2d 105, 108–09 (N.D.N.Y. 2000).
The record before us contains no indication that Defendant had actual knowledge that
Plaintiff was represented by counsel when it made the one call in quetion. The evidence
demonstrates that a letter was received by Defendant and picked up from a P.O. Box on
September 11, 2014 at 9:58 a.m. (Dkt. 34-1 at 2–3; dkt. 34-8 at 1; dkt. 35 at 1; dkt. 39-1 at 3.)
However, Plaintiff has not put forth any evidence that his counsel’s letter to Defendant was
actually read by any employee prior to Defendant’s communication to him on September 11,
2014 at 10:10 a.m. The record demonstrates that the letter was reviewed and processed by
Defendant on September 14, 2014 at 5:07 p.m. (Dkt. 35 at 10; dkt. 36-1 at 2.)
Plaintiff’s arguments regarding what the employee receiving the mail should have
done, or could have done, to read the letter and discover its contents are unavailing. The
statute mandates that Plaintiff demonstrate actual knowledge of his legal representation, not
just mere receipt of a letter from counsel. Simply receiving a letter from an attorney does not
satisfy the higher burden of actual knowledge required by § 1692c(a)(2). Compare 15 U.S.C.
§ 1692c(a)(2) (violation occurs when communication is made “if the debt collector knows the
consumer is represented” (emphasis added)), with 15 U.S.C. § 1692c(c)(3) (violation occurs
when debt collector makes communication after the consumer provides notice, and
“notification shall be complete upon receipt” (emphasis added)).
Because there is no genuine dispute of material fact that Plaintiff has failed to meet his
burden of proving Defendant’s actual knowledge, and thus a violation under 15 U.S.C. §
1692c(a)(2), we will enter judgment in favor of Defendant and deny Plaintiff’s motion for
Communication after receiving notification to cease all communications,
15 U.S.C. § 1692c(c)
Plaintiff and Defendant each move for summary judgment on Plaintiff’s claim under
15 U.S.C. § 1692c(c).
That subsection of the FDCPA provides that:
If a consumer notifies a debt collector in writing that the
consumer refuses to pay a debt or that the consumer wishes the
debt collector to cease further communication with the
consumer, the debt collector shall not communicate further with
the consumer with respect to such debt . . . . If such notice from
the consumer is made by mail, notification shall be complete
15 U.S.C. § 1692c(c).
The parties do not dispute that Defendant’s September 11, 2014 phone call to Plaintiff
at 10:10 a.m. was a prohibited communication3 because it was made after Defendant received
a letter from Plaintiff on September 11, 2014 at 9:58 a.m., notifying Defendant to cease all
communications. (Dkt. 34-1 at 3; dkt. 34-8 at 1; dkt. 34-9 at 1; dkt. 35 at 1–2; dkt. 39-1 at 3.)
Instead, Defendant argues that the communication was a bona fide error that precludes its
liability under the FDCPA.
Section 15 U.S.C. § 1692k(c), the bona fide error defense, provides that:
A debt collector may not be held liable in any action brought
under [the FDCPA] 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
The defense “immuniz[es] a debt collector for an unintentional violation where reasonable
error-avoidance procedures have been employed.” Glover v. FDIC, 698 F.3d 139, 149 (3d
To avail itself of the bona fide error defense, a debt collector must demonstrate “(1) the
alleged violation was unintentional, (2) the alleged violation resulted from a bona fide error,
There are three types of permissible communications that a debt collector may make to the
consumer, but none are applicable to the communication in question here. See 15 U.S.C. §
and (3) the bona fide error occurred despite procedures designed to avoid such errors.” Beck
v. Maximus, Inc., 457 F.3d 291, 297–98 (3d Cir. 2006).4 A mistaken legal interpretation of
the FDCPA does not qualify as a bona fide error. Jerman v. Carlisle, McNellie, Rini, Kramer
& Ulrich, L.P.A., 559 U.S. 573, 582–83 (2010). A debt collector bears the burden of proving
each element of the defense by a preponderance of the evidence. Rush v. Portfolio Recovery
Assocs. LLC, 977 F. Supp. 2d 414, 428 (D.N.J. 2013).
The intent required by the fist prong is the debt collector’s intent to violate the
FDCPA, and not an intent to communicate with the consumer. Rush, 977 F. Supp. 2d at 427
n.14. This is a “subjective test that requires a credibility determination concerning the debt
collector’s assertions that the ensuing FDCPA violation was unintentional.” Agostino v.
Quest Diagnostics, Inc., No. 04-4362, 2011 WL 5410667, at *4 (D.N.J. Nov. 3, 2011) (citing
Johnson v. Riddle, 443 F.3d 723, 728-29 (10th Cir. 2006)).
The second and third prongs are objective inquiries. Id. A bona fide error is “one that
is plausible and reasonable.” Wilhelm v. Credico, Inc., 519 F.3d 416, 420 (8th Cir. 2008).
The Supreme Court has explained that “procedures reasonably adapted to avoid any such
error” may be read to apply to “processes that have mechanical or other ‘regular orderly’ steps
to avoid mistakes—for instance, the kind of internal controls a debt collector might adopt to
ensure its employees to do not communicate with consumers at the wrong time of the day.”
Jerman, 559 U.S. at 587.
Other courts have applied the bona fide error defense as a two-prong test. See, e.g., Turner v.
J.V.D.B. & Assocs., Inc., 330 F.3d 991, 995–96 (7th Cir. 2003) (requiring debt collector to
demonstrate “(1) the violation was unintentional, resulting from a ‘bona fide error,’ and (2) that error
occurred ‘notwithstanding the maintenance of procedures reasonably adapted to avoid any such
Defendant argues that the defense applies because it has demonstrated all three
elements. First, it did not intend to violate the FDCPA. (Dkt. 33-1 at 13.) Second, making
the phone call only twelve minutes after receiving the letter from Plaintiff’s counsel was not
unreasonable and was a bona fide error. (Id.) Third, Defendant had in place reasonable
precautions to protect against making communications after the receipt of a cease all
communications letter. (Id. at 13–14.) Defendant notes that the FDCPA does not require a
debt collector to have “foolproof” procedures, but rather to take reasonable precautions. (Id.)
Plaintiff does not contest whether the alleged violation was unintentional or whether
the alleged violation resulted from a bona fide error. Instead, he argues that Defendant has
not met its burden under the third prong of the defense. (Dkt. 34-2 at 10–11; dkt. 36 at 6–7.)
Specifically, Plaintiff submits certain policies and procedures that Defendant could have
adapted to have prevented making the communication after the receipt of the letter. (Dkt. 342 at 10; dkt. 36 at 6.)
With no facts in dispute regarding the first two elements, we find that Defendant has
met its burden by a preponderance of evidence that the communication was not intentional
and resulted from a bona fide error. The record demonstrates that Defendant did not intend to
violate the FDCPA. (Dkt. 33-2 at 6.) The phone call—made twelve minutes after the letter
was received at the off-site P.O. Box (dkt. 34-1 at 2– 3; dkt. 34-8 at 1; dkt. 35 at 1; dkt. 39-1 at
3)—was a “plausible and reasonable” error because it was made during the processing time
between the receipt of letter and entry of the content into the computer system to remove the
consumer from communications. See Wilhelm, 519 F.3d at 420.
The dispute between the parties is whether Defendant has met its burden for the third
prong and demonstrated that it had reasonably adapted policies and procedures to avoid the
error of making a prohibited communication twelve minutes after receiving notice to cease all
Defendant has pointed to policies and procedures that it employs, specifically with
respect to processing legal representation and cease and desist notifications. (Dkt. 33-2 at 2–
4.)5 These policies and procedures govern how employees must conduct themselves while
attempting to collect on debts. (Id. at 2.)
All incoming mail to Defendant is forwarded to Defendant’s Client Services
Department, which reviews and processes the “voluminous amounts of written
correspondence” the company receives daily. (Id. at 3.) The Department reviews
correspondence in the order that it is received. (Id.) When notification is received, either of
legal representation or to cease communication, Defendant stops communicating with the
consumer who sent the correspondence. (Id. at 3–4.) Additionally, Defendant will
commence an account investigation, close the account, or request additional information from
the consumer or consumer’s counsel, depending on the information contained in the
correspondence. (Id. at 4.)
When Defendant receives notification that a consumer has retained legal
representation, the employee processing the correspondence must update the consumer’s
We derive these facts from the affidavit of Rebecca Roberts, the President and CEO of LJ Ross
Associates. (Dkt. 33-2.) Plaintiff did not dispute any of these statements by Defendant. (Dkt. 26-1 at
2–4.) Affidavits may establish that a debt collector has employed policies and procedures “reasonably
adapted to avoid” the error at issue. See, e.g., Wilhelm, 519 F.3d at 420–21; Rush, 977 F. Supp. 2d at
438; Howe v. Reader’s Digest Ass’n., 686 F. Supp. 461, 467 (S.D.N.Y. 1988).
account disposition code in the computer system to “3ATY.” (Id. at 3.) All further
communications then must be sent to counsel, rather than the consumer. (Id.) When an
account has the designation “3ATY,” “the account system is programmed to prevent further
calls being made to a consumer.” (Id. at 4.)
A similar process occurs when Defendant receives notice to cease all communications
with a consumer. When Defendant receives notice that a consumer wants Defendant to cease
and desist all communications, an employee must update the account disposition code in the
computer system to “3600 CEASE COMMUNICATIONS.” (Id.) All communications to the
consumer must cease. (Id.) When an account has the designation “3600 CEASE
COMMUNICATIONS,” “the account system is programmed to prevent further calls being
made to a consumer.” (Id.)
Defendant trains newly hired employees on these policies and procedures. (Id. at 2.)
It also tests employees on these policies and procedures at regular intervals. (Id.) Defendant
regularly audits all policies and procedures to “ensure adherence, consistency and ongoing
process improvement.” (Id. at 2.) Any policy or procedure updates are promptly
communicated to all employees. (Id.) An employee who fails to follow the company’s
policies and procedures is subject to discipline, which can include termination of
employment. (Id. at 3.)
We find that, by a preponderance of evidence, Defendant has demonstrated that it had
reasonably adapted procedures to prevent an error from occurring. See Rush, 977 F. Supp. 2d
at 428, 439 (finding that “the declarant sets out in reasonable detail the wide range of training,
communication policies, and other procedures sufficient for [Defendant] to carry its burden of
showing its entitlement to the bona fide error defense”). Defendant detailed policies
explaining how correspondence is received, reviewed, and processed by its employees. These
policies prohibit an employee from communicating with a consumer after the receipt of
notification that the consumer is represented by legal counsel or that the consumer wishes
Defendant to cease all communications. Defendant maintains a computer system that
prevents communications from being made when coded to denote the consumer is
represented by an attorney or demanded all communications to cease. Defendant’s
employees are trained and tested on the company’s policies and procedures to ensure
compliance with the FDCPA. We thus find these policies and procedures objectively
reasonable to prevent the type of error complained of here.
We have previously explained that a “‘processing’ delay” between receipt of a cease
all communications letter and entry of that information into the computer system does not
necessarily mean that the debt collector did not have in place “procedures reasonably adapted
to avoid an erroneous communication with consumers.” See Rush, 977 F. Supp. 2d at 440.
Indeed, it is inherently unreasonable to expect that Defendant have the ability to
instantaneously update its records upon receipt of a cease communications letter without there
being some time to process the request. See Hyman v. Tate, 362 F.3d 965, 968 (7th Cir.
2004). We have previously held that a prohibited communication one day after the receipt of
a notification, while the notice was still being processed, was insufficient to defeat a bona fide
error defense. See Rush, 977 F. Supp. 2d at 440 (citing Smith v. Transworld Sys., Inc., 953
F.2d 1025, 1031 (6th Cir. 1992); Beattie v. D.M. Collections, Inc., 754 F. Supp. 383, 389–90
(D. Del. 1991)). Likewise, the twelve-minute lapse between the receipt of the letter and the
communication here, while Defendant was processing the letter according to its policies
procedures, does not defeat the bona fide error defense.
Plaintiff has put forth no evidence that contradicts Defendant’s evidence that it has
reasonable procedures designed to prevent an error from occurring. Indeed, Plaintiff does not
dispute Defendant’s assertions that these procedures existed and were in place. (Dkt. 26-1 at
2–4.) Although Defendant bears the burden of demonstrating that it has satisfied the
affirmative defense, we may consider whether Plaintiff has put forth any evidence to
demonstrate that a genuine issue of material fact exists which would preclude the entry of
summary judgment. See, e.g., Wilhelm, 519 F.3d at 421 (in finding no genuine issue of
material fact, “it is highly relevant that [plaintiff] made no attempt to dispute the facts set forth
in affidavits by [defendant’s] highest-ranking official”); Rush, 977 F. Supp. 2d at 438, 440
(noting that Plaintiff did not provide any evidence to contradict the debt collector’s
procedures, and reiterating on reconsideration that the “undisputed evidence sufficiently
established that the bona fide error defense applied”); Howe v. Reader’s Digest Ass’n, 686 F.
Supp. 461, 467 (S.D.N.Y. 1988) (granting summary judgment on the bona fide error defense
because “[plaintiff] has failed to adduce any evidence refuting the affidavits . . . . which
demonstrate that [defendants] maintain extensive systems and procedures designed to prevent
Rather than putting forth evidence that might create a genuine issue of material fact,
Plaintiff contends that Defendant could have adopted more thorough procedures to prevent
the phone call from being made. Specifically, he points to alternate procedures that in his
view could have prevented the error, such as receiving mail onsite instead of using a P.O.
Box, picking up the mail in the morning and immediately opening it to scan for cease
communication requests, or ceasing all debt collection calls until all mail is reviewed. (Dkt.
34-2 at 10; dkt. 36 at 6; dkt. 41 at 4–5.) The FDCPA, however, “‘does not require debt
collectors to take every conceivable precaution to avoid errors; rather, it only requires
reasonable precaution.’” Parker v. Pressler & Pressler, LLP, 650 F. Supp. 2d 326, 343 (D.N.J.
2009) (quoting Kort v. Diversified Collection Servs., 394 F.3d 530, 539 (7th Cir. 2005)).
Although Plaintiff argues that Defendant could have done more to prevent the
communication, the FDCPA “only requires collectors to adopt reasonable procedures” and it
would not be reasonable to require Defendant to immediately open and process all mail or to
cease all collection calls until all mail is processed, as Plaintiff suggests. See Hyman, 362
F.3d 965 at 968; see also Rush, 977 F. Supp. 2d at 428.
Because we find no genuine issue of material fact, we conclude that Defendant has
met its burden of proving that it is entitled to the bona fide error defense, thereby immunizing
it from liability for a violation of 15 U.S.C. § 1692c(c). We will grant judgment in favor of
Defendant and deny Plaintiff’s motion for summary judgment.
For the reasons stated above, we will grant Defendant’s motion for summary judgment
and we will deny Plaintiff’s motion for summary judgment.
We will enter an appropriate order and judgment.
s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated: June 12, 2017
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