Huebner v. Midland Credit Management, Inc.

Filing 16

MEMORANDUM OPINION AND ORDER TO SHOW CAUSE dated 2/11/15. Plaintiff and his attorney are Ordered to Show Cause by 2/18/15 why this action should not be dismissed, with fees costs awarded under 15:1692k(a)(3), and sanctions issued pursuant to Rule 11. ( Ordered by Judge Brian M. Cogan on 2/11/2015 ) (Guzzi, Roseann)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------------------------LEVI HUEBNER on behalf of himself and all
others similarly situated,
Plaintiff,
- against MIDLAND CREDIT MANAGEMENT, INC.,
Defendant.
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MEMORANDUM OPINION
AND ORDER TO SHOW
CAUSE
14-cv-6046 (BMC)

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COGAN, District Judge.
Congress passed the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et
seq., for the salutary purpose of preventing the harassment of consumer debtors by professional
debt collectors. The legislative history abounds with examples of the kind of abuse that
occurred; from midnight calls, to calls occurring as frequently as fifty times in a single day, to
calls to the debtor’s children or employers for the sole purpose of embarrassing and pressuring
the debtor. It continues to serve its important purpose in a number of cases. See, e.g., Rivera v.
Nat’l Check Processing, LLC, No. 10-CA-605, 2011 WL 996340 (W.D. Tex. March 17, 2011).
In this Court, however, and I suspect in many others, the use of the statute has evolved
into something quite different than its original purpose would suggest. The majority of cases that
I see under the statute are brought by a handful of the same lawyers, based on complaints that
read much more like legal briefs than complaints. Frequently, these cases are brought on behalf
of the same debtor-plaintiffs, who seize on the most technical alleged defects in collection
notices or telephone communications, often raising claims of “confusion” or “deception”
regarding practices as to which no one, not even the least sophisticated consumer, could
reasonably be confused or misled. These cases are often brought for the non-salutary purpose of

squeezing a nuisance settlement and a pittance of attorneys’ fees out of a collection company,
which it will often find cheaper to pay than to litigate. A cottage industry among limited players
– plaintiffs’ lawyers, debtors, and even defendants’ lawyers – appears to be the primary progeny
of the statute. Still, a technical violation of the statute is a violation, and although the social
utility of this industry may be questioned, this technical use of the statute for economic gain
violates no law or ethical precept.
Thus, despite misgivings as to what this statute has become, this Court has applied the
statute, to the best of its ability, according to its language and the controlling case law that
construes it, leaving it to Congress or higher courts to correct any excess application of the
statute. The instant case, however, goes beyond anything that the Court has seen. It represents a
deliberate and transparent attempt by a sophisticated debtor to entrap a collection company into a
technical violation. Even more problematically, plaintiff chose to bring this action even though
there is a tape recording showing that the attempt at entrapment utterly failed. The collection
company in this case did everything by the book, and yet has still found itself a defendant in an
FDCPA action. There are substantial questions about whether this action should be allowed to
proceed and whether defendant is entitled to recover attorneys’ fees for having had to defend it.
BACKGROUND
Plaintiff’s complaint asserts that defendant violated the FDCPA during a phone
conversation that took place on October 17, 2013 regarding a debt obligation originally owed to
Verizon. (In the cases before me, unpaid cellular phone bills seem to be the most frequently
used basis for claims by debtors and their lawyers who are regular players in this industry.) It is
important to note that it was plaintiff who initiated the call, and for reasons that now seem
obvious, he chose to record it. His complaint alleges that defendant “wrongfully stated to the

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Plaintiff that he could not orally dispute the debt” and that “he must have a reason to dispute a
debt.” The complaint states that defendant “made the above false statements in violation of 15
U.S.C. §§ 1692e(8) and 1692e(10).”
The parties appeared before the Court for an Initial Status Conference. At that
conference, defense counsel explained that plaintiff had, in fact, been allowed to dispute his debt
verbally. Indeed, according to defense counsel, immediately after the phone call between the
parties, defendant issued a letter to plaintiff advising him that defendant was ceasing its
collection efforts and was requesting the deletion of the item from plaintiff’s credit reports.
Thus, defendant argued that plaintiff was on notice that his verbal dispute – the one he alleges
defendant refused to accept – resulted in an actual cessation of collection activity.
The parties agreed that if, in fact, a violation had occurred during the recorded telephone
call, then even prompt dispatch of the cessation notice following the call would not absolve
defendant of the technical violation. Plaintiff’s counsel assured me that a violation had occurred
because defendant had told plaintiff that the debt could only be disputed in writing, and that the
tape recording would show it. I directed plaintiff’s counsel to submit a copy of that recording to
Chambers and defense counsel, which he did. A transcript of the phone call is annexed to this
Memorandum Opinion and Order to Show Cause as Appendix A.
The recording is fifteen minutes long and consists of two calls. In the first, plaintiff
simply leaves a voicemail. In the second, plaintiff asks a representative how he can dispute his
debt. The representative transfers plaintiff to the consumer support department. Plaintiff asks
the same question to the consumer support department representative, who responds that all he
needs to do to dispute the debt is advise her of the dispute. When asked what he was disputing,
plaintiff steadfastly declined to say any more than that the debt is “non-existent.” The

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representative said she was not clear about what that meant and asked a few questions to find
out. Principal among these was whether plaintiff ever had an account with Verizon. As can be
seen from the transcript, plaintiff would not tell her whether he ever had a Verizon account.
Moreover, his baiting of the representative is very apparent from the transcript. At one
point, he asks her, “I don’t understand, I can’t take it off my credit card, my account without
paying it?” The representative declined the bait: “That’s not what I said, sir, I need to know
what your dispute is before I can just delete it for you. So you’re saying you want to dispute it,
why is it that you want to dispute it?” Plaintiff then reverted to his refrain that the debt is “nonexistent.” For the third time, the representative asked, “Did you ever have Verizon, sir?” And
plaintiff would only answer “I don’t understand the question you ask me, this is a non-existent
debt.” She responds, “[i]t’s a very straightforward question. Did you ever have Verizon
service?” Plaintiff again evaded the question: “Okay, but I told you, you ask me, I told you, if
you tell me, you’re not going to take my dispute, that’s fine. I’m just going to try to see if I can
get more information.” The substantive discussion in the call ended with the representative
saying, “I’m trying to help you with your dispute, sir, but you’re not really helping me help you.”
It is notable that despite the representation in the complaint that plaintiff was told he
could only dispute the debt in writing, which was reaffirmed by plaintiff’s counsel at the Initial
Status Conference, the word “writing” is never mentioned in the call. Again, it is undisputed that
following this call, defendant immediately dispatched a cessation letter and no effort was made
at collection.

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DISCUSSION
The FDCPA establishes a general prohibition against the use of “false, deceptive, or
misleading representation or means in connection with the collection of any debt.” 15 U.S.C. §
1692e. The various subsections of § 1692e, sixteen in total, provide a non-exhaustive list of
practices that fall within this ban. Plaintiff maintains that defendant’s conduct violated two of
these subsections, 1692e(8) and 1692e(10). The former prohibits communicating or threatening
to communicate “credit information which is known, or should be known, to be false, including
the failure to communicate that a debt is disputed.” The latter prohibits the use of “any false
representation or deceptive means to collect or attempt to collect any debt or to obtain
information concerning a consumer.”
Plaintiff alleges that defendant violated these two subsections by “[d]enying the Plaintiff
the right to dispute the debt verbally”; “[r]equiring the Plaintiff to provide a valid reason to
dispute the alleged debt”; “[f]ailing to communicate that a disputed debt is disputed; and
“mak[ing] the above false statements in violation of” these two subsections. The recording does
not support plaintiff’s version of the events and there does not appear to be any good faith basis
for this suit.
First, defendant’s employee told plaintiff that all he needed to do to dispute his debt was
to advise her of the dispute. There were no qualifications on that statement. The word “writing”
was never mentioned. Second, immediately after the call, defendant sent plaintiff a letter telling
him that it was ceasing its collection efforts. Far from denying plaintiff the right to dispute his
debt, the phone conversation and follow-up letter make clear that plaintiff disputed his debt, and
did so successfully. The phone conversation lacks any discernible false or deceptive statement
or representation. The fact that defendant’s representative wanted a smidgen of detail about the

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dispute, when plaintiff was being obviously and intentionally vague, does not amount to a
statutory violation.
This case has all the earmarks of a setup. Plaintiff and his lawyer decided they were
going to outsmart the collection company and make a little money while at it. But this statute is
not a game, and its purpose is not to provide a business opportunity. There are still consumers
who are in fact harassed by debt collectors, albeit less often than prior to the statute’s enactment.
Those genuinely aggrieved parties are entitled to the protection of the statute. It should not be
diluted to become a plaything for fast talking plaintiffs and their lawyers.
I am inclined to award defendant attorneys’ fees and costs in connection with having to
defend this action. See 15 U.S.C. § 1692k(a)(3). I am also inclined to award further sanctions
under Federal Rule of Civil Procedure 11(b) and 11(c)(3). See Cooter & Gell v. Hartmarx Corp.,
496 U.S. 384, 393, 110 S.Ct. 2447, 2454 (1990). Plaintiff and his attorney are therefore Ordered
to Show Cause by February 18, 2015 why this action should not be dismissed, with fees costs
awarded under 15 U.S.C. § 1692k(a)(3), and sanctions issued pursuant to Rule 11.

SO ORDERED.

Digitally signed by Brian M.
Cogan
______________________________________
U.S.D.J.

Dated: Brooklyn, New York
February 11, 2015

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APPENDIX A

Automated:
Thank you for calling Midland Credit Management, a debt collection company. To continue in
English, press 1. If you know your party’s five digit extension, enter it now. Your call may be
monitored or recorded, if you do not wish for this to happen, please advise the person who
answers your call.
This is an attempt to collect a debt. Any information obtained will be used for that purpose.
Please leave a voice message for David Strimson. At the tone please record your message,
when you are finished recording, hang up and press # for more options.
*********************
Hello, this is Mr. Huebner, I’d like to speak to Mr. Strimson, if you could kindly give me a call, I
would appreciate it, 917-701-5432, 917-701-5432. Thank you.
********************
Automated:
Thank you for calling Midland Credit, a debt collection company. To continue in English, press
1. If you know your party’s five digit extension, enter it now, if you do not know your party’s
extension, press 6 to search by last name or for further assistance, press 0 now. Your call may be
monitored or recorded, if you do not wish for this to happen, please advise the person who
answers your call.
*********************
MCM Representative: Thank you for calling MCM. You are talking to Josh Gables, may I have
the MCM account number please?
Mr. Huebner: I really don’t know the acct number but I got a thing on my credit report that said
that I have something on there by Midland Funding.
MCM Representative: Okay, so your first and last name please.
Mr. Huebner: Levi, last name Huebner. H-U-E-B-N-E-R.
MCM Representative: Okay, so this is the first time you’re calling us you and you didn’t receive
any calls and not even a single letter from us.
Mr. Huebner: I never received a letter from you, I just found out about this cause I had a, I got
something on a credit report.

MCM Representative: Alright, can you confirm for me the [inaudible] please?
Mr. Huebner: It has an account number here, I can give you the account number that it says.
MCM Representative: Is it with 10 digits?
Mr. Huebner: Hold on.
MCM Representative: Sure sir.
Mr. Huebner: It starts off 855965.
MCM Representative: 855965, that’s not the complete number sir.
Mr. Huebner: Well, I’m looking at the account number that I could associate this with. You
know, I don’t know where you got that acct number, the account number I have a different acct
number let me see here, it’s 7187569815.
MCM Representative: 7187569815
Mr. Huebner: Yea.
MCM Representative: Let me check. Okay, that’s the original account number sir, actually
that’s the telephone number that you had with Verizon. That’s a telephone number, it’s a home
telephone line that was activated by Verizon back in 2010 till 2011.
Mr. Huebner: Okay.
MCM Representative: Okay, and I’ll give you the account number with our company, so write it
down.
Mr. Huebner: Okay. Just a minute.
MCM Representative: It isMr. Huebner: Just a minute, I’m getting a pen and paper if you don’t mind.
MCM Representative: Sure sure.
Mr. Huebner: Okay, so the account, this is your account number.
MCM Representative: Yes, I’m going to give you our account number
Mr. Huebner: Yeah go ahead.
MCM Representative: So 855
Mr. Huebner: 855
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MCM Representative: 965
Mr. Huebner: 965
MCM Representative: 9948
Mr. Huebner: 9948. That’s a Midland account number.
MCM Representative: Yes, yes that is right, so the bill amount is for $131.21.
Mr. Huebner: Did Midland send me a letter about this account?
MCM Representative: Sir, I will verify the letter that was sent to you. I think we also, the
address which we mailed the letter to, it was in August, 478 Melbourne Street, first floor. That’s
the address which we have for in Brooklyn, NY. That’s the only address we have.
Mr. Huebner: And you sent the letter there?
MCM Representative: Yes we sent the letter in the month of August when Verizon sold your
account to us.
Mr. Huebner: Okay, that’s wonderful to hear that, and I want to know, if want to dispute the
debt, what do I have to do?
MCM Representative: Give me one minute, one minute sir. Okay, the account number which I
gave you, I’m going to connect your call with one of my departments, okay the dispute
department, give that account number to them, and they will go ahead and explain to you the
procedure how to dispute the account and how the account will be taken care of. Okay, one
minute, I’ll transfer you to them.
*********************
Automated:
[Please continue to hold for just a moment longer, we will on the line shortly to answer your call.
Thank you for calling Midland Credit Management, a debt collection company. Your call may
be monitored or recorded. If you do not wish for this to happen, please advise the person who
answers your call. This is an attempt to collect a debt. Any information obtained will be used
for that purpose. To continue in English, press 1.]
[Thank you for your continued patience, please hold for the next available agent.]
*********************
MCM Representative: Thank you for calling Midland Credit Management, my name is Emma
Elliott, may I have the account number please?
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Mr. Huebner: Hi, how are you?
MCM Representative: I’m good, thank you, how are you today?
Mr. Huebner: Very good, the account number is 8559659948.
MCM Representative: 9948?
Mr. Huebner: Correct
MCM Representative: And what is your name please?
Mr. Huebner: Levi Huebener, and may I ask your name?
MCM Representative: My name is Emma.
Mr. Huebner: E. How do you spell that?
MCM Representative: E-M-M-A.
Mr. Huebner: Okay.
MCM Representative: That’s 478 Melbourne Street your current address sir?
Mr. Huebner: That’s correct.
MCM Representative: Okay. How can I assist you on this Verizon NY account?
Mr. Huebner: What I want to know, what do I have to do if I want to dispute the debt?
MCM Representative: Just advise me what your dispute is, and I can see if I can assist you with
that.
Mr. Huebner: And, how do I get it off my credit report?
MCM Representative: Well we would need to work with what your dispute is in order to
remove it sir, so why are you disputing?
Mr. Huebner: I don’t understand, I just can’t get it off my credit report?
MCM Representative: No sir, we can’t just delete an account because the consumer wants it
deleted. We need to know why they want it deleted and what their dispute is. I can assist you
with your dispute here sir.
Mr. Huebner: I don’t understand, I can’t take get it off my credit card, my account without
paying it?

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MCM Representative: That’s not what I said sir, I need to know what your dispute is before I
can just delete it for you. So you’re saying that you want to dispute it, why is it you want to
dispute it?
Mr. Huebner: Because it’s a non-existent debt.
MCM Representative: Okay, can you elaborate as to what that means, did you already pay it
with Verizon, did you never have Verizon?
Mr. Huebner: Do you have a contact information?
MCM Representative: What do you mean sir?
Mr. Huebner: I don’t understand what the questions you’re asking me.
MCM Representative: Sir you called in to dispute the debt, I need to know why you’re
disputing. So I’m asking you questions about what your dispute is.
Mr. Huebner: I’m telling you it’s a non-existent debt
MCM Representative: Okay, sir, but I don’t know what that means, it is existing, cause its here
in our system so why are you stating its non-existent?
Mr. Huebner: Because it is non-existent. How am I supposed to tell you, I can’t prove a
negative, its non-existent.
MCM Representative: Okay sir, but I don’t know what that means, I need you to elaborate so I
can assist you with your dispute. Did you ever have Verizon?
Mr. Huebner: Okay, so can I ask you a question?
MCM Representative: Sure.
Mr. Huebner: So, I don’t understand what you’re saying, do you have a contact number?
MCM Representative: Yes sir, but my contact number is not going to assist you with your
dispute.
Mr. Huebner: Well, I don’t understand, I want to kind of want to look into my files and see if I
find anything, but I’m going to have to call you back.
MCM Representative: Okay, our extension here is 32980.
Mr. Huebner: I don’t know, you mean the same number?
MCM Representative: Yes sir.

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Mr. Huebner: 800-265-8825. Extension
MCM Representative: 32980
Mr. Huebner: 32980. Okay, thank you Emma.
MCM Representative: You’re welcome sir. So did you want to move forward with your
dispute?
Mr. Huebner: I told you I dispute it, because it’s a non-existent debt.
MCM Representative: I understand sir, but you haven’t given me why you’re disputing, you’re
just saying you’re disputing, I need to know what you’re disputing.
Mr. Huebner: It’s a non-existent debt.
MCM Representative: Okay sir, but that’s not a dispute.
Mr. Huebner: Okay.
MCM Representative: Did you ever have Verizon sir?
Mr. Huebner: I don’t understand the question you ask me, this is a non-existent debt.
MCM Representative: It’s a very straightforward question. Did you ever have Verizon service?
Mr. Huebner: Okay, but I told you, you ask me, I told you, if you tell me, you’re not going to
take my dispute, that’s fine. I’m just going to try to see if I can get more information.
MCM Representative: I’m trying to tell help you with your dispute, sir, but you’re not really
helping me help you.
Mr. Huebner: Okay, so if I call back that number, if I have more information. If I call back that
number, then I can reach you?
MCM Representative: You’ll get someone in my department, sir, yes.
Mr. Huebner: I’ll get someone in your department?
MCM Representative: We don’t have direct extensions.
Mr. Huebner: Okay. So what department is this I’m speaking to?
MCM Representative: Consumer support.
Mr. Huebner: Okay, thank you very much.
MCM Representative: You’re welcome sir.
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