Consumer Financial Protection Bureau v. Weltman, Weinberg & Reis Co., L.P.A.

Filing 19

Memorandum Opinion and Order denying defendant's Motion for judgment on the pleadings (Related Doc # 7 ). Judge Donald C. Nugent 9/28/2017(C,KA)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

CONSUMER FINANCIAL
PROTECTION BUREAU,
Plaintiff,
v.

WELTMAN, WEINBERG & REIS CO.,
L.P.A.,
Defendant.

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CASE NO. 1:17 CV 817

JUDGE DONALD C. NUGENT

MEMORANDUM OPINION
AND ORDER

This matter is before the Court on the Motion for Judgment on the Pleadings filed by
Defendant, Weltman, Weinberg & Reis Co., L.P.A. (“WWR”) on June 12, 2017. (Docket #7.)
I.

Procedural History.
On April 17, 2017, Plaintiff, Consumer Financial Protection Bureau (“the Bureau”), filed

its Complaint against WWR asserting violations of Sections 807(3), 807(10) and 814(b)(6) of
the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692e(3), (10) and 1692(l(b)(6),
and Sections 1031(a), 1036(a)(1), 1054 and 1055 of the Consumer Financial Protection Act of
2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1), 5564 and 5565. The Bureau alleges that
WWR engaged in unlawful collection activities by misrepresenting the level of attorney

involvement in demand letters it sent and calls it made to consumers requesting payment.
Specifically, the Bureau states as follows:
9.
Since at least July 21, 2011, the Firm has regularly collected or
attempted to collect debts on behalf of original creditors and debt buyers.
*

*

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14.
As part of its debt collection efforts, Weltman sends letters to
consumers requesting payment (“demand letters”).
15.
If a consumer does not respond to an initial demand letter, then
Weltman frequently sends a follow-up demand letter reiterating its request for
payment or offering to settle the debt for a reduced amount.
16.
The vast majority of the time, Weltman generates these demand
letters through an automated process. Specifically, consumer account information
provided by Weltman’s clients is populated into a form letter template and printed
by a third-party vendor.
17.
Weltman’s demand letters are printed on the Firm’s letterhead,
which states “WELTMAN, WEINBERG & REIS Co., LPA” at the top of the first
page, and directly underneath the Firm’s name, “ATTORNEYS AT LAW.” In
almost all versions of this template, the name of the Firm and the phrase
“ATTORNEYS AT LAW” are in bold type.
18.
“Weltman, Weinberg & Reis Co., L.P.A.” appears in type-face in
the signature line of nearly all of Weltman’s demand letter templates.
19.
Weltman’s form letters typically include a detachable payment
remission slip indicating that payments should be sent to Weltman, Weinberg &
Reis Co., L.P.A., and provide a mailing address.
20.
Since at least July 21, 2011, some of Weltman’s form letters have
included the following language: “Failure to resolve this matter may result in
continued collection efforts against you or possible legal action by the current
creditor to reduce this claim to judgment.”
21.
Since at least July 21, 2011, Weltman’s form letters have also
sometimes included the following language: “This law firm is a debt collector
attempting to collect this debt for our client and any information obtained will be
used for that purpose.”
22.

Since at least July 21, 2011, at times some form letters stated:
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“Please be advised that this law firm has been retained to collect the outstanding
balance due and owing on this account.”
23.
When Weltman sends demand letters, Weltman attorneys generally
have not reviewed a corresponding consumer’s individual account file to reach a
professional judgment that sending the letter is appropriate because, for example,
the information in the letter is accurate and the debt is due and owing.
24.
In most cases, Weltman attorneys do not review any individual
account information or any other aspects of a consumer’s file before Weltman
sends a demand letter.
25.
None of the subject demand letters include any disclaimer notifying
consumers that an attorney has not reviewed the consumer’s file or formed an
independent professional judgment about the subject debt.
26.
Weltman’s demand letters misrepresent that attorneys at the firm
have reviewed the consumer’s file and determined that the consumer owes the
amount demanded, when in fact no such review has occurred.
27.
Rather, at the time a consumer receives a demand letter, Weltman is
acting as a collection agency.
28.
Weltman has sent millions of demand letters to consumers since
July 21, 2011. Consumers have paid millions of dollars after Weltman sent a
given demand letter but before Weltman filed any related collection lawsuit.
29.
In addition to sending demand letters, Weltman also attempts to
collect debts through outbound telephone calls to consumers.
30.
These calls are generally handled by non-attorney collectors who
are part of Weltman’s “Pre-Legal” Department.
31.
In addition, consumers sometimes call Weltman after receiving a
demand letter from Weltman, and are routed to these collectors. During these
inbound calls, the collectors similarly request payment on the consumer’s alleged
debt.
32.
From at least July 21, 2011 through as late as July 2013, it was
Weltman’s practice and policy to identify Weltman as a law firm during these
collection calls. Some training materials and collection scripts instructed Weltman
collectors to tell consumers: “This law firm is a debt collector attempting to
collect this debt for our client and any information will be used for that purpose.”
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33.
Even after July 2013, at times collectors continued to refer to
Weltman as a law firm during calls with consumers. Sample statements made to
consumers by collection agents that referred to Weltman’s law firm status
included that Weltman was the “largest collection law firm in the United States,”
an account was forwarded to “the collections branch of our law firm,”
and that the account has been “placed here with our law firm.”
34.
When such calls occurred, however, Weltman attorneys generally
had not reviewed a corresponding consumer’s individual account file to reach a
professional judgment regarding whether the consumer owed the debt.
35.
Consumers were typically not cautioned that an attorney had not
reviewed their account information or formed an independent professional
judgment about the subject debt.
36.
Weltman’s statements to consumers during collection calls implied
that attorneys at the firm reviewed the consumer’s file and determined that the
consumer owed the amount demanded, when in fact no such review had occurred.
(Complaint at pp. 3-6.)
In its Motion for Judgment on the Pleadings, WWR argues the allegations set forth in the
Complaint are insufficient to state claims for violations of the FDCPA and/or CFPA; that claims
based on conduct before November 13, 2013 are barred by the applicable statutes of limitation;
and, that the Complaint otherwise fails on the merits because the communications at issue were
truthful and not misleading to the least sophisticated consumer.
The Bureau filed its Brief in Opposition to WWR’s Motion for Judgment on the
Pleadings on July 12, 2017. (Docket #10.) The Bureau argues that its FDCPA and CFPA claims
are sufficiently pled; that the letters and calls at issue falsely imply that an attorney has formed a
professional judgment that the consumer owes the debt; that WWR attorneys were not
meaningfully involved in the communications at issue; and, that none of the other arguments
raised by WWR (including statute of limitations, merits-based and public policy/professional

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obligation arguments) demonstrate that WWR is entitled to judgment.
WWR filed its Reply Brief on July 26, 2017. (Docket #13.)
II.

Standard of Review.
The Sixth Circuit reviews motions for judgment on the pleadings under Fed. R. Civ. P.

12(c) under the de novo standard applicable to motions to dismiss under Rule 12(b)(6). See
Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 n. 1 (6th Cir. Ohio 1988).
Correspondingly, the standard of review used by a district court to rule on a motion for judgment
on the pleadings is the same as the standard used to rule on Rule 12(b)(6) motions. See
Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. Tenn. 1998).
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) allows a defendant
to test the legal sufficiency of a complaint without being subject to discovery. See Yuhasz v.
Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir. Ohio 2003). In evaluating a motion to dismiss,
the court must construe the complaint in the light most favorable to the plaintiff, accept its
factual allegations as true, and draw reasonable inferences in favorable of the plaintiff. See
Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. Ky. 2007). The court will not, however,
accept conclusions of law or unwarranted inferences cast in the form of factual allegations. See
Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir. Tenn. 2000).
In order to survive a motion to dismiss, a complaint must provide the grounds of the
entitlement to relief, which requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action. See Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65
(2007). That is, “[f]actual allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in the complaint are true (even if

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doubtful in fact).” Id. (internal citation omitted); see Association of Cleveland Fire Fighters v.
City of Cleveland, No. 06-3823, 2007 WL 2768285, at *2 (6th Cir. Ohio Sept. 25, 2007)
(recognizing that the Supreme Court “disavowed the oft-quoted Rule 12(b)(6) standard of
Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed.2d 80 (1957)”). Accordingly, the
claims set forth in a complaint must be plausible, rather than conceivable. See Twombly, 127 S.
Ct. at 1974.
On a motion brought under Rule 12(b)(6), the court’s inquiry is limited to the content of
the complaint, although matters of public record, orders, items appearing in the record of the
case, and exhibits attached to the complaint may also be taken into account. See Amini v.
Oberlin College, 259 F.3d 493, 502 (6th Cir. Ohio 2001). It is with this standard in mind that the
instant Motion must be decided
II.

Discussion.
Congress enacted the FDCPA in order "to eliminate abusive debt collection practices by

debt collectors, to insure that those debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged, and to promote consistent State action
to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). Likewise, the CFPA
prohibits “any unfair, deceptive, or abuse practice” regarding consumer products or services. 12
U.S.C. § 5336.
FDCPA violations are analyzed through the lens of the "least sophisticated consumer,"
whereas a “reasonable consumer” standard applies to CFPA claims. Gionis v. Javitch, Block,
Rathbone, LLP, 238 Fed. App’x 24, 28 (6th Cir. Ohio 2007) (citing Smith v. Transworld Sys.,
Inc., 953 F.2d 1025, 1029 (6th Cir. Ohio 1992)); F.T.C. v. E.M.A. Nationwide, Inc., 767 F.3d

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611, 631 (6th Cir. Ohio 2014). The least sophisticated consumer standard is "lower than simply
examining whether particular language would deceive or mislead a reasonable debtor.” Smith v.
Computer Credit, Inc., 167 F.3d 1052, 1054 (6th Cir. Ohio 1999) (internal quotation omitted).
The least sophisticated consumer test "serves a dual purpose: 'it (1) ensures the protection of all
consumers, even the naive and the trusting, against deceptive debt collection practices, and (2)
protects debt collectors against liability for bizarre or idiosyncratic interpretations of collection
notices.'" Gionis, 238 Fed. App’x 24, 28 (quoting Clomon v. Jackson, 988 F.2d 1314, 1320 (2nd
Cir. 1993)).
Although the “least sophisticated consumer” standard is a lower standard, it “‘prevents
liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient
of reasonableness and presuming a basic level of understanding and willingness to read with
care.’” Federal Home Loan Mortgage Corp. v. Lamar, 503 F.3d 504, 509-10 (6th Cir. Ohio
2007) (quoting Wilson v. Quadramed Corp., 225 F.3d 350, 354-44 (3rd Cir. N. J. 2000). The
least sophisticated consumer “can be presumed to possess a rudimentary amount of information
about the world and a willingness to read a collection notice with some care.” Clomon, 988 F.2d
1314, 1219.
Counts I and IV allege violations of the FDCPA with regard to the letters and phone calls
made by WWR to debtors. 15 U.S.C. § 1692e, titled “False or misleading representation,”
provides in pertinent part as follows:
A debt collector may not use any false, deceptive, or misleading representation or means
in connection with the collection of any debt. Without limiting the general application of
the foregoing, the following conduct is a violation of this section:
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(3) The false representation or implication that any individual is an attorney or
that any communication is from an attorney.
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(10) The use of any false representation or deceptive means to collect or attempt
to collect any debt or to obtain information concerning a consumer.
The mere fact that a letter is written on law firm letterhead does not violate the FDCPA.
Rather, the question is whether the least sophisticated debtor, reading the letter, would
understand that the law firm has not reviewed the specific facts of the case. Greco v. Trauner,
412 F.3d 360 (2nd Cir. 2005). The Court in Greco explained the requirements of the FDCPA
relative to representations of attorney communication as follows:
One cannot, consistent with FDCPA, mislead the debtor regarding meaningful
“attorney” involvement in the debt collection process. But it does not follow that
attorneys may participate in this process only by providing actual legal services.
In fact, attorneys can participate in debt collection in any number of ways,
without contravening the FDCPA, so long as their status as attorneys is not
misleading. Put another way, our prior precedents demonstrate that an attorney
can, in fact, send a debt collection letter without being meaningfully involved as a
attorney within the collection process, so long as that letter includes disclaimers
that should make clear even to the “least sophisticated consumer” that the law
firm or attorney sending the letter is not, at the time of the letter’s transmission,
acting as an attorney.
Greco, 412 F.3d at 364.
The Parties do not dispute that Defendant truthfully identified itself as a law firm.
However, the question is whether WWR sufficiently clarified that it was not acting as an
attorney in connection with sending the debt collection letters or making the debt collection
phone calls, so as not to mislead. The Bureau includes allegations that the communications were
rife with references to the “law firm” and threaten the possibility of legal action in the event the
debt was not satisfied. With no disclaimer that would make it “clear to even the ‘least
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sophisticated consumer’ that the law firm or attorney sending the letter is not, at the time of the
letter’s transmission, acting as an attorney,” the Bureau alleges the communications were false
and/or deceptive. Construing the facts set forth in the Complaint in the light most favorable to
the Bureau, accepting its factual allegations as true, and drawing all reasonable inferences in
favor of the Bureau, the Court finds the Bureau has sufficiently pled its FDCPA claims.
Likewise, the Bureau’s CFPA claims, Counts II, III, V and VI, are pled sufficiently to
withstand dismissal. The Complaint sufficiently alleges a material representation, likely to
mislead a reasonable consumer. See Consumer Fin. Prot. Bureau v. Gordon, 819 F.3d 1179,
1192-93 n.7 (9th Cir. Cal. 2016); FTC v. E.M.A. Nationwide, Inc., 767 F.3d 611, 630-31 (6th Cir.
Ohio 2014). As set forth above, the question is not simply whether WWR truthfully identified
itself, but whether WWR’s communications failed to sufficiently identify or accurately convey
WWR’s role in the debt collection process so as not to be deceptive or misleading. Construing
the facts set forth in the Complaint in the light most favorable to the Bureau, accepting its factual
allegations as true, and drawing all reasonable inferences in favor of the Bureau, the Court finds
the Bureau has sufficiently pled its CFPA claims.
The Parties disagree as to the applicable statutes of limitation. WWR argues that a oneyear statute of limitations applies to claims brought pursuant to the FDCPA; that a three-year
statute of limitations applies to claims brought pursuant to the CFPA; and, that the statutes of
limitation began to run on the date of the alleged violation. The Bureau argues that the CFPA’s
three-year statute of limitations applies to all of its claims, whether brought pursuant to the
FDCPA or CFPA, arguing that the one-year FDCPA statute of limitations applies only to claims
brought by consumers. Further, the Bureau argues that the language of the CFPA provides that a
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claim must be brought within three years of the date of discovery of the violation to which an
action relates, not the date of the actual violation.
12 U.S.C. § 5564(g) provides as follows.
(g) Time for bringing action
(1) In general
Except as otherwise permitted by law or equity, no action may be brought under
this title more than 3 years after the date of discovery of the violation to which
an action relates.
(2) Limitations under other Federal laws

(A) In general
An action arising under this title does not include claims arising solely
under enumerated consumer laws.
(B) Bureau authority
In any action arising solely under an enumerated consumer law, the
Bureau may commence, defend, or intervene in the action in
accordance with the requirements of that provision of law, as
applicable.
(C) Transferred authority
In any action arising solely under laws for which authorities were
transferred under subtitles F and H, the Bureau may commence, defend, or
intervene in the action in accordance with the requirements of that
provision of law, as applicable.
12 U.S.C. § 5564(g) (emphasis added).
Pursuant to the plain language of the statute, the Bureau’s CFPA claims are subject to a
three-year statute of limitations, which began to run when the Bureau discovered the facts
constituting the violation. With regard to the Bureau’s FDCPA claims, at least one Federal
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Court has theorized that based on the express language of the CFPA and given the fact that the
Bureau’s action does not arise “solely under an enumerated consumer law,” but rather under both
the CFPA and the FDCPA, that the CFPA’s three-year statute of limitations applies to both the
FDCPA and CFPA claims. See Consumer Fin. Prot. Bureau v. Frederick J. Hanna & Assocs.,
114 F. Supp. 3d 1342, 1380 (N.D. Ga. July 14, 2015). In Frederick J. Hanna, the Georgia
District Court noted that “a survey of case law across the country has revealed little that is
helpful to resolving the statute of limitations question” where the Bureau’s Complaint alleged
claims under both the FDCPA and the CFPA. The Court looked to another case, Fed. Trade
Comm’n. v. CompuCredit, Case No. 1:08 CV 1976, at *10 (N.D. Ga. Oct. 8, 2008), for guidance.
In CompuCredit – a case in which the Federal Trade Commission (“FTC”) brought claims under
both the FDCPA and the FTC Act – the Court rejected application of the FDCPA’s one-year
statute of limitations, reasoning that the Bureau was not a “consumer” for purposes of the
FDCPA and, therefore, that the one-year statute of limitations applicable to FDCPA claims
brought by consumers was inapplicable. However, because the alleged violations of the FDCPA
were “deemed and unfair or deceptive act or practice” in violation of the FTC Act, the Court in
CompuCredit decided the FTC Act’s three-year statute of limitations should apply. Id.
Ultimately, the Court in Frederick J. Hanna reserved ruling on the statute of limitations
issue (the case was later disposed of by a Consent Judgment) and stated as follows.
As the Court rejects the "no limitations period" argument, the Court is left
at this point with two possibilities: limiting the Defendants' potential liability to
conduct occurring within one year of the filing of this lawsuit, or reaching back a
full three years for liability purposes. Either way, however, no claim in this action
will be completely foreclosed on statute of limitations grounds. And as a practical
matter, it makes little difference at this stage of litigation whether a one-year or
three-year statute of limitations applies. The Bureau's CFPA claims under 12
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U.S.C. § 5536(a), which are not time-barred, are based on the same conduct as the
FDCPA claims and thus support the same discovery. The CFPA claims reach back
to conduct occurring on July 21, 2011, (supra note 20), one week shy of three
years from the date this case was filed on July 14, 2014. Thus, a decision between
the one- and three-year limitations period would do little to narrow the scope of
discovery. Given the uncertainty regarding the appropriate statute of limitations to
apply here, and the real possibility that other courts at the district or appellate
level will in the next year address similar statute of limitations issues involving
this relatively new agency and its enforcement power, the Court declines at this
time to rule on this issue so as to consider further judicial developments that may
be of assistance. Defendants may reassert the statute of limitations defense on
summary judgment or in light of relevant circuit court decision developments.
Frederick J. Hanna, 114 F. Supp. 3d 1342, at *1380-81.
The Court finds the reasoning in CompuCredit to be persuasive. However, much like
Frederick J. Hanna, no claim in this action will be completely foreclosed on statute of
limitations grounds and all claims are based on the same conduct and thus support the same
discovery. Accordingly, the Court will reserve ruling on the statute of limitations at this time
and the Parties may revisit the statute of limitations on summary judgment if appropriate.
Conclusion
For the foregoing reasons, the Motion for Judgment on the Pleadings filed by Defendant,
Weltman, Weinberg & Reis Co., L.P.A. (Docket #7) is DENIED.
IT IS SO ORDERED.

s/Donald C. Nugent
DONALD C. NUGENT
United States District Judge

DATED: September 28, 2017

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