Pastian v. International Credit Systems, Inc et al

Filing 61

ORDER - IT IS THEREFORE ORDERED THAT: 1. Plaintiffs Motion for Partial Summary Judgment (Doc. # 48 ) is DENIED without prejudice to renewal; and 2. On or before April 20, 2020, the parties shall brief the issue of whether Plaintiff has Article III standing to litigate each of her FDCPA claims in light of Buchholz v. Meyer Njus Tanick, PA, 946 F.3d 855 (6th Cir. 2020) and other pertinent case law. Signed by Magistrate Judge Sharon L. Ovington on 3/30/2020. (srb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
MEGAN PASTIAN,

:
:
Plaintiff,
:
vs.
:
:
INTERNAL CREDIT SYSTEMS, INC., :
et al.,
:
:
Defendants.
:

Case No. 3:17-cv-00252
Magistrate Judge Sharon L. Ovington
(by full consent of the parties)

ORDER
I.

Introduction
Plaintiff Megan Pastian brings this case against Defendant Internal Credit

Systems, Inc. (ICS) under the Fair Debt Collections Practices Act (FDCPA), 15 U.S.C.
§§1692, et seq, and the Ohio Consumer Sales Practices Act, Ohio Rev. Code §1345.02
and §1345.03. The case is presently pending upon Plaintiff’s Motion for Partial
Summary Judgment on her claims that ICS violated the FDCPA and the Ohio Consumer
Sales Practices Act. Defendant ICS argues that Plaintiff lacks standing to bring a claim
under the FDCPA and opposes Plaintiff’s Motion for additional reasons.
II.

Factual Background
Plaintiff alleges in her Amended Complaint that in late 2016, she saw

advertisements offering a gym membership—“Join for $1”—with Everybody Fitness,

LLC.1 (Doc. #15, PageID #68). After visiting an Everybody Fitness location, she
declined an offer of a three-year membership but agreed to join for a maximum of one
year. She alleges that she was not given a written copy of the gym-membership contract
to review before she signed a blank electronic tablet. Id. at 70.
Problems soon arose. She alleges that her credit card was charged $33.11 for the
first month, not $1 as advertised. Id. She further alleges that after she received a free
personal training session, she declined to purchase two additional sessions at the offered
price of $200 per session. She eventually agreed to two training sessions, and she was
charged $30 per session. She alleges that she was not given a written personal-training
contract to review before she signed an electronic tablet. Id. at 71.
Plaintiff soon decided that she no longer wanted to be a member of the gym. She
“decided not to accept any further services from Everybody Fitness.” Id. She did not
return to an Everybody Fitness facility.
On May 31, 2017, Defendant ICS sent a letter to Plaintiff identifying itself as “a
debt collector.” (Doc. #48, PageID #406). The letter advised Plaintiff that Everybody
Fitness “has requested my office to collect this matter,” stated an amount due of
$3,343.52, and further stated, “This letter is to provide you with an opportunity to resolve
this matter expeditiously.” Id. The letter continued:
Pursuant to the Fair Debt Collection Practices Act requires [sic]
that we inform you that: unless you, within thirty (30) days after
receipt of this initial notice, dispute the validity of the debt, or any
portion thereof, the debt will be assumed valid by the debt
collector. If you notify the debt collector in writing within the
1

Also referred to as Every Body Fitness, LLC, in Plaintiff’s Amended Complaint.

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thirty-day period that the debt, or any portion thereof, is
disputed, the debt collector will obtain verification of the debt ….
Id. (emphasis in original).
Plaintiff read the letter and was confused by the amount of debt it stated. She
testified during her deposition, “I was confused as to how they—they got that amount.”
(Doc. #56, PageID #629). She was also “confused as to who Internal Credit Systems was
at that time I read the letter.” Id. at 632. She “planned on calling the gym to see where
they got that number, the amount that … was owed. I wanted to see how they came up
with that number.” Id. at 629-30. The letter caused Plaintiff significant stress and
anxiety because she “was confused as to how they got that amount of money.” Id. at 655.
A week later, on June 6, 2017, before Plaintiff contacted the gym, she received a
voicemail message from ICS owner and founder Ted Lachman. He testified during his
deposition that he founded ICS in 1999. He explained, “I just fell into it. I had a partner
and he had some—I was working actually, I was doing some stuff at the gym. And he
asked me to help him collect on something. All of a sudden, he said well, let’s open a
collection agency. And that’s how it all got started.” (Doc. #48, PageID #343).
Lachman bought his partner’s ownership interest in ICS during its first year of
operation, thus becoming its sole owner. Id. ICS employs Hieu Tran to handle “backend stuff, putting contracts in and receipts and stuff…,” and writing dispute letters Id. at
346. Tran sometimes very seldom talks with people from whom ICS is trying to collect a
debt. Lachman testified, “His [Tran’s] job is not to talk to people. That’s what I do.” Id.
at 347. Lachman described ICS as “a little small operation…, very few calls a day. We

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make enough to survive, very few calls….” Id. at 349-50. ICS does collection work only
for gyms. Id. at 351.
During Lachman’s deposition, a recording of the voicemail message he left for
Plaintiff on June 6, 2017 was played. Lachman recognized his own voice on the
recording. The recording says, “Yes, message for Megan. This is Ted Lachman giving
you a call regarding a legal matter. My number is 1-877 ….” Id. at 365. Lachman
explained that he referred to a “legal matter” in his voicemail message because “it was a
serious matter and we need to try to help her get it fixed…. I wanted to make sure she
knew it was serious, to call me back.” Id. at 366.
Plaintiff states in her sworn Declaration—prepared and executed before her
deposition—that she did not know anyone named Ted Lachman. She further stated,
“[U]pon hearing the voicemail, I felt sick and panicked. I thought my husband, Ben, or I
had gotten into legal trouble.” (Doc. #48, PageID #439).
Plaintiff returned the call that same day. Lachman answered. The parties dispute
what happened next.
Plaintiff testified that Lachman “just went straight into yelling at me, telling me
that I owed Every Body fitness money, and that I was going to pay them back.” (Doc.
#56, PageID #613). She tried to get Lachman to talk with her in a more professional
manner. According to Plaintiff, Lachman called her “a bitch. He said that I was
hallucinating to think that I was going to get out of paying the money….” Id. at 614.
And, she said, “I was just really shocked and confused that somebody was talking to me
the way he was talking to me.” Id. She did not raise her voice or use profanity during the
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phone call. Id. at 614-15. When asked how the phone call made her feel, Plaintiff
testified, “It made me anxious. It was embarrassing. I was shocked. I was upset that
someone talked to me that way and they weren’t very professional.” Id. at 683-84.
In her Declaration, Plaintiff alleges more:
On or about June 6, 2017, I made a return call based on the voicemail
I received. Mr. Lachman answered the phone. Mr. Lachman did not
explain that he was a debt collector, nor did he explain to me that any
information I gave him could be used to collect money from me. Mr.
Lachman was loud, aggressive, pushy, and condescending with me on
the phone. Mr. Lachman told me that I owed #3,343.52 to Everybody
Fitness and needed to fix my mistake, or I could face “possible jail
time.” I was concerned and confused based on his comments. I asked
to speak with someone else, and Mr. Lachman told me that he was the
only person I would ever be able to talk to and that he would see me
in court if I did not pay. Mr. Lachman then called me a “brat” and a
“bitch,” because I tried to insist that I did not owe the money to
Everybody Fitness and there was some confusion. Mr. Lachman hung
up on me.
(Doc. #48, PageID #439, ¶19). Plaintiff continues:
He [Lachman] said that I was “hallucinating” if I thought I would ever
get out of paying the money. Mr. Lachman’s statements made me
incredibly anxious, frustrated, and offended. I did not like how I was
being treated so I told Mr. Lachman I would see an attorney about
this. Mr. Lachman told me to go ahead and get an attorney because
he was looking forward to “seeing me in court.” Mr. Lachman hung
up on me.
Id. at ¶20.
Plaintiff explained during her deposition that she started seeing a therapist once a
week in February 2018. (Doc. #56, PageID #s 663-64). She takes prescription
medication (Celexa) because her conversation on June 6, 2017 with Lachman “caused a
lot of anxiety ….” Id. at 665-66.

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Lachman tells a different story. He testified that when Plaintiff called him back,
he identified himself as a debt collector. He described Plaintiff as “nasty”; “she was
ranting and raging and just—she didn’t want to hear anything. So I listened to her. She
was talking nonsense…. She just went on and on and on and didn’t want to hear nothing
and she wasn’t paying it and this and this. And right at the end, she said I’m not paying
you shit, I’m not paying Every Body Fitness shit, you can talk to my f**king lawyer, and
hung up the phone.” (Doc. #48, PageID #371). Lachman denied that he told Plaintiff he
would bring a legal proceeding against her, and he absolutely did not threaten her with
imprisonment if she didn’t pay the debt. Id. at 371-72.
It is undisputed that about one week later, Plaintiff received another voicemail
message. This message, played during Lachman’s deposition, stated, “Message for
Megan. This is Hieu Tran calling from Internal Credit Systems. We need to speak to
you immediately regarding a personal business matter. My number is 1-877 ….” Id. at
368.
Plaintiff testified during her deposition that when she returned Tran’s call, she told
him that she had retained counsel. She explained, “[H]e proceeded to tell me that I still
owed the money and that I could call him with a debit card, credit card, or send a check
in the mail if … I decided to pay it.” (Doc. #56, PageID #622).
On June 16, 2017, Plaintiff’s attorney sent a letter to ICS disputing the debt and
asking ICS to provide validation of the debt. (Doc. #48, PageID #432). Hieu Tran
responded by sending a letter to Plaintiff’s counsel. He also provided Plaintiff’s counsel
with a copy of her contract. He indicated that her amount due was $3,343.52 and that she
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had failed to make payments on her contract. After quoting some contract language, he
wrote, “If she does not clear her balance, she will be sent to collections for all the unpaid
months to the end of her contracts. Three late fees and three service fees. In order for this
matter to be closed the balance is due. Once paid in full, she will receive a receipt stating
nothing has been reported to her credit and the account is terminated.” Id. at 433.
Plaintiff describes her harm in her sworn Declaration:
The letter and the phone conversations have been incredibly stressful
for me. During the conversations with Mr. Lachman, he made me feel
anxious, frustrated, ignored, helpless, confused, and offended.
Internal Credit System’s attempts to collect money from me has
increased my stress level and anxiety. I felt embarrassed, less
confident and depressed that someone said I owed so much money so
soon after Ben and I got married. Based on Mr. Lachman’s
statements, I was worried that Internal Credit Systems would escalate
things to negative affect my credit and marriage to Ben. I was unsure
if Internal Credit Systems would take me to court or take some other
legal action that could cause me to lose my job as a bank teller and
ruin my life. I am still in shock about how I was treated on the phone
because I simply have never had such a hostile, offensive, and
aggressive conversation with another person in a professional setting.
Because of Internal Credit System’s attempts to collect an alleged
debt from me, I suffered severe emotional and mental distress.
Id. at 440, ¶27.2

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A summary-judgment subtlety should be noted here: It is proper to consider her Declaration at this point
in the case because it was not created in an attempt to contradict her deposition testimony. Instead, it
predates her deposition by slightly more than four months. Reich v. City of Elizabethtown, Kentucky, 945
F.3d 968, 976 (6th Cir. 2019) (citation omitted) (“A party may not create a factual issue by filing an
affidavit, after a motion for summary judgment has been made, which contradicts her earlier deposition
testimony.”). Her sworn Declaration is dated October 23, 2018. Her deposition occurred on March 1,
2019. Additionally, Defendant ICS’s counsel had a copy of her Declaration and questioned her about it
during her deposition.

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III.

Summary Judgment Standards
Summary judgment is available to a moving party who is able to “show that there

is no genuine dispute as to any material fact and that the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). The moving party “bear[s] the burden of
showing the absence of a genuine issue of material fact as to at least one essential
element of [Defendant’s] claim.” Laster v. City of Kalamazoo, 746 F.3d 714, 726 (6th
Cir. 2014) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)).
IV.

Discussion—FDCPA and Standing
“Congress passed the FDCPA to address the widespread and serious national

problem of debt collection abuse by unscrupulous debt collectors.” Currier v. First
Resolution Inv. Corp., 762 F.3d 529, 533 (6th Cir. 2014) (citing S.Rep. No. 95–382, at 2
(1977), 1977 U.S.C.C.A.N. 1695, 1696; 15 U.S.C. § 1692(a), (e)). “The goal of the
FDCPA is to eliminate abusive debt collection practices.” Lyshe v. Levy, 854 F.3d 855,
859 (6th Cir. 2017).
The FDCPA “prohibits a debt collector from the use of ‘any false, deceptive, or
misleading representation or means in connection with the collection of any debt.’”
Wallace v. Washington Mut. Bank, F.A., 683 F.3d 323, 326 (6th Cir. 2012) (quoting, in
part, 15 U.S.C. § 1692e). The FDCPA prohibits debt collectors from “a wide array of
specific conduct…,” Currier, 762 F.3d at 533, for instance, “false representation of—the
character, amount, or legal status of any debt…,”; “[t]he representation or implication
that nonpayment of any debt will result in arrest or imprisonment of any person…,”; [t]he
threat to take any action that cannot legally be taken or that is not intended to be
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taken…,”; “[t]he false representation or implication that the consumer committed any
crime or other conduct in order to disgrace the consumer….” 15 U.S.C. §§ 1692e(2)(A),
(4), (5), (7). The FDCPA “also prohibits, in general terms, any harassing, unfair, or
deceptive debt collection practice, which enables ‘the courts, where appropriate, to
proscribe other improper conduct which is not specifically addressed.’” Currier, 762
F.3d at 533 (quoting, in part, S.Rep. No. 95–382, at 4, 1977 U.S.C.C.A.N. 1695, 1698;
citing 15 U.S.C. §§ 1692d–1692f).
The FDCPA, 15 U.S.C. §1692k, “allows the consumer to recover statutory or
actual damages for violations of the Act.” Wallace, 683 F.3d at 326.
Plaintiff claims that ICS violated the FDCPA in the following ways:
1. falsely implying the existence of a legal action against her in
Lachman’s first voicemail message;
2. failing to identify itself as a debt collector in the first and second
voicemail messages;
3. misrepresenting the character and amount of alleged debt it was
trying to collect from her in the collection letter dated May 31,
2017;
4. threatening to negatively affect her credit; and
5. ICS’s outrageous conduct during the two phone calls, including
the use of obscene or profane language and threatening her with
possible jail time if she did not pay the debt.
ICS argues that summary judgment is unwarranted on Plaintiff’s FDCPA claims
because “standing is a genuine issue of material fact precluding summary judgment.”
(Doc. #56, PageID #578) (capitalization and bold omitted). It further asserts:
There are…, genuine issues of material fact as to whether Plaintiff
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suffered any concrete harm sufficient to give rise to standing due to
any technical violation of the FDCPA involving Defendant’s failure to
disclose it was a debt collector in its two voicemails. The Court
cannot conclusively answer those questions because they are issues of
fact for a jury to decide by weighing the credibility of witnesses and
their positions. The inability of the Court to answer those questions
means that it cannot determine whether Plaintiff had the requisite
standing to bring her claim in this Court.
Id. at 578-79.
ICS’s arguments rest on an incorrect premise. Rather than a factual issue,
standing presents an issue of law for the Court to resolve. Feiger v. Mich. Sup. Ct., 553
F.3d 955, 961 (6th Cir. 2009); see Neal v. Jyoti Ltd., 2:18cv958, 2019 WL 3416255, *5
(S.D. Ohio 2019). Yet, this flaw in ICS’s premise does not help Plaintiff much because
she bears the burden of establishing standing and must show it for each of her claims.
See Hagy v. Demers & Adams, 882 F.3d 616, 620 (6th Cir. 2018). In addition, the merits
of FDCPA claims, as presented in her Motion for Partial Summary Judgment, are not at
issue until she establishes her standing. “Standing is a threshold issue for bringing a
claim in federal court .…” Moody v. Michigan Gaming Control Board, 847 F.3d 399, 402
(6th Cir. 2017). “Whether a party has standing is an issue of the court’s subject matter
jurisdiction ….” Lyshe v. Levy, 854 F.3d 855, 857 (6th Cir. 2017) (citations omitted).
Standing derives from Article III of the Constitution, which extends federal
judicial power only to actual “Cases” and “Controversies” rather than theoretical
questions. U.S. Const. art. III, § 2; see Hagy, 882 F.3d at 620 (6th Cir. 2018). “That
case-or-controversy requirement is satisfied only where a plaintiff has standing.” Sprint
Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269, 273 (2008). To

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establish standing, Plaintiff must show: “(1) a particular and concrete injury (2) caused by
[defendant] and (3) redressable by the courts.” Hagy, 882 F.3d at 620 (citing Lujan v.
Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)).
Plaintiff contends that she has standing to litigate her FDCPA claims against ICS
because its FDCPA violations caused her concrete and particularized emotional harm.
She argues that she “felt stressed and anxious after receiving ICS’s collection letter
because the amount was outrageous and inaccurate. It is undisputed that [she] felt sick
and panicked thinking that she or her husband may be in legal trouble after receiving a
voicemail referencing a ‘legal matter.’” (Doc. #58, PageID #703). Plaintiff also points
to financial harm in that she incurred $525 in legal fees in requesting a validation letter
from ICS.
The Sixth Circuit Court of Appeals has explained:
Spokeo categorized statutory violations as falling into two broad
categories: (1) where the violation of a procedural right granted by
statute is sufficient in and of itself to constitute concrete injury in fact
because Congress conferred the procedural right to protect a
plaintiff’s concrete interests and the procedural violation presents a
material risk of real harm to that concrete interest; [or] (2) where there
is a “bare” procedural violation that does not meet this standard, in
which case a plaintiff must allege “additional harm beyond the one
Congress has identified.”
Macy v. GC Servs. Ltd. P’ship, 897 F.3d 747, 756 (6th Cir. 2018) (quoting, in part,
Spokeo, Inc. v. Robins, __U.S.__, 136 S.Ct. 1540, 1549 (2016)).
The parties in the present case have not had an opportunity to address a recent
case—Buchholz v. Meyer Njus Tanick, PA, 946 F.3d 855 (6th Cir. 2020)—that delves
into standing in the context of certain FDCPA claims. Because Buchholz appears to be
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the most recent published FDCPA-standing case in the Sixth Circuit and because Article
III standing is a threshold jurisdictional requirement, this Court must consider its
significance before resolving whether Plaintiff has Article III standing.
IT IS THEREFORE ORDERED THAT:
1.

Plaintiff’s Motion for Partial Summary Judgment (Doc. #48) is DENIED
without prejudice to renewal; and

2.

On or before April 20, 2020, the parties shall brief the issue of whether
Plaintiff has Article III standing to litigate each of her FDCPA claims in
light of Buchholz v. Meyer Njus Tanick, PA, 946 F.3d 855 (6th Cir. 2020)
and other pertinent case law.

March 30, 2020

s/Sharon L. Ovington
Sharon L. Ovington
United States Magistrate Judge

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