Vasquez-Estrada v. Collecto, Inc.
Filing
54
OPINION AND ORDER: Denying Defendant's Motion for Summary Judgment 35 ; Granting in Part and Denying in Part Plaintiff's Motion for Partial Summary Judgment 37 ); Signed on 10/20/15 by Magistrate Judge Janice M. Stewart. (ST)
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
CARLOS A. VASQUEZ-ESTRADA,
Plaintiff,
Case No. 3:14-CV-01422-ST
v.
OPINION AND ORDER
COLLECTO, INC.,
Defendant.
STEWART, Magistrate Judge:
INTRODUCTION
Plaintiff, Carlos A. Vasquez-Estrada, filed this action on September 3, 2014, alleging
claims against defendant, Collecto, Inc., for violating the Fair Debt Collection Practices Act
(“FDCPA”) and the Fair Credit Reporting Act (“FCRA”) in its efforts to collect from plaintiff a
$659.56 debt to AT&T Mobility (“AT&T”). The debt did not belong to plaintiff, but instead was
incurred by a person named “Carlos Vazquez” using plaintiff’s stolen birth date and social
security number.
Plaintiff’s claims stem from two separate collection attempts by defendant. Defendant
began its first effort in 2011 under the account number 4634717. Plaintiff disputed the debt to
1 – OPINION AND ORDER
the Consumer Reporting Agencies (“CRAs”), Experian, Trans Union and Equifax, prompting
two of the CRAs to send notice of plaintiff’s dispute to defendant through an Automated
Consumer Dispute Verification (“ACDV”) (“2011 ACDV”). The collection temporarily ended
after defendant placed a hold on the account and sent a fraud packet to plaintiff and after AT&T
recalled the debt from defendant without providing a reason.
In late 2012, defendant began a second effort to collect the debt after its subsidiary, U.S.
Asset Management, purchased plaintiff’s debt from AT&T among a large portfolio and sent it to
defendant for collection. Defendant assigned plaintiff’s debt a new account number of 3978147.
Plaintiff again disputed the debt, and defendant again received an ACDV (“2013 ACDV”), this
time only from Experian, referencing the new account. Defendant responded to the 2013 ACDV
without indicating that the debt was disputed and continued its collection effort.
Plaintiff alleges claims for: (1) negligent noncompliance with § 1681b(f) of the FCRA
for improperly obtaining his credit report and with § 1681s-2(b) of the FCRA for failing to report
the debt as disputed to the CRAs (First Claim); (2) willful noncompliance with the same FCRA
sections (Second Claim); and (3) violations of various sections of the FDCPA, including 15 USC
§§ 1692c –1692g, when attempting to collect the debt (Third Claim).
Defendant has filed a Motion for Summary Judgment (docket #35) against each of
plaintiff’s claims, and plaintiff has filed a Motion for Partial Summary Judgment (docket #37) on
his: (1) First Claim for violation of § 1681s-2(b) of the FCRA based on defendant’s failure to
note that plaintiff’s debt was disputed on the 2013 ACDV; and (2) Third Claim for violations of
§ 1692c(c) of the FDCPA based on defendant continuing to collect the debt even after plaintiff
requested a cease and desist and § 1692c(a)(1) of the FDCPA based on defendant telephoning
plaintiff before 8:00 am PST.
2 – OPINION AND ORDER
All parties have consented to allow a Magistrate Judge to enter final orders and judgment
in this case in accordance with FRCP 73 and 28 USC § 636(c). For the reasons stated below,
plaintiff’s motion is granted in part on the First Claim; otherwise, both motions are denied.
STANDARDS
Summary judgment may be granted if “no genuine issue” exists regarding any material
fact and “the moving party is entitled to judgment as a matter of law.” FRCP 56(c). The moving
party must show an absence of an issue of material fact. Celotex Corp. v. Catrett, 477 US 317,
323 (1986). Once the moving party does so, the nonmoving party must “go beyond the
pleadings” and designate specific facts showing a “genuine issue for trial.” Id at 324, citing
FRCP 56(e). The court does “not weigh the evidence or determine the truth of the matter, but
only determines whether there is a genuine issue for trial.” Balint v. Carson City, Nev., 180 F3d
1047, 1054 (9th Cir 1999) (citation omitted). A “‘scintilla of evidence,’ or evidence that is
‘merely colorable’ or ‘not significantly probative,’” does not present a genuine issue of material
fact. United Steelworkers of Am. v. Phelps Dodge Corp., 865 F2d 1539, 1542 (9th Cir 1989),
quoting Anderson v. Liberty Lobby, Inc., 477 US 242, 249–50, 252 (1986). The substantive law
governing a claim or defense determines whether a fact is material. Addisu v. Fred Meyer, Inc.,
198 F3d 1130, 1134 (9th Cir 2000) (citation omitted). The court must view the inferences drawn
from the facts “in the light most favorable to the non-moving party.” Bravo v. City of Santa
Maria, 665 F3d 1076, 1083 (9th Cir 2011) (citations omitted).
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3 – OPINION AND ORDER
DISCUSSION
I.
Causation
Defendant seeks summary judgment on all claims either because it did not cause
plaintiff’s damages or because plaintiff’s injuries have been fully compensated by others.
Defendant first argues that the damages plaintiff seeks to recover occurred before
defendant became involved in the collection of his debt. Plaintiff testified that he could only
remember his credit score falling in 2008 and 2010 before defendant began collecting his debt in
2011. See Plaintiff’s Depo., pp. 32, 68 (plaintiff could not remember whether his credit score
decreased during the period of October 2011 to mid-2012). 1 This is hardly evidence that
plaintiff suffered no damages to his credit score as a result of defendant’s continued effort to
collect the debt. In any event, plaintiff seeks relief beyond the damages that flow from bad
credit, including economic loss, damage to his reputation, emotional distress, and invasion of
privacy. First Amended Complaint, ¶¶ 43, 47, 51. Thus, this argument is rejected.
Defendant also argues that plaintiff has been compensated for these same damages
through his settlement with the CRAs in separate litigation. However, the settlement with the
CRAs resolved only claims under the FCRA, not under the FDCPA, and for different conduct.
Moreover, the settlement amount included attorney’s fees and compensation for plaintiff’s wife,
who was a co-plaintiff in that action. Even if plaintiff sought duplicate damages, there is no
express or implied right to an offset of amounts that plaintiff may have received in settlement
from other FCRA defendants. See Thomas v. Trans Union, LLC, Case No. 00-CV-1150-JE, at
*18 (D Or Jan. 29, 2003); Irvin v. Mascott, 94 F Supp2d 1052, 1058 (ND Cal 2000). Defendant
1
The parties have submitted documents with various attachments. Citations to affidavits, declarations, and
depositions are identified by the last name of the affiant, declarant, or deponent, and citations are to the paragraph(s)
of the affidavit or declaration or to the page(s) of the deposition transcript.
4 – OPINION AND ORDER
has failed to produce evidence that defendant did not produce any of plaintiff’s damages and
cannot reduce plaintiff’s damages based on a settlement with the CRAs as a matter of law.
II.
FCRA (First and Second Claims)
A.
§ 1681s-2(b)
In response to a request by a CRA, a furnisher of information (such as defendant) must:
(C)
(D)
(E)
report the results of the investigation to the consumer reporting
agency;
if the investigation finds that the information is incomplete or
inaccurate, report those results to all other consumer reporting
agencies to which the person furnished the information and that
compile and maintain files on consumers on a nationwide basis;
and
if an item of information disputed by a consumer is found to be
inaccurate or incomplete or cannot be verified after any
reinvestigation under paragraph (1), for purposes of reporting to a
consumer reporting agency only, as appropriate, based on the
results of the reinvestigation promptly–
(i)
modify that item of information;
(ii)
delete that item of information; or
(iii) permanently block the reporting of that item of
information.
15 USC § 1681s-2(b)(1).
Plaintiff claims that as a result of defendant’s unreasonable procedures, his debt was
inaccurately reported by the CRAs on his consumer reports. In particular, plaintiff alleges that
defendant violated its duties under § 1681s-2(b) by failing to: (1) conduct a reasonable
investigation upon receiving the 2011 ACDVs from all three CRAs and the 2013 ACDV from
Experian (First Amended Complaint, ¶¶ 8, 13, 23); and (2) report the debt as disputed in
response to the 2013 ACDV (id, ¶ 23). Defendant seeks summary judgment against the
allegation that it failed to conduct reasonable investigations, and plaintiff seeks summary
judgment on his allegation that defendant failed to report his debt as disputed.
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5 – OPINION AND ORDER
1.
Defendant’s Motion
a.
Statute of Limitations (2011 ACDVs)
The statute of limitations for violations of the FCRA is “2 years after the date of
discovery [or constructive discovery] by the plaintiff of the violation that is the basis for
liability.” Drew v. Equifax Info. Servs., LLC, 690 F3d 1100, 1109 (9th Cir 2012), citing 15 USC
§ 1681p(1) and Merck & Co., Inc. v. Reynolds, 559 US 633 (2010). Defendant argues that the
statute of limitations commenced no later than February 3, 2012, when plaintiff received a letter
from Enhanced Recovery Company, LLC (“Enhanced Recovery”), another collection agency,
attempting to collect the debt. First White Decl. (docket #36), Ex. E. Because plaintiff did not
file this action until September 3, 2014, more than two years later, defendant contends that his
claims based on the 2011 ACDVs for violation of § 1681s-2(b) is barred by the statute of
limitations.
By the time plaintiff received the Enhanced Recovery letter, he knew that efforts were
being made to collect on the debt which he had previously disputed with defendant and the
CRAs. Id, Exs. F & D. However, “the ultimate burden is on the defendant to demonstrate that a
reasonably diligent plaintiff would have discovered the facts constituting the violation. . . .
[defendant] must demonstrate how a reasonably diligent plaintiff . . . would have discovered the
violations.” Drew, 690 F3d at 1110, citing Strategic Diversity, Inc. v. Alchemix Corp., 666 F3d
1197, 1206 (9th Cir 2012). Defendant fails to explain how the letter from Enhanced Recovery
would have led plaintiff to discover the facts constituting defendant’s failure to conduct a
reasonable investigation upon receipt of the 2011 ACDVs. Plaintiff’s notice of continued
collection of his disputed debt is simply not evidence of constructive discovery under Drew.
[A § 1681s-2(b)] violation is tied to the reasonableness of an investigation
rather than the accuracy of its results. . . . In short, “[a]n investigation is
6 – OPINION AND ORDER
not necessarily unreasonable because it results in a substantive conclusion
unfavorable to the consumer, even if that conclusion turns out to be
inaccurate.” Thus, Gorman imposes fault, not for an investigation that
produces incorrect results, but for an unreasonable investigation.
Id, quoting Gorman v. Wolpoff & Abramson, LLP, 584 F3d 1147, 1162 (9th Cir 2009).
The Enhanced Recovery letter may have put plaintiff on notice that the dispute process
had failed to yield the correct outcome, but not on notice why that process had failed or which
party was to blame. The violation leading to continued collection of the debt could have been
committed by the CRAs in possibly relaying incorrect information to defendant that it simply
confirmed. Moreover, as plaintiff argues, the Enhanced Recovery letter just as likely indicated
the investigation was ongoing or that defendant had suspended collection of the debt in response
to plaintiff’s dispute in accordance with its FCRA duties and that AT&T had assigned the debt to
a new collection company. Using similar reasoning, the Ninth Circuit in Drew found that
constructive discovery did not arise without knowledge as to how the ACDV process unfolded.
Drew notes that he had no knowledge of what TransUnion relayed to FIA,
or even if the credit agency passed on the relevant information. Even if
the CRA had passed on the relevant information, Drew did not know what
information was available to the bank for its investigation, and had no
basis in June 2004 to judge whether the investigation was reasonable. In
fact, the record falls short of showing even that Drew knew that FIA’s
investigation had concluded.
Id (internal quotation marks omitted).
Plaintiff claims that he was equally unaware of the details regarding the ACDV process
between defendant and the CRAs on February 3, 2012. Second Plaintiff Decl. (docket #43),
¶¶ 3–4. As in Drew, defendant fails to meet its burden to conclusively show that plaintiff knew
or should have known of deficiencies in its investigation based on another company’s efforts to
collect the same debt. Thus, defendant is not entitled to summary judgment that plaintiff’s
7 – OPINION AND ORDER
claims under the FCRA based on defendant’s failure to reasonably investigate the 2011 ACDVs
are barred by the statute of limitations.
b.
Reasonable Investigation (2013 ACDV)
The 2013 ACDV from Experian requested defendant to “[p]rovide complete ID and
verify account information.” First White Decl., Ex. J. Defendant argues that this request only
required it to review its account to verify the consumer’s personal information and report any
conflicts, which it did. See Gorman, 584 F3d at 1157–58. Defendant did review its “file,”
consisting of the data entered in its FACS system, as well as information provided by AT&T.
Belmore Depo., p. 115. However, in response, defendant mistakenly reported back the wrong
name (different than the name in its account information). Id, pp. 47, 117–18. It also confirmed
that the address was in Oregon, although the AT&T documents in its file show a Kansas City
address. First Aflatooni Decl. (docket # 39), Ex. D. A reasonable juror could find that
defendant’s failure to discover and report accurate account information from its file amounted to
an unreasonable investigation. Likewise, it is a genuine issue of fact whether defendant’s
mistake in reporting plaintiff’s name is a minor difference which can be excused. See Gorman,
584 F3d at 1158.
Furthermore, the 2013 ACDV advised defendant that “THIS ACCOUNT HAS BEEN
DISPUTED BEFORE.” Although defendant had information about plaintiff’s prior disputes in
its file from 2011, it failed to cross-reference that information or look at those papers in its 2011
file. Defendant rejects plaintiff’s argument that it was required to investigate prior disputes
because the 2013 ACDV did not specify that he claimed identity theft. Even though the 2013
ACDV did not specify the nature of the dispute, it still put defendant on notice of prior disputes
which defendant had on file. “The pertinent question is thus whether the furnisher’s procedures
8 – OPINION AND ORDER
were reasonable in light of what it learned about the nature of the dispute from the description in
the CRA’s notice of dispute.” Id at 1157. Just as a notation of “fraudulent charges” required the
furnisher in Gorman to contact its fraud department to determine whether a fraud claim had been
submitted, the notion on the 2013 ACDV required defendant to investigate its files to determine
if it had previously received a letter of dispute from plaintiff. See id at 1158. If defendant had
done so, it would have discovered plaintiff’s letters in 2011 stating that the debt was fraudulent
and in 2012 requesting that collection cease. First White Decl., Ex. F (2011 letters); First
Aflatooni Decl., Ex. I (2012 letter). See Gorman, 584 F3d at 1155 (“By its ordinary meaning, an
‘investigation’ requires an inquiry likely to turn up information about the underlying facts and
positions of the parties.”).
Summary judgment is “generally an inappropriate way to decide questions of
reasonableness because the jury’s unique competence in applying the reasonable man standard is
thought ordinarily to preclude summary judgment.” Id at 1157 (internal quotation marks and
citations omitted). Accordingly, defendant is not entitled to summary judgment against the First
Claim for violation of § 1681s-2(b) for failure to perform a reasonable investigation in response
to the 2013 ACDV.
2.
Plaintiff’s Motion
Plaintiff seeks summary judgment on its allegation that defendant violated § 1681s-2(b)
of the FCRA by failing to indicate that the debt was disputed in its response to the 2013 ACDV.
In particular, plaintiff alleges that defendant failed to place the “XB” notation in the space
provided for the “consumer compliance code” on the response returned to Experian on
February 25, 2013. As a result, plaintiff’s next Experian credit report issued on February 28,
2013, still reflected the debt as undisputed. First Aflatooni Decl., Ex. K. This omission was
9 – OPINION AND ORDER
allegedly an abdication of a furnisher’s responsibility to investigate and verify the dispute to the
CRA.
On December 12, 2012, defendant received plaintiff’s letter disputing the debt. Belmore
Depo., p. 105; First White Decl., Ex. B, p. 7. Catherine Belmore (“Belmore”), defendant’s
FRCP 30(b)(6) witness, admits that defendant has no procedure to include the “XB” on ACDV
responses, but instead reports the debt as disputed through its FACS account system that
automatically notifies all three CRAs of disputed accounts every Friday. Belmore Depo., pp. 52,
118–19, 121, 128. The account notes show that defendant set a disputed flag on plaintiff’s
account on December 12, 2012. First White Decl., Ex. B, p. 7. As to why the ACDV did not
reflect defendant’s notification of the dispute, Belmore explains that “there was a glitch in this
case where this account in our system showed that we have reported it as disputed. However, the
bureaus are not showing it reported as disputed,” and defendant does not know how this mistake
occurred. Belmore Depo., pp. 119–20. Belmore further explains that it received the 2013
ACDV on February 18, 2013, and that the CRAs may not have yet updated the credit report
which “does take 60 to 90 days.” Id, p. 121.
Defendant argues that an “XB “mark on the 2013 ACDV response would have been
redundant because it had already notified Experian of the dispute through its FACS system.
Nonetheless, plaintiff argues that defendant was required to additionally indicate the debt as
disputed in response to the 2013 ACDV. “Congress clearly intended furnishers to review
[ACDV] reports not only for inaccuracies in the information reported but also for omissions that
render the reported information misleading.” Saunders v. Branch Banking & Trust Co. of Va.,
526 F3d 142, 148 (4th Cir 2008). Accordingly, plaintiff contends that a collection agency must
10 – OPINION AND ORDER
correct the omission of a consumer’s dispute in an ACDV regardless of any other notice the
agency has given to the CRAs.
When responding to an ACDV, a furnisher must correct a credit file that lacks the
notation of a bona fide dispute to avoid misleading the CRA. Gorman, 584 F3d at 1162-63
(following Saunders). Neither of the collection agencies in Saunders and Gorman had otherwise
notified the CRAs of the dispute, such as through automatic updates. Nonetheless, the duty
under § 1681s-2(b) is not a general duty to report a dispute at any time and in any way, but to
correct an inaccuracy when placed “upon notice of dispute” from a CRA. Id at 1154.
Responding to the CRA without correcting an omission is “misleading in such a way and to such
an extent that [it] can be expected to have an adverse effect.” Id, citing Saunders, 546 F3d at
150.
Even though defendant had previously reported plaintiff’s dispute to the CRAs, the 2013
ACDV did not contain the most current information, possibly because of the 60–90 day delay
described by Belmore. Plaintiff’s credit report would continue to show the debt as undisputed
until Experian processed defendant’s notification. Thus, responding to the 2013 ACDV without
correcting the omission of the “XB” code was “incomplete or inaccurate” within the meaning of
the FCRA, entitling plaintiff to summary judgment on his First Claim for negligent
noncompliance.
B.
2
§ 1681b(f)
Plaintiff also alleges that defendant violated § 1681b(f) of the FCRA by obtaining his
consumer report on August 21, 2012, “from Experian without a permissible purpose.” First
Amended Complaint, ¶¶ 16, 42. That statute provides as follows:
2
Whether defendant’s violation was willful under § 1681n, as alleged in the Second Claim, must be resolved at trial.
11 – OPINION AND ORDER
A person shall not use or obtain a consumer report for any purpose
unless (1) the consumer report is obtained for a purpose for which
the consumer report is authorized to be furnished under this
section; and (2) the purpose is certified in accordance with
[§ 1681e] by a prospective user of the report through a general or
specific certification.
15 USC § 1681b(f).
1.
Permissible Purpose
Defendant seeks summary judgment against this alleged violation because it obtained
plaintiff’s consumer report “for a purpose for which the consumer report is authorized to be
furnished.” Id. That purpose is found in subsection (a) of the same statute which allows a CRA
to furnish a consumer report:
(3) To a person which it has reason to believe –
(A) intends to use the information in connection with a credit
transaction involving the consumer on whom the information is to
be furnished and involving the extension of credit to, or review or
collection of an account of, the consumer . . .
15 USC § 1681b(a)(3)(A)
Defendant argues that collection of a debt is the “collection of an account” and, thus, a
permissible purpose as a matter of law under § 1681b(a)(3)(A), citing Pyle v. First Nat’l
Collection Bureau, No. 1:12-CV-00288-AWI, 2012 WL 5464357 (ED Cal Nov. 8, 2012).
However, Pyle is modified by the case on which it relies that explains that even where the
purpose is clearly to collect a debt, § 1681b(a)(3)(A) requires that collection effort relate to “a
credit transaction involving the consumer.” See Hinkle v. CBE Grp., No. CV 311-091, 2012 WL
681468, at *3 (SD Ga Feb. 3, 2012), report and recommendation adopted, No. CV 311-091,
2012 WL 676267 (SD Ga Feb. 29, 2012) (“Thus, if a collection agency . . . is retained by a
creditor to collect a debt owed by a consumer, then it typically has a permissible purpose for
12 – OPINION AND ORDER
obtaining a consumer report in conjunction with its collection activities, so long as it seeks to use
information in connection with a transaction that the consumer initiated with the creditor.”).
The Ninth Circuit also has held that debt collection is a permissible purpose for obtaining
a credit report under § 1681b(a)(3)(A) “only in connection with a ‘credit transaction’ in which a
consumer has participated directly and voluntarily.” Pintos v. Pac. Creditors Ass’n, 605 F3d
665, 674 (9th Cir 2010). Plaintiff argues that a credit transaction resulting from fraud is never
one “involving” the consumer who is the subject of the consumer report, citing Andrews v. TRW,
Inc., 225 F3d 1063, 1067 (9th Cir 2000), rev’d on other grounds, TRW, Inc. v. Andrews, 534 US
19 (2001). In Andrews, the Ninth Circuit concluded that plaintiff, the victim of identity theft,
was not “involved” in the credit transaction initiated by the imposter posing as plaintiff. Even
though plaintiff’s social security number and birth date were used to incur the debt, plaintiff was
not “drawn in as a participant” citing the ordinary definition of the word. Id at 1064–65.
Defendant argues that under the plain language of the statute, its purpose is permissible
as long as it intended to collect a debt that it believed was valid and “involved” plaintiff. District
court cases have read this same excuse into the statute. See Crehin v. ARS Nat’l Servs., No.
8:13-CV-01497-SVW, 2014 WL 104073, at *2 (CD Cal Jan. 9, 2014) (“A good faith belief that a
debt exists is thus sufficient to satisfy these provisions.”); Trikas v. Universal Card Servs. Corp.,
351 F Supp2d 37, 42 (EDNY 2005) (“[T]he plain language of [15 USC § 1681b(a)(3)(A) ] . . .
focuses on the intent of the party obtaining the consumer report.”); Korotki v. Attorney Servs.
Corp., 931 F Supp 1269, 1276 (D Md 1996) (“[S]o long as a user has reason to believe that a
permissible purpose exists, that user may obtain a consumer report without violating the
FCRA.”). However, these opinions do not discuss or follow Pintos or Andrews.
13 – OPINION AND ORDER
Plaintiff interprets Pintos and Andrews to deem the collection of a victim’s fraudulent
debt as an impermissible purpose, regardless of the user’s intent or good faith belief. However,
neither Pintos nor Andrews addressed how a collection agency’s good faith belief that the debt is
valid relates to whether it has a permissible purpose under § 1681b(a)(3)(A). Andrews did
address the issue of the CRA’s “reasonable belief” that the user had a permissible purpose, but
that standard applies only to the CRA. Likewise, the user’s intent was not an issue in Pintos
because the defendant collection agency was collecting plaintiff’s personal debt.
Nonetheless, § 1681b(a)(3)(A) defines a permissible purpose in terms of “a person” who
“intends to use the information” for a permissible purpose. As stated by another district court
interpreting the same FCRA section, “the inclusion of the verb ‘intends’ is significant, because a
statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence,
or word shall be superfluous, void, or insignificant.” Trikas, 351 F Supp2d at 42 (internal
quotation marks and citation omitted). Under the usual tenets of statutory interpretation, the
court must consider defendant’s intent in this case.
Pursuant to its routine, defendant obtained plaintiff’s consumer report to assess plaintiff’s
ability to pay what it believed was his debt. Belmore Depo., pp. 20–21, 38–40, 95–96.
Defendant argues that plaintiff cannot produce evidence that defendant lacked that intent.
Recently, a district court in this circuit interpreting Pintos and Andrews allowed a similar claim
to survive a motion to dismiss based on plaintiff’s allegation that the user of the consumer report,
Citibank, “either knew or should have known” that plaintiff was the victim of identity theft and
had not applied for the credit that it was trying to collect.” Rand v. Citibank, N.A., No. 14-CV04772 NC, 2015 WL 510967, at *3 (ND Cal Feb. 6, 2015). Citibank argued that the intent
requirement for the user is lower than the “reasonable belief” standard required for CRAs by
14 – OPINION AND ORDER
Andrews. The court did not agonize over that distinction because it found that plaintiff’s
allegations met the higher standard.
Plaintiff has produced evidence that at the time defendant requested plaintiff’s consumer
report on August 21, 2012, it was on notice that the debt was fraudulent. A reasonable juror
could conclude that, based on the letters defendant received from plaintiff disputing the
collections efforts in 2011, defendant knew or should have known that this account was the result
of identity theft and that obtaining plaintiff’s credit report was not authorized under the FCRA.
Accordingly, defendant is not entitled to summary judgment as to this violation.
2.
Certification
Defendant also argues that plaintiff cannot produce evidence that defendant failed to
certify its purpose as required by § 1681b(f). Defendant does not keep records of specific or
general certifications. Third White Decl. (docket #52), Ex. A, p. 2. Thus, plaintiff’s requests for
production of all documents related to certification during discovery yielded nothing other than
one document containing only cursory information about the August 12, 2012 credit score
request. Id, Ex. B. Because defendant has moved for summary judgment that it is not liable for
violating § 1681b(f), it bears the burden of submitting facts proving that it complied with that
statute. Defendant argues that it has met its burden simply by pointing to the absence of facts
essential to an element of plaintiff’s claim. See Celotex Corp., 477 US at 323 (“[T]here can be
‘no genuine issue as to any material fact,’ since a complete failure of proof concerning an
essential element of the nonmoving party’s case necessarily renders all other facts immaterial.”).
However, certification is not an essential element of plaintiff’s FCRA claim under § 1681b(f).
Plaintiff may prove a violation either with proof that defendant’s purpose in obtaining plaintiff’s
consumer report was improper or with proof it failed to certify that purpose. Even without
15 – OPINION AND ORDER
evidence of certification, plaintiff may succeed on this claim on the basis that defendant’s
purpose, whether certified or not, was impermissible. Thus, the lack of evidence regarding
defendant’s certification process does not defeat plaintiff’s claim under § 1681b(f).
III.
FDCPA (Third Claim)
The FDCPA is a strict liability statute that regulates the conduct of third-party debt
collectors. Clark v. Capital Credit & Collection Servs., Inc., 460 F3d 1162, 1175–76 (9th Cir
2006). As defined by the FDCPA, plaintiff is a consumer, defendant is a debt collector, and
defendant was attempting to collect a debt. 15 USC § 1691a(3), (6), & (5). Although the Third
Claim alleges that defendant failed to comply with the requirements of §§ 1692c–1692g of the
FDCPA, plaintiff seeks summary judgment only on two of those requirements.
A.
§ 1692c(c)
Plaintiff first moves for summary judgment on his claim that defendant violated
§ 1692c(c) of the FDCPA which prohibits a debt collector from continuing to communicate with
a consumer who “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.”
On April 19, 2013, plaintiff mailed defendant a letter in which he both refused to pay the debt
and told defendant to “not attempt to collect on it ever again.” First Plaintiff’s Decl., ¶ 12; First
Aflatooni Decl., Ex. L. Defendant received that letter on April 23, 2013. Belmore Depo.,
pp. 135–37. Although defendant admits that it should have stopped collection of the debt, it
continued its collection efforts through May 2014. Belmore Depo., pp. 140–41, 151–53, 158–
59; First White Decl., Ex. B (account activity log).
To avoid liability, defendant relies on the bona fide error defense which exempts a debt
collector who “shows by a preponderance of evidence that the violation was not intentional and
16 – OPINION AND ORDER
resulted from a bona fide error notwithstanding the maintenance of procedures reasonably
adapted to avoid any such error.” 15 USC § 1692k(c); see McCollough v. Johnson, Rodenburg
& Lauinger, LLC, 637 F3d 939, 948 (9th Cir 2011). To qualify for the bona fide error defense,
the defendant must prove that: (1) it violated the FDCPA unintentionally; (2) the violation
resulted from a bona fide error; and (3) it maintained procedures reasonably adapted to avoid the
violation. McCollough, 637 F3d at 948.
Belmore explained that the representative made a “mistake” by failing to put the account
in the “cease communication status” after receiving plaintiff’s letter. Belmore Depo., pp. 142–
44. With the right coding (“3600”), defendant would have made no collection attempts.
Although the account already had been coded “3FRW” (a hold pending the receipt of the fraud
packet) on April 8, 2013, that code was changed on April 24, 2013 to “3GPH,” based on
someone’s review of the fraud packet and determination that there was “no fraud,” causing
collection to continue. Id at p. 147. Regardless of that change, the hold on collection should
have continued if the account was properly coded based on plaintiff’s letter.
Even if defendant mistakenly failed to code the “cease communication status,” plaintiff
argues that defendant had no procedures in place to avoid the error that occurred here and,
therefore, cannot meet the third element of the bona fide defense. 3 According to Belmore,
defendant has a clear policy of coding accounts as “3600” after the consumer “requests no more
calls and letters.” Belmore Decl., ¶ 5 & Ex. B, p. 10. Additionally, defendant safeguarded
FDCPA compliance by providing “ongoing training” (Belmore Depo., pp. 14, 108), “[quality
control] on some of the correspondence” (id, p. 108), and an Annual FDCPA exam certification.
3
The parties also dispute whether defendant’s violation was unintentional. Plaintiff characterizes the violation as
the multiple acts of sending collection letters and telephoning plaintiff about the debt, which defendant knew was
happening. Defendant, on the other hand, contends that the correspondence was the direct result of the mistaken
coding, an unintentional act of the representative who read and processed plaintiff’s letter. The parties may argue
their different theories at trial.
17 – OPINION AND ORDER
Belmore Decl., ¶ 6 & Ex. C. However, these procedures must be “reasonably adapted to avoid
the specific error at issue,” which means that the “procedures themselves must be explained,
along with the manner in which they were adapted to avoid the error.” Reichert v. Nat’l Credit
Sys., Inc., 531 F3d 1002, 1007 (9th Cir 2008). This requires a showing of a nexus between the
procedures and the errors, such as redundancies or safeguards “to catch the stunning employee
errors.” See Webster v. ACB Receivables Mgmt., Inc., 15 F Supp3d 619, 629 (D Md 2014).
Defendant’s policy of coding “3600” was obviously intended to ensure compliance with
§ 1692c(c). However, for several reasons, a reasonable juror could also find that the policy was
not reasonably adapted to guarantee that collection would stop if, as here, the account already
was coded to halt communication for some reason other than the plaintiff’s request. Even
Belmore does not know why that the representative failed to code the account “3600” in addition
to “3FRW.” Belmore Depo., p. 143. Also, Belmore does not explain how the policy applies
when, as was the case here, collection was already suspended under the code “3FRW” pending
the return of plaintiff’s fraud packet. Finally, there is no evidence as to what the ongoing
training and quality control consists of or what the compliance exam requires. Due to a genuine
issue as to whether defendant’s policies were reasonably adapted to avoid the mistake that
caused collection to continue, plaintiff is not entitled to summary judgment on this claim.
B.
§ 1692c(a)(1)
Plaintiff also moves for summary judgment on his claim under § 1692c(a)(1) of the
FDCPA based on defendant making three collection calls before 8:00 a.m. PST. First Aflatooni
Decl., Ex. B, p. 4 (January 14, February 21, and February 26, 2014). The statute prohibits debt
collectors from communicating with a consumer regarding a debt “at any unusual time or place
or a time or place known or which should be known to be inconvenient to the consumer” that is
18 – OPINION AND ORDER
presumed to include the period after 9:00 p.m. and before 8:00 a.m. 15 USC § 1692c(a)(1).
Belmore testified that the absence of the letter “P” next to these call entries indicates that they
occurred before noon in the “a.m.” and did not know what the notation “GMT” indicated next to
the time stamps. Belmore Depo., p. 160. However, Belmore later clarified in her declaration
that defendant’s call data entry policies require calls be recorded under “GMT,” or Greenwich
Mean Time. Belmore Decl., ¶ 4. In GMT time, all three calls were made between 8:00 p.m. and
9:00 p.m. PST, within the allowable time frame under § 1692c(a)(1). Based on this evidence, the
undisputed facts do not support plaintiff’s claim, precluding summary judgment.
ORDER
Defendant’s Motion for Summary Judgment (docket #35) is DENIED, and plaintiff’s
Motion for Partial Summary Judgment (docket #37) is GRANTED on his First Claim for
violation of § 1681s-2(b) the FCRA based on defendant’s failure to note that plaintiff’s debt was
disputed on the 2013 ACDV, and is otherwise DENIED.
DATED October 20, 2015.
s/ Janice M. Stewart
Janice M. Stewart
United States Magistrate Judge
19 – OPINION AND ORDER
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