Daubert v. NRA Group, LLC d/b/a National Recovery Agency
Filing
73
MEMORANDUM (Order to follow as separate docket entry) re 53 MOTION for Reconsideration filed by NRA Group, LLC d/b/a National Recovery Agency, 51 MOTION for Reconsideration re 46 Memorandum (Order to follow as separate docket entry), 47 Order on Motion for Partial Summary Judgment filed by John Daubert. Signed by Honorable A. Richard Caputo on 7/20/16. (jam)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JOHN DAUBERT,
Plaintiff,
v.
CIVIL ACTION NO. 3:15-CV-00718
(JUDGE CAPUTO)
NRA GROUP, LLC,
Defendant.
MEMORANDUM
Presently before me are two motions to reconsider (Docs. 51 & 53) my May 27, 2016
Memorandum and Order (Docs. 46 & 47) granting in part and denying in part Plaintiff’s
Motion for Partial Summary Judgment (Doc. 24). Because neither party has demonstrated
a change in controlling law, new evidence that was previously unavailable, a clear error of
law or fact, or a manifest injustice, both motions will be denied.
I. Background
As the relevant facts are set forth in my May 27, 2016 Memorandum, a detailed
factual and procedural history is unnecessary. See Daubert v. NRA Grp., LLC, No.
3:15-cv-718, 2016 WL 3027826, at *1-*2 (M.D. Pa. May 27, 2016). However, for the
purpose of resolving the instant motions, I will briefly recite the following facts:
On November 8, 2013, Plaintiff John Daubert received medical services from
Radiology Associates of Wyoming Valley (“Radiology Associates”) as part of his
treatment at the Wilkes-Barre General Hospital (the “Hospital”). A few days later,
Plaintiff’s radiology report, which included Plaintiff’s phone number, was forwarded to
MBMS for coding and billing purposes. MBMS provides billing services to Radiology
Associates and collects unpaid medical bills on their behalf. After Plaintiff’s health
insurance company paid Twenty-One Dollars ($21.00) for services Plaintiff received from
Radiology Associates, MBMS billed Plaintiff for the remaining balance of Twenty-Five
Dollars ($25.00) and subsequently sent a reminder statement to Plaintiff on January 11,
2014. After Plaintiff failed to pay this outstanding balance, his account was transferred
to Defendant NRA Group, LLC, for collection purposes. As part of its collection efforts,
Defendant placed sixty-nine (69) phone calls to Plaintiff’s cellular telephone number,
only one of which was answered by Plaintiff. Plaintiff never directly gave Defendant his
telephone number, nor did he directly provide Defendant consent to receive such calls.
All calls were made with Defendant’s Mercury Predictive Dialer (the “Dialer”).
In addition to these calls, Defendant’s independent letter vendor, Renkim
Corporation, mailed Plaintiff a collection letter displaying a barcode (the “Barcode”),
which if scanned, would reveal Plaintiff’s account number. However, to the naked eye,
the Barcode contains no words or phrases, and is nothing more than an irregular pattern
of black and white markings that does not reveal any information.
In the instant action, Plaintiff has asserted claims against Defendant for violations
of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”) and the
Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”) arising out of
Defendant’s phone calls and collection letter to Plaintiff displaying the above-referenced
Barcode. On December 2, 2015, Plaintiff moved for partial summary judgment as to
liability on both his FDCPA and TCPA claims. (Doc. 24.) In opposing summary
judgment, Defendant relied on the bona fide error affirmative defense in response to
Plaintiff’s FDCPA claim and on the prior express consent affirmative defense in
response to Plaintiff’s TCPA claim.
On May 27, 2016, I issued a Memorandum and Order granting Plaintiff’s motion
for summary judgment as to Defendant’s liability relating to Plaintiff’s TCPA claim,
finding that there was no genuine issue of material fact as to whether Defendant was
entitled to proceed to trial on its affirmative defense of prior express consent. (Docs. 46
& 47.) However, I denied Plaintiff’s motion with regard to the FDCPA claim because
there were genuine issues of material fact as to whether Defendant was entitled to a
bona fide error defense. (Id.) Both parties subsequently moved for reconsideration.
(Docs. 51 & 53.)
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II. Legal Standard
The purpose of a motion for reconsideration is to correct manifest errors of law or
fact or to present newly discovered evidence. See Harsco Corp. v. Zlotnicki, 779 F.2d 906,
909 (3d Cir. 1985). A motion for reconsideration may be granted if the movant establishes:
(1) an intervening change in controlling law; (2) the availability of new evidence that was not
available when the court decided the motion; or (3) the need to correct a clear error of law
or fact or to prevent manifest injustice. Max's Seafood Café, by Lou–Ann, Inc., v. Quinteros,
176 F.3d 669, 677 (3d Cir. 1999).
“A motion for reconsideration is not to be used as a means to reargue matters
already argued and disposed of or as an attempt to relitigate a point of disagreement
between the Court and the litigant.” Ogden v. Keystone Residence, 226 F. Supp. 2d 588,
606 (M.D. Pa. 2002). Reconsideration motions also may not be used to raise new
arguments or present evidence that could have been raised prior to the entry of judgment.
Hill v. Tammac Corp., Civ. A. No. 05–1148, 2006 WL 529044, at *2 (M.D. Pa. Mar. 3, 2006).
Lastly, reconsideration is an extraordinary remedy, and should be granted sparingly.
D'Angio v. Borough of Nescopeck, 56 F. Supp. 2d 502, 504 (M.D. Pa. 1999).
III. Discussion
On June 9, 2016, Plaintiff filed a motion for reconsideration of my Order denying
summary judgment on his FDCPA claim, arguing that my finding that Defendant could
be entitled to a bona fide error defense was a clear error of law. (Doc. 51.) On June 11,
2016, Defendant filed a motion for reconsideration of my Order granting summary
judgment on Plaintiff’s TCPA claim, arguing that I committed a clear error of law by (1)
misapplying the summary judgment standard and (2) refusing to consider portions of an
affidavit submitted by Charlene Sarver (the “Sarver Affidavit”) that directly contradicted
Defendant’s Rule 30(b)(6) testimony. (Doc. 53.) Both motions have been fully briefed
and are now ripe for disposition.
3
A.
Plaintiff’s Motion for Reconsideration (Doc. 51)
Before addressing the merits of Plaintiff’s motion, it is worth taking some time to
address the unique procedural background of Plaintiff’s motion. On December 2, 2015,
Plaintiff filed a Motion for Partial Summary Judgment as to Liability on both his FDCPA
and TCPA claims. (Doc. 24.) On January 7, 2016, Defendant filed its opposition to the
motion (Doc. 32) and on February 4, 2016, Plaintiff filed his reply (Doc. 37). On March
8, 2016, this case was scheduled to proceed to trial in July of 2016. (Doc. 38.)
On April 4, 2016, after Plaintiff had already filed his reply brief, the parties
submitted a Stipulation permitting Defendant to file an Amended Answer asserting a new
bona fide error defense to Plaintiff’s FDCPA claim as well as a sur-reply to argue the
applicability of this new defense. (Doc. 39.) Plaintiff consented to these filings, provided
that (1) the Amended Answer would not be deemed to moot Plaintiff’s Motion for Partial
Summary Judgment; (2) Plaintiff would be given an opportunity to investigate the factual
allegations raised in the new affirmative defense; and (3) Plaintiff would be permitted to
file a brief responding to Defendant’s sur-reply within fourteen (14) days after Plaintiff
received the certified transcript of a deposition of Defendant’s designee. (Id.) On April
5, 2016, I entered an Order approving of the parties’ stipulation. (Doc. 40.) The next
day, the parties submitted another Stipulation permitting Plaintiff to conduct the
Defendant’s designee’s deposition on any day in May of 2016 (Doc. 41), which I again
approved (Doc. 45).
On April 6, 2016, Defendant filed both a sur-reply (Doc. 42) and an Amended
Answer (Doc. 44), both of which asserted its new bona fide error defense. On May 4,
2016, Plaintiff conducted a deposition of Defendant’s designee. However, during this
deposition, Defendant apparently agreed to later provide a supplemental disclosure of
documents that were discussed during the deposition. (Doc. 52, at 3.) Plaintiff reserved
the right to seek to reconvene the deposition after receiving this supplemental
information. (Doc. 52, at 3-4.) As of May 27, 2016, Plaintiff had not yet received the
certified copy of the transcript because the deposition had not officially concluded, and
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therefore the deadline to respond to Defendant’s sur-reply had not yet passed. Plaintiff
notes that he had intended to file a status report to notify me of the above information
and to advise that he would be filing a brief responding to the sur-reply. (Doc. 52, at 4
n.2.) However, almost two (2) months had passed and Plaintiff never made any such
filing and neither party ever brought any of the above information to my attention to
suggest that Plaintiff’s motion was not fully briefed or that a response to Defendant’s surreply was forthcoming.
Therefore, on May 27, 2016, I issued a ruling on the pending summary judgment
motion so that the parties would have adequate time to prepare for the upcoming trial,
which was scheduled for July of 2016. Specifically, I granted Plaintiff’s motion with
respect to his TCPA claim, but denied his motion with respect to his FDCPA claim.
Although there was no genuine issue of material fact as to whether Defendant violated
the FDCPA, summary judgment was denied on the basis of Defendant’s bona fide error
defense, which Plaintiff had failed to respond to or otherwise dispute.
On June 9, 2016, Plaintiff filed the instant Motion for Reconsideration of my denial
of summary judgment on his FDCPA claim to advise me of the above information, noting
that he had not yet received the certified transcript of Defendant’s deposition regarding
the bona fide error defense and that the deadline for filing his response to Defendant’s
sur-reply therefore had not yet passed.1 (Docs. 51 & 52.) Plaintiff’s motion also sets
forth his arguments in response to Defendant’s bona fide error defense. This is the first
time in which Plaintiff has made any response to this defense. Now that Plaintiff has
had an opportunity to fully brief the issue and respond to Defendant’s arguments, I will
again address this defense. Upon review of Plaintiff’s arguments, however, his motion
1
Although the deadline for Plaintiff to file his response to Defendant’s sur-reply
had therefore not yet passed, Plaintiff acknowledges that courts are permitted to
decide a motion at any time, including before the conclusion of the briefing
schedule. See generally Local Rule 7.6 (“Nothing in this rule shall be construed
to limit the authority of the court to grant any motion before expiration of the
prescribed period for filing a brief in opposition.”).
5
for reconsideration will be denied.
To invoke a bona fide error defense under the FDCPA, Defendant must show that
(1) the alleged violation was unintentional; (2) the alleged violation resulted from a bona
fide error; and (3) the bona fide error occurred despite procedures designed to avoid
such errors. Beck v. Maximus, Inc., 457 F.3d 291, 297-98 (3d Cir. 2006). Here,
Defendant argued that when its independent letter vendor mailed Plaintiff’s collection
letter containing the Barcode, every court that addressed the issue–including two (2)
district courts in Pennsylvania–had found that the presence of a barcode on the outside
of a collection notice did not violate the FDCPA. Defendant argued that even though the
Third Circuit later overruled these cases and held that the presence of a barcode did
violate the FDCPA, this decision came after Defendant mailed Plaintiff’s collection letter,
and that in mailing the letter, Defendant had relied in good faith on the previous cases
approving of the practice. Defendant also submitted an affidavit from its Director of
Legal and Compliance to explain that Defendant had adopted procedures to ensure that
it was in compliance with the most up-to-date case law.
In his motion for reconsideration, Plaintiff does not challenge that Defendant had
proper procedures in place to satisfy the bona fide error defense. Rather, Plaintiff
argues that a bona fide error defense cannot be premised on a mistake of law regarding
the FDCPA’s requirements. Plaintiff relies on the Supreme Court’s decision in Jerman v.
Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010), which held that “the
bona fide error defense in § 1692k(c) does not apply to a violation of the FDCPA
resulting from a debt collector’s incorrect interpretation of the FDCPA.” Id. at 604-05.
The parties’ dispute over the applicability of the bona fide error defense boils down to
competing interpretations of the Supreme Court’s articulation of this defense in Jerman,
and whether Jerman addresses situations like here, where the debt collector relied on
federal courts’ misinterpretation of the FDCPA, as opposed to the debt collector’s own
misinterpretation. Because there is no binding Third Circuit precedent on this issue, I
have looked to courts outside of this Circuit to inform my analysis.
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Plaintiff argues that Jerman applies to all mistakes of law regarding the FDCPA,
regardless of whether those mistakes are made by the debt collector or a federal district
court, and therefore precludes a debt collector who relies on district court cases that are
later overturned from asserting the bona fide error defense. In support of this
interpretation, Plaintiff relies on a federal district court case from Illinois, Portalatin v.
Blatt, 125 F. Supp. 3d 810 (N.D. Ill. 2015), which held that the bona fide error defense
did not apply where the debt collector, in violating the FDCPA, had relied on binding
legal authority at the time that was later reversed. The district court in Portalatin found
that “Jerman does not distinguish between debt collectors who exercise independent
legal judgment and those who do not.” Id. at 815. However, Plaintiff’s reliance on
Portalatin is misguided for a number of reasons.
First, Portalatin is not binding authority, and therefore does not warrant
reconsideration of my prior Memorandum. Second, the reasoning in Portalatin was
seriously called into doubt, if not entirely overturned, by the Seventh Circuit’s recent
opinion in Oliva v. Blatt, Hasenmiller, Leibsker & Moore, LLC, No. 15-2516, 2016 WL
3262370 (7th Cir. June 14, 2016).2
In Oliva, the Seventh Circuit held that a law firm, which based its decision on
where to bring a collection action against a consumer on a court’s FDCPA interpretation
that later was overturned, was not liable for suing a consumer in the wrong court. Judge
Daniel A. Manion, writing for a unanimous appellate panel, concluded that the debt
collector was covered by the FDCPA’s bona fide error defense. To provide some
background of this decision, the FDCPA restricts where a debt collector can file a
collection suit to either the judicial district or similar legal entity where the consumer lives
when the suit is filed or where the consumer signed the contract that is the basis of the
suit. 15 U.S.C. § 1692i(a)(2). In 1996, the Seventh Circuit decided in Newsom v.
2
Oliva was decided on June 14, 2016, which was approximately three (3) weeks
after my prior Memorandum was decided, on May 27, 2016.
7
Friedman, 76 F.3d 813 (7th Cir. 1996) that all of Cook County, Illinois comprised a single
judicial district, meaning that a consumer living anywhere in the county could be sued in
any of the county’s six (6) municipal districts. However, that interpretation was overruled
by the appellate court in 2014 in Suesz v. Med-1 Solutions, LLC, 757 F.3d 636 (7th Cir.
2014). In Suesz, the Seventh Circuit held that the judicial district or similar legal entity
meant the smallest geographic area that could be used to fix venue in the relevant court
system. In Cook County, that meant a consumer now had to be sued in the municipal
district where he lived. Suesz also explicitly said that the change in interpretation was
retroactive.
The law firm filed a collection suit against Ronald Oliva before Suesz was
decided. However, after Suesz was decided, the lawsuit was still pending. The
consumer sued, claiming that the collection suit had been filed in a location banned by
the FDCPA. There was no dispute that the law firm’s choice of municipal district was
permitted before Suesz and banned after Suesz. There was also no question that the
firm’s error was unintentional and that it occurred despite the firm’s procedures that were
reasonably adopted to avoid filing suit in the wrong place. Relying on the Supreme
Court’s opinion in Jerman, the consumer argued that the question of where the FDCPA
provided that a suit could be filed required a legal interpretation, thereby precluding the
law firm from asserting a bona fide error defense, even if the law firm had relied on what
the state of the law was at the time.
The Seventh Circuit disagreed, explaining that the law firm had not “interpreted”
the FDCPA’s legal requirements, but simply relied on a previously binding interpretation
by the court. If there was any mistaken interpretation of the FDCPA, it was a mistaken
interpretation by the Seventh Circuit, not the law firm. And even if the error had resulted
from a mistaken legal interpretation by the law firm, Jerman would not preclude the
defense because the law firm’s interpretation of the rule on where a suit could be filed
would not have been a mistaken interpretation of the law at the time it was made.
I find the Seventh Circuit’s reasoning in Oliva persuasive. As noted in my prior
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Memorandum, there is an important distinction to be made between a debt collector’s
independent exercise of legal judgment that results in a misinterpretation of the FDCPA,
and a debt collector’s good-faith reliance on federal judicial interpretations of the
FDCPA, even if those interpretations are later overturned. This distinction is important
for at least two (2) reasons.
First, if a debt collector relies on clear legal authority that is directly on point,
whether that legal authority comes in the form of district court opinions or appellate court
opinions, that debt collector is not exercising independent legal judgment to interpret the
law; the debt collector is relying on a court’s interpretation of the law. See Oliva,
2016 WL 3262370, at *2 (applying the bona fide error defense because the debt
collector “did not interpret the relevant venue provision of the FDCPA, mistakenly or
otherwise, but simply abided by [the Seventh Circuit’s] interpretation in Newsom,” and
that the debt collector’s “decision to follow Newsom does not amount to an independent
(and entirely futile) ‘interpretation’”). Therefore, even if those court opinions are later
overturned, deeming those judicial interpretations of the law to be incorrect, there has
been no misinterpretation of the law by the debt collector, only by the courts. For
example, in Oliva, in applying the bona fide error defense, the Seventh Circuit explained
that if the debt collector’s “selection of venue under Newsom was the result of a
mistaken interpretation of the FDCPA, it was the result of our mistaken interpretation,
not [the debt collector’s].”
Like in Oliva, here, Defendant had not “interpreted” the FDCPA’s legal
requirements regarding the Barcode, but simply relied on prior judicial opinions,
including courts from within Pennsylvania, that had specifically approved of Defendant’s
practice at the time. See, e.g., Waldron v. Prof’l Med. Mgmt., No. 12-1863, 2013 WL
978933, at *5 (E.D. Pa. Mar. 13, 2013) (“The embedded data is a seemingly random
series of letters and numbers that only Defendant can decipher. Its inclusion on the
envelope’s face thus does not violate the Act.’); Douglass v. Convergent Outsourcing,
963 F. Supp. 2d 440, 447 (E.D. Pa. 2013) (“Since exposure of this account number on
9
the envelope and through the QR code is benign, § 1692f(8) is not violated.”); see also
Marx v. Gen. Revenue Corp., 668 F.3d 1174, 1177 (10th Cir. 2011) (holding that the
mere presence of an account number does not show that the communication is related
to a debt collection). Therefore, Defendant did not make any independent legal
judgment as to whether the language of the FDCPA would permit the mailing of
Defendant’s collection notice to Plaintiff. Rather, Defendant explicitly relied on every
single judicial opinion that had addressed the issue, all of which permitted Defendant’s
mailing. Defendant maintains, and Plaintiff does not dispute, that there was no judicial
opinion holding otherwise. It was not until four (4) months after mailing Plaintiff’s
collection notice, on August 27, 2014, that the Third Circuit Court issued its opinion in
Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014), overturning the
previous opinions relied upon by Defendant. Any FDCPA violation arising out of
Defendant’s mailing was not based on any misinterpretation of the FDCPA by
Defendant, the debt collector, but by the courts noted above. Accordingly, there was no
misinterpretation of law by the debt collector, and Jerman does not apply. To impose
liability on debt collectors who, like Defendant here, researched and relied on federal
court opinions interpreting the FDCPA before sending a collection notice, would have
the practical effect of retroactively punishing debt collectors for following the law as it
then stood. Daubert, 2016 WL 3027826, at *7.
Second, even if one were to characterize a debt collector’s reliance on judicial
interpretations of the FDCPA that were later overturned as the debt collector’s
misinterpretation of the law, it would not be a misinterpretation because that was the
state of the law at the time the decision was made. See Oliva, 2016 WL 3262370, at *3
(explaining that “even if Blatt’s violation was the result of its own interpretation of the law,
Jerman still would not apply, for Blatt’s interpretation was not mistaken when it was
made”). For example, in Oliva, the Seventh Circuit explained that the fact that “Blatt’s
conduct would later be deemed a violation under Suesz is not the result of Blatt’s
mistaken interpretation of the FDCPA, but of a retroactive change of law that was
10
entirely outside Blatt’s control.” Id. Likewise, here, the fact that Defendant’s conduct
would later be deemed a violation by the Third Circuit in Douglass, which was decided
four (4) months after Defendant mailed Plaintiff’s collection notice, is not the result of
Defendant’s mistaken interpretation of the FDCPA, but of a “retroactive change of law
that was entirely outside of [its] control.” Id.
This distinction between a debt collector’s independent misinterpretation of the
FDCPA and a debt collector’s reliance on judicial interpretations of the FDCPA is
consistent with the Supreme Court’s holding in Jerman. Jerman did not hold that any
misinterpretation of the FDCPA–regardless of who makes the mistake–precludes the
bona fide error defense. Rather, the holding in Jerman applied only to a debt
collector’s misinterpretation of the FDCPA. Jerman, 559 U.S. at 577 (characterizing
the sole issue to be resolved as “whether the ‘bona fide error’ defense in § 1692k(c)
applies to a violation resulting from a debt collector’s mistaken interpretation of the
legal requirements of the FDCPA”) (emphasis added); id. at 604-05 (“We therefore hold
that the bona fide error defense in § 1692k(c) does not apply to a violation of the FDCPA
resulting from a debt collector’s incorrect interpretation of the requirements of that
statute.”) (emphasis added); see also Oliva, 2016 WL 3262370, at *2 (“Jerman applies
only when the debt collector’s violation results from the debt collector’s mistaken
interpretation of the law.”). To be sure, the Court’s holding in Jerman was based on its
concern with the potential abuse of the bona fide error defense if it applied to a debt
collector’s misinterpretation of the law because if that were the case, then the defense
would make every FDCPA violation subject to the debt collector’s purported
interpretation of the statute. Jerman, 559 U.S. at 602-03. However, where like here, the
interpretation of law comes from a federal court or a federal agency, it is not subject to
the same potential abuse or manipulation and does not “invite[] litigation about a debt
collector’s subjective intent.” Id.
Finally, Plaintiff attempts to distinguish Oliva by arguing that Oliva relied on
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“binding” legal authority in the form of a federal appellate court opinion, whereas here,
Defendant relied on district court opinions, which Plaintiff appears to argue are nonbinding. (Doc. 62, at 3-4.) Plaintiff argues that the bona fide error defense only covers
mistakes of law when the debt collector relies on “binding” legal authority in the form of
appellate court opinions, as opposed to district court opinions. (Id. at 2-3 (“Defendant’s
argument ignores the long standing principle that there is no such thing as the law of the
district. . . . The distinction between binding and non-binding authority here is of
paramount importance.”) (citation and internal quotation marks omitted).) Because
district court opinions are non-binding on other district courts, Plaintiff appears to adopt
the view that debt collectors may ignore district court opinions construing the FDCPA’s
requirements and should instead exercise their own independent legal judgment as to
what the language of the FDCPA requires. (Id.) According to Plaintiff, if a debt collector
chooses to follow a district court opinion, they are exercising their independent legal
judgment to do so; they are not bound to do so. Based on this view, Plaintiff argues that
Defendant could not in good faith rely on all of the uncontested district court opinions
holding that its collection notice did not violate the FDCPA. (Id.)
The only logical conclusion one can draw from Plaintiff’s argument is that district
court opinions can be freely disregarded and that unless there is a federal circuit court
opinion (or presumably Supreme Court opinion) addressing whether a practice would
violate the FDCPA, debt collectors should exercise their own independent legal
judgment to decide whether an action would violate the FDCPA, ignoring any district
court opinions addressing the issue since they are not binding. I cannot agree that this
is how the bona fide error doctrine was meant to be applied. To be sure, Plaintiff’s logic
would equally apply to disregarding circuit court opinions. For example, Plaintiff argues:
Because every lower court must follow binding circuit precedent, the debt
collector does not exercise any legal judgment when it also follows binding
precedent. . . . But, when a debt collector follows a district court’s decision,
it must necessarily exercise its own legal judgment as to the correctness of
that district court’s decision, because at any time a different district court
could reach an opposite holding.
12
(Doc. 62, at 4.) However, replace “lower court” with “circuit court,” “circuit precedent”
with “Supreme Court precedent,” and “a different district court” with “the Supreme
Court,” and you get the following:
Because every circuit court must follow binding Supreme Court precedent,
the debt collector does not exercise any legal judgment when it also follows
binding Supreme Court precedent. . . . But, when a debt collector follows a
circuit court’s decision, it must necessarily exercise its own legal judgment
as to the correctness of that circuit court’s decision, because at any time
the Supreme Court could reach an opposite holding.
Following Plaintiff’s logic, which relies on whether an opinion can be overruled by a
higher court or not, a debt collector should ignore any opinion regarding the FDCPA’s
requirements and instead exercise their own legal judgment as to what the FDCPA
requires, except in the rare cases where there is a Supreme Court opinion on point,
since that is the only court that cannot be overruled. Surely, this is not how the bona
fide error defense was meant to operate.
Plaintiff’s posed hypothetical at the end of his reply brief fails for similar reasons.
Plaintiff suggests that it “may be useful” to consider a hypothetical scenario where a
district court reaches a decision that is clearly at odds with the FDCPA, such as a district
court holding that a debt collector is always free to communicate with third-parties, and
where there are no contradictory district court opinions. (Doc. 62, at 4-5.) Since the
hypothetical decision would directly contradict the plain language of the FDCPA, which
generally prohibits a debt collector from communicating with third parties, 15 U.S.C. §
1692c(b), should the debt collector be comforted by the district court decision which it
knows, or should know, ignores the plain language of the statute? This is the question
posed by Plaintiff in distinguishing Oliva on the basis that it involved “binding” precedent
from a circuit court as opposed to the instant matter, which involves “non-binding” district
court opinions. Putting aside the irony of this distinction, since Oliva involved a debt
collector’s reliance on a Seventh Circuit Court opinion, which was then overturned by a
later Seventh Circuit opinion, this same hypothetical question could be posed if a circuit
court opinion affirmed that district court decision, yet there were no other contradictory
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circuit court opinions holding otherwise. Should the debt collector be comforted by the
circuit court opinion which it knows, or should know, ignores the plain language of the
statute? Based on this posed hypothetical, I can only assume that Plaintiff is suggesting
that unlike circuit court judges, district court judges cannot be trusted to properly
interpret the law. I cannot agree that this was what the Supreme Court intended with its
opinion in Jerman. Accordingly, and for all of the reasons outlined above, Defendant is
entitled to proceed to trial on its bona fide error defense and Plaintiff’s motion to
reconsider my Order denying summary judgment on his FDCPA claim will be denied.
B.
Defendant’s Motion for Reconsideration (Doc. 53)
On June 11, 2016, Defendant also filed a motion for reconsideration. (Doc. 53.)
Although this motion was untimely filed,3 I will decline Plaintiff’s invitation to deny
Defendant’s motion on this basis because considering the motion would not prejudice
Plaintiff. See United States v. Eleven Vehicles, Their Equip. & Accessories, 200 F.3d
203, 215 (3d Cir. 2000) (holding “that a district court can depart from the strictures of its
own local procedural rules where (1) it has a sound rationale for doing so, and (2) so
doing does not unfairly prejudice a party who has relied on the local rule to his
detriment”); Szostek v. Drexel Univ., No. 12-2921, 2013 WL 6667746, at *2 (E.D. Pa.
Dec. 18, 2013) (waiving application of Local Rule 7.1 to consider the substance of a
motion for reconsideration filed fourteen (14) days after the deadline). Therefore, I will
proceed to address the merits of Defendant’s motion.
1.
Prior Express Consent Defense
First, Defendant argues that I erred in finding insufficient record evidence on
Defendant’s prior express consent defense to survive summary judgment on Plaintiff’s
3
Local Rule 7.10 requires that a motion for reconsideration be filed within fourteen
(14) days from the date of the order that the motion seeks reconsideration of.
Here, Defendant challenges my May 27, 2016 Order, making the deadline for
Defendant’s motion fourteen (14) days after May 27, 2016, or June 10, 2016.
Defendant did not file its motion until June 11, 2016.
14
TCPA claim. Prior express consent is an affirmative defense to TCPA claims where the
calls were made with the “prior express consent” of the called party. 47 U.S.C. §
227(b)(1)(A). Defendant argues that I required absolute proof of Plaintiff’s consent,
thereby “flipping” the summary judgment standard and placing the burden of proving its
case on Defendant instead of Plaintiff. However, this misconstrues my Memorandum
and ignores that “prior express consent” is an affirmative defense that Defendant
ultimately bears the burden of proving. See In the Matter of Rules & Regulations
Implementing the Tel. Consumer Prot. Act of 1991, Request of ACA Int’l for Clarification
& Declaratory Ruling, 23 F.C.C.R. 559, 565 ¶ 10 (Jan. 4, 2008) (“2008 FCC Order”)
(“conclud[ing] that the creditor should be responsible for demonstrating that the
consumer provided prior express consent” and that “[s]hould a question arise as to
whether express consent was provided, the burden will be on the creditor to show it
obtained the necessary prior express consent”); see also Evankavitch v. Green Tree
Servicing, LLC, 793 F.3d 355, 366 (3d Cir. 2015) (explaining that the defendant bears
the burden to prove entitlement to the prior express consent defense to a TCPA claim
because it is an affirmative defense); Stoops v. Wells Fargo Bank, N.A., No. 3:15-83,
2016 WL 3566266, at *4 (W.D. Pa. June 24, 2016) (“It is well settled that when a
defendant invokes the affirmative defense of express consent, the defendant bears the
burden of establishing that it applies.”); Sengenberger v. Credit Control Servs., Inc., No.
9-c-2796, 2010 WL 1791270, at *3 (N.D. Ill. May 5, 2010) (“The defendant bears the
burden of proof with respect to ‘prior express consent [for TCPA claims].’”) (citations
omitted). Cf. United States v. First City Nat’l Bank of Houston, 386 U.S. 361, 366 (1967)
(explaining that “where one claims the benefits of an exception to the prohibition of a
statute,” that party carries the burden of proof). Contrary to Defendant’s assertion, I did
not place Plaintiff’s burden of proving his TCPA claim on Defendant. Rather, after
finding that Plaintiff satisfied his burden of establishing a prima facie case of his TCPA
claim, which Defendant does not dispute, I found that there was insufficient evidence to
establish a genuine issue of material fact as to whether Defendant was entitled to its
15
affirmative defense, which Defendant would bear the burden of proof for at trial.
Because there was no genuine issue of material fact as to whether Plaintiff established
his prima facie case and there was insufficient evidence for a reasonable juror to
conclude that Defendant was entitled to an affirmative defense, summary judgment was
entered in favor of Plaintiff.
There is no dispute that Plaintiff never directly provided express consent to
Defendant. Rather, Defendant argues that Plaintiff indirectly provided express consent
by providing direct consent to either the Hospital or Radiology Associates, and that
consent was then passed along to MBMS and Defendant. In order for a reasonable
juror to conclude that any express consent was adequately “passed along” so that
Defendant could be entitled to this defense, there would have to be some evidence from
which a reasonable juror could conclude that Plaintiff “had given express consent to
someone at some point,” such as Radiology Associates or the Hospital, who was then
authorized to pass that consent along to Defendant. Daubert, 2016 WL 3027826, at
*17. Other than Defendant’s uncorroborated assertion repeatedly made in its pleadings
that this “must have” been the case (see, e.g., Doc. 33, Def. Resp. to PSUMF, ¶ 24), the
record contains no such evidence. Cf. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986) (explaining that in opposing summary judgment, the
non-moving party “must do more than simply show that there is some metaphysical
doubt as to the material facts”) (citations omitted); El v. Se. Pa. Transp. Auth., 479 F.3d
232, 238 (3d Cir. 2007) (explaining that in order to defeat summary judgment, “[t]he nonmoving party cannot rest on mere pleadings or allegations; rather it must point to actual
evidence in the record on which a jury could decide an issue of fact its way”) (citation
omitted). As the moving party, Plaintiff satisfied his burden by pointing out the absence
of any evidence to support this defense, and as explained by the Supreme Court, this
was all that Plaintiff had to do with regard to an issue that Defendant, even as the nonmoving party, bore the burden of proving:
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But we do not think the Adickes [v. S.H. Kress & Co., 398 U.S. 144 (1970)]
language quoted above should be construed to mean that the burden is on
the party moving for summary judgment to produce evidence showing the
absence of a genuine issue of material fact, even with respect to an issue
on which the nonmoving party bears the burden of proof. Instead, as we
have explained, the burden on the moving party may be discharged by
‘showing’–that is, pointing out to the district court–that there is an
absence of evidence to support the nonmoving party’s case.
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (emphasis added). The Court explicitly
“disapprove[d] a line of cases allowing a party opposing summary judgment to resist a
properly made motion by reference only to its pleadings.” Id.4
After Plaintiff pointed out this absence of evidence to support Defendant’s
affirmative defense of prior express consent, it was then up to Defendant to respond and
come forth with any evidence (not to be confused with direct evidence or absolute
proof) it had to make a showing of this defense. Id. at 322 (explaining that the moving
party is entitled to summary judgment where “the nonmoving party has failed to make a
sufficient showing on an essential element of her case with respect to which she has the
burden of proof”). The Third Circuit has explained that in cases like these, “summary
judgment is essentially ‘put up or shut up’ time for the non-moving party: the nonmoving party must rebut the motion with facts in the record and cannot rest solely on
assertions made in the pleadings, legal memoranda, or oral argument.” Berckeley Inv.
Grp. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006) (citations and internal quotation marks
omitted). Even as the moving party, it is not Plaintiff’s burden to come forth with
evidence affirmatively disproving Defendant’s affirmative defense. Celotex Corp., 477
4
Defendant’s focus on the fact that it did not move for summary judgment to argue
that I “flipped” the summary judgment standard is misplaced, because as the
Supreme Court noted in Celotex, “district courts are widely acknowledged to
possess the power to enter summary judgments sua sponte, so long as the losing
party was on notice that she had to come forward with all of her evidence.” Id. at
326. The Supreme Court explained that it “would surely defy common sense to
hold that the District Court could have entered summary judgment sua sponte in
favor of petitioner in the instant case, but that petitioner’s filing of a motion
requesting such a disposition precluded the District Court from ordering it.”
17
U.S. at 325. Where the nonmoving party fails to go beyond its pleadings and come forth
with sufficient evidence on issues it bears the burden of proving at trial, there 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,” making summary judgment appropriate. Celotex Corp., 477 U.S. at 322-23
(noting that the standard for granting summary judgment mirrors the standard for a
directed verdict).
In applying this standard, courts have granted plaintiffs’ motions for summary
judgment on TCPA claims where defendants failed to adduce sufficient evidence in
support of their affirmative defenses to proceed to trial. For example, in Hines v. CMRE
Fin. Servs., Inc., No. 13-61616, 2014 WL 105224 (S.D. Fla. Jan. 10, 2014), the plaintiff
sought treatment at a hospital in Florida and at the time of his admission, he provided
his telephone number to the hospital. Town & Country Emergency Physicians, LLC
(“TCEP”), which contracted with the hospital to provide emergency services, saw to the
plaintiff’s medical needs. TCEP billed the plaintiff for the services rendered, but when
the plaintiff did not pay his bill, TCEP obtained the plaintiff’s telephone number from the
hospital and retained the defendant CMRE, a provider of debt-collection services, to
collect upon the debt. In the course of its debt-collection efforts, CMRE placed as many
as one hundred fifty-three (153) automated calls to the plaintiff’s telephone, which
resulted in the plaintiff filing a TCPA claim against CMRE.
The plaintiff moved for summary judgment, and the defendant, like Defendant
here, countered with the prior express consent defense, arguing that the plaintiff
consented to receive the calls. Id. at *4. It was undisputed that the plaintiff never
provided his telephone number to TCEP, the creditor behind the calls. The court found
that the defendant failed to adduce evidence on this defense, and therefore granted
partial summary judgment in favor of the plaintiff as to liability on this claim:
Because Plaintiff has provided evidence of an absence of consent to calls
on behalf of TCEP, and because Defendant has failed to adduce evidence
that would allow a reasonable factfinder to conclude that Plaintiff expressly
18
consented to receive such calls, Defendant has failed to create an issue of
fact with regard to prior express consent that could preclude summary
judgment in Plaintiff’s favor.
Id. at *4. The court applied the same standard articulated by the Supreme Court in
Celotex and the same standard applied in my prior Memorandum. Here, Defendant
“failed to adduce evidence that would allow a reasonable factfinder to conclude that
Plaintiff expressly consented to receive such calls,” and has therefore “failed to create
an issue of fact with regard to prior express consent that could preclude summary
judgment in Plaintiff’s favor.” Id.
Defendant argues that I erred in requiring direct evidence that Plaintiff consented
to receiving calls, and that I ignored circumstantial evidence showing that Plaintiff
provided his phone number to the Hospital. Defendant points to evidence showing that
(1) Plaintiff received medical services from Radiology Associates as part of his treatment
at the Hospital; (2) MBMS was forwarded Plaintiff’s radiology report and phone number;
(3) MBMS then forwarded Plaintiff’s phone number to Defendant for collections; (4)
neither MBMS nor Defendant conducts independent research to discover phone
numbers; (5) MBMS received Plaintiff’s phone number from either Radiology Associates
or the Hospital; and (6) Plaintiff testified that he never gave his phone number to
Radiology Associates. Based on this evidence and nothing more, Defendant argues
that it must be the case that Plaintiff gave his phone number to the Hospital, and
therefore claims that there is a genuine issue of material fact as to whether Plaintiff
provided express consent.
However, as stated in my Memorandum, express consent can indeed be passed
along to a third party indirectly, but only “under certain circumstances,” such as when the
plaintiff expressly authorized that the consent could be passed along to a third party.
Daubert, 2016 WL 3027826, at *16. Contrary to Defendant’s assertions, the issue of
whether Plaintiff provided express consent does not turn solely on whether he provided
his telephone number to the Hospital, but also on whether in providing his telephone
number, Plaintiff authorized the Hospital to transfer his information to a third party like
19
Defendant for billing purposes. Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d
1110, 1123-24 (11th Cir. 2014) (“Other FCC explications of the prior express consent
exception also show that the appropriate analysis turns on whether the called party
granted permission or authorization, not on whether the creditor received the number
directly.”); id. at 1125 (“Because Mais’s wife specifically authorized that transfer of
health information for billing purposes, ‘the wireless number was provided by the
consumer to the creditor’ in satisfaction of the prior express consent exception.”)
(emphasis added). For example, in Mais v. Gulf Coast Collection Bureau, Inc., a
plaintiff’s express consent was “passed along” to a third party when the plaintiff’s wife, in
providing the hospital with the plaintiff’s phone number, signed release forms “granting
the Hospital permission to pass his health information to Florida United for
billing.” Id. at 1126 (emphasis added). It is not enough to merely provide a hospital
one’s contact information to expressly consent to being called by any third party that the
hospital then passes that number along to in connection with the hospital’s services.
See, e.g., id. at 1124 (“Thus, under the 2008 FCC Ruling a cell phone subscriber like
Mais could provide his number to a creditor like Florida United–and grant prior express
consent to receive autodialed or prerecorded calls–by affirmatively giving an
intermediary like the Hospital permission to transfer the number to Florida United for
use in billing.”); Hines, 2014 WL 105224, at *2-*3 (“The Court agrees with Plaintiff that
the mere provision of his telephone number to the Hospital upon admission does not
constitute express consent to receive calls from a distinct creditor . . . Although Plaintiff
provided his telephone number to the Hospital upon admission, Defendant has failed to
illustrate how this act constituted ‘prior express consent’ to receive debt-collection calls
on behalf of TCEP, a third-party creditor.”); Moise v. Credit Control Servs., Inc., 950 F.
Supp. 2d 1251, 1253 (S.D. Fla. 2011) (“Nothing in either the TCPA or the FCC order
indicates that consent to one creditor is consent to another creditor who has some
relationship with the first creditor.”); id. (rejecting the defendant’s argument that if the
plaintiff gave his cell phone number to his treating physician, that would constitute prior
20
express consent for the physician’s third party collector to contact the plaintiff in
connection with the services rendered). In Mais, the Eleventh Circuit explicitly
distinguished between a “patient filling out a form from a healthcare provider,” who may
expect to be contacted about his health and treatment, and a form that “explicitly states
that the provided information will be used for payment and billing,” whereby the patient
could then expect collection calls as a retail consumer. Mais, 768 F.3d at 1122.
However, here, even assuming a reasonable juror could conclude that Plaintiff provided
his telephone number to the Hospital, there is simply no evidence anywhere in the
record from which a reasonable juror could conclude that in providing his telephone
number, Plaintiff authorized the Hospital to transmit his information to MBMS and
Defendant for billing.
Perhaps in realization of this, Defendant now raises new evidence in its reply brief
in further support of its motion for reconsideration, citing to the Hospital’s Notice of
Privacy Practices, which has never been disclosed in earlier pleadings. This Notice
states that a patient’s “medical information may be used and disclosed so that the
treatment and services received at the facility may be billed and payment may be
collected from you, your insurance company and/or a third party.” (Doc. 63, at 6 n.3.)
Defendant uses this Notice to argue that there is a genuine issue of material fact as to
whether Plaintiff provided express consent. However, this is too little, too late. I cannot
consider this new evidence presented in Defendant’s reply brief because Defendant has
made no argument as to why this evidence was not raised earlier or why it was not
previously available.5 The Third Circuit has made clear that “[w]here evidence is not
newly discovered, a party may not submit that evidence in support of a motion for
reconsideration.” Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985) (explaining
that the district court “appropriately did not consider the affidavit in its disposition of the
motion for reconsideration” because the affidavit contained evidence that was available
5
Additionally, there is no evidence that Plaintiff signed this Notice.
21
prior to summary judgment); see also Donegan v. Livingston, 877 F. Supp. 2d 212, 215
(M.D. Pa. 2012), aff’d, 523 F. App’x 195 (3d Cir. 2013) (explaining that a motion for
reconsideration “is not a vehicle to raise new arguments or present evidence that could
have been raised prior to the entry of judgment”) (citation and internal quotation marks
omitted). Therefore, I may not consider this evidence on Defendant’s motion.
In sum, prior express consent is an affirmative defense that Defendant would
bear the burden of proving at trial. In moving for summary judgment, Plaintiff pointed to
the absence of any evidence to support this defense. In response, Defendant failed to
adduce any evidence from which a reasonable juror could conclude that this consent
was given. Therefore, Plaintiff was entitled to summary judgment. Defendant’s eleventh
hour attempt to now submit evidence in its reply brief in support of a motion for
reconsideration is too late. Accordingly, there is no evidence in the record from which a
reasonable juror could conclude that Defendant is entitled to an affirmative defense to
Plaintiff’s TCPA claim and Defendant’s motion to reconsider my ruling on this question
will be denied.
2.
Sarver Affidavit
Defendant also argues that I should have considered the Sarver Affidavit in ruling
on Plaintiff’s motion for partial summary judgment, even where the affidavit directly
contradicted Defendant’s Rule 30(b)(6) testimony. To provide some background,
Plaintiff had sought to obtain binding testimony from Defendant on various topics during
discovery, including Defendant’s Dialer system. Defendant designated Anita Schaar as
its corporate designee, who, at the Rule 30(b)(6) deposition, testified that the Dialer had
the capacity to place calls without human intervention. In moving for partial summary
judgment, Plaintiff used this testimony to argue that the Dialer constituted an automatic
telephone dialing system under the TCPA. In opposing summary judgment, Defendant
attempted to disavow this testimony by submitting an affidavit by its Director of
Collections, Charlene Sarver, which asserted that “[t]he Dialer is not capable of making
phone calls without human intervention.” (Doc. 32-4, Def. Ex. 4 (emphasis added).)
22
The “sham affidavit doctrine” provides that “a party may not create a material
issue of fact to defeat summary judgment by filing an affidavit disputing his or her own
sworn testimony.” Jiminez v. All Am. Rathskellar, Inc., 503 F.3d 247, 251 (3d Cir. 2007).
Here, Defendant submitted an affidavit in connection with its summary judgment papers,
which directly contradicts testimony provided by its Rule 30(b)(6) deponent. As
explained in my prior Memorandum, Defendant cannot rely on this contradictory affidavit
under the sham affidavit doctrine unless it can be shown that the information was “not
known or was inaccessible” at the time. Daubert, 2016 WL 3027826, at *12.
Additionally, Rule 30(b)(6) deponents have a duty of preparation that makes them
uniquely different from Rule 30(b)(1) deponents, who generally do not have an obligation
to prepare for a deposition. Defendant designated Ms. Schaar as its Rule 30(b)(6)
designee. As such, Ms. Schaar had a duty to prepare to testify on behalf of Defendant
regarding the topics listed by Plaintiff in the deposition notice, which included the Dialer
system. This duty included an obligation to obtain all information known or reasonably
accessible to Defendant. Thus, when Ms. Schaar testified to the lack of human
involvement with regard to calls placed by the Dialer, she was providing binding
testimony regarding the information known or reasonably accessible to Defendant. To
allow Defendant to disavow this binding 30(b)(6) testimony with an affidavit filed later, in
connection with summary judgment and after discovery has already closed, would
encourage companies to send poorly prepared designees to testify, and then to file a
contradictory affidavit during summary judgment to disavow any Rule 30(b)(6) testimony
they were not pleased with. Companies could then cherry pick at trial which testimony
or affidavits would best serve their interests on each particular claim. This is precisely
what the sham affidavit doctrine was aimed at preventing.
In its motion for reconsideration, Defendant argues that my focus on Rule
30(b)(6) obligations and my ruling that a defendant cannot rely on a contradictory
affidavit unless it can “prove that the information was not known or was inaccessible” is
narrower and at odds with the Third Circuit’s more “flexible” approach to the sham
23
affidavit doctrine. In Jiminez, the Third Circuit discussed this flexible approach, and
explained that “[w]hen there is independent evidence in the record to bolster an
otherwise questionable affidavit, courts generally have refused to disregard the affidavit.”
503 F.3d at 254; see also Baer v. Chase, 392 F.3d 609, 625 (3d Cir. 2004) (“When there
is independent evidence in the record to bolster an otherwise questionable affidavit,
courts generally have refused to disregard the affidavit.”) (emphasis added).
However, Jiminez did not address the unique obligations defendants have under
Rule 30(b)(6) to provide binding testimony. Additionally, even assuming Jiminez applied
to Rule 30(b)(6) testimony, Defendant still fails to meet its standard because Defendant
has offered no “independent evidence in the record” to bolster the conflicting Sarver
Affidavit, as required by the Third Circuit in both Jiminez and Baer. Jiminez, 503 F.3d at
254; Baer, 392 F.3d at 625. The only “independent” evidence that Defendant points to
is the Sarver Affidavit itself, which of course, is not independent evidence. Accordingly,
Defendant fails to demonstrate that the sham affidavit doctrine does not apply and its
motion for reconsideration on this claim will be denied.
IV. Conclusion
For the above stated reasons, both motions for reconsideration will be denied.
An appropriate order follows.
July 20, 2016
Date
/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge
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