FYI: Oregon Fed Ct Holds Request to "Please" Provide Debt Dispute in Writing Violates FDCPA

The U.S. District Court for the District of Oregon recently held that a notice provided pursuant to 15 U.S.C. 1692g that also contained additional language requesting that a dispute of the debt "please" be sent in writing violated the federal Fair Debt Collection Practices Act (FDCPA).

 

In so ruling, the District Court held that such additional language overshadows or is inconsistent with a consumer's right to orally dispute the debt within the 30 day period under 15 U.S.C. 1692g, and constitutes a false representation or deceptive means to collect or attempt to collect a debt under the FDCPA.

 

A copy of the opinion is available at:  Link to Opinion

 

A debt collector sent a debt validation notice to a debtor.  In addition to the language required under 15 U.S.C. 1692g, the notice also contained additional language stating "If you dispute any account referenced in this letter, please send all information regarding the dispute to [address]."

 

The debtor filed suit alleging that the request to mail information regarding a dispute violates the FDCPA because it overshadows or is inconsistent with the consumer's right to dispute the debt orally, and that it amounts to an attempt to collect a debt by false or deceptive means.

 

The defendant moved to dismiss both claims.  The District Court denied the motion.

 

Although ruing on a motion to dismiss, the Court held that the additional language requesting that the debtor disputing the debt "please" provide his or her dispute in writing overshadows or is inconsistent with the consumer's right to dispute the debt orally, and would likely mislead the least sophisticated consumer into thinking a dispute would need to be in writing and accompanied by supporting documentation.

 

As you may recall, for notices required under 15 U.S.C. 1692g, the FDCPA prohibits any language or statements that overshadow or are inconsistent with the disclosure of the consumer's right to dispute the debt within 30 days, including statements in the notice itself, and with the consumer's right to dispute the debt orally or in writing. 

 

The FDCPA also prohibits the use of false, deceptive, or misleading representations in debt collection communications.  In addition, the Ninth Circuit uses the least sophisticated consumer standard in applying the requirements of the FDCPA.

 

The District Court distinguished defendant's reliance on Riggs v. Prober & Raphael, 681 F. 3d 1097 (9th Cir. 2012), wherein a 15 U.S.C. 1692g notice simply reversed the order in which it stated the consumer's rights to dispute the debt and the reversal of order could be interpreted to imply a dispute must be in writing.  In Riggs, the Ninth Circuit held that any confusion from the reversed order stemmed at least in part from the language of the FDCPA itself.

 

The Court held that the 1692g notice here, however, contained additional language requesting that the dispute "please" be sent in writing, and any confusion did not therefore stem from the FDCPA itself, but from defendant's inclusion of the additional language.

 

Accordingly, the District Court denied the motion to dismiss.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

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FYI: 6th Cir Holds Voicemail to Third Party Did Not Convey Info as to Debt, and Thus Did Not Violate FDCPA

The U.S. Court of Appeals for the Sixth Circuit recently affirmed judgment on the pleadings in favor of a debt collector because the voicemail in question, which was left at the plaintiff's business, was not a "communication" as defined by the federal Fair Debt Collection Practices Act ("FDCPA") because it did not convey information about the debt.

 

A copy of the opinion is available at: http://www.ca6.uscourts.gov/opinions.pdf/15a0252p-06.pdf

 

A debt collector sent a letter to the debtor's business requesting payroll information and later left a voicemail at the debtor's business that stated the caller's name, the name of the company on whose behalf she was calling, asked if someone in the payroll department could return the call, and left a reference number and call back phone number.

 

The debtor filed suit, alleging that the voicemail supposedly violated section 1692c(b) of the FDCPA by communicating with a third party regarding the debt, and supposedly violated section 1692g(a) "by failing to provide required written notices after an 'initial communication with a consumer.'"

 

The debt collector answered then moved for judgment on the pleadings. The debtor responded and also moved to amend the complaint to add an allegation that the person that heard the voicemail "knew that calls to [debtor's] business were intended for [the debtor]."

 

The district court granted the debt collector's motion for judgment on the pleadings, and denied the debtor's motion to amend as futile, reasoning that because the voicemail message did not imply the existence of a debt, it was not a "communication" as defined by the FDCPA and the complaint thus failed to state a claim under the FDCPA.

 

On appeal, the debtor argued that he stated a claim under 15 U.S.C. § 1692c(b), the FDCPA's prohibition on certain communications with third parties.

 

The Sixth Circuit disagreed, holding that "[t]he district court properly granted [the debt collector's] motion for judgment on the pleadings, because [the debtor] failed to plead a communication by [the debt collector] under the FDCPA."

 

The Court reasoned that "[i]n order to state a claim under 15 U.S.C. § 1692c(b), a plaintiff must plausibly allege, in part, that the defendant 'communicate[d], in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney for the creditor, or the attorney for the debt collector. 15 U.S.C. § 1692c(b). The FDCPA defines 'communication' as 'the conveying of information regarding a debt directly or indirectly to any person through any medium.'" 15 U.S.C. § 1692a(2). To convey information regarding a debt, a communication must at a minimum imply the existence of a debt. Otherwise, whatever information is conveyed cannot be understood as 'regarding a debt.'"

 

The Sixth Circuit found that the subject voicemail did not convey information regarding the plaintiff's debt because it did little more than ask for a return call from the called business' payroll department. Nothing in the message suggested that any kind of debt existed.

 

The Court rejected the plaintiff's argument that the word "credit" as part of the debt collector's corporate name referred to debt collection because "the word 'credit' refers to a category of financial services far broader than debt collection."

 

The other information in the voicemail only gave the impression that the debt collector had some kind of business relationship with plaintiff's business, someone employed by plaintiff's business, or that the caller sought to establish a business relationship. The fact that the voicemail asked for a return call from the payroll department suggested only that the caller was seeking "some sort of payroll information, whether about an individual employee or the business as a whole."

 

The Sixth Circuit acknowledged that "[w]hat information a message conveys depends party on context," but noted that the plaintiff did "not plead circumstances in which [the debt collector's] message would mean more than what the words say." Because the plaintiff did not plead that anyone saw the letter that preceded the voicemail or that it did anything other than inquire about the debtor's payroll information, the Court did not deem it "appropriate to treat it as part of the context of the voicemail." Regardless, the letter did "not create a context in which the voicemail suggests anything about [the plaintiff's] debt."

 

In short, because the voicemail did not convey information about a debt, it was not a "communication" under the FDCPA.

 

The Court pointed out that its "application of the definition of 'communication' under the FDCPA is consistent with the FDCPA's purposes, the [Federal] Trade Commission's commentary, and the decision of the Tenth Circuit in Marx v. General Revenue Corp., 668 F.3d 1174 (10th Cir. 2011)."

 

Citing the Tenth Circuit's ruling in Marx, the Sixth Circuit reasoned that "[t]he ban on communicating with third parties like employers is meant to protect debtors from harassment, embarrassment, loss of job, [and] denial of promotion." This, in turn, "suggests that FDCPA does not cover communications that do not refer to or imply the existence of a debt and thus do not reveal information about the debtor's debts."

 

"The non-binding commentary of the Federal Trade Commission" further supported the Court's conclusion because the FTC rejected "an interpretation that would categorically exclude from the definition of 'communication' all communications that do not directly refer to the existence of a debt," insisting instead on "a common sense approach" under which messages may imply the existence of a debt in some situations, and they are 'communication' in exactly those situations." "Thus, 'communication' under the FDCPA 'does not include situations in which the debt collector does not convey information regarding the debt, such as … [a] request to a third party for information about the consumer's assets, if the debt collector does not reveal the existence of a debt." Although in the case at bar "the debt collector's request concerned income rather than assets … it similarly did not directly or indirectly reveal the existence of [plaintiff's] debt or any information about his debt."

 

In concluding, the Sixth Circuit reasoned that "requiring that a communication at a minimum imply or refer to the existence of a debt is consistent with the text of the FDCPA as a whole."

 

The district court's judgment was affirmed.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: Fla App Ct (1st Dist) Allows "Picking Off" Putative Class Plaintiff, But Holds Injunctive Relief Claims Survived

The District Court of Appeal of the State of Florida, First District, recently held that providing a putative class representative with complete monetary relief mooted his individual and putative class claims for damages and attorney's fees, but did not moot his individual or putative class claims for declaratory and injunctive relief under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).

 

A copy of the opinion is available at:  https://edca.1dca.org/DCADocs/2014/4256/144256_DC08_11062015_091520_i.pdf

 

The plaintiff received emergency medical treatment from a hospital in September 2013. Lacking health insurance for the medical care, he received a bill for $5,953.26. After paying $330 of the bill, the plaintiff found fault with the charges and launched a class action alleging the amounts charged by the hospital to him and other uncovered patients was unreasonable in light of the services provided and the rates charged to patients who had appropriate health insurance coverage for the same services.

 

Before the plaintiff requested class certification, the hospital moved for summary judgment and advised that it had waived the plaintiff's remaining balance, and also offered to have the court assess appropriate attorney's fees and costs against it.  The trial court granted summary judgment and dismissed the complaint.  This appeal followed.

 

The Appellate Court agreed that the plaintiff's claims for breach of contract, breach of implied covenant of good faith, and monetary damages under § 501.211(2) of the FDUTPA were mooted by the hospital's waiver of the balance due and offer to pay the plaintiff's attorney's fees and costs.  It also rejected the plaintiff's argument that, although these claims are moot, he continued to have standing as a class representative.

 

The Court commented that, although a majority of federal courts hold that a defendant cannot "pick off" a class representative prior to class certification by mooting a claim, as a Florida state court interpreting state law, the Appellate Court was compelled to follow Florida Supreme Court precedent established in Sosa v. Safeway Premium Fin. Co., 73 So. 3d 91, 116 (Fla. 2011).

 

In Sosa, the Florida Supreme Court held that before a class can be certified, the class representative must have standing -- meaning the plaintiff must show that an actual controversy exists between him or her and the defendant that will continue throughout the existence of the litigation.

 

The Appellate Court here held that the hospital's debt waiver and offer to pay attorney's fees and costs left no actual controversy on the breach of contract and breach of implied covenant claims, such that the plaintiff could not satisfy this burden and lacked standing on behalf of the class.

 

Moving on to the plaintiff's claim for monetary damages under the FDUTPA, the Appellate Court noted that § 501.211(2) of the FDUTPA entitles an aggrieved party who has "suffered a loss as a result of a violation of this part" to recover "actual damages, plus attorney's fees and court costs."  Reasoning that the plaintiff's entitlement to actual damages was satisfied by the waiver of his balance and by the hospital's agreement to pay attorney's fees and costs, the Court agreed with the trial court that his claims were mooted in this regard and thus the plaintiff lacked standing on behalf of a class.

 

However, the Appellate Court held that the plaintiff continued to have a claim for declaratory and injunctive relief under § 501.211(1) of the FDUTPA. This section provides that "without regard to any other remedy or relief to which a person is entitled, anyone aggrieved by a violation of this part may bring an action to obtain a declaratory judgment that an act or practice violates this part and to enjoin a person who has violated, is violating, or is otherwise likely to violate this part."

 

The hospital argued that the plaintiff was not "aggrieved" as required by this section because, having waived the balance and agreed to pay his attorney's fees and costs, the plaintiff suffered no loss and had no actual damages.

 

The Appellate Court disagreed. The term "aggrieved," the Court reasoned, indicated an intentional legislative distinction and it would not read it as the equivalent of having "suffered a loss."

 

Citing its prior decision in Davis v. Powertel, Inc., 776 So. 2d 971, 975 (Fla. 1st DCA 2000), the Court reasoned that the plaintiff may pursue his claims as "an aggrieved party" even if the relief would only be to protect "consumers who have not yet been harmed by the unlawful trade practice."

 

In concluding that a party is not required to have suffered "actual damages" to obtain FDUTPA injunctive relief, the Court pointed out that for someone to be aggrieved under the FDUTPA "the injury claimed to have been suffered cannot be merely speculative." The Court further determined that due to the language of § 501.211(1) governing declaratory and injunctive relief, the offending conduct need not be continuing to create a cause of action, rather there must be a demonstration of a specific past, present or future grievance.

 

Although the plaintiff's individual and putative class claims for FDUTPA injunctive relief remained viable, the issue of whether the plaintiff had been "aggrieved" was not resolved. The Appellate Court sent this question back to the trial court.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: 11th Cir Confirms Arbitration Delegation Clause Must Be Challenged Specifically

The U.S. Court of Appeals for the Eleventh Circuit recently held that a party challenging an arbitration agreement containing a delegation clause – requiring threshold determinations, such as whether an arbitration agreement is enforceable, to be made by an arbitrator – must challenge the delegation clause specifically, and not simply the agreement as a whole.

 

A copy of the opinion is available at: http://media.ca11.uscourts.gov/opinions/pub/files/201412082.pdf

 

The plaintiff, a Georgia resident, responded to a television advertisement for short-term loans by applying for the $1,000 loan using his computer. The lender was a South Dakota limited liability company located on Indian tribal land.

 

The loan agreement contained a provision that required any dispute be submitted to arbitration.

 

After making his final payment, the plaintiff sued in state court, alleging that the lender's business practices violated the Georgia Payday Lending Act.

 

The lender removed the case to federal court and moved to compel arbitration. The district court denied the motion, reasoning that the plaintiff properly challenged the arbitration provision, which was unconscionable. The lender appealed.

 

On appeal, the Eleventh Circuit noted that the FAA "sets forth a clear presumption — 'a national policy' — in favor of arbitration" and governs the loan agreement because "the parties conducted their business across state lines."

 

"Section 2 of the FAA requires the courts to enforce an arbitration provision within a contract unless 'such grounds exist at law or in equity for the revocation of any contract'" … [and such] … provisions will be upheld as valid unless defeated by fraud, duress, unconscionability, or another 'generally applicable contract defense.'"

 

In addition, section 4 of the FAA "permits one party to seek the assistance of the district court when the other party refuses to proceed with arbitration, and requires the court to 'make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement."

 

"Importantly, parties may agree to commit even threshold determinations to an arbitrator, such as whether an arbitration agreement is enforceable. The Supreme Court has upheld these so-called 'delegation provisions' as valid … and explained that they are severable from the underlying agreement to arbitrate."

 

"When an arbitration agreement contains a delegation provision and the plaintiff raises a challenge to the contract as a whole, federal courts may not review his claim because it has been committed to the power of the arbitrator. Instead, the plaintiff must 'challenge the delegation provision specifically. ... In sum, absent a challenge to the delegation provision itself, the federal courts must treat the delegation provision 'as valid under § 2, and must enforce it under §§ 3 and 4, leaving any challenge to the validity of the Agreement as a whole for the arbitrator."

 

The question or whether the parties committed an issue to arbitration is governed by  state contract law.  "However, as the Supreme Court has explained …, '[c]ourts should not assume that the parties agreed to arbitrate unless there is clear and unmistakable evidence that they did so."

 

The loan agreement at issue provided that the laws of the Cheyenne River Sioux Tribe governed, but the parties did not provide the Court — nor could the Court discover on its own — any rule of tribal law regarding contract interpretation. In such situations, the Court explained that "the plain-meaning rule is a foundational principle of common law contract interpretation widely adopted in the United States, including Georgia" and, accordingly, the Court looked "to Georgia law for a statement of the plain-meaning rule and apply it in this case."

 

The loan agreement committed all "disputes" to arbitration, and defined dispute as including "any issue concerning the validity, enforceability, or scope of this loan or the Arbitration agreement." Applying the Georgia rule of contract interpretation that if the language is plain and unambiguous, no further inquiry is required and the plain meaning governs, the Court held that "the Loan Agreement's plain language contains an express delegation provision [and] [t]his provision conveys the parties' intent to submit to an arbitrator the threshold issue of arbitrability."

 

The Court found that the plaintiff's "complaint only challenges the arbitration provision generally, and therefore falls short of the … pleading requirement [established by the Supreme Court in Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 130 S. Ct. 2772 (2010)]."

 

Because the plaintiff did not specifically challenge "the parties' agreement to commit to arbitration the question of the enforceability of the arbitration agreement … [but instead asked the Court] to review the validity of the arbitration agreement as a whole, a task which the delegation provision expressly commits to an arbitrator [,] …" the Court held that "§ 2 of the FAA requires us to treat it as valid and enforce the Loan Agreement according to its terms."

 

Accordingly, the Court reversed the district court's denial of the lender's motion to compel arbitration and remanded for further proceedings, noting that "[a]s this case remains in its pre-trial stages, [plaintiff] may still seek leave from the district court to amend his complaint to reflect a proper challenge to the delegation provision."

 

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

California   |   Florida   |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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