Romine v. Diversified Collection Services, Inc.

• Citation: 155 F.3d 1142
• Decision Date: 17 September 1998
• Docket Number: No. 97-15586,97-15586
• Parties: 98 Cal. Daily Op. Serv. 7250, 98 Daily Journal D.A.R. 10,057 Steve ROMINE, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. DIVERSIFIED COLLECTION SERVICES, INC., and Western Union, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1142

155 F.3d 1142

98 Cal. Daily Op. Serv. 7250, 98 Daily Journal

D.A.R. 10,057

Steve ROMINE, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. DIVERSIFIED COLLECTION SERVICES, INC., and Western Union Defendants-Appellees.

No. 97-15586.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 11, 1998.

Decided Sept. 17, 1998.

Mitchell D. Gliner, Las Vegas, NV and O. Randolph Bragg, Horwitz, Horwitz & Associates, Chicago, IL, for plaintiff-appellant.

Gary R. Goodheart, Jones Vargas, Las Vegas, NV and David G. Russell, Parker, Hudson, Rainer & Dobbs, Atlanta, GA, for defendants-appellees.

Appeal from the United States District Court for the District of Nevada Howard D. McKibben, District Judge, Presiding. D.C. No. CV-95-00994-HDM.

Before: HUG, Chief Judge, FERNANDEZ and THOMAS, Circuit Judges.

HUG, Chief Judge:

This case involves the district court's dismissal of Western Union from a class action lawsuit brought by Steve C. Romine ("Appellant") against Western Union and Diversified Collection Services ("DCS"), a debt collection agency, for violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. ("FDCPA"), which prohibits debt collectors from engaging in abusive, deceptive, and unfair practices. The challenged practice involves Western Union's Automated Voice Telegram ("AVT") service, in which Western Union obtains debtors' telephone numbers by eliciting responses to personal delivery telegrams, then disseminates the unlisted numbers to creditors and collection agencies. The sole issue before us is whether Western Union's activities amount to a direct or indirect attempt to collect a debt, bringing Western Union within the ambit of the FDCPA. The district judge astutely entered 54(b) certification to resolve this legal issue before proceeding with the trial. Fed.R.Civ.P. 54(b). We have jurisdiction pursuant to 28 U.S.C. § 1291. We reverse the district court's judgment dismissing Western Union in this action and remand for further proceedings.

I. Procedural and Factual Background

Appellant appeals the district court's order dismissing Western Union pursuant to Fed.R.Civ.P. 12(b)(6) from Appellant's First Amended Class Action Complaint seeking declaratory judgment and statutory damages on behalf of himself and others similarly situated. Appellant alleges that Western Union violated the FDCPA by: (a) failing to inform him that the voice telegram constituted an attempt to collect a debt, 15 U.S.C. § 1692e(11); (b) failing to provide a validation notice as required by the Act, 15 U.S.C. § 1692g(a); and (c) implying a false sense of urgency and using false or deceptive means in an attempt to collect a debt, 15 U.S.C. §§ 1692e & e(10).

DCS, a California-based debt collection company, entered into a service agreement with Western Union for provision of its AVT service, also called "Talking Telegrams." The service agreement was signed under the heading, "Automated Voice Telegram Debtor Notification Services Agreement."

Western Union advertises that its AVT service was "specially developed for the credit and collections industry." Western Union markets the service as a "revolutionary new collections service that will stimulate recoveries dramatically." The service stimulates debtor responses by employing telegrams bearing the Western Union name, conveying a sense of urgency. Two Western Union advertisements promise the following:

Talking Telegrams gets results!! Since no one--not even your hard-to-reach account holders--can resist a Western Union Telegram, your contact rates can easily approach 88%. So, to pick up your collections dramatically, pick up the phone and call us about Talking Telegrams--the call no debtor can ignore!

. . . . .

That's the beauty of Talking Telegrams, the revolutionary new collections service that has produced up to an 88% contact rate for a major credit card issuer and a student loan servicer.

Once a debtor calls Western Union to retrieve a telegram, Western Union requires the caller to provide his telephone number, allegedly to "confirm" the caller's identity. Western Union then transmits the previously-unlisted or otherwise unavailable telephone number to creditors or debt collection agencies employing the AVT service. A Western Union advertisement explains the process:

What if you don't have a phone number? We'll send a Western Union letter saying that there is a telegram waiting. When the account holder calls, not only will we deliver your collection message, but we'll obtain the needed phone number for your records.

In the case at bar, the following sequence of events occurred. DCS provided Western Union with Appellant's name and address in September, 1995. The parties have stipulated that neither DCS nor Western Union knew of Appellant's telephone number at that time.

On behalf of DCS, Western Union mailed Appellant a "NOTIFICATION OF PERSONAL DELIVERY TELEGRAM HELD FOR DELIVERY." The notification contained a message stating:

WESTERN UNION HAS A "PERSONAL DELIVERY ONLY TELEGRAM" MARKED FOR VOICE DELIVERY TO YOU. WE CANNOT DELIVER THE MESSAGE BECAUSE YOUR TELEPHONE NUMBER WAS NOT PROVIDED AND WE CANNOT CONFIRM THAT YOU ARE THE INTENDED RECIPIENT.

The message provided a toll-free number and directed Appellant to contact a Western Union operator to request his telegram. Appellant telephoned Western Union in response to the notification. He was not informed that this was an effort to collect a debt. A computerized caller identification system ("caller ID") recorded his unlisted telephone number. The operator also requested Appellant's name, address, and telephone number, which he provided. After receiving this information from Appellant, the operator read aloud the following debt collection message prepared by DCS:

WE HAVE PREVIOUSLY ATTEMPTED TO CONTACT YOU REGARDING YOUR ELIGIBILITY FOR THE FEDERAL CONSOLIDATION LOAN PROGRAM. IN AN EFFORT TO STRESS THE IMPORTANCE IN CONTACTING YOU, WE HAVE SENT THIS TELEGRAM REQUESTING THAT YOU TELEPHONE OUR OFFICE IMMEDIATELY AT 1-800-766-7617 BETWEEN 11 A.M. AND 7 P.M. PACIFIC STANDARD TIME TO DISCUSS THE ADVANTAGES OF REFINANCING YOUR DEFAULTED STUDENT LOANS WITH NO UP-FRONT COST TO YOU.

FEDERAL LAW REQUIRES NOTIFICATION THAT THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION WE OBTAIN FROM YOU MAY BE USED AS A BASIS TO ENFORCE COLLECTION OF THIS DEBT.

FROM DIVERSIFIED COLLECTION SERVICES INCORPORATED.

Western Union then mailed Appellant a Mailgram containing a written confirmation of the debt collection message, and provided DCS with Appellant's unlisted telephone number. DCS's debtor collection transaction history shows that DCS subsequently used the newly-acquired telephone number to contact Appellant on several occasions.

The district court entered a judgment dismissing Western Union on the ground that Western Union was not a "debt collector" subject to the FDCPA, and the judge certified the partial dismissal for immediate appeal pursuant to Fed.R.Civ.P. 54(b).

II. Standard of Review

A dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) is converted into a summary judgment motion where, as here, matters outside the pleadings are presented. Fed.R.Civ.P. 12(c). ¹

A grant of summary judgment is reviewed de novo. Covey v. Hollydale Mobilehome Estates, 116 F.3d 830, 834 (9th Cir.1997). The appellate court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Id. The court must not weigh the evidence or determine the truth of the matter but only determine whether there is a genuine issue for trial. Id.

III. Statutory Interpretation

Appellant contends that the district court erred in concluding that Western Union was not a "debt collector" subject to the FDCPA. The district court determined that Western Union acted merely as a "messenger," providing its services to the general public, including creditors and debt collection agencies. Appellant counters that Western Union's role in contacting him by way of a Western Union telegram, requiring a return call for delivery of the telegram, communicating with him personally, obtaining his unlisted telephone number, and forwarding the unlisted number to DCS for use in collection efforts brings Western Union within the ambit of the FDCPA. The FDCPA defines "debt collector" as:

[A]ny person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

15 U.S.C. § 1692a(6). Appellant concedes that Western Union does not qualify as a debt collector under the first prong of the FDCPA definition because debt collection is not the principal purpose of Western Union's business. Appellant argues instead that Western Union regularly collects or attempts to collect debts, directly or indirectly, and therefore satisfies the definition's second prong. As evidence of Western Union's debt collection activity, Appellant points to the fact that the company: (a) aggressively markets its AVT service as a "revolutionary new collections service"; (b) contacts debtors directly; (c) transmits telegrams as a vehicle for eliciting responses and procuring debtors' telephone numbers; (d) relays debt collection messages provided by DCS; and (e) supplies debtors' previously-unknown telephone numbers to creditors and debt collection agencies.

The interpretation of a statute is a question of law reviewed de novo. Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1300 (9th Cir.1997). We determine the plain meaning of a statute by looking at the particular language at issue, as well as the language and design of the...