Avila v. Rubin
| Decision Date | 16 May 1996 |
| Docket Number | 95-3905 and 95-3978,95-2895,Nos. 95-2881,s. 95-2881 |
| Parties | Raul AVILA, on Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellee, v. Albert G. RUBIN and Van Ru Credit Corporation, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Daniel A. Edelman, J. Eric VanderArend, Michelle A. Weinberg (argued), O. Randolph Bragg, Tara L. Goodwin, Cathleen C. Cohen, James O. Latturner, Edelman & Combs, Chicago, IL, Joanne Faulkner, New Haven, CT, for plaintiff-appellee in No. 95-2881.
Daniel A. Edelman, Cathleen M. Combs, Tara G. Redmond, J. Eric VanderArend, Michelle A. Weinberg (argued), Edelman & Combs, Chicago, IL, Joanne Faulkner, New Haven, CT, for plaintiff-appellee in No. 95-2895.
Daniel A. Edelman, Cathleen M. Combs, Tara G. Redmond, J. Eric VanderArend, Michelle A. Weinberg (argued), O. Randolph Bragg, Edelman & Combs, Chicago, IL, Joanne Faulkner New Haven, CT, for plaintiff-appellee in No. 95-3905.
Daniel A. Edelman, J. Eric VanderArend, Michelle A. Weinberg (argued), O. Randolph Bragg, Tara L. Goodwin, Edelman & Combs, Chicago, IL, Joanne Faulkner, New Haven, CT, for plaintiff-appellee in No. 95-3978.
George W. Spellmire, Bruce L. Carmen (argued), D. Kendall Griffith, David M. Schultz, Hinshaw & Culbertson, Chicago, IL, for defendant-appellant in No. 95-2881.
Daniel P. Shapiro (argued), Michael J. Small, Steven A. Levy, Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Chicago, IL, for defendant-appellant in Nos. 95-2895 and 95-3905.
George W. Spellmire, Bruce L. Carmen (argued), David M. Schultz, Hinshaw & Culbertson, Chicago, IL, for defendant-appellant in No. 95-3978.
Before BAUER, CUDAHY, and EVANS, Circuit Judges.
Can a person, licensed to practice law, be in violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., for sending dunning collection letters that purport to be from an "attorney"? This is one of two interesting questions we address today in this case involving Raul Avila (and a class of similarly situated persons), the Van Ru Credit Corporation, and Albert G. Rubin, an attorney-at-law from Skokie, Illinois. As Joe Friday would say, let's get to the facts. We will, but unlike Sergeant Friday, it won't be "just the facts" as we'll mix in some observations and findings along the way.
Avila is a student loan debtor living in Connecticut. Van Ru Credit Corporation is a collection agency in Skokie, Illinois. Rubin is an Illinois attorney. Although we were told at oral argument that Rubin and the Van Ru agency are separate, they actually seem to be as closely intertwined as lovers during an embrace. Here's the situation from which, we think, that conclusion is justified.
Rubin founded Van Ru and owns 80 percent of its corporate stock. The remainder is owned by Van Ru's president, who is Rubin's son. Rubin is Van Ru's chief executive officer, draws a large salary from the company, and, until eight years ago, managed Van Ru's day-to-day collection activities. Rubin is involved in the creation and modification of form letters, the most critical part of the debt collection operation.
In addition to his duties at Van Ru, Rubin has a law office which he calls Rubin & Associates. Rubin & Associates is located on the third floor of the "Van Ru Building." The Van Ru Building is owned by Van Ru Credit Services, Inc., and Rubin owns 75 percent of this firm. Rubin & Associates splits the third-floor space of the building with Van Ru. Rubin & Associates is comprised of Rubin, one other attorney, and some 35 "legal assistant collectors." The primary business of Rubin & Associates is to send form letters to delinquent debtors urging them to pay their debts and to refer the files of delinquent debtors to other attorneys for litigation. Neither Rubin nor the other attorney in his office actually litigates in Connecticut, and it is unclear (but we think doubtful) whether they litigate anywhere. Rubin & Associates receives all its business from Van Ru after Van Ru's efforts to collect debts are unsuccessful. Van Ru pays Rubin & Associates a monthly retainer for work that Rubin & Associates does on debtor accounts.
Rubin personally maintains offices in both the Van Ru and Rubin & Associates offices. Rubin works at Van Ru around 20 hours a week and spends some 30 hours each week working at Rubin & Associates. Van Ru and Rubin & Associates use the same computer system and internal account number to identify files. Van Ru and Rubin & Associates also utilize the same automated telephone dialing system to call delinquent debtors; employees from both entities sit next to each other when using the system. Van Ru and Rubin & Associates receive mail at the same post office box. Van Ru and Rubin & Associates use the same printer for their respective form letters. The two also use the same machine to fold and process form letters in preparation for mailing. The mailing machine processes Van Ru and Rubin & Associates letters simultaneously, resulting in stacks of mixed letters ready for mailing. The letters of both Van Ru and Rubin & Associates are placed in identical envelopes. The printer and mailing machine are operated, and the letters are handled, by employees of Pegasus Data Systems, Inc., a company located at the same address as Van Ru and Rubin & Associates. Rubin owns 50 percent of Pegasus.
Although Van Ru and Rubin & Associates utilize the same computer system, Van Ru employees do not issue Rubin & Associates letters or input data into a debtor's file after it is transferred to Rubin & Associates. Once a file is referred to Rubin & Associates, Van Ru's employees generally do not pursue collection activities against the debtor.
Avila allegedly owes money on a student loan to his creditor, the Connecticut Student Loan Foundation. The foundation has a written contract with Van Ru and an oral agreement with Rubin for debt collection services. The foundation forwarded Avila's account for collection to Van Ru via electronic data transmission. As is its practice, the foundation did not forward underlying documentation about Avila's loan. Van Ru sent Avila two demand or "dunning" letters in an attempt to collect the debt. Avila did not respond. Van Ru then "referred" Avila's account to Rubin & Associates. Rubin & Associates then cranked out three dunning letters to Avila on attorney letterhead in an attempt to collect the debt. The five form letters are the basis for this suit, filed by Avila (as a class action) against Van Ru and Rubin. Now let's look at the letters.
The first letter (we'll call it exhibit A), dated November 22, 1993, tells Avila that Van Ru intends to collect his debt. It informs Avila of his right to dispute the validity of the debt within 30 days. Ten days later, on December 2, 1993, Van Ru sent Avila a second letter, exhibit B, which demanded that Avila "commence immediate repayment of [the] loan" and threatened that "[i]f payment is not received, a civil suit may be initiated against you by your creditor."
The next three letters, which we'll call exhibits C, D, and E, were sent by Rubin & Associates on the following letterhead:
Albert G. Rubin, Ltd.
Attorney at Law
P.O. Box 1010
Skokie, IL 60076-8010
Exhibit C, dated January 4, 1994, tells Avila of his right to dispute or verify the debt. This information is immediately followed by the sentences: Exhibit A, the first letter from Van Ru, also contained this statement.
Exhibits D and E are letters from Rubin demanding payment from Avila and threatening a civil suit if payment is not forthcoming. Exhibits D and E do not notify Avila of a right to dispute the debt. Exhibits C through E are mass-produced collection letters "signed" with a mechanically reproduced facsimile of the signature of attorney "Albert G. Rubin."
Mr. Rubin reviews and approves the general form used on letters sent by Rubin & Associates. He does not, however, personally prepare, sign, or review any of the letters sent to targets, including Avila. This is understandable, for Rubin would probably be in the hospital with a severe case of writer's cramp if he did because some 270,000 such letters go out each year. That, by the way, comes out to 1,062 per working day, 133 per working hour.
The letters from attorney Rubin are actually the product of a nonattorney "legal assistant collector" who directs the computer to generate a letter on Rubin's attorney letterhead. Legal assistant collectors are provided with a training manual developed by Rubin to help them determine when an attorney debt collection letter is warranted. According to Rubin, the collectors use their "skill, judgment, and training" to determine when a letter should be sent.
Claiming that the letters, exhibits A-E, were violations of the FDCPA, 1 Avila filed this suit in the spring of 1994. Class certification, not challenged here, was granted, and discovery continued until the parties filed joint motions for summary judgment on liability. Avila's motion carried the day as Rubin was held liable to the class under §§ 1692g and 1692e(3) and (9) of the FDCPA, and Van Ru was found liable as well under § 1692g. Van Ru and Avila stipulated to damages of $20,000 and judgment in that amount was entered. Then, following a bench trial on the issue of statutory damages, judgment was entered for Avila against Rubin for $84,983. Rubin and Van Ru appeal.
The rules for granting summary judgment and our standard of review are well-known and need not be repeated. Suffice to say that the facts are not in dispute and only questions of law are present which we review on a clean slate.
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