Bassett v. Credit Bureau Servs., Inc.

CourtUnited States District Courts. 8th Circuit. United States District Court of Nebraska
Citation554 F.Supp.3d 1000
Docket Number8:16CV449
Parties Kelly M. BASSETT, individually and as heir of James M. Bassett, on behalf of herself and all other similarly situated; Plaintiff, v. CREDIT BUREAU SERVICES, INC., and C.J. Tighe, Defendants.
Decision Date13 August 2021

O. Randolph Bragg, Horwitz, Horwitz Law Firm, Chicago, IL, Pamela A. Car, William L. Reinbrecht, Car, Reinbrecht Law Firm, Omaha, NE, for Plaintiff.

Joshua C. Dickinson, Shilee T. Mullin, Spencer, Fane Law Firm, Omaha, NE, for Defendants.


Joseph F. Bataillon, Senior United States District Judge

This issue is before the Court after a jury trial held June 15, 2021 to June 17, 2021. The plaintiffs brought this class action under both the Federal Debt Collection Practices Act (FDCPA) 15 U.S.C. § 1692 et seq and the Nebraska Consumer Protection Act (NCPA), Neb. Rev. Stat. § 59-1601 et seq. Filing No. 1 at 9. At trial, the Plaintiff's FDCPA claims were submitted to a jury on June 17, 2021. Filing No. 232. The jury returned a verdict in favor of the defendants on all claims. Id. The Nebraska Consumer Protection Act's principal thrust is equitable in nature insofar as it seeks to prevent prejudicial conduct, and thus it is a matter tried by the Court. Hage v. General Service Bureau , 306 F.Supp.2d 883, 890 (D. Neb. 2003) ; State ex rel. Douglas v. Schroeder , 222 Neb. 473, 384 N.W.2d 626, 629-30 (1986). This Court has jurisdiction under 28 U.S.C. § 1331.


Many of the facts of this case were set out in previous orders and need not be repeated and are incorporated herein by reference. Filing Nos. 20 and 83. On or about March 14, 2016, Defendants C.J. Tighe and Credit Bureau Services, INC. (CBS) sent the named Plaintiff, Kelly M. Bassett, a debt collection letter known in company records as a B-10.1 Filing No. 1-1. The defendants sent this form letter to over 9,500 Nebraska residents with allegedly overdue medical debts. Filing No. 51-8 at 4. All B-10 letters include the statement, "Interest and other charges may accrue daily." Filing No. 1-1. A collection letter strikingly similar to Exhibit A here was the subject of Reynolds v. Credit Bureau Servs., Inc. , No. 8:15-cv-168, 2016 WL 2859604, at *1 (D. Neb. May 16, 2016) ("Defendants agree to change the form collection letter that is the subject of this litigation"); id. , Filing No. 1-1, Letter. Defendants agreed to stop using the challenged letter going forward. See id. , No. 8:15-cv-168, Filing No. 19-1, Settlement Agreement at 9-10.

The March 14, 2016 letter sent to the Bassetts alleged several debts owed to General Radiology PC and one to Heartland Orthopedic. Filing No. 1-1. Immediately above the addressee's name, the letter states: "URGENT - DATED MATERIAL." Id. The letter does not identify the patient's name or the dates of service for the alleged accounts. Id. The letter also sets an appointment and declares, "if you fail to keep this appointment or pay the balance by that date, we shall proceed with collection efforts." Id.

The record shows defendants Credit Bureau Services, Inc. and C.J. Tighe are debt collectors. Filing No. 51-8, Tighe 30(b)(6) Dep. at 17-19, 46. During the trial, Tighe testified she is the president and sole shareholder of Credit Bureau Services, and she manages and operates the business. Tighe testified she oversees CBS's collection efforts, drafted the B-10 letter, and establishes all the procedures for the debt collectors. She also testified CBS automatically charges interest on all its accounts unless explicitly prohibited by the client. She contended debt collectors are permitted to charge interest at a rate of 12% per year under Neb. Rev. Stat. § 45-104. She further testified Heartland Orthopedic had a contract allowing for interest, but no evidence was admitted during the trial concerning an interest rate, the method of accrual or any written examples of the contract between the debtor and provider. During her testimony, Tighe explained every B-10 letter included accrued interest in the amounts alleged due. However, upon further questioning, she could not distinguish interest accrued from principal, nor match alleged B-10 amounts with original principal amounts identified in CBS's records. Tighe testified that interest was computed automatically in the computer system, and she would have to access the computer system to distinguish principal from interest on any given account. Further, she was unable to testify as to when CBS begins charging interest. CBS keeps all interest collected, according to Tighe.

CBS, Tighe admitted, has no written contract with any consumers unless the consumer opts to sign a payment agreement. Specifically, CBS had no signed agreement with the Bassetts, and Tighe did not know if a written agreement between the Bassetts and General Radiology existed. Tighe also testified that while CBS's computer system can mimic the underlying contracts by charging the same interest as the creditors, CBS used the statutory interest rate which is a different rate than the one allegedly contracted for by Heartland Orthopedic.

During the trial, Darcy Kreikemeier also testified. Kreikemeier worked as office manager for General Radiology PC during the relevant time. Part of her duties during that period was to refer past-due accounts to CBS for collection. She further testified General Radiology provided names, dates of service, and principal amounts to CBS. Notably, she asserted General Radiology did not charge interest on overdue accounts. General Radiology did not have contracts with the consumers, and consumers did not know when General Radiology was providing services, according to Kreikemeier.

The defendants repeatedly waived the bona fide error defense at trial.2

I. Standing

This Court has previously considered the defendantsmotion to dismiss and supporting brief wherein the defendants argued the plaintiffs lacked Article III standing because they had not suffered a concrete harm nor established actual damages. Filing No. 71 at 4-5. The Court held the plaintiffs had standing to sue, partly on the reasoning that plaintiffs alleged a violation of their statutory right not to be the target of misleading debt-collection efforts. Filing No. 83 at 13-14. Since then, the Supreme Court has further delimited the scope of Article III standing in TransUnion v. Ramirez , ––– U.S. ––––, 141 S.Ct. 2190, 210 L.Ed.2d 568 (2021). Since standing is a threshold issue for the Court, the Court will review standing on its own initiative. Arbaugh v. Y & H Corp. , 546 U.S. 500, 506, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) ("the objection that a federal court lacks subject-matter jurisdiction ... may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment.").

a. Law

In TransUnion v. Ramirez the Supreme Court held a violation of a statutory right without a concrete harm does not support Article III standing for private citizens to sue in federal court. TransUnion , 141 S.Ct. at 2205. Specifically, TransUnion addressed the standing of class members in class-action litigation under the Fair Credit Reporting Act. Id. at 2200. The Court distinguished between those class members who had had false information published to third parties and class members who had false information on their credit files that was never disseminated to other parties. Id. The central point of analysis hinged on whether the alleged concrete harms were akin to harms traditionally understood to create a cause of action in federal court. Id. at 2204-2209 (finding having false information published to a third party was akin to defamation). Following Spokeo , the Supreme Court reiterated that certain harms readily qualify for Article III Standing: "The most obvious are traditional tangible harms, such as physical harms and monetary harms. If a defendant has caused physical or monetary injury to the plaintiff, plaintiff has suffered a concrete injury in fact under Article III." Id. at 2204. Beyond these harms, an alleged harm must have "close historical or common-law analogue." Id. However, that analogue need not be "an exact duplicate." Id. Beyond these limiting clarifications, the old rules regarding Article III standing remain.

"The issue of standing involves constitutional limitations on federal court jurisdiction under Article III of the Constitution, which confines the federal courts to adjudicating actual cases and controversies.’ " See Potthoff v. Morin , 245 F.3d 710, 715 (8th Cir. 2001) ; Oti Kaga v. South Dakota Hous. Dev. Auth. , 342 F.3d 871, 878 (8th Cir. 2003). To establish Article III standing, the plaintiff seeking compensatory relief must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. Town of Chester, N.Y. v. Laroe Estates, Inc. , ––– U.S. ––––, 137 S. Ct. 1645, 1650, 198 L.Ed.2d 64 (2017). To establish injury in fact, a plaintiff must show that he or she suffered "an invasion of a legally protected interest" that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Spokeo, Inc. v. Robins , 578 U.S. 330, 136 S. Ct. 1540, 1548, 194 L.Ed.2d 635 (2016), as revised (May 24, 2016) (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ) (internal quotation marks omitted). For an injury to be particularized, it must affect the plaintiff in a personal and individual way. Id. Particularization is necessary to establish injury in fact, but it is not sufficient—an injury in fact must also be "concrete." Id. A "concrete" injury must be "de facto;" that is, it must actually exist. Id. (meaning real, not abstract). " ‘Concrete’ is not, however, necessarily synonymous with ‘tangible.’ " Id. at 1549 (noting that "though tangible injuries are perhaps easier to...

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