Janetos v. Fulton Friedman & Gullace, LLP

• Decision Date: 07 April 2016
• Docket Number: No. 15–1859.,15–1859.
• Citation: 825 F.3d 317
• Parties: Mary T. JANETOS, et al., Plaintiffs–Appellants, v. FULTON FRIEDMAN & GULLACE, LLP and Asset Acceptance, LLC, Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

825 F.3d 317

Mary T. JANETOS, et al., Plaintiffs–Appellants

v.FULTON FRIEDMAN & GULLACE, LLP and Asset Acceptance, LLC, Defendants–Appellees.

No. 15–1859.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 12, 2016.

Decided April 7, 2016.

Daniel A. Edelman, Attorney, Edelman Combs Latturner & Goodwin, LLC, Chicago, IL, for Plaintiffs–Appellants.

Garrett L. Boehm, Jr., Attorney, Johnson & Bell, Ltd., Chicago, IL, Bradley M. Sayad, The Sayad Law Group, Ltd., Plainfield, IL, Robert Matthew Horwitz, Attorney, Dykema Gossett PLLC, Detroit, MI, Amy R. Jonker, Attorney, Dykema Gossett PLLC, Grand Rapids, MI, Theodore W. Seitz, Attorney, Dykema Gossett PLLC, Lansing, MI, Jill M. Wheaton, Attorney, Dykema Gossett PLLC, Ann Arbor, MI, for Defendants–Appellees.

Before BAUER and HAMILTON, Circuit Judges, and PETERSON, District Judge.^*

HAMILTON, Circuit Judge.

Section 1692g(a)(2) of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., requires a debt collector to disclose to a consumer “the name of the creditor to whom the debt is owed,” either in its initial communication with the consumer or in a written notice sent within the next five days. When defendant Fulton Friedman & Gullace, LLP set out to collect debts from the plaintiffs on behalf of creditor Asset Acceptance, LLC, it sent them letters that identified Asset Acceptance as the “assignee” of the original creditors but said that the plaintiffs' accounts had been “transferred” from Asset Acceptance to Fulton. Nowhere in the letters did Fulton explicitly identify Asset Acceptance as the current creditor.

Plaintiffs brought suit alleging that Fulton had violated §§ 1692e, 1692e(10), and 1692g(a)(2) of the Act by failing to disclose the current creditor's name and that Asset Acceptance was vicariously liable for Fulton's violations. The district court granted defendants' motion for summary judgment. The court held that the letters were ambiguous as to the identity of the current creditor but that plaintiffs needed to present extrinsic evidence of confusion, like a consumer survey, to survive summary judgment. The court also held that even if plaintiffs had presented such evidence, their claims would still fail because the ambiguity about the identity of the current creditor was immaterial, meaning it would neither contribute to nor undermine the Act's objective of providing “information that helps consumers to choose intelligently.” See Hahn v. Triumph Partnerships LLC, 557 F.3d 755, 757–58 (7th Cir.2009).

We reverse. The district court correctly found that the letters were unclear, but it erred in finding that additional evidence of confusion was necessary to establish a § 1692g(a)(2) violation. Section 1692g(a) requires debt collectors to disclose specific information, including the name of the current creditor, in certain written notices they send to consumers. If a letter fails to disclose the required information clearly, it violates the Act, without further proof of confusion. Section 1692g(a) also does not have an additional materiality requirement, express or implied. Congress instructed debt collectors to disclose this information to consumers, period, so these validation notices violated § 1692g(a). Finally, because Asset Acceptance is itself a debt collector, it is liable for the violations of the Act by its agent. We remand this case to the district court for further proceedings consistent with this opinion.

I. Background

Factually speaking, this case is a simple one. Asset Acceptance is a debt collector that acquired, or claimed to have acquired, consumer debts purportedly owed by the various plaintiffs. Later, pursuant to § 1692g, Fulton sent its initial collection notices to the plaintiffs (or, for those plaintiffs with legal representation, to their attorneys). The letters followed essentially the same template. We quote the letter sent to plaintiff Erik King, but there are no meaningful differences among the letters. Before the salutation, each letter had a heading in roughly the following form:

Re: Asset Acceptance, LLC Assignee of

AMERISTAR

Original Creditor Acct # : XX0682

Fulton, Friedman & Gullace, LLP Acct # :

XXXXXX2109

Balance Due: $17479.24

Letters sent to attorneys rather than directly to the consumers had the consumer's name in the first line followed by the reference to Asset Acceptance as assignee in the second. The letters began: “Please be advised that your above referenced account has been transferred from Asset Acceptance, LLC to Fulton, Friedman & Gullace, LLP.” They also said that if the consumer had “already entered into a payment plan or settlement arrangement with Asset Acceptance, LLC,” Fulton was “committed to honoring the same,” and instructed consumers to direct all future contact, including any questions they had, to Fulton's offices. The letters provided no additional details about the relationship between Asset Acceptance and Fulton. Nowhere did they say who currently owned the debt.¹

Lawsuits by plaintiffs Mary T. Janetos, Erik King, Pamela Fujioka, and Ignacio Bernave were eventually combined in one action. They alleged that the letters violated § 1692g(a)(2) of the Fair Debt Collection Practices Act by failing to identify the current creditor or owner of the debt. They also alleged the letters violated § 1692e and e(10), which prohibit the use of false or misleading representations or means in connection with the collection of a consumer debt. In July 2014, the district court certified a plaintiff class consisting of consumers who received the letters personally and a subclass of consumers who had been sent the letters in care of their attorneys.

On cross-motions for summary judgment, the district court ruled in favor of defendants. Addressing first the § 1692e and e(10) claims, the court acknowledged the form letter's ambiguity on the question of the current owner of the debt, noting that the word “transferred” could mean either conveyance of title or assignment for collection and that, applying the ordinary meaning of “transfer,” the letter did not “suggest any particular form or method of conveyance.” Nevertheless, the court held that the ambiguous letter and plaintiffs' affidavits attesting to their own confusion failed to create a genuine dispute of material fact for trial under § 1692e and that plaintiffs failed to offer evidence that the omission met the materiality requirement we have found implied for most § 1692e claims. The district court then rejected the plaintiffs' § 1692g(a)(2) claim on the same grounds as the § 1692e and e(10) claims, including lack of materiality. Plaintiffs have appealed.

II. Analysis

The Fair Debt Collection Practices Act is designed to protect consumers from abusive and unfair debt collection practices. See 15 U.S.C. § 1692e ; Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir.2000). To help accomplish that goal, § 1692g(a) provides that in either the initial communication with a consumer in connection with the collection of a debt or another written notice sent within five days of the first, a debt collector must provide specific information to the consumer. The required information includes “the name of the creditor to whom the debt is owed.” 15 U.S.C. § 1692g(a)(2). Plaintiffs argue that the letters they received failed to make that disclosure. Plaintiffs have also claimed that the failure violated the more general requirements of § 1692e and e(10), but at oral argument, plaintiffs' counsel agreed those claims add nothing here to the § 1692g(a)(2) claim, so we focus our attention on § 1692g(a)(2).

A. The Violations of § 1692g(a)(2)

When § 1692g(a) requires that a communication include certain information, compliance demands more than simply including that information in some unintelligible form. Otherwise, as we have said, “the collection agency could write the letter in Hittite and have a secure defense.” Chuway v. National Action Financial Services, Inc., 362 F.3d 944, 948 (7th Cir.2004). To satisfy § 1692g(a), the debt collector's notice must state the required information “clearly enough that the recipient is likely to understand it.” Id.; see also Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir.1997) (debt collector may not defeat the Act's purpose by “making the required disclosures in a form or within a context in which they are unlikely to be understood by the unsophisticated debtors who are the particular objects of the statute's solicitude”); Russell v. Equifax A.R.S., 74 F.3d 30, 35 (2d Cir.1996) (“We recognize there are many cunning ways to circumvent § 1692g under cover of technical compliance, but purported compliance with the form of the statute should not be given sanction at the expense of the substance of the Act.”) (internal citation omitted).

Thus, standing alone the fact that the form letter included the words “Asset Acceptance, LLC” did not establish compliance with § 1692g(a)(2). The Act required Fulton's letter to identify Asset Acceptance as the “creditor to whom the debt is owed.” 15 U.S.C. § 1692g(a)(2). The letter had to make that identification clearly enough that the recipient would likely understand it. Chuway, 362 F.3d at 948.

Nowhere did the letter say that Asset Acceptance currently owned the debts in question. Asset Acceptance was identified as the “assignee” of another company, not as the current creditor or owner of the debt. The letter went on to say that the referenced account “has been transferred from Asset Acceptance, LLC, to Fulton, Friedman & Gullace, LLP.” These statements simply did not say who currently owned the debts. Instead, each recipient was left to guess who owned the debt following the “transfer” of the “account.” On its face, then, the letter failed to disclose the information that § 1692g(a)(2) required. The district judge correctly recognized this ambiguity, noting that the word “transfer” could mean either conveyance of title or assignment for collection, and that the letter did not ...