Jeter v. Credit Bureau, Inc.

• Decision Date: 20 May 1985
• Docket Number: No. 84-8009,84-8009
• Citation: Jeter v. Credit Bureau, Inc., 760 F.2d 1168 (11th Cir. 1985)
• Parties: Diane JETER, Plaintiff-Appellant, v. CREDIT BUREAU, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1168

760 F.2d 1168

Diane JETER, Plaintiff-Appellant, v.CREDIT BUREAU, INC., Defendant-Appellee.

No. 84-8009.

United States Court of Appeals Eleventh Circuit.

May 20, 1985.

Ralph Goldberg, Atlanta, Ga., for plaintiff-appellant.

W. Rhett Tanner, Caryn R. May, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before KRAVITCH and ANDERSON, Circuit Judges, and ATKINS^*, District Judge.

ON PETITION FOR REHEARING

(Opinion March 4, 1985, 11 Cir., 1985, 754 F.2d 907).

R. LANIER ANDERSON, III, Circuit Judge:

No member of this panel nor other Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc (Rule 35, Fed.R.App.P.; Eleventh Circuit Rule 26), the Suggestion for Rehearing En Banc is DENIED.

The Petition for Panel Rehearing, having pointed out a factual error in the opinion (which does not, however, change our result or rationale), is GRANTED; our previous opinion is, thus, withdrawn, and the following opinion is substituted:

Appellant Jeter appeals the district court's grant of summary judgment in favor of appelleeCredit Bureau, Inc.("Credit Bureau"), in Jeter's suit under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C.A. Sec. 1692. 584 F.Supp. 973.With regard to Jeter's claims under 15 U.S.C.A. Sec. 1692e("False or misleading representations"), we hold that the district court applied an improper legal standard and erred in granting summary judgment to Credit Bureau.We agree with the district court's grant of summary judgment in favor of Credit Bureau with regard to Jeter's claim under 15 U.S.C.A. Sec. 1692d("Harassment or abuse").Thus, we affirm in part, reverse in part, and remand for proceedings not inconsistent with this opinion.

I.FACTS AND PROCEDURAL BACKGROUND

Credit Bureau operates a debt collection agency subject to the FDCPA.Credit Bureau attempts to collect money on behalf of creditors who refer accounts (i.e., alleged debts) to Credit Bureau for collection.One of Credit Bureau's clients during the time period preceding this lawsuit was Associated Consumers Club ("Associated Consumers").Sometime prior to October 25, 1983, Jeter incurred what Associated Consumers believed was a valid legal debt with Associated Consumers.On October 25, 1983, Jeter's account was referred by Associated Consumers to Credit Bureau for collection.On March 4, 1983, Credit Bureau sent Jeter a letter which reads as follows:

Take notice that the above creditor claims you are indebted to him as shown.

Although duly demanded, the same has not been paid.You have ignored our previous contacts.

Therefore, you are hereby notified that unless satisfactory arrangements are made within five (5) days from this date, we will recommend to our client, suit and subsequent action (judgment, garnishment, levy, and/or attachment proceedings) may be instigated against you by their attorneys.

Respond now and avoid the necessity of further action.An envelope has been enclosed for your convenience.

After March 4, and prior to April 7, 1983, neither Credit Bureau nor Associated Consumers took any further action with regard to Jeter's account.Jeter did not respond to the letter during this time period.On April 7, 1983, Credit Bureau sent Jeter another letter which reads as follows:

This is our final notice to you before recommending that our client give the account to their attorney for legal action.

Although it may cause you embarrassment, inconvenience and further expense, we will do so if the entire balance is not in this office within the next five days.

To insure proper credit, please return this notice with your payment in the envelope enclosed.

Attend to it now--This is a final notice.

Neither Credit Bureau nor Associated Consumers took any action with regard to Jeter's account subsequent to the April 7, 1983, letter.

Sometime prior to May 11, 1983, Jeter hired a lawyer, Elizabeth Leonard.On May 11, 1983, Ms. Leonard sent a letter on Jeter's behalf to Credit Bureau stating Jeter's position that she owed no money to Associated Consumers.A copy of the letter was sent to Associated Consumers.Thereafter, Credit Bureau determined that the collection of Jeter's account was impractical, closed its files, and made no further contact with Jeter.

On June 16, 1983, Jeter sued Credit Bureau in the federal district court for the Northern District of Georgia claiming violations of the FDCPA.¹First, Jeter claimed that as a consequence of Credit Bureau's letters and its subsequent inaction, Credit Bureau had violated 15 U.S.C.A. Sec. 1692e(5) for "threat[ening] to take any action that cannot legally be taken or that is not intended to be taken" and Sec. 1692e(10) for using "any false representation or deceptive means to collect or attempt to collect any debt ...."Second, Jeter claimed that Credit Bureau had "engage[d] in ... conduct the natural consequence of which [was] to harass, oppress, or abuse any person in connection with the collection of a debt" in violation of 15 U.S.C.A. Sec. 1692d.

After limited discovery, ²the district court, responding to Credit Bureau's motion for summary judgment and Jeter's motion for partial summary judgment, granted summary judgment to Credit Bureau on all issues.This appeal ensued.

In Part II, we discuss the legal standard applicable generally to claims of false, deceptive, or misleading representations under 15 U.S.C.A. Sec. 1692e.In Part III.A., we consider Jeter's claims under Sec. 1692e(5), and reverse the district court's grant of summary judgment in favor of Credit Bureau.In Part III.B., we consider Jeter's Sec. 1692e(10) claim, apply the standard enunciated in Part II, and reverse the district court's grant of summary judgment in favor of Credit Bureau.Finally, in Part IV, we consider Jeter's claim of harassment or abuse under Sec. 1692d, apply the legal standard developed in Part II as modified for the purpose of evaluating claims of harassment or abuse, and affirm the district court's grant of summary judgment on this issue.

II.APPLICABLE LEGAL STANDARD

The district court held that in determining whether the FDCPA has been violated the court was obligated to "decide whether a 'reasonable consumer' would be deceived, mislead [sic], or harassed by the letters at issue in this case."Relevant administrative adjudications and case law under the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.A. Sec. 41, et seq., upon which we rely by analogy, and persuasive authority under the FDCPA lead us to the conclusion that the district court applied an improper standard.

Section 5 of the FTC Act declares unlawful all "unfair or deceptive acts or practices in commerce."15 U.S.C.A. Sec. 45(a)(1).An act or practice is deceptive or unfair under Sec. 5 if it has the tendency or capacity to deceive.The FTC Act was enacted to protect unsophisticated consumers, not only "reasonable consumers" who could otherwise protect themselves in the market place.The leading case of Charles of the Ritz Distributors Corp. v. FTC, 143 F.2d 676(2d Cir.1944), is instructive.In Charles of the Ritz, the petitioner was charged by the FTC with falsely advertising its cosmetic preparation "Charles of the Ritz Rejuvenescence Cream" because the name "rejuvenescence" and the accompanying advertisement "represent[ed], directly or by inference, that [the] cosmetic preparation [would] rejuvenate the skin of the user thereof or restore youth or the appearance of youth to the skin of the user."Id. at 678.In affirming the FTC's finding of deception, the Second Circuit defined "capacity to deceive" as follows:

There is no merit to petitioner's argument that, since no straight-thinking person could believe that its cream would actually rejuvenate, there could be no deception.Such a view results from a grave misconception of the purposes of the Federal Trade Commission Act.That law was not "made for the protection of experts, but for the public--that vast multitude which includes the ignorant the unthinking, and the credulous,"Florence Mfg. Co. v. J.C. Dowd & Co., 2 Cir., 178 F. 73, 75[ (1910) ]; and the "fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced."Federal Trade Commission v. Standard Education Soc., 302 U.S. 112, 116[58 S.Ct. 113, 115, 82 L.Ed. 141(1937) ] ....

Id. at 679;see alsoFTC v. Raladam Co., 316 U.S. 149, 151-52, 62 S.Ct. 966, 968-69, 86 L.Ed. 1336(1942);Exposition Press, Inc. v. FTC, 295 F.2d 869(2d Cir.1961), cert. denied, 370 U.S. 917, 82 S.Ct. 1554, 8 L.Ed.2d 497(1962).The standard enunciated by Charles of the Ritz, supra, has been followed in an enormous number of federal court and FTC decisions, and controlling precedent in this circuit is in accord.Gulf Oil Corp. v. FTC, 150 F.2d 106(5th Cir.1945)³(adopting the above-quoted language from Charles of the Ritz ).

In 1967, the FTC issued regulations entitled "Guidelines Against Debt Collection Deception,"16 C.F.R. Sec. 237.0-.6, which under the authority of Sec. 5 of the FTC Act bans debt collection agencies from using "any deceptive representation or deceptive means to collect or attempt to collect debts or to obtain information concerning debtors."16 C.F.R. Sec. 237.1.⁴Unfair and deceptive debt practices have been the frequent subject of FTC enforcement action.SeeState v. O'Neill Investigations, Inc., 609 P.2d 520, 529 n. 29(Alaska1980)(citing numerous cases).The FTC and the federal courts have consistently held that it is a deceptive practice to falsely represent that unpaid debts would be referred to a lawyer for immediate legal action.E.g., Trans World Accounts v. FTC, 594 F.2d 212, 215(9th Cir.1979);Dorfman v. FTC, 144 F.2d 737(8th Cir.1944);State Credit Ass'n, 86 FTC 502, 507, 510(1975);American Credit Bureau, Inc.,...