Kobs v. Arrow Service Bureau, Inc.

• Decision Date: 22 January 1998
• Docket Number: No. 97-1383,97-1383
• Citation: 134 F.3d 893
• Parties: Ron KOBS and Stacie Kobs, Plaintiffs-Appellants, v. ARROW SERVICE BUREAU, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 893

134 F.3d 893

Ron KOBS and Stacie Kobs, Plaintiffs-Appellants, v. ARROW SERVICE BUREAU, INC., Defendant-Appellee.

No. 97-1383.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 21, 1997.

Decided Jan. 22, 1998.

Richard J. Rubin (argued), Santa Fe, NM, Mary C. Fons, Stoughton, WI, for Plaintiffs-Appellants.

Darrell R. Banks (argued), Banks & Fanning, P.C., Lansing, MI, for Defendant-Appellee.

Before CUMMINGS, WOOD, Jr., and COFFEY, Circuit Judges.

CUMMINGS, Circuit Judge.

Plaintiffs Ron and Stacie Kobs commenced this action against defendant Arrow Service Bureau, Inc. ("Arrow") alleging numerous violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., arising from Arrow's collection of an alleged consumer debt. They sought statutory and actual damages as well as reasonable attorney's fees and costs, in accordance with 15 U.S.C. § 1692k(a), and requested trial by jury. A jury trial was held on the issue of liability which resulted in a verdict that Arrow violated the rights of plaintiffs under the FDCPA and awarded actual damages to plaintiff Stacie Kobs. Granting Arrow's motion requesting that the issue of statutory damages not be submitted to the jury, the court then awarded statutory damages to Ron Kobs and not to Stacie Kobs. Holding that the FDCPA provides for trial by jury in determining statutory additional damages under the FDCPA, we remand so that the district court can impanel a jury for the purpose of determining the amount of statutory damages, if any, due to the plaintiffs.

Facts

Arrow is a debt collection agency with 100 employees and approximately 400,000-500,000 current accounts. In December of 1995, Arrow purchased debts originally owed to American TV, including one alleged to be owed by Mr. Kobs. On January 4, 1996, Arrow sent an initial collection letter to an address where the Kobs no longer resided. On January 11, 1996, Arrow telephoned Mrs. Kobs who told the collector that they no longer lived at the address Arrow had listed for them and that they had not received the initial letter and provided the collector with their current address. On January 24, 1996, more than five days after the initial communication on January 11, Arrow sent the letter, which included the validation notice required by 15 U.S.C. § 1692g on the bottom portion of the reverse side, to the correct address.

During January 1996, Mrs. Kobs received more than five calls from Arrow debt collectors, and Mr. Kobs received between one and three calls. Mrs. Kobs informed one of the collectors that they did not owe any money on the American TV account as confirmed by a credit bureau report showing no balance on their debt. Mrs. Kobs received the majority of her calls from a woman who identified herself as Sharon Tobias. Mrs. Kobs was upset by how rudely and disrespectfully Ms. Tobias behaved on these telephone calls.

In order to put an end to the harassing phone calls, Mr. Kobs then sought the assistance of attorney Carla Andres in early February. When Mrs. Kobs received another telephone call from Ms. Tobias, she advised Ms. Tobias of Ms. Andres' representation of her and her husband and gave the collector the attorney's name, address, and telephone number. Arrow's computer log confirmed receipt of this information. Under Arrow's policy, debt collectors may not contact a consumer known to be represented by an attorney; however, collectors need not rely on a consumer's notification of attorney representation and are permitted to verify this fact with the attorney. Arrow did not attempt to contact Ms. Andres after being informed of her representation. Arrow contacted the Kobs again in April, calling on April 9, April 21, and again on May 8.

In addition to receiving telephone calls from Arrow after notifying Arrow that they were represented by counsel, the Kobs received another letter from Arrow dated April 22, 1996. The letter stated that it was a "NOTICE BEFORE RECOMMENDATION OF SUIT" and threatened a lawsuit at once, demanding that the Kobs contact Arrow within seven days of the notice date or mail full payment to avoid litigation. The Kobs did not contact Arrow within seven days, and Arrow never filed suit as threatened in the April 22, 1996 letter.

Arrow waited three months after the Kobs informed Arrow that they were represented by counsel before initially contacting the Kobs' attorney. Attorney Andres informed Arrow that she represented the Kobs. When Ms. Tobias subsequently called Mrs. Kobs on May 8, Ms. Tobias responded to Mrs. Kobs' claim that they were represented by an attorney by stating that she had spoken to Ms. Andres, and Ms. Andres knew nothing about the case.

The Kobs claim that Arrow engaged in abusive, deceptive, and unlawful collection practices resulting in numerous violations of the FDCPA. Specifically, they claim that (1) Arrow failed to provide the requisite statutory validation and dispute notice within five days of its initial communication with the Kobs, in violation of § 1692g(a); (2) the language in the January 24, 1996 letter from Arrow contradicted and overshadowed the validation notice on the reverse side, in violation of § 1692g(a); (3) Arrow engaged in conduct to harass, oppress, or abuse the Kobs during collection telephone calls, in violation of § 1692d; (4) Arrow communicated with the Kobs after Arrow knew they were represented by an attorney, in violation of § 1692c(a)(2); (5) Arrow threatened litigation without intending to follow through with the threats, in violation of § 1692e(5); (6) the April 22 letter threatening litigation conveyed a false sense of urgency by requiring full payment or phone contact within seven days to avoid a lawsuit, in violation of § 1692e(10); (7) the April 22 letter from Arrow to the Kobs made false, deceptive, and misleading representations by failing to provide information concerning exempt property when discussing the process of obtaining a judgment, garnishment, or attachment, in violation of § 1692e(10); (8) the debt collector's statements that the Kobs' attorney knew nothing about the case was an attempt to harass, oppress, and abuse Mrs. Kobs and was also false, deceptive, and misleading, in violation of § 1692d and § 1692e(10).

In a pre-trial motion, Arrow requested that the award of statutory damages be decided by the judge and not submitted to the jury. The court granted the motion over the Kobs' objection. In response, the Kobs proposed a special verdict form in order to provide guidance to the court when making the statutory additional damage determination. However, the court refused to use the special verdict form.

A jury trial was held on the issue of liability which resulted in a verdict that defendant violated the rights of both plaintiffs under the FDCPA and awarded actual damages to plaintiff Stacie Kobs in the amount of $1500. The jury did not award plaintiff Ron Kobs actual damages. After trial the court awarded statutory damages to plaintiff Ron Kobs in the amount of $100 pursuant to § 1692k (a)(2)(A) and no statutory damages to plaintiff Stacie Kobs.

The issue raised before this Court is whether the determination of statutory additional damages under the FDCPA should have been submitted to the jury or whether the court was permitted to make such determination. We hold that 15 U.S.C. § 1692k(a)(2)(A) provides for trial by jury in determining statutory additional damages and thus remand for a jury to determine the amount of statutory damages, if any, to which the Kobs are entitled.

Analysis

Section 1692k of the FDCPA provides in pertinent part:

(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of-

(1) any actual damage sustained by such person as a result of such failure;

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000, * * * *

15 U.S.C. § 1692k.

The Eleventh Circuit has been the only federal court of appeals to address the issue of whether § 1692k(a) provides for trial by jury in an action for damages under the FDCPA. In Sibley v. Fulton DeKalb Collection Service, 677 F.2d 830 (11th Cir.1982), the court held that a party upon timely demand is entitled to a jury trial in an action for damages under the FDCPA. Id. at 832. The court noted that there are two possible sources of a right of trial by jury for a statutory cause of action. Id. Congress may provide for trial by jury in the statute that creates the claim regardless of whether the claim involves rights and remedies of the type traditionally enforced in a court of law before a jury. Id. Alternatively, if the claim involves rights and remedies of the type traditionally enforced in an action at law, the Seventh Amendment requires that the right of jury trial be preserved. Id.

In analyzing whether there is a statutory basis for a jury trial under § 1692k(a), the court recognized that the FDCPA states that any debt collector who violates the Act is liable in an amount equal to the sum of actual damages and "such additional damages as the court may allow, but not exceeding $1,000." 15 U.S.C. § 1692k(a)(2)(A). However, the Eleventh Circuit noted that "[i]t has been frequently determined * * * that the word 'court,' used in the Act and in the remedial portions of numerous other statutes, encompasses trial by both judge and jury rather than by judge alone." Sibley 677 F.2d at 832. Therefore, the Sibley court chose to interpret the word "court" to include trial by both judge and jury, finding that such an interpretation avoids the serious constitutional issues that would be raised under the Seventh Amendment if the Act was construed to prohibit trial by jury. Id. at 833. In Rogers v. Loether, 467 F.2d 1110, 1122-1123 (7th Cir.1972), aff'd. sub nom. Curtis v. Loether, 415 U.S. 189, 94...