Macarz v. Transworld Systems, Inc., Civ. No. 3:97cv2194 (JBA).

• Court: U.S. District Court — District of Connecticut
• Writing for the Court: Arterton
• Citation: Macarz v. Transworld Systems, Inc., 26 F.Supp.2d 368 (D. Conn. 1998)
• Decision Date: 21 September 1998
• Docket Number: Civ. No. 3:97cv2194 (JBA).
• Parties: Jeff MACARZ, Plaintiff, v. TRANSWORLD SYSTEMS, INC., Defendant.

26 F.Supp.2d 368

Jeff MACARZ, Plaintiff, v. TRANSWORLD SYSTEMS, INC., Defendant.

Civ. No. 3:97cv2194 (JBA).

United States District Court, D. Connecticut.

September 21, 1998.

COPYRIGHT MATERIAL OMITTED

Joanne Faulkner, Law Offices of Joanne Faulkner, New Haven, CT, Daniel A. Edelman, Cathleen M. Combs, James O. Latturner, Rick D. Young, Edelman & Combs, Chicago, IL, for Plaintiff.

Robert W. Allen, Tyler, Cooper & Alcorn, New Haven, CT, for Defendant.

Ruling on Parties' Cross-Motions for Judgment [docs. # 13-1, # 13-2, # 15]

ARTERTON, District Judge.

Plaintiff Jeff Macarz brings this proposed class action claiming that a debt-collection letter sent to him by the defendant Transworld Systems, Inc. is violative of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. He claims that the letter, a copy of which is attached to this ruling as an appendix, does not comply with 15 U.S.C. §§ 1692e and 1692g in that it fails to effectively convey the 30-day dispute right provided by § 1692g. The parties now cross-move for judgment on the pleadings.

Legal Standard

Federal Rule of Civil Procedure 12(c) provides that:

After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, ...

A motion for judgment on the pleadings under Rule 12(c) is judged by the same standards as motion made pursuant to Fed. R.Civ.P. 12(b)(6). See Sheppard v. Beerman, 94 F.3d 823, 827 (2d Cir.1996). In deciding a motion to dismiss, a court must construe in plaintiff's favor any well-pleaded factual allegations in the complaint. Finnegan v. Campeau Corp., 915 F.2d 824, 826 (2d Cir.1990). A court may dismiss the complaint only where it appears beyond doubt that plaintiff can prove no set of facts in support of his or her claim which would entitle him or her to relief. See Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir.1991) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

Discussion

The Fair Debt Collection Practices Act states in relevant part that:

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing —

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

15 U.S.C. § 1692g.

"When determining whether § 1692g has been violated, an objective standard, measured by how the `least sophisticated consumer' would interpret the notice received from the debt collector, is applied." Russell v. Equifax A.R.S., 74 F.3d 30, 33 (2d Cir.1996). A notice violates § 1692g when it "contains language that `overshadows or contradicts' other language informing a consumer of her rights." Id. at 34 (citing Graziano v. Harrison, 950 F.2d 107 (3d Cir.1991)). Moreover, a plaintiff need not show a "threatening contradiction" but merely that from the "perspective of the least sophisticated consumer, language contained in the notice overshadowed or contradicted the mandatory validation notice." Id. at 35. Overshadowing and contradiction occur whenever the least sophisticated consumer would be "uncertain as to her rights." Id. A "debtor cannot satisfy its requirements simply by timely stating the requisite language in its collection notice.... [T]he notice Congress required must be conveyed effectively to the debtor. It must be large enough to be easily read and sufficiently prominent to be noticed — even by the least sophisticated debtor." Gaetano v. Payco of Wisconsin, Inc., 774 F.Supp. 1404, 1410 (D.Conn.1990).

The notice that the plaintiff received states in the main body, in approximately 12-point type:

COURTESY NOTICE — Our client has requested that we contact you regarding your overdue payment. We realize this could be an oversight on your part and not a willful disregard of an assumed obligation. If there is a legitimate misunderstanding concerning this debt, contact your creditor and discuss it.

Please make further collection procedures unnecessary by sending payment in full or making payment by Visa, Mastercard or Discover card.

BAREFOOT GRASS LAW SERVICE

ATTN CREDIT RATING DEPT

P.O. BOX 980

ROCKY HILL CT 06067

TEL. 860/594-4180

Below this main text, in a font size that can only be described as the proverbial "fine print," is the statutory validation notice, which reads:

Transworld Systems Inc. is a licensed collection agency and any information obtained from you will be used for the purpose of collecting this debt. All portions of this claim shall be assumed valid unless disputed within thirty days of receiving this notice. If disputed in writing, verification of the debt will be provided to you. If the original creditor is different from the above named creditor, the name and address of the original creditor will also be provided.

The plaintiff objects to two aspects of the defendant's notice. First, he argues that the sentence in the body of the letter, "If there is a legitimate misunderstanding concerning this debt, contact your creditor and discuss it," combined with the passive voice of the validation notice in smaller print misdirects the consumer to contact the creditor, rather than the debt collector. Secondly, the plaintiff argues that the exhortation in the body of the letter to "discuss" any dispute with the creditor misleads the consumer into believing that he or she can preserve his or her rights through oral rather than written communication.

In Russell, 74 F.3d 30, the Second Circuit found that a statement on the front of a notice that said, "[i]f you do not dispute this claim (see reverse side) and wish to pay it within the next 10 days we will not post this collection to your file" and "[i]t is our practice to post unpaid collections in the amount of $25 or more to individual credit records," overshadowed and contradicted the otherwise adequate validation notice contained on the reverse side. The Second Circuit reasoned that the consumer was presented with two different and conflicting statements. "If she believed the message printed on the back of the notice, she would understand, as the Act intends her to, that she had 30 days to decide whether to contest the claim. But if she believed what was printed on the front of the notice, she would fear that unless she decided not to dispute the claim and to pay it within 10 days, the debt she owed would be `posted' to her credit file." Id. at 34.

More recently, in Madonna v. Academy Collection Service, Inc., 1997 WL 530101 (D.Conn.1997), the plaintiff received, among other communications from the defendant, a notice that stated, in part:

If you do not dispute this debt or any portion thereof, you are requested to remit the above stated balance in the enclosed envelope. If you can not (sic) remit the balance, contact us as soon as possible to discuss a repayment plan.

Failure to comply may result in our informing our client that you have refused to cooperate, they may choose to pursue legal action. (sic)

Id. at *1 (alterations in original). The plaintiffs argued that the "contact us as soon as possible" language overshadowed the 30-day validation period required by law. Judge Covello found, after a trial to the bench, that the above quoted section of the notice did not contradict or overshadow the § 1692g notice given elsewhere in the debt-collection letter. The letter advised the consumer three times of the 30-day period to dispute the debt, which appeared in the second paragraph of the letter, in the same type-face as the rest of the communication, and in the same font size. In addition, the court explained, the "contact us as soon as possible" language appeared in the context of discussing the possibility of a repayment plan, which the court found wholly unrelated to the 30-day period provided to the consumer.

In this case, the plaintiff takes issue with the direction to contact the creditor rather than the debt-collection agency. "The debt validation notice is designed to fulfill congressional intent to `eliminate the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid.'" Gaetano, 774 F.Supp. at 1410 (quoting S.Rep. No. 382, 95th Cong.2d Sess. 4, reprinted in 1977 U.S.Code Cong. & Admin. News 1695, 1699). This statutory purpose will only be fulfilled if the notice is sufficiently clear for the least sophisticated consumer to understand 1) that she or he must put any dispute in writing, and 2) that such writing must be directed to the debt-collection agency. Although the notice in dispute contains the defendant's address at the top of the page, it is the creditor's contact information that appears in the body of the letter, and again in the tear-off payment coupon section at the bottom of the letter. Such...