Pettit v. Retrieval Masters Creditors Bureau, Inc., 98 C 1154.

Citation42 F.Supp.2d 797
Decision Date10 March 1999
Docket NumberNo. 98 C 1154.,98 C 1154.
PartiesLori PETTIT, on behalf of herself and all others similarly situated, Plaintiff, v. RETRIEVAL MASTERS CREDITORS BUREAU, INC. and Russell Fuchs, Defendants.
CourtU.S. District Court — Northern District of Illinois

Cathleen M. Combs, Daniel A. Edelman, James O. Latturner, Ignacio Daniel Maramba, Edelman & Combs, Chicago, IL, Charley Hoon Lee, Edelman & Combs, Chicago, IL, for plaintiff.

George William Spellmire, David Matthew Schultz, John Matthew Foley, Matthew R. Henderson, Hinshaw & Culbertson, Chicago, IL, for defendants.

MEMORANDUM OPINION AND ORDER

PALLMEYER, District Judge.

Plaintiff Lori Pettit ("Pettit") filed this class action complaint on February 24, 1998, against Defendants Retrieval Masters Creditors Bureau, Inc. ("RMCB") and RMCB's owner, Russell Fuchs ("Fuchs"), alleging that the Defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692e, 1692e(10), 1692e(16) ("FDCPA") when they sent her a collection letter requesting payment on behalf of a company from which she had ordered merchandise. Pettit claims that the Defendants' use of the name "Creditors Bureau," along with references to her "file" and to the "National Delinquent Debtor File" ("NDDF") falsely suggest that RMCB is a credit bureau. Furthermore, she alleges that references in the letter to the NDDF in the letter falsely convey the impression that a debtor will face serious consequences for continued non-payment.

The parties filed cross-motions for summary judgment. Pettit's motion for partial summary judgment asserts that the text of the collection notice violates the FDCPA. In addition, Plaintiff argues that not only RMCB, but Fuchs also is liable as a matter of law for choosing the allegedly misleading name of the company and allowing the continued use of the name.

Defendants RMCB and Fuchs filed separate motions for summary judgment. Fuchs' motion is based on the proposition that he is neither a debt collector, nor personally involved in the alleged offending behavior and thus cannot be personally liable for the actions of the corporation. RMCB argues that it did not violate the FDCPA because the name of the company is not misleading to the unsophisticated consumer and because reference to the NDDF in the collection letter does not deceptively indicate that the consumer will face serious consequences for a failure to pay.

FACTS

August 12, 1997 letter to Plaintiff

Plaintiff Lori Pettit owed $20.70 to an entity known as Crafting and Decorating Made Simple for literature she ordered from that company. (Defendants' Joint Rule 12(m) Statement (hereinafter "Defendants' 12(m)") ¶ 8.) Despite repeated requests, Pettit did not make payment, so Crafting and Decorating Made Simple turned the matter over to RMCB. On August 12, 1997, RMCB sent Pettit a letter in which it requested payment on behalf of Crafting and Decorating Made Simple. (Id. ¶ 8.) The letter, dated August 12, 1997, reads as follows:

NOTICE BEFORE DEBTOR FILE NOTIFICATION [surrounded by asterisks]

Dear L PETTIT:

For an amount of $20.70, are you willing to let Crafting and Decorating Made Simple record your name on a delinquent debtor file, computerized on a national basis?

You have had ample opportunity to explain why you have not paid our client, Crafting and Decorating Made Simple, for the order shipped to you.

It is essential that you mail payment in full by 09/12/97.

Remember, your account is now being handled by debt collectors who want to see this matter resolved. Clear your record with us once and for all. Remit the $20.70 owed and keep Crafting and Decorating Made Simple from putting your name on the National Delinquent Debtor File, which could affect your ability to obtain certain types of credit with direct marketing companies.

                  SINCERELY
                  /s/ Joseph Howard
                  JOSEPH HOWARD
                  COLLECTION MANAGER
                

(Id. ¶ 11; Collection Letter, Ex. A to Plaintiff's Complaint.) The front of the letter includes a notice to "SEE REVERSE FOR IMPORTANT INFORMATION"; the information on the reverse is a statement in light type: "This is an attempt to collect a debt. Any information obtained will be used for that purpose. This communication is from a debt collector. New York City Department of Consumer Affairs License Number 808906." (Collection Letter, Ex. A to Plaintiff's Complaint) (original quotation marks omitted.)

At her deposition, Pettit initially acknowledged that she knew the letter was from a collection agency, but went on to testify that she was misled by the letter and thought the letter was from a credit bureau. (Defendants' 12(m) ¶ 43.) She cited Defendant's name and the contents of the letter as her basis for this belief:

Q. Did you know who sent you the letter?

A. Yes.

Q. Who is that?

A. Retrieval Masters Creditors Bureau.

Q. And you knew they were a debt collector, didn't you?

A. Yes.

Q. You didn't think that Retrieval Masters Creditors Bureau was a credit bureau, did you?

A. Yes, I did.

Q. Why did you think that?

A. Because it states that in the letter.

Q. What does it state?

A. It says that they will put me on a National Delinquent Debtor File, so I thought I would never get credit again.

Q. What is it about the statement that made you think that you would never get credit again?

A. Delinquent debtor. It says you don't get certain types of credit.

* * * * * *

Q. When you received this letter in August of 1997, what about the letter made you think that it was from a credit bureau?

A. The name Creditors Bureau.

Q. Is that the only thing?

A. Yes.

Q. But you also knew it was from a debt collector, right?

A. I thought they were the same.

(Pettit Dep. at 11-12, 25; Ex. L to Appendices to Plaintiff's Motion For Partial Summary Judgment.)

RMCB sent the letter on its letterhead which displays the letters "RMCB" in bold face and smaller, non-bolded words, "COLLECTION AGENCY," beneath those letters in the upper left corner. (Defendants' 12(m) ¶ 9; Collection Letter, Ex. A to Plaintiff's Complaint.) Across the middle of the letterhead is the full name of the company: "RETRIEVAL MASTERS CREDITORS BUREAU" in capital letters; its address, 2269 Sawmill River Rd., Bldg. 3, Elmsford, NY, 10523; and its phone number, 914-345-7136. (Defendants' 12(m) ¶ 10; Collection Letter, Ex. A to Plaintiff's Complaint.) The upper right hand corner features a small version of the seal of the American Collectors Association. (Defendants' 12(m) ¶ 10; Collection Letter, Ex. A to Plaintiff's Complaint.) The letters "RMCB" in the upper left corner are the most prominent feature of the letterhead.

History of RMCB

Defendant Russell Fuchs and his brother Ira Fuchs founded RMCB, a collection agency, under the name Retrieval Masters Credit Bureau in 1977. (Defendants' 12(m) ¶¶ 55, 59.) Russell Fuchs testified that it was Ira who selected the name Retrieval Masters Credit Bureau. (Fuchs' Dep., at 18.) Russell and Ira Fuchs each owned 37.5% of the outstanding shares, and a man named Joseph Schiff owned the remaining stock. (Plaintiff's Statement of Material Facts (hereinafter "Plaintiff's 12(m)") ¶ 10.) The company originally had four employees, including Ira and Russell Fuchs and Joseph Schiff. (Id. ¶ 10.)

In 1979, the Federal Trade Commission ("FTC") suggested that the company change its name. (Defendants' 12(m) ¶ 60.) Russell Fuchs testified that he does not know why the FTC made the request. (Defendants' 12(n) ¶ 14.) Fuchs further stated in his deposition that he does not recall being involved in the name change to Retrieval Masters Creditors Bureau. (Plaintiff's 12(n) ¶ 61; Fuchs dep., at 19, 28-29.)

In compliance with New York incorporation laws, the corporation filed a Certificate of Amendment of Certificate of Incorporation ("Certificate of Amendment") to officially change the name of the company to Retrieval Masters Creditors Bureau in compliance with the New York incorporation laws. A portion of the Certificate of Amendment states that the amendment to the name "was authorized by the unanimous vote of the holders of all the issued and outstanding shares entitled to vote at a meeting of the shareholders on May 3, 1979." (Plaintiff's 12(m) ¶ 15; Certificate of Amendment, Ex. H to Appendices to Plaintiff's Motion For Partial Summary Judgment.) The signatures on the Certificate of Amendment are those of Ira Hayes Fuchs, President, and Joseph Schiff, Secretary. (Certificate of Amendment, Ex. H to Appendices to Plaintiff's Motion For Partial Summary Judgment.) Russell Fuchs does not recall being present at a meeting to discuss the name change or voting for a name change (Fuchs Dep., at 28-29), and his signature does not appear on the Certificate of Amendment. (Defendants' 12(n) ¶ 15; Certificate of Amendment, Ex. H to Appendices to Plaintiff's Motion For Partial Summary Judgment.)

Fuchs' Involvement with RMCB

Russell Fuchs currently has sole ownership of RMCB. (Plaintiff's 12(m) ¶ 11.) He is the president and treasurer of the corporation (id. ¶ 5), and, as sole equity owner, he is able to authorize an official name change of RMCB. (Id. ¶ 19.) Fuchs stated that he "likes" the name Retrieval Masters Creditors Bureau. (Id. ¶ 17.) At his deposition, Fuchs admitted that he could authorize anything for the company, but testified that he does not currently have much involvement with RMCB and has delegated authority for running the corporation to RMCB's officers and directors. (Defendants' 12(n) ¶ 7, Fuchs Dep., at 53-55, 58, 63-64, 68-69.) RMCB has 75 employees. (Fuchs Dep., at 17.)

Fuchs daily receives information from officers and directors about "big picture" concerns such as finances, clients, and capital investments (Defendants' 12(m) ¶ 80), but Fuchs does not have regular meetings with the officers and directors. (Id. ¶ 83.) RMCB has employees who are responsible for ensuring that RMCB complies with the FDCPA (id. ¶ 73); but Fuchs himself does not monitor FDCPA compliance. (Id. ¶ 75.) In fact,...

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