Pettit v. Retrieval Masters Creditors Bureau, No. 99-1797

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtBefore Easterbrook, Manion, and Rovner; Manion
Citation211 F.3d 1057
Parties(7th Cir. 2000) Lori Pettit, Plaintiff-Appellant, v. Retrieval Masters Creditors Bureau, Inc., and Russell Fuchs, Defendants-Appellees
Docket NumberNo. 99-1797
Decision Date09 May 2000

Page 1057

211 F.3d 1057 (7th Cir. 2000)
Lori Pettit, Plaintiff-Appellant,
v.
Retrieval Masters Creditors Bureau, Inc., and Russell Fuchs, Defendants-Appellees.
No. 99-1797
In the United States Court of Appeals For the Seventh Circuit
Argued October 25, 1999
Decided May 9, 2000
Rehearing and Rehearing En Banc Denied June 7, 2000.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 C 1154--Rebecca R. Pallmeyer, Judge.

Page 1058

Before Easterbrook, Manion, and Rovner, Circuit Judges.

Manion, Circuit Judge.

Lori Pettit claims that the Retrieval Masters Creditors Bureau (Retrieval) and its president--Russell Fuchs-- violated the Fair Debt Collection Practices Act (FDCPA) by using its name in a collection letter. Specifically, she contends that the name "Retrieval Masters Creditors Bureau,

Page 1059

Incorporated" is deceptive because it leads unsophisticated debtors to believe that Retrieval is a credit bureau rather than a collection agency. The district court granted summary judgment for Fuchs because he is not a "debt collector." It also granted summary judgment for Retrieval based on its view that the letter was not deceptive as a matter of law. We affirm because under the FDCPA Fuchs is not a debt collector and because Pettit failed to create a genuine issue of material fact as to whether an unsophisticated debtor would find Retrieval's name misleading. We also reject her argument that her own subjective belief that all debt collectors are credit bureaus results in liability for Retrieval Masters.

A. Liability of the Debt Collector's Shareholders or Officers Under the FDCPA

The FDCPA is designed to protect against abusive debt collection practices which would likely disrupt a debtor's life. Mace v. Van Ru Credit Corp., 109 F.3d 338, 343 (7th Cir. 1997). Its provisions generally apply only to debt collectors. See 15 U.S.C. sec. 1692(e); Transamerica Fin. Servs., Inc. v. Sykes, 171 F.3d 553, 554 n.1 (7th Cir. 1999); Whitaker v. Ameritech Corp., 129 F.3d 952, 958 (7th Cir. 1997). A "debt collector" is defined as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. sec. 1692a(6).

Pettit argues that Russell Fuchs--as the largest shareholder and president of Retrieval Masters-- is a debt collector under the terms of the FDCPA, and thus is personally liable for any violations of the Act perpetrated by Retrieval, or at least for those violations in which he was intimately involved. The district court rejected this argument and held that Fuchs is not liable under the FDCPA because he exercised little or no day- to-day control over Retrieval Masters. Pettit v. Retrieval Masters Creditors Bureau, Inc., 42 F. Supp.2d 797, 805 (N.D. Ill. 1999). But under our holding in White v. Goodman, the extent of control exercised by an officer or shareholder is irrelevant to determining his liability under the FDCPA. 200 F.3d 1016, 1019 (7th Cir. 2000). Because such individuals do not become "debt collectors" simply by working for or owning stock in debt collection companies, we held that the Act does not contemplate personal liability for shareholders or employees of debt collection companies who act on behalf of those companies, except perhaps in limited instances where the corporate veil is pierced. Id.; Aubert v. American Gen. Fin., Inc., 137 F.3d 976, 979-80 (7th Cir. 1998). Rather, the FDCPA has utilized the principle of vicarious liability. See Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996); Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1516 (9th Cir. 1994). Just as in the Title VII context, the debt collection company answers for its employees' violations of the statute. With vicarious or respondeat superior liability, the debt collection company "and its managers have the proper incentives to adequately discipline wayward employees, as well as to instruct and train employees to avoid actions that might impose liability." U.S. EEOC v. AIC Sec. Investigations, Ltd., 55 F.3d 1276, 1282 (7th Cir. 1995). Individuals who do not otherwise meet the statutory definition of "debt collector" cannot be held liable under the Act. Transamerica, 171 F.3d at 554 n.1. As we mentioned in White, FDCPA suits against the owners of a debt collection company who are not otherwise debt collectors are frivolous and might well warrant sanctions. 200 F.3d at 1019. The holding of White is equally applicable to this case, so regardless of whether Fuchs exercised extensive control over Retrieval Masters, the district court correctly granted summary judgment for Fuchs. Of course, Pettit may still seek

Page 1060

redress from Retrieval Masters for any violations of the Act committed by Fuchs, since it is undisputed that Retrieval is a debt collector.

B. The FDCPA and the Unsophisticated Debtor

The FDCPA specifically prohibits a "false representation or implication that a debt collector operates or is employed by a consumer reporting agency . . . ." 15 U.S.C. sec. 1692e(16). A consumer reporting agency is "any person which, for monetary fees . . . regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties . . . ." 15 U.S.C. sec. 1681a(f). The purpose of this provision is to prevent debt collectors from coercing payments from debtors by falsely leading them to believe that the failure to pay the debt will adversely affect the debtor's credit rating and ability to obtain credit. Cf. McKenzie v. E.A. Uffman & Assocs., Inc., 119 F.3d 358, 361 (5th Cir. 1997).

Practices purporting to violate the Act must be viewed from the objective standard of an "unsophisticated debtor." Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997); Jang v. A.M. Miller & Assoc., 122 F.3d 480, 483 (7th Cir. 1997). In attempting to describe this hypothetical debtor we have recognized that he is not as learned in commercial matters as are federal judges, see Walker v. National Recovery, Inc., 200 F.3d 500, 501 (7th Cir. 1999), but neither is he completely ignorant. Thus, on the one hand, we have described an unsophisticated debtor as "uninformed, naive, or trusting." Gammon v. GC Servs., Ltd. Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994). At the same time, we have rejected the "least sophisticated debtor" standard used by some other circuits because we don't believe that the unsophisticated debtor standard should be tied to "the very last rung on the sophistication ladder." Id. Instead, we and other courts have held that our uneducated debtor possesses rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses "reasonable intelligence," and is capable of making basic logical deductions and inferences. See Chaudhry v. Gallerizzo, 174 F.3d 394, 408-09 (4th Cir. 1999); United...

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268 practice notes
  • McDermott v. Marcus, Errico, Emmer & Brooks, P.C., CIVIL ACTION NO. 09-10159-MBB
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • November 20, 2012
    ...inferences.'" Pettway v. Harmon Law Offices, P.C., 2005 WL 2365331, at *3 (quoting Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000), in parenthetical) (internal ellipses omitted); accord Marino v. Hoganwillig, PLLC, 2012 WL 1424733, at *4 (W.D.N.Y. Apr......
  • Johnson v. BAC Home Loans Servicing, LP, No. 5:10–CV–271–F.
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • September 29, 2011
    ...Corp., 654 F.Supp.2d 1051, 1059 (C.D.Cal.2009) (collecting cases); but see Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir.2000) (holding that employees of debt collection company are not “debt collectors”). The decisions of these courts finds support in the......
  • Schwarm v. Craighead, No. CIV. 05-01304 WBS GGH.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • May 5, 2008
    ...plaintiffs "should have been sanctioned for what amounts to malicious prosecution"); Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir. 2000) ("[U]nder ... White v. Goodman, the extent of control exercised by an officer or shareholder is irrelevant to determini......
  • Frye v. Bowman, Heintz, Boscia and Vician, P.C., No. IP 99-1455-C-T.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
    • January 28, 2002
    ...practice violates the FDCPA from the perspective of the "unsophisticated debtor." See Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir.2000); Avila v. Rubin, 84 F.3d 222, 226 (7th Cir.1996). "[T]he standard is low, close to the bottom of the sophistication me......
  • Request a trial to view additional results
268 cases
  • McDermott v. Marcus, Errico, Emmer & Brooks, P.C., CIVIL ACTION NO. 09-10159-MBB
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • November 20, 2012
    ...inferences.'" Pettway v. Harmon Law Offices, P.C., 2005 WL 2365331, at *3 (quoting Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000), in parenthetical) (internal ellipses omitted); accord Marino v. Hoganwillig, PLLC, 2012 WL 1424733, at *4 (W.D.N.Y. Apr......
  • Johnson v. BAC Home Loans Servicing, LP, No. 5:10–CV–271–F.
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • September 29, 2011
    ...Corp., 654 F.Supp.2d 1051, 1059 (C.D.Cal.2009) (collecting cases); but see Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir.2000) (holding that employees of debt collection company are not “debt collectors”). The decisions of these courts finds support in the......
  • Schwarm v. Craighead, No. CIV. 05-01304 WBS GGH.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • May 5, 2008
    ...plaintiffs "should have been sanctioned for what amounts to malicious prosecution"); Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir. 2000) ("[U]nder ... White v. Goodman, the extent of control exercised by an officer or shareholder is irrelevant to determini......
  • Frye v. Bowman, Heintz, Boscia and Vician, P.C., No. IP 99-1455-C-T.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
    • January 28, 2002
    ...practice violates the FDCPA from the perspective of the "unsophisticated debtor." See Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir.2000); Avila v. Rubin, 84 F.3d 222, 226 (7th Cir.1996). "[T]he standard is low, close to the bottom of the sophistication me......
  • Request a trial to view additional results

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