Schweizer v. Trans Union Corp.

• Decision Date: 26 January 1998
• Docket Number: No. 97-7542,97-7542
• Parties: Kate SCHWEIZER, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. TRANS UNION CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

Page 233

136 F.3d 233

Kate SCHWEIZER, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. TRANS UNION CORPORATION, Defendant-Appellee.

No. 97-7542.

United States Court of Appeals Second Circuit.

Jan. 26, 1998.

Scott N. Gelfand, New York City, for Plaintiff-Appellant.

Mark E. Kogan, Philadelphia, PA (Marion, Satzberg, Trichon & Kogan, P.C., of Counsel), for Defendant-Appellee.

Debra A. Valentine, General Counsel, Jay C. Shaffer, Deputy General Counsel, Ernest J. Isenstadt, Assistant General Counsel, Federal Trade Commission, Washington, DC, Amicus Curiae.

Before FEINBERG, KEARSE and WALKER, Circuit Judges.

FEINBERG, Circuit Judge:

Plaintiff Kate Schweizer appeals from an order of the United States District Court for the Southern District of New York, Charles L. Brieant, J., granting summary judgment to defendant Trans Union Corporation ("Trans Union") on Schweizer's claim under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq.

Schweizer's claim is based on a collection notice that she received from Trans Union in July 1995 regarding a debt of $15 allegedly owed by Schweizer to Roche Biomedical Labs, Inc. Schweizer does not challenge the content of the letter. Rather, she alleges that the appearance of the letter, and of the envelope in which it arrived, simulated a telegram and thereby "created a false sense of urgency" and "misrepresented the importance, cost, purpose and urgency of the communication" in violation of 15 U.S.C. § 1692e. ¹ Judge Brieant held that under the applicable law no reasonable juror could "find that the total effect of the document, including the envelope, was to create a false sense of urgency essentially by simulating a Telegram." We agree that there was no statutory violation here, and affirm.

I. Background

A. Facts

In July 1996, almost one year after receiving the collection letter, Schweizer filed this action in the district court. The complaint alleged that the letter, which had the word "Priority-Gram" in large print at the top, simulated a telegram. A copy of the letter was attached to the complaint. The complaint did not make any allegations with respect to the envelope enclosing the collection letter, nor was a copy of the envelope attached. In February 1997, Trans Union moved for summary judgment dismissing the complaint. Schweizer cross-moved for partial summary judgment on the issue of liability or, alternatively, for a continuance pending completion of discovery, and for a stay of Trans Union's motion "pending the Court's determination with respect to certification of the putative plaintiff class." At no time, however, did Schweizer move for class certification.

In her Counter-Statement of Facts Pursuant to Local Civil Rule 3(g), submitted in support of her motion for partial summary judgment, Schweizer supplemented and particularized her allegations with respect to the characteristics of the collection notice that simulated a telegram. Specifically, she pointed to the fact that the letter was written on white paper with a horizontal blue stripe at the top, and began with the legend " * * * IMPORTANT NOTICE * * *." She also noted that Trans Union's name "looks and sounds, not coincidentally, like 'WESTERN UNION,' the entity commonly known to deliver telegrams," and that "the letter concludes by suggesting that the balance sought could be paid by, inter alia, 'WESTERN UNION.' " Schweizer also made allegations regarding the envelope in which the letter had arrived, noting that it was also white with a horizontal blue stripe and bore the legend, "Priority-Gram," and that it said, "ELECTRONICALLY TRANSMITTED BY LASON SYSTEMS, INC. FOR PRIORITY POSTAL DELIVERY," even though the notice was sent and received by ordinary first class mail. Schweizer further stated that she believed the notice to be a "telegram-like communication." The envelope was not attached to Schweizer's motion papers, but a sample envelope was submitted by Trans Union in support of its motion for summary judgment.

The district judge granted Trans Union's motion for summary judgment and denied Schweizer's cross-motions. Applying the "least sophisticated consumer" standard, Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.1993), Judge Brieant held that the notice did not simulate a telegram or create a false sense of urgency, and therefore did not violate the statute. He also noted that, "[f]ew debtors today have ever received a telegram, and accordingly the telegram has lost whatever sense of urgency it may have been able to convey in the past." The judge saw support for his ruling in the Federal Trade Commission (FTC)'s Statements of General Policy or Interpretation Staff Commentary on the FDCPA. Specifically, Judge Brieant quoted comment 3 to § 1692f(8), ² which states that use of "the word 'telegram' (or similar word) on the envelope" would not violate § 1692f(8). 53 Fed.Reg. 50098, 50108.

On appeal, Schweizer argues that Judge Brieant ignored relevant precedent in holding that the notice does not simulate a telegram, and that he erroneously relied on § 1692f(8) even though her claim is based on § 1692e. Schweizer also argues that summary judgment should not have been granted before the court made a determination on the issue of class certification.

B. Amicus Brief

After the appeal was submitted by counsel, we requested and received a brief from the FTC, "setting forth its views on the issues raised by the appeal," and permitted the parties to comment thereon.

In its brief, the FTC finds nothing misleadingly urgent about the collection letter itself, which was the sole basis of the complaint. It argues, however, that a reasonable jury might find the envelope deceptive under the FDCPA to the least sophisticated debtor. The FTC points out that although the Priority-Gram does not resemble a yellow Western Union telegram, it does resemble a Western Union "Mailgram" or "Priority Mail" from the United States Postal Service. Both of these services cost more than normal first class mail and may thus "convey[ ] a false message about the manner in which they have been delivered, misrepresent the urgency of the subject communication, and thereby violate the FDCPA."

The FTC suggests that we should either (1) remand "to the district court for determination of the question of deceptiveness by the jury;" or (2) given "the trend of FDCPA jurisprudence to treat such issues as appropriate for summary judgment" affirm "narrowly, on grounds that do not condone the use ... of envelopes that may misrepresent the means by which, and cost at which, these envelopes have been sent."

II. Discussion

A. Standard of Review

We review the district court's order granting summary judgment de novo. Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 710 (2d Cir.1991). The order can only be affirmed if we determine that there is no genuine issue of material fact to be tried, and Trans Union is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

The district court properly applied the "least sophisticated consumer" standard in evaluating Schweizer's claim. Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir.1996). "The basic purpose of [this standard] is to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd." Clomon v. Jackson, 988 F.2d at 1318. "The FDCPA does not extend to every bizarre or idiosyncratic interpretation by a debtor of a creditor's notice. However, it does reach the reasonable interpretation of a notice by even the least sophisticated [debtor]." Rosa v. Gaynor, 784 F.Supp. 1, 3 (D.Conn.1989). With this standard in mind, we turn to Schweizer's claim.

B. Simulating a Telegram

In support of her contention that Trans Union's collection notice simulated a telegram and violated the FDCPA, Schweizer relies primarily on Trans World Accounts, Inc. v. F.T.C., 594 F.2d 212 (9th Cir.1979). In that case the Ninth Circuit affirmed, as being supported by substantial evidence, an FTC order issued under § 5 of the FTC Act, 15 U.S.C. § 45, a precursor to the FDCPA. The order enjoined Trans World from using a collection letter that looked like and was labelled a telegram, finding it "deceptive." It also enjoined use of a letter called a "Trans-O-Gram" because it simulated a Western Union Mailgram. Schweizer asserts that the Trans-O-Gram was very similar to the Priority-Gram she received from Trans Union and argues that we must therefore find the Priority-Gram deceptive.

The district court properly considered itself not bound by Trans World, a case from another circuit. In addition, Trans World involved a different standard of review under a different statute. The Ninth Circuit did not decide by a preponderance of the evidence that the Trans-O-Gram format was deceptive, as Schweizer would have us believe; it simply decided that the FTC's decision that Trans World had engaged in deceptive practices was supported by substantial evidence. 594 F.2d at 215-16.

Amicus FTC points out an even more telling distinction of Trans World. The collection letter enclosed in the Trans-O-Gram envelope threatened immediate legal action, but the only consequence of failure to pay was receipt of another form letter. Thus, in that case "the misleading format of Trans World's envelopes complemented and enhanced their misleading text combining to create the false impression" of urgency. In the appeal before us the letter's contents are not deceptive, nor does Schweizer allege violation of the FDCPA other than by simulation of a telegram.

Schweizer also cites two FDCPA cases: In re Scrimpsher, 17 B.R. 999 (Bankr.N.D.N.Y.1982), and Rosa v. Gaynor. Rosa involved a collection letter threatening legal action that misrepresented that it had been personally sent by an attorney. The district court in Rosa found, among other things, that these letters created a false sense of urgency and were...