Sullivan v. Credit Control Serv. Inc.

• Decision Date: 30 September 2010
• Docket Number: Civil Action No. 09–40220–FDS.
• Parties: James F. SULLIVAN, on his own behalf and on behalf of others similarly situated, Plaintiff,v.CREDIT CONTROL SERVICES, INC., CCS Holding Business Trust, Steven Sands, David Sands and Donna Ramsdell, each independently and together doing business as Credit Collection Services, Defendants.
• Court: U.S. District Court — District of Massachusetts

745 F.Supp.2d 2

James F. SULLIVAN, on his own behalf and on behalf of others similarly situated, Plaintiff,

v.CREDIT CONTROL SERVICES, INC., CCS Holding Business Trust, Steven Sands, David Sands and Donna Ramsdell, each independently and together doing business as Credit Collection Services, Defendants.

Civil Action No. 09–40220–FDS.

United States District Court, D. Massachusetts.

Sept. 30, 2010.

Sergei Lemberg, Lemberg & Associates, Stamford, CT, for Plaintiff.David A. Grossbaum, Andrew M. Schneiderman, Hinshaw & Culbertson LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS

SAYLOR, District Judge.

This is an action under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692–1692p, (“FDCPA”). It arises out of a one-page collection notice sent by Credit Collection Services (“CCS”) to James F. Sullivan in August 2009. Sullivan has brought an action against five defendants: Credit Control Services, Inc.; CCS Holding Business Trust; Steven Sands; David Sands; and Donna Ramsdell. The complaint alleges seven separate violations of the FDCPA, all arising from the single notice. Specifically, the complaint alleges that the notice (1) falsely represented that CCS is vouched for or affiliated with the United States government; (2) falsely represented the character, amount, or legal status of the debt and created a false impression that non-payment may result in unspecified regulatory or legal consequences; (3) falsely represented that the written communication was authorized, issued, or approved by a government agency or official; (4) used false representations and deceptive means to collect the debt; (5) failed to effectively communicate that it is transmitted by a debt collector; (6) used unfair or unconscionable means to collect the debt; and (7) failed to effectively provide the requisite debt validation notice. (Compl.¶¶ 18–22, 44).

Defendants have jointly moved to dismiss the entire complaint. For the reasons set forth below, the motion will be granted.

I. Background

In August 2009, James F. Sullivan received a “WARNING NOTICE” from CCS concerning a $77.68 debt that he allegedly owed to the Government Employees Insurance Company. (Compl. ¶ 12).¹ The Notice was the first written communication that Sullivan had received concerning the matter. ( Id. ¶ 14). The Notice contained the following characteristics.

At the top of the document was a header. In bold, capitalized letters were the words “CREDIT COLLECTION SERVICES.” (Def.'s Mem. Ex. A). Below that appeared the following introduction: a Newton, Massachusetts address; weekly hours of operation; a “Self Service” website of www. warningnotice. com; and a toll-free number. ( Id.).²

Below that, on the left-hand side of the document, was a bar code and plaintiff's name and address. On the right-hand side was the date, a file number, and a “CANCEL DATE.” (Def.'s Mem. Ex. A).

A gray text bar followed, which contained the following language: “REGARDING: GOVERNMENT EMPLOYEES INSURANCE COMPANY ... AMOUNT DUE: $77.68.” ( Id.). Under that, a black text bar contained the words “WARNING NOTICE—WARNING NOTICE” in larger white font. ( Id.). Another gray text box appeared under that, with the following language inside it:

This notice and all further steps undertaken by this agency will be in compliance with applicable State and Federal Law(s). In accordance with Federal Law, the following warning notice is required. This is an attempt to collect a debt and any information obtained will be used for that purpose. This Communication was sent from a debt collector.

The above referenced amount is due for coverage provided under your insurance contract. Please remit payment in the envelope provided or visit our secure website www. warningnotice. com. Self service options include:

• Paying online by check or credit card

• Establishing payment arrangements with this office

• Printing scheduled payment vouchers

• Activating private email as your preferred method to be contacted

• Accessing help desk information, etc.

Thank you for your anticipated cooperation.

( Id.).

Below that text box, the following language appeared:

FEDERAL LAW

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice, this office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor if different from the current creditor. This is an attempt to collect a debt and any information obtained will be used for that purpose. This communication has been sent by a debt collector.

MASSACHUSETTS LAW

NOTICE OF IMPORTANT RIGHTS: YOU HAVE THE RIGHT TO MAKE A WRITTEN OR ORAL REQUEST THAT TELEPHONE CALLS REGARDING YOUR DEBT NOT BE MADE TO YOU AT YOUR PLACE OF EMPLOYMENT. ANY SUCH ORAL REQUEST WILL BE VALID FOR ONLY TEN DAYS UNLESS YOU PROVIDE WRITTEN CONFIRMATION OF THE REQUEST POSTMARKED OR DELIVERED WITHIN SEVEN DAYS OF SUCH REQUEST. YOU MAY TERMINATE THIS REQUEST BY WRITING TO THE DEBT COLLECTOR.

( Id.). The remainder of the Notice provided information on the availability of e-mail messaging, mailing instructions for payment or correspondence, and payment options. ( Id.).II. Standard of Review

On a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the Court “must assume the truth of all well-plead[ed] facts and give the plaintiff the benefit of all reasonable inferences therefrom.” Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir.2007) (citing Rogan v. Menino, 175 F.3d 75, 77 (1st Cir.1999)). To survive a motion to dismiss, the plaintiff must state a claim that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). That is, “[f]actual allegations must be enough to raise a right to relief above the speculative level, ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555, 127 S.Ct. 1955 (citations omitted). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955). Dismissal is appropriate if plaintiff's well-pleaded facts do not “possess enough heft to show that plaintiff is entitled to relief.” Ruiz Rivera v. Pfizer Pharms., LLC, 521 F.3d 76, 84 (1st Cir.2008) (quotations and original alterations omitted).

III. Analysis

The FDCPA was enacted in 1978 to “eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692. Plaintiff contends that defendants violated the FDCPA by providing false and/or misleading information in the August 17, 2009 Notice, in violation of provisions of §§ 1692e, 1692f, and 1692g.

Most circuits have applied a “least sophisticated consumer” standard in assessing whether a debt collector's communication is deceptive or misleading. See, e.g., Lewis v. ACB Bus. Servs., 135 F.3d 389, 400 (6th Cir.1998); Clomon v. Jackson, 988 F.2d 1314, 1318–19 (2d Cir.1993); Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir.1991); Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1175 (11th Cir.1985); Baker v. G.C. Servs. Corp., 677 F.2d 775, 778 (9th Cir.1982). This is an objective standard, based on “whether the ‘least sophisticated consumer’ would be deceived by the collection practice.” Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232, 236 (2d Cir.1998). The standard is intended to vindicate the statutory purpose of protecting vulnerable consumers from deceptive or misleading collection tactics. See Clomon, 988 F.2d at 1319 (noting that the standard “is grounded, quite sensibly, in the assumption that consumers of below-average sophistication or intelligence are especially vulnerable to fraudulent schemes”).

As the Seventh Circuit has observed, in practice courts do not literally apply the “least sophisticated consumer” standard. See Chuway v. National Action Fin. Servs., Inc., 362 F.3d 944, 948–49 (7th Cir.2004) (noting that the least sophisticated consumer “cannot even read, for the literacy rate in the United States is not 100 percent”). To eliminate the “incongruity” between what the standard literally demands and the way it is interpreted in practice, the Seventh Circuit has adopted a different formulation that looks to whether “an unsophisticated consumer” would be deceived or misled by the communication. Gammon v. GC Servs. Ltd. P'ship, 27 F.3d 1254, 1257 (7th Cir.1994). Under the “unsophisticated consumer” standard, “statements are not ... misleading unless a significant fraction of the population would be similarly misled.” Veach v. Sheeks, 316 F.3d 690, 693 (7th Cir.2003) (describing the “unsophisticated consumer” as one who is “uninformed, naive, or trusting”); accord Duffy v. Landberg, 215 F.3d 871, 874–75 (8th Cir.2000) (applying the unsophisticated consumer standard).

The Fifth Circuit has commented that the unsophisticated consumer and the least sophisticated consumer standards “serve[ ] the same purpose and ... would lead[ ] to the same results in most cases.” Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1236 (5th Cir.1997). That circuit's formulation encompasses both standards, but assumes that the “plaintiff-debtor is neither shrewd nor experienced in dealing with creditors.” Goswami v. American Collections Enter.,...