Zortman v. J.C. Christensen & Assocs., Inc.

• Decision Date: 29 April 2011
• Docket Number: Civil No. 10–3086 (JNE/FLN).
• Citation: 819 F.Supp.2d 874
• Court: U.S. District Court — District of Minnesota
• Parties: Christina ZORTMAN, Plaintiff, v. J.C. CHRISTENSEN & ASSOCIATES, INC., Defendant.

819 F.Supp.2d 874

Christina ZORTMAN, Plaintiff,

v.J.C. CHRISTENSEN & ASSOCIATES, INC., Defendant.

Civil No. 10–3086 (JNE/FLN).

United States District Court, D. Minnesota.

April 29, 2011.

Trista M. Roy, Esq., Consumer Justice Center, PA, appeared for Plaintiff Christina Zortman.

Michael A. Klutho, Esq., Bassford Remele, PA, appeared for Defendant J.C. Christensen & Associates, Inc.

AMENDED ¹ ORDER

JOAN N. ERICKSEN, District Judge.

Plaintiff Christina Zortman brings this action under the Fair Debt Collection Practices Act (FDCPA) against J.C. Christensen & Associates, Inc. (JCC). On November 24, 2010, JCC filed a motion for judgment on the pleadings, and the Court conducted a hearing on that motion on January 6, 2011. For the reasons stated below, the Court denies the motion.

I. BACKGROUND

Zortman incurred a consumer debt with Chase Bank USA N.A. by using a Kohl's Department Stores credit card. The debt became delinquent and was transferred or assigned to JCC. Both Zortman's home and cellular voicemail systems have automated outgoing messages that do not identify occupants or potential listeners. Zortman alleges that JCC left messages on both voicemail systems “disclosing Plaintiff's debt” and that the messages were heard by Zortman's children. Zortman argues that this violated the FDCPA and caused Zortman to suffer emotional distress, embarrassment, and humiliation.

II. DISCUSSION

A court should grant judgment on the pleadings only if the moving party clearly establishes that there are no material issues of fact and that it is entitled to judgment as a matter of law. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.1999). A court evaluates a motion for judgment on the pleadings brought under Rule 12(c) of the Federal Rules of Civil Procedure under the same standard as a motion brought under Rule 12(b)(6). See Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir.1990). In deciding a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must accept the facts alleged in the complaint as true and grant all reasonable inferences in favor of the plaintiff. Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir.2009). Although a complaint is not required to contain detailed factual allegations, “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Id. (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

The complaint alleges that JCC violated 15 U.S.C. § 1692c(b) (2006) when it left messages on Zortman's voicemail systems that were heard by Zortman's children. The gist of JCC's motion for judgment on the pleadings is that Zortman has no claim because JCC did not purposefully or deliberately ² disclose the debt information to a third party. The Court concludes that Zortman has pleaded an actionable FDCPA claim.

The FDCPA prohibits a debt collector from disclosing a consumer's debt to third parties:

Except as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

§ 1692c(b). A “communication” is “the conveying of information regarding a debt directly or indirectly to any person through any medium.” Id. § 1692a(2).

A. JCC's appeal to the “ Foti problem”

JCC urges the Court to hold that violations of § 1692c(b) require an intent to purposefully or deliberately make disclosures to a third party. JCC bases this proposition, in part, on a line of cases, which includes Foti v. NCO Financial Systems, Inc., 424 F.Supp.2d 643 (S.D.N.Y.2006), interpreting 15 U.S.C. §§ 1692d(6) and 1692e(11) (2006). Section 1692d(6) generally requires a “disclosure of the caller's identity” when a debt collector places a telephone call. Courts have construed § 1692d(6) as requiring a debt collector to disclose the caller's name, the debt collection company's name, and the nature of the debt collector's business. Baker v. Allstate Fin. Servs., Inc., 554 F.Supp.2d 945, 949–50 (D.Minn.2008) (collecting cases). Section 1692e(11) requires the debt collector to disclose “that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose” in the initial communication with the consumer, and it requires the debt collector to disclose “that the communication is from a debt collector” in later communications.

Beginning by the early 2000s, district courts from around the country began to hold that debt collectors could violate §§ 1692d(6) and 1692e(11) by leaving voicemail or answering machine messages without the required disclosures. One of these decisions was Foti, which was followed by a recent District of Minnesota case on which JCC primarily relies, Mark v. J.C. Christensen & Associates, Inc., Civil No. 09–100 ADM/SRN, 2009 WL 2407700 (D.Minn. Aug. 4, 2009). Until fairly recently, some debt collectors, including JCC, followed the practice of leaving semi-anonymous messages for debtors that only stated the caller's first name and did not disclose the name of the company or the nature of the call. Apparently, this practice was adopted out of fear that a message with the §§ 1692d(6) and 1692e(11) disclosures would violate § 1692c(b) if overheard by a third party. In Mark, the plaintiff sued JCC and claimed that semi-anonymous messages on her answering machine violated §§ 1692d(6) and 1692e(11). For example, JCC left a message for the Mark plaintiff that stated: “Hi Cindy, this is Eva, can you call me quick when you get this message. My office number is 866–565–1399.” Mark, 2009 WL 2407700, at *1. JCC argued that messages of this type do not violate the FDCPA because they (1) are not communications; (2) are not harassing, abusive, false, deceptive, or misleading; and (3) are not material. After rejecting these arguments, the Mark court addressed JCC's constitutionality argument. If the semi-anonymous messages violated §§ 1692d(6) and 1692e(11), JCC argued, then debt collectors would be prevented from leaving messages on answering machines and voicemail systems because compliance with §§ 1692d(6) and 1692e(11) risks violating § 1692c(b). JCC argued that such a construction amounted to an unconstitutional restriction of speech. The Mark court rejected this argument and minimized the risk of violating § 1692c(b):

There is no indication that others shared Mark's answering machine and, more importantly, no allegation that JCC, when it left the messages, deliberately intended that they be heard by third parties. The FDCPA was intended to protect against deliberate disclosures to third parties as a method of embarrassing the consumer, see Joseph [ v. J.J. Mac Intyre Cos., 281 F.Supp.2d 1156, 1164 (N.D.Cal.2003) ], not to protect against the risk of an inadvertent disclosure that could occur if another person unintentionally overheard the messages left on Mark's answering machine. Thus, JCC's argument that it faced a significant risk of exposure to liability under § 1692c(b) had it made the required disclosures in the messages left on Mark's answering machine is rejected.

Mark, 2009 WL 2407700, at *5. The court then went on to conclude that “even accepting for the sake of argument JCC's claim that the FDCPA presents debt collectors with an unavoidable dilemma that restricts First Amendment rights, the restrictions are constitutional.” Id. at *6.

JCC now argues that that the messages here were “in full compliance with the FDCPA and as directed by the U.S. District Court for the District of Minnesota in Mark ” (Answer ¶ 11), and that no violation of § 1692c(b) can occur without a purposeful or deliberate disclosure to a third party (Def.'s Mem. 8). Mark held that certain semi-anonymous messages violated the FDCPA because the messages did not include certain disclosures; it is a logical error to conclude that this holding implies that messages with the disclosures will be necessarily in compliance with the FDCPA.³ Although JCC may appeal to the implications of the reasoning in Mark, it cannot argue that Mark held that messages like those at issue here do not violate the FDCPA.

Moreover, the language from Mark about purposeful or deliberate intent on which JCC relies is dictum. In addressing JCC's constitutionality argument, the Mark court first briefly considered the risk of liability under § 1692c(b) for debt collectors who leave disclosures. The court reasoned that the risk was minimal because of the absence of deliberate or purposeful intent. Then the court spent the bulk of its analysis on the constitutionality of the FDCPA assuming the FDCPA presented debt collectors with an “unavoidable dilemma” when leaving messages on answering machines and voicemail systems. It concluded that such a restriction would be constitutional. This Court therefore concludes that the commentary concerning purposeful or deliberate intent was dictum because it was not necessary to Mark's holding. Such reasoning is, however, commonly to be found in cases finding...