United States District Court, S.D. New York
August 24, 2005.
MICHAEL ACHEAMPONGTIEKU, on his own behalf and on behalf of all others similarly situated, Plaintiff,
ALLIED INTERSTATE, INC., Defendant.
The opinion of the court was delivered by: HAROLD BAER, JR., District Judge[fn*] [fn*] Paul-Philippe L. Reyes, a summer 2005 intern in my Chambers, and currently a second year law student at Brooklyn Law School, provided substantial assistance in the research of this Opinion.
OPINION & ORDER
On October 25, 2004, Plaintiff, Michael Acheampongtieku, filed
the instant action individually, and on behalf of others
similarly situated, against Defendant, Allied Interstate, Inc.
("Allied"), a debt collection agency, for violation of the Fair
Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et
seq. Plaintiff seeks: (1) a declaratory judgment requiring
Defendant to make corrective disclosures in its letters to
alleged debtors; and, (2) statutory damages. (Compl. ¶ 23.) Here,
Allied moves for summary judgment pursuant to Rule 56 of the
Federal Rules of Civil Procedure. For the following reasons,
Defendant's motion for summary judgment is GRANTED.
A. Factual Background
The essential facts that give rise to this action are not in
dispute. Plaintiff is a resident of New York City, New York.
(Compl. ¶ 4.) Allied is a debt collection agency with its
principal place of business in Minnesota. (Compl. ¶ 5; Ans. ¶ 4.)
In an attempt to collect debts alleged to be owed to Providian
Financial Corporation ("Providian"), the Defendant, between
October 25, 2003 and November 8, 2004, mailed 170,090 similar
letters to Providian debtors. (Pl. Memo. in Op. to Def. Mot. for
Summ. J., Ex. B, Resp. to Interrogs., at ¶ 1.) While letters, or
a draft thereof, was checked for errors prior to being sent, the
complained of language remained. (Aff. of Jeffrey Swedberg, Vice
Pres. Operations of Allied, at ¶ 7.) The parties do not dispute
that Allied maintained specific procedures "to prevent errors in the letters it sent to Plaintiff and others from whom
it sought to collect a debt and to ensure compliance with the
FDCPA." Id. These procedures included:
(1) a client of Allied requested a proposed letter be
used; (2) the proposed letter was reviewed and
revised to ensure compliance with applicable law; (3)
the proposed letter was sent to an outside letter
vendor so it could be formatted and prepared; (4) the
outside vendor formatted the letter and returned it
to Allied for inspection; and (5) the letter was
entered into production and used.
Id. Allied acknowledges that after the letters were sent into
production they were not rechecked for accuracy. Id.
On July 13, 2004, Plaintiff received one of these letters from
Allied which sought to collect a debt Plaintiff owed to
Providian. (Aff. Swedberg, at ¶ 5.) The Collection Letter reads
in pertinent part:
SPECIAL NOTICE AND PAYMENT DEMAND . . . Your account
is currently scheduled to be listed with a national
credit bureau. To avoid reporting of your delinquent
Providian account to the credit bureau, contact us
for acceptable arrangements.
(Compl. Ex. A, Ltr. dated Jul. 13, 2004, from Allied to Michael
Acheampongtieku) (herein, "Collection Letter").*fn1
the language of the letter indicating that delinquent debtors may be reported, Allied never informed any credit bureau of
Plaintiff's debt. (Aff. Swedberg, at ¶¶ 6-8.)
However, according to Plaintiff, while Allied did not report
Plaintiff's debt to any credit bureau, Providian, unbeknownst to
Allied until the filing of this action, reported Plaintiff's debt
to three credit bureaus in violation of Section 1692e of the
FDCPA. (Compl. ¶ 17; Aff. Swedberg, at ¶ 11) (see also Pl.
Mem. of Law in Op. to Summ. J., at 6 (". . . as there was no
reporting done by the defendant nor did the defendant intend on
reporting any consumer to a credit reporting agency.")). In
particular, Plaintiff alleges that his "Providian account status
was listed with (a) Experian as a Charge-off, with (b) Equifax as
a bad debt placed for collection and with (c) Trans Union as
charged off as bad debt." (Compl. ¶ 17.) Plaintiff alleges, the
Collection Letter was false, deceptive, and prohibited Plaintiff
from disputing the validity of the debt prior to it being
reported to a credit bureau. Id. In addition, Plaintiff also
claims that the language of the Collection Letter overshadows,
confuses, and divests the consumer of his right to meaningfully
dispute the debt in contravention of 15 U.S.C. §§ 1692e and
1692g. Id. Thus, Plaintiff seeks both a declaratory judgment
requiring Allied to make corrective disclosures in its collection
letters and statutory damages. (Compl. ¶ 23.)
B. Procedural History
On October 24, 2004, Plaintiff filed the instant action for
violation of the FDCPA. (Compl. ¶ 17.) On June 30, 2005, Allied
moved for summary judgment, and argued that (1) the Collection
Letter does not obfuscate Plaintiff's rights under the FDCPA, and
(2) even if the Collection Letter violates the FDCPA, Allied is
entitled to protection under 15 U.S.C. § 1692k(c). (Def. Mem. of
Law in Supp. of Def. Mot. for Summ. J., at 1-3) (Dckt. 10.)
II. STANDARD OF REVIEW
A court will not grant a motion for summary judgment unless it
determines that there is no genuine issue of material fact and
the undisputed facts are sufficient to warrant judgment as a matter of law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby Inc.,
477 U.S. 242, 250 (1986). The party opposing summary judgment
"may not rest upon the mere allegations or denials of the adverse
party's pleading, but . . . must set forth specific facts showing
that there is a genuine issue for trial." Fed.R. Cir. P. 56(e).
In determining whether there is a genuine issue of material fact,
the Court must resolve all ambiguities, and draw all inferences,
against the moving party. United States v. Diebold, Inc.,
369 U.S. 654, 655 (1962) (per curiam); Donahue v. Windsor Locks
Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). It is not
the court's role to resolve issues of fact; rather, the court may
only determine whether there are issues of fact to be tried.
Donohue, 834 F.2d at 58 (citations omitted).
The purpose of FDCPA is "to protect consumers from a host of
unfair, harassing, and deceptive debt collection practices
without imposing unnecessary restrictions on ethical debt
collectors." Shevach v. Am. Fitness Franchise Corp., No. 98
Civ. 2938, 2001 WL 274121, at *2 (S.D.N.Y. Mar. 19, 2001)
(citing to S. Rep. No. 382, 95th Cong., 1st Sess. 1-2). The
FDCPA delineates a laundry list of possible violations designed
to prohibit "false, deceptive or misleading representation or
means in connection with the collection of any debt."
15 U.S.C. § 1692e; see also Russell v. Equifax A.R.S., 74 F.3d 30, 33
(2d Cir. 1996). In particular, Section 1692e prohibits:
(5) The threat to take any action that cannot legally
be taken or that is not intended to be taken; . . .
(8) Communicating or threatening to communicate to
any person credit information which is known or which
should be known to be false, including the failure to
communicate that a disputed debt is disputed; . . .
and (10) The use of any false representation or
deceptive means to collect or attempt to collect any
debt or to obtain information concerning a consumer.
15 U.S.C. §§ 1692e(5); 1692e(8); 1692e(10). In addition to the
expressed violations, a collection letter may implicitly violate
Section 1692e "regardless of whether the representation in
question violates a particular subsection of that provision."
Russell, 74 F.3d at 33.
The FDCPA also protects consumers by requiring a debt collector
to inform consumers of certain information either in the initial
collection letter or within five days after the initial
communication. See, e.g., Johnson v. Equifax Risk Mgmt.
Serv.'s, No. 00 Civ. 7836, 2004 WL 540459, at *4 (S.D.N.Y. Mar. 17, 2004) (Baer, J.). Pursuant to
Section 1692g, a collection letter is required to include four
items: (1) the amount of the debt; (2) the name of the creditor,
(3) [A] statement that unless the consumer, within
thirty days after receipt of the notice, disputes the
validity of the debt, or any portion thereof, the
debt will be assumed to be valid by the debt
collector; [and] (4) a statement that if the consumer
notifies the debt collector in writing within the
thirty-day period that the debt, or any portion
thereof, is disputed, the debt collector will obtain
verification of the debt or a copy of a judgment
against the consumer.
15 U.S.C. § 1692g(a); see, e.g., Johnson, 2004 WL 540459,
at *4 ("In short, 15 U.S.C. 1692g requires the debt collector to
inform the consumer of his right to dispute and demand
verification of the debt."). Collection letters that neglect to
provide these essential notices violate the FDCPA because they
are overshadowing and contradictory, and "would make the least
sophisticated consumer uncertain as to her rights." McStay v.
I.C. Sys., Inc., 308 F.3d 188
, 191 (2d Cir. 2002) (internal
In accordance with well-settled Second Circuit precedent, when
determining whether a collection letter violates the FDCPA, a
court is to apply "an objective standard, measured by how the
least sophisticated consumer would interpret the notice received
from the debt collector." Savino v. Computer Credit, Inc.,
164 F.3d 81, 85 (2d Cir. 1998); see, e.g., Miller v. Wolpoff &
Abramson LLP, 321 F.3d 242, 310 (2d Cir. 2003) (cited by
Johnson, No. 00 Civ. 7836, 2004 WL 540459, at *4). This
standard "ensure[s] that the FDCPA protects all consumers, the
gullible as well as the shrewd." Clomon v. Jackson,
988 F.2d 1314, 1318 (2d Cir. 1993). As such, "when a notice contains
language that overshadows or contradicts other language
informing a consumer of her rights, it violates the [FDCPA]."
Savino, 164 F.3d at 85 (emphasis added). However, the FDCPA
also protects debt collectors from "unrealistic or peculiar
interpretations of Collection Letters." Shapiro v. Dun &
Bradstreet Receivable Mgmt. Serv.'s, Inc., 209 F. Supp. 2d 330,
334 (S.D.N.Y. 2002) (citing to Jang v. A.M. Miller &
Assoc., 122 F.3d 480, 483-84 (7th Cir. 1997); Orenbuch v. N.
Shore Health Sys., Inc., 250 F. Supp. 2d 145 (E.D.N.Y. 2003)
(same). Indeed, the least sophisticated consumer standard serves
the FDCPA's dual purpose: to protect the consumer from
unscrupulous collection practices and save debt collectors from
"liability for unreasonable misrepresentations of collection
notices." Clomon, 988 F.2d at 1320.
Here, Plaintiff maintains that the collection letter he
received violated the FDCPA for three reasons. First, Plaintiff
argues that the Collection Letter violated the notice requirement articulated in Section 1692g. Second, Plaintiff maintains that
the Collection Letter falsely stated that the debt would be
reported to a credit bureau when Providian had already reported
the debt as delinquent. (Compl. ¶ 18.) Third, and lastly,
Plaintiff argues that Defendant is not entitled to protection
under the "bona fide error" provision because the volume of
letters sent by Allied indicates a lack of necessary procedural
safeguards. Defendant disagrees and moves for summary judgment.
A. Section 1692g: Overshadowing and Contradicting Language
Plaintiff's primary contention is that the Collection Letter
contradicts or otherwise overshadows Plaintiff's right to dispute
and verify a debt in accordance with 15 U.S.C. § 1692g(a). In
particular, Plaintiff argues that the Collection letter
contradicted or otherwise overshadowed Plaintiff's right to
dispute and verify his debt. (Pl. Memo. in Op. to Def. Mot. for
Summ. J., at 5).
The Collection Letter here mirrors Judge Posner's approach in
Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997), if not in
style, in substance. It contains the elements necessary to
apprise the debtor of his rights, while not concealing any of the
possible options available to settle the debt. The Collection
Letter clearly articulates that Plaintiff owes Providian
$1,560.71 and suggests one method to resolve the matter: "Your
account is currently scheduled to be listed with a national
credit bureau, contact use for acceptable arrangements." (Compl.
Compl. Ex. A, Ltr. dated Jul. 13, 2004, from Allied to Michael
Acheampongtieku.) Two paragraphs later, the Collection Letter
notifies Plaintiff of his right to dispute the debt within 30
[I]f you notify this office in writing within 30 days
from receiving this notice that you dispute the
validity of this debt or any portion thereof, this
office will obtain verification of the debt . . . and
mail you a copy of such . . . verification.
(Collection Letter, at ¶ 5.) Such language is in the spirit of
Section 1692g and the approach taken in Bartlett; it is
unreasonable to read such statements as ambiguous. The language
neither requires payment by a certain time nor indicates that
legal action will be taken prior to expiration of adequate time
allotted to dispute the debt. Rather, the Collection Letter
simply requests that the debtor contact Allied. See, e.g.,
Savino, 164 F.3d at 85 (concluding that language containing a
telephone number is not enough to be a violation of the FDCPA);
see also Lerner v. Forster, 240 F. Supp. 2d 233
(E.D.N.Y. 2003) (stating, "it does not follow that simply because
a Collection Letter instructs a consumer to contact a debt
collector that the validation notice is necessarily overshadowed or contradicted."). Moreover, the letter
does not have features that demonstrate overshadowing, such as
differences in typeface and size from the rest of the letter, or
any "ominous language such as immediate payment or immediate
attention." Johnson, 2004 WL 540459, at *5 (S.D.N.Y. Mar. 17,
2004) (internal quotations omitted).
Accordingly, there is no indication that repayment, and
repayment only, would resolve the dispute; thus, the language
does not violate Section 1692g.
B. Section 1692e: False, Deceptive or Misleading
Plaintiff also claims that the Collection Letter includes false
and misleading representations in violation of Section 1692e.
(Compl. ¶ 17.) In particular, Plaintiff claims that the
Collection Letter violates Section 1692e(8) because it assures
"the consumer that absent payment [Allied] will report the
nonpayment without regard to the consumer's right to verification
and right to dispute the debt." (Compl. ¶ 18.)
The language of the Collection Letter, however much Plaintiff
would like it otherwise, is clear and unambiguous. The Debtor is
informed of his right to challenge the debt ("[u]nless you notify
this office"), the length of time with which the debtor has to
challenge ("within 30 days after receiving this notice"), and the
consequences ("this office will assume this debt is valid").
(Compl. Ex. A, Ltr. dated Jul. 13, 2004, from Allied to Michael
Acheampongtieku) (emphasis omitted). As already noted, the
Collection Letter neither threatens to report the information to
a credit bureau without providing Plaintiff a chance to
meaningfully dispute the debt nor includes an unfair deadline.
See Goldman v. Cohen, No. 01 Civ. 5952, 2004 WL 2937793, at
*2 (S.D.N.Y. Dec. 17, 2004). In particular, the language "[y]our
account is currently scheduled to be listed," when read in
conjunction with the 30-day verification provided two paragraphs
later, while it could be clearer, cannot be reasonably construed
to imply that a debt would be reported without Plaintiff having
an opportunity to dispute it. (Compl. Ex. A, Ltr. dated Jul. 13,
2004, from Allied to Michael Acheampongtieku.) Plaintiff's claim
in this instance is doubly deficient as he acknowledges that
Allied did not report the debt to any credit bureau. (Aff.
Swedberg, at ¶ 9; Pl. Mem. of Law in Op. to Summ. J. at 6.) Since
Providian, not Allied, allegedly listed the debt to the credit
bureau, the letter was neither false, misleading, nor deceptive.
Plaintiff's claim that the letter threatens legal action and
deprives Plaintiff of a right to verify and dispute the claim is
without merit. However, while it is well settled that the FDCPA principally
targets collection agencies, the statute does not shield
creditors from liability.*fn2 As part of the relationship
between collection agencies and creditors, collection agencies
are required to act in accordance with the FDCPA, and creditors
are duty-bound to abide by the parameters of collection agencies'
communications with debtors. While Allied's collection letter
abided by the FDCPA, the thirty day time period provided to
debtors to dispute the validity of the debt require both the
collection agency and the creditor to cease any debt collection
activity during that time. The creditors and collection agencies
shall, in future contracts, provide explicit warnings as to this
prohibited activity and their potential consequences. Such
language was apparently absent here.
C. Section 1692e: Actions by Providian
Assuming arguendo that the Collection Letter violated the
FDCPA, Allied maintains that any misstatements were mistakes and
it is entitled to the bona fide error protection and, therefore,
as a matter of law, Allied is not liable under the statute.
The FDCPA affords debt collectors an affirmative defense called
the bona fide error defense. See 15 U.S.C. § 1692k(c). In
accordance with Section 1692k(c):
A debt collector may not be held liable [under the
FDCPA] if the debt collector shows by a preponderance
of evidence that the violation was not intentional
and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably adapted to
avoid any such error.
15 U.S.C. § 1692k(c); Fedotov v. Peter T. Roach & Assoc., P.C.,
354 F. Supp. 2d 471
, 474 n. 2 (S.D.N.Y. 2005) (same); see
also Russell v. Equifax, 74 F.3d 30, 33-34 (2d Cir. 1996).
Allied need not demonstrate that the procedures be fool proof,
but "rather, it only requires reasonable precaution." Kort v.
Diversified Collection Serv., Inc., 394 F.3d 530
, 539 (7th Cir.
2005) (citation omitted); Pipelines v. Credit Bureau of
Lockport, Inc., 886 F.2d 22
, 27 (2d Cir. 1989) (holding that the
bona fide error defense is available only if violation was (1)
unintentional and (2) the error occurred despite the existence of
procedures reasonably designed to prevent it). Allied's collection letter procedures are undisputed. First,
the "proposed letter was reviewed and revised (as necessary) by
an Allied compliance employee, to ensure compliance with
applicable law, including the FDCPA." (Aff. Swedberg, at ¶ 7.)
After the Collection Letter was sent to an outside vendor for
formatting and preparation for use, the Collection Letter was
returned to Allied, and "an Allied compliance employee and a
software engineer responsible for entering the letter into
production then reviewed the proposed letter again." (Aff.
Swedberg, at ¶ 7.) Only after this second review was the
Collection Letter entered into production and sent. (Aff.
Swedberg, at ¶ 7.) With regard to the particular collection
letter received by the Plaintiff, it appears that "after the
[Collection] Letter was entered into the operating system for
use, an employee not involved in any of the compliance reviews
changed the [Collection] Letter, so that the complained of
language was added to the [Collection] Letter."
All told, the Collection Letter was reviewed twice before it
was distributed. While the Collection Letter apparently should
have been checked a third time, the law does not require every
possible precaution but, rather, reasonable procedures. See
e.g., Kort, 394 F.3d at 539 (citation omitted) (holding that
the FDCPA "does not require debt collectors to take every
conceivable precaution to avoid errors; rather, it only requires
In addition, as opposed to Johnson v. Equifax, where I denied
defendant's motion for summary judgment based on a bona fide
error defense because the procedures "were clearly inadequate
given the numerous errors and violations of the FDCPA," 2004 WL
540459, at *9, here, Plaintiff points to the inadvertent
inclusion of two limited sentences in letters sent to debtors
owing money to a specific client of Allied. Indeed, Plaintiff
does not even suggest that the inclusion of the language was
intentional and fails to contest in its Rule 56.1 statement that
there were reasonable procedures in place. To the contrary,
Plaintiff fails to produce a scintilla of evidence to support the
conclusory allegations contained in the Complaint, or refute the
reasonableness of Allied's safeguard procedures. See Shapiro
v. Haenn, 222 F. Supp. 2d 29, 44 (D.Me. 2002) (holding that
"because Defendant . . . has produced evidence that satisfies . . .
his bona fide error defense, and Plaintiff has failed to raise
evidence from which a reasonable jury could find to the contrary,
Defendant . . . is entitled to summary judgment on Plaintiff's
FDCPA claims.") Allied's affidavits and evidence establish that
procedural safeguards in place at the time the Collection Letter
was sent were adequate and any questionable language was
unintentional. Accordingly, Allied's affidavits and evidence establish that
procedural safeguards in place at the time the Collection Letter
was sent were adequate, any questionable language was
unintentional, and Plaintiff's claim that Allied violated Section
1692e is unavailing.
For the foregoing reasons, Defendant's Motion for Summary
Judgment is GRANTED. The Clerk of the Court is instructed to
close this motion and remove this case from my docket.
IT IS SO ORDERED.