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Gareth D. Wood, In His Own Behalf and On Behalf of All Others v. Capital One Services

September 20, 2012


The opinion of the court was delivered by: Neal P. McCurn, Senior District Judge


I. Introduction

Presently before the court in this Fair Debt Collection Practices Act case are motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure by defendant Capital One Services, LLC ("COS"), and by defendant, NCO Financial Systems, Inc. ("NCO"). Plaintiff, Gareth D. Wood ("Wood"), opposes each defendant's motion and seeks summary judgment against NCO by cross motion.*fn1 Each defendant replies. Also pending is Wood's motion for class certification, which is also fully briefed. Decision regarding the pending motions is based solely on the submitted papers, without oral argument.

II. Procedural Background

Wood originally commenced this putative class action against Capital One Bank (USA), N.A. ("Capital One"), COS and NCO alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq., ("FDCPA") and New York General Business Law § 349 ("GBL § 349").*fn2 A motion to dismiss the complaint by the Capital One defendants was granted as against Capital One, but denied as against COS. NCO did not file a motion to dismiss.

Thereafter, the parties engaged in extensive discovery, during which time the magistrate judge assigned to this case was called upon repeatedly to resolve disputes among them. During the discovery period, Wood filed a motion to certify class, which has been fully briefed and is still pending. While an appeal of one of the magistrate judge's discovery orders was pending, each defendant filed a motion for summary judgment. When deciding the appeal, the court denied the motions for summary judgment without prejudice to renew at the close of discovery, with permission of the magistrate judge. Having received such permission, the pending motions for summary judgment were filed and have now been fully briefed.

III. Standard of Review

A motion for summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The movant has the initial burden to show the court why it is entitled to summary judgment. See Salahuddin v. Goord, 467 F.3d 263, 272 (2d Cir. 2006) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548 (1986)). If the movant meets its burden, the burden shifts to the non-movant to identify evidence in the record that creates a genuine issue of material fact. See id., at 273 (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348 (1986)).

When the court is deciding a motion for summary judgment, it must resolve all ambiguities and draw all reasonable inferences in the non-movant's favor. See Vermont Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598 (1970)). Where, as here, a court is considering multiple motions for summary judgment, each party's motion must be evaluated "on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Byrne v. Rutledge, 623 F.3d 46, 53 (2d Cir. 2010) (quotation and citation omitted).

IV. Factual Background

The following facts are not in dispute, unless otherwise noted.

In December 2007, Wood opened a credit card account ("the Account") with Capital One. Under an existing arrangement with Capital One, COS provided all account-related functions necessary to service the Account from the moment it was opened to the present. These functions include transmitting monthly account statements, sending other account-related correspondence to Wood, responding to telephonic inquiries from Wood, and deciding whether to assign collection responsibilities to a third-party debt collector, such as NCO. COS performs these functions for all Capital One credit card accounts.

Wood used the Account for the purchase of goods and services. Under the terms of his cardholder agreement with COS, Wood was obligated to pay back COS through minimum monthly payments. He failed to meet his obligation and became delinquent in his payments to COS in June 2009. Between June and September 2009, COS sent Wood at least two letters notifying him of his delinquent status and requesting payment. By October 6, 2009, Wood's account was 120 days delinquent. His balance was $1,731.35.

When an account becomes seriously delinquent, as was the case with Wood's account, COS may assign collection responsibility for the account to a third-party debt collector. During the period when collection responsibility is assigned to the debt collector, COS is still performing functions in connection with the account. COS will continue to send statements and other correspondence to the account holder, it will monitor payment status on the account, and it will periodically assess whether collection responsibility should be returned to COS or transferred to another third-party debt collector.

During any period when collection responsibility for an account has been transferred to a third-party debt collector, COS ceases all telephonic contact with the account holder. COS will not itself call to attempt to collect the amount due, and if the account holder calls any COS telephone number -- i.e., the telephone number on an account statement, the telephone number on the back of the credit card, or the telephone number on a collection letter -- COS will transfer the call to the third-party debt collector with collection responsibility for the account. If a cardholder whose account is delinquent and has been assigned to a third-party debt collector calls a COS customer service number, COS's systems will answer the phone, and an automated message will state, "Welcome to Capital One. Please say or enter your 16-digit account number." After the cardholder has entered the account number, COS's computer system will recognize that collection responsibility for the account has been transferred to a third-party debt collector, and the call will be automatically transferred to that third-party debt collector. It is expected that the customer service representative for the third-party debt collector who answers the call will identify the name of the agency, make other disclosures required by the State and federal law, and then attempt to reach an agreement on a payment plan with the cardholder.

COS expects that, immediately upon being assigned collection responsibility for a COS account, a third-party debt collector will send the cardholder a written notice that identifies itself as a debt collector and contains the disclosures otherwise required by Section 809(a) of the FDCPA. It is undisputed that NCO sent such a letter here.

In September 2009, Capital One began sending "Pre-Legal Notices," identical to one sent to Wood, to cardholders whose accounts were more than 120 days delinquent and whose outstanding balance exceeded COS's threshold for legal action if the account charged off. COS serviced each of these accounts in accordance with its standard practice, but for some of these accounts, COS assigned collection responsibility to one of the several third-party debt collectors, including NCO, that COS uses.

On October 8, 2009, COS generated the Pre-Legal Notice ("the Notice") it would send to Wood. The Notice is titled, "PRE-LEGAL NOTICE" and appears on Capital One letterhead, which includes the trademarked logo of the Capital One companies. Capital One is identified as the creditor. The Notice includes the balance and minimum payment due, Wood's account number, and that the account is "Serviced by: CAPITAL ONE." Ex. 1 to Decl. of Lewis F. Powell III, Jul. 12, 2012, Dkt. No. 105-2. The text of the letter reads as follows:

Dear Gareth D. Wood:

Your account is seriously delinquent and meets the guidelines for legal action if payment is not made toward the amount shown above.

Lawsuits can have serious consequences. If a judg[]ment is obtained against you, whatever legal actions are deemed advisable to enforce it will be taken.* Judg[]ments are a matter of pubic record, so landlords, lenders and potential employers can see judg[]ments against you. This could make it more difficult for you to rent an apartment, borrow money or even get a job in the future.

No decision has been made to sue you yet, so you still have options:

You can pay $259.00 by your statement due date to bring your account current.

Or, you can call to learn about possible flexible payment options and special offers.

To see what your options are or to make a payments, call 1-800-955-6500 or visit ...

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