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Brown v. Card Service Center

September 29, 2006

ELIZABETH BROWN, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, FORMERLY KNOWN AS ELIZABETH SCHENCK, APPELLANT
v.
CARD SERVICE CENTER; CARDHOLDER MANAGEMENT SERVICES.



On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 05-cv-0498) District Judge: Honorable William H. Yohn, Jr.

The opinion of the court was delivered by: Fuentes, Circuit Judge.

PRECEDENTIAL

Argued June 1, 2006

Before: AMBRO, FUENTES, and GREENBERG, Circuit Judges.

OPINION OF THE COURT

Seeking to recover what it considered a bad debt, Card Service Center sent Elizabeth Brown a collection letter telling her that unless she made arrangements to pay within five days, the matter "could" result in referral of the account to an attorney and "could" result in "a legal suit being filed." Brown sued, claiming that because Card Service Center had no intention of referring her account to an attorney and no intention of filing a law suit, the letter violates the Fair Debt Collection Practices Act's ban on false, misleading or deceptive communications. The District Court dismissed Brown's suit, concluding that because "[t]he letter neither states nor implies that legal action is imminent, only that it is possible," Brown had failed to state a claim upon which relief could be granted. We disagree, and for the reasons that follow we vacate the District Court's judgment and remand for further proceedings.

I. Background

Card Service Center and Cardholder Management Services (collectively, "CSC") are debt-collection firms. In February of 2004, CSC sent Brown a collection letter (the "CSC Letter") demanding payment of a delinquent credit card balance of $1,874, which it stated was due. The letter threatened referral of Brown's account to CSC's attorney if payment was not made within five days. In relevant part, the letter reads:

You are requested to contact the Recovery Unit of the Card Service Center . . . to discuss your account.

Refusal to cooperate could result in a legal suit being filed for collection of the account.

You now have five (5) days to make arrangements for payment of this account. Failure on your part to cooperate could result in our forwarding this account to our attorney with directions to continue collection efforts.

(JA 1.) Though Brown did not make arrangements for payment on her delinquent account within five days, CSC did not institute a suit or otherwise enlist an attorney to assist with its collection efforts. Rather, Brown's decision not to comply with CSC's request resulted only in her receiving additional debt-collection letters from CSC.

In February of 2005, Brown filed suit against CSC in the United States District Court for the Eastern District of Pennsylvania on behalf of herself and all other similarly situated Pennsylvania consumers. In her complaint Brown alleged that the CSC Letter contained "false and misleading" statements "designed to coerce and intimidate the consumer . . . by false threat" and that the complaint suggested a deadline for debtor action that was "false and overstated." (Amend Compl. ¶¶ 11, 13, 15.) In support of this claim, Brown alleged that the 5-day deadline was illusory because CSC never intended to bring suit against her or to refer her debt--or that of the members of her putative class--to an attorney.

In response to the complaint, CSC filed a motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint for failure to state a claim under the Fair Debt Collection Practices Act (the "FDCPA" or the "Act"), 15 U.S.C. ยง 1692 et seq. The District Court granted the motion without prejudice in June of 2005. The District Court's order dismissing the complaint, which was amended by a second order in August of 2005, granted Brown through the end of September to conduct further investigation so that she might amend her complaint, with the caveat that if she failed to do so, the June ...


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