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Stair v. Thomas & Cook

September 23, 2008

WILLIAM F. STAIR, BY AND THROUGH HIS APPOINTED POWER OF ATTORNEY DEAN SMITH, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
THOMAS & COOK AND RODMAN L. COOK, DEFENDANTS.



The opinion of the court was delivered by: Hon. Jerome B. Simandle

OPINION

Plaintiff filed this action on behalf of himself and others similarly situated, alleging that a debt collection letter that he received from Defendants violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq. Presently before the Court is Plaintiff's motion for class certification and for summary judgment, in which Plaintiff also moves for an award of attorney's fees [Docket Item 24]. For the reasons set forth below, the Court will grant Plaintiff's motion for class certification and for summary judgment as to the issues of liability and damages, but will deny Plaintiff's request for attorney's fees as premature, without prejudice to renewal.

I. BACKGROUND

A. Facts

This action arises out of debt collection letters that Defendants mailed to Plaintiff*fn1 and 227 other individuals between September 20, 2005 and September 20, 2006. (Doherty Cert. Ex. 1.) The individually named Defendant in this case, Rodman L. Cook, Esq., is an attorney employed by Defendant business organization Thomas & Cook. (Compl. ¶ 3.) According to Plaintiff, Defendants engage regularly in the practice of consumer debt collection. (Id. at ¶ 6.)

On July 13, 2006, Defendants mailed Plaintiff a letter printed on Thomas & Cook letterhead (the "July 2006 letter") pertaining to a debt that Plaintiff allegedly owed to Underwood Memorial Hospital ("UMH"). (Doherty Cert. Ex. 1.) The body of the letter contains four paragraphs which read as follows:

The above matter has been turned over to us for collection. There is due upon this account the sum of $2,557.00.

Before instituting suit upon this debt, we thought it advisable to offer you this opportunity of making payment without coercion. 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 the 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 and mail you a copy of such 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. Any information will be used for that purpose.

If you would save yourself the annoyance and expense of legal action, kindly send us the amount due.

Let us hear from you before July 27, 2006. (Doherty Cert. Ex. 1.) On August 4, 2006, Mr. Cook filed a lawsuit in the Superior Court of New Jersey against Mr. Stair on behalf of UMH in order to collect the debt. (Smith Cert. Ex. 5-c.) Plaintiff received the summons and complaint for the Superior Court lawsuit on August 18, 2006. (Compl. ¶ 8.)

Between September 20, 2005 and September 20, 2006, Defendants sent to 227 individuals similar debt collection letters. (Doherty Cert. ¶ 4.) The parties do not dispute that the contents of these letters were identical in all relevant respects to the letter mailed to Plaintiff--while the individual letters contained different names, debt amounts, and dates, each letter provided the same two-week response window while also purporting to afford the recipient thirty days to dispute the debt. (Id.)

B. Procedural History

On September 20, 2006, Plaintiff, through his appointed power of attorney Dean Smith, filed his Complaint in this action, alleging on behalf of himself and the similarly situated recipients of Defendants' debt collection letters that the letters violated various provisions of the FDCPA, including 15 U.S.C. § 1692g. (Compl. ¶¶ 9-13.) Section 1692g requires that debt collectors provide certain information in writing to a consumer within five days of the "initial communication" with the consumer, and "mandates the debt collector to cease all collection efforts if the consumer provides written notice that he or she disputes the debt or requests the name of the original creditor until the debt collector mails either the debt verification or creditor's name to the consumer." Wilson v. Quadramed Corp., 225 F.3d 350, 354 (3d Cir. 2000) (citing 15 U.S.C. § 1692g(b)). Defendants moved for summary judgment, arguing that the letter they mailed to Plaintiff complied with the notice requirements set forth in section 1692g.

In its February 7, 2008 Opinion and Order, the Court denied Defendants' motion for summary judgment. (Docket Items 20 and 21.) The Court first explained: In addressing whether a debt collection letter comports with the Act's notice provisions, the Court of Appeals for the Third Circuit has been clear that "statutory notice must not only explicate a debtor's rights; it must do so effectively." Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir. 1991); see also Wilson, 225 F.3d at 354. The effectiveness of a collection letter's provision of notice is to be "interpreted from the perspective of the'least sophisticated debtor.'" Graziano, 950 F.2d at 111. Applying this standard, courts have held that where the statutory notice in a debt collection letter is "overshadowed," Swanson v. Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1225 (9th Cir. 1988), or "contradicted by accompanying messages from the debt collector," Graziano, 950 F.2d at 111, such notice has not been provided effectively within the meaning of 15 U.S.C. § 1692g. (Docket Item 20 at 8-9.)

The Court then held that, under this "least sophisticated debtor" standard, the explication of section 1692g rights in Defendants' letter to Plaintiff was contradicted and undermined by the letter's remaining contents:

The Court [finds]... that the statutory notice provisions in the July 2006 letter are sufficiently contradicted by its remaining contents that the least sophisticated debtor would harbor serious doubts as to his ability to dispute or verify the debt within thirty days. Foremost among the Court's concerns regarding the likelihood that an unsophisticated debtor would misunderstand his rights upon reading the letter are the confusing timelines the letter presents. In the absence of its final sentence--"Let us hear from you before July 27, 2006"--the letter would make clear that the recipient risks "the annoyance and expense of legal action" and other "coercion," but would also inform the recipient of his rights under 15 U.S.C. § 1692g. The final sentence, however, undermines the significance of the section 1692g notice, in that it announces a deadline far short of the thirty-day window but does nothing to reconcile this shorter time frame with the preceding statement of the debtor's rights. The Court is convinced that an unsophisticated debtor, confronted with repeated threats of litigation and a two-week deadline, "would be induced to overlook his statutory right to dispute the debt within thirty days." Graziano, 950 F.2d at 111. (Id. at 11-12) (some internal citations omitted).

Finally, the Court noted, in light of the letter's apparent noncompliance with the FDCPA, that Plaintiff, rather than Defendants, appeared to be entitled to judgment as a matter of law on the question of liability. (Id. at 15.) Recognizing, however, that "great care must be exercised to assure that the original movant has had an adequate opportunity to show that there is a genuine issue and that the opponent is not entitled to judgment as a matter of law," 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 2720 (3d ed. 2001), the Court afforded Defendants the opportunity to submit evidence in opposition to the entry of summary judgment in Plaintiff's favor as to the issue of liability. (Docket Item 20 at 15.)

Shortly after the Court issued its Opinion and Order denying Defendants' motion for summary judgment, Plaintiff filed its motion for class certification and summary judgment [Docket Item 24], as amended to include a different form of proposed order [Docket Item 25], to the merits of which the Court now turns.

II. DISCUSSION

Plaintiff has moved to certify as a class the 227 consumers who received Defendants' form letter between September 20, 2005 and September 20, 2006, and has moved for summary judgment as to liability and damages for this class's claims. As the following discussion makes clear, the viability of both aspects of Plaintiff's motion turns in part on the resolution of a threshold legal question regarding the applicability of section 1692g of the FDCPA to the initial communications of so-called subsequent debt collectors. The Court addresses this matter at the outset before addressing the merits of Plaintiff's motion for class certification and summary judgment.

A. Applicability of Section 1692g to the Initial Communications of Subsequent Debt Collectors

In opposing Plaintiff's motion, Defendants argue that summary judgment as to Mr. Stair's claim should not be entered against them because although the July 2006 letter was Defendants' "initial communication with [Mr. Stair] in connection with the collection of [his alleged] debt," § 1692g, the fact that they were not the first debt collectors to communicate with Mr. Stair about this debt relieves them of any obligation to comply with the FDCPA's notice and validation requirements.*fn2 For the reasons now explained, the Court rejects this argument and holds that section 1692g applies to the initial communications of subsequent debt collectors like Defendants.

Congress enacted the FDCPA "to eliminate abusive debt collection practices which contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy." Wilson, 225 F.3d at 354 (quoting Miller v. Payco-General American Credits, Inc., 943 F.2d 482, 483-84 (4th Cir. 1991) (in turn quoting 15 U.S.C. §§ 1692a and 1692e)). In furtherance of this goal of eliminating certain debt collection practices, the FDCPA requires that

[w]ithin five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing--(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed; (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;

(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 and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. § 1692g(a). Section 1692g(b) further provides that

[i]f the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. § 1692g(b).

In determining whether section 1692g applies to the initial communications of subsequent debt collectors, the Court's starting point, of course, is the statutory text. "In matters of statutory interpretation, the plain meaning of statutory language is often illuminated by considering not only the particular statutory language at issue, but also the structure of the section in which the key language is found, the design of the statute as a whole and its object." United States v. Manzella, 475 F.3d 152, 157 (3d Cir. 2007) (internal quotations and citations omitted). The Court first notes, as have other courts, that the "language [of section 1692g(a) itself] does not specify whether each subsequent debt collector on each separate debt must provide a validation notice." Turner v. Shenandoah Legal Group, P.C., No. 06-045, 2006 WL 1685698, at *9 (E.D. Va. June 12, 2006). Whether the "initial communication" in section 1692g(a) refers to each debt ...


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