Court: District Court, N.D. California; June 7, 2016; Federal District Court
The court partially granted and partially denied Defendant Asset Recovery Solutions, LLC’s motion for summary judgment while denying Plaintiff Meena Arthur Datta’s motion for summary judgment. Plaintiff claims that Defendant, in its debt collection efforts, sent a collection letter in a glassine window envelope, which allegedly exposed her name, address, account number, and a bar code to third parties during transit. Defendant contests these claims, asserting that the number and bar code do not identify Plaintiff. The case stems from a consumer debt incurred by Plaintiff with HSBC Bank Nevada, N.A., which was assigned to Defendant for collection.
Plaintiff filed her initial complaint on January 13, 2015, later amending it to assert violations of the Fair Debt Collection Practices Act (FDCPA) and California’s Rosenthal Fair Debt Collection Practices Act (RFDCPA). She sought class certification for a group of individuals who received similar collection letters from Defendant. The court granted class certification on March 18, 2016, and the certified class consisted of individuals who received collection letters sent in a specific format between a defined time period. Following motions for summary judgment by both parties in April 2016, the court reviewed the submissions and legal standards applicable to the case. The procedural history includes multiple filings and responses regarding the motions and class-related documents.
Summary judgment is warranted when, after considering evidence in the light most favorable to the nonmoving party, there are no genuine issues of material fact, allowing the movant to secure judgment as a matter of law. The court, at this stage, does not evaluate credibility or weigh evidence, but assesses whether a genuine factual dispute exists. A material fact is one that could influence the case's outcome, and a genuine dispute arises when sufficient evidence exists for a reasonable trier of fact to rule in favor of the nonmoving party. If evidence is merely colorable or lacks significant probative value, summary judgment may be granted.
The moving party must first highlight parts of the record that demonstrate the absence of a genuine issue of material fact. If the opposing party has the burden of proof at trial, the moving party only needs to indicate the lack of evidence supporting the nonmoving party's claims. Upon meeting this initial burden, the nonmoving party must present specific facts via affidavit or other means showing a genuine issue for trial.
In the case at hand, Defendant submitted a declaration from CEO Steve Fishbein, who detailed his qualifications and familiarity with operational procedures. He contradicted the Plaintiff's assertion that certain characters visible through the envelope window were the Plaintiff's delinquent account number, clarifying they were unique identifiers for tracking returned mail used by Defendant’s letter vendor. Fishbein also explained that the bar code serves a similar tracking purpose and emphasized that Defendant does not disclose customer account information or personal identifying information to third parties.
Plaintiff moved to strike statements made by Fishbein regarding the significance of the reference number and bar code on Plaintiff's envelope, asserting that they are only relevant to Defendant and its letter vendor. Plaintiff also objected to Fishbein's claim that it is not Defendant's practice to disclose customer account information to third parties, arguing these statements violate Federal Rules of Evidence 602 and 701 concerning lay witness testimony. The objections were deemed meritless. Federal Rule of Civil Procedure 56 allows for declarations based on personal knowledge, relevant facts, and competence. Fishbein, as CEO, possesses the necessary familiarity with Defendant's relationships with letter vendors, fulfilling the personal knowledge requirement. His statements are deemed relevant and admissible at trial, as they pertain to the core issue of whether the reference number and bar code represent Plaintiff's delinquent account. Furthermore, even if evidence presented during summary judgment doesn't need to be admissible at trial, Fishbein's declarations meet the criteria of both Rules 602 and 701 based on his firsthand experience. Consequently, Plaintiff's evidentiary objection was overruled.
The summary judgment motions from both parties address two main issues: whether the reference number and bar code on Plaintiff's envelope violate the Fair Debt Collection Practices Act (FDCPA) and the Rosenthal Fair Debt Collection Practices Act (RFDCPA), and whether the display of Defendant's business name, Asset Recovery Solutions, LLC, on the envelope constitutes a violation of these acts. Plaintiff acknowledges that Defendant's liability under the RFDCPA stems from its liability under the FDCPA, as specified in California Civil Code § 1788.17. Therefore, the court will examine both issues in the cross-motions for summary judgment concurrently, recognizing that liability under the RFDCPA is contingent upon liability under the FDCPA.
To establish a claim under the Fair Debt Collection Practices Act (FDCPA), a plaintiff must demonstrate four elements: (1) the plaintiff is a consumer; (2) the debt is related to a transaction for personal purposes; (3) the defendant is a debt collector; and (4) the defendant violated the FDCPA. In this case, the defendant concedes the first three elements but disputes the fourth. A violation occurs if a debt collector's communication is likely to deceive or mislead a "least sophisticated debtor." The plaintiff alleges a violation of 15 U.S.C. § 1692f(8), which prohibits any identifying language or symbols on envelopes, except for the debt collector’s address. The plaintiff claims that a collection letter contained a reference number and barcode that identify them, violating this provision.
Courts have recognized a "benign language exception," which states that neutral information unrelated to a debtor's status does not incur FDCPA liability, as punishing benign language does not further the statute's consumer protection goals. Previous rulings, including those from the Eighth and Fifth Circuits, have held that innocent markings or phrases on envelopes do not constitute violations of § 1692f(8). For example, the Eighth Circuit noted that strict interpretation could inadvertently ban harmless markings, while the Fifth Circuit explained that the legislative intent behind § 1692f(8) was to prevent embarrassment, not to restrict all potentially identifying information. The FTC has also indicated that debt collectors can use neutral notations on envelopes without violating the FDCPA, as long as those notations do not suggest the envelope relates to debt collection. Thus, the markings in question, such as "priority letter," are not deemed threatening or embarrassing, and do not violate the FDCPA.
Numerous courts, including the district court in Lindbergh v. Transworld Systems, Inc., have established that 15 U.S.C. § 1692f(8) includes a benign language exception, which prevents debt collectors from using symbols indicating debt collection on envelopes but does not prohibit neutral or benign language. In Lindbergh, the court dismissed the FDCPA claim because the plaintiff failed to demonstrate that the envelope's wording, "TRANSMITTAL," was associated with debt collection. Similarly, in Masuda v. Thomas Richards, Co., the court ruled that terms like "PERSONAL" and "CONFIDENTIAL" did not violate the FDCPA. The trend among district courts, including those in California, supports the existence of this benign language exception, as seen in Voris v. Resurgent Capital Servs., L.P.
The Court finds that the benign language exception applies in this case regarding the reference number and bar code in question. The defendant clarified that the reference number is not the original creditor's account number but a unique identifier assigned by its letter vendor for undeliverable mail tracking. The bar code serves a similar internal tracking purpose. Evidence supporting the defendant's position includes a declaration from Fishbein, which confirmed that the reference number and bar code are solely for internal tracking and do not identify the plaintiff as a debtor. The plaintiff has not contested this assertion.
The reference number in this case, ARSL/1/647509 694009370925 18361/000012983/45, is visible through the glassine window envelope, while the plaintiff's delinquent account number, 5156250129573855, is not visible on the envelope and can only be seen within the letter itself. During her deposition, the plaintiff confirmed that her account number ends in "3855" and did not establish any connection between the reference number and her delinquent account. She speculated that the reference number was created by the defendant but provided no factual evidence to support this belief. Legal precedent supports the defendant's position, as no court has found liability under the Fair Debt Collection Practices Act (FDCPA) based solely on symbols or characters on an envelope that do not identify the recipient as a debtor. The case Gardner v. Credit Management LP exemplifies this, where the court ruled that a string of characters did not indicate debt to a casual observer. Similarly, in McShann v. Northland Group, the court concluded that an internal reference number was not recognizable as a debt identifier. The Northern District of Illinois in Gonzalez v. FMS, Inc. also dismissed an FDCPA claim based on an internal reference number, reasoning that an unsophisticated consumer would not associate it with a delinquent debt. The plaintiff has not provided evidence that the reference number had any meaning beyond the defendant.
Gardner, McShann, and Gonzalez align with the benign language exception in legal precedent. The Plaintiff contests the evidence and legal rationale by arguing for adherence to the Third Circuit’s ruling in Douglass v. Convergent Outsourcing, which involved the visibility of a delinquent account number through a transparent envelope. In Douglass, the Court found that displaying a delinquent account number and a QR code could identify the plaintiff as a debtor, thus violating the Fair Debt Collection Practices Act (FDCPA). The Third Circuit reversed a lower court's decision, emphasizing the potential harm of disclosing such information.
In contrast, the present case does not involve the disclosure of the Plaintiff's delinquent account number or debt amount; the reference number and barcode are solely for internal tracking by the Defendant’s vendor. Evidence presented by the Plaintiff's counsel indicates that the scanned barcode reveals only part of the reference number, without identifying any debt-related information. The Plaintiff has not demonstrated that the barcode or reference number could identify her as a debtor, rendering the concerns raised in Douglass inapplicable. Additionally, other courts have disagreed with Douglass regarding the potential for FDCPA liability based on the presence of a delinquent account number alone. Ultimately, since the reference number and barcode do not reveal the Plaintiff's delinquent account or debt status, there is no basis for liability under the FDCPA in this case.
Displaying a delinquent account number without accompanying information about the debt amount or debtor status does not generally trigger liability under the Fair Debt Collection Practices Act (FDCPA), as established by various court rulings. In Peres v. Global Credit and Collection, Corp., the court criticized a prior assertion that account numbers could harm consumers, emphasizing that such numbers alone do not indicate the nature of the communication—whether debt collection or unrelated offers. The court found that an account number is merely a string of digits with no inherent meaning regarding debt. Similarly, in Brooks v. Niagara Credit Solutions, Inc., the court rejected FDCPA liability for displaying an account number, referencing the Tenth Circuit’s decision in Marx v. General Revenue Corp., which deemed internal account numbers as non-informative identifiers. The Western District of Missouri also dismissed an FDCPA claim based on the visibility of a debtor's name and account number on an envelope, clarifying that the FDCPA aims to prevent identifying recipients as debtors rather than disclosing internal identifiers. Lastly, Schmid v. Transworld Systems, Inc. reinforced that a meaningless alphanumeric string does not convey debt collection information, aligning with the FDCPA's intent to protect consumer privacy without restricting non-indicative symbols. Overall, the courts maintain that without additional contextual information, delinquent account numbers do not violate consumer privacy protections established by the FDCPA.
The debt collection envelope in this case does not disclose the Plaintiff's delinquent account number, debt amount, or debtor status, differing from the situation in Douglass. The reference number and bar code used are solely for internal tracking by the Defendant's letter vendor and are considered benign under the Fair Debt Collection Practices Act (FDCPA), which aims to protect consumers from improper conduct. The Plaintiff's assertion that part of the reference number includes digits from her Social Security number is unsubstantiated; during her deposition, she initially stated there was no relationship, later admitting three digits coincided with her Social Security number after a recess. However, the overall reference number is nearly fifty characters long, making such overlap coincidental and not indicative of identity disclosure. The court references Johnson v. NCB Collection Services, where a similar claim regarding encoded debt information was rejected, emphasizing that the information was not decipherable by an uninformed individual. Consequently, the court supports the Defendant's position, indicating that the envelope's content does not violate the FDCPA, leading to a summary judgment in favor of the Defendant.
Neither the original complaint nor the First Amended Complaint (FAC) mentions any overlap between digits in the reference number and the Plaintiff's Social Security number, nor do they reference "Social Security." The theory involving the Social Security number was introduced only after Defendant's counsel inquired about it during the Plaintiff's deposition. Additionally, the Plaintiff has not provided legal authority to support the claim that displaying three digits of a nine-digit Social Security number within a longer string violates the Fair Debt Collection Practices Act (FDCPA). Consequently, the Court declines to establish new precedent for liability under the FDCPA in this case. Therefore, the Defendant's motion for summary judgment regarding the display of the reference number and barcode on the debt collection envelope is granted, while the Plaintiff's motion on the same issue is denied.
Regarding the display of "Asset Recovery Solutions, LLC," the Plaintiff argues that this name violates 15 U.S.C. § 1692f(8) since it does not fit within the exceptions allowing a debt collector to use their business name. However, there is no precedent in the Ninth Circuit imposing liability for simply displaying a business name on a debt collection envelope. The court referenced the case Mathis v. Omnium Worldwide, where a similar argument was rejected, and the court held that the name "Estate Recoveries, Inc." did not indicate a debt collection business. This aligns with findings from other circuits, such as in Strand v. Diversified Collection Services, which similarly found no liability for displaying the debt collector's name. The majority of courts support the notion that the mere presence of a debt collector's name on an envelope does not violate the FDCPA.
The term "Revenue Department" in a return address could imply a financial transaction but does not clearly indicate that the correspondence is from a debt collector. The designation does not differentiate the letter from other legitimate communications, such as billing statements for current debts. Consequently, using "Revenue Department" does not constitute an abusive practice under the Fair Debt Collection Practices Act (FDCPA). Recent court interpretations of 15 U.S.C. § 1692f(8) suggest liability arises only when a name clearly indicates it is from a debt collector. In Davis v. MRS BPO, LLC, the court found that the return address did not violate the FDCPA, as it complied with postal regulations unless it was obvious that the sender was a debt collector. Similarly, in Johnson v. I.C. System, Inc., the court dismissed claims against a company whose name was widely recognized as a debt collector, emphasizing that the FDCPA allows for a return address on an envelope as long as it does not clearly identify the sender as a debt collector. The plaintiff's reliance on out-of-circuit cases, Rutyna and Keasey, is insufficient, as those cases found specific names indicating debt collection practices, unlike the current context. The Ninth Circuit has not adopted the findings from these cases, and previous interpretations, such as in Masuda, supported a narrow reading of § 1692f(8), allowing benign language on correspondence.
Masuda's complaint regarding the language used by the defendant does not present the FDCPA issues raised in Rutyna. The court concludes that a reasonable jury could find for either party based on the case facts, referencing Riley v. Giguiere. It compares the case to Mathis and NCB Collection Services, where the names used did not violate the FDCPA. Although the defendant's name includes "Recovery" and "Asset," suggesting a financial relationship, it does not definitively indicate a debtor-creditor relationship. Conversely, a jury could interpret these terms as indicative of debt collection activity. The district court in Davis v. Baron’s Creditors Service Corp. also faced a similar situation, ruling that the designation could lead an unsophisticated consumer to believe the entity was involved in debt collection, but this ambiguity was insufficient for summary judgment. The court emphasizes that the statute permits a debt collector's name unless it clearly indicates they are in the debt collection business. As the name in question is not as explicit as in Rutyna, the determination of a violation under the FDCPA is left to the jury. Although the Ninth Circuit hasn't specifically ruled on the submission of 15 U.S.C. 1692f(8) disputes to a jury, district courts in the circuit have allowed such cases to proceed to a jury trial. The court denies both parties' motions for summary judgment regarding the name's implications under the FDCPA and RFDCPA. However, it grants the defendant's motion concerning the bar code and reference number. In conclusion, the court denies both motions for summary judgment related to the name but grants the defendant's motion regarding the bar code and reference number violations.
Plaintiff initiated a lawsuit against Asset Recovery Solutions, LLC and Oliphant Financial, LLC, which was subsequently dismissed from the case on March 9, 2015. The excerpt references 15 U.S.C. § 1692f(8), which prohibits debt collectors from using unfair means to collect debts, specifically stating that debt collectors cannot use any language or symbols on envelopes that indicate they are in the debt collection business, except for their address or a business name that does not imply such activity. The Court noted that the Plaintiff had the opportunity to depose the Defendant's Rule 30(b)(6) witness but did not do so, despite expressing intentions to conduct the deposition in prior case management statements. By the close of discovery on March 31, 2016, the deposition had not been conducted. During the April 7, 2016 case management conference, Plaintiff's counsel voiced concerns about the potential increase in attorney's fees associated with the deposition, while also acknowledging a lack of excuse for the oversight and attributing it to a hope for settlement. The excerpt also discusses case law regarding FDCPA liability, highlighting that the only court outside the Third Circuit to find such liability based on the Douglass case was the district court in Adkins v. Financial Recovery Services, Inc., which found Douglass persuasive despite other courts in the Northern District of Illinois and elsewhere disagreeing with it, though Adkins provided no independent analysis for its conclusion.
