Peter v. GC Services L.P.

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 01-21027

ELIZABETH PETER,

Plaintiff-Appellant,

VERSUS

GC SERVICES L.P.; DLS ENTERPRISES, INC.; and GC FINANCIAL
CORPORATION,

Defendants-Appellees.

Appeal from the United States District Court
For the Southern District of Texas
October 18, 2002

Before JOLLY, DUHÉ, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

Plaintiff Elizabeth Peter appeals from the district court’s

grant of complete summary judgment in favor of Defendants GC

Services, L.P., DLS Enterprises, and GC Financial Corp. on her

claims alleging violations of various sections of the Fair Debt

Collection Practices Act (FDCPA). Peter claims that a debt

collection letter sent to her by GC Services included false

1
statements which obscured or confused the validation notice

required by 15 U.S.C. § 1692g and which violated 15 U.S.C. § 1692e.

She also alleges that the envelope in which that letter was sent,

which gave the name and address of the Department of Education as

the return address, violated 15 U.S.C. §§ 1692e(1),(14), and f(8).

We agree with the district court’s determination that the

collection letter did not violate the FDCPA. Because we believe

that the envelope violates the FDCPA, however, we reverse the

district court’s grant of summary judgment for Defendants on the

envelope claims, render judgment for Plaintiff, and remand this

case to the district court for proceedings to determine damages.

I.

Plaintiff Elizabeth Peter received a letter dated April 12,

2000 from Defendant GC Services attempting to collect a student

loan in the amount of $2,300 that she allegedly owed the Department

of Education. The letter was two pages long, printed on both sides

of one sheet of paper. The same block print is used throughout the

letter, with no changes in font, and no underlining, bold type, or

other emphases upon any one portion of the letter. The front of

the letter read as follows:

YOUR STUDENT LOAN, WHICH IS IN SERIOUS
DEFAULT, HAS BEEN REFERRED TO GC SERVICES– A
CONTRACTED PROFESSIONAL COLLECTION AGENCY– BY
THE U.S. DEPARTMENT OF EDUCATION (ED). FULL
COLLECTION ACTIVITY WILL CONTINUE UNTIL THIS
ACCOUNT IS PAID IN FULL.

...

2
 THE DEPARTMENT WILL CHARGE YOU FOR THE
EXPENSES INCURRED TO COLLECT THIS ACCOUNT, AS
AUTHORIZED BY THE HIGHER EDUCATION ACT OF
1965, AND YOUR PROMISSORY NOTE(S). THESE
COLLECTION COSTS COULD ADD AS MUCH AS 25% TO
THE AMOUNT NEEDED TO PAY THE ACCOUNT IN FULL.

TO AVOID FURTHER COLLECTION ACTIVITY, YOUR
STUDENT LOAN MUST BE PAID IN FULL. SHOULD YOU
FAIL TO PAY THIS AMOUNT IN FULL, GC SERVICES
WILL REVIEW YOUR ACCOUNT AND MAKE
RECOMMENDATIONS TO THE DEPARTMENT OF EDUCATION
FOR THE MOST EFFECTIVE COLLECTION METHOD
ALLOWABLE UNDER FEDERAL LAW.

...

NOTE: SEE REVERSE SIDE FOR IMPORTANT CONSUMER
INFORMATION.

The reverse side of the letter to which the note referred, in

pertinent part provided:

IF YOU DO DISPUTE THE VALIDITY OF THIS DEBT,
OR ANY PORTION THEREOF, IN WRITING, WITHIN THE
THIRTY (30) DAY PERIOD, WE WILL OBTAIN
VERIFICATION OF THE DEBT OR A COPY OF A COPY
OF A JUDGMENT AND WILL MAIL A COPY OF SUCH
VERIFICATION OR JUDGMENT TO YOU. AT YOUR
REQUEST, IN WRITING, WITHIN THE THIRTY (30)
DAY PERIOD, WE WILL PROVIDE YOU WITH THE NAME
AND ADDRESS OF THE ORIGINAL CREDITOR, IF
DIFFERENT FROM THE CURRENT CREDITOR. THE
DEMANDS FOR PAYMENT IN THIS LETTER DO NOT
REDUCE YOUR RIGHTS TO DISPUTE THIS DEBT, OR
ANY PORTION THEREOF, AND/OR TO REQUEST
VERIFICATION WITHIN THE THIRTY (30) DAY PERIOD
AS SET FORTH ABOVE.

This letter came in an envelope which had in the upper-left

hand corner the following return address:

US Department of Education
P.O. Box 4144
Greenville, TX 75403-4144
Official Business

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 Penalty for Private Use, $300

II.

Plaintiff first appeals from the district court’s grant of

summary judgment to Defendant on her claim that the collection

letter violated the validation notice requirements of § 1692g.

We review the district court’s grant of summary judgment de

novo. Taylor v. Perrin, Landry, deLaunay, and Durand, 103 F.3d

1232, 1234 (5th Cir. 1997). Under Rule 56(c) of the Federal Rules

of Civil Procedure, summary judgment is appropriate where the

moving party is entitled to judgment as a matter of law. FED. R.

CIV. P. 56(c). The moving party must “demonstrate the absence of

a genuine issue of material fact.” Celotex Corp. v. Catrett, 477

U.S. 317, 323 (1986). In considering the motion we must view the

evidence in the light most favorable to the non-moving party.

Matsushita Elec. Indus Co. v. Zenith Radio Corp., 475 U.S. 574,

587-88 (1986). But “the nonmoving party must set forth specific

facts showing the existence of a ‘genuine’ issue concerning every

essential component of its case.” Morris v. Covan World Wide

Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).

Section 1692g requires debt collectors within five days of the

initial communication regarding a debt to provide debtors with

written notice containing the amount of the debt and the name of

the creditor to whom the debt is owed. § 1692g(a)(1)-(2). That

section also requires a written statement to debtors explaining

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that: (1) unless the debtor “disputes the validity of the debt”

within 30 days, the debt collector will assume the debt is valid;

(2) that if the debtor notifies the collector that she is

disputing the debt in writing within the 30 day period, “the debt

collector will obtain verification of the debt [from the

creditor]...and a copy of [the] verification...will be mailed to

the consumer”; and (3) that upon debtor’s request the debt

collector will give him the name and address of the original

creditor, if the original creditor is different from the current

one. § 1692g(a)(3)-(5). If the debtor requests verification of

the debt or information on the original creditor, the debt

collector must “cease collection of the debt...until the [requested

information] is mailed to the consumer.” § 1692g(b). However, the

statute does not require the debt collector to inform the debtor of

the obligation to cease collection under these circumstances.

Compare §1692g(a) with § 1692g(b).

Although the text of § 1692g does not explicitly provide that

the disclosures required by it must be made in a non-confusing

manner, courts have held that the statute implies that the required

disclosures be set forth in a form and within a context that does

not distort or obfuscate its meaning.1 Bartlett v. Heibl, 128 F.3d

1
Circuits have split on the question of from whose perspective
the communication is analyzed in determining whether it is
confusing. Some circuits have adopted the “least sophisticated
consumer” standard, which is a more demanding standard than asking
whether a reasonable consumer would be confused, but one that still
protects against “bizarre or idiosyncratic” interpretations of

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497, 500 (7th Cir. 1997)(citing Avila v. Rubin, 84 F.3d 222, 226

(7th Cir. 1996); Terran v. Kaplan, 109 F.3d 1428, 1431-34 (9th Cir.

1997); Russell v. Equifax A.R.S., 74 F.3d 30, 34-35 (2nd Cir.

1996); Miller v. Payco-General American Credits, Inc., 943 F.2d

482, 484 (4th Cir. 1991)). See also Wilson v. Quadramed Co., 225

F.3d 350, 354 (3rd Cir. 2000). In Bartlett, 128 F.3d at 500, the

Seventh Circuit explained that most cases in which the literal

language of § 1692g is found to be confusing are cases where other

language in the collection letter contradicts, appears to

contradict, or overshadows the mandatory language alerting the

debtor of his or her statutory rights.2

communications. Swanson v. S. Oregon Credit Serv., Inc., 869 F.2d
1222, 1225 (9th Cir. 1989). See also Wilson v. Quadramed Co., 225
F.3d 350, 354 (3rd Cir. 2000); Savino v. Computer Credit Inc., 164
F.3d 1052, 1054 (2nd Cir. 1998); Jeter v. Credit Bureau, Inc., 760
F.2d 1168, 1175 (11th Cir. 1985). Other circuits have favored the
“unsophisticated consumer” formulation, which is also designed to
protect consumers of less than average sophistication or
intelligence, without tying the standard to “the very last rung on
the sophistication ladder.” Gammon v. GC Services, 27 F.3d 1254,
1257 (7th Cir. 1994). See also, Duffy v. Landberg, 215 F.3d 871,
873 (8th Cir. 2000).

We have explicitly avoided ruling on which of these standards,
if either, we use. Taylor, 103 F.3d at 1236. Because the
difference between the standards is de minimis at most, we again
opt not to choose between these standards.
2
A validation letter engages in overshadowing when the
contradictory language is in “screaming headlines,” Miller, 943
F.2d at 483, or the notice language is in fine print, faint print,
or confusing typeface. Rabideau v. Management Adjustment Bureau,
805 F.Supp. 1086, 1090, 1094 (W.D. N.Y. 1992). Because there were
no headlines and the validation notice was the same size and print
as the rest of the letter, Plaintiff does not claim an
overshadowing violation.

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 In the present case, Plaintiff argues that two sentences in

the collection letter stating that full collection activity would

continue until Peter’s account was paid in full misrepresented

Plaintiff’s rights under § 1692g, thereby contradicting or

appearing to contradict the 30-day period for disputing the debt or

requesting the name and address of the original creditor.

Specifically, plaintiff objects to the sentences: “FULL COLLECTION

ACTIVITY WILL CONTINUE UNTIL THIS ACCOUNT IS PAID IN FULL....TO

AVOID FURTHER COLLECTION ACTIVITY, YOUR STUDENT LOAN MUST BE PAID

IN FULL.” When the letter is read as a whole, however, we conclude

that these lines do not misrepresent, contradict, or overshadow the

language explaining plaintiff debtor’s statutory rights.

Courts have generally found contradiction or apparent

contradiction of the printed § 1692g notice where payment is

demanded in a concrete period shorter than the 30-day statutory

contest period. For example, in Bartlett, the offending collection

letter demanded the debtor pay his debt, or make arrangements to do

so, “within one week of the date of this letter,” or face legal

action. As that court explained, “the juxtaposition of the one

week and 30-day crucial periods is to turn the required disclosure

into legal gibberish.” Bartlett, 128 F.3d at 500. See also

Swanson, 869 F.2d at 1226 (holding demand for payment in “10 days”

confuses least sophisticated consumer about 30-day statutory

contest period). Demands for “immediate payment” or payment “now”

have also been found to appear to contradict the 30-day contest

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period notice, at least where their relationship to the 30-day

window is not explained. Savino, 164 F.3d at 86; Miller, 943 F.2d

at 484.

By contrast, statements that request payment or other actions

with no time period specified have been found not to contradict the

§ 1692g notice.3 Vasquez v. Gertler & Gertler, Ltd., 987 F.Supp.

652, 657 (N.D. Ill. 1997) (concluding request for payment without

“further delay” did not “demand[] payment within a period shorter

than 30 days.”). See also Terran, 109 F.3d at 1434 (finding

request for immediate phone call did not contradict printed

notice). Because the challenged language here did not demand

payment in a specific time period shorter than 30 days, we conclude

that the letter did not violate § 1692g.4

3
Plaintiff’s points to Kramsky v. The Revenue Maximization
Group, No. 00-CV-2936 (ARR) (E.D. N.Y. Jan. 11, 2001) (unpublished)
as an example of a case where a violation of § 1692g did not
involve a demand for payment in a specific period shorter than the
validation period. The court there rested its finding of a
violation of the FDCPA on the failure of the collection letter to
“indicate to the consumer that disputing the validity of the debt
or requesting verification of the debt will halt th[e] collection
process.” As we noted above, however, there is no statutory
requirement that collectors inform debtors that collection activity
will stop pending the collectors response to the debtor’s request
for additional information on the debt or original creditor.
Accordingly, we decline to follow Kramsky.
4
The district court rested its determination that Defendant’s
letter did not contradict the required validation notice language
on its similarity to a letter found not to violate § 1692g by the
Third Circuit in Wilson, 225 F.3d at 361. The letter there stated
“We shall afford you the opportunity to pay this bill immediately
and avoid further action against you.” Despite the use of the word
“immediately,” the Third Circuit concluded the request for payment
was closer to Vasquez than to Savino, in part because it was

8
 Plaintiff next claims that even if the challenged statements

did not contradict the validation notice, they were still a

violation of § 1692e, which prohibits “false, deceptive or

misleading representation[s] or means in connection with the

collection of any debt.” Peter argues that the letter was false or

misleading in stating that full collection activity will continue

until the debt was paid in full because her timely exercise of her

§ 1692g rights would require the collector to cease collection

activity until responding to the information request.

We find this argument unpersuasive for three reasons. First,

the letter fully informed the debtor of her § 1692g rights to

dispute the validity of the debt or request more information on the

original creditor within 30 days of receipt of the collection

letter. Second, the letter does not contain a threat of legal

action by the debt collector within that 30 day window. Instead,

the letter explains: “SHOULD YOU FAIL TO PAY THIS ACCOUNT IN FULL,

GC SERVICES WILL REVIEW YOUR ACCOUNT AND MAKE RECOMMENDATIONS TO

THE DEPARTMENT OF EDUCATION FOR THE MOST EFFECTIVE COLLECTION

phrased as a request rather than demand, and in part because the
validation notice was on the front with the potentially offending
language, rather than on the reverse, as in Savino. Id. at 357.

Wilson represents a difficult and close case as it falls between
cases like Savino that confuse consumers by emphasizing immediate
payment, and cases like Vasquez that merely indicate that immediate
payment is an option. Because the letter in question here did not
specify a time period for action, however, it allows for a far
easier resolution than Wilson, and we need not express an opinion
on that case.

9
METHOD ALLOWABLE UNDER FEDERAL LAW.” This language implies a

substantial bureaucratic delay built into the debt collection

process that is consistent with Plaintiff’s right to seek

verification of the debt and the original creditor’s identity

within the 30 day period. Third, the statements are not misleading

because, except for temporary delays caused by the nature of the

collection process, only full payment of the debt would prevent the

continuation of the collection activity. 15 U.S.C. § 1692g(b).

See also Miller, 943 F.2d at 484. Consequently, we conclude that

the letter does not contain any real or material false, deceptive,

misleading representation in connection with the collection of the

debt within the meaning of § 1692e.

III.

Plaintiff also appeals the district court’s grant of summary

judgment on her claims relating to the envelope in which the

collection letter arrived. She first argues that the district

court erred in ruling that the envelope did not violate § 1692f(8),

which bars “[u]sing any language or symbol, other than the debt

collector’s address, on any envelope when communicating with a

consumer by use of the mails or telegram, except that a debt

collector may use his business name if such name does not indicate

that he is in the debt collection business.” 15 U.S.C. § 1692f(8).

“[W]e begin...in any exercise of statutory construction with

the text of the provision in question, and move on, as need be, to

10
the structure and purpose of the Act in which it occurs.” New York

State Conference of Blue Cross and Blue Shield Plans v. Travelers

Insurance Co., 514 U.S. 645, 655 (1995). We may not look beyond

the text of the statute except in those rare instances where using

the plain meaning of the text creates an “absurd result.” In re

Hammers, 988 F.2d 32, 34 (5th Cir. 1993).

The defendants’ use of the United States Department of

Education’s name and address on the envelope, as well as a marker

that the envelope is not to be used for private communication,

violated the plain language of § 1692f(8). The name and address of

the Department of Education and the penalty for private use

language is language other than the debt collectors’ name and

address on the envelope. The district court concluded, however,

that a literal interpretation of the statute would result in debt

collectors being prohibited from placing the address of the debtor

or a stamp on the envelope. Such a ridiculous outcome, the

district court concluded, required legislative history to be used

in arriving at a reasonable reading of the provision.

The district court’s interpretation of § 1692f(8) fails to

account for the entire text of that section. The language “use of

mails” within the provision implies that mail is an appropriate

form of communication between collection agencies and debtors.

Concomitant with this recognition is a statutory allowance for

those items that are necessary for an envelope to move through the

mails. Such items include the name and address of the debtor,

11
required postage, and, as explicitly allowed by this section, the

return address of the collection agency, as well as its name,

provided that name does not reveal that the communication has to do

with debt collection. Thus, if § 1692f(8) is read as a whole, no

absurd result ensues, meaning we need not inquire beyond the

statutory text.

Defendants argue that even if their envelope violates the

literal language of this section, there is a benign language

exception to the statutory prohibition within which their envelope

falls. They base this argument on three district court cases,

which have ruled that “benign language” does not violate §

1692f(8). See Lindbergh v. Transworld Sys., Inc., 846 F. Supp.

175, 180 & n.27 (D. Conn. 1994) (blue stripe and word “transmittal”

on envelope did not violate § 1692f(8)); Johnson v. NCB Collection

Services, 799 F.Supp. 1298, 1304-05 (use of “Revenue Department” as

return addressee allowed); Masuda v. Thomas Richards & Co., 759

F.Supp. 1456, 1466 (C.D. Cal. 1991) (phrases such as “personal &

confidential” and “forwarding and address correction requested” not

prohibited by § 1692f(8)).

We do not need to reach the issue of whether § 1692f(8)

implicitly includes an exemption for benign language, since the

Defendants’ impersonation of the Department of Education is

certainly not benign. The Senate Report accompanying the FDCPA

explained that the purpose of the act was “to protect consumers

from a host of unfair, harassing, and deceptive debt collection

12
practices without imposing unnecessary restrictions on ethical debt

collectors.” S. REP. NO. 95-382, at 1-2, reprinted in 1977 U.S. Code

Cong. & Admin. News 1695, 1696. One of the deceptive practices

Congress was concerned about was “impersonating public officials,”

id., because of the large number of pre-FDCPA cases where debt

collectors were sanctioned for impersonating government agencies.

See, e.g., Slough v. FTC, 396 F.2d 870, 872 (5th Cir. 1968) (ruling

that use of “State Credit Control Board” by private debt collection

firm violated 15 U.S.C. § 45(a)(1) ban on “deceptive practices in

commerce”). As Defendants’ impersonation of the Department of

Education implicates this core concern of the FDCPA, any implicit

exception for benign language cannot be stretched to cover that

thoroughly disapproved practice. Accordingly, we conclude that

Defendants violated § 1692f(8).

We also hold that the envelope violates § 1692e(14).5

Section e(14) bars “[t]he use of any business, company or

organization name other than the true name of the debt collector’s

5
While statutory damages for violation of the FDCPA in § 1692k
are limited to actual damages, plus maximum statutory damages of
$1000 per action, not per violation, Wright v. Finance Service of
Norwalk, Inc., 22 F.3d 647, 650 (6th Cir. 1994); Harper v. Better
Business Services, Inc., 961 F.2d 1561, 1563 (11th Cir. 1992);
McDaniel v. Asset Retrieval of Florida, 1996 U.S. Dist. LEXIS
22722*, *3n1 (E.D. La. 1996), the nature of the non-compliance is
a factor to be considered by the district court in assessing
damages within the statutory range. 15 U.S.C. § 1692k(b)(1).
Accordingly, we consider all of Plaintiff’s alleged statutory
violations to guide the district court in assessing a fair amount
of statutory damages.

13
business, company or organization.” The envelope violates the

mandate of this section by using the United States Department of

Education name and address in the upper left hand corner of the

envelope. By convention the name and address placed in this corner

is that of the return addressee, or the sender of the mail.6 By

using the department as the return addressee, GC Services

represented the sender of the mail as the Department of Education,

when in fact it was GC Services. Thus, GC Services used the

Department of Education name as its own, violating § 1692e(14).

The district court concluded that this statutory provision was

not violated because a sentence within the collection letter

explained that the communication was sent by GC Services, as a

government contractor. The language within the letter conflicts

with the false impersonation conveyed by the envelope, but it does

not cancel or cure the envelope’s departure from the strict mandate

of that section. Section 1692e was enacted against a backdrop of

cases in which courts held that communications designed to create

a false sense of urgency were deceptive. See, e.g., Trans World

Accounts, Inc. v. FTC, 594 F.2d 212, 215 (9th Cir. 1979) (deceptive

to make communications appear to be a telegram which heightened

sense of urgency). Post-FDCPA courts have read the language of §

1692e as encompassing this concern. Rosa v. Gaynor, 784 F.Supp. 1,

6
As GC Services’ official Michael Sullivan acknowledged, the
first place to which people look to determine who sent a letter is
the return address on “the outer envelope.”

14
5 (D. Conn. 1989) (placing collection letter on attorney’s

letterhead deceptive where letter is not from attorney because it

creates a false sense of urgency). By making the letter appear to

come from the United States Department of Education, Defendants

created a false sense of urgency as to the letter’s contents

through a practice specifically prohibited in § e(14). As these

actions implicate core Congressional concerns underlying the FDCPA,

we cannot depart from the statutory text of § 1692e. Judgment must

be rendered for Plaintiff on this claim as well.

IV.

The final issue raised on appeal is whether defendants GC

Financial and DLS Enterprises can be held liable for the FDCPA

violations of GC Services, a Delaware partnership in which they are

general partners. The district court, concluding that GC Services

had in no way violated the FDCPA, dismissed all complaints against

the general partners. It had no occasion to address whether those

corporations could be held liable if GC Services were found to be

in violation of the FDCPA.

GC Financial and DLS Enterprises argue they cannot be held

liable for the FDCPA violations of GC Services because they are not

debt collectors as defined in 15 U.S.C. § 1692(a)(6). This

argument ignores a basic principle of partnership law. Under

Delaware law general partners are liable for all obligations of the

partnership. 6 Del C. §15-306(a) (2001) (“...all partners are

15
liable jointly and severally for all obligations of the partnership

unless otherwise agreed by the claimant or provided by law.”).

Nothing in the FDCPA limits this basic provision of the applicable

state law. Miller v. McCalla, Raymer, Padrick, Cobb, Nichols &

Clark, 214 F.3d 872, 876 (7th Cir. 2000) (holding that general

partners are liable for FDCPA violations of partnership). Thus, GC

Financial and DLS Enterprises are jointly and severally liable for

GC Services’ infractions, and are not entitled to a dismissal of

this action.

V.

The grant of summary judgment to Defendants on Plaintiff’s 15

U.S.C. §§ 1692e(14) and f(8) claims is REVERSED, and the case is

REMANDED with instructions to enter judgment for Plaintiff on these

claims and to award her the statutory damages, costs, and

attorney’s fees to which she is entitled. The district court’s

grant of summary judgment to Defendants on all other claims is

AFFIRMED.

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