Campuzano-Burgos v. Midland Credit Mgmt

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit

12-16-2008

Campuzano-Burgos v. Midland Credit Mgmt
Precedential or Non-Precedential: Precedential

Docket No. 07-3770

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 PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________

No. 07-3770
____________

LISA Y. CAMPUZANO-BURGOS;
CHARMAINE T. ANGUS, TIAISHA C. HALL;
on behalf of themselves and all others similarly situated,

vs.

MIDLAND CREDIT MANAGEMENT, INC.;
J. BRANDON BLACK; RON ECKHARDT;
MIDLAND FUNDING LLC;
MIDLAND FUNDING NCC-2 CORP.;
MRC RECEIVABLES CORP.
Appellants
____________

Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 07-cv-00092)
District Judge: The Honorable Stewart Dalzell
____________

Argued: September 11, 2008
Before: McKEE, SMITH, and WEIS, Circuit Judges.
 (Filed: December 16, 2008)

Tomio B. Narita, Esquire (ARGUED)
Jeffrey A. Topor, Esquire
Simmonds & Narita LLP
44 Montgomery Street, Suite 3010
San Francisco, CA 94104

Andrew M. Schwartz, Esquire
James W. Gicking, Esquire
Marshall, Dennehey, Warner, Coleman & Goggin
1845 Walnut Street
Philadelphia, PA 19103

Attorneys for Appellants

Cary L. Flitter, Esquire (ARGUED)
Lundy, Flitter, Beldecos & Berger, P.C.
450 N. Narberth Avenue
Narberth, PA 19072

Attorneys for Appellees
____________

OPINION
____________

WEIS, Circuit Judge.

In this appeal we consider whether a debt collection
company violates the Fair Debt Collection Practices Act by

2
sending debtors settlement offers that bear the name of one of
the company’s senior executives. We conclude that no
violation occurred in the circumstances presented here.
Because the District Court held that the practice was not in
conformity with the statute, we will remand for entry of
judgment in favor of the collector-defendants.

I.

Plaintiffs Lisa Y. Campuzano-Burgos, Charmaine T.
Angus and Tiaisha C. Hall filed a complaint against defendants
Midland Credit Management, Inc.; Midland Funding NCC-2
Corp.; MRC Receivables Corp.; Midland Funding, LLC; J.
Brandon Black; and Ron Eckhardt alleging that defendants
violated the Fair Debt Collection Practices Act, 15 U.S.C.
§§ 1692-1692p, in sending false, misleading, or deceptive
collection notices in contravention of §§ 1692e and 1692e(9) of
the Act. Plaintiffs sought to bring a class action on behalf of
themselves as well as other affected Pennsylvania residents.

Both parties filed motions for summary judgment
directed only to the issue of liability. In a memorandum and
order, the District Court, finding a general violation of § 1692e,
denied Midland Credit’s motion and granted partial summary
judgment to plaintiffs. Following a conference with counsel, the
district judge amended his order and, pursuant to 28 U.S.C.
§ 1292(b), certified a controlling question of law: whether a
senior officer of a collection company violates the Act by
signing “dunning letters” sent to debtors. We accepted the
certification.

3
 Plaintiffs based their claims on three communications
sent by Midland Credit to collect unpaid debts. One page
documents containing three sections, the letters are nearly
identical in content and form. They only materially differ with
respect to the debtors’ names, amounts due, and the typed names
following the communications’ complementary close. Two
letters contain the name “Ron [or R.] Eckhardt, Executive Vice
President/General Manager of Consumer Debt.” On the third,
“J. Black, President” appears.

One of the letters is reproduced below.

4
5
 In a joint stipulation of facts, the parties agreed that
Eckhardt and Black are real people employed by Midland
Credit. The letters accurately reflect Eckhardt and Black’s titles
and positions. Neither individual is an attorney nor was
identified as one. As officers of Midland Credit, Eckhardt and
Black authorized the mailing of the communications. Neither
man, however, wrote or signed any of the letters, nor did either
executive know the amount of debts or of Midland Credit’s
actions in attempting to collect them. Both officers lacked
knowledge that the letters were sent to plaintiffs, and neither
man personally directed Midland Credit’s staff to mail them.

Finding no determinative precedent in this Court’s
opinions, the district judge reviewed the Act’s jurisprudence,
focusing on case law addressing § 1692e(3) 1 and dunning letters
sent by attorneys. Those cases, the District Court determined,
“expresse[d] a general concern with debt collectors’ practice of
falsely implying that someone in a position of real authority
[wa]s supervising the collection of [a] debt.” Campuzano-
Burgos v. Midland Credit Mgmt., Inc., 497 F. Supp. 2d 660, 664
(E.D. Pa. 2007).

The Court concluded that “the use of top executives of
the company as signatories is likely meant to impress upon
debtors the seriousness of the communication and will almost

1
Section 1692e(3) prohibits debt collectors from falsely
representing or implying, in connection with the collection of a
debt, “that any individual is an attorney or that any
communication is from an attorney.” 15 U.S.C. § 1692e(3).

6
certainly have such an effect on at least some debtors.” Id. at
665. Because Eckhardt and Black in this case had no “actual
involvement in the decision to send the letter[s] to a particular
debtor . . . the letters . . . are deceptive and misleading within the
meaning of Section 1692e.” Id.

On appeal, defendants assert that the letters were not
deceptive, that nothing in them suggests Midland Credit’s
executives had any involvement in the decision to send the
communications and that they clearly appear to have originated
from the company as a whole. Plaintiffs contend that the letters,
when viewed from the perspective of the least sophisticated
debtor, were deceptive in implying that the defendants’ officers
had reviewed the debts and authorized the release of the letters.

II.

In the preface to the Fair Debt Collection Practices Act,
Congress explained that “[t]here is abundant evidence of
abusive, deceptive, and unfair debt collection practices by many
debt collectors.” 15 U.S.C. § 1692(a). Those tactics “contribute
to the number of personal bankruptcies, to marital instability, to
the loss of jobs, and to invasions of individual privacy.” Id.
The Act is directed to the goals of “eliminat[ing] abusive debt
collection practices by debt collectors . . . [and] insur[ing] that
those debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged.” 15
U.S.C. § 1692(e).

Of particular relevance to this case is § 1692e, a
provision of the Act that states, “A debt collector may not use

7
any false, deceptive or misleading representation or means in
connection with the collection of any debt. Without limiting the
general application of the foregoing, the following conduct is a
violation of this section.” 15 U.S.C. § 1692e. There follows a
listing of sixteen prohibited acts not germane to this matter.2 Id.

A communication is deceptive for purposes of the Act if
“it can be reasonably read to have two or more different
meanings, one of which is inaccurate.” Rosenau v. Unifund
Corp., 539 F.3d 219, 222 (3d Cir. 2008) (quoting Brown v. Card
Serv. Ctr., 464 F.3d 450, 455 (3d Cir. 2006)). In order to give
effect to the Act’s intent to “protect[] the gullible as well as the
shrewd,” Brown, 464 F.3d at 453 (quoting Clomon v. Jackson,
988 F.2d 1314, 1318 (2d Cir. 1993)), courts have analyzed the
statutory requirements “from the perspective of the least
sophisticated debtor.” Rosenau, 539 F.3d at 221 (quoting
Brown, 464 F.3d at 454).

This standard is less demanding than one that inquires
whether a particular debt collection communication would
mislead or deceive a reasonable debtor. Id. at 455.

2
The District Court found a general violation of § 1692e
and therefore declined to “directly address the question of
whether [the letters] also violate Section 1692e(9).”
Campuzano-Burgos v. Midland Credit Mgmt., Inc., 497 F. Supp.
2d 660, 665 (E.D. Pa. 2007). That subsection prohibits “[t]he
use or distribution or any written communication . . . which
creates a false impression as to its source, authorization, or
approval.” 15 U.S.C. § 1692e(9).

8
Nevertheless, the least sophisticated standard safeguards bill
collectors from liability for “bizarre or idiosyncratic
interpretations of collection notices” by preserving at least a
modicum of reasonableness, as well as “presuming a basic level
of understanding and willingness to read with care [on the part
of the recipient].” Id. at 221 (quoting Wilson v. Quadramed
Corp., 225 F.3d 350, 354-55 (3d Cir. 2000)).

Although established to ease the lot of the naive, the
standard does not go so far as to provide solace to the willfully
blind or non-observant. Even the least sophisticated debtor is
bound to read collection notices in their entirety. Fed. Home
Loan Mortgage Corp. v. Lamar, 503 F.3d 504, 510 (6th Cir.
2007); see also, Schweizer v. Trans Union Corp., 136 F.3d 233,
238 (2d Cir. 1998) (analyzing a debt collection letter as a whole
under the least sophisticated debtor standard); Peter v. GC
Servs. L.P., 310 F.3d 344, 349 (2d Cir. 2002) (same); McStay v.
I.C. Sys., Inc., 308 F.3d 188, 191 (2d Cir. 2002) (same).
Rulings that ignore these rational characteristics of even the
least sophisticated debtor and instead rely on unrealistic and
fanciful interpretations of collection communications that would
not occur to even a reasonable or sophisticated debtor frustrate
Congress’s intent to “insure that those debt collectors who
refrain from using abusive debt collection practices are not
competitively disadvantaged.” 15 U.S.C. § 1692(e).

Some creative collectors, convinced that conflict is
counterproductive, choose conciliation over confrontation.
They do this through communications that are civil and cajoling,
yet conforming with the statute – “settlement letters.” These

9
notices advise the debtor that he may settle the claim by paying
a percentage of the amount owed rather than the total.

“There is nothing improper about making a settlement
offer.” Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d
769, 775 (7th Cir. 2007). Forbidding them “would force honest
debt collectors seeking a peaceful resolution of the debt to file
suit in order to advance efforts to resolve the debt -- something
that is clearly at odds with the language and purpose of the
[Act].” Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 399 (6th
Cir. 1998).

Permitting the use of settlement letters may allow
resolution of a claim without the “needless cost and delay of
litigation . . . [and] is certainly less coercive and more protective
of the interests of the debtor.” Id. Nevertheless, in keeping with
the statutory requirements, collection agencies “may not be
deceitful in the presentation of th[e] settlement offer.” Goswami
v. Am. Collections Enter., 377 F.3d 488, 496 (5th Cir. 2004).3

3
A number of district courts have ruled on the conformity
of settlement letters to the Act. See, e.g., Gully v. Van Ru
Credit Corp., 381 F. Supp. 2d 766 (N.D. Ill. 2005) (settlement
offer not deceptive); Johnson v. AMO Recoveries, 427 F. Supp.
2d 953 (N.D. Cal. 2005) (same); Hernandez v. AFNI, Inc., 428
F. Supp. 2d 776 (N.D. Ill. 2006) (same); Dupuy v. Weltman,
Weinberg & Reis Co., 442 F. Supp. 2d 822, 829 (N.D. Cal.
2006) (same); Jackson v. Midland Credit Mgmt., Inc., 445 F.
Supp. 2d 1015 (N.D. Ill. 2006) (same); Cruz v. MRC
Receivables Corp., 563 F. Supp. 2d 1092 (N.D. Cal. 2008)

10
 III.

With that general overview, we come to the question
certified to us, “Does it violate the FDCPA for a senior officer
of the debt collector, who had no personal involvement in the
collection of the debts, to sign dunning letters addressed to
putative debtors?” In addressing this inquiry, we are not bound
by the District Court’s statement of the issue. Cipollone v.
Liggett Group, Inc., 789 F.2d 181, 188 n. 9 (3d Cir. 1986), aff’d
in part, rev’d in part on other grounds, 505 U.S. 504 (1992). It
is the order that is appealable, and “we are obliged to address
[it] rather than the controlling question of law framed by the
district court.” Id. at 187-88; see also Yamaha Motor Corp.,
U.S.A. v. Calhoun, 516 U.S. 199, 205 (1996) (“appellate
jurisdiction [under § 1292(b)] applies to the order certified to the
court of appeals, and is not tied to the particular question
formulated by the district court”). In our review, we may
address any matters “fairly set forth in the record and which
ultimately affect the outcome of the litigation.” Beazer E., Inc.
v. Mead Corp., 525 F.3d 255, 262 (3d Cir. 2008).

Preliminarily, we note that the notices sent by defendants
are technically not “dunning letters,” which are insistent or
repeated demands for payment. See Black’s Law Dictionary
502 (6th ed. 1990) (defining “dun” as “a demand for payment
(e.g., dun letter) to a delinquent debtor”); see also Webster’s

(same); Pescatrice v. Robert J. Orovitz, P.A., 539 F. Supp. 2d
1375, 1381 (S.D. Fla. 2008) (whether the terms of a debt
settlement offer violate the Act is a factual matter for a jury).

11
New World Dictionary 421 (3d College ed. 1988) (same).
Midland Credit’s settlement letters demanded nothing; they
provided plaintiffs with an opportunity to settle their debts at a
discounted rate.4 Nevertheless, the defendants’ communications
fall within the ambit of § 1692e, which prohibits the use of “any
false, deceptive, or misleading representation or means in
connection with the collection of any debt.” 15 U.S.C. § 1692e.

Viewed as a whole, the settlement offers are not
deceptive. On their face, the notices do not appear to be letters
from a corporate executive to an individual. Their font does not
comport with that found in a routine business letter. The
frequent use of capital letters, exclamation points, and bold-
faced type, as well as the employment of various other items –
such as indented text, bar-codes, a toll-free telephone number,
lines, boxes, and perforation – do not fit the format to be
expected in a routine commercial communication. Rather, the
letters resemble an advertisement, and the use of the officers’
names and titles, but not signatures at the close of the letters’
text, is consistent with a form notice.

The communications’ content further militates against
finding that the least sophisticated debtor would believe he
received a personal letter from the named officers instead of a
notice from a company. Defendants’ messages speak of the
“settlement opportunity offered . . . by Midland Credit

4
Some courts, speaking imprecisely, have used
“settlement offers” and “dunning letters” interchangeably. See,
e.g., Gully, 381 F. Supp. 2d at 768.

12
Management, Inc.” They state, “[w]e would like to offer you a
positive and flexible option to resolve your account . . . please
contact us TOLL-FREE . . . and any of our Account Managers
will be able to assist you.” The use of the plural rather than the
singular in reference to the debt collector indicates that the
notices do not come from Black or Eckhardt, but from the
corporation itself.

It is also pertinent that Black and Eckhardt are officers of
Midland Credit and not attorneys. Analogizing senior
executives to lawyers, as the District Court did, was not
appropriate. Corporate executives have no more direct access
to legal proceedings than other laymen.

Under the Act, attorney debt collectors warrant closer
scrutiny because their abusive collection practices “are more
egregious than those of lay collectors.” Crossley v. Lieberman,
868 F.2d 566, 570 (3d Cir. 1989). The state has given lawyers
certain privileges – such as the ability to file a lawsuit – not
applicable to lay debt collectors. Avila v. Rubin, 84 F.3d 222,
229 (7th Cir. 1996). Debtors react more quickly to an attorney’s
communication because they believe “that a real lawyer, acting
like a lawyer usually acts, directly controlled or supervised the
process through which [such a] letter was sent.” Id. (“It is
reasonable to believe that a dunning letter from an attorney
threatening legal action will be more effective in collecting a
debt than a letter from a collection agency.”). Accordingly,
lawyers “sending dunning letters must be directly and personally
involved in the mailing of the letters in order to comply with the
strictures of [the Act].” Id. at 228.

13
 Coming from a collection agency and lacking any
reference to an attorney or legal department, the defendants’
letters here do not imply, in the way that a communication from
a lawyer would, that either Black or Eckhardt had some sort of
actual involvement in sending the settlement offers. Id. at 227-
29 (collection letters electronically signed by attorney violated
the Act because the attorney had no role in the letters’
preparation and mailing); see also Rosenau, 539 F.3d at 223
(reversing a grant of judgment on the pleadings to a debt
collector that represented that a dunning letter came from its
“Legal Department” because the least sophisticated debtor could
believe that an attorney “played a role in writing or sending the
letter”).

It is immaterial that Black and Eckhardt did not
personally write or authorize their staff to send the specific
letters to plaintiffs. Midland Credit had authorized and
approved the communications whose appearance and content
reveal no personal efforts by the executives.

We thus find that the defendants’ settlement offers cannot
reasonably be read to have more than one meaning. Even the
least sophisticated debtor, possessing some common sense and
a willingness to read the entire document with care, would not
have believed that he had received a personal communication
from Black or Eckhardt.

Plaintiffs have not alleged that the settlement letters were
otherwise untruthful, incorrectly listed the amount of debt owed,
made false statements about the debts’ enforceability, or that
Midland Credit never intended to honor the terms of the offer.

14
Other courts have found that debt collector communications
have the potential to be deceptive in such circumstances. See,
e.g., United States v. Nat’l Fin. Servs., Inc., 98 F.3d 131, 137-39
(4th Cir. 1996) (letters from an attorney threatening legal action
not actually contemplated by the debt collector may be deceptive
and thus violate the Act). We also recognize that in certain
contexts a completely accurate statement can be deceptive or
misleading. That is not the case here.

On the record before us, the letters are honest attempts to
extend a settlement proposal that cannot, even by the least
sophisticated debtor, be interpreted as coming from anyone
other than Midland Credit, the corporation. As such, they do not
violate § 1692e of the Act.5

IV.

Accordingly, the question put to us will be answered in
the negative. The letters were not deceptive or otherwise
actionable. Because we must also address the order granting
summary judgment to plaintiffs, we will reverse and remand
with directions to enter summary judgment for defendants.
Cipollone, 789 F.2d at 187-88.

5
Our analysis and conclusion dispose of the plaintiffs’
§ 1692e(9) claim, which the District Court declined to address.
Because the least sophisticated debtor would not believe that
Black or Eckhardt had sent him a personal communication,
Midland Credit’s offers did not “create a false impression as to
[their] source, authorization, or approval.” 15 U.S.C.
§ 1692e(9).

15