Recently, the United States District Court in New Jersey granted summary judgment in a Fair Debt Collections Practices Act (FDCPA) case in favor of a debt collector where at 9:58 a.m. an employee of the collector had picked up a Cease & Desist Letter that was sent certified mail, but because it hadn't yet been processed, a call was placed to that consumer just twelve minutes later, at 10:10 a.m. the same day. The case is Gebhardt v. LJ Ross Associates, Inc. (Case No 15-2154, U.S. District Court, New Jersey). A copy of the court’s opinion can be found here.


Defendant LJ Ross Associates, Inc. (Ross) is a debt collector. On August 19, 2014, defendant was referred to collect on an allegedly unpaid debt that Plaintiff Scott Gebhardt owed to New Jersey City Power and Light.  Defendant attempted to contact plaintiff by phone regarding the debt. 

Plaintiff hired an attorney, who sent a certified letter, dated September 8, 2014, to defendant. The letter advised defendant that plaintiff had retained counsel and that all communications should be directed to counsel, not plaintiff. The letter also “SERVE[D] AS NOTICE TO IMMEDIATELY CEASE AND DESIST CONTACTING OUR CLIENT.”

Defendant maintains a post office box for receipt of mail. The post office received the letter on September 11, 2014 at 8:47 a.m., and made it available for defendant to pick up. A defendant employee signed for the letter at 9:58 a.m. that same day. On September 11, 2014, at 10:10 a.m., defendant placed a collection call to plaintiff.  Defendant made no further contact with plaintiff after this phone call.

An employee for defendant processed the letter on September 14, 2014 at 5:07 p.m., and updated Plaintiff’s account in the computer system, indicating that he was represented by counsel and that all defendant employees were to cease communications with him.

On March 26, 2015, plaintiff filed suit against defendant alleging various violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. Two counts remained at issue in the case: plaintiff’s allegations that defendant’s September 11, 2014 phone call violated § 1692c(a)(2), prohibiting communications with a represented individual (Count One), and § 1692c(c), prohibiting communications after receiving notice to cease all communications (Count Two). In its Answer, defendant raised multiple affirmative defenses, but the sole remaining defense at issue was defendant’s claim that the bona fide error defense, § 1692k(c), precludes its liability under the FDCPA.

Both parties moved for summary judgment.

Editor’s NoteA motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

The Court’s Opinion

The Memorandum Opinion was written by the Honorable Mary L. Cooper, U.S. District Court Judge. 

Count 1 

Judge Cooper wrote: 

“The sole contention between the parties, and the only question for us to resolve with this count, is whether Defendant had the requisite statutory “knowledge” of the representation when it called Plaintiff.

We agree with Defendant that the statute, as a matter of law, requires the debt collector to have actual knowledge of an individual’s legal representation prior to making a communication. 

Plaintiff’s arguments regarding what the employee receiving the mail should have done, or could have done, to read the letter and discover its contents are unavailing. The statute mandates that Plaintiff demonstrate actual knowledge of his legal representation, not just mere receipt of a letter from counsel. 

Because there is no genuine dispute of material fact that Plaintiff has failed to meet his burden of proving Defendant’s actual knowledge, and thus a violation under 15 U.S.C. § 1692c(a)(2), we will enter judgment in favor of Defendant and deny Plaintiff’s motion for summary judgment."

Count 2  

15 U.S.C. § 1692c(c) of the FDCPA provides that:

If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt . . . . If such notice from the consumer is made by mail, notification shall be complete upon receipt. 

The parties did not dispute that defendant’s September 11, 2014 phone call to plaintiff at 10:10 a.m. was a prohibited communication because it was made after defendant received a letter from plaintiff on September 11, 2014 at 9:58 a.m., notifying defendant to cease all communications. 

Defendant argued that the communication was a bona fide error that precludes its liability under the FDCPA. 

Judge Cooper wrote:

Section 15 U.S.C. § 1692k(c), the bona fide error defense, provides that: 

A debt collector may not be held liable in any action brought under [the FDCPA] if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. 

Defendant argues that the defense applies because it has demonstrated all three elements. First, it did not intend to violate the FDCPA. (Dkt. 33-1 at 13.) Second, making the phone call only twelve minutes after receiving the letter from Plaintiff’s counsel was not unreasonable and was a bona fide error. (Id.) Third, Defendant had in place reasonable precautions to protect against making communications after the receipt of a cease all communications letter. 

Plaintiff does not contest whether the alleged violation was unintentional or whether the alleged violation resulted from a bona fide error. Instead, he argues that Defendant has not met its burden under the third prong of the defense. Specifically, Plaintiff submits certain policies and procedures that Defendant could have adapted to have prevented making the communication after the receipt of the letter.” 

The court then reviewed defendant’s policies and procedures. The court determined: 

“We find that, by a preponderance of evidence, Defendant has demonstrated that it had reasonably adapted procedures to prevent an error from occurring. 

Defendant detailed policies explaining how correspondence is received, reviewed, and processed by its employees. These policies prohibit an employee from communicating with a consumer after the receipt of notification that the consumer is represented by legal counsel or that the consumer wishes Defendant to cease all communications. Defendant maintains a computer system that prevents communications from being made when coded to denote the consumer is represented by an attorney or demanded all communications to cease. Defendant’s employees are trained and tested on the company’s policies and procedures to ensure compliance with the FDCPA. 

We thus find these policies and procedures objectively reasonable to prevent the type of error complained of here. 

Because we find no genuine issue of material fact, we conclude that Defendant has met its burden of proving that it is entitled to the bona fide error defense, thereby immunizing it from liability for a violation of 15 U.S.C. § 1692c(c). We will grant judgment in favor of Defendant and deny Plaintiff’s motion for summary judgment.” 

insideARM Perspective 

This writer practiced law for 15 years in Minnesota. This is the type of case that makes me happy that I am no longer involved in the legal business.  There were 12 minutes between “receipt” of the letter and the “offending phone call.” I hate to sound like the “Get off my lawn” senior citizen, but I long for the days of professional courtesy. Had this fact situation occurred when I practiced, it was likely that I would have received a phone call from the attorney for the plaintiff and asked what happened.  I would then have explained our process for mail pick-up and documenting of Cease & Desist notices.  More than likely the attorney for the Plaintiff would have said: “Thank you” for the information and the file would have been closed. Not so in today’s litigious world. 

I wish the “good old days” would make a comeback. 

However, in today’s world, policies and procedures are vitally important. It is refreshing to see a judge apply a common-sense approach to the facts in this case. Kudos to the defendant for documenting the policies and procedures in this case. 

insideARM contacted David Cherner from the Moss & Barnett law firm for his reaction to this case.  Cherner commented: 

“This decision is a good reminder for any ARM company to run a simple, but critical exercise. You may be surprised with what you find about your business: 

  1. Set your existing policies aside, get the team around a table, and map out at all the different channels through which you can receive communications from the outside world: mail, fax, e-mail, etc.
  2. Identify whether you need those channels to conduct business. If you don’t need that channel, get rid of it (i.e., FAX!)
  3. Discuss how a communication through each channel is received, processed, and documented.
  4. Confirm if existing policies and procedures match up with what has been discussed, and make changes accordingly.
  5. Test your policies and procedures regularly to make sure your policies and procedures remain up to date.” 

Finally, this case should also be viewed and considered in conjunction with an article we wrote on July 6, 2017 regarding a faxed revocation of consent to call a cell phone. The result was positive in that case. But the decision was fact-specific. It seems that faxes are making a comeback with consumers and their attorneys.  Agency policies should be reviewed to acknowledge that reality. 

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