Ninth Circuit Court of Appeals Rules – Failure to Specifically State “This Communication is From a Debt Collector” is Not FDCPA Violation

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Yesterday, the Court of Appeals for the Ninth Circuit reversed a decision from a district court in a bench trial that a collection law firm had violated the Fair Debt Collection Practices Act (FDCPA) by failure to specifically state in a voice message: “This communication is from a debt collector.”

The case is Davis v. Hollins Law, a Professional Corporation, (Ninth Circuit Court of Appeals, Case No 2:12-cv-03107). A copy of the opinion can be found here.

Background

Plaintiff Michael Davis obtained an American Express TrueEarnings Business Card at Costco in 2009.  In order to qualify for a business card, Davis filled in the credit card application with information about his wife’s real estate practice, even though his wife had stopped working in real estate the previous year. He subsequently used the card to purchase a number of personal items at Costco, including groceries, gas, and a 65-inch television. Neither Davis nor his wife ever used the card for business purposes.

Davis failed to pay the balance on the American Express card and his debt was referred to Hollins Law. The firm’s first contact with Davis was on July 23, 2012.  Between July 23, 2012 and September 25, 2012 the law firm and the plaintiff had significant interaction regarding a potential settlement of the account. The interaction included voice messages, telephone conversations, and email exchanges.

Then, on September 25, 2012 an employee of the law firm (Gregory Daulton) left the following voicemail message for Davis:

“Hello, this is a call for Michael Davis from Gregory at Hollins Law. Please call sir, it is important, my number is 866-513-5033. Thank You.”

In the voicemail message, the employee did not state that Hollins Law was a debt collector. However, Davis later admitted in response to a discovery request that, “Upon hearing the voice message, . . . Plaintiff understood that it was from a debt collector by combining the message itself with Plaintiff’s prior knowledge that Defendant was a debt collector.”

After September 25, 2012 (from October 4 to October 12) Davis and the law firm employee exchanged eleven additional emails discussing a potential settlement of the account. By October 12 (the last email in the record), the two parties had still not reached an agreement to settle the debt.

On December 28, 2012, Davis filed suit against Hollins Law, alleging a violation of the FDCPA. In his complaint, Davis stated that Hollins Law was “attempting to collect a debt” on behalf of American Express and that by leaving the September 25th voicemail message, Hollins Law violated the FDCPA by (among other things) “failing to disclose in subsequent communications that the communication was from a debt collector” in violation of § 1692e(11).

The district court held a bench trial on April 15, 2014, and ruled in favor of Davis. The trial court held that the debt at issue was consumer debt because the credit card was “primarily used for household purposes” even though Davis had applied for a business credit card. Therefore, the FDCPA (which applies only to consumer debt) was applicable to communications from Hollins Law to Davis.

Further, the trial court held that because the September 25th voicemail message failed to disclose that “the communication is from a debt collector,” it technically violated § 1692(e)(11), which imposes liability for the “failure to disclose in subsequent communications that the communication is from a debt collector.”

Although the trial court recognized that the violation was “clearly de minimis,” it proceeded to enter judgment in favor of Davis on June 24, 2014. Hollins Law timely appealed the district court’s judgment.

The Court’s Opinion

The appellate court began its analysis with a review of discussion of the standard for reviewing the message in question. The court wrote,

“We first apply an objective standard that takes into account whether Daulton’s voicemail message would be sufficient to disclose to the least sophisticated debtor that the call was on behalf of a debt collector. See Tourgeman, 755 F.3d at 1119. In applying this standard, we presume that the debtor has a basic level of understanding, which does not include “bizarre or idiosyncratic interpretations” of the communication at issue. Evon, 688 F.3d at 1027. We also must avoid taking a hypertechnical approach. See Tourgeman, 755 F.3d at 1119.”

The court then applied the law to the facts of this case. The court wrote,

“Before the September 25 voicemail message, Davis and Daulton had been involved in settlement negotiations for about a two week period. Davis had made a “telephone inquiry” to Daulton and had exchanged eight emails with him. At the time Daulton left the voicemail for Davis on September 25, Davis had a pending settlement offer to settle the debt for 30 percent of the total due and had asked Daulton for a status report regarding the creditor’s response. In the voicemail in question, Daulton identified himself as “Gregory at Hollins Law.”

We conclude, given the extent of the prior communications, that the voicemail message’s statement that the call was from “Gregory at Hollins Law” was sufficient to disclose to a debtor with a basic level of understanding that the communication at issue was “from a debt collector,” 15 U.S.C. § 1692e(11). Indeed, any other interpretation of Daulton’s voicemail message would be “bizarre or idiosyncratic.” Evon, 688 F.3d at 1027 (quoting Campuzano- Burgos, 550 F.3d at 298). Given the context, the call was not “false, deceptive, or misleading,” 15 U.S.C. § 1692e, and would not frustrate consumers’ ability to intelligently chart a course of action in response to a collection effort, see

Donohue, 592 F.3d at 1034. Although Daulton’s voicemail message did not expressly state that Hollins Law is “a debt collector,” § 1692e(11) does not require a subsequent communication from the debt collector to use any specific language so long as it is sufficient to disclose that the communication is from a debt collector, as it was here. See Tourgeman, 755 F.3d at 1119.

Because Daulton’s September 25th voicemail message was sufficient to disclose to the least sophisticated debtor that the communication at issue was “from a debt collector,” Hollins Law did not violate § 1692e(11) in its communications with Davis, and the district court erred in so holding.”

insideARM Perspective

It is always refreshing to see a court take a common sense approach to a FDCPA case. This court rejected the notion that the debt collector must say certain precise “magic words” to avoid liability under the statute.

On the other hand, industry best practices would suggest using the “magic words” could or would have avoided the time and expense of this litigation. That is the more conservative approach. This case is precedential for the ninth circuit.  Other circuits may come up with a contrary result under the same or similar facts.

insideARM would suggest the more conservative approach is probably the best approach. Use the full: “This communication is from a debt collector” language.

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Posted in Collection Laws and Regulations, Debt Collection, FDCPA, Opinion .

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  • avatar William Hare says:

    ‘Logic’ and ‘reason’ found in the same ruling? By a court? No, actually it really is refreshing to see some common sense used. However, the ‘Mount Everest’ for all of those that attempt to make a living assisting consumers with resolving legitimately incurred debts, remains: Laws, rules, guidelines of some-sort that ‘govern’ or at least ‘suggest’ proper conduct on the part of the consumer in their interactions with debt-recovery firms/agencies. A consumer can (and some do) bring suit based not on a ‘provable’ fact, but rather on how they ‘felt’ about an interaction with a debt-collector – as in, “I felt he/she was rude” and the CFPB or others would be all over it. However; when the shoe is on the other foot, there is no recourse that I am aware of. Consumers can harass, threaten, use profanity, yell/scream rudely – essentially use the most inappropriate or obnoxious tactics regarding a debt they voluntarily incurred, but the agent/representative must be ‘perfect’ at all times. Honestly, it what other line of work do we ask people to literally be human punching-bags? A bill-collector is not calling the consumer based on pulling their name out of a hat. The bill-collector is not the one that signed (after reading – or should have read) an ‘agreement’ that stated how/when etc. the consumer would repay the obligation they have entered into. And, just because someone has the nerve to expect that they might actually live up to that obligation – the bill-collector should expect to be treated in the most vile, disrespectful ways imaginable? I think we can do better. And I would love for someone to show me a ruling whereby a judge ‘mentions’ or ‘calls-out’ a consumers behavior along these lines. I am not saying one (or many) does not exist, I ask from the perspective to educate myself and would simply be interested in reading the language chosen by the judge in mentioning how the ‘consumer’ behaved. In my 30+ years managing call-center – AR – 3rd-party etc., most (not all) but most-calls that have hostility in them – it is the consumer that is dishing out the hostility. We have all heard recordings of our agents saying things that make us cringe – and no doubt there are many bad-apples we would all like to get out of our industry – however, that does not change the fact that many, many calls go bad at the outset the instant the consumer learns it is a bill-collector and literally goes ballistic. Someday, it would be nice to see a set of ‘decency-standards’ that the court expects to hear on the calls involving anyone that expects to win a judgment against an agency. Meaning, if you have been harassing the agency; if you have been yelling/screaming obscenities or inappropriate ‘slurs’ at the representatives of the agency – well, that goes on the ‘scorecard’ too when we boil it all down and we can see what is actually left on the ‘balance-sheet’ and ‘who gets what’ in the end. Crazy idea, I know – expecting ‘civility’ and decency on both sides of the equation but there are certainly more than enough protections/rules on one side that throwing a rule or two the other way would not endanger the overwhelming advantage the consumer has per the current arrangement.

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