Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-16437/USCOURTS-ca9-14-16437-0/pdf.json

Parties Involved:
Michael Davis
Appellee
Hollins Law
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL DAVIS,

Plaintiff-Appellee,

v.

HOLLINS LAW, a Professional

Corporation,

Defendant-Appellant.

No. 14-16437

D.C. No.

2:12-cv-03107-LKK-AC

OPINION

Appeal from the United States District Court

for the Eastern District of California

Lawrence K. Karlton, District Judge, Presiding

Argued and Submitted May 12, 2016

San Francisco, California

Filed August 8, 2016

Before: Stephen S. Trott, Sandra S. Ikuta,

and Paul J. Watford, Circuit Judges.

Opinion by Judge Ikuta

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2 DAVIS V. HOLLINS LAW

SUMMARY*

Fair Debt Collection Practices Act

The panel reversed the district court’s judgment, after a

bench trial, in favor of the plaintiff on a claim under the Fair

Debt Collection Practices Act.

The panel held that the defendant’s communication was

sufficient in context to disclose to the least sophisticated

debtor that it was from a debt collector, and therefore did not

violate 15 U.S.C. § 1692e(11).

COUNSEL

Kathleen Mary Kushi Carter (argued) and Tamara M.

Heathcote, Hollins Law, Irvine, California, for DefendantAppellant.

Aaron D. Radbil (argued), Greenwald Davidson Radbil

PLLC, Austin, Texas; Ryan S. Lee, Krohn & Moss, LTD, Los

Angeles, California; Matthew A. Rosenthal, Westgate Law,

Los Angeles, California; for Plaintiff-Appellee.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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DAVIS V. HOLLINS LAW 3

OPINION

IKUTA, Circuit Judge:

Hollins Law, a law firm and debt collection agency, is

subject to the Fair Debt Collection Practices Act (FDCPA),

which among other things requires debt collectors “to

disclose in subsequent communications that the

communication is from a debt collector.” 15 U.S.C.

§ 1692e(11). Today we hold that if a subsequent

communication is sufficient to disclose to the least

sophisticated debtor that the communication was from a debt

collector, there is no violation of § 1692e(11) even if the debt

collector did not expressly state, “this communication is from

a debt collector.” Accordingly, Hollins Law did not violate

§ 1692e(11) here.

I

We begin by describing the legal background. The

FDCPA, 15 U.S.C. §§ 1692–1692p, comprehensively

regulates debt collectors. Tourgeman v. Collins Financial

Servs., Inc., 755 F.3d 1109, 1119 (9th Cir. 2014). Its

remedial purpose is to prevent debt collection actions that

frustrate consumers’ ability to chart a course of action in

response to a collection effort. See Donohue v. Quick

Collect, Inc., 592 F.3d 1027, 1034 (9th Cir. 2010). Section

1692e precludes a debt collector from using “any false,

deceptive, or misleading representation or means in

connection with the collection of any debt.” 15 U.S.C.

§ 1692e. “Debt” is defined as “any obligation or alleged

obligation of a consumer to pay money arising out of a

transaction in which the money, property, insurance, or

services which are the subject of the transaction are primarily

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4 DAVIS V. HOLLINS LAW

for personal, family, or household purposes, whether or not

such obligation has been reduced to judgment.” Id.

§ 1692a(5). Section 1692e provides a nonexclusive list of 16

collection practices that violate the FDCPA. At issue here is

§ 1692e(11), which provides:

The failure to disclose in the initial written

communication with the consumer and, in

addition, if the initial communication with the

consumer is oral, in that initial oral

communication, that the debt collector is

attempting to collect a debt and that any

information obtained will be used for that

purpose, and the failure to disclose in

subsequent communications that the

communication is from a debt collector,

except that this paragraph shall not apply to a

formal pleading made in connection with a

legal action.

To determine whether a debt collector is liable for a

violation of § 1692e, we apply an objective standard that

“takes into account whether the least sophisticated debtor

would likely be misled by a communication.” Tourgeman,

755 F.3d at 1119 (internal quotation marks omitted). We

have defined the “least sophisticated debtor” standard as

“lower than simply examining whether particular language

would deceive or mislead a reasonable debtor.” Id. (internal

quotation marks omitted). Even though the “least

sophisticated debtor maybe uninformed, naive, and gullible,”

the debtor’s “interpretation of a collection notice cannot be

bizarre or unreasonable.” Evon v. Law Offices of Sidney

Mickell, 688 F.3d 1015, 1027 (9th Cir. 2012). Courts “have

carefully preserved the concept of reasonableness” and have

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DAVIS V. HOLLINS LAW 5

presumed that debtors have “a basic level of understanding

and willingness to read [the relevant documents] with care”

in order to safeguard bill collectors from liability for

consumers’ “bizarre or idiosyncratic interpretations of

collection notices.” Id. (quotingClomon v. Jackson, 988 F.2d

1314, 1319 (2d Cir. 1993) and Campuzano-Burgos v.

Midland Credit Mgmt., Inc., 550 F.3d 294, 298 (3rd Cir.

2008)).

We have also held that any error in a debt collectors’

communications must be material in order to be actionable

under § 1692e. Donohue, 592 F.3d at 1033. Immaterial

errors, by definition, would not frustrate a debtor’s ability to

intelligently choose an appropriate response to a collection

effort. See Tourgeman, 755 F.3d at 1119. For instance, in

Donohue, a debt collector’s statement to a consumer

accurately stated the total amount owed, “but the label for at

least one of the two sums comprising the total debt was

technically incorrect” in that it labeled that amount “12%

interest” when it actually included both interest and preassignment finance charges. Donohue, 592 F.3d at 1034. We

held that the misstatement was not a materially false

characterization of the debt “and hence not actionable” under

§ 1692e. Id. In sum, mere technical errors that deceive no

one do not give rise to liability under the FDCPA. See

Tourgeman, 755 F.3d at 1119.

II

We now turn to the facts of this case. In 2009, Michael

Davis obtained an American Express TrueEarnings Business

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6 DAVIS V. HOLLINS LAW

Card at Costco.1In 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, a law firm and

debt collection agency. Hollins Law used case management

software to track calendar entries, employee emails,

employee notes, and other records, as well as to generate

reports, including a report detailing Hollins Law’s

communications with Davis. The firm’s first contact with

Davis was on July 23, 2012, when Maggie Higgins, a Hollins

Law employee, called Davis and spoke to him by telephone. 

According to the report, Davis told Higgins to communicate

with a debt settlement firm that he had retained to negotiate

on his behalf, and that he would call back the following day

with the settlement firm’s contact information. Hollins Law

required its debt collectors to identify both the nature of the

call and to identify the law firm as a debt collector, and Davis

does not allege Higgins failed to do so.

Davis did not call back with the information he had

promised, so on July 25, 2012, Higgins called Davis again

and reached Davis’s wife, who provided Higgins with the

name and contact information for their debt settlement firm.

1 Unless otherwise specified, the following facts were either found by

the district court or undisputed at trial.

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DAVIS V. HOLLINS LAW 7

Over the next few weeks, Higgins communicated

exclusively with the debt settlement firm. The call records

demonstrate that Higgins made multiple attempts to reach

Davis’s representative at the firm during that time. On

August 29, 2012, Davis’s case was assigned to a different

Hollins Law employee, Gregory Daulton, who continued to

leave multiple voicemail messages for different

representatives at the debt settlement firm.

On September 10, 2012, Daulton emailed Davis to thank

him for a telephone inquiry about settling the credit card debt. 

Daulton’s email asked Davis to detail the amount of the

settlement offer and the date it would be paid, as well as

information regardingDavis’s monthly income and expenses. 

Davis responded by email that same day and offered to settle

the debt for roughly 30 percent of the total due. Davis’s

email explained: “I am in a similar situation with two

additional credit cards both with higher dollar amounts. . . .

[M]y goal is to settle the bad debt for all three credit cards

and this is where I get the 30% number.” Daulton emailed a

reply to Davis’s message, stating that he would forward the

information to the creditor.

The next day, September 11, Daulton emailed Davis with

a second request to specify the amount of his settlement offer. 

Davis responded via email: “Actually I don’t even know the

total due on the AMEX account. Can you provide me the

number?” Daulton responded to the inquiry by attaching a

report to a reply email.

On September 17, Davis sent Daulton an email asking for

a status report on the creditor’s response to his settlement

offer. Daulton sent an email reply, stating: “No update. This

is a low offer. Possibly they are dealing with the larger

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8 DAVIS V. HOLLINS LAW

percentage offers first, but I’m not sure.” The email also

stated that Daulton would advise Davis about any updates he

received.

Hollins Law’s records show that on September 25,

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.”2

In the voicemail message,

Daulton 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, Davis and Daulton exchanged eleven

additional emails from October 4 to October 12. In those

emails, Daulton informed Davis that his initial settlement

offer had been declined and that Hollins Law would move

forward with legal action. At one point, Davis hired debt

consolidation attorneys to represent him, but then fired the

attorneys and told Daulton to “feel free to deal with [him]

directly.” By October 12 (the last email in the record), the

two parties had still not reached an agreement to settle the

debt.

 

2 The evidence in the record establishes that Daulton left the voicemail

message for Davis on September 25, 2012. Although Davis submitted an

affidavit in support of a summary judgment motion stating that he had

received Daulton’s voicemail message on August 29, 2012, Davis

admitted at trial that he did not actually recall when he had received the

voicemail, and did not know whether August 29th was the correct date. 

On appeal, Davis concedes that he received Daulton’s call in September.

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DAVIS V. HOLLINS LAW 9

On December 28, 2012, Davis filed suit against Hollins

Law, alleging a violation of the FDCPA.3In 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).

Davis and Hollins Law filed cross motions for summary

judgment, which the district court denied. The court held a

bench trial on April 15, 2014, and ruled in favor of Davis. 

The 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 court held that because

Daulton’s 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 court

recognized that the violation was “clearly de minimis,” it

proceeded to enter judgment in favor of Davis on June 24,

2014.

 

3 Davis also alleged that Hollins Law violated the Rosenthal Fair Debt

Collection Practices Act (RFDCPA), which is the California state

equivalent of the FDCPA. See Cal. Civ. Code § 1788 et. seq. The

applicable provision of the RFDCPA states that “every debt collector

collecting or attempting to collect a consumer debt shall comply with the

provisions of Sections 1692b to 1692j” of the FDCPA. Cal. Civ. Code

§ 1788.17. Because the state law claim is derivative of the federal claim,

we do not address it separately.

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10 DAVIS V. HOLLINS LAW

Hollins Law timely appealed the district court’s judgment

and raises multiple arguments on appeal.4 The district court

had jurisdiction under 28 U.S.C. § 1331, and we have

jurisdiction under 28 U.S.C. § 1291. When reviewing a

district court’s ruling following a bench trial, we review

questions of law de novo and findings of fact for clear error. 

Ambassador Hotel Co. v. Wei-Chuan Inv., 189 F.3d 1017,

1024 (9th Cir. 1999).

III

We begin by considering whether, assuming without

deciding that the amount due on the American Express card

was a “debt” for purposes of the FDCPA, Daulton’s

voicemail message on September 25, 2012, violated the

FDCPA’s prohibition on the “failure to disclose in subsequent

communications that the communication is from a debt

collector.” See 15 U.S.C. § 1692(e)(11).

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

4 Hollins Law argues the following: (1) Davis incurred his debt on a

business credit card, so the district court erred by concluding that the debt

was a consumer debt covered by the FDCPA; (2) even if Davis’s debt is

covered by the FDCPA, Hollins Law met its disclosure obligations under

15 U.S.C. § 1692e(11); (3) Daulton’s voicemail is not a “communication”

under the FDCPA because it did not reference the debt; (4) the district

court erred by misapplying the burden of proof on Davis’s FDCPA claim;

and (5) the district court abused its discretion by precluding the

presentation of Hollins Law’s “bona fide error” defense at trial.

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DAVIS V. HOLLINS LAW 11

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.

Before Daulton’s 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,”5

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 (quotingCampuzanoBurgos, 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

5

Indeed, Davis admits he did know this, by “combining the message

itself with [his] prior knowledge that [Hollins Law] was a debt collector.”

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12 DAVIS V. HOLLINS LAW

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 1119.6

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.

7

REVERSED.

6 Davis cites a number of district court decisions establishing a per se

rule that a debt collector violates § 1692e(11) unless it expressly states

that it is a debt collector in every subsequent communication. See Forkum

v. Co-Operative Adjustment Bureau, Inc., 44 F. Supp. 3d 959, 963 (N.D.

Cal. 2014); Pasquale v. Law Offices of Nelson & Kennard, 940 F. Supp.

2d 1151, 1158 (N.D. Cal. 2013); Savage v. NIC, Inc., 2009 WL 2259726,

at *5–6 (D. Ariz. July 28, 2009). Because the FDCPA does not require

such a hypertechnical approach, we disapprove these decisions to the

extent they are contrary to our decision here.

7 Because we decide Hollins Law’s appeal on this ground, we do not

reach Hollins Law’s other arguments.

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