1

United States Court of Appeals,

Fifth Circuit.

No. 95-30678.

Charles Ray TAYLOR, Plaintiff-Appellant,

v.

PERRIN, LANDRY, deLAUNAY & DURAND, Allan L. Durand and USI

Financial Services, Inc., Defendants-Appellees.

Jan. 29, 1997.

Appeal from the United States District Court for the Middle

District of Louisiana.

Before GARWOOD, EMILIO M. GARZA and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

This is a review of the district court's summary judgment

dismissing a suit by Charles Ray Taylor against Perrin, Landry,

deLaunay & Durand (PLdD), Allan L. Durand, and USI Financial

Services, Inc. (USI) under the Fair Debt Collection Practices Act

(FDCPA), 15 U.S.C. § 1692 et seq. We reverse and remand the case

to the district court for further proceedings.

1.

The Fair Debt Collection Practices Act (FDCPA) was enacted "to

eliminate abusive debt collection practices by debt collectors, to

insure that those debt collectors who refrain from using abusive

debt collection practices are not competitively disadvantaged, and

to promote consistent State action to protect consumers against

debt collection abuses." 15 U.S.C. § 1692(e). Congress found that

existing state and federal laws were inadequate to fully address

the problem caused by debt collectors using unfair or deceptive
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practices. These abuses contributed to personal bankruptcies,

marital instability, loss of jobs, and invasions of individual

privacy. 15 U.S.C. § 1692(a); see TANG THANH TRAI LE, PROTECTING

CONSUMER RIGHTS § 10.15 (1987).

The Act applies principally to "debt collectors". There are

several ways a person may act as a "debt collector" or otherwise

become subject to the provisions of the FDCPA. In its primary

definition, the term "debt collector" means "any person who uses

any instrumentality of interstate commerce or the mails in any

business, the principal purpose of which is the collection of any

debts, or who regularly collects or attempts to collect, directly

or indirectly, debts owed or due or asserted to be owed or due

another." 15 U.S.C. § 1692a(6).

The term does not ordinarily include creditors who, directly

or indirectly, try to collect debts owed them. The Act

specifically provides, however, that "debt collector" does include

any creditor who, in the process of collecting his own debts, uses

any name other than his own which would indicate that a third

person is collecting or attempting to collect such debts. 15

U.S.C. § 1692a(6); LE, § 10.16.

Further, the FDCPA provides that it is unlawful to design,

compile, and furnish any form knowing that such form would be used

to create the false belief in a consumer that a person other than

the creditor of such consumer is participating in the collection of

or in an attempt to collect a debt such consumer allegedly owes

such creditor, when in fact such person is not so participating.
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15 U.S.C. § 1692j(a). Any person who violates this section shall

be liable to the same extent and in the same manner as a debt

collector is liable for failure to comply with a provision of the

Act. 15 U.S.C. § 1692j(b).

The FDCPA prohibits debt collectors from, inter alia, using

any false, deceptive, or misleading representation or means in

connection with the collection of any debt, 15 U.S.C. § 1692e,

including but not limited to the false representation or

implication that any individual is an attorney or that any

communication is from an attorney. § 1692e(3).

Any debt collector who fails to comply with any provision of

the FDCPA with respect to any person is liable to such person for

any consequential damage actually sustained, such additional

damages as the court may allow up to $1,000, and, in the case of a

successful action to enforce the foregoing liability, the costs of

the action, together with a reasonable attorney's fee. On the

other hand, the court may award reasonable attorney's fees to the

defendant if the plaintiff brought the action in bad faith. 15

U.S.C. § 1692k.

2.

In making factual findings and drawing inferences from the

appropriate filings by the parties in connection with the motion

for summary judgment, we consider them de novo in the light most

favorable to the nonmoving party. See Neff v. American Dairy Queen

Corp., 58 F.3d 1063, 1065 (5th Cir.1995), cert. denied, --- U.S. --

--, 116 S.Ct. 704, 133 L.Ed.2d 660 (1996). Applying these
4

principles, we consider the district court's summary judgment in

the context of the following background of material facts

determined from the record.

USI loaned Taylor money to pay his automobile insurance

premiums. Taylor failed to pay the debt timely. After Taylor

failed to respond to USI's direct attempts to collect, USI sent him

an "attorney demand letter," which appeared substantially as

follows:

CA (97) 242,SIZE-41 PICAS,TYPE-PDI

This letter was a reprint of a form letter prepared by Durand and

PLdD for USI to use in collecting or attempting to collect from

their debtors. It bore the letterhead of the PLdD law firm and the

facsimile of a signature by Allan L. Durand. The procedures used

by USI in sending out reprints of the letter were preapproved by

Durand and PLdD, but neither Durand nor any other attorney reviewed

the accounts, the balances due or the particular letters before

they were sent to Taylor and other debtors.

USI regularly used the form letter in attempting to collect

debts owed to it. USI had a computer program which printed out a

daily business report of all amounts due, paid and unpaid, each

day. When a debt remained unpaid, the program caused a letter

notifying the debtor of the deficiency to be sent to the debtor on

USI stationery. If that letter went unheeded, after the computer

system verified that the amount was in fact still due, the USI

system generated and mailed an "attorney demand letter" under the

PLdD letterhead and over a facsimile of Durand's signature.
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Taylor filed a complaint, alleging that USI sent the deceptive

form letter indicating that Durand and his law firm were assisting

USI in collecting the debt, but that in fact Durand had not

performed the minimal tasks required of an attorney acting as an

attorney, such as reviewing Taylor's file, determining the merits

of the claim, or reviewing and sending the particular letter, thus

violating various provisions of the FDCPA. Taylor sought actual

and statutory damages, costs and reasonable attorney's fees

pursuant to 15 U.S.C. § 1692k. The parties filed cross-motions,

the defendants for summary judgment and Taylor for partial summary

judgment.

Following a hearing on the motions for summary judgment, and

without ruling on Taylor's motion for partial summary judgment, the

district court rendered summary judgment for all defendants,

dismissing Taylor's suit. Taylor appealed.

3.

PLdD, Durand and USI are not entitled to summary judgment as

a matter of law because, under the undisputed material facts

assembled for purposes of the summary judgment motion, it is

evident that they committed violations of the FDCPA.

A.

The most widely accepted tests for determining whether a

collection letter contains false, deceptive, or misleading

representations are objective standards based on the concepts of

the "least sophisticated consumer" or the "unsophisticated

consumer." Several Circuit Courts of Appeals have held that, in
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determining whether a violation of the FDCPA has occurred, the debt

collector's representations, notices and communications to the

consumer must be viewed objectively from the standpoint of the

"least sophisticated consumer." Bentley v. Great Lakes Collection

Bureau, 6 F.3d 60, 62 (2d Cir.1993); Clomon v. Jackson, 988 F.2d

1314 (2d Cir.1993); Jeter v. Credit Bureau, Inc., 760 F.2d 1168,

1174-75 (11th Cir.1985); Smith v. Transworld Systems, Inc., 953

F.2d 1025, 1028 (6th Cir.1992); Graziano v. Harrison, 950 F.2d

107, 111 (3d Cir.1991); Baker v. G.C. Services Corp., 677 F.2d

775, 778 (9th Cir.1982). This standard serves the dual purpose of

protecting all consumers, including the inexperienced, the

untrained and the credulous, from deceptive debt collection

practices and protecting debt collectors against liability for

bizarre or idiosyncratic consumer interpretations of collection

materials. Clomon, 988 F.2d at 1318-19. The Seventh Circuit has

adopted an "unsophisticated consumer" standard that serves the same

purposes and apparently would lead to the same results in most

cases, except that it is designed to protect consumers of below

average sophistication or intelligence without having the standard

tied to "the very last rung on the sophistication ladder". Gammon

v. GC Services Limited Partnership, 27 F.3d 1254, 1257 (7th

Cir.1994). We need not choose between these standards in the

present case. The spurious "attorney demand letter" sent to Taylor

was deceptive and misleading under either standard.

 USI acted as a "debt collector" and engaged in conduct that

violated the FDCPA. Although USI was attempting to collect its own
 

1The term "debt collector" means any person who uses any

instrumentality of interstate commerce or the mails in any business

the principal purpose of which is the collection of any debts, or

who regularly collects or attempts to collect, directly or

indirectly, debts owed or due or asserted to be owed or due

another. Notwithstanding the exclusion provided by clause (F) of

the last sentence of this paragraph, the term includes any creditor

who, in the process of collecting his own debts, uses any name

other than his own which would indicate that a third person is

collecting or attempting to collect such debts....

15 U.S.C. § 1692a(6) (emphasis added). 

 

2Section 1692e states in relevant part:

A debt collector may not use 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:

(3) The false representation or implication that any

individual is an attorney or that any communication is

from an attorney.

(10) The use of any false representation or deceptive

means to collect or attempt to collect any debt or to

obtain information concerning a consumer. 

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loan, it acted as a "debt collector" because it used names other

than its own, viz., the names of PLdD and Allan Durand, which would

indicate that third persons were attempting to collect the debt.

15 U.S.C. § 1692a(6)1. Under the undisputed facts presented for

our review, USI violated § 1692e(3)2 by falsely representing to

Taylor that the collection letter was a communication from an

attorney and his law firm, viz., Allan Durand and PLdD. See Masuda

v. Thomas Richards & Co., 759 F.Supp. 1456, 1460-61 (C.D.Cal.1991)

(debt collector violated § 1692e(3) by a similar collection

process, although the attorney, who did not participate otherwise,

signed the letters at the direction of the collection agency);
 

3Section 1692j provides in pertinent part:

(a) It is unlawful to design, compile, and furnish any

form knowing that such form would be used to create the

false belief in a consumer that a person other than the

creditor of such consumer is participating in the

collection of or in an attempt to collect a debt such

consumer allegedly owes such creditor, when in fact such

person is not so participating.

(b) Any person who violates this section shall be liable

to the same extent and in the same manner as a debt

collector is liable under section 813 [15 USCS § 1692k]

for failure to comply with a provision of this title [15

USCS §§ 1692 et seq.]. 

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Martinez v. Albuquerque Collection Services, Inc., 867 F.Supp. 1495

(D.N.M.1994) (debt collector liable under the Section for

pseudo-attorney collection letter process, although the attorney

was later employed to file collection suits, because the violation

occurred when the debt collector made the false representation that

the collection letter was from an attorney).

Allan Durand and PLdD acted as persons subject to the

provisions of the Act and, by the same token, violated the FDCPA,

because it may be reasonably inferred that they designed and

furnished a form letter to USI knowing that USI would use it to

create the belief in consumers that persons other than USI, namely

Durand and his law firm, were participating in attempts to collect

debts, when in truth Durand and PLdD were not participating. The

FDCPA provides that any person who knowingly furnishes forms for

use in this deceptive fashion shall be liable to the same extent

and in the same manner as a debt collector who fails to comply with

the Act. See 15 U.S.C. § 1692j(a) & (b).3 The demand letter,

bearing a facsimile of Durand's signature under PLdD's letterhead,
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informed consumers that USI had retained Durand to collect the

balance due and had instructed him to file suit against the debtor

to collect the past due amount if it was not paid within ten (10)

days of receipt of the letter. The defendants' motion for summary

judgment and affidavits and other documents of record do not

contain any assertion that Durand or PLdD participated in the

attempt to collect Taylor's debt. To the contrary, the summary

judgment evidence shows that Durand and PLdD never billed USI or

received any income from USI for the demand letter or for any other

legal services; that only USI verified the consumer accounts and

sent out the "attorney demand letters" via its computer; that

Durand and PLdD were not involved in any way in the selection or

account evaluation of debtors sent demand letters or in the sending

of the letters bearing the PLdD letterhead over the facsimile of

Durand's signature; that USI kept no records of the demand letters

sent and had no record of transmitting such data to Durand and

PLdD; that the defendants filed a written contradiction of the

plaintiffs' statement of uncontested facts in which defendants

specifically denied that they regularly collect or attempt to

collect debts owed to another; and that defendants moved to amend

their original answer to correct an inadvertent admission that

Durand and PLdD were in the business of regularly collecting debts,

asserting vigorously that they had never been in the business of

regularly collecting debts.

In a similar situation, the Second Circuit in Clomon v.

Jackson, 988 F.2d 1314 (2d Cir.1993), concluded that an attorney,
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Jackson, who was also part-time general counsel for a debt

collection agency, violated § 1692e(3) and (10) of the FDCPA by

furnishing an attorney collection letter form to the agency for its

deceptive use in mass mailing reprints of the letter to consumer

debtors. The form that Jackson furnished, when mailed to

consumers, would not only falsely represent or imply that the

letter had been specifically prepared and sent to an individual

consumer by the attorney, Jackson. It would also deceptively

indicate that the consumer's file had been referred to the

attorney, Jackson, who had evaluated the case and formed the

opinion that the creditor's claim could and would be judicially

enforced.

The attorney collection letter form contained a facsimile of

Jackson's signature: "P.D. Jackson, Attorney at Law/General

Counsel/NCB Collection Services"; a letterhead: "Offices of

General Counsel/336 Atlantic Avenue/East Rockaway, N.Y. 11518";

and a marginal inscription: "P.D. Jackson, G.C./Attorney-at-Law".

In actuality, as was typical in the handling of the agency's

accounts, Jackson did not review Clomon's file; he never reviewed

or signed any letter that was sent in his name to Clomon; he never

gave advice with respect to Clomon's case; and he never received

any instructions as to any steps to be taken against Clomon. "In

short, Jackson never considered the particular circumstances of

Clomon's case prior to the mailing of the letters and he never

participated personally in the mailing." Id. at 1317.

The Court in Clomon v. Jackson observed:
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[T]he use of an attorney's signature on a collection letter

implies that the letter is "from" the attorney who signed it;

it implies, in other words, that the attorney directly

controlled or supervised the process through which the letter

was sent.... [T]he use of an attorney's signature implies—at

least in the absence of language to the contrary—that the

attorney signing the letter formed an opinion about how to

manage the case of the debtor to whom the letter was sent....

[T]here will be few, if any, cases in which a mass-produced

collection letter bearing the facsimile of an attorney's

signature will comply with the restrictions imposed by §

1692e.

988 F.2d at 1321.

Clomon is helpful to understanding that a debt collector, who

uses a mass-produced collection letter using the letterhead and

facsimile signature of a lawyer who is not actually participating

in the collection process, violates § 1692e(3). The Clomon opinion

does not explain how it reached the conclusion that the attorney

Jackson was a debt collector and therefore subject to the

prohibitions of 15 U.S.C. § 1692e(3) and (10). Nevertheless, the

decision reaches the correct result because an attorney, such as

Jackson and Durand, who violates § 1692j(a) by furnishing a form

knowing that it will be used by a debt collector to deceive

consumers is liable for a violation of the Act under § 1692j(b).

A single violation of any provision of the Act is sufficient

to establish civil liability under the FDCPA. Section 1692k of the

Act establishes civil liability for "any debt collector who fails

to comply with any provision of this title [15 U.S.C. § 1692 et

seq.]" Clomon v. Jackson, 988 F.2d at 1318. Accordingly, we need

not consider any of the other potential bases for reversing the

summary judgment that have been urged by Taylor.

B.
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The defendants' arguments and the District Court's reasons to

the contrary can be refuted without difficulty.

The District Court fell into error by deciding that (1) PLdD

and Durand were not subject to the provisions of the Act because

they did not "regularly" collect debts; (2) USI was not a debt

collector because it was collecting a debt on its own behalf; and

(3) assuming that the defendants acted as debt collectors, the

violations were excusable as innocuous, unintentional and not

abusive.

As we explained, under the summary judgment motion evidence,

PLdD and Durand are liable under § 1692j to the same extent and in

the same manner as a debt collector who violates the Act because it

is reasonable to infer that they furnished an attorney collection

letter form knowing that it would be used to create the false

impression that a third person was participating in the collection

of the debt. Their liability does not depend upon whether they

fall within the definition of a debt collector who regularly

collects debts for others provided for in § 1692a(6) of the Act.

USI acted as a debt collector because under § 1692a(6) that

term includes any creditor who, in the process of collecting his

own debts, uses any name other than his own which would indicate

that a third person is collecting or attempting to collect such

debts. USI used the names of PLdD and Durand in this manner. See

Kempf v. Famous Barr Co., 676 F.Supp. 937, 938 (E.D.Mo.1988) (term

"debt collector" includes "creditors, who in the process of

collecting their own debts, use any names which would indicate that
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a third person is collecting or attempting to collect such debts");

Kimber v. Federal Financial Corp., 668 F.Supp. 1480, 1483-4

(M.D.Ala.1987); Horne v. Farrell, 560 F.Supp. 219, 224

(M.D.Pa.1983).

The defendants unsuccessfully assert several affirmative

defenses that are not supported by the summary judgment evidence.

A debt collector may not be held liable in any action brought

under the Act if he 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 adopted to

avoid any such error. § 1692k(c). The record presented for our

review does not show that the defendants' violations were

unintentional or that they resulted from bona fide errors

notwithstanding the adoption of precautions designed to prevent

them.

The frequency and persistence of noncompliance by the debt

collector, the nature of such noncompliance, and the extent to

which such noncompliance was intentional are factors the court must

consider, among other relevant factors in determining the amount of

liability in any individual action under the Act. § 1692k.

Consequently, the fact that violations were innocuous and not

abusive may be considered only in mitigating liability, and not as

defenses under the Act.

The Defendants argue that they cannot be held liable under

the Act because PLdD and USI "were under common control and were

working together toward a common end, i.e. to collect money." The
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Act does not provide for a defense or exclusion in these terms.

Section 1692a(6) provides that the term "debt collector" does not

include (A) any officer or employee of a creditor who, in the name

of the creditor, collects debts for such creditor; or (B) any

person while acting as a debt collector for another person, both of

whom are related by common ownership or affiliated by corporate

control, if the person acting as a debt collector does so only for

persons to whom it is so related or affiliated and if the principal

business of such person is not the collection of debts. But these

provisions do not shield any of the defendants from liability.

First, they do not absolve PLdD or Durand from liability for

violations of § 1692j, which does not require a "debt collector"

finding. Second, as to USI, neither subsection (A) nor (b)

applies.

Conclusion

For the reasons assigned, the summary judgment of the district

court in favor of the defendants is REVERSED. We express no

opinion upon the partial summary judgment motion of the plaintiff

as that motion was not ruled upon by the District Court. The case

is REMANDED to the District Court for further proceedings.

GARWOOD, Circuit Judge, with whom EMILIO M. GARZA, Circuit

Judge, joins, concurring:

Agreeing in large measure with Judge Dennis's able opinion, in

my view the district court's summary judgment was inappropriate

because there is at least a fact issue, or a failure by defendants

to make an adequate showing of entitlement to summary judgment, as

to whether USI was a debt collector by virtue of the second
15

sentence of 15 U.S.C. § 1692a(6), whether USI violated 15 U.S.C. §

1692e(3) & (10), whether Durand and PLdD violated 15 U.S.C. §

1692j(a) (and are hence subject to debt collector liability by

virtue of section 1692j(b)), and whether USI or Durand and PLdD are

shielded from liability for any such violations by virtue of

section 1692a(6)(A) or (B) or by 15 U.S.C. § 1692k(c).

With respect to the standard for interpreting the letter

quoted in Judge Dennis's opinion for purposes of sections 1692e(3)

& (10) and 1692j(a), I note that the Second Circuit in Clomon v.

Jackson, 988 F.2d 1314, 1319 (2d Cir.1993), observed that "the

least-sophisticated consumer standard" had been "consistently

applied ... in a manner that protects debt collectors against

liability for unreasonable misinterpretations of collection

notices." As the Seventh Circuit suggested in Gammon v. GC

Services, Ltd., 27 F.3d 1254, 1257 (7th Cir.1994), this raises the

question whether "least sophisticated consumer" is a misnomer. See

also id. at 1259 (Easterbrook, J., concurring). In my view,

summary judgment here was inappropriate whether or not we use a

"least sophisticated consumer" standard, or an "unsophisticated

consumer" standard, or a standard similar to that suggested by

Judge Easterbrook's thoughtful concurrence in Gammon, a standard

such as that of "a reasonable consumer with intelligence and

experience typical of or average for those consumers to whom the

communication was directed." I do not understand us to choose

between these or like formulations. I also do not understand us to

determine whether section 1692j(a) reaches instances where there is
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meaningful third party participation in the debt collection effort,

and the form furnished is misleading merely as to the degree or

character of that participation. Nor do I understand us to hold

that as a matter of law Durand and PLdD were not participating in

the debt collection; only that such participation remains at least

a fact issue on this record. Finally, I do not understand us to

pass upon plaintiff's entitlement to summary judgment. With these

observations, I concur in the reversal and remand.

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