Court Opinion

ID: 768636
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:11:28+00
Date Added: 2024-06-11T09:15:00.825238
License: Public Domain

211 F.3d 1057 (7th Cir. 2000)
Lori Pettit,    Plaintiff-Appellant,v.Retrieval Masters Creditors Bureau, Inc.,  and Russell Fuchs,    Defendants-Appellees.
No. 99-1797
In the  United States Court of Appeals  For the Seventh Circuit
Argued October 25, 1999
Decided May 9, 2000
Rehearing and Rehearing En Banc Denied June 7, 2000.

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 1154--Rebecca R. Pallmeyer, Judge.
Before Easterbrook, Manion, and Rovner, Circuit  Judges.
Manion, Circuit Judge.

1
Lori Pettit claims that  the Retrieval Masters Creditors Bureau  (Retrieval) and its president--Russell Fuchs--  violated the Fair Debt Collection Practices Act  (FDCPA) by using its name in a collection letter.  Specifically, she contends that the name  "Retrieval Masters Creditors Bureau, Incorporated" is deceptive because it leads  unsophisticated debtors to believe that Retrieval  is a credit bureau rather than a collection  agency. The district court granted summary  judgment for Fuchs because he is not a "debt  collector." It also granted summary judgment for  Retrieval based on its view that the letter was  not deceptive as a matter of law. We affirm  because under the FDCPA Fuchs is not a debt  collector and because Pettit failed to create a  genuine issue of material fact as to whether an  unsophisticated debtor would find Retrieval's  name misleading. We also reject her argument that  her own subjective belief that all debt  collectors are credit bureaus results in  liability for Retrieval Masters.

2
A. Liability of the Debt Collector's  Shareholders or Officers Under the FDCPA

3
The FDCPA is designed to protect against abusive  debt collection practices which would likely  disrupt a debtor's life. Mace v. Van Ru Credit  Corp., 109 F.3d 338, 343 (7th Cir. 1997). Its  provisions generally apply only to debt  collectors. See 15 U.S.C. sec. 1692(e);  Transamerica Fin. Servs., Inc. v. Sykes, 171 F.3d 553, 554 n.1 (7th Cir. 1999); Whitaker v.  Ameritech Corp., 129 F.3d 952, 958 (7th Cir.  1997). A "debt collector" is defined as "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. sec. 1692a(6).

4
Pettit argues that Russell Fuchs--as the largest  shareholder and president of Retrieval Masters--  is a debt collector under the terms of the FDCPA,  and thus is personally liable for any violations  of the Act perpetrated by Retrieval, or at least  for those violations in which he was intimately  involved. The district court rejected this  argument and held that Fuchs is not liable under  the FDCPA because he exercised little or no day-  to-day control over Retrieval Masters. Pettit v.  Retrieval Masters Creditors Bureau, Inc., 42 F.  Supp.2d 797, 805 (N.D. Ill. 1999). But under our  holding in White v. Goodman, the extent of  control exercised by an officer or shareholder is  irrelevant to determining his liability under the  FDCPA. 200 F.3d 1016, 1019 (7th Cir. 2000).  Because such individuals do not become "debt  collectors" simply by working for or owning stock  in debt collection companies, we held that the  Act does not contemplate personal liability for  shareholders or employees of debt collection  companies who act on behalf of those companies,  except perhaps in limited instances where the  corporate veil is pierced. Id.; Aubert v.  American Gen. Fin., Inc., 137 F.3d 976, 979-80  (7th Cir. 1998). Rather, the FDCPA has utilized  the principle of vicarious liability. See  Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996); Fox v. Citicorp Credit  Servs., Inc., 15 F.3d 1507, 1516 (9th Cir. 1994).  Just as in the Title VII context, the debt  collection company answers for its employees'  violations of the statute. With vicarious or  respondeat superior liability, the debt  collection company "and its managers have the  proper incentives to adequately discipline  wayward employees, as well as to instruct and  train employees to avoid actions that might  impose liability." U.S. EEOC v. AIC Sec.  Investigations, Ltd., 55 F.3d 1276, 1282 (7th  Cir. 1995). Individuals who do not otherwise meet  the statutory definition of "debt collector"  cannot be held liable under the Act.  Transamerica, 171 F.3d at 554 n.1. As we  mentioned in White, FDCPA suits against the  owners of a debt collection company who are not  otherwise debt collectors are frivolous and might  well warrant sanctions. 200 F.3d at 1019. The  holding of White is equally applicable to this  case, so regardless of whether Fuchs exercised  extensive control over Retrieval Masters, the  district court correctly granted summary judgment  for Fuchs. Of course, Pettit may still seek redress from Retrieval Masters for any violations  of the Act committed by Fuchs, since it is  undisputed that Retrieval is a debt collector.

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B.  The FDCPA and the Unsophisticated  Debtor

6
The FDCPA specifically prohibits a "false  representation or implication that a debt  collector operates or is employed by a consumer  reporting agency . . . ." 15 U.S.C. sec.  1692e(16). A consumer reporting agency is "any  person which, for monetary fees . . . regularly  engages in whole or in part in the practice of  assembling or evaluating consumer credit  information or other information on consumers for  the purpose of furnishing consumer reports to  third parties . . . ." 15 U.S.C. sec. 1681a(f).  The purpose of this provision is to prevent debt  collectors from coercing payments from debtors by  falsely leading them to believe that the failure  to pay the debt will adversely affect the  debtor's credit rating and ability to obtain  credit. Cf. McKenzie v. E.A. Uffman & Assocs.,  Inc., 119 F.3d 358, 361 (5th Cir. 1997).

7
Practices purporting to violate the Act must be  viewed from the objective standard of an  "unsophisticated debtor." Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997); Jang v. A.M.  Miller & Assoc., 122 F.3d 480, 483 (7th Cir.  1997). In attempting to describe this  hypothetical debtor we have recognized that he is  not as learned in commercial matters as are  federal judges, see Walker v. National Recovery,  Inc., 200 F.3d 500, 501 (7th Cir. 1999), but  neither is he completely ignorant. Thus, on the  one hand, we have described an unsophisticated  debtor as "uninformed, naive, or trusting."  Gammon v. GC Servs., Ltd. Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994). At the same time, we  have rejected the "least sophisticated debtor"  standard used by some other circuits because we  don't believe that the unsophisticated debtor  standard should be tied to "the very last rung on  the sophistication ladder." Id. Instead, we and  other courts have held that our uneducated debtor  possesses rudimentary knowledge about the  financial world, is wise enough to read  collection notices with added care, possesses  "reasonable intelligence," and is capable of  making basic logical deductions and inferences.  See Chaudhry v. Gallerizzo, 174 F.3d 394, 408-09  (4th Cir. 1999); United States v. National Fin.  Servs., Inc., 98 F.3d 131, 136 (4th Cir. 1996);  Gammon, 27 F.3d at 1257; Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993). Furthermore,  while our unwary debtor may tend to read  collection letters literally, he does not  interpret them in a bizarre or idiosyncratic  fashion. White, 200 F.3d at 1020; Taylor v.  Perrin, Landry, deLaunay & Durand, 103 F.3d 1232,  1236 (5th Cir. 1997). According to our  unsophisticated debtor standard, a statement will  not be confusing or misleading unless a  significant fraction of the population would be  similarly misled. Gammon, 27 F.3d at 1260  (Easterbrook, J., concurring). With this standard  in mind, we turn to the letter at hand.

C.  No Genuine Issue of Material Fact

8
The first thing a person notices when reading  the letter is the name "RETRIEVAL MASTERS  CREDITORS BUREAU, INC." which is prominently  displayed, in capital letters, at the top of the  correspondence. See Appendix. Almost as prominent  are the words, also in capital letters, "RCMB  COLLECTION AGENCY". In smaller type, the letter  also informs Pettit that Retrieval Masters is a  member of the "American Collectors Association,  Incorporated." The body of the letter plainly  states that "your account is now being handled by  debt collectors . . .", and it warns Pettit that  a failure to pay the debt might result in her  name being placed on the "National Delinquent  Debtor File, which could affect your ability to  obtain certain types of credit . . . ." The  letter is signed by a person identified as a  "Collection Manager." Finally, the letter  instructs Pettit to examine the reverse side, which informs her in plain English that "[t]his  is an attempt to collect a debt."

9
The district court held that this letter would  not dupe an unsophisticated debtor into believing  that Retrieval Masters was a credit bureau.  Pettit, 42 F. Supp. 2d at 810. The court based its  holding on the fact that the letter does not  suffer from the usual defects which result in  FDCPA liability. For instance, it does not  contain an explicit statement that Retrieval is a  credit bureau.1 There are no inconsistent or  contradictory assertions concerning Retrieval's  status with respect to being a credit bureau or a  collection agency, and the letter does not bury  or overshadow its identification of Retrieval as  a collection agency with a suggestion that it is  a credit bureau. Rather, Retrieval's reminder  that the creditor might place Pettit's name on  the National Delinquent Debtor File suggests to  the reader that Retrieval is not a credit bureau,  since it is not the one in charge of the  Delinquent Debtor File. As the district court  stated: "Obviously, RMCB is warning that Pettit's  name will be turned over to a credit reporting  agency if she does not pay promptly. If RMCB was  falsely suggesting that RMCB itself was a credit  bureau, it would not need to threaten to report  her to a credit reporting agency." 42 F. Supp. 2d  at 810.

10
Undeterred, Pettit points to the obvious  similarity between the term "Creditors Bureau" in  the defendant's name and the term "credit  bureau," and argues that an unlearned debtor  might mistakenly read the name as "credit  bureau." While it's true that upon cursory review  this or any other collection letter could be  misread, as we mentioned above, even an  unsophisticated debtor reads collection letters  carefully so as to be sure of their content.  Gammon, 27 F.3d at 1257. A careful reading of the  letter would not lead an unsophisticated debtor  to believe that Retrieval is identified as a  credit reporting agency. So we agree with the  district court that any danger of misreading  created by simply placing the name "Retrieval  Masters Creditors Bureau, Inc." on the letterhead  does not violate the Act.2 White, 200 F.3d at  1020; Chaudhry, 174 F.3d at 408; Clomon, 988 F.2d  at 1319. So Pettit can't prevail on her  "misreading" argument.3

11
Pettit also argues that an unsophisticated  debtor might believe that there is no difference  between a creditors' bureau and a credit bureau,  or that the collection agency in question is both  a credit bureau and a creditors' bureau, and so  the letter would be deceiving in this respect.  While there may be some merit to this argument,  Pettit cannot prevail because at the summary  judgment stage of a case she must do more than  merely speculate about how a naive debtor would  interpret the letter. The non-moving party must  offer sufficient evidence to create a genuine  factual issue for trial. See Fed. R. Civ. P.  56(e). But Pettit presents little on this point.  The best she could come up with was her own self-  serving deposition testimony that Retrieval's name led her to believe that the company was a  credit bureau. This fails to create a genuine  issue as to whether a significant fraction of the  population would have believed the same thing  after reading this letter. Robin v. Espo Eng'g  Corp., 200 F.3d 1081, 1088 (7th Cir. 2000)  (nonmoving party "must supply evidence sufficient  to allow a jury to render a verdict in his  favor."). We have advised litigants on several  occasions that this feat might be accomplished  through the use of survey evidence, see, e.g.,  Walker, 200 F.3d at 501; Johnson v. Revenue  Management Corp., 169 F.3d 1057, 1060 (7th Cir.  1999), but Pettit elected not to take this route.  The self-serving opinion of the plaintiff,  clearly not an expert or an objective observer,  does not create a genuine issue for trial.  Therefore, for this reason alone summary judgment  was proper.

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D. Imputation of Irrationality to the  Unsophisticated Debtor

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Another more substantial problem exists with  Pettit's reliance on her own deposition  testimony. This court has held that it will not  ascribe to the hypothetical unsophisticated  debtor all of the irrational notions which FDCPA  plaintiffs might suggest. White, 200 F.3d at  1020. Yet that is exactly what Pettit asks us to  do here. In her deposition she revealed her own  subjective standard for an unsophisticated  debtor. Pettit essentially contends that no  matter what name Retrieval had used, she (as the  typical unsophisticated debtor) would have  thought that it was a credit bureau, because she  thought that credit bureaus and collection  agencies were the same thing.

14
Q:  When you received this letter in August of  1997, what about the letter made you think that  it was from a credit bureau?    Pettit:  The name Creditors Bureau.

15
Q:  Is that the only thing?    Pettit:  Yes.

16
Q:  But you also knew that it was from a debt  collector, right?

17
Pettit:  I thought they were the same thing.

18
Pettit Dep. p. 25.

19
Pettit's self-serving testimony does not serve  her well. Her proposed standard would create  liability for debt collectors based on  information which the Act requires debt  collectors to place in their collection letters.  15 U.S.C. sec. 1692e(11) (debt collector must  inform the debtor that it is attempting to  collect a debt, and thus that it is a debt  collector); Lewis v. ACB Business Servs., Inc.,  135 F.3d 389, 399 (6th Cir. 1998) (debt collector  must inform the debtor that the dunning letter is  from a debt collector who is attempting to  collect a debt). We obviously cannot accept  Pettit's claimed level of unsophistication as the  level of unsophistication possessed by the  typical unsophisticated debtor. If we did, nearly  all collection letters from debt collectors would  violate the Act. Under Pettit's standard, any  letter which states it is an attempt to collect a  debt or which states that it is from a collection  agency would lead someone with Pettit's mindset  to believe not only that the letter is from a  collection agency, but also, because she believes  that collection agencies are credit bureaus, that  the debt collector sending her the letter is a  credit bureau. Pettit's proposed standard of  unsophistication would mean that all attempts to  collect debts by non-credit bureau debt  collectors would violate the FDCPA. But the text  of the FDCPA implicitly places limits on how far  we can go in attributing unenlightened notions to  our hypothetical debtor. White, 200 F.3d at 1020;  Smith v. Computer Credit, Inc., 167 F.3d 1052,  1055 (6th Cir. 1999) ("A collection agency does  not have to stop its collection efforts to comply  with the Act."). In short, under the FDCPA,  confusion is not in the eyes of the beholder. As  we said in White, the "Act is not violated by a  dunning letter that is susceptible of an  ingenious misreading, for then every dunning  letter would violate it. The Act protects the  unsophisticated debtor, but not the irrational  one." White, 200 F.3d at 1020. As a matter of  law, the extremely low level of sophistication  and the high level of irrationality suggested by  Pettit is not the standard for unsophisticated  debtors. Chaudhry, 174 F.3d at 409 (least  sophisticated debtor standard preserves a  quotient of reasonableness and presumes a basic  level of understanding). Accordingly, the  district court correctly granted summary judgment  for Retrieval Masters.

20
We    AFFIRM.

APPENDIX

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[Tabular or Graphical Material Omitted][Tabular or Graphical Material Omitted]

Notes:

1
 Prior to 1979, Retrieval's official name was  "Retrieval Masters Credit Bureau, Inc." The name  change was engendered by the Federal Trade  Commission's suggestion that "Credit Bureau" was  misleading. The FTC has made no complaint about  Retrieval's present name.

2
 This is not to say that Retrieval Masters  couldn't improve the letter. In the future, it  might place in its collection letters an explicit  statement that it is not a credit reporting  agency. As we discuss below, this would not have  mattered in Pettit's case because she believed  that all debt collectors were credit bureaus, but  such a disclaimer may prove helpful to some  debtors.

3
 Pettit attempts to support her argument with a  Fifth Circuit opinion dealing with a collection  agency that used the name "Collections  Department, Credit Bureau of Baton Rouge." See  McKenzie, 119 F.3d at 358. The McKenzie court  found that this name would lead debtors to  believe that the company was a credit reporting  agency. Obviously that case is distinguishable  from the present one for, as we point out above,  Retrieval Masters did not use the term "credit  bureau" in its name or any other part of the  letter.