Diane Russell v. Absolute Collection Services
763 F.3d 385
| 4th Cir. | 2014Background
- Russell was pursued for a $501 medical bill by Absolute Collection; she paid Sandhills directly and notified Absolute Collection, but Absolute Collection continued to demand payment and threatened credit report action.
- Absolute Collection sent multiple dunning letters, falsely stating Russell owed the amount and would be reported as past due to credit bureaus.
- Russell sued in federal district court alleging FDCPA and NC state-law collection claims; as to FDCPA, trial produced jury verdict in her favor on state-law claims and damages; court granted JMOL against Absolute Collection on some FDCPA counts and denied others.
- Absolute Collection asserted a bona-fide-error defense and moved for JMOL; discovery disputes emerged regarding reliance on third-party payment reports and disclosure deficiencies.
- During discovery Absolute Collection disclosed new evidence (McKesson reports, Pavesi as a witness) late; district court excluded this evidence as a Rule 37 sanction; trial then proceeded with the limited evidentiary record.
- District court ultimately denied Absolute Collection’s post-trial motions and the Fourth Circuit affirmed in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Must a debtor dispute the debt in writing before filing a §1692e claim? | Russell not required to dispute to sue under §1692e. | Dispute pursuant to §1692g is a precondition to §1692e claims. | Not required; §1692e claims may proceed without pre-suit dispute. |
| Were Absolute Collection’s dunning letters false or deceptive under §1692e(2)(A), (8), (10)? | Letters falsely claimed unpaid debt and threatened false credit reporting. | Letters complied with permissible collection practices or disputed as non-false. | Yes; letters violated §1692e(2)(A), (8), and (10). |
| Did Rule 37 discovery sanctions correctly exclude late-disclosed evidence supporting bona fide error? | Late disclosures were substantially justified due to reopened discovery. | Late disclosures were not justified and caused unfair surprise. | Yes; the district court did not abuse its discretion in excluding the evidence. |
| Did the district court properly reject Absolute Collection’s bona-fide-error defense? | Bona-fide-error defense failed given undisclosed failures and misleading notices. | Procedural errors here foreclose §1692k(c) defenses, timing uncertain. | Yes; the court properly denied the bona-fide-error defense. |
| Is Russell entitled to JMOL on §1692e claims based on the record viewed for the least-sophisticated consumer? | Letters misled the least-sophisticated consumer irrespective of dispute status. | Jury should resolve factual questions about communications. | Yes; §1692e violations were established as a matter of law. |
Key Cases Cited
- Warren v. Sessoms & Rogers, P.A., 676 F.3d 365 (4th Cir. 2012) (liability without proof of intentional violation under FDCPA)
- Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364 (3d Cir. 2011) (FDCPA liability without showing intent; bona fide error defense limitations)
- McLaughlin v. Phelan Hallinan & Schmieg, LLP, F.3d (3d Cir. 2014) (discussed in context of §1692e pre-suit dispute and remedial scheme)
- Nat’l Fin. Servs., Inc. v. Nat’l Fin. Servs., Inc., 98 F.3d 131 (2d Cir. 1996) (least-sophisticated-consumer standard for §1692e)
- Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055 (9th Cir. 2011) (duty of legal interpretation of §1692e varies by circuit; in this case treated as law for letter analysis)
- Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996) (whether language of a collection letter is false or deceptive; jury vs. law split among circuits)
- Clark v. Absolute Collection Serv., Inc., 741 F.3d 487 (4th Cir. 2014) (FDCPA §1692e protections triggered by a debtor’s oral dispute; context used to evaluate actions)