Washington v. Portfolio Recovery Associates, LLC, 211 F. Supp. 3d 1041

Background

Brenda Washington defaulted on a Lord & Taylor credit card; Portfolio Recovery Associates (PRA) bought the charged-off debt and retained Freedman Anselmo Lindberg, LLC to collect.
A Cook County court entered a default judgment for $803.60 on December 17, 2013; Washington’s counsel later moved to vacate the judgment and the court vacated it on March 5, 2014.
Washington’s counsel sent Freedman a December 27, 2013 letter notifying them that he represented Washington and disputing the debt; Freedman received no formal served appearance.
On February 13, 2014 Freedman sent counsel a letter stating the balance and warning that “interest, late charges, and other charges” might increase the amount.
On March 20, 2014 Freedman mailed a wage-deduction (garnishment) notice directly to Washington (not her attorney), referencing a judgment and a higher balance, even though the default judgment had already been vacated (Freedman asserts it did not learn of the vacatur until after mailing).
Washington sued under the FDCPA; cross-motions for summary judgment addressed whether Freedman’s February 13 letter and March 20 wage-deduction notice violated various FDCPA provisions (including §1692c(a)(2), §§1692e and 1692f).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the February 13, 2014 letter violated §§1692e/1692f by referencing “late charges”	Statement falsely implied late charges could be added though none were legally possible	Language was not false; courts sometimes impose post-judgment penalties and letter tracked Miller safe-harbor wording	Defendants entitled to summary judgment — letter not shown to mislead a competent attorney; §1692e/1692f claims denied
Whether the March 20, 2014 wage-deduction notice violated §§1692e/1692f by falsely stating a judgment and garnishment	Notice was false because the judgment had been vacated; thus unlawful threat/false representation	Bona fide error: Freedman had not received notice of vacatur and maintained reasonable procedures	Defendants entitled to summary judgment under the bona fide error defense for §§1692e/1692f claims
Whether the March 20, 2014 wage-deduction notice violated §1692c(a)(2) by communicating with represented consumer	Sending notice to Washington rather than her attorney violated the statute because Freedman knew counsel represented her	State garnishment law requires notice to debtor at last known address; mailing to debtor was therefore required; bona fide error	Plaintiff entitled to summary judgment — Freedman violated §1692c(a)(2); federal FDCPA controls and bona fide error not available for this statutory misinterpretation
Whether PRA is vicariously liable for Freedman’s §1692c(a)(2) violation	PRA exercised control over Freedman, had contractual approval rights over communications, and may be liable vicariously	PRA contends it gave directions and is not liable for agent acts contrary to its directions	Plaintiff entitled to summary judgment — PRA vicariously liable because it had right/opportunity to control and review Freedman’s communications

Key Cases Cited

Fields v. Wilber Law Firm, 383 F.3d 562 (7th Cir.) (unsophisticated-consumer standard for FDCPA false/misleading claims)
Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769 (7th Cir.) (competent-attorney standard when communications are to debtor's lawyer)
Miller v. McCalla, Raymer, Padrick, Cobb, Nichols & Clark, L.L.C., 214 F.3d 872 (7th Cir.) (safe-harbor language for varying debt amounts under §1692g)
Chuway v. National Action Financial Services, Inc., 362 F.3d 944 (7th Cir.) (advice to use Miller language when collecting varying balances)
Kort v. Diversified Collection Servs., Inc., 394 F.3d 530 (7th Cir.) (bona fide error defense and reasonable procedures in garnishment/collection context)
Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317 (7th Cir.) (vicarious liability under the FDCPA where creditor controls collection agent)