Watson v. ARC Management Group, LLC (JRG3)
2:16-cv-00300
E.D. Tenn.Dec 18, 2017Background
- Plaintiff Sandra K. Watson incurred a medical debt (~$1,070) that was assigned to ARC Management Group, LLC for collection; ARC reported the debt to Equifax and later obtained a Tennessee collection-service license.
- Plaintiff sued as class representative under the FDCPA, alleging ARC violated various provisions (15 U.S.C. §§1692e, e(2)(A), e(5), e(9), e(10), and 1692f) by reporting the debt and by reporting before ARC held a Tennessee license.
- ARC did not otherwise contact Watson (no calls, letters, or suit) beyond reporting the debt to Equifax; the parties agree the debt was valid for purposes of summary judgment.
- Plaintiff moved for partial summary judgment on liability only; ARC moved for summary judgment on all claims.
- The district court denied plaintiff’s partial summary judgment, granted ARC’s summary judgment, and dismissed the action in its entirety.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ARC’s lack of a Tennessee collection license when it reported the debt converts that conduct into an FDCPA violation | Watson: reporting while unlicensed violated FDCPA and was an unlawful collection attempt | ARC: FDCPA does not require state licensing; ARC later obtained a license which cures any state-law default; reporting was permitted and not actionable under FDCPA | Court: License defect alone does not establish an FDCPA violation; subsequent licensure cured any state-law default and does not make reporting unlawful under FDCPA |
| Whether reporting a debt to a consumer reporting agency is a “debt collection” communication under the FDCPA | Watson: reporting to Equifax was a collection activity and thus subject to FDCPA prohibitions | ARC: reporting a valid debt to a CRA is not an actionable collection communication here; FDCPA permits furnishing to consumer reporting agencies when otherwise permitted by law | Court: Did not decide the broader question; on these facts reporting a valid debt was not an abusive collection practice and did not violate FDCPA |
| Whether reporting a valid debt to Equifax constituted a false, deceptive, or misleading representation under §1692e (and related subsections) | Watson: reporting to Equifax supported §1692e claims | ARC: debt was valid and accurately reported; no false or misleading representations were made | Court: Summary judgment for ARC — reporting a valid debt was not false, deceptive, or misleading; counts I–V dismissed |
| Whether reporting the valid debt was an unfair or unconscionable practice under §1692f | Watson: reporting was an unfair means to collect (esp. given lack of license) | ARC: reporting a valid debt to a CRA is not among the unfair practices listed or shown here | Court: Reporting a valid debt to Equifax was not unfair or unconscionable under §1692f; count VI dismissed |
Key Cases Cited
- Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389 (6th Cir.) (adopted least-sophisticated-consumer standard for FDCPA claims)
- Currier v. First Resolution Inv. Corp., 762 F.3d 529 (6th Cir.) (state-law licensing violations may be relevant but do not automatically create FDCPA violations)
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir.) (state-law violations do not themselves establish FDCPA violations absent conduct falling within FDCPA prohibitions)
- Frey v. Gangwish, 970 F.2d 1516 (6th Cir.) (FDCPA is broadly construed; even minor violations can be actionable under statute)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Sup. Ct.) (summary judgment standard—assess whether a fair-minded jury could return a verdict for the nonmoving party)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (Sup. Ct.) (court must view evidence in light most favorable to nonmoving party on summary judgment)