Lead Opinion
MOORE, J., delivered the opinion of the court. OLIVER, D.J. (p. 618), delivered a separate concurring opinion. WHITE, J. (pp. 618-19), delivered a separate dissenting opinion.
OPINION
Plaintiff-Appellant Delores Hartman (“Hartman”) and plaintiff-appellant Deborah Rice (“Rice”) appeal the district court’s grant of summary judgment in favor of defendants-appellees Great Seneca Financial Corporation
Hartman and Rice filed separate actions in the United States District Court for the Southern District of Ohio arguing that Great Seneca and Javitch violated the Fair Debt Collection Practices Act (“FDCPA”) by representing, in their state-court complaints, that the document generated on Great Seneca’s behalf was a statement of the debtor’s account. The district court determined that there was no genuine issue of material fact as to whether this behavior violated the FDCPA and granted Great Seneca’s and Javitch’s motions for summary judgment in each case. Hartman and Rice appeal these judgments.
We REVERSE the district court’s grant of summary judgment and REMAND the cases for proceedings consistent with this opinion. We also REMAND the question of whether Great Seneca
I. BACKGROUND
The district court explained the facts surrounding Hartman’s debt as follows:
Plaintiff Hartman is a consumer who opened a credit card account with Providian National Bank on or about May 10, 2000, account number xxxxxxxxxxxx [yyyy]. Plaintiff received the terms and conditions of the credit card, which permitted transfer or assignment of right to payment. Plaintiff used the account from May 17, 2000 through March 20, 2001, at which time the account had an outstanding balance of $2,089.33. The account records indicate that final payment before charge off was made on February 9, 2001. The last fees were posted to the account in September 2001, with final balance being $2,565.81. The final statement before Plaintiffs account was sold, dated July 29, 2002 showed an unpaid balance of $2,551.30, after the posting of a $14.51 credit for a class action settlement benefit to her account.
In February 2003, Providian National Bank sold Plaintiffs account to Unifund CCR Partners. Later that same month, Unifund sold the account to Defendant Great Seneca. With each sale, certain electronic information was transmitted, including the account number, name of the debtor, address, city, state, zip, phone, current balance, charge off date, charge off amount, last payment amount, last payment date, social security number, APR, account opening date, and an issuer flag for each account. Throughout this time, Plaintiffs account did not accrue additional fees and had an interest rate of 0%. In August 2003, Defendant [Javitch], on behalf of Defendant Great Seneca, sent a validation notice to Plaintiff. Plaintiff did not timely respond to the validation notice.
Hartman Dist. Ct. Op. and Order at 2.
The district court delineated the similar facts of Rice’s case:
Plaintiff Rice is a consumer who opened a credit card account with Providian National Bank on or about June 26, 2000, account number [zzzz]. Plaintiff received the terms and conditions of the credit card, which permitted transfer or assignment of right to payment. Plaintiff used the account from July 25, 2000 through March 21, 2001, at which time the account had an outstanding balance of $1,994.88. The account records indicate that final payment before charge off was made on April 6, 2001. The last fees were posted to the account in November 2001, with final balance being $2,778.99. The final statement before Plaintiffs account was sold, dated January 28, 2003, reflected the $2,778.99 balance.
In February 2003, Providian National Bank sold Plaintiffs account to Unifund CCR Partners. Later that same month, Unifund sold the account to Defendant Great Seneca. With each sale, certain electronic information was transmitted, including the account number, name of the debtor, address, city, state, zip, phone, current balance, charge off date, charge off amount, last payment amount, last payment date, social security number, APR, account opening date, and an issuer flag for each account. Throughout this time, Plaintiffs account did not accrue additional fees and had an interest rate of 0%. In August 2003, Defendant [Javitch], on behalf of Defendant Great Seneca, sent a validation notice to Plaintiff. Plaintiff did not timely respond to the validation notice.
Rice v. Great Seneca Fin. Corp.,
1. There is due the Plaintiff from the Defendant upon an account, the sum of $2,551.30.
2. A copy of the said Account is attached hereto as “Exhibit A”.
Hartman Ex. A to Am. Compl. The language of the state-court complaint filed against Rice is identical except that the amount owed is different. Javitch attached a financial document called “Exhibit A” to each of the complaints. In each case, Exhibit A was prepared by Great Seneca’s law firm
After the state-court actions against them were dismissed, Hartman and Rice each filed an action in the United States District Court for the Southern District of Ohio alleging that Great Seneca and Javitch violated the FDCPA. Hartman and Rice argued that Great Seneca and Javitch acted in a false, deceptive, or misleading manner when they represented that Exhibit A, generated by Great Seneca, was an account statement. Hartman and Rice also alleged that this behavior violated the Ohio Consumer Sales Practices Act (“OCS-PA”). In both cases, the plaintiffs moved for partial summary judgment, and the defendants moved for summary judgment. The United States filed briefs as an intervenor because Great Seneca and Javitch challenged the constitutionality of the FDCPA. Because of the similarity of the two cases, the district court judge in deciding Hartman’s case adopted his Rice opinion.
The district court granted summary judgment in favor of Great Seneca and Javitch in both cases because it concluded that, as a matter of law, the least sophisticated consumer would have not have been confused or misled by the representation that Exhibit A was an account statement. Additionally, the district court found that, even assuming that there was an issue of material fact, Great Seneca and Javitch were protected by the FDCPA’s bona-fideerror (“BFE”) defense.
Hartman and Rice appeal the district court’s grant of summary judgment in favor of Great Seneca and Javitch. Hartman and Rice first argue that Great
II. ANALYSIS
A. Standard of Review
We have explained the standard for reviewing a grant of summary judgment as follows:
We review a district court’s grant of summary judgment de novo. Mazur v. Young,507 F.3d 1013 , 1016 (6th Cir.2007). “Summary judgment is proper if the evidence, taken in the light most favorable to the nonmoving party, shows that there are no genuine issues of material fact and that the moving party is entitled to a judgment as a matter of law.” Id. (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574 , 587,106 S.Ct. 1348 ,89 L.Ed.2d 538 (1986); Fed.R.Civ.P. 56(c)). “Because we review the grant of summary judgment de novo, we may affirm the judgment on grounds other than those employed by the lower court, as long as the party opposing summary judgment is not denied the opportunity to respond.” Thornton v. Fed. Express Corp.,530 F.3d 451 , 456 n. 2 (6th Cir.2008); see also Nance v. Goodyear Tire & Rubber Co.,527 F.3d 539 , 553 (6th Cir.2008).
Medical Mutual of Ohio v. k. Amalia Enters. Inc.,
B. Violation of the Fair Debt Collection Practices Act
Hartman and Rice assert that Great Seneca’s and Javitch’s behavior violates three provisions of the FDCPA: (1) 15 U.S.C. § 1692e, which provides that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt”; (2) § 1692e(10), which prohibits “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer”; and (3) § 1692f, which provides that “[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.” We have explained the concerns and standards applicable to FDCPA claims as follows:
Congress enacted the FDCPA to eliminate “abusive, deceptive, and unfair debt collection practices.” 15 U.S.C. § 1692(a). “When interpreting the FDCPA, we begin with the language of the statute itself.” Schroyer v. Frankel,197 F.3d 1170 , 1174 (6th Cir.1999). As this court has noted, the FDCPA is “extraordinarily broad,” crafted in response to what Congress perceived to be a widespread problem. Frey v. Gangwish,970 F.2d 1516 , 1521 (6th Cir.1992). Courts use the “least sophisticated con*612 sumer” standard, an objective test, when assessing whether particular conduct violates the FDCPA. Harvey v. Great Seneca Fin. Corp.,453 F.3d 324 , 329 (6th Cir.2006). This standard ensures “that the FDCPA protects all consumers, the gullible as well as the shrewd.” Kistner v. Law Offices of Michael P. Margelefsky, LLC.,518 F.3d 433 , 438 (6th Cir.2008) (quotation marks and citations omitted). Nonetheless, the standard “also prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and presuming a basic level of understanding and willingness to read with care.” Id. at 438-39 (quotation marks and citations omitted).
Barany-Snyder v. Weiner,
Ohio law requires that “[w]hen any claim or defense is founded on an account or other written instrument, a copy of the account or written instrument must be attached to the pleading.” Ohio Civ. R. 10(D). The Ohio courts have explained this requirement as follows:
It is elementary that in an action on an account, a plaintiff must set forth an actual copy of the recorded account. The records must show the name of the party charged and must include the following:
(1) a beginning balance (zero, or a sum that can qualify as an account stated, or some other provable sum);
(2) listed items, or an item, dated and identifiable by number or otherwise, representing charges, or debits, and credits; and
(3) summarization by means of a running or developing balance, or an arrangement of beginning balance and items which permits the calculation of the amount claimed to be due.
Arthur v. Parenteau,
Because Great Seneca and Javitch sued Hartman and Rice in Ohio state court, they were subject to this requirement. In attempting to comply with this requirement, Great Seneca and Javitch did two things which form the basis of Hartman’s and Rice’s current claims. First, the state-court complaints alleged that Hartman and Rice owed Great Seneca money on an account and that “[a] copy of the said Account is attached hereto as ‘Exhibit A.’ ” Hartman Ex. A to Am. Compl.; Rice Ex. A to Am. Compl. Second, Great Seneca and Javitch attached to each complaint, as Exhibit A, a document which had been generated at Great Seneca’s behest. As described above, these documents facially resembled credit-card statements but were not actually copies of the Providian credit-card accounts on which Hartman and Rice were sued. Instead, these documents contained general information about the debt that had been transferred electronically from Providian to Unifund and then to Great Seneca.
Determining whether Great Seneca’s and Javitch’s representations regarding Exhibit A were false would require us to decide what “account” means under Ohio law. However, because we conclude that Hartman and Rice have raised a genuine issue of material fact as to whether Great Seneca’s and Javitch’s representations were misleading or deceptive, we hold that summary judgment is inappropriate regardless of whether the designation of Exhibit A as an “account” was false. Though Exhibit A identifies Great Seneca as an assignee of Unifund, and Unifund as an assignee of Providian, the document on the whole looks like a credit-card statement issued by Great Seneca. See Kistner v. Law Offices of Michael P. Margelefsky, LLC,
Summary judgment is also improper on Hartman’s and Rice’s state claims under the OCSPA.
C. Defense of Bona Fide Error
The FDCPA provides a bona-fideerror defense which states that:
A debt collector may not be held liable in any action brought under this sub-chapter if the debt collector 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 adapted to avoid any such error.
15 U.S.C. § 1692k(c). This court recently held that this defense applies to mistakes of law as well as to clerical errors. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA
In each case, the district court found that even if summary judgment was not proper because of a genuine issue whether the least sophisticated consumer would be confused or misled, Great Seneca and Javitch had established that they were entitled to the BFE defense. The district court based this finding on its conclusion that Great Seneca had no intent to mislead or misrepresent, that Great Seneca has exhaustive procedures in place to verify financial information associated with debts, that Great Seneca hired a law firm to manage its portfolio, and that Javitch relied on Great Seneca’s representations and did not believe that calling Exhibit A an “account” was prohibited by the FDCPA. Contrary to the district court’s conclusion, Great Seneca and Javitch have not established that they qualify for the BFE defense. Taking the facts in the light most favorable to Hartman and Rice, we believe that Great Seneca and Javitch have not shown that the violation was unintentional. Indeed, Hartman and Rice assert that Great Seneca and Javitch made Exhibit A look like a credit-card statement in order to avoid Ohio law. Nor have Great Seneca and Javitch shown by a preponderance of the evidence that they maintained procedures intended to avoid the type of error that occurred. The error made by Great Seneca and Javitch was a mistake of law; they represented that Exhibit A was an account in a manner that could be found to be misleading or deceptive. However, Great Seneca’s and Javitch’s arguments fail to address the procedures that they had in place to avoid this type of error. Before the district court, Great Seneca and Javitch extensively detailed the process of the electronic transfer of debts to show that the amount they alleged was actually the amount owed. Procedures meant to ensure that the amount of a debt is properly verified are not at issue in these cases, as Hartman and Rice do not now dispute the underlying debts. One of Javitch’s managing partners stated that he believed that Ohio law permitted the use of a document like Exhibit A in a creditor’s claim. This statement suggests that the violation was unintentional, but it does not detail any procedures that Great Seneca or Javitch used to ensure that mistakes of law did not occur. Great Seneca and Javitch presented no evidence that they perform ongoing FDCPA training, procure the most recent case law, or have an individual responsible for continuing compliance with
Taking the facts in the light most favorable to Hartman and Rice, we believe that Great Seneca and Javitch have not shown by a preponderance that the violation was unintentional or that they employ procedures meant to avoid mistakes of law that could cause FDCPA violations. Therefore, the district court erred in its conclusion that Great Seneca and Javitch are entitled to dismissal at the summary-judgment stage of this litigation on the ground that they have established the BFE defense. Whether Great Seneca and Javitch can establish the elements of the BFE defense by a preponderance of the evidence is an issue that may be explored further as the litigation proceeds on remand.
D. Constitutionality of the FDCPA
In the district court, Great Seneca and Javitch argued that the complaints that they filed in state court were protected by the First Amendment and that the FDCPA is unconstitutionally vague and overbroad when applied to pleadings that are not baseless.
Great Seneca and Javitch argue that they are immune from suit based on statements made during judicial proceedings and that permitting such suits as brought here under the FDCPA would violate their constitutional right to petition granted in the First Amendment. Similarly, Great Seneca and Javitch urge us to use the Noerr-Pennington doctrine to limit the application of the FDCPA. The Ninth Circuit has explained that “[ujnder the Noerr-Pennington rule of statutory construction, we must construe federal statutes so as to avoid burdening conduct that implicates the protections afforded by the Petition Clause unless the statute clearly provides otherwise.” Sosa v. DIRECTV, Inc.,
First, the Supreme Court’s conclusion in Heintz v. Jenkins,
With respect to litigation immunity, Javitch maintains that “[t]he Right to Petition under the First Amendment has been construed by Courts to afford qualified immunity [to lawyers engaged in litigation]” (JA 38) (emphasis added), and, at the same time, “[l]awyers possess an absolute privilege [under common law] concerning statements they make which are reasonably related to and made in the course of judicial proceedings, and are likewise absolutely immune from suit for claims which are based on such statements.” (JA 54) (emphases added.) Accepting these propositions as true as applied to Javitch would, of course, undercut Heintz v. Jenkins— where the Supreme Court held that “the-Act applies to attorneys who ‘regularly’ engage in cónsumerdebt-collection activity, even when that activity consists of litigation.” 514*616 U.S. at 299,115 S.Ct. 1489 (emphasis added); see also 15 U.S.C. § 1692a(6). Javitch does not dispute that it “ ‘regularly’ engage[s] in consumer-debt-eollection activity.” See Heintz,514 U.S. at 299 ,115 S.Ct. 1489 . So any discussion of litigation immunity as applied to lawyers in general (those who do. not regularly engage in consumer-debt-collection activity) is of no help to Javitch. The Supreme Court has already said that lawyers, in their function as debt collectors, are covered by the Act.
Gionis v. Javitch, Block & Rathbone, LLP,
Heintz did not consider, , however, whether the application of the FDCPA to statements made during judicial proceedings would violate the Constitution. Even assuming that the First Amendment provides some protection from FDCPA suits based on conduct and statements during litigation, we believe that the First Amendment would not protect the conduct at issue in this case. The Supreme Court has explained that the Petition Clause of the First Amendment does not provide an absolute right to petition. McDonald v. Smith,
Great Seneca and Javitch next argue that the FDCPA is unconstitutionally vague and overbroad because if they can be punished for their behavior here, “it would lead to strict liability for what is protected petitioning activity....” Mem. in Supp. of Claim of Unconstitutional Fed. Stat. at 3. “A statute can be impermissibly vague for either of two independent reasons. First, if it fails to provide people of ordinary intelligence a reasonable opportunity to understand what conduct it prohibits. Second, if it authorizes or even encourages arbitrary and discriminatory enforcement.” Hill v. Colorado, 530 U.S.
The overbreadth doctrine is “manifestly, strong medicine” that “should be employed ‘only as a last resort.’ ” Sensations, Inc. v. City of Grand Rapids,
Great Seneca and Javitch also argue that this application of the FDCPA violates their rights to substantive due process. However, “the Supreme Court has repeatedly cautioned that the concept of substantive due process has no place when a provision of the Constitution directly addresses the type of illegal governmental conduct alleged....” Montgomery v. Carter County,
Great Seneca and Javitch finally assert that this application of the FDCPA violates the Commerce Clause because it would involve the interference of the federal government with state rules of civil procedure. This argument is misdirected. Holding Great Seneca and Javitch liable under the FDCPA has no effect on Ohio state law. Instead, it punishes Great Seneca and Javitch for acting in a misleading and deceptive manner while using the Ohio court system. Ohio law is implicated in making this determination, but Ohio law is not altered by the federal prohibition on false, deceptive, or misleading debt collection. Accordingly, we refuse to affirm the district court’s grant of dismissal on this alternate ground.
E. Great Seneca’s Claim of Voluntary Dissolution
After oral argument, the attorney for Great Seneca and Javitch filed a motion to dismiss Great Seneca from the cases. On March 6, 2009, prior to oral argument, Great Seneca notified this court that Great Seneca had filed for voluntary dissolution in Maryland, but that this action did not “moot or abate” the appeals. Great Seneca Notice, March 6, 2009, at 1. In the post-argument motion to dismiss, Great Seneca
III. CONCLUSION
Because we conclude that there is a genuine issue of material fact as to whether calling Exhibit A an “account” would have misled the least sophisticated consumer, and because we cannot conclude on these facts that the bona-fide-error defense must apply, we REVERSE the district court’s grant of summary judgment to Great Seneca and Javitch and REMAND the cases for proceedings consistent with this opinion. We also REMAND the question of whether Great Seneca should remain a party to this litigation, given its alleged voluntary dissolution.
Notes
. We note that apparently Great Seneca has voluntarily dissolved. The effect of this action is discussed in Part II.E.
. The facts contained in these summaries are either undisputed or, like whether and how
. Great Seneca employed a law firm, Wolpoff & Abramson, to service its accounts. Wolpoff & Abramson, on behalf of Great Seneca, hired Javitch to collect debts owed in Ohio. Wolpoff & Abramson created the document in question.
. Hartman and Rice assert that Great Seneca and Javitch generated these documents and made them look like a credit-card statement to evade Ohio’s account statement requirement because it would cost them too much to get copies of the actual account statements. Further, Hartman and Rice allege that when a consumer questions the attached statement or asks for an actual statement, Great Seneca and Javitch dismiss their complaint against that consumer without prejudice.
. This court's recent decision in Miller v. Javitch, Block & Rathbone,
. Great Seneca and Javitch argue that Hartman and Rice waived their OCSPA claims by failing to brief them on appeal. This assertion is incorrect; Hartman and Rice adopted their FDCPA analysis in connection with their OCSPA claims.
. The United States argues that these arguments should be deemed waived as they were only briefly noted in Great Seneca and Javitch's appellate briefs. However, because Great Seneca and Javitch did detail these arguments before the district court, and asserted these arguments as an alternate basis for upholding the judgment, we do not conclude that these arguments have been waived.
Dissenting Opinion
dissenting.
I respectfully dissent. Plaintiffs’ claims rest on the assertion that the accounts attached to the complaints as Exhibit A are false, deceptive or misleading. The majority concludes that there is a genuine issue of material fact whether defendants’ representations embodied in the accounts are deceptive or misleading. Because I agree with the district court that Exhibit A to the complaints would not mislead the least sophisticated consumer, Harvey v. Great Seneca Financial Corp.,
The accounts attached to the complaints clearly stated that Great Seneca, the creditor, is the assignee of Unifund, assignee of Providian. Thus, the least sophisticated consumer would know that the complaint concerns a debt once owed to Providian. And, while the exhibits do, indeed, appear
Nor can I conclude that use of such account statements by an assignee as an attachment to a court complaint constitutes an “unfair or unconscionable means to collect or attempt to collect any debt.” Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692f. While one can conceive of circumstances where a court filing would amount to an unfair or unconscionable means of debt collection, the use of this form of statement to collect an otherwise valid and actionable debt is not unfair or unconscionable.
I would affirm.
. I note that plaintiffs’ complaints focus on the use of these statements of account to "falsely impl[y] that Defendants had possession of documentation from the original creditor which showed a precise amount due as of a 'statement closing date.' ” A similar claim was rejected in Harvey,
Concurrence Opinion
concurring.
I concur in Judge Moore’s opinion, but I write separately to discuss the way in which I find Great Seneca’s document to be potentially misleading to the least sophisticated consumer.
While this case presents a close call, I find that there is slightly more than a scintilla of evidence to support the argument that the least sophisticated consumer would be misled into thinking that this document was a credit card statement from Great Seneca Financial Corporation. As stated in the majority opinion, the document facially resembles that of a credit card statement, as it is arranged in a tabular format with boxes for credit limit, credit available, and new transactions similar to a legitimate credit card statement. Additionally, it includes boxes for the statement closing date and the date of the transaction. In these boxes, Great Seneca has included dates that are years after the individual consumers acquired their debt with Providian. The least sophisticated consumer, in reviewing this document, could be misled into believing that it was a credit card statement for an account with Great Seneca that involved transactions that occurred on the date listed. That consumer might then conclude that he or she never opened a credit card with Great Seneca and did not engage in any transactions with Great Seneca on such a date. This interpretation of the document would lead the least sophisticated consumer to disregard the statement as one merely issued in error. Accordingly, I concur that Plaintiffs have provided sufficient evidence to give rise to a genuine issue of material fact regarding whether this statement would mislead the least sophisticated consumer.