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Martsolf v. JBC Legal Group

January 30, 2008


The opinion of the court was delivered by: Judge Conner



This is a class action instituted by Ashlee Martsolf ("Martsolf"), on behalf of herself and others similarly situated, alleging that defendants' debt collection practices violate the Fair Dept Collection Practices Act ("FDCPA" or "the Act"), 15 U.S.C. §§ 1692-1692p. Martsolf and defendants have filed cross-motions (Docs. 105, 108) for summary judgment. For the reasons that follow, both motions will be granted in part and denied in part.*fn1

I. Statement of Facts*fn2

During early 1994, two blank checks signed by Martsolf, a resident of Pennsylvania, and drawn on her bank account were presented to Service Merchandise, a now-defunct chain of retail stores. (Doc. 107 ¶ 1; Doc. 110 ¶ 19; Doc. 117 ¶ 1; Doc. 120 ¶ 19.) The checks, dated March 18 and March 20, 1994, were dishonored soon after presentment. (Doc. 107 ¶ 1; Doc. 107, Ex. G; Doc. 107, Ex. H; Doc. 110 ¶ 19; Doc. 117 ¶ 1; Doc. 120 ¶ 19.) Defendant Outsource Recovery Management ("ORM") purchased the debt associated with the two checks during the years between their issuance and the institution of the present action.*fn3 (Doc. 107, Ex. F at 39; Doc. 110 ¶ 7; Doc. 120 ¶ 7.) ORM retained defendant JBC Legal Group ("JBC") to attempt to collect the debt. JBC is a law firm that engages in the collection of defaulted debt. (Doc. 107 ¶¶ 2-3, 13; Doc. 110 ¶¶ 2, 8; Doc. 117 ¶¶ 2-3, 13; Doc. 120 ¶¶ 2, 8.) Defendant Jack H. Boyajian ("Boyajian") is the president of both JBC and ORM and the sole owner of JBC. He has no ownership interest in ORM. (Doc. 107 ¶ 6; Doc. 114 ¶ 3; Doc. 110 ¶ 2; Doc. 114 ¶ 3; Doc. 117 ¶ 6; Doc. 120 ¶ 2.)

ORM's primary business is the purchase of defaulted debt, and it retains JBC and other law firms to collect the obligations it acquires. (Doc. 107 ¶ 9; Doc. 107, Ex. F at 33-34; Doc. 117 ¶ 9.) JBC regularly receives large bundles of data about the debt purchased by ORM, and a single data set may contain information about a large number of debtor accounts. (Doc. 107, Ex. D at 63-65; Doc. 128 at 23-25; cf. Doc. 107, Ex. I (listing quantities of collection letters sent by JBC).) Boyajian performs a series of technological and statistical analyses that he developed on the data to identify anomalies within a data set. (Doc. 107, Ex. D at 63-65; Doc. 114 ¶ 5.) Based on the results of these analyses, Boyajian determines which accounts contain sufficient information to issue a collection letter and which ones contain only incomplete information upon which no letter can be issued. (Doc. 107, Ex. D at 64; Doc. 114 ¶ 5.) ORM retains JBC to collect accounts that contain complete information. (Doc. 107, Ex. D at 64; Doc. 114 ¶ 5.) Accounts lacking crucial information are returned to ORM. (Doc. 107, Ex. D at 64; Doc. 114 ¶ 5.) This review occurs very rapidly and allows Boyajian to accept or reject large quantities of accounts at one time. (Doc. 107, Ex. D at 64; Doc. 114 ¶ 5; Doc. 128 at 25-26.)

Boyajian performed these procedures on Martsolf's account. He agreed that JBC would represent ORM in the collection of Martsolf's debts. JBC then sent two collection letters dated April 24, 2004 to Martsolf. (Doc. 107, Exs. G & H.) Both letters appear on letterhead reading: "JBC LEGAL GROUP, P.C. / Attorneys at Law / A California Professional Corporation." (Id.) JBC's letterhead lists four attorneys, who collectively are licensed in California, the District of Columbia, Kansas, Massachusetts, New Jersey, and New York. (Id.)

The bodies of the letters read as follows: This firm represents the successors in interest of the obligation you created and have not yet satisfied when you passed the bad check(s) identified below. Below are the details of each dishonored check. In addition to the full amount of the check(s), under applicable provisions of the Uniform Commercial Code, our client is entitled to a $30.00 per check fee as a service charge to handle your dishonored check(s). . . .

Pursuant to Pennsylvania law, you have thirty (30) days from receipt of this letter to pay the full amount of each check plus a service charge of $30.00 per check . . . . You are cautioned that unless this total amount is paid in full within thirty (30) days after the date this letter is received, you may be subject to a civil penalty, court costs and reasonable attorney fees after suit has been filed. (Id.) Both letters are signed: "Very truly yours, / JBC LEGAL GROUP, P.C. / Attorneys at Law." (Id.)

Martsolf filed the complaint instituting the present case on June 23, 2004. (Doc. 1.) The court certified the matter as a class action on February 7, 2005, and Martsolf filed an amended complaint the same day. (Docs. 29, 30.) The complaint alleges that the collection practices of Boyajian and JBC violated the FDCPA in several respects.*fn4 She alleges that defendants' collection letters threatened to institute suit to collect a time-barred debt, and attempted to collect a $30 returned- check fee not authorized under Pennsylvania law. She further argues that Boyajian and JBC misrepresented the amount of her debt (due to inclusion of the returned-check fee in the total debt amount) and misrepresented the level of attorney review that her account received.*fn5 She avers that these actions violated specific provisions of the Act and its general prohibition on the use of "false representation[s] or deceptive means to collect" a debt. 15 U.S.C. § 1692e(10). Finally, she contends that ORM, itself a debt collector, is vicariously liable for FDCPA violations committed by JBC and Boyajian in the course of collecting debts on its behalf. The parties have fully briefed these issues, which are now ripe for disposition.

II. Standard of Review

Through summary judgment the court may dispose of those claims that do not present a "genuine issue as to any material fact," and for which a jury trial would be an empty and unnecessary formality. See FED. R. CIV. P. 56(c). It places the burden on the non-moving party to come forth with "affirmative evidence, beyond the allegations of the pleadings," in support of its right to relief. Pappas v. City of Lebanon, 331 F. Supp. 2d 311, 315 (M.D. Pa. 2004); FED. R. CIV. P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-moving party on the claims. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-89 (1986); see also FED. R. CIV. P. 56(c), (e). Only if this threshold is met may the cause of action proceed. Pappas, 331 F. Supp. 2d at 315.

The court is permitted to resolve cross-motions for summary judgment concurrently. Cf. Assicurazioni Generali, S.P.A. v. Pub. Svc. Mut. Ins. Co., 77 F.3d 731, 733 & n.2 (3d Cir. 1996) (observing that district court may dispose of case through cross-motions for summary judgment); see also 10A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 2720 (3d ed. 1998). When doing so, the court is bound to view the evidence in the light most favorable to the non-moving party with respect to each motion. FED. R. CIV. P. 56; United States v. Hall, 730 F. Supp. 646, 648 (M.D. Pa.1990).

III. Discussion

The FDCPA is a remedial statute designed to protect consumers from the ills that often accompany abusive debt-collection practices.*fn6 See 15 U.S.C. § 1692(a), (e); Schaffhauser v. Citibank (S.D.) N.A., No. 1:05-CV-2075, 2007 WL 2752141, at *2 (M.D. Pa. Sept. 19, 2007) (describing policies of FDCPA, including elimination of abusive collection practices.) Congress implemented the statute to regularize debt collection practices on a national scale and to ensure that all debt collectors seek repayment of debts without threatening, intimidating, or harassing consumers. See 15 U.S.C. § 1692(e). As a remedial statute, courts apply the language of the FDCPA broadly to effectuate these policies among financially savvy and economically unfledged consumers alike. See Campuzano-Burgos v. Midland Credit Mgmt., 497 F. Supp. 2d 660, 662 (E.D. Pa. 2007) (quoting Clomon v. Jackson, 988 F.2d 1314, 1318 (3d Cir. 1993)) ("The basic purpose of the least-sophisticated consumer standard is to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd.").

Courts evaluate whether a debt collector's communication with a debtor complies with the Act under the "least sophisticated consumer" or "least sophisticated debtor" standard. This standard requires that courts consider the impression that the least sophisticated debtor would receive from the debt collector's communications. Brown v. Card Svc. Ctr., 464 F.3d 450, 453 (3d Cir. 2006); see also Schaffhauser, 2007 WL 2752141, at *3. "The least sophisticated debtor standard requires more than 'simply examining whether particular language would deceive or mislead a reasonable debtor' because a communication that would not deceive or mislead a reasonable debtor might still deceive or mislead the least sophisticated debtor." Brown, 464 F.3d at 454. This standard ensures that all consumers receive similar protection under the FDCPA regardless of their financial expertise. Id.

Whether a communication is misleading under the FDCPA presents a question of law for the court; disputed facts must be resolved by a jury. See Wilson v. Quadramed, 225 F.3d 350, 353 n.2 (3d Cir. 2000) (holding that collection letter's compliance with FDCPA presents a question of law); Dupuy v. Weltman, Weinberg & Reis Co., 442 F. Supp. 2d 822, 824 (N.D. Cal. 2006) (quoting Van Westrienen v. Americontinental Collection Corp., 94 F. Supp. 2d 1087, 1099 (D. Or. 2000)) ("Whether language employed in connection with the collection of debt violates the FDCPA is a question of law for the court to decide."); Gionis v. Javitch, Block & Rathbone, 405 F. Supp. 2d 856, 873 (S.D. Ohio 2005) (same); Shimek v. Weissman, Nowack, Curry & Wilso, P.C., 323 F. Supp. 2d 1344, (N.D. Ga. 2003) (same). With these considerations in mind, the court will turn to the substance of Martsolf's FDCPA allegations.

A. Liability for Violation of the FDCPA

Martsolf alleges that defendants' collection letters violate the FDCPA by (1) threatening to institute suit to collect a time-barred obligation; (2) representing that Pennsylvania law authorized collection of a $30 returned-check fee; (3) misrepresenting the total amount of the debt; and (4) misrepresenting that an attorney had reviewed her debts and reached a profession opinion that they were effective. She also alleges that these actions ...

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