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Denise Harlan v. Nra Group


February 9, 2011


The opinion of the court was delivered by: Rufe, J.


Before the Court is a motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure by Plaintiff Denise Harlan [doc no. 10], a motion for summary judgment by Defendants NRA Group d/b/a National Recovery Agency and Business Office Solutions, a division of the National Recovery Agency ("Defendants") [doc. no. 16], and Plaintiff's Cross-Motion for Summary Judgment [doc. no. 18]. For the reasons that follow, the Court will grant Plaintiff's Motion for Judgment on the Pleadings, and dismiss both Defendant's Motion for Summary Judgment and Plaintiff's Cross-motion for Summary Judgment as moot.


Harlan alleges that Defendants *fn1 violated Sections 1692g and 1692e, and subsection 1692e(10), of the Fair Debt Collection Practices Act *fn2 when, on November 4, 2009, they sent her a collection notice for an account Defendants asserted was delinquent. Section 1692g(a) of the Act requires that debt collectors send a consumer a written "validation notice," either in an initial collection notice or within five days of that notice, that informs the consumer of her right to dispute the validity of the debt, the time frame for doing so, and the debt collector's obligations to verify the debt if it is disputed." *fn3 Among the required disclosures in the validation notice is "a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector." *fn4 The validation notice that Harlan received departed from that statutory language by stating: "Unless you dispute this debt or any part thereof within 30 days after receiving this notice, the debt will be presumed to be valid." *fn5

Harlan alleges that the use of "presumed" instead of "assumed" in the validation notice, and the omission of "by the debt collector" at the end of that sentence violated not only Section 1692g, which requires effective notice of her validation rights, but also Section 1692e and 1692e(10), which provide that:

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt [including] . . . . (10) [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. *fn6 Based on the language in her validation notice, Harlan moved for judgment on the pleadings.


On a motion for judgment on the pleadings, judgment may be granted only if "the movant clearly establishes that no material issue of fact remains to be resolved and that [the movant] is entitled to judgment as a matter of law." *fn7 A court must view all facts and inferences drawn from them in the light most favorable to the non-movant. *fn8

Defendants argue that judgment on the pleadings is inappropriate because whether the terms and omissions in the November 4 notice would render it ineffective or confuse, mislead, or deceive the least sophisticated debtor (the test for liability under the Act) is a question of fact for the jury rather than a question of law for this Court to resolve on the pleadings. *fn9 The Court disagrees. The Third Circuit has held that whether Section 1692g disclosures would confuse the least sophisticated debtor is a question of law. *fn10 Other courts have likewise found that application of the least sophisticated debtor test to Section 1692e is a question of law. *fn11

Defendants do not dispute that they sent the November 4 letter to Harlan or that it contained the text she alleges. *fn12 Nor have Defendants asserted the sole permissible affirmative defense provided for under the Act-the "bona fide error" defense-that might, if raised, present questions of material fact for a jury to resolve. *fn13 In fact, other than the defense of failure to state a claim, Defendants' asserted affirmative defenses are inapplicable to this case; nearly all of them are boilerplate defenses relating uniquely to the Fair Credit Reporting Act, which is not the statute at issue here. *fn14 Accordingly, if the Court finds the Defendants' notice would confuse, mislead or deceive the least sophisticated consumer, Defendants are strictly liable. *fn15 And with no material facts in dispute, *fn16 resolution on a 12(c) motion is appropriate.


a. The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act *fn17 is a remedial statute, the purpose of which is to "eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." *fn18 To carry out the Act's remedial purposes, courts are to broadly construe its terms. *fn19 As a result, whether a validation notice complies with Section 1692g or is false, misleading or deceptive under Section 1692e is evaluated from the perspective of "the least sophisticated debtor" rather than from that of a reasonable debtor. *fn20 That standard protects both the "gullible and the shrewd" without permitting "bizarre and idiosyncratic" interpretations of the notice *fn21 or relieving the "willfully blind or non-observant" of their responsibilities to carefully review collection notices. *fn22

Though use of the exact statutory language under Section 1692g will ordinarily result in a finding that the communication is not false, misleading or deceptive, *fn23 validation notices need not necessarily track the statutory language verbatim to be compliant. Instead, to comply with Section 1692g, a communication must effectively communicate-both in form and substance-the statutory validation notice. *fn24 This requires inter alia that the mandated notice of the debtor's rights "must not be overshadowed or contradicted by accompanying messages from the debt collector" *fn25 or otherwise be deceptive. *fn26 Language that "would make the least sophisticated consumer uncertain as to her rights" does not meet the standard for the required notice. *fn27 Moreover, a collection letter is deceptive when it can "'be reasonably read to have two or more different meanings, one of which is inaccurate.'" *fn28

b. Use of "Presumed" & Omission of "by the Debt Collector"

The Court has little difficulty in finding that Defendants' use of "presumed," together with their omission of "by the debt collector" and language with similar meaning, violated the Act.

Though Defendants are correct that "presumed" is a synonym for "assumed," their assertion that the word is not susceptible to two reasonable interpretations is mistaken. To be sure, "presumed" can be synonymous with "assumed" in some contexts. *fn29 But it also has a legal meaning, which takes on particular significance in the context of debt collection. Even non-legal dictionaries define "presumed" as "to suppose to be true without proof, [as in] presumed innocent until proved guilty." *fn30 And a presumption-the thing presumed-is a "legal inference" that "shifts the burden of production or persuasion to the opposing party." *fn31 The party enjoying the benefit of the presumption, of course, prevails in legal proceedings if the opposing party does nothing to rebut it (in the case of rebuttable presumption). One need never have opened a law book to comprehend the burden-shifting implications when something is "presumed:" any one of a number of television crime dramas exposes consumers to the notion of the presumption of innocence and the resulting burden on the government to prove otherwise. And in the context of a debt collection notice-often a precursor to formal legal action-interpreting "presumed" as taking on its legal meaning would hardly be bizarre or idiosyncratic. The least sophisticated debtor could reasonably conclude from Defendants' letter that any inaction could shift to the debtor the burden of disproving the debt's validity in any subsequent legal proceeding. *fn32 At a minimum, this language creates significant uncertainty about what rights the debtor has if she fails to dispute the debt within 30 days.

Moreover, Defendants' omission of language indicating that it is the debt collector that will assume the validity of the debt only fuels the confusion. Though Defendants need not use the verbiage "by the debt collector," courts have held that they must include some language that makes clear it is only the debt collector that may assume validity and only for collection purposes; otherwise the debtor is left uncertain about what entity will make the assumption and for what purpose. *fn33 This is particularly so here, where Defendants informed Harlan that the debt would be "presumed" valid without specifying by which entity. Given the legal connotations of that word, the least sophisticated debtor could reasonably believe that failure to dispute the debt would create an evidentiary presumption of validity by a court or other entity of authority in a subsequent collection proceeding.

And, of course, that interpretation is inaccurate. The statutorily required validation notice is intended to convey to the consumer that failure to dispute the debt permits the debt collector to proceed for collection purposes on the "temporary fiction" that the debt is valid. *fn34 Failure to dispute a debt has no legal effect on a debtor's rights, and a court may not construe such failure as an admission of liability. *fn35 In any subsequent collection action, the burden would remain on the debt collector-plaintiff to prove the validity of the debt.

Defendants correctly assert that this Court should evaluate the effect of the letter as a whole on the least sophisticated debtor. *fn36 But doing so does not alter the outcome here. Defendants' collection letter, in its entirety, reads:

Your account with NORTHEAST IMAGING is presently delinquent. The amount due and owing is $60.00.

Unless you dispute this debt or any part thereof, within 30 days after receiving this notice, the debt will be presumed to be valid. Should you notify the above-named creditor in writing that you contest the debt, or any portion thereof, the creditor will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. If you request the creditor in writing within 30 days after receiving this notice, the creditor will provide you with the name and address of the original creditor if different from the current creditor.

Should your payment or dispute not be received within 30 days from the date of this notice, this debt will be considered for referral by our client to the National Recovery Agency for collection activity.

The purpose of this communication is to collect a debt and any information obtained will be used for that purpose. . . . .

This Communication is from a debt collector. *fn37

Defendants contend that reference in the third sentence of the letter to the "above-named creditor . . . clearly connects the verb 'presumed' with the Defendants" and that the letter as a whole makes clear which entity will be presuming validity. *fn38 The Court disagrees. Each subsequent statement in the letter refers to the debt collector's independent obligations relating to verification that are triggered when the debtor contests the debt; they have no bearing on what will be presumed and by whom if the debtor fails to contest the debt. As such, they do not cure the prior defects. *fn39

Accordingly, this Court finds the use of "presumed," together with the omission of "by the debt collector" or similar clarifying language, is susceptible to two or more different interpretations and would create uncertainty about the debtor's rights. This defect renders the validation notice ineffective in violation of Section 1962g, and deceptive in violation of Sections 1962e and 1962e(10).


For the foregoing reasons, the Court will grant Plaintiff's Motion for Judgment on the Pleadings and this matter will proceed to assessment of damages and costs *fn40 pursuant to 15 U.S.C. § 1692k. An appropriate Order follows.

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