Peggy Miller v. Javitch, Block & Rathbone

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 09a0136p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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PEGGY MILLER,

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Plaintiff-Appellant,

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No. 08-3336

UNITED STATES OF AMERICA,

Intervenor, ,>

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v.

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JAVITCH, BLOCK & RATHBONE; DIANA J. -

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Defendants-Appellees. -

PREHN; BRIAN C. BLOCK,

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Appeal from the United States District Court

for the Southern District of Ohio at Cincinnati.

No. 06-00828—Michael R. Barrett, District Judge.

Argued: December 3, 2008

Decided and Filed: April 6, 2009

*

Before: COLE and COOK, Circuit Judges; EDMUNDS, District Judge.

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COUNSEL

ARGUED: Stephen R. Felson, LAW OFFICE, Cincinnati, Ohio, for Appellant.

Michael D. Slodov, JAVITCH, BLOCK & RATHBONE, Cleveland, Ohio, for

Appellees. Howard S. Scher, UNITED STATES DEPARTMENT OF JUSTICE,

Washington, D.C., for Intervenor. ON BRIEF: Stephen R. Felson, LAW OFFICE,

Cincinnati, Ohio, Steven C. Shane, STEVEN C. SHANE, ATTORNEY AT LAW,

Bellevue, Kentucky, for Appellant. Michael D. Slodov, JAVITCH, BLOCK &

RATHBONE, Cleveland, Ohio, for Appellees. Howard S. Scher, Michael S. Raab,

UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Intervenor.

COOK, J., delivered the opinion of the court, in which EDMUNDS, D. J., joined.

COLE, J. (pp. 13-20), delivered a separate dissenting opinion.

*

The Honorable Nancy G. Edmunds, United States District Judge for the Eastern District

of Michigan, sitting by designation.

1

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 2

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OPINION

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COOK, Circuit Judge. Peggy Miller filed a putative class action against law firm

Javitch, Block & Rathbone and two of its agents (collectively, “JBR”) under the Fair

Debt Collection Protection Act (“FDCPA”). 15 U.S.C. §§ 1692e et seq. Miller contends

that JBR violated the FDCPA by using false, deceptive, and misleading language in a

debt-collection complaint. The district court first granted judgment on the pleadings on

the falsity claim, and then entered summary judgment in favor of JBR as to the

remaining claims. Miller appeals, and because we agree with the district court that

Miller failed in her burden to raise a genuine issue of fact regarding a statutory violation

by JBR, we affirm.

I.

This case centers on a form debt-collection complaint drafted and used by JBR

in numerous state-court suits, including one filed against Peggy Miller in Scioto County,

Ohio. Miller accrued debt on a credit card issued by Providian National Bank. The bank

sent her monthly statements detailing the charges on her “Providian Visa Card,” and she

paid the statements with checks made out to “Providian.” But after she stopped making

payments—a fact she does not dispute—Providian sold Miller’s debt to Palisades

Collection LLC (“Palisades”). Palisades then hired JBR, and JBR filed the state-court

complaint that prompted this class-action suit.

The state court “COMPLAINT FOR MONEY LOANED” read as follows:

1. Plaintiff acquired, for a valuable consideration, all right, title

and interest in and to the claim set forth below originally owed by

Defedant(s) to ASTA II/PROVIDIAN -03 /NAT

As a result of the assignment, Plaintiff became, and now is, the owner of

funds loaned on account number xxxx-xxxx-xxxx-0736.

2. There is presently due the Plaintiff from the Defendant (s) on

the money loaned on defendant’s charge card debt, the sum of $4,604.56.

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 3

3. Plaintiff notified Defendant (s) of the assignment and

demanded that Defendant (s) pay the balance due on the account, but no

part of the forgoing balance has been paid.

4. Defendant (s) is/are in default on this repayment obligation.

WHEREFORE, Plaintiff prays for judgment against Defendant

(s) in the amount of $4,604.56 with statutory interest from the date of

judgment, costs of this action, and such other and further relief as the

Court deems just and proper under the circumstances.

[signature block omitted]

Miller admits that when she read the complaint, she “pretty much” understood

it. She took the complaint to a lawyer who responded to it by moving for a more definite

statement. JBR then voluntarily dismissed the suit, as large volume collection firms

often do when met with resistance.

Miller then went on the offensive in federal court, suing JBR on behalf of herself

and others similarly situated. She claimed that JBR—a “debt collector” for purposes of

the FDCPA, see Heintz v. Jenkins, 514 U.S. 291, 299 (1995)—violated the FDCPA by

including false, deceptive, and misleading language in its state-court complaint. JBR

answered and moved for a judgment on the pleadings.1 The district court granted the

motion in part, finding that Miller failed to state a claim when she alleged that “for

money loaned” amounted to a false statement. But the court—attentive to how a true

statement may still be misleading—also denied JBR’s motion in part, finding that Miller

stated a claim with respect to four potentially misleading statements: (1) the complaint

was “for money loaned,” (2) Palisades was “the owner of funds loaned on account

number xxxx . . .”; (3) “there is presently due the Plaintiff from the Defendant(s) on the

money loaned on defendant’s charge card debt . . .”; and (4) “Plaintiff acquired, for

valuable consideration, all right, title, and interest in and to the claim set forth below

originally owed by Defendant(s) . . . .”

1

JBR also argued that the FDCPA violates the First Amendment’s Petition Clause. The United

States, as intervenor, defends the FDCPA’s constitutionality. The district court bypassed the constitutional

issues and granted JBR summary judgment on other grounds. We do the same. And because affirming

on the merits affords a more straightforward resolution, we also sidestep JBR’s arguments that Miller

waived certain claims and that the bona-fide-error defense shields JBR from liability.

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 4

The matter never reached a jury. After discovery, the district court examined the

evidence and found nothing to suggest that these four statements qualified as deceptive

or misleading under the FDCPA. Accordingly, the district court granted JBR’s summary

judgment motion. Miller appeals the district court’s judgment on the pleadings and its

summary judgment.

II.

Congress enacted the FDCPA “to eliminate abusive debt collection practices by

debt collectors, to insure that those debts 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.” 15 U.S.C. § 1692(e). The

FDCPA’s relevant sections read:

A debt collector may not use any false, deceptive, or misleading

representation or means in connection with the collection of any debt.

Without limiting the general application of the foregoing, the following

conduct is a violation of this section:

...

(2) The false representation of—(A) the character, amount, or legal status

of any debt;

...

(10) The use of any false representation or deceptive means to collect or

attempt to collect any debt or to obtain information concerning a

consumer.

...

(12) The false representation or implication that accounts have been

turned over to innocent purchasers for value.

15 U.S.C. § 1692e.

These provisions sweep with “extraordinar[y]” breadth, Frey v. Gangwish, 970

F.2d 1516, 1521 (6th Cir. 1992), and call for “strict liability, . . . meaning that a

consumer may recover statutory damages if the debt collector violates the FDCPA even

if the consumer suffered no actual damages,” Fed. Home Loan Mortgage Corp. v.

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 5

Lamar, 503 F.3d 504, 513 (6th Cir. 2007) (citing 15 U.S.C. § 1692k(a)). This court, in

determining whether a statement qualifies as misleading, employs an objective,

“least-sophisticated-consumer” test. Kistner v. Law Offices of Michael P. Margelefsky

LLC, 518 F.3d 433, 438–39 (6th Cir. 2008). This standard “protects naive consumers

[while] prevent[ing] 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. (quoting Lamar, 503 F.3d at

509–10). Stated differently, we “will not ‘countenance lawsuits based on frivolous

misinterpretations or nonsensical interpretations of being led astray.’” Lamar, 503 F.3d

at 514 (quoting Jacobson v. Healthcare Fin. Servs. Inc., 434 F. Supp. 2d 133 (E.D.N.Y.

2006)).

Applying these principles to Miller’s claim, we begin by analyzing the district

court’s judgment on the pleadings, and then consider its summary judgment.

A.

JBR’s state-court complaint characterized Miller’s credit-card debt as a loan.

Miller thinks that description counts as false under the FDCPA. Credit-card debt, so her

argument goes, is actually a merchant’s account receivable, not a loan. The district court

rejected this position in its judgment on the pleadings. Reviewing the issue de novo,

Roger Miller Music, Inc. v. Sony/ATV Publ’g, LLC, 477 F.3d 383, 389 (6th Cir. 2007),

we agree with the district court and rely on its well-reasoned analysis:

Typically, credit card debt is one that is considered “an account” where

there is a balance sheet of sorts that lists the purchases made with the

credit card and the payments received by the card issuer. This approach

of calling it a loan is a novel one. Although the Ohio Rules of Civil

Procedure do provide for a complaint for money loaned, the question is

whether or not a claim that has historically been one on an account can

now be plead as one for money loaned. Defendant cites a handful of

cases from other circuits and state courts as well as various other

secondary sources for the proposition that a credit card transaction

equates to a loan by the credit card issuer to the credit card holder.

In In re Mercer, 246 F.3d 391, 406 (5th Cir. 2001), a bankruptcy

discharge case, the Court stated that “. . . by each card-use, [the debtor]

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 6

requested a loan against that line; and by approving each card-use, and

therefore reimbursing the merchant, including an ATM owner, USC [the

credit card issuer] made a loan to her.”

...

Defendants also cite May Co. v. Trusnick, 54 Ohio App.2d 71, 75 (8th

Dist. App. 1977), a statute of limitations case involving the failure of a

debtor [Trusnik] to timely pay for purchases placed on an account at a

retail store [The May Company]. The May Court cited Harris Trust and

Savings Bank v. McCray (1974), 21 Ill. App. 3d 605, 316 N.E. 2d 209.

In Harris Trust the issuer of a bank credit card sued the cardholder to

recover the balance due on the cardholder’s account. Harris Trust argued

that the cause of action arose when the cardholder failed to repay the

bank for funds advanced to the merchant. The Court agreed with Harris

Trust and held “money advanced to a merchant in payment for

merchandise received by the defendant constitutes a loan.” Id. at 608.

The May Court distinguished Harris Trust by stating that, “[i]n the

present case the purchase money was loaned by The May Company, not

by a third party as in Harris Trust, supra.” May Co. v. Trusnik, 54 Ohio

App. 2d at 75. The factual allegations of the underlying state court

collection case are more in line with Harris Trust whereby a credit card

company issued a credit card to Miller who in turn used the credit card

to make purchases at merchant stores.

The Harris Trust Court provided a good summary of the credit card

issuer/holder relationship:

The bank credit card system involves a tripartite

relationship between the issuer bank, the cardholder, and

merchants participating in the system. The issuer bank

establishes an account on behalf of the person to whom

the card is issued, and the two parties enter into an

agreement which governs their relationship. This

agreement provides that the bank will pay for

cardholder’s account the amount of merchandise or

services purchased through the use of the credit card and

will also make cash loans available to the cardholder. It

also states that the cardholder shall be liable to the bank

for advances and payments made by the bank and that the

cardholder’s obligation to pay the bank shall not be

affected or impaired by any dispute, claim or demand by

the cardholder with respect to any merchandise or service

purchased.

Harris Trust & Sav. Bank v. McCray, 21 Ill. App. 3d 605,

607-608 (Ill. App. Ct.1974).

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 7

Based upon the reasoning in Harris Trust, the fact that money was

actually paid by the credit card issuer to merchants on the credit card

holders’ behalf, and Form 5 in the Ohio Rules of Civil Procedure, the

Court finds that the filing of an action for “money loaned” by a credit

card issuer or its successor to recover funds owed from a credit card

holder does not violate the FDCPA.

The district court’s conclusion finds additional support in Miller’s credit-card

agreement with Providian, where she “promise[d] to pay [Providian] when due all

amounts borrowed.” (emphasis added). The record also includes evidence of nine

instances where Miller used her credit card to secure cash advances from automated-

teller machines (“ATMs”). Finally, Miller’s brief to this court concedes that “as a legal

matter the word ‘loan’ may or may not be accurate.” For these reasons, the complaint’s

references to “money loaned” are not actionable here as false statements. The Seventh

Circuit’s decision in Beler v. Blatt, Hanenmiller, Leibsker & Moore, LLC, 480 F.3d 470

(7th Cir. 2007), which addressed a complaint’s “confusing description” of a

credit-card-debt transaction, id. at 472, articulates the problem with Miller’s claim:

[Not] everything a lawyer writes during the course of litigation must be

stated in plain English understandable by unsophisticated consumers.

However desirable that might be, it is not a command to be found in the

FDCPA.

Section 1692e does not require clarity in all writings. What it says is that

“[a] debt collector may not use any false, deceptive, or misleading

representation or means in connection with the collection of any debt.

A rule against trickery differs from a command to use plain English and

write at a sixth-grade level. . . . Whatever shorthand appeared in the

complaint—the payments system through which credit-card slips flow is

complex, and even many lawyers don’t grasp all of its details—was

harmless rather than an effort to lead anyone astray. It was the judge, not

[the plaintiff], who had to be able to determine to whom the debt was

owed, for it is the judge (or clerk of court) rather than the defendant who

prepares the judgment specifying the relief to which the prevailing party

is entitled.

Id. at 473 (internal quotation marks omitted).

Like the dissent, we “permit Javitch some leeway for the use of legal terms of art

and other language that might be difficult for the least-sophisticated consumer to

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 8

understand.” Thus, even if JBR could have drafted its complaint using plainer language,

and even if it novelly styled the claim as one “for money loaned,” JBR did not go so far

as to falsely describe Miller’s debt. See Evans v. Midland Funding LLC, 574 F. Supp.

2d 808, 813 (S.D. Ohio 2008) (holding in an FDCPA credit-card debt case “that the

allegations in the state court complaints at issue here were not false insofar as they

sought recovery ‘for money loaned’”).

B.

Turning to the district court’s summary judgment, we conduct a de novo review.

Jones v. Potter, 488 F.3d 397, 402 (6th Cir. 2007). Drawing all inferences in Miller’s

favor, we affirm where no genuine issue exists as to any material fact and where JBR is

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus.

Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

Miller argues that the same four statements we cite above from JBR’s complaint

deceive or mislead by wrongly implying that Providian actually transferred funds to her.

The district court, examining the evidence gathered in discovery, determined that Miller

failed to raise a genuine issue of material fact. Addressing the first three statements, the

district court correctly explained:

Plaintiff has presented no affidavits, other than one from Plaintiff’s

counsel, no surveys, no expert opinion, nothing to demonstrate that a

genuine issue of fact exists. In fact, Plaintiff admits that when she first

saw the state court complaint she was not confused. . . . [Additionally,]

the Court notes that the Plaintiff stated in her deposition that she read the

state court complaint, and that she “pretty much” understood it.

Miller v. Javitch, Block & Rathbone, 534 F.Supp. 2d 772, 776-77 (S.D. Ohio 2008).

Miller argues that the district court’s reasoning contravenes Kistner, a case

decided after the district court granted JBR summary judgment. In particular, Miller

focuses on the district court’s comment that “[h]ad the state court complaint stated only

that it was a ‘complaint for money loaned’ [then] this inquiry may very well have turned

out differently.” This observation, Miller asserts, triggers Kistner’s requirement that any

statement susceptible to “more than one reasonable interpretation” raises a genuine issue

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 9

of material fact. 518 F.3d at 441. But Miller’s reliance on Kistner is misplaced because

that case involved a communication containing “conflicting aspects.” Id. at 440. No

such conflict exists here; JBR’s complaint is susceptible to just one reasonable reading.

And contrary to Miller’s suggestion, the district court did not imply otherwise when it

noted that the “inquiry may very well have turned out differently” had other language

been omitted. That comment merely shows that the district court properly assessed the

complaint’s meaning as read in its entirety. See Lamar, 503 F.3d at 510 (observing that

the least-sophisticated-consumer standard assumes that the document at issue “is read

in its entirety, carefully and with some elementary level of understanding”) (quoting In

re Martinez, 266 B.R. 523, 532 (Bankr. S.D. Fla. 2001)). And read as a

whole—referring to a “charge card,” specific account number, and “balance due on the

account”—the complaint did not mislead. Miller, 534 F. Supp. 2d at 777 (“Even the

least sophisticated consumer would be able to know if the account number stated in the

underlying complaint was one that belong[ed] to him or her.”); see also Beler, 480 F.3d

at 474 (commenting that not “everything a lawyer writes during the course of litigation

must be stated in plain English understandable by unsophisticated consumers”). Nor

does the complaint deceive, particularly because Miller does not use that term “in the

traditional sense.” Harvey v. Great Seneca Fin. Corp., 453 F.3d 324, 332 (6th Cir.

2006). She “never denied in her complaint that she owed . . . a debt,” and she does not

claim that JBR “misstated or misrepresented the amount that she owed.” Id.

Miller focuses on the complaint’s failure to use the words “credit card.” Even

if including those words would have clarified, omitting them did not impermissibly

mislead. Again, we read the complaint as a whole, see Lamar, 503 F.3d at 510,

conscious of its mention of Miller’s credit-card account number and the “balance due

on the account.” Given those statements, we agree with the district court: “the least

sophisticated consumer, with a careful reading of the entire state court complaint, would

understand that he or she was being sued for the collection of an unpaid credit card

balance.” It bears repeating that she admits having “pretty much” understood the

complaint.

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 10

Nor does the complaint’s reference to a “charge card” render it misleading.

Regardless of how a credit card differs from a charge card, that difference would not

mean so much to the least sophisticated consumer that he or she would be misled by the

use of one term instead of the other. Granted, a lawyer “closely parsing [the complaint]

like a municipal bond offering” may detect some ambiguity or confusion. Jacobson, 434

F. Supp. 2d at 138. But the least-sophisticated-consumer standard is not so exacting.

It does not require reading the complaint with “the astuteness of a ‘Philadelphia

lawyer.’” Jacobson, 434 F. Supp. 2d at 138 (quoting Russell v. Equifax A.R.S., 74 F.3d

30, 34 (2d Cir. 1996)). We read the complaint in its entirety and give it a “common

sense appraisal.” Id. Doing so, we conclude that the complaint would not mislead or

deceive the least-sophisticated consumer.

As for Miller’s interpretation of the fourth potentially misleading

statement—“Plaintiff acquired, for valuable consideration, all right, title and interest in

and to the claim set forth below originally owed by Defendant(s) to ASTA

II/Providian-03/NAT”—we again side with the district court. Miller contends that this

statement violates § 1692(e)(12) by falsely or misleadingly implying that Providian

assigned her debt to an innocent purchaser for value who enjoyed protection under the

holder-in-due-course rule. She insists that this acquired-for-value statement would dupe

the least-sophisticated consumer into thinking that Palisades enjoyed

holder-in-due-course protection. We think not. The statement says nothing about

holders in due course. And no reason exists to think that the least-sophisticated

consumer gives any thought to holders in due course—by definition, the

least-sophisticated consumer lacks any knowledge of the concept. Also, as we and the

dissent agree, “some leeway” must be given for the use of legal terms.

The district court’s analysis, following our decision in Lamar, 503 F.3d at 514,

properly relied on insights from a New York district court to expose the flaw underlying

Miller’s holder-in-due-course position:

Ironically, it appears that it is often the extremely sophisticated consumer

who takes advantage of the civil liability scheme defined by [the

FDCPA], not the individual who has been threatened or misled. The

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 11

cottage industry that has emerged does not bring suits to remedy the

“widespread and serious national problem” of abuse that the Senate

observed in adopting the legislation, 1977 U.S.C.C.A.N. 1695, 1696, nor

to ferret out collection abuse in the form of “obscene or profane

language, threats of violence, telephone calls at unreasonable hours,

misrepresentation of a consumer’s legal rights, disclosing a consumer’s

personal affairs to friends, neighbors, or an employer, obtaining

information about a consumer through false pretense, impersonating

public officials and attorneys, and simulating legal process.” Id. Rather,

the inescapable inference is that the judicially developed standards have

enabled a class of professional plaintiffs.

The statute need not be applied in this manner . . . [A proper]

understanding of the least sophisticated consumer standard points away

from closely parsing a debt collection letter like a municipal bond

offering and towards a common sense appraisal of the [communication].

It is interesting to contemplate the genesis of these suits. The

hypothetical Mr. Least Sophisticated Consumer (“LSC”) makes a $400

purchase. His debt remains unpaid and undisputed. He eventually

receives a collection letter requesting payment of the debt which he

rightfully owes. Mr. LSC, upon receiving a debt collection letter that

contains some minute variation from the statute’s requirements,

immediately exclaims “This clearly runs afoul of the FDCPA!”

and—rather than simply pay what he owes—repairs to his lawyer’s

office to vindicate a perceived “wrong.” “[T]here comes a point where

this Court should not be ignorant as judges of what we know as men.”

Watts v. State of Ind., 338 U.S. 49, 52 (1949).

Jacobson, 434 F. Supp. 2d at 138–39.

We also reject Miller’s claim on materiality grounds. Writing for the Seventh

Circuit, Judge Easterbrook recently observed that “[m]ateriality is an ordinary element

of any federal claim based on a false or misleading statement.” Hahn v. Triumph P’ships

LLC, ___F.3d___, 2009 WL 529562, at *2 (7th Cir. Mar. 4, 2009) (citing Carter v.

United States, 530 U.S. 255 (2000); Neder v. United States, 527 U.S. 1 (1999)). Seeing

no “reason why materiality should not equally be required in an action based on

§ 1692e,” Judge Easterbrook found a statement “false in some technical sense”

immaterial. Id. (quoting Wahl v. Midland Credit Mgmt., Inc., ___F.3d___, 2009 WL

426055, at *3 (7th Cir. Feb. 23, 2009)). “A statement cannot mislead unless it is

material, so a false but non-material statement is not actionable.” Id. We agree. Miller,

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 12

along with the dissent, relies on a too technical reading of the complaint. Appraising the

complaint in a common sense way convinces us that, just as Miller “pretty much”

understood JBR’s language, so too would the least-sophisticated consumer.

III.

We affirm.

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 13

_________________

DISSENT

_________________

COLE, Circuit Judge, dissenting. Because I cannot say with confidence that no

reasonable jury could find this document to be misleading from the perspective of the

least-sophisticated consumer, and because it is potentially misleading in a way that

harms interests the Fair Debt Collection Practices Act (“FDCPA”) was designed to

protect, I believe the proper course is to submit this question to a jury. The first three

sentences of this six-sentence complaint contain literally false statements, and although

this document is an attempt to collect credit-card debt, it never uses the term “credit

card.” I respectfully dissent.

A. The document is confusing on its face

The state-court complaint at issue in this case appeared as follows:

IN THE SCIOTO COUNTY CLERK OF COURTS

SCIOTO COUNTY

Palisades Collection LLC )

Assignee of Providian National Bank )

210 Sylvan Avenue ) CASE NUMBER:

)

Englewood Cliffs, NJ 07632 - )

) JUDGE:

Plaintiff )

vs. )

) COMPLAINT FOR MONEY LOANED

Peggy Miller )

AKA Peggy A. Miller )

1315 9Th St. )

Portsmouth, OH 45662 - )

)

- )

)

Defendant (s) )

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 14

1. Plaintiff acquired, for a valuable consideration, all right, title and interest in

and to the claim set forth below originally owed by Defedant(s) to ASTA

II/PROVIDIAN -03 /NAT

As a result of the assignment, Plaintiff became, and now is, the owner of funds loaned

on account number xxxx-xxxx-xxxx-0736.

2. There is presently due the Plaintiff from the Defendant (s) on the money

loaned on defendant’s charge card debt, the sum of $4,604.56.

3. Plaintiff notified Defendant (s) of the assignment and demanded that

Defendant (s) pay the balance due on the account, but no part of the forgoing balance has

been paid.

4. Defendant (s) is/are in default on this repayment obligation.

WHEREFORE, Plaintiff prays for judgment against Defendant (s) in the amount

of $4,604.56 with statutory interest from the date of judgment, costs of this action, and

such other and further relief as the Court deems just and proper under the circumstances.

[signature block omitted]

(See Joint Appendix 18).

Javitch’s state-court complaint is, without a doubt, confusing. The terms

“complaint for money loaned” seem inconsistent with the reference to a “charge card

debt,” since we do not tend to think of credit card companies as “loaning” us “money.”

Rather, we usually talk in terms of having “credit-card debt” or an “account” with a

credit card company that may be “overdue” or have an “outstanding balance.” To

illustrate the point, consider a bank customer who goes into a bank branch and asks for

some of the money he had “loaned” to the bank—although this would be a technically

correct way of asking to withdraw money from a savings account, it would almost

certainly confuse the teller. Granted, Javitch’s complaint also refers to the “balance due

on the account,” but the “money loaned” language, which is prominently placed in the

caption and repeated within the document, creates confusion and seems to refer to a

traditional, one-time loan from a lender, which, unlike a credit card issuer, loans money

directly to consumers. Furthermore, the reference to “money loaned on defendant’s

charge card debt” (emphasis added) could cause a reader to wonder if the “money

loaned” referred to a separate loan from the “charge card debt,” as in “money loaned on

plaintiff’s house.” In fact, Miller testified that she did not understand the sentence

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 15

containing the “money loaned on defendant’s charge card debt” and that she was

confused by the fact that the document was entitled “Complaint for Money Loaned.”

In addition to being generally confusing, the complaint includes three false

statements, one in each of the first three sentences. First, it refers to Palisades, the debt-

buyer, as the “owner of funds loaned.” Palisades does not and never did own the funds

that were “loaned” by Providian—rather, it owns the debt that formerly belonged to

Providian. This may seem like a fine distinction, but the “owners” of the funds that

Providian “loaned” are the merchants to whom those funds were paid in exchange for

goods and services provided to Mrs. Miller. Second, despite the fact that the complaint

seeks a judgment based on a credit-card debt, the words “credit card” are inexplicably

omitted from the document. Instead, there is a single reference to “charge card debt.”

A “charge card” is not the same as a “credit card.” The latter involves a revolving credit

arrangement in which an outstanding balance may be carried from month to month,

while the former must be paid off in full at the end of each billing cycle. See, e.g.,

Consumer Information, “Credit and Charge Cards,” Federal Reserve Bank of San

Francisco, available at http://www.frbsf.org/publications/consumer/cards.html.

According to Javitch’s brief, Mrs. Miller applied for a Providian “credit card,” so the

statement in the complaint that Mrs. Miller borrowed funds with a “charge card” also

appears to be false.

Third, the complaint refers to a “claim . . . originally owed by Defendant(s) to

ASTA II/PROVIDIAN -03/NAT.” It is incorrect to say that a debtor “owes” a “claim”

to anyone—this is yet another false statement—impressive for a document consisting

of about fifteen lines of text. One could guess that the drafter intended to say that

Palisades owns a claim against the debtor formerly owned by “ASTA II/PROVIDIAN

-03/NAT,” but that is not what the document says. In addition to the fact that the

statement is incorrect, a debtor would almost certainly be confused about what “ASTA

II/PROVIDIAN -03/NAT” actually is. The majority defines this term for its readers as

“Providian,”—a definition that may not be strictly correct—but the state-court complaint

offered no such definition for the benefit of the debtor, and I am quite sure that Mrs.

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 16

Miller, when she entered into a credit card agreement, did not imagine herself to be

dealing with an entity called “ASTA II/PROVIDIAN -03/NAT.” What “ASTA II” and

“-03/NAT” refer to remains a mystery to the debtor and to me (and, apparently, to the

majority).

Also, the “for money loaned” language is arguably false because, in addition to

any amounts paid to merchants on Mrs. Miller’s behalf, the sum sought by Javitch

almost certainly includes a significant amount of penalty fees and penalty interest added

to her account balance before the debt was charged off. See, e.g., Discover Bank v.

Owens, 822 N.E.2d 869 (Ohio Mun. Ct. 2004) (denying on equitable grounds action to

collect credit-card debt primarily composed of late fees and penalty interest, rather than

amounts advanced for purchases). Therefore, while part of the relationship between the

debtor and the credit-card issuer can be described as a series of loans, it is potentially

very misleading to refer to the entire account balance as “money loaned.” And, of

course, the only way to know for sure how much of the “sum of $4,604.56” is actually

“for money loaned” is to examine the accounting required by Ohio Rule of Civil

Procedure 10(D)(1) (see infra).

The majority claims that the literal falsehoods in the complaint may be

overlooked because the least-sophisticated consumer would not be savvy enough to

know that they were false. It is not clear to me that this is an appropriate use of the least-

sophisticated-consumer test, which was primarily intended as a sword for consumers, not

a shield for debt-collectors making false statements. See Kistner v. Law Offices of

Michael P. Margelefsky, LLC, 518 F.3d 433, 438 (6th Cir. 2008) (“[The] test is designed

‘to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd.’”

(quoting Fed. Home Loan Morgage Corp. v. Lamar, 503 F.3d 504, 509 (6th Cir. 2007)

(emphasis added)). I acknowledge that an additional purpose of the test is to “‘prevent

liability for bizarre or idiosyncratic interpretations of collection notices,’” id., but the

only thing “bizarre” and “idiosyncratic” in this case is the wording of Javitch’s

complaint. See also Jacobson v. Healthcare Fin. Servs., 516 F.3d 85, 95 (2d Cir. 2008)

(noting that the “mischief” the FDCPA was “designed to address” is that of debt-

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 17

collectors, and “the Act is primarily a consumer protection statute” and reversing the

grant of summary judgment in the district-court decision relied on and quoted at length

by the majority). Even if it is correct that a lender should not be held liable for

immaterial false statements that clearly lack a tendency to mislead, cf. Muha v. Encore

Receivable Mgmt., __ F.3d __, No. 07-3581, 2009 WL 593135, at *3-4 (7th Cir. Mar.

10, 2009), the fact that half of the sentences in this document contain literally false

statements seems to me to weigh in favor of allowing a jury to decide whether the least-

sophisticated-consumer test has been met.

I recognize that the document at issue is not a collection letter; it is a state-court

complaint, which is a legal document. Therefore, I believe that we must permit Javitch

some leeway for the use of legal terms of art and other language that might be difficult

for the least-sophisticated consumer to understand. See, e.g., Beler v. Blatt, Hasenmiller,

Leibsker & Moore, LLC, 480 F.3d 470, 473 (7th Cir. 2007) (stating that if the FDCPA

applies to state-court complaints, it does not require that all language in the complaint

be understandable by unsophisticated consumers). However, we have held that an

affidavit attached to a state-court complaint is a “communication” such that the FDCPA

forbids it from containing misleading statements, see Gionis v. Javitch, Block &

Rathbone, LLP, 238 F. App’x 24, 30 (6th Cir. 2007), and if an affidavit attached to a

complaint is covered by the FDCPA’s prohibition of “false representation[s] [and]

deceptive means” in debt collection, then surely the complaint is covered as well. Id.

(quoting 15 U.S.C. § 1692e(10)); see also Heintz v. Jenkins, 514 U.S. 291, 292 (1995)

(“[FDCPA] applies to a lawyer who ‘regularly,’ through litigation, tries to collect

consumer debts.”). False statements and a consistent effort to misconstrue the nature of

the debt owed cannot be excused by the fact that they are found in a legal document.

B. The confusing language is primarily directed at state judges, not debtors

Unlike most allegedly misleading language challenged under the FDCPA, it

seems likely that the“for money loaned” language was not meant to encourage the debtor

to pay, nor even drafted with the debtor primarily in mind. Cf. Kistner, 518 F.3d at 441

(considering whether letter gave false impression that it was from an attorney, such that

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 18

debtor would have felt more compelled to pay); Gionis, 238 F. App’x at 29 (considering

whether least-sophisticated consumer “would be confused, and reasonably might feel

pressured to immediately pay the debt, even if she disputed its validity, in order to avoid

the possibility of having to also pay [the debt collector’s] attorney fees at some later

date”). Rather, the relevant language is, at least partially, the result of a litigation

strategy designed with state-court judges in mind. Javitch freely admits that it adopted

the “Complaint for Money Loaned” form of pleading in the hope that state trial judges

would deem its credit-card-collection suits exempt from the requirement of Ohio Rule

of Civil Procedure 10(D)(1), which normally applies to such suits. This rule states:

“When 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. If the

account or written instrument is not attached, the reason for the omission must be stated

in the pleading.” Apparently, Javitch hopes that by styling its pleading as “for money

loaned” rather than “on an account” and altering the language to make the action sound

more like a suit for a traditional loan of money, it can avoid the burdens imposed by

Rule 10(D)(1). While it seems unlikely that state trial judges will agree, given that the

superficial change in wording does not change the substance of the suit, which remains

a suit for credit-card debt founded both on an account and on a written instrument,

Javitch may pursue this litigation strategy as long as it does not violate the FDCPA in

the process.

C. The fact that the confusing language was not entirely intended to mislead

debtors does not exempt it from the requirements of the FDCPA

The fact that Javitch did not draft the confusing language with the debtor solely

in mind does not change the fact the debtor who receives such a complaint may be

confused by it and may suffer as a result. Nor does it negate the possibility that Javitch

intended the confusing language to mislead the debtor. First, the least-sophisticated

debtor might reasonably believe that the suit is for some kind of traditional loan of

money. If the debtor has not taken out such a loan, or has taken out such a loan but has

disposed of it in some way, she might ignore the suit, resulting in a default judgment

(obviously a desirable outcome for Javitch). Second, if the debtor simply does not

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 19

understand from the document the debt to which it refers, she might be less likely to

contest the suit, again making a default judgment more likely. See also Muha, 2009 WL

593135, at *5 (“Confusing language in a dunning letter can have an intimidating effect

by making the recipient feel that he is in over his head and had better pay up rather than

question the demand for payment.”). Third, the debtor might be led to believe that the

“money loaned” consisting of “the sum of $4,604.56” is a fixed amount that is not

susceptible to the types of defenses a debtor can assert in an action for collection of

credit-card debt, such as contested or improper charges, improper additions of fees after

the debt has been charged off, or other violations of the lending agreement. See Muha,

2009 WL 593135, at *5 (“The intimidating effect may have been magnified by [language

that] might have suggested to an unsophisticated consumer that any right he might have

to challenge the demand for payment had been extinguished . . . .”). Finally, if the

debtor is fooled into thinking this complaint is not for a credit-card debt, she might be

less likely to demand that the court enforce Javitch’s obligation to provide

documentation of her credit-card account under Rule 10(D)(1).

Javitch could have drafted this complaint in a way that made the nature of the suit

clear to the debtor, but, instead, the document is stated in confusing, unnatural language

and contains several false statements about the financial relationships at issue. As the

majority states, Congress wrote the FDCPA to be “extraordinarily broad,” Frey v.

Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992), and to provide for strict liability. See

15 U.S.C. § 1692k(c). We are bound to analyze whether a debt-collector’s practice is

deceptive, not using our own common sense as experienced jurists, but using the least-

sophisticated-consumer test, which is “designed to ensure that the FDCPA protects all

consumers, the gullible as well as the shrewd.” Kistner, 518 F.3d at 438. Unlike the

majority, I view Javitch’s complaint as one that a reasonable jury could find misleading

to the least-sophisticated consumer. Therefore, I believe that “a jury should determine

whether the [complaint] is deceptive and misleading.” Id. at 441; see also Muha, 2009

WL 593135, at *5 (“The defendant’s letter was not so palpably misleading as to entitle

the plaintiffs to summary judgment, but neither was it so palpably not misleading as to

entitle the defendant to summary judgment.”).

No. 08-3336 Miller v. Javitch, Block & Rathbone, et al. Page 20

Javitch may be able to prove that it did not intend the complaint to mislead Miller

and that the confusing nature of the complaint was a bona fide error. See Jerman v.

Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 538 F.3d 469, 478 (6th Cir. 2008)

(holding that bona fide error defense in15 U.S.C. § 1692k(c) applies to bona fide errors

of law). Similarly, it may be able to prove that its false statements were unintentional

and resulted either from careless drafting or a lack of understanding of the relevant

concepts. However, given the pervasiveness of the confusing language in this document,

I cannot say that Javitch has established its burden to such an extent that there is no

genuine issue of material fact for a jury.

D. Conclusion

For the foregoing reasons, I would reverse the grant of summary judgment and

remand for trial.