Miller v. Javitch, Block & Rathbone

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, Englewood Cliffs, NJ 07632 — Plaintiff

vs.

Peggy Miller AKA Peggy A. Miller, 1315 9Th St. Portsmouth, OH 45662 — Defendants)

CASE NUMBER:

JUDGE:

COMPLAINT FOR MONEY LOANED

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/PROVI-DIAN-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 *598 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 plaintiffs house.” In fact, Miller testified that she did not understand the sentence 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 Pro-vidian — 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 Jav-itch’s brief, Mrs. Miller applied for a Provi-dian “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/PROVI-DIAN-03/NAT” actually is. The majority defines this term for its readers as “Provi-dian,” — 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. 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., Dis *599 cover Bank v. Owens, 129 Ohio Misc.2d 71 , 822 N.E.2d 869 (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 Mortgage 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-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., 558 F.3d 623 , No. 07-3581, 558 F.3d 623, 627-28 , 2009 WL 593135, at *3-4 (7th Cir.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 Fed.Appx. 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 , 115 S.Ct. 1489 , 131 L.Ed.2d 395 (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 *600 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 debtor would have felt more compelled to pay); Gionis, 238 Fed.Appx. 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 debt- or 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 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, 558 F.3d at 629 , 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 debt- or can assert in an action for collection of credit-card debt, such as contested or im *601 proper charges, improper additions of fees after the debt has been charged off, or other violations of the lending agreement. See Muha, 558 F.3d at 629 , 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, 558 F.3d at 629 , 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”).

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 in 15 U.S.C. § 1692k(e) 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.