Scheuer v. Jefferson Capital Sys., LLC

43 F.Supp.3d 772

Donna M. SCHEUER, f/k/a Donna M. Millard, Plaintiff

v.JEFFERSON CAPITAL SYSTEMS, LLC, Defendant.

Case No. 14–cv–11218.

United States District Court, E.D. Michigan, Southern Division.

Signed Sept. 9, 2014.

Brian P. Parker, Brian P. Parker Assoc., Southfield, MI, for Plaintiff.

David L. Hartsell, McGuire Woods, Chicago, IL, for Defendant.

OPINION AND ORDER (1) GRANTING DEFENDANT'S MOTION TO DISMISS (ECF # 18); (2) DENYING AS MOOT PLAINTIFF'S MOTION FOR CLASS CERTIFICATION (ECF # 14); AND (3) DISMISSING COMPLAINT WITH PREJUDICE

MATTHEW F. LEITMAN, District Judge.

INTRODUCTION

In this action, Plaintiff Donna M. Scheuer (“Scheuer”) alleges that Defendant Jefferson Capital Systems, LLC (“Jefferson”) violated the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. § 1692 et seq., and the Michigan Collection Practices Act (the “MCPA”), M.C.L. § 445.251 et seq., when it sent her a collection notice containing purportedly false statements. However, the statements in question would not have misled nor deceived the “least sophisticated debtor,” nor would the statements have been material to such a debtor. Accordingly, the statements are not actionable under the FDCPA or the MCPA.

FACTUAL BACKGROUND

Scheuer bases her claims on a letter she received from Jefferson dated March 7, 2014. (See the “Letter,” attached to the Amended Complaint as Ex. 1, ECF # 13–1.) The Letter stated that a debt of $235.98 owed by Scheuer “is with [Jefferson's] office for collection and servicing.” (Letter at 2, Pg. ID 174.) The Letter further identified Jefferson as Scheuer's “[c]urrent [c]reditor,” and it described the debt in question as “FINGERHUT DIRECT MARKETING.” (Id. )

The Letter asked Scheuer to “consider the following opportunities to satisfy this balance”:

1. Opportunity # 1—50% Discount

Pay this account with a lump sum payment of $117.99 which is a 50% discount off the amount due. This arrangement will settle the account with Jefferson Capital.

2. Opportunity # 2—40% Discount

Pay three payments of $47.17 and settle the account for $141.59.

3. Opportunity # 3—Monthly Payments

Jefferson Capital will also accept payments of $19.66 a month over the next twelve months. These payments will apply toward the amount due of $235.98.

(Id. )

The Letter explained that Scheuer could exercise these options by (1) calling the toll-free phone number provided in the Letter, (2) sending a “MONEY GRAM” made “[p]ayable to: Jefferson Capital Systems, LLC,” or (3) sending payment to a specific P.O. Box address in St. Louis, Missouri. (Id. )

At the bottom of the Letter, in bold capital letters, Jefferson disclosed that “THIS COMMUNICATION IS FROM A DEBT COLLECTOR AND IS AN ATTEMPT TO COLLECT A DEBT.” (Id. ) In additional bold capital letters, Jefferson advised Scheuer to “SEE REVERSE SIDE FOR IMPORTANT INFORMATION REGARDING YOUR RIGHTS UNDER FEDERAL, STATE, AND LOCAL LAWS.” (Id. )

The reverse side of the Letter provided, in relevant part, that “JEFFERSON CAPITAL COMPLIES WITH A FEDERAL LAW CALLED THE [FDCPA] THAT PROVIDES CONSUMERS WITH CERTAIN RIGHTS. THE [FDCPA] ... REQUIRE[S] THAT ... COLLECTORS MAY NOT USE FALSE OR MISLEADING STATEMENTS....” (Id. at 4, Pg. ID 176.) The reverse side of the Letter also informed Scheuer that “[b]ecause of the age of your debt, we will not bring any kind of legal proceeding against you ... to collect on the debt.” (Id. ) The reverse side further assured Scheuer that if she made a partial payment toward the debt, Jefferson would not deem that payment to re-start the already-expired statute of limitations on an action to collect the debt. (Id. )¹

Jefferson included with the Letter a remittance insert for Scheuer to return along with any payment she made by mail. (See id. at 3, Pg. ID 175.) The remittance insert was addressed to “Jefferson Capital Systems, LLC” at the St. Louis post office box identified in the text of the Letter. (See id. ) The insert contained payment instructions. It directed Scheuer to “include your JCS Reference Number ... on the check or money order payable to: Jefferson Capital.” (Id. at 3, Pg. ID 175.)

SCHEUER'S CLAIMS AND THE PROCEDURAL HISTORY OF THIS ACTION

Scheuer filed her Amended Complaint in this action on March 24, 2014. (See Amended Complaint, ECF # 13.) She alleges—on behalf of a purported class of consumers who received communications like the Letter from Jefferson—that the Letter contained certain false, misleading, and deceptive statements. The short “Factual Allegations” section of Scheuer's Amended Complaint, in its entirety, provides as follows:

26.

On or about March 7, 2014, 2014, Defendant JCS sent a letter to Plaintiff specifically and Michigan Consumers Please see Exhibit 1. The letter provided Ms. [Scheuer] notice of her dispute and validation rights under the FDCPA with a notice that stated:

“THIS COMMUNICATION IS FROM A DEBT COLLECTOR AND IS AN ATTEMPT TO COLLECT A DEBT ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. ”

27.

This is the only letter that Ms. Scheuer has received from JCS. Please see Exhibit 2, Affidavit of Ms. Scheuer.

28.

JCS is writing to “Dear Donna [Scheuer]” and states in the first line of its letter that:

“The above referenced account is with our office for collection and servicing. ”

29.

The “Jefferson” letter indentifies [sic] JEFFERSON CAPITAL SYSTEMS LLC as “Your Current Creditor.”

30.

The letter did not provide Ms. [Scheuer] notice of her dispute and validation rights under the FDCPA but stated:

THIS COMMUNICATION IS FROM A DEBT COLLECTOR AND IS AN ATTEMPT TO COLLECT A DEBT ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.

31.

As part of its business purchasing debt portfolios, the subject debt has been purchased by JCS as a junk, charged off debt in default and JCS is therefore a debt collector at the time it purchased the debt and now.

32.

Defendant JCS is communicating to the Plaintiff specifically and the Michigan Consumer Class generally that it is both the debt collector and the creditor. However, a debt collector cannot be both a ‘creditor’ and a ‘debt collector,’ as defined in the FDCPA, because those terms are mutually exclusive.” Bridge v. Ocwen Federal Bank, FSB, 681 F.3d 355 —Court of Appeals, 6th Circuit 2012. (“Congress has unambiguously directed our focus to the time the debt was acquired in determining whether one is acting as a creditor or debt collector under the FDCPA.”); Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir.2003) (noting that “the Act treats assignees as debt collectors if the debt sought to be collected was in default when acquired by the assignee, and as creditors if it was not ”).

33.

It is a violation of the FDCPA and MCPA for Defendant to represent itself to Plaintiff and the Class as both the collector and the creditor when it obtains a debt that was acquired in default.

(Id. at ¶¶ 26–33) (emphasis in original).

The Amended Complaint contains two claims for relief—one under the FDCPA and one under the MCPA. Scheuer's claims, in their entirety,² are as follows:

Count 1—Fair Debt Collection Practices Act

Defendants have [sic] violated the FDCPA. Defendants' [sic] violations of the FDCPA include, but are not necessarily limited to, the following:

a. Defendant violated 15 U.S.C. [§ ]1692e by using false, deceptive and misleading representations and means in connection with the collection or attempted collection of a debt using [the Letter] ...; and

b. Defendant collected on the debt and violated 15 U.S.C. [§ ]1692e(10) while claiming to be both the debt collector and the creditor at the same time in connection with the collection of a debt that was in default at the time Jefferson purchased the debt ...; and

c. Defendant collected on the debt and violated 15 U.S.C. [§ ]1692g(a)(2) by falsely claiming to be [the] creditor who services the debt in [the Letter]; and

d. Defendant violated 15 U.S.C. [§ ]1692e(2)(A) with the falsification of the character, amount, or legal status of the alleged [debt] [in the Letter].

[...]

Count 2—Michigan Collection Practices Act

Defendants have [sic] violated the MCPA. Defendant's violations of the MCPA include, but are not necessarily limited to, the following:

a. Defendant violated MCLA [§ ]445.252(n) by using a harassing, oppressive, or abusive method to collect a debt, using [the Letter] as mentioned above;

b. Defendant violated MCLA [§ ]445.252(e) [by m]aking an inaccurate, misleading, untrue, or deceptive statement or claim in a communication to collect a debt or concealing or not revealing the purpose of a communication when it is made in connection with collecting a debt [in the Letter];

c. Defendant has violated MCLA [§ ]445.252(f) [by m]isrepresenting in a communication with a debtor [one] or more of the following:

i. The legal status of a legal action being taken or threatened.

ii. The legal rights of the creditor or debtor [in the Letter].

d. Defendant has violated MCLA [§ ]445.252(q) by failing to implement a procedure designed to prevent a violation by an employee such as continuing to contact a represented debtor.

(Id. at ¶¶ 47–49) (paragraph numbers omitted).

In lieu of filing an Answer, on May 22, 2014, Jefferson filed a Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (See Jefferson's Motion, ECF # 18.) Jefferson argued that it could not be liable as alleged by Scheuer because it was, in fact, both a “creditor” and a “debt collector,” as it indicated in the Letter, and because it was legally required to identify itself as such in the Letter. (See Jefferson's Brief, ECF # 19 at 1–2, Pg. ID 219–20.)

In response, Scheuer argued at great length that, as a matter of law, Jefferson could not have been both a “creditor” and a “debt collector;” that Jefferson's statements to that effect in the Letter were thus false; and that Jefferson's false statements gave rise to liability under the FDCPA and MCPA. (See Scheuer Response, ECF # 22–1 at 5–16, Pg. ID 244–55.) Scheuer submitted her own affidavit in support of her response. (See Scheuer Aff., ECF #...