Sunday, August 22, 2010

Defending “Call Volume” Claims: How Many Calls Are Too Many Under Section 1692d(5) Of The FDCPA?

Collectors cannot collect money if they cannot make contact with consumers. The primary way collectors do this is by phone, and it is often necessary to make multiple call attempts before a consumer is reached. But how many call attempts are too many? When will a collector cross the line between diligently trying to make contact, and calling so many times that a court will conclude the collector was trying to harass the consumer? Is there a magic number of calls?

There are no hard and fast rules on how many times a collector can call a consumer, and decisions of the district courts have been all over the map. Call volume claims are generally fact-intensive and can be expensive to defend, and this may explain why these cases are favored by consumer lawyers. Fortunately for collectors, however, there is an emerging trend among the district courts to reject FDCPA claims that are based solely upon counting up the number of call attempts made by the collector. These decisions reflect an appreciation of the basic fact that collectors often must make multiple attempts before the can make contact with the debtor. These call attempts reflect an attempt to start a dialogue about the debt – not an intent to harass or annoy.

Section 1692d(5) of the FDCPA prohibits collectors “[c]ausing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.” 15 U.S.C. § 1692d(5) (emphasis added). The FDCPA is often described as a “strict liability” statute, but this is not true for a section 1692d(5) claim. The plaintiff must plead and prove that the collector intended to annoy, abuse or harass in order to prevail. See, e.g., Clark v. Capital Credit & Collection Servs, Inc., 460 F. 3d 1162, 1176, n.11 (9th Cir. 2006) (identifying sections 1692d(5), 1692f(3) and 1692c(a)(1) of the FDCPA as exceptions to strict liability); Kaplan v. Assetcare, Inc., 88 F. Supp. 2d 1355, 1362 (S.D. Fla. 2000)(same: “Congress took care to require an element of knowledge or intent in certain portions of the FDCPA where it deemed such a requirement necessary.”).

Thus, to establish a violation of section 1692d(5), the consumer must show that the calls were made “repeatedly or continuously” and that they were made with the intent to annoy, abuse, or harass. Although the FDCPA does not define “repeatedly or continuously,” the FTC has opined that "continuously" means “making a series of telephone calls, one right after the other” and has said that “repeatedly means “calling with excessive frequency under the circumstances.” See Statements of General Policy or Interpretation Staff Commentary On the Fair Debt Collection Practices Act, 53 Fed.Reg. 50,097, 50,105 (Fed. Trade Comm’n Dec. 13, 1988).

The FDCPA does not contain any bright-line rules setting forth the permissible number of calls a collector can place in a day, week, month or year without violating section 1692d(5). When deciding if a collector has violated section 1692d(5), courts consider both the volume and the pattern of the calls. See Katz v. Capital One, 2010 WL 1039850, *3 (E.D. Va. Mar. 18, 2010); Saltzman v. I.C. Sys., Inc., 2009 WL 2190359, *7 (E.D. Mich. Sept. 30, 2009); see also Martin v. Select Portfolio Serving Holding Corp., 2008 WL 618788, *6 (S.D. Ohio Mar. 3, 2008) (“In determining whether the debt collector intended to annoy, abuse and harass the consumer, the Court may consider frequency, persistence, and volume of the telephone calls.”); Sanchez v. Client Services, Inc., 520 F. Supp. 2d 1149 (N.D. Cal. 2007) (summary judgment for consumer on section 1692d(5) claim where collector placed 54 telephone calls to debtor's place of employment during six month period, including 17 calls in one month and six on one day); Akalwadi v. Risk Management Alternatives, Inc.,336 F. Supp. 2d 492, 505-06 (D. Maryland 2004) (summary judgment denied on section 1692d(5) claim; 28 calls in two month period, including periods of daily calls, and three calls on one day); Kuhn v. Account Control Tech., Inc., 865 F. Supp. 1443, 1453 (D. Nev.1994) (six calls to consumer’s place of employment within twenty-four minutes constituted harassment under section 1692d(5)).

Recent decisions by district courts around the country reflect an encouraging trend for collectors facing call volume claims. A district court in Florida recently granted summary judgment for a collector who called plaintiff (a non-debtor) fifty-seven times, including seven times in a single day. See Tucker v. CBE Group, Inc., _ F. Supp. 2d _, 2010 WL 1849034, *1, 3 (M.D. Fla. May 5, 2010). Despite the relatively high number of calls, there was no evidence the collector had repeatedly placed calls after being asked to cease communication, or that it had called back on the same day it left a message. See id. at *3. The court held the “evidence demonstrates that CBE placed each of its telephone calls with an intent to reach [plaintiff’s daughter] rather than an intent to harass Plaintiff.” Id.

In Katz v. Capital One, the collector allegedly called the consumer “fifteen to seventeen times” after her attorney sent a letter instructing the collector to cease contact. The letter was sent to the original creditor, however, not to the collector. See 2010 WL 1039850 at **1-2. The court granted summary judgment for the collector, concluding there was no evidence to establish “that the phone calls were intended to be annoying, abusive, or harassing. Instead, the records shows that Allied, believing the debt to be valid, attempted to take steps to collect that debt.” Id. at *3. The collector never called more than twice in one day, none of its calls “were made back-to-back, at inconvenient times, after plaintiff had asked [the collector] to stop calling, or immediately after plaintiff hung up.” Id.

In Saltzman v. I.C. Systems, Inc., the court granted summary judgment for a collector who placed “somewhere between twenty and fifty unsuccessful telephone calls and between two and ten successful telephone calls” to the consumer in just over one month. See Saltzman, 2009 WL 2190359 at *6 n.4. While number of call attempts was relatively high, the court observed that the disparity between the large number of calls placed by the collector, and low number of actual conversations with the consumer, suggested a “difficulty of reaching Plaintiff, rather than an intent to harass.” Id. at *7 (citation omitted).

In Arteaga v. Asset Acceptance, LLC, _ F. Supp. 2d _, 2010 WL 3310259 (E.D. Cal. Aug. 23, 2010), the court granted summary judgment for a collector on a section 1692d(5) claim, despite testimony from the consumer that the collector called her “daily” or “almost daily.” Id. at *7. The court held that “even if Ms. Arteaga’s allegations are believed true, and considered under the ‘least sophisticated debtor’ standard, the conduct does not constitute harassment as a matter of law.” Id.

There is no circuit level authority on section 1692d(5) claims, and no precise guidelines regarding the permissible number of call attempts have been established. Some cases appear to reflect ad hoc reasoning based solely on number of attempts made to reach the consumer. See, e.g., Bassett v. I.C. System, Inc., _ F.Supp.2d _, 2010 WL 2179175 at *4 (N.D. Ill. June 1, 2010) (denying summary judgment where collector made thirty-one call attempts during a twelve day period); Krapf v. Nationwide Credit Inc., 2010 WL 2025323, *4 (C. D. Cal. May 21, 2010) (denying summary judgment where collector placed over 180 calls in a single month, with an average of six calls per day). The trend in the case law is encouraging for collectors, however, with courts using a more holistic, analytical approach to section 1692d(5) claims, rather than just blindly counting up the number of call attempts.

Monday, August 9, 2010

Leaving Voicemail Messages - Ninth Circuit May Resolve The Foti Issue

Debt collectors who have struggled to formulate what voicemail message, if any, to leave for consumers may be receiving guidance on the issue if the Ninth Circuit Court of Appeals decides to grant the petition that was filed on December 29, 2010, pursuant to 28 U.S.C. § 1292(b), in the case of Koby v. ARS National Service, Inc, 2010 WL 1438763 (S.D. Cal. March 29, 2010). A copy of the petition filed with the Court by defendant ARS National Services, Inc. can be read and downloaded here:

Koby v. ARS National Services, Inc. Section 1292(b) Petition To Ninth Circuit -

In Koby, the United States District Court for the Southern District of California found that the following voice mail message left for one of the plaintiffs, Michael Simmons, was NOT a “communication” within the meaning of the FDCPA, and, therefore, when defendant left the message it had NOT violated section 1692e(11) of the Act:

This is Brian Cooper. This call is for Mike Simmons, I need you to return this call as soon as you get this message 877-333-3880, extension 2571.”

Regarding this message, the court held: “The Court, however, finds the message left for Plaintiff Simmons, which merely included the caller's name and asked for a return call, does not convey, directly or even indirectly, any information regarding the debt owed. As such, the claim based upon the voicemail message left with Plaintiff Simmons would not permit recovery under section 1692e(11) and Defendant is entitled to judgment as to this claim.” This portion of the Koby opinion is very similar to the case of Biggs v. Credit Collections Inc., 2007 WL 4034997 *4 (W.D. Okla. Nov.15, 2007).

Having made this ruling, however, the district court also held that the same message, and two other similar messages, left for plaintiffs Koby and Supler, violated section 1692d(6) of the FDCPA, by failing to “meaningfully disclose” the identity of the collector. The court also found that the Koby and Supler messages did constitute “communications” under the FDCPA, and therefore the complaint had stated a section 1692e(11) claim with respect to those messages. The Koby and Supler messages were alleged to state the following:

This is Robin calling for Michael Koby, if you could please return my call at 800-440-6613. My direct extension is 3171. Please refer to your Reference Number as 15983225.”

Hey John, uh, it's Mike Mazzouli with ARS National. Umm, there appears to be some documents here in my office, uh, John at this point your [sic] involved. Call me as soon as you can. My direct number and direct extension is 800-440-6613; I'm at extension 3697. Thank you.

Recently, the district court held, consistent with the requirements of 28 U.S.C. § 1292(b), that its ruling “involves controlling questions of law as to which there is substantial ground for difference of opinion, and that an immediate appeal from the Order may materially advance the ultimate termination of the litigation” and the district court therefore certified the following two questions to the Ninth Circuit:

1. Do each of the voice mail messages as alleged in the complaint in this action constitute a ‘communication’ within the meaning of section 1692a(2) of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et. seq., (the “FDCPA”), 15 U.S.C. § 1692, et seq.;” and

2. Do the voice mail messages as alleged in the complaint violate section 1692e(11) and/or section 1692d(6) of the FDCPA?

The principal reasons raised by ARS in the petition explaining why the Ninth Circuit should take the appeal are:

• The messages are not “communications” under the plain language of the FDCPA. They did not disclose any information “regarding a debt,” such as the amount due, the name of the creditor or the applicable interest rate. By omitting this information, ARS respected the consumer’s right to privacy.

• The messages did meaningfully disclose the “caller’s identity,” because each message stated the name of the caller and provided the consumer with a toll-free number to return the call. In the context of a voice mail message, this is sufficiently meaningful disclosure.

• The district court correctly held that the message left for Plaintiff Simmons – “which merely included the caller’s name and asked for a return call” – was not a “communication” under the FDCPA, and therefore did not violate section 1692e(11) of the Act. This is consistent with the holding of the district court of Oklahoma in Biggs v. Credit Collections, Inc., 2007 WL 4034997, *4 (W.D. Okla. Nov. 15, 2007).

• The district court erred, however, when it held that the messages left for Plaintiffs Koby and Supler stated a viable claim under section 1692e(11), as this cannot be reconciled with the ruling on the message left for Plaintiff Simmons. The only differences are that the message for Koby also mentioned a “reference number” and the message for Supler also mentioned “documents” in the caller’s office.

• The district court erred when it held that all three messages stated a viable claim under section 1692d(6) for failure to provide meaningful disclosure of the caller’s identity. The court reasoned that a collector can avoid liability under 1692d(6) by not leaving any message at all, but this directly conflicts with a ruling issued by the Northern District of California, which effectively held that a collector must leave a voice mail message in order to avoid liability.

• The logic of the district court is internally inconsistent, since it found that ARS did not “communicate” with Simmons when ruling on the section 1692e(11) claim, but also found that ARS was required to state it was a “debt collector” attempting to collect a debt in order to comply with section 1692d(6).

• There are serious constitutional issues raised by the district court’s interpretation of the FDCPA, because the messages are a valid form of commercial speech. The ruling, read in conjunction with other district court cases, would expose collectors to strict liability every time they place a call, deterring calls to consumers, and silencing an entire channel of commercial speech. This violates the canon of “constitutional avoidance” which prohibits courts from interpreting statutes in a way that raises serious constitutional issues.

The Ninth Circuit should rule on the petition within the next few months and, if it is granted, the matter will then proceed as a normal appeal.