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Gibson v. US Collections West Inc.

United States District Court, D. Arizona

May 8, 2017

Charlotte Gibson, Plaintiff,
v.
US Collections West Incorporated, Defendant.

          ORDER

          HONORABLE G. MURRAY SNOW, UNITED STATES DISTRICT JUDGE

         Pending before the Court are Plaintiff Charlotte Gibson's and Defendant U.S. Collections West Incorporated's (“US Collections”) cross motions for summary judgment, (Docs. 25 & 30). For the following reasons, the Court grants Plaintiff's motion and denies the Defendant's motion.[1]

         BACKGROUND

         Charlotte Gibson owed money to North Valley Endodontic for medical expenses. (Doc. 25-2 at 2.) At some point, she fell behind on payments and U.S. Collections began collection activity to recover her account's balance. (Id.) On September 22, 2015, Ms. Gibson wrote a letter informing U.S. Collections that she refused to pay. (Id.) U.S. Collections received this notice on September 25, 2015. (Id.)

         Despite receiving this letter, U.S. Collections concedes that it sent two additional debt-collection letters to Ms. Gibson. It asserts, however, that these communications were sent in error after a clerk, Kay Kasey, [2] who was trained to give refusal to pay letters to a manager to handle, mistakenly placed Ms. Gibson's refusal letter into a box for dispute letters. (Doc. 30 at 3, Doc 32 at 1.)

         Ms. Gibson filed the instant suit, alleging a violation of the Fair Debt Collection Practices Act (“FDCPA”). (Doc. 1.) U.S. Collections concedes that it violated the FDCPA but asserts that it should not be held liable because the violation was the result of a bona fide error, which is an affirmative defense under the statute. (Doc. 30.)

         DISCUSSION

         I. Legal Standard

         Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law determines which facts are material and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “A fact issue is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002) (quoting Anderson, 477 U.S. at 248). Thus, the nonmoving party must show that the genuine factual issues “‘can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.'” Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987) (quoting Anderson, 477 U.S. at 250).

         Although “[t]he evidence of [the non-moving party] is to be believed, and all justifiable inferences are to be drawn in [its] favor, ” the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations unsupported by facts. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record . . . or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c). “A trial court can only consider admissible evidence in ruling on a motion for summary judgment, ” and evidence must be authenticated before it can be considered. Orr v. Bank of Am., 285 F.3d 764, 773-74 (9th Cir. 2002).

         II. Analysis

         The FDCPA imposes strict liability on debt collectors for continuing to contact a consumer once the “consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer.” 15 U.S.C. § 1692c(c). 15 U.S.C. § 1692(e); See also Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002, 1005 (9th Cir. 2008) (affirming that “the FDCPA imposes strict liability”). Although the FDCPA imposes strict liability in such cases, debt collectors may seek to demonstrate that their actions were the result of a “bona fide error” to avoid liability. 15 U.S.C. § 1692k; see Reichert, 531 F.3d at 1005 (explaining that the bona fide error defense “provides a narrow exception to strict liability.”) (internal quotation marks omitted). “The bona fide error defense is an affirmative defense, for which the debt collector has the burden of proof.” Reichert, 531 F.3d at 1005. To establish the defense, the debt collector must establish, by the preponderance of the evidence, that “(1) it violated the FDCPA unintentionally; (2) the violation resulted from a bona fide error; and (3) it maintained procedures reasonably adapted to avoid the violation.” McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 948 (9th Cir. 2011).

         A. U.S. Collections Provided No Evidence that it Utilized Procedures Reasonably Adapted to Avoid Mistakes in the Handling of Consumer Mail.

         To utilize the bona fide error defense as a shield, the defense must establish that it maintained procedures “designed to avoid discoverable errors.” Reichert, 531 F.3d at 1007. As this Court previously noted the Ninth Circuit uses a two-step process to determine whether the “procedures” prong may have been satisfied. Reichert, 531 F.3d at 1006. First the debt collector must “ ‘[maintain]-i.e., actually [employ] or [implement]-procedures to avoid errors.'” Id. (quoting Johnson v. Riddle, 443 F.3d 723, 729 (10th Cir. 2006)). Second the procedures must be “‘reasonably adapted' to avoid the specific error at issue.” Id. “To qualify for the bona fide error defense under the FDCPA, the debt collector has an affirmative obligation to maintain procedures designed to avoid discoverable errors.” And, further “[i]f the bona fide error defense is to have any meaning in the context of a strict liability statute, then a showing of “procedures reasonably adapted to avoid any such error” must require more than a mere assertion to that effect. The ...


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