Case 3:15-cv ST Document 41 Filed 12/10/15 Page 1 of 29 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON PORTLAND DIVISION

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1 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 1 of 29 Michael Fuller, Oregon Bar No Trial Attorney for Plaintiff michael@underdoglawyer.com UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON PORTLAND DIVISION KIAN FATEMI, a consumer residing in Multnomah County, v. Plaintiff, Case No. 3:15-cv ST PLAINTIFF S RESPONSE IN OPPOSITION TO DEFENDANT S MOTION FOR SUMMARY JUDGMENT NORTHLAND GROUP, INC., a debt collector, Defendant. SUMMARY OF RESPONSE Defendant s motion must be denied because a reasonable juror may review the evidence and determine defendant violated the FDCPA by attempting to collect debt plaintiff did not owe. A reasonable juror may also determine defendant s procedures to avoid violating the FDCPA were not reasonable under the circumstances. SUMMARY JUDGMENT - Page 1 of 29

2 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 2 of 29 TABLE OF CONTENTS SUMMARY OF RESPONSE...1 FACTUAL BACKGROUND...8 I. FDCPA prerequisites...8 II unauthorized charges...8 III placement by Cavalry...8 IV. Defendant s FDCPA procedures...9 GENUINE ISSUES OF MATERIAL FACT...9 I. Did defendant attempt to collect debt plaintiff did not owe?...10 II. Was defendant s FDCPA violation intentional?...10 III. Was defendant s reliance on Cavalry s unwarranted information reasonable under the circumstances?...11 IV. Were defendant s procedures reasonably adapted to avoid collecting debt plaintiff did not owe?...12 SUMMARY JUDGMENT - Page 2 of 29

3 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 3 of 29 LEGAL POINTS AND AUTHORITIES...13 I. Summary judgment...13 II. FDCPA...13 A. Strict liability standard...13 B. Prohibited conduct...13 C. Debt validation not a prerequisite to suit...14 D. Bona fide error defense...16 ARGUMENT...18 I. Whether defendant violated the FDCPA involves questions of fact and credibility only the jury can decide...18 A. Defendant s alleged FDCPA violation was material...19 B. Plaintiff was not required to dispute the debt with defendant to trigger his rights under the FDCPA...19 II. The reasonableness of defendant s FDCPA compliance procedures presents issues of fact and credibility only the jury can decide...22 A. A reasonable juror may determine defendant s violation was intentional...23 SUMMARY JUDGMENT - Page 3 of 29

4 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 4 of 29 B. A reasonable juror may determine defendant s reliance on Cavalry s unwarranted information was unreasonable under the circumstances...23 C. A reasonable juror may determine defendant s procedures were not reasonably adapted to avoid collecting invalid debts in its initial demand letters...26 CONCLUSION...28 SUMMARY JUDGMENT - Page 4 of 29

5 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 5 of 29 TABLE OF AUTHORITIES Cases Atchison, Topeka & Santa Fe Ry. Co. v. Buell, 480 U.S. 557 (1987)...15 Brown v. Palisades Collection, LLC 2011 U.S. Dist. LEXIS (S.D. Ind. June 24, 2011) Burdett v. Harrah s Kan. Casino Corp., 294 F. Supp. 2d 1215 (D. Kan. 2003)...14 Camacho v. Bridgeport Fin., Inc., 523 F.3d 973 (9th Cir. 2008)...16 Camacho v. Jefferson Capital Sys., LLC, 2015 U.S. Dist. LEXIS (N.D. Cal. Sept. 21, 2015)...18 Clark v. Capital Credit & Collection Servs., 460 F.3d 1162 (9th Cir. 2006)...13,16,17 Collins v. Portfolio Recovery Assocs., LLC 2013 U.S. Dist. LEXIS (E.D. Tenn. June 7, 2013)...14 Davis v. Midland Funding, LLC, 41 F. Supp. 3d 919 (E.D. Cal. 2014)...13 DeCapri v. Law Offices of Shaprio Brown & Alt, LLP 2014 U.S. Dist. LEXIS (E.D. Va. Sept. 19, 2014)...14 Donohue v. Quick Collect, Inc., 592 F.3d 1027 (9th Cir. 2010)...19 Eide v. Colltech, Inc., 987 F. Supp. 2d 951 (D. Minn. 2013)...14 Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507 (9th Cir. 1994)...17 Gater v. Russell Collection Agency, Inc U.S. Dist. LEXIS (E.D. Mich. Nov. 10, 2015)...17 SUMMARY JUDGMENT - Page 5 of 29

6 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 6 of 29 Gigli v. Palisades Collection, L.L.C U.S. Dist. LEXIS (M.D. Pa. Aug. 14, 2008)...14 Hyman v. Tate, 362 F.3d 965 (7th Cir. 2004)...24 Jenkins-Brown v. Liberty Acquisitions Servicing, LLC 2015 U.S. Dist. LEXIS (D. Or. July 29, 2015)...13 Mahon v. Credit Bureau of Placer County, Inc., 171 F.3d 1197 (9th Cir. 1999)...20 McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F3d 939 (9th Cir. 2011)... 9,16,22-24 McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240 (3d Cir. 2014)...31 Muller v. Midland Funding, LLC, 2015 U.S. Dist. LEXIS (S.D. Fla. May 20, 2015)...14 Ohio v. Roberts, 448 U.S. 56 (1980)...21 Owen v. I.C. Sys., Inc., 629 F.3d 1263 (11th Cir. 2011)...17 Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002 (9th Cir. 2008)...13,16,23,27 Richardson v. Valley Credit Serv., 2014 U.S. Dist. LEXIS (D. Or. June 25, 2014)...20 Russell v. Absolute Collection Servs., Inc., 763 F.3d 385 (4th Cir. 2014)... 14,21-22 Serrania v. LPH, Inc., 2015 MT 113, 22, 379 Mont. 17, 22, 347 P.3d Story v. Midland Funding LLC et al., Civ. No. 3:15-cv AC...20 Vasquez-Estrada v. Collecto, Inc., 2015 U.S. Dist. LEXIS (D. Or. Oct. 20, 2015) 9,13,17 Velazquez v. NCO Fin. Sys., 2011 U.S. Dist. LEXIS (E.D. Pa. May 31, 2011)...14 Legislative History S. Rep. No. 382, 95th Cong. at 4 (1977)...15 SUMMARY JUDGMENT - Page 6 of 29

7 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 7 of 29 Federal Statutes 15 U.S.C et seq ,20-22, 42 U.S.C. 1997e(a) U.S.C. 2000e-5(f)(1)...29 Federal Rules FRCP Treatises National Consumer Law Center, Fair Debt Collection, (8th ed. 2014)...9 SUMMARY JUDGMENT - Page 7 of 29

8 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 8 of 29 FACTUAL BACKGROUND I. FDCPA PREREQUISITES Plaintiff is a consumer, defendant is a debt collector, and defendant attempted to collect consumer debt from plaintiff from November 7, 2014 to February 12, [Fatemi decl. 2-3; Doc. 39, 1-3; Doc. 38-2, Ex. B, pg ] II UNAUTHORIZED CHARGES Defendant sought to collect old debt to Bank of America that plaintiff never agreed to pay and did not owe. [Id. at 3] The debt resulted from unauthorized charges on consumer credit card accounts caused by overseas fraud and identity theft in [Id. at 2] Plaintiff disputed the unauthorized charges with Bank of America promptly after the fraud occurred. [Id. at 4] Plaintiff has repeatedly disputed the debt over the past six years, including on his credit reports, and with subsequent collectors and debt buyers, including Cavalry. [Id. at 5] III PLACEMENT BY CAVALRY On November 5, 2014, Cavalry assigned plaintiff s Bank of America account ending 2306 to defendant for collection. [Doc. 39, 5] As part of its written placement agreement, Cavalry did not warrant the accuracy of the debt information it provided defendant. [Doc. 38-3, Ex. C, pg. 39] Cavalry did not provide defendant information about whether the debts it assigned were invalid or in dispute. [Ex. 5, pg. 26] SUMMARY JUDGMENT - Page 8 of 29

9 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 9 of 29 IV. DEFENDANT S FDCPA PROCEDURES Prior to sending plaintiff its initial demand letter, defendant reviewed plaintiff s abridged credit report. [Ex. 5, pg. 39] Plaintiff s abridged credit report showed indicia of disputed debt incurred by fraud. [Ex. 15] Plaintiff s full credit report listed his Bank of America accounts with Cavalry as disputed. [Ex. 6] Defendant maintained no FDCPA compliance procedures to ensure the accuracy of its initial demand letter to plaintiff. [Ex. 5, pg ] Defendant s procedures were only triggered after a consumer informally disputed a debt directly with defendant. [Id.] GENUINE ISSUES OF MATERIAL FACT Whether defendant violated the FDCPA and whether a bona fide error occurred involve genuine issues of material fact and credibility not appropriate for summary judgment. See Vasquez-Estrada v. Collecto, Inc., 2015 U.S. Dist. LEXIS (D. Or. Oct. 20, 2015) (denying plaintiff s motion for summary judgment as to bona fide error because the defense involved a genuine issue as to whether defendant s policies were reasonably adapted to avoid the FDCPA violation at issue); National Consumer Law Center, Fair Debt Collection, (8th ed. 2014) ( The bona fide error defense generally involves questions of fact for the jury, but could be so clearly inadequately supported by the evidence as to be determined as a matter of law. ) (citing McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F3d 939 (9th Cir. 2011)). SUMMARY JUDGMENT - Page 9 of 29

10 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 10 of 29 I. DID DEFENDANT ATTEMPT TO COLLECT DEBT PLAINTIFF DID NOT OWE? A reasonable juror may conclude that defendant misrepresented and attempted to collect debt that plaintiff did not owe based on the following evidence: Plaintiff s testimony that his alleged debt with Bank of America was the result of unauthorized charges caused by overseas fraud and identity theft that occurred in or around April [Id. at 2] No evidence suggests otherwise. [Ex. 5, pg. 16] Plaintiff s testimony that he never agreed to pay Bank of America for debt resulting from unauthorized charges. [Id. at 4] Plaintiff s documentation of written disputes with Bank of America in 2008 limiting his liability for unauthorized charges under federal law. [Id.; Doc. 38-2, Ex. B, pg ] II. WAS DEFENDANT S FDCPA VIOLATION INTENTIONAL? A reasonable juror may conclude defendant s FDCPA violation was not unintentional based on defendant s admission that there was a very well probability that it knew plaintiff s debt was invalid and disputed during the time it was sending him demand letters. [Ex. 5, pg. 61] For this reason alone, defendant s motion may be denied. SUMMARY JUDGMENT - Page 10 of 29

11 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 11 of 29 III. WAS DEFENDANT S RELIANCE ON CAVALRY S UNWARRANTED INFORMATION REASONABLE UNDER THE CIRCUMSTANCES? A reasonable juror may conclude that defendant s reliance on Cavalry s unwarranted information was not reasonable under the circumstances based on the following evidence: Cavalry s written placement agreement with defendant did not warrant the accuracy of the information Cavalry provided defendant. [Doc. 38-3, Ex. C, pg. 39] Cavalry did not notify defendant if the accounts Cavalry assigned to defendant for collection were invalid or in dispute. [Ex. 5, pg. 26] In the instant case, Cavalry did in fact assign plaintiff s disputed accounts to defendant for collection. [Doc. 39, 5] Defendant admitted it would be unreasonable for Cavalry to assign it plaintiff s accounts if plaintiff s accounts were in dispute. [Ex. 5, pg. 73] Plaintiff s abridged credit report in defendant s own file showed indicia of disputed debt incurred by fraud. [Ex. 15] Plaintiff s full credit report listed his Bank of America accounts with Cavalry as disputed. [Ex. 6] Defendant admitted that its procedures don t require it to review the portions of abridged credit reports in its files listing disputed accounts or fraud alerts. [Ex. 5, pg ] Defendant initially claimed that its written placement agreement with Cavalry warranted the accuracy of the debt information Cavalry provided defendant. [Ex. 5, pg ] Defendant later claimed that its understanding was that Cavalry would not place disputed accounts for collection. [Ex. 5, pg. 30] Defendant s SUMMARY JUDGMENT - Page 11 of 29

12 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 12 of 29 understanding was not based on any agreement with Cavalry but on defendant s commonsense. [Id.] IV. WERE DEFENDANT S PROCEDURES REASONABLY ADAPTED TO AVOID COLLECTING DEBT PLAINTIFF DID NOT OWE? A reasonable juror may conclude defendant s procedures were not reasonably adapted to avoid collecting debt plaintiff did not owe based on the following evidence: Defendant maintained no procedures to ensure the accuracy of the initial demand letter it sent plaintiff. [Ex. 5, pg ] Defendant s compliance procedures were only triggered after a consumer received a demand letter, then disputed a debt with defendant. [Id.] Based on the evidence supporting the four genuine material issues above, whether defendant violated the FDCPA and whether defendant s violation was the result of a bona fide error both involve issues of fact and credibility only the jury can decide. SUMMARY JUDGMENT - Page 12 of 29

13 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 13 of 29 LEGAL POINTS AND AUTHORITIES I. SUMMARY JUDGMENT FRCP 56(c) allows for summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. Jenkins-Brown v. Liberty Acquisitions Servicing, LLC, 2015 U.S. Dist. LEXIS (D. Or. July 29, 2015). The party moving for summary judgment bears the burden to show the absence of an issue of material fact. See Vasquez-Estrada. The court must view the facts presented on summary judgment in the light most favorable to the non-moving party. Id. II. FDCPA A. Strict liability standard The FDCPA uses a strict liability standard that makes debt collectors liable for violations that are not knowing or intentional. Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002, 1005 (9th Cir. 2008). In the case of a close call, courts must interpret the FDCPA liberally in favor of consumers and against collectors. Clark v. Capital Credit & Collection Servs., 460 F.3d 1162, 1176 (9th Cir. 2006). B. Prohibited conduct The FDCPA defines debt to include not only actual obligations to pay but also merely alleged obligation[s] to pay. 1692a(5). Accordingly, a collector s demand for payment of debt a consumer does not owe violates the plain text of 15 U.S.C. 1692e and 1692f. See, e.g., Davis v. Midland Funding, LLC, 41 F. Supp. 3d 919, 924 (E.D. Cal. 2014) ( By its plain text, the FDCPA encompasses claims brought by individuals subjected to collection efforts for SUMMARY JUDGMENT - Page 13 of 29

14 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 14 of 29 obligations they are falsely alleged to have owed. ); Collins v. Portfolio Recovery Assocs., LLC, 2013 U.S. Dist. LEXIS (E.D. Tenn. June 7, 2013). In Collins, the court held a collector liable under the FDCPA for its collection of consumer credit card debt incurred by identify theft. C. Debt validation not a prerequisite to suit The FDCPA contains no requirement that a consumer informally dispute a debt before bringing suit. Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 392 (4th Cir. 2014). 1 See also Tourgeman v. Collins Fin. Servs., 755 F.3d 1109 (9th Cir. 2014) (collector strictly liable for dunning letters that consumer never disputed or even received). 1. The plain text of the FDCPA does not contain a pre-filing dispute requirement. The FDCPA s debt validation provisions ensure consumers receive notice of their rights to dispute and verify debts. 1692g. Informal disputes are optional for consumers, and failure to file a dispute may not be treated as an admission of liability against a consumer. 1692g(c). The language of 1692g indicates that disputing a debt is optional. McLaughlin, 756 F.3d at 247. [N]o provision of the FDCPA explicitly requires debtors to use the informal debt 1 The vast majority of courts that have decided the issue agree that consumers are not required to dispute debts before filing FDCPA lawsuits. See Muller v. Midland Funding, LLC, 2015 U.S. Dist. LEXIS (S.D. Fla. May 20, 2015); Serrania v. LPH, Inc., 2015 MT 113, 22, 379 Mont. 17, 22, 347 P.3d 1237, 1241; Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 392 (4th Cir. 2014); McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240, 247 (3d Cir. 2014) (cert. denied by Hallinan v. McLaughlin, 2014 U.S. LEXIS 7516 (U.S., Nov. 10, 2014); DeCapri v. Law Offices of Shaprio Brown & Alt, LLP, 2014 U.S. Dist. LEXIS (E.D. Va. Sept. 19, 2014); Eide v. Colltech, Inc., 987 F. Supp. 2d 951 (D. Minn. 2013); Burdett v. Harrah s Kan. Casino Corp., 294 F. Supp. 2d 1215, 1227 (D. Kan. 2003); Brown v. Palisades Collection, LLC, 2011 U.S. Dist. LEXIS (S.D. Ind. June 24, 2011); Velazquez v. NCO Fin. Sys., 2011 U.S. Dist. LEXIS (E.D. Pa. May 31, 2011); Gigli v. Palisades Collection, L.L.C., 2008 U.S. Dist. LEXIS (M.D. Pa. Aug. 14, 2008). SUMMARY JUDGMENT - Page 14 of 29

15 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 15 of 29 verification procedure. Brown at *7-*8. Collectors, however, are strictly liable for failing to comply with 1692g. The FDCPA s private right of action contains no requirement that a consumer dispute a debt prior to suit. 1692k. Sections 1692e and f contain no pre-dispute safe harbor provisions for collectors. The legislative intent of 1692g s validation notice is to protect consumers from demand letters to pay debts they do not owe, not to provide collectors immunity from violations of the Act s other provisions. S. Rep. No. 382, 95th Cong. at 4 (1977). A canon of statutory interpretation requires courts to construe remedial statutes liberally. Atchison, Topeka & Santa Fe Ry. Co. v. Buell, 480 U.S. 557, (1987). When Congress wants to require plaintiffs to use non-judicial remedies before filing suit, Congress says so. See, e.g., 42 U.S.C. 2000e-5(f)(1) (permitting suit under Title VII only after consumers have applied to the EEOC for mediation); 42 U.S.C. 1997e(a) (permitted prisoners to bring suit under 1983 only after exhausting all administrative remedies). 2. The remedial nature of the FDCPA encourages private litigation to hold collectors strictly liable for violation of any provision of the Act. Congress focused the FDCPA squarely on the conduct of collectors. Tourgeman, 755 F.3d at Collectors are liable for unlawful collection practices, regardless of whether some interceding condition such as non-receipt of the letter, or the consumer s failure to read it, or the fact that the consumer is savvy enough not to be misled by it renders the practice ineffective. Id. The FDCPA s broad regulatory purpose is effectuated by measuring the lawfulness of a debt collector s conduct not by its impact on the particular consumer who happens to bring a lawsuit[.] Id. SUMMARY JUDGMENT - Page 15 of 29

16 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 16 of Congress intended the FDCPA to protect unsophisticated consumers from attempts to collect debt that are not owed. The stated purpose of the FDCPA is to eliminate abusive debt collection practices, in part, to avoid unnecessary personal bankruptcy filings. 1692(a), (e). Congress drafted the FDCPA s remedial scheme to ensure compliance by encouraging private litigants to enforce the Act s strict liability provisions. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 978 (9th Cir. 2008). The FDCPA is intended to protect least sophisticated debtors from unlawful practices, regardless of the sophistication or conduct of the litigant in a particular case. Tourgeman 755 F.3d at D. Bona fide error defense To qualify for the bona fide error defense, a collector must establish 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, 637 F.3d at 948. The bona fide error defense is a narrow exception to strict liability under the FDCPA. Id. 1. Procedures must be reasonably adapted. A collector may generally rely on information provided by debt buyers. Clark, 460 F.3d at However, a collector s reliance on unwarranted information is unreasonable as a matter of law if the collector overlooks contrary information in its file. McCollough at 948. The fact that the creditor provided accurate information in the past cannot, in and of itself, establish that reliance in the present case was reasonable and act as a substitute for the maintenance of adequate procedures to avoid future mistakes. Reichert, 531 F.3d at A SUMMARY JUDGMENT - Page 16 of 29

17 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 17 of 29 debt collector is not entitled under the FDCPA to sit back and wait until a creditor makes a mistake and then institute procedures to prevent a recurrence. Id. 2. Procedures must be preventative. A collector seeking to use the bona fide error defense must show that it maintains procedures to avoid violating the FDCPA. Clark, 460 F.3d at Specifically, a collector must prove its procedures were preventative, meaning they were aimed at avoiding the error giving rise to the FDCPA violation at issue. Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1514 (9th Cir. 1994). Collectors must also prove a nexus between the procedures and the errors that caused the violation at issue. Vasquez-Estrada. In Vasquez-Estrada, this Court denied a plaintiff s motion for summary judgment because genuine issues existed as to whether the collector s policies were reasonably adapted to avoid the mistake that caused the FDCPA violation. 3. Corrective measures alone are not enough. Congress designed the FDCPA to prevent debt collection abuses, not to furnish debt collectors with a free pass as to errors in their first collection attempts. Owen v. I.C. Sys., Inc., 629 F.3d 1263, 1275 (11th Cir. 2011). Thus, maintaining policies and procedures to correct mistakes after sending out an initial collection notice is not sufficient. Gater v. Russell Collection Agency, Inc., 2015 U.S. Dist. LEXIS (E.D. Mich. Nov. 10, 2015) ( The bona fide error defense requires a defendant to show that it maintained procedures reasonably adapted to avoid any such error, not merely to correct such error. ) (internal citation omitted). Accordingly, a policy designed to prevent one specific FDCPA violation cannot serve as the SUMMARY JUDGMENT - Page 17 of 29

18 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 18 of 29 basis for a bona fide error defense as to a different violation of the FDCPA. Camacho v. Jefferson Capital Sys., LLC, 2015 U.S. Dist. LEXIS (N.D. Cal. Sept. 21, 2015). ARGUMENT Defendant s motion must be denied because a reasonable juror may determine defendant violated the FDCPA and may reject defendant s bona fide error defense under the circumstances. I. WHETHER DEFENDANT VIOLATED THE FDCPA INVOLVES QUESTIONS OF FACT AND CREDIBILITY ONLY THE JURY CAN DECIDE Plaintiff will testify at trial that he never agreed to pay Bank of America for unauthorized charges on his consumer credit cards. [Fatemi decl. 2, 4-5] No evidence suggests otherwise. [Ex. 5, pg. 16] When asked if any evidence suggested that plaintiff s debt was not incurred by fraud or identity theft, defendant pointed only to plaintiff s failure to request verification from defendant. Id. The plain text of 1592g(c) makes clear that plaintiff s failure to request verification from defendant cannot be used as an admission against him in this action. The fact remains that plaintiff repeatedly disputed the debt at issue for the past six years. [Fatemi decl. 5] Information in defendant s file suggested the debt was disputed and incurred by fraud before defendant sent plaintiff its first demand letter. [Ex. 15] No evidence suggests plaintiff agreed to pay for unauthorized charges on his credit cards with Bank of America. In any event, such an agreement would be unenforceable because plaintiff disputed the unauthorized charges under the Fair Credit Billing Act, as discussed below. Plaintiff will also testify that his liability to Bank of America cannot legally exceed $50 because he promptly disputed the unauthorized charges pursuant to the Fair Credit Billing Act. SUMMARY JUDGMENT - Page 18 of 29

19 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 19 of 29 [Id. at 4] Plaintiff s documentation of written disputes with Bank of America substantiate his compliance with the Fair Credit Billing Act. [Id.; Doc. 38-2, Ex. B, pg ] A jury may reasonably find plaintiff s testimony credible. Based on the evidence above, a reasonable juror may conclude defendant s demand letters attempted to collect payment on debt with Bank of America that plaintiff did not owe. For this reason, defendant s motion for summary judgment as to liability under the FDCPA must be denied. A. Defendant s alleged FDCPA violation was material Defendant s assertion that the amount of a debt is not material is not supported by the plain text of the FDCPA or Ninth Circuit case law. The plain text of the FDCPA prohibits attempts to collect debt in an amount a consumer does not owe. Published Ninth Circuit opinions dealing with materiality have all involved technical errors and typos, not the validity or amount of the debt at issue. See, e.g., Tourgeman (letter that misidentified original creditor name was materially false); Donohue v. Quick Collect, Inc., 592 F.3d 1027 (9th Cir. 2010) (complaint that accidentally transposed the words interest and charge was not materially false). Defendant s alleged violation of the FDCPA in this case is material based on the plain text of the FDCPA and Ninth Circuit case law interpreting the immateriality exception. B. Plaintiff was not required to dispute the debt with defendant to trigger his rights under the FDCPA Almost every court to have considered the issue, including all published Court of Appeals opinions, has firmly held that the FDCPA does not contain a pre-filing dispute requirement. The instant case must be distinguished from opinions involving alleged willful FDCPA violations, SUMMARY JUDGMENT - Page 19 of 29

20 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 20 of 29 alleged violations of the 1692g dispute process itself, and alleged litigation-based validation issues. See, e.g., Story v. Midland Funding LLC et al., Civ. No. 3:15-cv AC, Doc. 32; Richardson v. Valley Credit Serv., 2014 U.S. Dist. LEXIS (D. Or. June 25, 2014); Mahon v. Credit Bureau of Placer County, Inc., 171 F.3d 1197, 1202 (9th Cir. 1999). The Ninth Circuit s 2014 Tourgeman opinion makes clear that collectors are strictly liable for demand letters that violate the FDCPA, regardless of whether litigants dispute or even receive the letters. 1. To require plaintiff to informally dispute his debt before filing suit would contradict the plain text of the FDCPA. The plain text of 1692g(c) makes clear that the informal dispute and validation process is an optional, added protection for consumers, not to be used against consumers who chose to proceed directly to court. The legislative history of the FDCPA s validation provision shows no Congressional intent to safeguard collectors with a free pass to violate the FDCPA in their initial collection attempts. Congress knows how to condition private rights of action on exhaustion of non-judicial remedies when it wants to. Congress intentionally omitted a pre-filing dispute condition in 1692k s private right of action and this Court must honor that choice. 2. To require plaintiff to informally dispute his debt before filing suit would frustrate the FDCPA s remedial scheme that Congress intended. As the Tourgeman opinion explains, Congress intended strict liability for collectors the moment their demand letters leave the printers. Tourgeman at The remedial nature of the FDCPA encourages private enforcement by litigants, even litigants who never received the SUMMARY JUDGMENT - Page 20 of 29

21 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 21 of 29 letters at issue. Id. To require plaintiff in the instant case to engage defendant in a pre-suit dispute and validation process would undercut the FDCPA s remedial scheme that Congress intended and constitute an exercise in futility. 2 Plaintiff has repeatedly disputed the invalid debt at issue in this case for the past six years to no avail. [Fatemi decl. 5] Meanwhile, he continues to receive demand letters and phone calls (including calls and letters to old roommates) to collect a debt he doesn t owe. [Id.] Plaintiff would welcome a collection lawsuit (or even a counterclaim in the instant action) to resolve the debt issue once and for all. [Id.] But no one seems willing to resolve the issue. Instead, the debt continues to be shuffled between debt buyers and collectors, who refuse to pass along notice of plaintiff s prior disputes to one another. [Ex. 5, pg. 26] Bank of America is an original creditor not subject to the FDCPA. 1692a(6). Cavalry buy old debts by the millions and passes along all FDCPA compliance liability to its third party collectors, including defendant. [Doc. 39, 3] Congress did not intend the FDCPA s strict liability remedial scheme to allow such a shell game. 1692(b). As the Fourth Circuit Court of Appeals recently reasoned in Russell, [gi]ven the explicit protection conferred upon debtors who choose not to dispute their debts, it would be anomalous to conclude that a debtor forfeits his or her ability to bring a lawsuit under the FDCPA simply because the debtor failed to invoke 1692g's discretionary validation procedures. Russell, 763 F.3d at 393. This Court should not disrupt the FDCPA s remedial scheme by inserting a pre-filing requirement where one was not written or intended by Congress. 2 As a general maxim, the law does not require a party to engage in futile acts. Ohio v. Roberts, 448 U.S. 56, 74 (1980). SUMMARY JUDGMENT - Page 21 of 29

22 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 22 of To require plaintiff to informally dispute his debt before filing suit would frustrate the purposes of the FDCPA. To allow collectors a free pass to violate the FDCPA in their initial collection attempts would frustrate two purposes of the FDCPA. First, it would encourage the shell game described above, where collectors send initial demand letters in hopes that least sophisticated consumers who may not owe debt will not know of the dispute process and enter payment arrangements just to stop future calls and letters. Russell, 663 F.3d at 393. Second, and applicable to plaintiff in the instant case, it would leave personal bankruptcy as the sole option to stop debt buyers from continuing to assign accounts to subsequent collectors. 3 [Fatemi decl. 5] For these reasons, plaintiff s claims should not be dismissed because he chose not to avail himself of 1692g s informal dispute procedures with defendant. II. THE REASONABLENESS OF DEFENDANT S FDCPA COMPLIANCE PROCEDURES PRESENTS ISSUES OF FACT AND CREDIBILITY ONLY THE JURY CAN DECIDE The bona fide error defense generally involves questions of fact for the jury, but can be so clearly inadequately supported by the evidence as to be determined as a matter of law. See generally McCollough. In the instant case, defendant has produced at least some procedures that a reasonable juror could find credible. However, a reasonable juror will likely be persuaded that defendant s procedures were woefully inadequate in this case for the reasons below U.S.C. 523 generally prohibits debt buyers from assigning discharged debt to collections after bankruptcy. See, e.g., In re Nassoko, 405 B.R. 515 (Bankr. S.D.N.Y. 2009). SUMMARY JUDGMENT - Page 22 of 29

23 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 23 of 29 A. A reasonable juror may determine defendant s violation was intentional At its deposition, defendant admitted there was a very well probability that it knew the accounts at issue were invalid and in dispute during the time it was sending plaintiff demand letters. [Ex. 5, pg. 61] At trial, plaintiff will ask defendant exactly when it learned his debt was invalid and disputed. Depending on defendant s answer, a reasonable juror may determine defendant s violation as to all of its demand letters was not unintentional and thus not subject to a bona fide error defense. If defendant changes its testimony, a reasonable juror may cast doubt on defendant s credibility. Defendant is not entitled to a bona fide error defense as a matter of law because a reasonable juror could conclude defendant s violation was not unintentional. B. A reasonable juror may determine defendant s reliance on Cavalry s unwarranted information was unreasonable under the circumstances Under McCollough, this Court should instruct the jury that defendant s reliance may not be reasonable where information provided by Cavalry was not warranted and was contrary to information in defendant s own file. McCollough at 948. Under Reichert, this Court should instruct the jury that Cavalry s alleged history of providing only valid undisputed accounts to defendant cannot, in and of itself, substitute for procedures to avoid collecting debt plaintiff didn t owe. Upon receiving these instructions, a reasonable juror may well determine that the instant case is similar to McCollough and reject defendant s bona fide error defense based on the following evidence. SUMMARY JUDGMENT - Page 23 of 29

24 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 24 of Cavalry never warranted the information it provided to defendant. At its deposition, defendant initially claimed that its written placement agreement with Cavalry warranted the accuracy of the debt information Cavalry provided defendant. [Ex. 5, pg ] However, the placement agreement makes clear that no such written warranty exists. 4 [Doc. 38-3, Ex. C, pg. 39] After taking a break to talk with its attorneys, defendant later claimed that its understanding was that Cavalry would not place disputed accounts for collection. [Ex. 5, pg. 30] When pressed, defendant admitted that its understanding was not based on any agreement with Cavalry but on commonsense. [Id.] A reasonable juror may find defendant lacks credibility on this issue, given that its testimony changed. A reasonable juror may also question defendant s veracity based on its use the phrase understanding after speaking with its attorneys. Defendant s motion for summary judgment relies heavily on Hyman v. Tate, 362 F.3d 965 (7th Cir. 2004), which also uses that exact phrase understanding. While the Seventh Circuit s 2004 Hyman opinion remains persuasive authority, the Ninth Circuit s more specific 2011 opinion in McCollough controls. In McCollough the Ninth Circuit acknowledged Hyman and ultimately held that a collector s reliance on unwarranted information by overlooking contrary information in its own file was not reasonable under the circumstances. McCollough, 637 F.3d at 948. A reasonable juror in the instant case may draw a similar conclusion. 4 Plaintiff intends to file a motion in limine for an order that defendant s written placement agreement does not warrant the information Cavalry provided to defendant as a matter of law. The document speaks for itself. SUMMARY JUDGMENT - Page 24 of 29

25 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 25 of 29 Finally, a juror may question defendant s credibility because defendant can offer no explanation why plaintiff s debt, which had been repeatedly disputed and flagged as fraud, was ever assigned to defendant for collection in the first place. Defendant admitted that it would be unreasonable for Cavalry to place a disputed account for collection. [Ex. 5, pg. 73] Based on the evidence above, a reasonable juror may determine that Cavalry never agreed to warrant the information it provided defendant about plaintiff s accounts. 2. Defendant overlooked information in its own file indicating plaintiff s accounts were invalid and in dispute. Prior to sending plaintiff its initial demand letter, defendant reviewed plaintiff s abridged credit report. [Ex. 5, pg. 39] Plaintiff s abridged credit report showed indicia of disputed debt incurred by fraud. [Ex. 15] Defendant admitted at its deposition that its procedures didn t require its agents to review the portion of a consumer s abridged credit report listing fraud alerts or accounts in dispute. [Ex. 5, pg ] Upon receipt of abridged credit report showing indicia of disputed debt incurred by fraud, defendant took no action to review the full report which would have specifically showed the Bank of America debt with Cavalry was in dispute. [Ex. 6] Based on the evidence above that Cavalry did not warrant the information it provided defendant, and that defendant s own file indicated plaintiff s debt was invalid and in dispute, a reasonable juror may determine defendant s bona fide error procedures were unreasonable. For this reason, defendant is not entitled to a bona fide error defense as a matter of law. SUMMARY JUDGMENT - Page 25 of 29

26 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 26 of 29 C. A reasonable juror may determine defendant s procedures were not reasonably adapted to avoid collecting invalid debts in its initial demand letters Under Fox, this Court should instruct the jury that defendant s FDCPA compliance procedures must have been proactive, not reactive. Under Reichert, this Court should instruct the jury that defendant was not permitted to sit back and wait for plaintiff to dispute debt before triggering its procedures with respect to its initial demand letters. Based on these instructions, a reasonable juror may well determine that defendant s procedures concerning the initial demand letter it sent plaintiff dated November 7, 2014 was not reasonably adapted to comply with the FDCPA based on the following evidence. 1. Defendant maintained no procedures to avoid collecting invalid debt from plaintiff in its initial demand letter. Defendant maintained no procedures to avoid collecting invalid debt from plaintiff in its initial November 7, 2014 demand letter. [Ex. 5, pg ] Cavalry did not provide defendant information about whether the debts it assigned were invalid or in dispute. [Ex. 5, pg. 26] Defendant s procedures didn t require it to review the portion of plaintiff s abridged credit report listing fraud alerts or debts in dispute. [Ex. 5, pg ] Every single FDCPA compliance procedure defendant produced in this case would only be triggered after plaintiff received an initial demand to pay a debt he didn t owe. [Ex. 5, pg ] Defendant knows how to implement proactive procedures when it wants to. For instance, defendant regularly searches PACER to find FDCPA actions against it before being served with lawsuits. [Gruett decl. 10] A reasonable juror may determine that defendant s procedures were SUMMARY JUDGMENT - Page 26 of 29

27 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 27 of 29 not reasonably adapted to avoid violating the FDCPA in its initial demand letter because its procedures were only reactive, not proactive. On the eve of discovery, and only to moot a motion to compel, defendant, through the hand of its attorneys, produced written answers to questions defendant would not answer at its deposition. [Doc. 38-1, Ex. A] Plaintiff intends to cross-examine defendant about its answers at trial. Regardless, under Reichert, the fact that Cavalry may have provided defendant accurate information in the past cannot substitute for procedures to avoid demanding invalid debts in its initial demand letter in the instant case. Because defendant maintains no procedures to ensure the accuracy of the unwarranted information Cavalry provides it, a reasonable juror may determine defendant s procedures were not reasonably adapted to avoid the specific FDCPA violation in this case. For these reasons, defendant s motion must be denied because a reasonable juror may determine defendant violated the FDCPA and may reject defendant s bona fide error defense under the circumstances. SUMMARY JUDGMENT - Page 27 of 29

28 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 28 of 29 judgment. CONCLUSION For all the reasons above, this Court should deny defendant s motion for summary DATED: December 10, 2015 RESPECTFULLY FILED, /s/ Michael Fuller Michael Fuller, Oregon Bar No Special Counsel for Plaintiff michael@underdoglawyer.com SUMMARY JUDGMENT - Page 28 of 29

29 Case 3:15-cv ST Document 41 Filed 12/10/15 Page 29 of 29 CERTIFICATE OF SERVICE I certify that on the date below, I caused this document and all attachments to be delivered to the following persons via ECF and USPS first class regular mail, postage pre-paid: Northland Group, Inc. c/o attorney Robert E. Sabido 888 SW Fifth Avenue, Suite 500 rsabido@cosgravelaw.com DATED: December 10, 2015 /s/ Michael Fuller Michael Fuller, Oregon Bar No Special Counsel for Plaintiff michael@underdoglawyer.com SUMMARY JUDGMENT - Page 29 of 29