Appeal from the United States District Court for the Western District of Wisconsin.
No. 96 C 826-S -- John C. Shabaz, Chief Judge.
Before Posner, Chief Judge, and Manion and Evans, Circuit Judges.
Argued September 10, 1997
The Fair Debt Collection Practices Act, 15 U.S.C. sec.sec. 1692-1692o, provides that within five days after a debt collector first duns a consumer debtor, the collector must send the debtor a written notice containing specified information. The required information includes the amount of the debt, the name of the creditor, and, of particular relevance here, a statement that unless the debtor "disputes the validity of the debt" within thirty days the debt collector will assume that the debt is valid but that if the debtor notifies the collector in writing within thirty days that he is disputing the debt, "the debt collector will obtain verification of the debt [from the creditor] . . . and a copy of [the] verification . . . will be mailed to the consumer." sec.sec. 1692g(a)(1)-(4). A similar provision requires that the debtor be informed that upon his request the debt collector will give him the name and address of his original creditor, if the original creditor is different from the current one. sec. 1692g(a)(5). If the debtor accepts the invitation tendered in the required notice, and requests from the debt collector either verification of the debt or the name and address of the original debtor, the debt collector must "cease collection of the debt . . . until the [requested information] is mailed to the consumer." sec. 1692g(b). These provisions are intended for the case in which the debt collector, being a hireling of the creditor rather than the creditor itself, may lack first-hand knowledge of the debt.
If the statute is violated, the debtor is entitled to obtain from the debt collector, in addition to any actual damages that the debtor can prove, statutory damages not to exceed $1,000 per violation, plus a reasonable attorney's fee. sec. 1692k(a).
A credit-card company hired lawyer John Heibl, the defendant in this case, to collect a consumer credit-card debt of some $1,700 from Curtis Bartlett, the plaintiff. Heibl sent Bartlett a letter, which Bartlett received but did not read, in which Heibl told him that "if you wish to resolve this matter before legal action is commenced, you must do one of two things within one week of the date of this letter": pay $316 toward the satisfaction of the debt, or get in touch with Micard (the creditor) "and make suitable arrangements for payment. If you do neither, it will be assumed that legal action will be necessary." Under Heibl's signature appears an accurate, virtually a literal, paraphrase of section 1692g(a), advising Bartlett that he has thirty days within which to dispute the debt, in which event Heibl will mail him a verification of it. At the end of the paraphrase Heibl adds: "suit may be commenced at any time before the expiration of this thirty (30) days." A copy of Heibl's letter is appended to this opinion.
The letter is said to violate the statute by stating the required information about the debtor's rights in a confusing fashion. Finding nothing confusing about the letter, the district court rendered judgment for the defendant after a bench trial. The plaintiff contends that this finding is clearly erroneous. The defendant disagrees, of course, but also contends that even if the letter is confusing this is of no moment because Bartlett didn't read it. That would be a telling point if Bartlett were seeking actual damages, for example as a consequence of being misled by the letter into surrendering a legal defense against the credit-card company. He can't have suffered such damages as a result of the statutory violation, because he didn't read the letter. But he is not seeking actual damages. He is seeking only statutory damages, a penalty that does not depend on proof that the recipient of the letter was misled. E.g., Tolentino v. Friedman, 46 F.3d 645, 651 (7th Cir. 1995); Harper v. Better Business Services, Inc., 961 F.2d 1561, 1563 (11th Cir. 1992); Clomon v. Jackson, 988 F.2d 1314, 1322 (2d Cir. 1993); Baker v. G.C. Services Corp., 677 F.2d 775, 780-81 (9th Cir. 1982). All that is required is proof that the statute was violated, although even then it is within the district court's discretion to decide whether and if so how much to award, up to the $1,000 ceiling. E.g., Tolentino v. Friedman, supra, 46 F.3d at 651; Clomon v. Jackson, supra, 988 F.2d at 1322.
If reading were an element of the violation, then Bartlett would have to prove that he read the letter. But it is not. The statute, so far as material to this case, requires only that the debt collector "send the consumer a written notice containing" the required information. sec. 1692g(a). It is unsettled whether "send" implies receipt or just mailing. Compare, e.g., Bates v. C&S Adjusters, Inc., 980 F.2d 865, 868 (2d Cir. 1992) (receipt), with, e.g., Maloy v. Phillips, 64 F.3d 607, 608 (11th Cir. 1995) (mailing). No matter; Bartlett did receive the letter. Sending a letter doesn't imply that the letter is read; there is no contradiction in saying, "I received your letter but I never read it."
Before coming to the central issue, concerning the likelihood of confusion, we must remark the fatuity of Bartlett's naming "John A. Heibl" and "John A. Heibl, Attorney at Law," as separate defendants. If Heibl were being sued for conduct within the scope of his agency or employment as a partner or an associate of a law firm, the firm could be named along with him as a defendant, because it would be liable jointly with him for that conduct. E.g., Old Republic Ins. Co. v. Chuhak & Tecson, P.C., 84 F.3d 998, 1002 (7th Cir. 1996); Dinco v. Dylex Ltd., 111 F.3d 964, 969 (1st Cir. 1997); Entente Mineral Co. v. Parker, 956 F.2d 524 (5th Cir. 1992); Grotelueschen v. American Family Mutual Ins. Co., 492 N.W.2d 131, 136-37 (Wis. 1992). Apparently he is not being sued in such a capacity; in any event "John A. Heibl, Attorney at Law" is not the name of a firm but merely the name of an individual and the identification of his profession. For the plaintiff to try to split Heibl into an individual and a lawyer and sue both is the equivalent of, in a medical malpractice suit, suing "John Smith" and "Dr. John Smith," or of suing a sole proprietor in both his personal and his business capacity. A sole proprietorship ("John A. Heibl, Attorney at Law") is not a suable entity separate from the sole proprietor. Patterson v. V&M Auto Body, 589 N.E.2d 1306, 1308 (Ohio 1992).
The main issue presented by the appeal is whether the district judge committed a clear error in finding that the letter was not confusing. The statute does not say in so many words that the disclosures required by it must be made in a non-confusing manner. But the courts, our own included, have held, plausibly enough, that it is implicit that the debt collector may not defeat the statute's purpose by making the required disclosures in a form or within a context in which they are unlikely to be understood by the unsophisticated debtors who are the particular objects of the statute's solicitude. E.g., Avila v. Rubin, 84 F.3d 222, 226 (7th Cir. 1996); Terran v. Kaplan, 109 F.3d 1428, 1431-34 (9th Cir. 1997); Russell v. Equifax A.R.S., 74 F.3d 30, 34-35 (2d Cir. 1996); Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir. 1991); Miller v. Payco-General American Credits, Inc., 943 F.2d 482, 484 (4th Cir. 1991).
Most of the cases put it this way: the implied duty to avoid confusing the unsophisticated consumer can be violated by contradicting or "overshadowing" the required notice. E.g., Chauncey v. JDR Recovery Corp., 118 F.3d 516, 518 (7th Cir. 1997); United States v. National Financial Services, Inc., 98 F.3d 131, 139 (4th Cir. 1996); Russell v. Equifax A.R.S., supra, 74 F.3d at 34; Graziano v. Harrison, supra, 950 F.2d at 111. This sounds like two separate tests, one for a statement that is logically inconsistent with the required notice and the other for a statement that while it doesn't actually contradict the required notice obscures it, in much the same way that static or cross-talk can make a telephone communication hard to understand even though the message is not being contradicted in any way. The required notice might be "overshadowed" just because it was in smaller or fainter print than the demand for payment. United States v. National Financial Services, Inc., supra, 98 F.3d at 139.
As with many legal formulas that get repeated from case to case without an effort at elaboration, "contradicting or overshadowing" is rather unilluminating -- even, though we hesitate to use the word in this context, confusing. The cases that find the statute violated generally involve neither logical inconsistencies (that is, denials of the consumer rights that the dunning letter is required to disclose) nor the kind of literal "overshadowing" involved in a fine-print, or faint-print, or confusing-typeface case. In the typical case, the letter both demands payment within thirty days and explains the consumer's right to demand verification within thirty days. These rights are not inconsistent, but by failing to explain how they fit together the letter confuses. E.g., id.; Chauncey v. JDR Recovery Corp., supra, 118 F.3d at 518-19; Avila v. Rubin, supra, 84 F.3d at 226; ...