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RANDLE v. GC SERVS.

October 15, 1998

BRENDA RANDLE and PAMALA EDWARDS, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
GC SERVICES, L.P.; DLS ENTERPRISES, INC., and GC FINANCIAL CORPORATION, Defendants.



The opinion of the court was delivered by: GETTLEMAN

MEMORANDUM OPINION AND ORDER

 Plaintiffs Brenda Randle and Pamala Edwards have filed a class action *fn1" complaint against defendants GC Services, L.P. ("GC Services"), DLS Enterprises ("DLS"), and GC Financial Corporation ("GC Financial"), alleging that DLS and GC Financial are general partners of GC Services, a Delaware limited partnership, and are therefore liable for the partnership's debt collection activities. Plaintiffs also allege that defendants have violated §§ 1692j and 1692e(10) of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Defendants DLS and GC Financial move to dismiss plaintiffs' claims against them under Fed. R. Civ. P. 12(b)(6), claiming that although they are general partners of G.C. Services, they are not "debt collectors" that can be sued directly under the FDCPA. Defendant GC Services moves to dismiss plaintiffs' FDCPA claims under Rule 12(b)(6) for failure to state a claim. As discussed below, both motions are denied.

 FACTUAL BACKGROUND

 According to the amended complaint, plaintiffs are residents of Illinois. Defendant GC Services is a Delaware limited partnership and a "debt collector" under the FDCPA. Defendants DLS and GC Financial are Delaware corporations and general partners of GC Services.

 Shortly after March 18, 1997, plaintiff Randle received a letter from defendants demanding payment for subscriptions to Jet and Disney Adventures magazines. Shortly after August 12, 1997, plaintiff Edwards received a substantially identical letter demanding payment for subscriptions to the periodicals Nickelodeon and Animals. The letters, copies of which were attached to the amended complaint as Exhibits A and B, state: "This is a demand made on behalf of Publishers Clearing House for payment on your delinquent balance . . . . If you do not pay promptly, Publishers Clearing House has informed us that your file will be referred to us or another collection agency which is properly authorized to undertake collection activity . . . . It is in your best interest to promptly mail your payment." Plaintiffs assert that the type of document represented by Exhibits A and B is a "precollection" letter which falsely suggests that a third party collection agency, GC Services, has become involved in collecting the debt. Plaintiffs further assert that GC Services has no information about the debt other than that reflected in the demand for payment.

 DISCUSSION

 I. STANDARDS FOR A MOTION TO DISMISS

 In ruling on a motion to dismiss, the court considers "whether relief is possible under any set of facts that could be established consistent with the allegations." Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir. 1992). A claim may be dismissed only if it is beyond doubt that under no set of facts would the plaintiff's allegations entitle him to relief. Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1429-30 (7th Cir. 1996). The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide its merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). For purposes of a motion to dismiss, the court accepts the factual allegations of the complaint as true and draws all reasonable inferences in favor of the plaintiff. Travel All Over the World, 73 F.3d at 1428.

 II. DEFENDANTS DLS AND GC FINANCIAL'S MOTION TO DISMISS

 Defendants DLS and GC Financial argue that they are not "debt collectors" under the FDCPA, and therefore cannot be held liable under the Act. The FDCPA defines a debt collector as "any person who uses any instrumentality of interstate commerce or the mails in any business the principle purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). Defendants argue that the Seventh Circuit's decision in Aubert v. American Gen. Finance Inc., 137 F.3d 976 (7th Cir. 1998), dictates a narrow definition of debt collector which does not include the general partners of a debt collector. Defendants' use of Aubert is inapposite. Aubert rested on the sentence in FDCPA § 1692a(6) that explicitly states that corporate affiliates of debt collectors are not necessarily liable as debt collectors. See id. at 978. The statute does not contain a similar provision absolving a debt collector's general partners of liability.

 Plaintiffs allege that, as general partners of GC Services, DLS and GC Financial are responsible for and can be held liable for the debt collection activities of the limited partnership entity. They essentially allege that the general partners are "indirect debt collectors" under the Act. See Jenkins v. Union Corp., 999 F. Supp. 1120, 1142 (N.D. Ill. 1998) (discussing whether a parent company is liable as an "indirect debt collector" for the acts of its subsidiary). Few courts have discussed whether the general partners of a limited partnership engaged in debt collection can themselves be held liable under the FDCPA. However, Judge Bucklo recently answered this question in the affirmative in a similar case pending against these same defendants. See Peters v. AT&T, 179 F.R.D. 564 (N.D. Ill. 1998) (applying general principles of partnership law to deny DLS' and GC Financial's motion to dismiss).

 The court agrees with plaintiffs that the "person" who engages in debt collection under the FDCPA is whoever is legally responsible for that act under general principles of law. The Seventh Circuit has suggested that general agency principles apply to suits under the FDCPA. See Bartlett v. Heibl, 128 F.3d 497, 499 (7th Cir. 1997) ("If Heibl were being sued for conduct within the scope of his agency or employment as a partner . . . 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."). Other courts have applied such general principles to hold employers vicariously liable for the acts of their employees in cases arising under the FDCPA. See, e.g., Newman v. CheckRite California, Inc., 912 F. Supp. 1354, 1370 (E.D. Cal. 1995) ("The FDCPA is silent on the issue of vicarious liability. In this circuit, however, it is established that, under the FDCPA, a debt collector may be found vicariously liable for the conduct of its attorney."); United States v. ACB Sales & Service, Inc., 590 F. Supp. 561, 575 (D. Ariz. 1984) ("The FDCPA is enforced as a FTC rule under section 5(m)(1)(A) of the Federal Trade Commission Act. 15 U.S.C. § 16921. I find no distinction between enforcement of orders under section 5(1) and enforcement of the FDCPA under section 5(m)(1)(A) that would limit the application of the doctrine of respondeat superior."). The court therefore applies general principles of partnership liability to determine whether general partners DLS and GC Financial can be held vicariously liable for the debt collection activities of the limited partnership, GC Services.

 Under Delaware partnership law and the Uniform Limited Partnership Act, § 403, 6 U.L.A. § 177 (1976) (amended 1985), defendants DLS and GC Financial are vicariously liable for the acts of the limited partnership, defendant GC Services. Accord Peters, 179 F.R.D. at 569. Delaware partnership law provides that "all partners are liable . . . jointly and severally for everything chargeable to the partnership . . . .'" Del. Code. Ann. tit. 6, § 1515(a); see also In re Phillips Petroleum Sec. Litig., 738 F. Supp. 825, 837 (D. Del. 1990) ("It is well-established that under the law of partnerships, knowledge and actions of one partner are imputed to all others. The partnership is liable for acts performed in its name and within the scope of its business, and the partners are liable for all debts and obligations of the partnership.") (citations omitted). The same liabilities apply to a general partner in a limited partnership. See Del. Code. Ann. tit. 6, § 17-403(b); see also Unif. Limited Partnership Act § 403(b).

 In addition, under Delaware partnership law, plaintiffs are entitled to sue both the limited partnership and its general partners. Delaware has a "common name" statute which allows a limited partnership to be sued as an entity. See Del. Code Ann. tit. 10, § 3904 ("An unincorporated association of persons, including a partnership, using a common name may sue and be sued in such common name . . . ."). Such statutes "are permissive, not mandatory; suit may still be brought against the general partners . . . liable for the partnership obligation." 4 Alan R. Bromberg & Larry E. Ribstein, Bromberg and Ribstein on Partnership § 15.12, at 108 (1997). Under Delaware law, "individuals comprising groups or associations ...


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