GC Services has filed a cross-motion for summary judgment, arguing that
it did participate in the collection of debts.
The parties do not dispute that GC Services is a professional debt
collector hired by AT & T. Instead, the contested issue is whether, and
to what extent, GC Services is involved in collecting AT & T's debts in
Stage I. I agree with the plaintiffs that an analysis of the relationship
between AT & T and GC Services is necessary, as opposed to a cursory look
at whether AT & T hired a debt collector. See, e.g., Arellano v. Etan
Indus., Inc., 1998 WL 911729 (N.D.Ill. 1998) (examining relationship
between creditor and debt collector); White v. Goodman, 1998 WL 850814
(N.D.Ill. 1998) (the same); Epps v. Etan Indus., Inc., 1998 WL 851488
(N.D.Ill. 1998) (the same).
Minimal participation by a debt collector in the collection process is
not enough to avoid liability under the FDCPA. As the court noted in
White, "[t]he preparation of form letters lending a debt collector's name
is a participation of sorts, and explicitly a statutory violation."
White, 41 F. Supp.2d 794, ___, 1998 WL 850814, at *2. To determine
whether parties can be held liable under the FDCPA, courts have focused
on whether the collection agency was hired only as a mailing service, or
whether the collection agency performs more traditional collection
services as well. Epps, 1998 WL 851488, at *4, "[M]erely mailing letters
is not the sort of meaningful participation in debt collection that
absolves a defendant of § 1692 liability." Randle v. GC Services,
25 F. Supp.2d 849, 854 (N.D.Ill. 1998).
When evaluating cross-motions for summary judgment, I must view the
facts in the light most favorable to the nonmoving party in each
instance. Both parties rely primarily on depositions by Gerald G.
Matlesky, staff manager for AT & T's outside collection agency work, and
by Diana C. Derbas, a manager at GC Services who oversees the operational
functions of letter collection. AT & T also relies on an affidavit
submitted by Mr. Matlesky. This evidence, along with the letter sent to
Mr. Peters, is conflicting on the issue of whether GC Services was acting
as the debt collector.
Ms. Derbas states in her deposition that her department at GC Services
creates collection strategies for overdue AT & T accounts. She is,
however, unaware of the success rate of the letter program, and Mr.
Matlesky says that he does not recall any conversations regarding the
business strategy behind the letter program. In his affidavit, Mr.
Matlesky states that the original draft of the form letter at issue
emanated from AT & T in 1985, but that the letter used by GC Services
since 1987 is substantially the work of GC Services, which has
continually revised the draft. Mr. Matlesky's deposition testimony,
however, indicates that the letter has not been significantly changed
since at least December 1996, when he started in his current position.
Mr. Matlesky also says in his deposition that AT & T must approve any
substantive changes made by GC Services.
According to Mr. Matlesky, GC Services communicates with AT & T to
assist in negotiating settlements. Ms. Derbas, however, does not even
know the name of a contact person at AT & T, and says that she rarely
deals with anyone at AT & T. She has met only one such individual, whose
name she cannot recall. Ms. Derbas' department, which sends the letters,
is not the same department that works on a contingency fee basis in Stage
II. AT & T assigns approximately 15% of its Stage II accounts to GC
Services randomly, without even considering whether GC Services was
involved with the account in Stage I.
Mr. Matlesky's affidavit states that GC Services has discretion
regarding how to handle questions from AT & T customers during the
collection process. Ms. Derbas, however, says that AT & T requires GC
Services to obtain approval for some types of communications. According
to Ms. Derbas, GC Services retains the information regarding each account
in its computer for some time. Yet when AT & T mistakenly requested GC
Services to send many of the same letters twice in a six-month period, GC
Services did not catch the mistake. In addition, Ms. Derbas says that any
mail received regarding AT & T accounts may be forwarded to AT & T
without GC Services necessarily retaining a copy. Moreover, when GC
Services takes a call from an AT & T customer, the customer is ultimately
given AT & T's telephone number.
Ms. Derbas says the $0.54 fiat fee paid to GC Services' by AT & T
includes followup services such as receiving telephone calls and
responding to correspondence from AT & T customers. Although GC Services'
address is included in the form letter, its telephone number is not.
Instead, the person to whom the letter is addressed is directed to
contact AT & T, and is supplied with AT & T's telephone number. Ms.
Derbas states that nonetheless AT & T customers have somehow contacted GC
Services by telephone. Ms. Derbas is unaware of the frequency of calls
received from AT & T customers; she is also unable to specify the amount
of mail GC Services receives from AT & T custimers, even whether it
receives more than one letter per month. GC Services sends approximately
30,000 AT & T letters per month.
The degree to which GC Services participated in the collection of debts
is a factual dispute that cannot be resolved on a motion for summary
judgment. See Arellano, 1998 WL 911729 (denying cross-motions for summary
judgment where degree to which defendants participated in collection
process was disputed); Fratto v. Citi-bank (South Dakota), 1996 WL 554549
(N.D.Ill. 1996) (denying defendant's motion for summary judgment where
evidence showed that defendant, a creditor, might qualify as a debt
collector despite the fact that it hired a collection agency to send
collection letters). Therefore all of the motions for summary judgment
The General Partners
The general partners of GC Services, DLS and GC Financial, additionally
argue that they cannot be held liable as debt collectors under the FDCPA
because they are not debt collectors within the meaning of the FDCPA. As
I have previously held in this case, general partnership law determines
whether DLS and GC Financial are liable for the acts of GC Services under
the FDCPA. GC Services, a professional debt collection agency, is a
partnership organized under Delaware law. GC Services mails approximately
30,000 AT & T letters per month in its third party collection program,
which is clearly within the scope the partnership's business. Delaware
partnership law provides that "all partners are liable . . . [j]ointly and
severally for everything chargeable to the partnership. . . ."
Del.Code.Ann. tit. 6, § 1515(a). Under Delaware partnership law and
the Uniform Limited Partnership Act § 403 (amended 1985), the General
Partners are vicariously liable for the acts of GC Services, the limited
partnership. See also Randle, 25 F. Supp.2d at 851-52 (finding that the
general partners of GC Services, DLS and GC Financial, are vicariously
liable for the acts of GC Services under general principles of
partnership law and Delaware partnership law). Therefore the summary
judgment motions by DLS and GC Financial are denied.