Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 C 5909--Charles P. Kocoras, Chief Judge.
Before Cudahy, Rovner, and Williams, Circuit Judges.
The opinion of the court was delivered by: Rovner, Circuit Judge.
After receiving a letter from attorney David D. Dickerson advising her that the balance on her GM credit card account was past due, plaintiff Ann L. Nielsen filed a class action suit against Dickerson and others pursuant to the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Nielsen asserted that Dickerson's letter, which was sent to thousands of delinquent creditors like her, falsely suggested that an attorney had become actively involved in GM's debt collection efforts, when in fact Dickerson had done little more than lend his name and firm letterhead to the debt collection effort. See 15 U.S.C. §§ 1692e(3) and (10), 1692j(a). After certifying a class comprised of all Illinois residents who had received letters from Dickerson's firm, 1999 WL 350649, Judge Kocoras granted summary judgment in favor of the plaintiffs, 1999 WL 754566. We affirm.
Household Bank (SB), N.A. ("Household Bank" or the "Bank"), issued GM credit cards to Nielsen and the other class members. The Bank's affiliate, Household Credit Services, Inc. ("Household"), which operated under the trade name "GM Card," serviced the Bank's credit card portfolio by, among other activities, maintaining the individual credit accounts and rendering collection services.
Dickerson is licensed to practice law in Virginia and has done so for more than 30 years. He heads a small firm, David D. Dickerson & Associates, comprised of himself, two other attorneys, and some twenty to twenty-five staff assistants. (We shall refer to Dickerson and his firm collectively as "Dickerson.") For more than 25 years, Dickerson has provided legal services in connection with debt collection activities, and Dickerson has acquired a certain expertise in debt collection law, including the FDCPA. He keeps current on the FDCPA, and seeks to ensure that he and his staff do not violate the statute, by maintaining membership in two debt collection organizations, attending seminars, and reading monthly publications concerning state and federal debt collection law. He also oversees the training of his staff, maintains office manuals outlining debt collection procedures, has his staff review a videotaped presentation regarding the FDCPA, conducts regular meetings with his staff, and, on occasion, has fired employees who deviate from his established collection procedures.
In April 1997, after Dickerson made a presentation to Household about the FDCPA and the types of legal services his firm could provide, Household engaged Dickerson to aid it in the collection of delinquent GM Card accounts. Dickerson signed a nine-page Legal Collection Services Agreement pursuant to which he agreed to exercise due diligence and to render legal services consistent with applicable federal, state, and local laws--including the FDCPA. Dickerson had provided legal services to other creditors in addition to Household.
The "legal service" that Dickerson provided to Household pursuant to this agreement consisted primarily of issuing a form "past due" letter--that Dickerson himself had drafted before he was engaged by Household--to delinquent GM Card holders after the firm had performed certain checks on the information supplied to it by Household. By the terms of the agreement, Household approved the initial form of Dickerson's letter and reserved the right to approve any changes thereto. Household itself never suggested any changes to the letter, however.
Periodically, Household would forward to Dickerson a computer disk containing delinquent account data. The data included each debtor's account number, name, address, account balance, and the amount past due. After reformatting the data into its own system, the firm pulled the data up onto a computer screen to check for any obvious gaps or errors in the data. In the absence of such faults, the firm then transmitted the data to Contact U.S.A., a printing and mailing service, which printed a hard copy of the data and sent the hard copy back to Dickerson. Upon receipt of the printed copy, someone in Dickerson's office would stamp the document with a small checklist that Dickerson and his staff would initial to reflect completion of the three-level review of the data that they conducted. Pursuant to that review, the firm made sure that duplicate letters were not sent to the same debtor and also flagged any instances in which Household had provided it with incomplete or inaccurate debtor information. The firm also checked the data against an in-house database of recent bankruptcy declarations compiled from bankruptcy notices that it received on a regular basis, in order to stop letters from being sent to debtors who had declared bankruptcy. The firm's computer also checked the data to flag debtors who lived in one of three "prohibited" states--West Virginia, Colorado, and Connecticut--to which Dickerson did not send letters; staff members were also instructed to eyeball the data for these same states as a safeguard against computer error. An attorney conducted the final level of this review and sometimes one of the first two levels. Dickerson himself reviewed nearly all of the printouts of the pertinent data, although his review was admittedly quite brief. (Dickerson indicated that he spent approximately two minutes reviewing a page listing the data on forty overdue accounts, which suggests that he devoted only a few seconds to each account.) Upon completion of the tripartite review, an acknowledgment report listing the debtors to whom a delinquency letter would be sent was forwarded to Household; a separate report also identified any debtors to whom the firm had decided a letter should not be sent based on its review of the data. The firm then waited for at least twenty-four hours before taking any further action, giving Household the opportunity to make corrections. (If Household flagged a mistake in the report, a letter would not be sent to that debtor.) At the expiration of the waiting period, the firm then forwarded the appropriate data to Contact U.S.A., which printed and mailed the letters on firm letterhead with a facsimile of Dickerson's signature.
Beyond checking the Household account data in the manner we have just described, Dickerson did not make an individualized assessment of the status or validity of the debt or the propriety of sending delinquency letters to the account debtors referred to him by Household; nor was the law firm the only party to perform these checks. Household selected the accounts that were referred to the firm for delinquency letters; and before transmitting an account to Dickerson, Household not only reviewed the pertinent account information, but screened each account for deceased or bankrupt debtors and those who lived in prohibited states. The firm's own review of the referred accounts was confined to the information supplied by Household. Dickerson did periodically review the standard GM Cardmember and Disclosure Agreement; and he had sufficiently familiarized himself with Household's method of handling the GM card portfolio to know generally how long the accounts had been delinquent and what steps Household had taken to collect on those accounts by the time they were referred to him. But Household did not supply Dickerson with a copy of a debtor's file, nor did Dickerson have access to Household's account system. Thus, beyond conducting facial checks of the data he was provided and checking that data to screen out debtors who were bankrupt or who lived in prohibited states, Dickerson relied on Household's judgment as to the validity and delinquency of the debt. Indeed, Dickerson never requested additional information from Household before instructing the mailing service to issue a delinquency letter. Dickerson "assum[ed] that many demands for payment have been made on the debtor and that legal action is contemplated if it appears that these debtors will not pay amicably and have the means to satisfy a judgment," he wrote in the standard letter accompanying the acknowledgment reports he sent to Household. R. 30 Ex. D. "It is understood that these are accurate and valid claims for the amounts stated and that any information indicating that the debtors dispute any part(s) of the debt have been furnished to this office." Id. After Dickerson's review of Household's account data was complete and the firm had forwarded the data to Contact U.S.A. for printing and mailing, the mailing service itself performed a final computerized check of the data to ensure that the letters were sent to the correct addresses and reflected the correct overdue balances and that duplicate letters were not sent to the same debtor.
The letter that Dickerson sent to delinquent GM Card holders stated as follows:
DAVID D. DICKERSON AND ASSOCIATES A PROFESSIONAL CORPORATION ATTORNEYS AND COUNSELORS AT LAW
[Firm Address, Telephone Number, and Fax Number] [Debtor Name and Address] [Date, Account Number, Balance, and Past Due Amount]
My client, GM Card, has requested that I write to you concerning your delinquent account.
Unless you dispute the validity of all or part of the debt within thirty days after receiving this notice, the debt will be assumed to be valid by us. However, if you notify us in writing within the thirty day period that all or part of the debt is disputed, we will obtain verification of the debt or a copy of a judgment and mail a copy of such verification or judgment to you. Also, upon your written request within the thirty day period, we will provide you with the name and address of the original creditor, if different from the current creditor. This is an attempt to collect a debt. Any information obtained will be used for that purpose.
If you do not dispute this debt or any portion thereof, please do one of the following:
1. Make payment to my client GM Card, or
2. Call GM Card at (800) 557-5620 ext. 3740 to discuss payment arrangements.