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United States District Court, N.D. Illinois, Eastern Division

Lisa Cohn, Plaintiff,
Gulf State Credit, L.L.C., d/b/a Palisades Corporation, AT&T Corporation, Defendants.

The opinion of the court was delivered by: JOAN GOTTSCHALL, District Judge


Plaintiff Lisa Cohn brought this two-count action against AT&T Corp. for defamation (Count II) and Gulf State Credit LLC, d/b/a Palisades Collection ("Gulf State") for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. ยง 1692 (Count I). On plaintiff's motion, on March 18, 2004, the court dismissed Gulf State with prejudice as a defendant in this case; plaintiff's FDCPA claim against Gulf State is accordingly dismissed with prejudice. Thus, the only items remaining before the court are defendant AT&T's motion for summary judgment on plaintiff's defamation claim and motion to strike plaintiff's affidavit.


  Plaintiff's defamation claim against AT&T asserts that AT&T published inaccurate statements about an unpaid balance of $40.61 on her AT&T account to various creditors, prospective grantors, and other credit-reporting agencies which caused her to suffer serious injury, namely, personal humiliation, embarrassment, mental anguish, and emotional distress. The following facts are undisputed.

  In April 2000 plaintiff learned that AT&T sought to collect an unpaid balance of $40.61 on her account. At some later time plaintiff disputed this debt by contacting AT&T. On January 13, 2000, AT&T referred plaintiff's account to its internal review staff to assess whether the charge was valid after a notation appeared on her account that she disputed owing the $40.61. On January 18, 2000, AT&T concluded that plaintiff's $40.61 charge was actually owed.

  Pursuant to AT&T procedures, plaintiff's debt was then placed with a collection agency while AT&T retained control over her account. This initial placement proved unsuccessful and plaintiff's debt was returned to AT&T. Plaintiff's debt was then placed with a second collection agency while AT&T retained control over her account. The second placement was also unsuccessful and plaintiff's debt was returned to AT&T. Finally, on January 17, 2002, in accordance with AT&T collection procedures, plaintiff's debt was sold outright to a third collection agency, OSI Portfolio Services ("OSI"). After this sale AT&T no longer owned the debt nor controlled nor directed any of OSI's collection efforts.

  On April 4, 2002, plaintiff received a dunning letter from Gulf State which indicated that her $40.61 debt was unpaid, due, and owing and that she must repay it immediately. The letter clearly stated that Gulf State was collecting the debt on behalf of OSI, which had purchased plaintiff's past-due account from AT&T. Plaintiff contacted Gulf State to dispute the debt, and on May 24, 2002, Gulf State sent plaintiff a letter stating that her account had been closed and reference to it would be deleted from Gulf State's next credit bureau reporting cycle.

  On September 25, 2002, plaintiff obtained a copy of her credit report from Equifax which contains an entry stating that her AT&T account was delinquent. The credit report names Palisades Collection (aka Gulf State) as the reporting company, the amount due as $41, the status as more than 120 days past due, and the date reported as May 2002. Plaintiff at no time paid AT&T, Gulf State, or any other entity any amount of money in satisfaction the $40.61 debt.


  Plaintiff claims that she has been defamed by AT&T's disclosure of her debt to collection agencies and credit companies because AT&T at all times knew that she did not owe the $40.61 and yet persisted in reporting to third parties that she did. AT&T maintains that it is entitled to summary judgment because AT&T did not make a false statement about plaintiff's account, did not publish the allegedly false statements which plaintiff complains of, and did not act with reckless disregard of plaintiff's rights, as is required to bring a defamation claim independent of the relief available under the Fair Credit Reporting Act ("FCRA").

  Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R. Civ. P. 56(c). When considering a motion for summary judgment, the court must view the record and any inferences to be drawn from it in the light most favorable to the party opposing summary judgment. See Griffin v. Thomas, 929 F.2d 1210, 1212 (7th Cir. 1991). The party moving for summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party opposing summary judgment may not rest upon the pleadings, but "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). There is no genuine issue for trial unless there is "sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Id.

  Though AT&T makes several valid arguments for why it should prevail on summary judgment, the court need address only one: that AT&T is not liable for defamation because its statement that plaintiff owed $40.61 on her account was true. To prove defamation, plaintiff must show (1) a false statement by AT&T, (2) an unprivileged publication of the defamatory statement; and (3) damages. Haywood v. Lucent Technologies, Inc., 323 F.3d 524, 533 (7th Cir. 2003). An allegedly defamatory statement is not actionable if it is true. Thus, a plaintiff must prove "that the defendant either knew the statement to be false, or believing it to be true, lacked reasonable grounds for that belief." Klug v. Chicago School Reform Bd. of Trustees, 197 F.3d 853, 860 (7th Cir. 1999). A defendant invoking the truth defense need only establish the "substantial truth" of the allegedly defamatory statement, that the "gist" or "sting" of the statement is true. Harrison v. Chicago Sun-Times, 793 N.E.2d 760, 767 (Ill.App. Ct. 2003).

  Here, AT&T maintains that plaintiff actually owed $40.61 on her account and presents unrebutted evidence establishing its reasonable grounds for that belief. AT&T submits the affidavit of Mark Farinella, an attorney in AT&T's Law & Government Affairs department, whose job is to manage AT&T's compliance with collection laws. Farinella avers that AT&T conducted an internal review of plaintiff's debt upon receiving notice that plaintiff disputed the charge and concluded that the amount was actually owed. AT&T then complied with its three-part procedure for collecting debts by placing plaintiff's account with two separate collection agencies, and when those efforts failed, by selling plaintiff's account to a third agency, OPI. After the sale of plaintiff's account, AT&T no longer retained control of plaintiff's account. AT&T's internal reports of plaintiff's account confirm that these procedures were followed, and plaintiff offers no evidence showing that AT&T's accounting reports were flawed or its collection procedures were not followed.

  Plaintiff's only evidence in support of her contention that AT&T knew its allegedly defamatory statement about her account was false is her own affidavit and deposition testimony stating that AT&T knew she did not owe any money to the company.*fn1 In her affidavit, plaintiff avers that after she disputed the charge by contacting AT&T, she "received correspondence from AT&T indicating the settlement of the alleged delinquent payment." In her deposition testimony, plaintiff again asserts that she received a "letter of settlement" from AT&T stating that the company would delete the charge from her account. When pressed on the details of this letter, plaintiff admitted that she could not remember exactly what the letter said and that "[m]y lawyer has the letter." Plaintiff failed to produce the letter when requested by AT&T during discovery and has offered no additional explanation about its contents.

  In light of AT&T's evidence establishing that it had a reasonable basis for its belief that plaintiff in fact owed $40.61 on her account, plaintiff's conclusory and self-serving statements to the contrary are insufficient to defeat summary judgment on her defamation claim. Even if plaintiff's affidavit and deposition testimony were credited, plaintiff offers no evidence for the court to find that AT&T lacked a reasonable basis for believing that plaintiff's debt was owed. Plaintiff has simply not come forth with enough evidence to provide a basis for a jury verdict in her favor. Because plaintiff cannot prove that AT&T's allegedly defamatory statement about her past due account was false, she cannot establish the elements of her defamation claim. III. CONCLUSION

  Defendant AT&T's motion for summary judgment on plaintiff's defamation claim is granted.

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