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Muha v. Encore Receivable Management

March 10, 2009

CHARLOTTE V. MUHA AND MARY CAJSKI, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
ENCORE RECEIVABLE MANAGEMENT, INC., DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Eastern District of Wisconsin. No. 05-C-940-J.P. Stadtmueller, Judge.

The opinion of the court was delivered by: Posner, Circuit Judge

ARGUED SEPTEMBER 8, 2008

Before POSNER, KANNE, and TINDER, Circuit Judges.

The Fair Debt Collection Practices Act, so far as relates to this case, forbids a debt collector (which the defendant is) to "use any false, deceptive, or misleading representation . . . in connection with the collection of any debt." 15 U.S.C. § 1692e. The defendant sent a dunning letter to credit card debtors, including the plaintiffs and the 7,000 or so other members of the class that the plaintiffs represent, which states (with irrelevant boilerplate language omitted):

The above referenced account has been referred to our office for collection of the balance in full. Previous attempts have been made by our client to resolve this debt voluntarily. As of this date, those attempts have not been successful. Therefore, your original agreement with the above mentioned creditor has been revoked.

Encore Receivable Management, Inc. [the defendant debt collector] has been authorized by our client to provide the necessary effort to collect this debt. We recommend that you take advantage of this opportunity to pay the balance in full to prevent further collection activity.

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice, this office will: obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification.

The plaintiffs allege that the sentence that we have italicized in the first paragraph of the letter is false, and they sought to bolster this allegation with deposition testimony that specific provisions of the credit-card contract were still in effect, in which event the agreement itself had not been "revoked." Certainly the payment requirements of the contract were still in effect-they were the basis of the attempt to collect a "debt" due to the issuer. The plaintiffs argue that this false statement was misleading and confusing, a claim they attempted to support with a consumer survey. The district judge excluded the survey and went on to rule that the challenged sentence is true because it clearly means only that the debtors' credit-card privileges have been revoked; and so he granted summary judgment for the defendant.

The judge was right to exclude the survey. Although the plaintiffs hired a competent survey researcher to conduct it, the questions he asked in the survey were drafted not by him but by the plaintiffs' lawyer. That has turned out to be a mistake. A consumer survey, to be sufficiently objective to be usable as evidence in a suit under the Fair Debt Collection Practices Act, depends among other things on "whether the questions are leading or suggestive." American Home Products Corp. v. Johnson & Johnson, 654 F. Supp. 568, 590 (S.D.N.Y. 1987); see also Johnson & Johnson * Merck Consumer Pharmaceuticals Co. v. Smithkline Beecham Corp., 960 F.2d 294, 299-300 (2d Cir. 1992); Pittsburgh Press Club v. United States, 579 F.2d 751, 759 (3d Cir. 1978); Weight Watchers Int'l, Inc. v. Stouffer Corp., 744 F. Supp. 1259, 1272 (S.D.N.Y. 1990); Bruce P. Keller, "A Survey of Survey Evidence," in The Litigation Manual 770 (John G. Koeltl & John S. Kiernan eds. 1999); 6 Business and Commercial Litigation in Federal Courts § 75:55, p. 1027 (Robert L. Haig ed., 2d ed. 2005). That the questions were drafted by the plaintiffs' lawyer was apt to make them leading, and did.

The key question-the meaning of "your original agreement with the above mentioned creditor has been revoked"-was rephrased as follows, with a choice of possible answers:

If a debt collector sent you a letter stating that your agreement with the original creditor has been revoked, what do you feel this statement means?

# There is no longer a contract between the original creditor and me.

# I must pay the debt immediately.

# I do not have to pay the debt because the creditor ...


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