Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 3:06-cv-50042-Frederick J. Kapala, Judge.
The opinion of the court was delivered by: Ripple, Circuit Judge.
Before RIPPLE AND SYKES, Circuit Judges, and LAWRENCE, District Judge.*fn1
Alice A. Ruth and Marylou Hahn brought this class action in the United States District Court for the Northern District of Illinois against Triumph Partnerships, LLC, and Triumph Asset Services, alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. The district court certified the class on January 8, 2008. The parties filed cross-motions for summary judgment. The court initially denied the motions, but later reconsidered its earlier decision and granted summary judgment to the defendants.
Ms. Ruth and Ms. Hahn now appeal; they contend that the district court erred in granting summary judgment to the defendants and in failing to grant summary judgment to them. For the reasons set forth in this opinion, we now reverse the district court's judgment and remand with instructions to enter judgment in favor of the plaintiffs.
Defendant Triumph Partnerships is a company that purchases defaulted debts and attempts to recover them. Defendant Allied International Credit Corporation, doing business as Triumph Asset Services ("TAS"), is a debt collection agency. Both of these entities are independently operated subsidiaries of the same parent company, Allied Global Holdings.
The plaintiff class, represented by Alice A. Ruth and Marylou Hahn (collectively "Ms. Ruth" or "plaintiffs"), consists of individuals who owed debts purchased by Triumph Partnerships. Triumph Partnerships hired TAS to collect these debts.
In January 2006, TAS sent a letter to each plaintiff. The first sentence of the letter, which was titled "Notification of Assignment," stated: "TRIUMPH PARTNERSHIPS LLP recently purchased your [credit card] account and Triumph Asset Services ('TAS'), a debt collection company, is the servicer of this obligation." R.1, Ex. A. The letter then listed the amount owed and stated: "As the new owner of this account, we have authorized TAS to work with you to find a positive resolution to this outstanding debt. Once TAS receives your payment of [amount], we will notify the credit bureaus that the debt is 'Paid' and immediately stop all recovery activity on this account." Id. The letter also stated: "Please understand that this is a communication from a debt collector. This is an attempt to collect a debt. Any information obtained will be used for that purpose." Id.
In the same envelope as the collection letter was a second document, titled "Privacy Notice of Financial Information From Triumph Partnerships LLC ('TPLLC') and its affiliates" (the "notice"). Id. The notice, which stated that it was "sent on behalf of TPLLC and its affiliate: Triumph Asset Services," also stated the following:
What Information Do we collect and share?
To the extent permitted by law, we may collect and/or share all the information we obtain in servicing your account. We collect information about you to service your account with the highest quality.
We may share information about you (whether you are a customer or former customer) to the following third parties:
! Non-financial companies, such as direct marketers or retailers financial service companies (like banks, mortgage lenders, and organizations with which we have a joint marketing agreements [sic])
! Non-financial companies, such as direct marketers or retailers as outlined below in the OPTOUT NOTICE section, you may tell us not to share information about you with outside companies. However, that choice will not affect sharing: with credit reporting agencies, with third party collection agencies, with attorneys, with companies that process financial products, in connection with the sale of debt portfolios, and to respond to legal subpoenas and other legal process.
You have the option of directing us NOT to disclose your information with outside companies (other than those disclosures permitted by law). If you prefer that we do not disclose nonpublic personal information about you to nonaffiliated third parties, please fill out the Opt-Out Response Form on the reverse side . . . .
Id. The language of the notice was chosen by Richard Arko, Triumph Partnerships' vice president, who selected the letter from samples provided by a letter vendor. After selecting this language, Arko sent it to TAS' compliance office for review. TAS returned the notice, altered in form but unchanged in substance, about three weeks later.
Beginning in January 2006, TAS sent an envelope containing a collection letter and a copy of the notice to each of the plaintiffs. In March 2006, Ms. Ruth filed this action in the United States District Court for the Northern District of Illinois. She alleged that by sending the notice, the defendants had violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692e.
The parties filed cross-motions for summary judgment. Ms. Ruth contended that the notice violated the FDCPA because it made a false statement in connection with the collection of a debt and threatened illegal action. She claimed that the notice falsely stated that the defendants, by law, could disclose certain nonpublic information about the debtor without the debtor's permission, and would do so unless the debtor expressly "opted out." Ms. Ruth submitted that these statements were false and constituted a threat to take illegal action because the FDCPA prohibits debt collectors from sharing nonpublic information about a debtor without the debtor's explicit consent.
The defendants argued that they were entitled to sum-mary judgment because the notice was not sent in connection with the collection of a debt. They claimed that the notice was sent "not for the purpose of collecting the debt but in order to satisfy Triumph Partnerships' obligations under the [Gramm-Leach-Bliley Act]."*fn2 The defendants also argued that even if the notice was a communication in connection with collection of a debt, it did not run afoul of section 1692e because it did not make any false or misleading statement. Moreover, even if the notice was a false or misleading communication in connection with collection of a debt, the defendants argued that they were shielded from liability by the FDCPA's "bona fide error defense," which provides that debt collectors are not liable for FDCPA violations that were "not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error." 15 U.S.C. § 1692k(c). Triumph Partnerships further argued that it was not a "debt collector" as defined in the FDCPA and that the statute's restrictions therefore did not apply to it.
On January 22, 2008, the district court denied both parties' motions for summary judgment. The court began by holding that Triumph Partnerships was a debt collector under the FDCPA. The court then rejected the defendants' other arguments because it concluded that there were disputed issues of material fact as to whether, when viewed from the perspective of an "unsophisticated consumer," the notice: (1) was a communication in connection with the collection of a debt and (2) threatened to take illegal action.*fn3 The court held that a reasonable jury could conclude that the notice was a communication in connection with collection of a debt because it was the only other document in the envelope with the collection letter, both documents contained the same Triumph logo, and both documents were worded as though they had been written by Triumph Partnerships. The court also rejected the defendants' argument that the bona fide error defense entitled them to summary judgment. The court concluded that the evidence, when reviewed in the light most favorable to Ms. Ruth, was not sufficient to allow it to conclude that the defendants were entitled to the defense as a matter of law.
The district court also denied Ms. Ruth's motion for summary judgment. The court held that, although there was enough evidence to support a jury's finding that the notice violated the FDCPA, the evidence was not sufficient ...