United States District Court, W.D. Wisconsin
OPINION AND ORDER
STEPHEN L. CROCKER Magistrate Judge.
a civil action for damages and injunctive relief brought
pursuant to the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692, and the
Wisconsin Consumer Act (“WCA”), Wis.Stat.
§§ 425-427. Plaintiffs Patricia and Michael VanHuss
contend that defendants Rausch, Sturm, Israel, Enerson &
Hornik and Absolute Resolutions Corporation violated
§§ 1692(e)(5) and 1692g(b) of the FDCPA and similar
provisions of the Wisconsin Consumer Act by commencing a
small claims collection action before complying with a
request sent by Patricia VanHuss for validation of the debt,
and then maintaining that lawsuit for 53 days after VanHuss
filed a motion to dismiss in which she asserted that
defendants had failed to respond to her request for
validation of the debt.
the court is defendants' motion for summary judgment on
all of plaintiffs' claims. Dkt. 29. I am granting this
motion for every claim but one: Patricia VanHuss's claim
under § 1692g(b) of the FDCPA survives. Although
defendants have shown that their failure to provide her with
validation of her debt before suing her in small claims court
was the result of an unintentional, bona fide error,
reasonable factfinders could disagree whether defendants had
procedures in place that were reasonably adapted to avoid any
such error. Accordingly, I must deny defendants' motion
for summary judgment on their bona fide error defense under
§ 1692k. I further reject defendants' argument that
Patricia VanHuss must show that the alleged violation of
§ 1692g(b) was material. However, I agree with
defendants that Michael VanHuss cannot proceed on this claim
because he has not shown that he suffered any plausible
injury as a result of defendants' actions.
remaining claims will be dismissed. Wis.Stat. § 425.107
does not confer a private cause of action on consumers, and
plaintiffs have failed to show that defendants'
maintenance of the collection action for 53 days after
Patricia VanHuss filed a motion to dismiss constitutes
prohibited action under either the FDCPA or WCA.
the parties' submissions, I find the following facts to
be undisputed and material to the motion for summary
Patricia VanHuss and Michael VanHuss reside in Reedsburg,
Wisconsin. Defendant Rausch, Sturm, Israel, Enerson &
Hornik LLC (“RSIEH”) is a law firm with an office
in Brookfield, Wisconsin. Defendant Absolute Resolutions
Corporation (“ARC”) is a debt buyer with an
office in San Diego, California.
RSIEH Attempts to Collect a Debt from Patricia
VanHuss incurred a debt to Citibank Retail Card for an
AT&T Universal Rewards Card on which she defaulted.
VanHuss received and retained billing statements sent in
connection with her account. Citibank sold its interest in
the debt to ARC, which in turn retained RSIEH as counsel for
the purpose of collecting the debt.
January 2, 2015, Citibank sent a letter to Patricia VanHuss
informing her that her account with a number ending in 7310
and with a balance of $8, 564.12 had been sold to ARC. In the
letter, Citibank told VanHuss that she should send future
payments or correspondence regarding her debt to ARC. It
provided ARC's mailing address as PO Box 880306, San
Diego, CA 92168-0306. Patricia VanHuss received this letter.
about September 18, 2015, Patricia VanHuss received from
RSIEH a letter advising her that ARC had referred the debt to
RSIEH for collection of the balance owed. Among other things,
RSIEH advised VanHuss that the original creditor was Citibank
Retail Card, the account balance was $8, 565.12 and she had a
right to dispute the validity of the debt. The September 18,
2015 letter identified ARC's contact information as 6602
El Cajon Blvd. Ste. 200, San Diego, CA 92115.
VanHuss testified that on October 15, 2015, she printed a
“validation” letter from the internet, by which
she intended to dispute the debt and request validation as
allowed by § 1692g(b). According to VanHuss, she mailed
this letter via certified mail to RSIEH on October 17, 2015.
She received a certified mail receipt showing that RSIEH
received her mailing on October 19, 2015.
mailroom log confirms that the firm received a piece of
certified mail from Patricia VanHuss on October 19, 2015.
However, neither the certified mail receipt nor the mailroom
log describes what was in the envelope. According to the
mailroom log, the envelope was marked for distribution to
attorney Shane Gale, who is RSIEH's Managing Attorney for
its Wisconsin office. However, Gale never received any debt
validation request from Patricia VanHuss, and defendants do
not know what happened to it.
unaware that VanHuss had sent a validation request or
otherwise disputed the debt, RSIEH began collection
proceedings. On November 24, 2015, in its capacity as counsel
for ARC, RSIEH filed a small claims action on ARC's
behalf against Patricia VanHuss in Sauk County Circuit Court.
Michael VanHuss was not named as a defendant.
December 14, 2015, Patricia VanHuss filed a motion to dismiss
the collection case, asserting that service of process was
ineffective and ARC lacked the capacity to sue her because it
had not responded to her October 15, 2015 validation request.
The court ordered briefing on the motion and VanHuss filed a
letter brief in support on January 28, 2016. Eight days
later, RSIEH responded to the motion by advising the court
that it did not object to dismissal of the action without
prejudice. The state court dismissed the collection case on
February 5, 2016, 53 days after Patricia VanHuss filed her
motion to dismiss. Since that time, defendants have taken no
further steps to collect VanHuss's debt.
RSIEH's Policies Concerning Debt Disputes
Gale was deposed as RSIEH's representative pursuant to
Rule 30(b)(6). Gale explained RSIEH's policies and
procedures for complying with federal and state debt
collection laws. Gale has been RSIEH's State Managing
Attorney for Wisconsin since June 2015; before that, he
worked at RSIEH as an associate since 2009.
utilizes a bonded mail courier to transport mail to and from
its office. Its bonded courier is required to enter
RSIEH's office through a secured entrance, and a log is
maintained that records the details of each person's
passage through security. When mail is received, RSIEH's
receptionist immediately notifies the mailroom, at which
point a certain employee is expected to transport the
delivered mail from reception to the secured mailroom. Upon
arrival in the mailroom, each piece of certified mail is
logged and saved to create a record of the tracking number,
the identity of the RSIEH employee who opened it, and the
identity of the individual to whom it would be routed. Once
the mail is sorted, it is placed in folders organized to
reflect the path of delivery. The mail is then distributed by
folder along the expected path.
consumer disputes and requests for validation related to
Wisconsin consumers are directed to Attorney Gale. It is
RSIEH's policy to honor disputes and debt validation
requests regardless of whether they are received within the
30 days following a consumer's receipt of the notice
required by § 1692g(a).
to Gale, RSIEH trains mailroom employees to identify types of
correspondence RSIEH receives to ensure mail is properly
sorted and routed. This training includes instructing
mailroom staff to recognize words such as
“validation” and “verification.”
Gale, however, could not say what the qualifications RSIEH
required for employment in its mailroom, he did not know
whether any mailroom training policies were documented in
writing or available on video, he did not know who provided
the training to the mailroom employees, and he could not say
when the mailroom employees had been hired who were working
in October 2015 .
following categories of mail are routed to Gale: (1) mail
addressed directly to him; (2) all debt verification requests
related to Wisconsin consumers; (3) all mail related to
Wisconsin litigation in which RSIEH is counsel of record that
is not otherwise addressed to a specific attorney. According
to print-outs submitted by plaintiffs that were obtained by
searching Wisconsin's online database of court records,
RSIEH is the law firm of record in nearly 3, 500 active
Wisconsin cases; Gale himself is listed as the attorney of
record on 309 of these Wisconsin cases. Gale also appears as
the attorney of record on thousands of Wisconsin small claims
cases, but plaintiffs' submissions do not show how many
of these cases are open or how old they are.
Gale personally reviews and sorts his mail and distributes it
to others, as necessary. Gale testified that he ordinarily
processes his mail in this order: first, he reviews pleadings
and processes them or routes them to another attorney (if
related to a case that was assigned to another attorney;
second, he reads through debt verifications and other
consumer mail; and third, he goes through court notices and
give those to his legal assistant to enter into calendars and
the electronic file database for scheduling. Gale depo., at
61, at 12-18. When asked at his deposition whether he could
estimate with any level of accuracy the number of pieces of
mail that are routed to him on a given day, he could not,
stating, “It varies.” Dkt. 33, at 54, lines 1-3.
maintains written procedures concerning the handling of
consumer disputes and requests for validation once they are
received. These are set forth in a document entitled
“Consumer Dispute & Debt Validation
Standard.” Aff. of Shane Gale, Dkt. 32, Exh. A. These
procedures document various steps that RSIEH employees must
take once a validation letter has been received to ensure
that debt collection activities cease. Upon receipt of a
verbal or written dispute or request for validation, a
certain code must be entered into the corresponding
electronic file. Consumer cease-and-desist requests are coded
in a similar fashion. Upon entering the specified codes,
RSIEH clients, such as ARC, are notified electronically of
the facts giving rise to the codes. Copies of written
disputes and validation requests must be scanned into the
electronic file. Entry of the specified codes into
RSIEH's electronic file after receipt of a dispute or
validation requests causes RSIEH's electronic file to
block further collection efforts on the file, although an
attorney can “override” the
“cease-and-desist” code if he or she needs to do
work on the file.
Director of Compliance monitors all files with the specified
codes to ensure proper coding and handling. Once RSIEH
compiles the documentation or information necessary to
respond to the dispute or validation request, such
information and documentation is scanned to the corresponding
electronic file and reviewed by a RSIEH attorney. With the
approval of RSIEH's attorney, relevant information or
documentation is sent to the consumer by mail. After the
information or documentation is sent to the consumer, the
attorney enters another code into the corresponding
electronic file. Entry of that code causes the removal of the
“dispute” code. Removal of the
“dispute” code from the electronic file results
in the ability to engage in further collection efforts.
safeguard against the possibility of incorrect code entry
during the course of receiving and responding to a
consumer's dispute or request for validation, RSIEH
attorneys are required to review a consumer's file for
outstanding validation requests. If a RSIEH attorney sees an
outstanding validation request when reviewing a file for
suit, then the attorney must reject the suit and add any code
required to complete the validation response process. In the
event that a ...