Edwards v. Niagara Credit Solutions, Inc., 2009 U.S. App. LEXIS 22500
sufaud
INC., a New York corporation, Defendant-Appellant.
No. 08-17006
UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
2009 U.S. App. LEXIS 22500
October 14, 2009, Decided
October 14, 2009, Filed
PRIOR HISTORY: [*1]
Appeal from the United States District Court for the Northern District
of Georgia. D. C. Docket No. 07-02396-CV-BBM-1.
Edwards v. Niagara Credit Solutions, Inc., 586 F. Supp. 2d 1346, 2008
U.S. Dist. LEXIS 95040 (N.D. Ga., 2008)
DISPOSITION:
AFFIRMED.
COUNSEL: For Niagra Credit Solutions, Inc., Appellant: Michael D.
Robl, Thomerson Spears & Robl, LLC, DECATUR, GA.
For Brenda Edwards, Appellee: Kris Skaar, Skaar & Feagle, LLP,
MARIETTA, GA; James Marvin Feagle, Skaar & Feagle, LLP, DECATUR, GA.
JUDGES: Before CARNES, FAY and ALARCON *, Circuit Judges.*
Honorable Arthur L. Alarcon, United States Circuit Judge for the Ninth
Circuit, sitting by designation.
OPINION BY: CARNES
OPINION
CARNES, Circuit Judge:
In an oft-repeated statement from the Vietnam War, an unidentified
American military officer reputedly said that "we had to destroy the
village to save it." n1 That oxymoronic explanation may be apocryphal,
but the debt collection agency in this case offers up much the same
logic to explain why it violated the Fair Debt Collection Practices
Act: it was necessary to violate the Act in order to comply with the
Act.
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FN1 See Bruce O. Solheim, The Vietnam War Era: A Personal Journey 80
(2006).
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I.
Brenda Edwards owed money to the Consumer Shopping Network. Her past
due account was assigned to Niagara Credit Solutions, Inc. for
collection. Niagara is a debt collection [*2] agency subject to the
provisions of the Fair Debt Collection Practices Act, 15 U.S.C. §
1692, et seq. It attempts to collect debts by sending letters and
making phone calls to debtors.
As part of its collection efforts, Niagara left over a dozen messages
on Edwards' answering machine from July through October 2007. In
September 2007, Niagara left a pre-recorded message on her machine
stating: "This is an important message for Edwards Brenda. [sic]
Please return this message at 1-800-381-0416, between the hours of 8
a.m. and 9 p.m. eastern standard time. It is important that you reach
our office." The next month Niagara left another message on her
answering machine: "This message is intended for Brenda Edwards.
Please contact Jennifer [last name not clear] at 1-800-381-0416, my
extension is 220. When returning my call have your file number
available, it's 1250740."
At the time of those events Niagara had a well-defined policy about
messages that it left on debtors' answering machines. That policy was
to: leave a message asking the debtor to call back about an important
matter; provide Niagara's phone number; supply the real first name of
the person calling on behalf of Niagara; and give [*3] any reference
number assigned to the account. Niagara purposefully left out of the
messages any information disclosing that they were from Niagara Credit
Solutions, Inc. or a debt collector or that the call had been made for
the purpose of collecting a debt. The Fair Debt Collection Practices
Act specifically requires that a debt collector disclose in all
communications with a debtor that the message is from a debt
collector. See 15 U.S.C. § 1692e(11). Niagara deliberately chose not
to comply with that requirement because it feared that doing so would
risk violating another provision of the Act, which generally forbids
an agency from communicating about the debt with a third party. See 15
U.S.C. § 1692c(b). It was concerned that answering machine messages
might be played by or within the hearing of a family member or
roommate, who would then know that a collection agency was calling the
debtor.
II.
In September 2007 Edwards filed a complaint against Niagara alleging
that the messages it left on her answering machine violated § 1692e
(11) of the Fair Debt Collection Practices Act, as well as § 1692d(6)
(requiring meaningful disclosure of the caller's identity). She sought
an award of statutory [*4] damages, costs, and attorney's fees and
moved for summary judgment. Niagara asserted a number of defenses,
including the bona fide error defense contained in § 1692k(c). The
district court granted summary judgment in favor of Edwards after
concluding, among other things, that the messages Niagara left
violated § 1692d(6) and § 1692e(11) and that the bona fide error
defense did not apply. Niagara concedes at this stage that the
messages it left violated § 1692e(11) and is only challenging the
district court's conclusion that it is not protected by the bona fide
error defense. n2 The issue before us is whether a debt collector is
entitled to the bona fide error defense when it intentionally violates
one provision of the Act in order to avoid the risk of violating
another provision.
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FN2 Niagara has waived any argument that the messages did not also
violate § 1692d(6). Although it made such an argument in the district
court, Niagara failed to include that argument in the initial brief it
filed in this Court. Even though Niagara asserted at oral argument
that it had not violated § 1692d(6), that assertion comes too late to
preserve the issue. See McFarlin v. Conseco Servs.,LLC, 381 F.3d 1251,
1263 (11th Cir. 2004) [*5] ("A party is not allowed to raise at oral
argument a new issue for review."); Marek v. Singletary, 62 F.3d 1295,
1298 n.2 (11th Cir. 1995) ("Issues not clearly raised in the briefs
are considered abandoned."). Nevertheless, we will not rely on the
waiver because Niagara's concession that it violated one provision of
the Act is enough; an additional violation does not affect our
analysis.
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III.
The Fair Debt Collection Practices Act was enacted by Congress "to
eliminate abusive debt collection practices by debt collectors" and
"to protect consumers against debt collection abuses." 15 U.S.C. § 1692
(e). Congress found abusive practices by debt collectors to be
"serious and widespread." Russell v. Equifax A.R.S., 74 F.3d 30, 33
(2d Cir. 1996). The Act provides a civil cause of action against any
debt collector who fails to comply with the requirements of the Act,
including § 1692e(11). See 15 U.S.C. § 1692k(a). A debt collector can
be held liable for an individual plaintiff's actual damages, statutory
damages up to $ 1,000, costs, and reasonable attorney's fees. 15
U.S.C. § 1692k(a)(1)-(3).
The Act, however, provides debt collectors with an affirmative defense
called the "bona fide error" [*6] defense, which insulates them from
liability even when they have failed to comply with the Act's
requirements. Johnson v. Riddle, 443 F.3d 723, 727 (10th Cir. 2006).
The defense is found in 15 U.S.C. § 1692k(c), which provides:
A debt collector may not be held liable in any action brought under
this subchapter if the debt collector shows by a preponderance of
evidence that the violation was not intentional and resulted from a
bona fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.A debt collector asserting
the bona fide error defense must show by a preponderance of the
evidence that its violation of the Act: (1) was not intentional; (2)
was a bona fide error; and (3) occurred despite the maintenance of
procedures reasonably adapted to avoid any such error. Johnson, 443 F.
3d at 727-28. The failure to meet any one of those three requirements
is fatal to the defense.
Niagara cannot make the first required showing. Section 1692e(11)
requires a debt collector "to disclose in subsequent communications
that the communication is from a debt collector." 15 U.S.C. § 1692e
(11). n3 By its own admission, Niagara deliberately decided not to
disclose [*7] in the messages it left that the caller was a debt
collector. Its failure to disclose was intentional.
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FN3 All the communications alleged in this case were "subsequent
communications" within the meaning of § 1692e(11).
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Niagara has also failed to meet the second requirement of the bona
fide error defense, which is that the violation actually be a "bona
fide" error. Taking Niagara at its word, it was concerned that
disclosing that the call was from a debt collector could result in a
violation of 15 U.S.C. § 1692c(b), which prohibits a debt collector
from communicating with third parties about the consumer's debt. n4
Niagara feared that leaving a message on a debtor's machine stating
that it was from a debt collector calling to collect a debt might be
viewed as a violation of § 1692c(b) if the message were overheard by
or played in the presence of someone other than the debtor, such as a
family member or roommate. We do not need to decide whether that
concern is well-grounded in the law. Even if there would be a
violation of § 1692c(b) in those circumstances, involving fewer than
all of the messages left on answering machines, Niagara's violation of
§ 1692e(11) with every message it left cannot [*8] be said to be a
bona fide error.
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FN4 Section 1692c(b) provides: "Except as provided in section 1692b of
this title, without the prior consent of the consumer given directly
to the debt collector, or the express permission of a court of
competent jurisdiction, or as reasonably necessary to effectuate a
postjudgment judicial remedy, a debt collector may not communicate, in
connection with the collection of any debt, with any person other than
the consumer, his attorney, a consumer reporting agency if otherwise
permitted by law, the creditor, the attorney of the creditor, or the
attorney of the debt collector."
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As used in the Act "bona fide" means that the error resulting in a
violation was "made in good faith; a genuine mistake, as opposed to a
contrived mistake." Kort v. Diversified Collection Servs., Inc., 394 F.
3d 530, 538 (7th Cir. 2005); see also Black's Law Dictionary 186 (8th
ed. 2004) (defining "bona fide" as "1. Made in good faith; without
fraud or deceit" and "2. Sincere; genuine"); Garcia v. Vanguard Car
Rental USA, Inc., 540 F.3d 1242, 1246 (11th Cir. 2008) ("When
statutory terms are undefined, we typically infer that Congress
intended them to have their common and ordinary meaning, [*9] unless
it is apparent from context that the disputed term is a term of
art."). To be considered a bona fide error, the debt collector's
mistake must be objectively reasonable. Johnson, 443 F.3d at 729 ("[I]
n effect, [the bona fide] component serves to impose an objective
standard of reasonableness upon the asserted unintentional
violation." (second alteration in original) (internal quotation marks
omitted)). Just as it is not reasonable to destroy a village in order
to save it, neither is it reasonable to violate an Act in order to
comply with it. It was not reasonable for Niagara to violate § 1692e
(11) of the Fair Debt Collection Practices Act with every message it
left in order to avoid the possibility that some of those messages
might lead to a violation of § 1692c(b).
Niagara complains that if it is not permitted to leave out of its
answering machine messages the disclosure required by § 1692e(11), the
result will be that it cannot leave any messages on answering
machines. That assumes an answering machine message that includes the
disclosure required by § 1692e(11), if heard by a third party, would
violate § 1692c(b). We have not decided that issue, but even if
Niagara's assumption [*10] is correct, the answer is that the Act
does not guarantee a debt collector the right to leave answering
machine messages.
Because Niagara has failed to meet either of the first two
requirements of the bona fide error defense of § 1692k(c), we need not
decide whether it also has failed to meet the third one, which
requires the maintenance of procedures reasonably designed to avoid
the violation of the Act. Although the district court's grant of
summary judgment to Edwards was based on that ground, we can and do
affirm on different grounds. See Cuddeback v. Fla. Bd. of Educ., 381 F.
3d 1230, 1235 (11th Cir. 2004) ("This court may affirm [summary]
judgment on any legal ground, regardless of the grounds . . . relied
upon by the district court.").
AFFIRMED.