Rahier v. Thunderbird Collection Specialists Incorporated ( 2023 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Wendy Rahier, No. CV-22-00141-TUC-JGZ 10 Plaintiff, ORDER 11 v. 12 Thunderbird Collection Specialists Incorporated, 13 Defendant. 14 15 In this action, Plaintiff Wendy Rahier alleges Defendant Thunderbird Collection 16 Specialists (TCS) violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 17 1692e(2)(A) & (8), by failing to remove a dispute notation from its collection item on 18 Rahier’s consumer credit file. (Doc. 1 at 3.) Pending before the Court are Rahier’s Motion 19 for Partial Summary Judgment, (Doc. 22), and TCS’s Motion for Summary Judgment. 20 (Doc. 24.) The Motions are fully briefed. (Docs. 22–25, 27–32.) The Court heard Oral 21 Argument on the motions on June 29, 2023. For the following reasons, the Court will deny 22 Rahier’s Motion and grant TCS’s Motion.1 23 I. Background2 24 TCS is a debt collector and was attempting to collect on a debt owed to Arizona 25 Arthritis & Rheumatology Associates, P.C., by Rahier, in the amount of $3,223.00 (the 26 1 At the June 29 hearing, the Court also heard argument on Plaintiff’s Counsel’s Motion 27 to Withdraw. (Doc. 20.) In light of its resolution of the motions for summary judgment, the Court will deny the Motion to Withdraw as moot. 28 2 The facts in this background section are undisputed unless otherwise indicated. 1 Debt). (Docs. 27 at 2; 1 at 2.) Because Rahier originally disputed the Debt, (Docs. 25 ¶ 1; 2 30 ¶ 1), TCS notified the credit reporting agencies (CRA), including Trans Union, that the 3 Debt was disputed, (Docs. 25 ¶ 2; 30 ¶ 2). Subsequently, Rahier sent a letter through her 4 counsel, to TCS, informing TCS that she was no longer disputing the Debt and requesting 5 the dispute remark be removed from the tradeline. (Docs. 25 ¶ 3; 30 ¶ 3.) 6 Upon receipt of Rahier’s letter, TCS took steps to change the status of the Debt from 7 disputed to not being disputed in the software program it uses to provide debt collection 8 information to the CRAs to which it reports. (Docs. 25 ¶ 4; 30 ¶4–5.) TCS removed the 9 “dispute” designation from the field in the software program which identifies debts that are 10 being disputed (the compliance condition code field), and left the field blank. (Docs. 25 11 ¶5; 25-1 ¶ 9; 30 ¶¶ 4, 5.) TCS’s collection notes document a change of the Debt from 12 disputed to undisputed. (Docs. 25 ¶ 7; 30 ¶ 7.) TCS submitted the revised debt collection 13 information to the CRAs. (Docs. 25 ¶ 6; 30 ¶ 6.) 14 Rahier’s subsequent credit report from Trans Union still showed the Debt as being 15 disputed. (Docs. 30 ¶ 8; 25 ¶ 8.) Rahier states that TCS’s procedures were ineffective to 16 remove the dispute designation as evidenced by the Credit Reporting Resource Guide 17 (CRRG), which she identifies as a source of credit reporting industry standards and 18 procedures. (Doc. 23 ¶ 4–5.) According to Rahier, the CRRG establishes that the only way 19 to remove a dispute code is to replace it with another compliance condition code or with 20 “XR” (a removal code). (Id. ¶¶ 7, 8.) Thus, although TCS deleted the dispute code, TCS’s 21 leaving the compliance code field blank resulted in the continued reporting of the Debt as 22 disputed, as evidenced by Rahier’s Trans Union credit report. (Id. ¶ 9–10.) 23 On March 23, 2022, Rahier filed suit against TCS alleging violations of § 1692e of 24 the FDCPA, 15 U.S.C., for falsely reporting that the Debt was disputed. (Doc. 1 at 4–5.) 25 On March 23, 2023, the parties filed the pending Motions for Summary Judgment. 26 (Docs. 22; 24.) Rahier requests that the Court enter judgment against TCS as to liability 27 and allow the case to proceed to trial on the question of damages. (Doc. 22 at 6.) TCS 28 argues it is entitled to judgment because Rahier cannot prove that TCS violated the FDCPA 1 and that she suffered actual damages. (Doc. 24 at 7, 10.) 2 II. Discussion 3 At issue in this lawsuit is whether TCS’s response to Rahier’s request caused the 4 dispute remark to continue to be reported to Trans Union. The parties agree that summary 5 judgment is the appropriate mechanism for resolving this case because the facts are 6 undisputed and the issue presented is a matter of law. (Docs. 22 at 6; 24 at 10.) 7 Summary judgment will be granted when the movant has shown “that there is no 8 genuine dispute as to any material fact and the movant is entitled to judgment as a matter 9 of law.” Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A dispute 10 is “genuine” if there is sufficient evidence for a reasonable jury to return a verdict in favor 11 of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact 12 is “material” if it might affect the outcome of the suit under the governing law. Id. There 13 is no genuine issue of material fact when a party fails to establish an element essential to 14 that party’s case and on which that party will bear the burden of proof at trial. Celotex 15 Corp., 477 U.S. at 322–23. In its analysis, the court must believe the nonmovant’s evidence 16 and draw all inferences in the nonmovant’s favor. Anderson, 477 U.S. at 255. 17 A. FDCPA Claim 18 To prevail on a claim for violation of the FDCPA, a plaintiff must establish that (1) 19 the plaintiff is a consumer, (2) who was the object of a collection activity arising from a 20 debt, (3) the defendant is a debt collector, and (4) the defendant violated a provision of the 21 FDCPA. See Turner v. Cook, 362 F.3d 1219, 1227–28 (9th Cir. 2004). The parties here 22 dispute only the fourth element—whether the defendant violated a provision of the 23 FDCPA. 24 Under § 1692e of the FDCPA, “[a] debt collector may not use any false, deceptive, 25 or misleading representation in connection with the collection of any debt.” 15 U.S.C. § 26 1692e. The FDCPA’s prohibitions include making a “false representation of the character 27 of, . . . or legal status of any debt,” (15 U.S.C. § 1692e(2)(A)), and “communicating . . . 28 credit information which is known, or which should be known to be false, including the 1 failure to communicate that a disputed debt is disputed,” (15 U.S.C. § 1692e(8)). “The 2 FDCPA does not ordinarily require proof of [an] intentional violation, and is a strict 3 liability statute.” Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1061 (9th Cir. 2011). 4 On the undisputed facts, Rahier cannot establish an essential element of her claim. 5 Rahier’s evidence does not establish that TCS falsely reported information about the Debt 6 to Trans Union. The CRRG is Rahier’s sole proof Rahier offers to prove that TCS reported 7 to Trans Union information that it knew or should have known to be false. Rahier argues 8 that the CRRG provides the industry standards and proves that TCS’s communication of 9 revised information to Trans Union was ineffective, and the communication therefore false, 10 because TCS did not follow the procedure for removing the disputed designation set forth 11 in the CRRG. The CRRG states that the only way to remove a dispute code is to replace it 12 with another compliance condition code or with “XR” (a removal code), which TCS did 13 not do. (Docs. 23 ¶¶ 7, 8; 30 ¶ 6.) 14 The CRRG, however, is not admissible or applicable in resolution of this dispute. 15 First, Rahier fails to provide expert testimony or other evidence which would support her 16 assertion that the CRRG sets forth the credit report industry standards and procedures. See 17 Fed. R. Civ. P. 56(c)(2) (“A party may object that the material cited to support or dispute 18 a fact cannot be presented in a form that would be admissible in evidence.”); Calvin v. 19 Michigan First Credit Union, No. 19-CV-11519, 2020 WL 3972519, at *4 (E.D. Mich. 20 July 14, 2020) (finding CRRG is inadmissible hearsay because plaintiff did not provide 21 expert witness testimony to establish CRRG as an industry standard). 22 Second, compliance with industry guidelines, such as the CRRG, is not sufficient to 23 prove (or disprove) an alleged violation of the FDCPA. See, e.g., Koehler v. Waypoint Res. 24 Grp., LLC, No. 8:18-CV-2071-T-60AAS, 2019 WL 5722117, at *2 (M.D. Fla. Nov. 5, 25 2019) (debt collector’s noncompliance with industry standards is insufficient to prove an 26 FDCPA claim); Boatley v. Diem Corp., No. CIV. 03-0762-PHX-SMM, 2004 WL 5315892, 27 at *3 (D. Ariz. Mar. 24, 2004) (debt collector’s compliance with industry standards is not 28 1 a defense to an FDCPA claim).3 2 The evidence, viewed in a light most favorable to Rahier, demonstrates only that: 3 TCS received Rahier’s letter and took steps to remove the “dispute” designation from the 4 field in the software program which identifies debts that are being disputed. TCS’s 5 collection notes corroborate this and indicate that TCS removed the disputed remark. TCS 6 then reported its information to Trans Union. The record does not contain evidence from 7 Trans Union. There is no evidence that TCS’s revisions were not received by Trans Union 8 and no admissible evidence that TCS’s manner of revising its data was ineffective. The 9 fact that Trans Union continued to report the Debt as disputed does not, by itself, support 10 the inference that TCS failed to accurately report to Trans Union to the exclusion of other 11 possible explanations for Trans Union’s reporting. See Navarro v. Portfolio Recovery 12 Assocs., LLC, No. CV-18-02333-PHX-JJT, 2019 WL 4418254, at *3 (D. Ariz. Sept. 16, 13 2019) (granting summary judgment in favor of debt collector when plaintiff failed to show 14 evidence that the debt collector reported inaccurate information to the CRA). This is 15 particularly true in light of the undisputed evidence that TCS took steps to remove the 16 “dispute” designation in its collection data. On this record, Rahier cannot establish that 17 TCS reported to Trans Union information about the Debt that was “false, deceptive, or 18 misleading.” See 15 U.S.C. 1692e. 19 Because Rahier cannot prove that TCS reported false information to Trans Unition, 20 the Court will grant TCS’s motion for summary judgment. (Doc. 22 at 5–6.) See Celotex 21 Corp., 477 U.S. at 322 (there is no genuine issue of material fact when a party fails to 22 establish an element essential to that party’s case and on which that party will bear the 23 burden of proof at trial.).4 24 3 TCS argues that the Court should preclude Rahier’s use of the CRRG to support her claim because Rahier did not timely disclose the CRRG during discovery as required by 25 Fed. R. Civ. P. 26 (a)(1)(A)(ii). (Docs. 27 at 6–7; 32 at 5.) Although Rahier admits that she did not timely disclose the CRRG, in light of the Court’s conclusion that the CRRG is 26 inadmissible, the Court need not decide whether the sanction of exclusion is warranted. For the same reason, the Court also does not address TCS’s additional evidentiary challenges 27 to Rahier’s use of the CRRG. 28 4 TCS argues alternatively that a fact question exists as to TCS’s bona-fide-error defense. (Doc. 31 at 3.) The bona-fide-error defense states a debt collector is not liable for violations 1|| Il. Conclusion 2 For the foregoing reasons, the Court concludes that TCS is entitled to summary 3 || judgment as a matter of law. 4 IT IS ORDERED: 5 1. Plaintiff’s Motion for Partial Summary Judgment (Doc. 22) is DENIED. 6 2. Defendant’s Motion for Summary Judgment (Doc. 24) is GRANTED. 7 3. Plaintiff's Counsel’s Motion to Withdraw (Doc. 20) is DENIED as moot. 8 4. The Clerk of Court must enter judgment accordingly and close its file in this action. 10 Dated this 11th day of July, 2023. 11 12 □ 13 pod Soya 4 ; Honorable Jennify ve Zfpps United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 nowithstanding. the maintenance of procedures reasonably adapted to avoid any. such error.” 15 U.S.C. § 1692k(c). In light of the Court’s conclusion fat Rahier has failed to 28 prove a violation of the FDCPA, the Court does not consider this affirmative defense. -6-