Guerrero v. Rjm Acquisitions

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KENNETH JON GUERRERO,  No. 05-15121
Plaintiff-Appellee,
v.  D.C. No.
CV-03-00038-HG
RJM ACQUISITIONS LLC,
OPINION
Defendant-Appellant.

Appeal from the United States District Court
for the District of Hawaii
Helen Gillmor, District Judge, Presiding
Argued and Submitted
November 15, 2006—Honolulu, Hawaii
Filed August 23, 2007
Before: Stephen S. Trott, Kim McLane Wardlaw, and
William A. Fletcher, Circuit Judges.
Per Curiam Opinion;
Partial Concurrence and Partial Dissent by Judge W. Fletcher
10327
10330 GUERRERO v. RJM ACQUISITIONS
COUNSEL
John Harris Paer, Honolulu, Hawaii, for the plaintiff-appellee.
David J. Minkin, McCorriston, Miller, Mukai, & MacKinnon,
LLP, Honolulu, Hawaii, for the defendant-appellant.
Daniel P. Shapiro, Goldberg, Kohn, Bell, Black, Rosenbloom
& Moritz, Ltd., Chicago, Illinois, Amicus Curiae for the
National Association of Retail Collection Attorneys and the
Debt Buyers’ Association, Inc.
GUERRERO v. RJM ACQUISITIONS 10331
OPINION
PER CURIAM.
Kenneth Jon Guerrero, a consumer, sued RJM Acquisi-
tions, LLC, a purchaser of consumer debt, in the United States
District Court for the District of Hawaii, alleging violations of
the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et
seq. After extensive pretrial litigation, the district court issued
two orders. The first denied RJM’s motion to dismiss Guerre-
ro’s first amended complaint and ruled on the parties’ cross
summary judgment motions, concluding that RJM violated
the Act and therefore Guerrero was entitled to actual and stat-
utory damages and reasonable attorneys’ fees. The second
order adopted a special master’s report recommending an
award to Guerrero of over $45,000 in attorneys’ fees. RJM
appeals from these orders, claiming the district court incor-
rectly interpreted the Act. We have jurisdiction pursuant to 28
U.S.C. § 1291, and after carefully reviewing the district
court’s rulings, we reverse and remand.
I
RJM claims the district court erroneously denied RJM’s
motion to dismiss, in which RJM asserted that Guerrero’s first
amended complaint did not relate back to the date he filed his
original complaint, and therefore his action was barred by the
Act’s one-year statute of limitations. As for the rulings on the
parties’ summary judgment motions, RJM claims the district
court incorrectly interpreted the Act’s provisions and what
they require of debt collectors. Specifically, RJM challenges
the district court’s conclusions that RJM violated the Act
when it (1) sent Guerrero two collection letters containing
slightly different account and file numbers, in an attempt to
collect one debt, in violation of § 1692g(a); (2) continued col-
lection efforts, in violation of § 1692g(b), after receiving
notice that Guerrero disputed the debt and before providing
verification of the debt; and (3) misrepresented to Guerrero’s
10332 GUERRERO v. RJM ACQUISITIONS
counsel, in violation of § 1692e, that it was not a debt collec-
tion agency and not subject to the Act. In light of these alleg-
edly erroneous conclusions, RJM argues, the district court’s
conclusion that RJM violated Hawaii consumer protection
statutes is likewise incorrect. RJM claims also that Guerrero’s
complaint was brought in bad faith and to harass, and there-
fore the district court should have awarded RJM attorneys’
fees. Finally, RJM challenges the district court’s award of
over $45,000 in attorneys’ fees to Guerrero.
RJM and amici the National Association of Retail Collec-
tion Attorneys and the Debt Buyers’ Association urge us to
consider also whether communications that violate the Act
when directed at a consumer do not violate the Act when
directed at a consumer’s legal counsel. RJM and amici argue
for an affirmative answer to this question. RJM argued before
the court, and amici argued in its brief, that the Act’s purpose
is to protect unsophisticated debtors from abusive debt collec-
tors, and once a consumer obtains this protection by procuring
legal counsel, the Act’s protections become superfluous and
therefore its provisions no longer apply. We agree. The Act’s
language and underlying purposes recognize a distinction
between a consumer and a consumer’s legal counsel. They are
distinct legal entities. We therefore hold that the letter
directed to the consumer’s attorney after receiving notice that
the consumer disputed an alleged debt does not violate the
Act.
RJM and amici urge us also to correct the district court’s
conclusion that “even if [RJM] had ceased with its efforts to
collect the alleged debt, [RJM] still would have been obli-
gated to verify” it. We respectfully disagree with the district
court, and hold that the Act requires a debt collector who
receives notice that a consumer disputes an alleged debt to
cease collection efforts until it provides the consumer with
verification of the debt. The Act does not impose an indepen-
dent obligation to verify a debt where the collector ceases all
collection efforts directed at the consumer.
GUERRERO v. RJM ACQUISITIONS 10333
II
In May of 2002, RJM sent Guerrero two “WE ARE YOUR
NEW CREDITOR” collection letters, one to his home address
and one to his post office box. Each letter informed Guerrero
that RJM had purchased a debt Guerrero originally owed to
Shell Oil Corp., each contained the same partially redacted
social security number, and each indicated a balance of
$1291.86. The letters were identical except that Guerrero’s
mailing address on each letter was different, and the last letter
in both the “account” and “RJM file” identifiers, which
appeared at the top and the bottom of each letter, were slightly
different. The account and file numbers in the letter sent to
Guerrero’s post office box each consisted of a series of num-
bers followed by the letter “A”. The account and file numbers
in the letter sent to his street address were identical to those
in the other letter in all respects but one — they ended with
a “B”.
In small print below the account information in each letter,
the words “Please see reverse side for important information”
appeared. On the reverse side of each letter appeared language
the Act requires debt collectors to include in initial communi-
cations with consumers regarding collection of debts, inform-
ing Guerrero that if he disputed the debt in writing within
thirty days of receiving the letter, RJM would obtain and pro-
vide Guerrero with verification of the debt or a copy of a
judgment against him. As mandated by the Act, each letter
concluded with the statement that “[t]his is an attempt to col-
lect a debt.”
Between May 20 and June 10, Guerrero contacted his law-
yer, Mr. Paer, regarding RJM’s debt collection effort. Electing
to turn the tables on RJM, attorney Paer wrote RJM on June
10, asserting violations of the Act and related Hawaii state
laws by RJM, and offering to settle Guerrero’s claims arising
from these alleged violations within ten days for a payment
from RJM of $3,000.00. He threatened also to sue RJM in
10334 GUERRERO v. RJM ACQUISITIONS
federal court. The subject line of attorney Paer’s letter went
so far as to read: “Re: Guerrero v. RJM Acquisitions LLC.”
At this point in time, RJM had sent to Guerrero only the two
letters dated May 20.
Attorney Paer, threatening to transform a simple debt col-
lection matter into a federal case, wrote:
Please be advised that this office represents Mr.
Kenneth Jon Guerrero.
It is his position that your letters of May 20, 2002,
and its [sic] other collection attempts do not comply
with the Fair Debt Collection Practices Act . . . . Mr.
Guerrero will accept payment of $3000.00 covering
both actual and statutory damages as well as attor-
neys fees in full settlement of his claims.
This offer will remain open for ten days from today,
after which, Mr. Guerrero expects to file his action
in Federal District Court to obtain the sums due him.
Please respond within that time if you are interested
in resolving this matter without litigation.
In addition, Mr. Guerrero hereby indicates formally
that he disputes this alleged debt and requests that
you send him verification of the debt . . . . Send veri-
fication and other communication to this office and
not to Mr. Guerrero.
(emphasis added).
Attorney Paer’s letter can only be described as a hardball
tactic aimed either at resolving his client’s debt at less than
the amount RJM believed Guerrero owed, or at generating a
lawsuit against RJM, or both. The letter had as one of its
objectives the collection from RJM of alleged damages and
attorneys’ fees for violations of the Act for which attorney
GUERRERO v. RJM ACQUISITIONS 10335
Paer claimed RJM was clearly liable. In point of fact, all RJM
had done was send a letter to the two addresses, provided by
the debtor, seeking to collect a relatively small debt. As we
shall explain, the letters did not violate the Act, and attorney
Paer’s claims to the contrary were baseless. In return, RJM
received a short ten-day turnaround demand for more than
double the amount of the debt, including attorneys’ fees, and
a threat of immediate federal litigation.
Upon receipt of attorney Paer’s letter, RJM ceased all direct
collection activity from Guerrero. As instructed by Guerrero’s
attorney, and in compliance with the Act,1 RJM wrote attor-
ney Paer on June 14, 2002, stating that it had acquired the
Shell Oil account opened in the name of Kenneth Guerrero
from Citibank, and providing Guerrero’s complete social
security number and the date of last payment. Enclosed with
this letter was a copy of a June 11, 2002 letter from Citibank
to Kenneth J. Guerrero. The letter reads,
Dear Mr. Guerrero,
The inquiry we received in reference to Associates/
Shell Oil account number 146240502 should be
directed to:
RJM Acquisitions, LLC
575 Underhill Blvd
Suite 224
Syosset, NY 11791
800-541-0824
Citibank no longer owns this account. This account
was sold to RJM in March, 2002. All communication
concerning this account should be addressed to the
new owner.
1
See 15 U.S.C. § 1692c(a)(2) (“a debt collector may not communicate
with a consumer . . . if the debt collector knows the consumer is repre-
sented by an attorney . . . .”).
10336 GUERRERO v. RJM ACQUISITIONS
Sincerely,
[signed]
Portfolio Analyst
This letter responding to an inquiry presumably by Guererro
was sent to him by Citibank at his address approximately one
month after he received from RJM the May, 2002 letters
attempting to collect this debt. The dates and sequences of the
letters suggest an inquiry by Guerrero to Citibank upon
receipt of RJM’s May, 2002 letters. In the June 14, 2002 let-
ter, RJM stated that it “was in the process of verifying the
account.”
We note that RJM’s June 14, 2002 letter referenced both
the account number from Shell Oil and its own file number
without the As and Bs appearing in the two earlier letters to
Guerrero. RJM asserted also in the letter its own (correct)
legal position that it “respectfully maintains that it has vio-
lated no laws,” and its (partially incorrect) position that it was
“not a collection agency and therefore, not subject to the
[Act].” RJM purchased the debt from Guerrero’s original
creditor. Therefore, RJM was not a “collection agency”
employed by the creditor to collect the creditor’s delinquent
debts. Nevertheless, it does not follow that RJM was not sub-
ject to the Act. RJM further clarified that its only attempt to
communicate directly with Mr. Guerrero was by letter before
attorney Paer’s intervention. RJM reiterated the current bal-
ance and requested attorney Paer to contact the office to dis-
cuss the matter.
Apparently taking every precaution to comply with the Act,
RJM included in its letter, as it did in its earlier letters to
Guerrero, the statement “This is an attempt to collect a debt.
Any information obtained will be used for that purpose.” This
language is required by the Act in all initial communications
with a consumer, see 15 U.S.C. § 1692e(11) — the failure to
include it is a violation. While it is true that § 1692e(11)
requires in subsequent communications only a statement that
GUERRERO v. RJM ACQUISITIONS 10337
the “communication is from a debt collector,” we cannot con-
clude that RJM continued to collect a debt in violation of the
Act merely because in attempting to comply with the Act it
included in a letter to a debtor’s counsel a statement the Act
generally requires. Moreover, the word “this,” in RJM’s dis-
closure, without more, does not necessarily mean “this letter.”
“This” can also mean “this initiative,” which began with the
earlier letters to Guerrero. No further communications
between RJM and Guerrero or RJM and attorney Paer
occurred.
Six months later, in January of 2003, having yet to receive
full verification of the alleged debt, Guerrero filed his com-
plaint in the district court, alleging that RJM violated the Act
and Hawaii consumer protection law. Later that year, RJM
filed a motion for judgment on the pleadings, and Guerrero
filed a motion for summary judgment. The protracted legal
battle was on. In January of 2004, after extensive briefing on
the motions and an unnecessarily antagonistic discovery pro-
cess, the district court issued an order vacating the hearing
date set for the motions and stating it would decide the
motions without a hearing. In early February, the district court
denied Guerrero’s motion for summary judgment and granted
RJM’s motion for judgment on the pleadings, subject to a
grant of leave to Guerrero to file an amended complaint. A lit-
tle over a week later, Guerrero filed a first amended com-
plaint, stating the same general allegations as the original
complaint but alleging additional facts and identifying spe-
cific provisions of the Act.
In March of 2004, RJM filed its motion to dismiss Guerre-
ro’s first amended complaint, arguing inter alia that Guerre-
ro’s claims in the amended complaint did not relate back to
his original complaint, and therefore his claims were barred
by the Act’s one-year statute of limitations. In mid-April,
Guerrero filed another motion for summary judgment. Two
weeks later RJM filed a cross motion for summary judgment.
In the months following these filings, both parties briefed the
10338 GUERRERO v. RJM ACQUISITIONS
issues extensively. The amount of briefing throughout this
case, coupled with a combative discovery process, resulted in
what Judge Gillmor, at the hearing on the motions, referred to
as an amount of lawyering disproportionate to the issues
involved.
In July of 2004, the district court entered an order denying
RJM’s motion to dismiss and granting in part and denying in
part the parties’ summary judgment motions. Judgment was
entered in December, awarding Guerrero $2,545.00 in actual
and statutory damages plus reasonable attorneys’ fees and
costs. A week later, Guerrero filed a motion for award of
attorneys’ fees and a memorandum in support of the motion.
RJM filed a memorandum opposing it. The district court
referred the motion to a magistrate judge who, as special mas-
ter, prepared a report on the motion for attorneys’ fees, which
the district court adopted in a June 2005 order awarding Guer-
rero $45,237.21 in attorneys’ fees.
III
Whether an amended pleading relates back to an original
pleading is a question of law, and is therefore reviewed de
novo. Oja v. U.S. Army Corps of Eng’rs, 440 F.3d 1122, 1127
(9th Cir. 2006) (“We . . . review de novo the district court’s
application of the Federal Rules of Civil Procedure, including
Rule 15(c)’s relation back doctrine.”). A district court’s ruling
on a motion to dismiss is reviewed de novo. Decker v. Advan-
tage Fund, Ltd., 362 F.3d 593, 595-96 (9th Cir. 2004). We
review de novo a district court’s interpretation of the Act, and
a district court’s ruling on cross motions for summary judg-
ment. Romine v. Diversified Collection Serv., Inc., 155 F.3d
1142, 1145 (9th Cir. 1998); Slenk v. Transworld Sys., Inc.,
236 F.3d 1072, 1074 (9th Cir. 2001). In the context of claims
brought under the Act, we review a district court’s denial of
attorneys’ fees to a debt collector under two standards of
review. The district court’s finding on the issue of bad faith
and harassment is reviewed for clear error; the district court’s
GUERRERO v. RJM ACQUISITIONS 10339
ultimate denial is reviewed for an abuse of discretion. Swan-
son v. S. Oregon Credit Serv., Inc., 869 F.2d 1222, 1229 (9th
Cir. 1989).
A.
[1] An amendment of a pleading relates back to the date of
the original pleading when the claim or defense asserted in the
amended pleading arose out of the conduct, transaction, or
occurrence set forth or attempted to be set forth in the original
pleading. Fed. R. Civ. P. 15(c)(2). The district court con-
cluded that the claims asserted in both of Guerrero’s com-
plaints arose out of the same underlying transaction; namely,
RJM’s attempt to collect a debt Guerrero allegedly owed.
RJM argues that the claims Guerrero raised in his first
amended complaint did not arise from the same conduct,
transaction, or occurrence set forth in the original complaint.
To support this contention, RJM cites to SEC v. Seaboard
Corp., 677 F.2d 1301, 1314 (9th Cir. 1982), which identified
the basic inquiry in a relation back issue as “whether the
opposing party has been put on notice about the claim or
defense raised in the amended pleading.” RJM argues that
because the amended complaint mentioned specifically, for
the first time, the June 14 letter RJM sent to counsel, the fac-
tual allegations in the original complaint provided “absolutely
no notice of those claims raised for the first time” in the
amended complaint.
[2] RJM’s reliance on Seaboard Corp. is misplaced. Unlike
Guerrero’s amended complaint, the amended pleading in Sea-
board Corp. added a new cause of action. 677 F.2d at 1314.
It added, to a pleading alleging illegal market manipulation,
a claim alleging illegal misrepresentation in a document. Id.Guerrero’s original and first amended complaints alleged vio-
lations of the Act and Hawaii consumer protection law. While
the amended complaint added the specific facts involving the
June 14 letter, and was more specific than the original in iden-
10340 GUERRERO v. RJM ACQUISITIONS
tifying provisions of the Act, the claims it asserted arose out
of the same conduct, transaction, or occurrence the district
court identified; namely, RJM’s attempt to collect a debt from
Guerrero.
[3] RJM’s argument is further undermined by the policy the
rules governing amendments to pleadings is meant to effectu-
ate. In Hurn v. Retirement Fund Trust, 648 F.2d 1252, 1254
(9th Cir. 1981), we noted “that the Supreme Court has
instructed the lower federal courts to heed carefully the com-
mand of Rule 15(a), F.R.Civ.P., by freely granting leave to
amend when justice so requires.” (internal quotes and cita-
tions omitted). Nothing in the record suggests the district
court’s decision to allow Guerrero to amend his complaint,
and its conclusion that the amended complaint related back to
the original, resulted in injustice to RJM. RJM’s argument
rests on an exaggerated interpretation of the rules of civil pro-
cedure and Ninth Circuit precedent. The district court con-
cluded correctly that Guerrero’s amended complaint related
back to the original. We therefore proceed to evaluate the
merits of the district court’s rulings.
B.
[4] The district court agreed with Guerrero that RJM vio-
lated the Act when it sent two supposedly confusing letters to
him in an attempt to collect one debt. The district court con-
strued this claim as alleging violations of §§ 1692d, 1692e,
and/or 1692f. These provisions of the Act prohibit debt col-
lectors from, respectively, using harassing or abusive collec-
tion methods, making false or misleading representations, and
employing unfair practices. The principle governing the Ninth
Circuit’s evaluation of claims under these provisions of the
Act is set forth in Swanson: If the least sophisticated debtor
would “likely be misled” by a communication from a debt
collector, the debt collector has violated the Act. 869 F.2d at
1225. The district court observed that neither letter contained
a statement indicating it was a copy of an original notice sent
GUERRERO v. RJM ACQUISITIONS 10341
to a separate address, and concluded a least sophisticated
debtor likely would have been confused and would believe
that he was being dunned for two distinct accounts. We
respectfully disagree.
[5] As an initial matter, we note that RJM suggests incor-
rectly that the least sophisticated debtor standard’s application
is limited to claims arising under §§ 1692g and 1692e(5) of
the Act. The Ninth Circuit has applied the standard to other
sections as well. See, e.g., Clark v. Capital Credit & Collec-
tion Serv., 460 F.3d 1162, 1171 (9th Cir. 2006) (applying the
standard to section 1692c); see also Wade v. Regional Credit
Ass’n, 87 F.3d 1098, 1099-1100 (9th Cir. 1996) (applying the
standard to sections 1692e(10) and 1692f). Nonetheless, we
agree with RJM that sending the two letters does not amount
to a violation of the Act, because even the least sophisticated
debtor would understand that this collection effort was aimed
at one, and not two, delinquent accounts.
[6] First and foremost, the letters were sent to the two
addresses that Guerrero gave the original creditor. The same
social security identifier appeared on each. Each letter indi-
cated a balance identical to the other, each owed to the same
original creditor, Shell Oil Corp. The account and file identifi-
ers were identical, except for the designation “A” on the first
letter, and “B” on the second. Each letter showed the same
“Last Payment Date.” We find untenable Guerrero’s assertion
that the letters were sufficiently confusing so as to mislead the
least sophisticated debtor into believing RJM was attempting
to collect on two accounts. RJM was attempting to collect on
one account, as the identical balance amounts, original credi-
tor identification, date of last payment, and virtually identical
account and file numbers indicated. In addition, the June 11,
2002 letter from Citibank to Guerrero in response to the
inquiry suggests that Guerrero recognized the delinquent
account at issue. We conclude with no doubt that RJM did not
violate § 1692g(a) under the “least sophisticated debtor” stan-
dard, and therefore reverse the district court on this issue.
10342 GUERRERO v. RJM ACQUISITIONS
C.
[7] Section 1692g(b) of the Act requires a debt collector,
who receives from a consumer written notice disputing a debt,
to cease collection of the debt directly from the consumer
until it has obtained either verification of the debt or a copy
of a judgment and provided it to the consumer. Section 1692e
prohibits a debt collector from using false, deceptive, or mis-
leading means to collect a debt. The district court concluded
that the June 14 letter RJM faxed to Guerrero’s counsel was
a prohibited collection effort in violation of both these provi-
sions. We respectfully disagree, and hold that communica-
tions directed solely to a debtor’s attorney are not actionable
under the Act. Therefore, we hold that the responsive letter to
counsel, and not to his client — “the consumer” — was not
a prohibited collection effort and did not violate §§ 1692g(b)
or 1692e.
A consumer and his attorney are not one and the same for
purposes of the Act. They are legally distinct entities, and the
Act consequently treats them as such. For example, a debt
collector who knows that a consumer has retained counsel
regarding the subject debt may contact counsel, but may not
generally contact the consumer directly, unless the attorney
gives his consent.2 See 15 U.S.C. § 1692c(a)(2). Subject to
certain exceptions, a debt collector may not communicate in
connection with a debt with “any person other than the con-
sumer, his attorney, a consumer reporting agency . . . , the
creditor, the attorney of the creditor, or the attorney of the
debt collector.” 15 U.S.C. § 1692c(b) (emphasis added). And
“consumer” is defined broadly in § 1692c to include “the con-
sumer’s spouse, parent (if the consumer is a minor), guardian,
executor, or administrator.” 15 U.S.C. § 1692c(d). Notably
2
Similarly, when a debt collector knows that a consumer has retained
counsel with regard to the subject debt, he may not generally contact any-
one other than that attorney to determine the consumer’s whereabouts. 15
U.S.C. § 1692b(6).
GUERRERO v. RJM ACQUISITIONS 10343
absent from this list of relatives and fiduciaries sharing in
common the identity of “consumer” is a consumer’s attorney.
[8] The statute as a whole thus suggests a congressional
understanding that, when it comes to debt collection matters,
lawyers and their debtor clients will be treated differently. See
U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508
U.S. 439, 455 (1993) (“In expounding a statute, we must not
be guided by a single sentence or member of a sentence, but
look to the provisions of the whole law, and to its object and
policy.”) (quoting United States v. Heirs of Boisdore, 49 U.S.
(8 How.) 113, 122 (1850)). Specifically, it appears that Con-
gress viewed attorneys as intermediaries able to bear the brunt
of overreaching debt collection practices from which debtors
and their loved ones should be protected. Section 1692c, for
instance, covers “[c]ommunications in connection with debt
collection.” In regulating the ability of debt collectors to com-
mence such communications, the Act is plainly concerned
with harassment, deception, and other abuse.3 Accordingly,
Congress sought to protect not just debtors themselves from
illegal communications, but also others who would be vulner-
able to the more sinister practices employed in the debt col-
lection industry. Section 1692c(d), as explained above, thus
defines “consumer” broadly to include a range of the debtor’s
relatives and fiduciaries. The conspicuous absence of the
debtor’s attorney from that otherwise extensive list is telling.
It suggests that in approaching the debt collection problem,
Congress did not view attorneys as susceptible to the abuses
that spurred the need for the legislation to begin with, and that
Congress built that differentiation into the statute itself. See
Zaborac v. Phillips & Cohen Assocs., Ltd., 330 F. Supp. 2d
962, 967 (N.D. Ill. 2004).
Analyzing § 1692c(a)(2) leads to the same conclusion.
3
The Act notes the “abundant evidence of the use of abusive, deceptive,
and unfair debt collection practices by many debt collectors.” 15 U.S.C.
§ 1692(a).
10344 GUERRERO v. RJM ACQUISITIONS
Under that provision, a debt collector who knows how to con-
tact a debtor’s attorney must target all communications to the
attorney, and not to the debtor himself. The rationale behind
this rule is clear. Unsophisticated consumers are easily bullied
and misled. Trained attorneys are not.
[9] Turning to the provisions at issue here, the plain lan-
guage sheds pale light at best on the question of whether
RJM’s June 14, 2002 letter, targeted solely at a debtor’s attor-
ney, is actionable. Section 1692g(b) reads in relevant part:
Disputed debts. If the consumer notifies the debt col-
lector in writing within the thirty-day period
described in subsection (a) that the debt, or any por-
tion thereof, is disputed, or that the consumer
requests the name and address of the original credi-
tor, the debt collector shall cease collection of the
debt, or any disputed portion thereof, until the debt
collector obtains verification of the debt or a copy of
a judgment, or the name and address of the original
creditor, and a copy of such verification or judgment,
or name and address of the original creditor, is
mailed to the consumer by the debt collector.
RJM is charged with violating the command that it “cease col-
lection of the debt” when it mailed its June 14 letter to Attor-
ney Paer before verifying the debt. Thus, the crucial question
is whether “collection of the debt” can include efforts directed
exclusively to a debtor’s attorney, but not at the debtor him-
self. Section 1692g(b)’s repeated emphasis on the “consum-
er,” along with the Act’s clear distinction between consumer
and attorney, compel the conclusion that a collection effort
must be aimed directly to the consumer himself to be prohib-
ited by § 1692g(b).
[10] Section 1692e prohibits debt collectors from “us[ing]
any false, deceptive, or misleading representation or means in
connection with the collection of any debt.” We do not dis-
GUERRERO v. RJM ACQUISITIONS 10345
agree with the dissent that such prohibited representations or
means may take the form of a communication. But we hold
that communications directed only to a debtor’s attorney,4 and
unaccompanied by any threat to contact the debtor, are not
actionable under the Act.
D.
All but one published federal decision to have given rea-
soned consideration to the question has determined that com-
munications to a debtor’s attorney are not actionable under
the Act. See, e.g., Kropelnicki v. Siegel, 290 F.3d 118, 127-28
(2d Cir. 2002); Diesi v. Shapiro, 330 F. Supp. 2d 1002, 1004
(C.D. Ill. 2004); Zaborac, 330 F. Supp. 2d at 966-67; Tromba
v. M.R.S. Assocs., Inc., 323 F. Supp. 2d 424, 428 (E.D.N.Y.
2004); but see Sayyed v. Wolpoff & Abramson, 485 F.3d 226,
232-33 (4th Cir. 2007). At least six unpublished district court
opinions have come to the same conclusion.5
In Kropelnicki, debt collectors had allegedly made mislead-
ing statements to a debtor’s attorney about when, if ever, they
might file suit in state court to collect on the debt. 290 F.3d
at 127. Plaintiffs argued that these misleading statements vio-
lated 15 U.S.C. § 1692e, a provision also at issue here. Id. The
Second Circuit ultimately dismissed the action for lack of
subject matter jurisdiction, id. at 129, but the panel first
addressed the underlying merits of the plaintiff’s claim.
4
Our holding applies where the debtor is represented by an attorney and
the communication is directed only to that attorney. A debt collector is not
insulated from liability under the Act merely because a debtor also hap-
pens to be an attorney.
5
See, e.g., Captain v. ARS Nat’l Servs. of N. Am., 2006 U.S. Dist.
LEXIS 47796, at *9 (S.D. Ind. 2006); Lauer v. Mason, Silver, Wenk &
Mishkin, LLC, 2006 U.S. Dist. LEXIS 20080, at *6 (N.D. Ill. 2006); Hill
v. Mutual Hospital Service, Inc., 2005 U.S. Dist. LEXIS 34507, at *4
(S.D. Ind. 2005); Young v. Manley, 2000 U.S. Dist. LEXIS 13035, at *3
(N.D. Ill. 2000); Phillips v. N. Am. Capital Corp., 1999 U.S. Dist. LEXIS
7000, at *7 (N.D. Ill. 1999); Ringer v. Credit Bureau, Inc., 1983 U.S. Dist.
LEXIS 20346, at *3-*4 (D. Ore. 1983).
10346 GUERRERO v. RJM ACQUISITIONS
The court expressed its “grave reservations about conclud-
ing that this sort of claim is actionable under the FDCPA . . . .
[A]lleged misrepresentations to attorneys for putative debtors
cannot constitute violations of the FDCPA.” Id. at 127(emphasis in original). Noting the Act’s underlying policy of
“protect[ing] consumers from deceptive or harassing actions
taken by debt collectors,” the panel came to the sensible con-
clusion that when “an attorney is interposed as an intermedi-
ary between a debt collector and a consumer, we assume the
attorney, rather than the FDCPA, will protect the consumer
from a debt collector’s fraudulent or harassing behavior.” Id.
at 127-28.
Several other federal courts have confronted the issue
squarely and have reached the same conclusion. In Zaborac,
for example, a consumer disputed a debt and requested verifi-
cation, and the debt collector responded by “plac[ing] an
immediate hold” on all collection efforts pending verification
of the debt. 330 F. Supp. 2d at 965. Counsel for the consumer
then contacted the debt collector to alert it that the consumer
might file for bankruptcy, at which point the consumer’s
counsel and the debt collector attempted to negotiate a settle-
ment. Id. The consumer filed suit, alleging that the settlement
negotiations with his attorney before verification violated
§ 1692g(b). Id. at 966.
In a persuasive opinion, the district court held that state-
ments made to a debtor’s attorney are not actionable under
§ 1692g(b). Id. (“While the statute commands a debt collector
to cease demanding payment from the consumer until a
requested validation is obtained, its language is certainly not
expansive enough to create a ban on all communications
between a consumer’s lawyer and a debt collector.”) (empha-
sis in original). The court noted that § 1692g(b) “speak[s]
solely of the consumer and the debt collector,” id., while other
provisions in the Act explicitly single out a consumer’s attor-
ney, id. at 967. And, like the Second Circuit in Kropelnicki,
the Zaborac court focused on the underlying purposes served
GUERRERO v. RJM ACQUISITIONS 10347
by the Act, finding they would be ill-served by applying the
Act’s strictures to communications with a debtor’s counsel.
Id. at 966-67.6
The dissent cites two types of cases for support: cases that
do not actually analyze the issue we must now decide, and
cases that erroneously rely on those cases for their implicit
assumptions. In Heintz v. Jenkins, the Supreme Court was
concerned with a single question: “The issue before us is
whether the term ‘debt collector’ in the [Act] applies to a law-
yer who regularly, through litigation, tries to collect consumer
debts.” 514 U.S. 291, 292 (1995) (internal quotation marks
and emphasis omitted). The offending communication in that
case happened to be sent to a debtor’s counsel, id. at 293, but
the question on review was the entirely different matter of
whether a law firm engaged in collecting a debt is a debt col-
lector for purposes of the Act. The identity of the recipient
was mentioned in passing; neither the Court nor the parties7
addressed the issue now before us. We are not required to fol-
low what amounts to, at most, an implicit assumption,
because “[s]uch unstated assumptions on non-litigated issues
are not precedential holdings binding future decisions.” Saka-
moto v. Duty Free Shoppers, Ltd., 764 F.2d 1285, 1288 (9th
Cir. 1985); see also Brecht v. Abrahamson, 507 U.S. 619,
630-31 (1993) (holding that stare decisis is not applicable
6
The dissent’s claim that Zaborac’s reasoning is limited to § 1692g(b),
and irrelevant to § 1692e, is off the mark. The relevant portion of Zaborac
arose under § 1692g(b), but its reasoning is broader than that, reaching to
the Act as a whole. Indeed, the court cited favorably to Kropelnicki, which
arose under § 1692e, for the proposition that a consumer’s attorney serves
as “an intermediary between the debt collector and the consumer.” 330 F.
Supp. 2d at 967 n.5; see also Tromba, 323 F. Supp. 2d at 427-28 (dismiss-
ing claim brought under § 1692e because communications to a debtor’s
attorney are not actionable under the Act).
7
Heintz’s Petition for Certiorari sought review of only one question: “Is
an attorney engaged solely to prosecute litigation against a consumer a
‘debt collector’ within the meaning of the [Act]?” Petition for Writ of Cer-
tiorari, Heintz, 514 U.S. 291 (No. 94-367).
10348 GUERRERO v. RJM ACQUISITIONS
unless the issue was “squarely addressed” in a prior decision);
Webster v. Fall, 266 U.S. 507, 511 (1925) (“Questions which
merely lurk in the record, neither brought to the attention of
the court nor ruled upon, are not to be considered as having
been so decided as to constitute precedents.”); Captain, 2006
U.S. Dist. LEXIS 47796, at *10 (“The issue presented here
did not arise [in Heintz]. Neither [the Supreme Court nor the
Seventh Circuit’s Heintz] opinion should be treated as binding
authority on an issue that did not arise and was not addressed.”).8
The dissent also relies upon Sayyed, which held that com-
munications sent to a debtor’s attorney are covered by the
Act. 485 F.3d at 232-33. But the Fourth Circuit’s decision in
Sayyed, which did not even acknowledge the great weight of
authority holding to the contrary, relied on the implicit
assumption by the Supreme Court in Heintz, which we find
inappropriate for the reasons just discussed.
Moreover, Sayyed found support for its position in
§ 1692c(a)(2), which, with limited exceptions, requires a debt
collector who knows that a debtor is represented by an attor-
ney to communicate only with that attorney. That provision
cuts in the opposite direction, however, because it demon-
strates that the Act contemplates different roles for, and dif-
ferent treatment of, attorneys and their debtor clients. Section
1692c(a)(2) actually reinforces our view that Congress treated
attorneys as intermediaries between debtors and debt collec-
tors, and that a debtor’s attorney does not require the same
protections as a debtor himself.
8
Similarly, in Dikeman v. National Educators, Inc., another case the dis-
sent relies upon, the Tenth Circuit bypassed the threshold question of
whether communications sent only to a debtor’s attorney are actionable
and jumped instead to consider what an attorney might find misleading.
81 F.3d 949, 953-54 (10th Cir. 1996).
GUERRERO v. RJM ACQUISITIONS 10349
E.
The purpose of the FDCPA is to protect vulnerable and
unsophisticated debtors from abuse, harassment, and decep-
tive collection practices. See S. Rep. 95-389, at 2, 4 (1977),
as reprinted in 1977 U.S.C.C.A.N. 1695; Clark v. Capital
Credit & Collection Servs., Inc., 460 F.3d 1162, 1171 (9th
Cir. 2006) (“[T]he FDCPA protects all consumers, the gull-
ible as well as the shrewd . . . the ignorant, the unthinking and
the credulous.”) (quoting Clomon v. Jackson, 988 F.2d 1314,
1318-19 (2d Cir. 1993)).
The Act’s purposes are not served by applying its strictures
to communications sent only to a debtor’s attorney, particu-
larly in the context of settlement negotiations. Congress was
concerned with disruptive, threatening, and dishonest tactics.
The Senate Report accompanying the Act cites practices such
as “threats of violence, telephone calls at unreasonable hours
[and] misrepresentation of a consumer’s legal rights.” S. Rep.
95-389, at 2. In other words, Congress seems to have contem-
plated the type of actions that would intimidate unsophisti-
cated individuals and which, in the words of the Seventh
Circuit, “would likely disrupt a debtor’s life.” Pettit v.
Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057,
1059 (7th Cir. 2000).
When an individual is represented by counsel who fields all
communications relevant to the debt collection, these con-
cerns quickly evaporate. Attorneys possess exactly the degree
of sophistication and legal wherewithal that individual debtors
do not. See Kropelnicki, 290 F.3d at 127-28 (when “an attor-
ney is interposed as an intermediary between a debt collector
and a consumer, we assume the attorney, rather than the
FDCPA, will protect the consumer from a debt collector’s
fraudulent or harassing behavior.”).
The dissent overstates the scope of our holding, asserting,
for example, that we hold that “a debtor is protected against
10350 GUERRERO v. RJM ACQUISITIONS
false, deceptive, or misleading representations only so long as
she does not retain an attorney.” Diss. Op. at 10362. But
under our rule, the Act applies to conduct aimed at a debtor
himself regardless of whether he has retained counsel. We
merely hold that when the debt collector ceases contact with
the debtor, and instead communicates exclusively with an
attorney hired to represent the debtor in the matter, the Act’s
strictures no longer apply to those communications.
F.
While no purpose of the Act is furthered by the unwar-
ranted extension of its prohibitions to communications tar-
geted exclusively at a debtor’s attorney, the facts of this case
illustrate well how a contrary rule would actively frustrate
some of these objectives.
One purpose of the Act is to avoid “forc[ing] honest debt
collectors seeking a peaceful resolution of the debt to file suit
in order to resolve the debt — something that is clearly at
odds with the language and purpose of the FDCPA.” Clark,
460 F.3d at 1170 (quoting Lewis v. ACB Bus. Servs., 135 F.3d
389, 399 (6th Cir. 1998)). Congress in passing the Act sought
to encourage the prompt and amicable settlement of debts.
There is also, of course, the “strong judicial policy that favors
settlements” of disputes in general. Class Plaintiffs v. City of
Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992).9
Here, Attorney Paer sent RJM an incendiary letter alleging
violations of the Act and offering to settle RJM’s alleged vio-
lations for a lump-sum payment of $3,000 to Guerrero. The
letter further stated: “Please respond within [ten days] if you
are interested in resolving this matter without litigation. . . .
9
We do not, contrary to the dissent, hold that policy arguments favoring
settlement trump the provisions of the Act. Rather, we look to the Act’s
purposes and objectives because the statutory text and structure do not
offer a clear answer.
GUERRERO v. RJM ACQUISITIONS 10351
Send verification and other communication to this office and
not to Mr. Guerrero.” (emphasis added). Only at that point did
RJM contact Attorney Paer as requested, restating the amount
allegedly owed by Guerrero. Moreover, RJM enclosed a copy
of a letter from Citibank verifying the existence of the debt
and its sale to RJM. Then, instead of working toward resolv-
ing a rather small debt, counsel succeeded in morphing it into
a federal battle royale complete with attorneys’ fees far in
excess of the amount in controversy.
We can think of no better way to frustrate settlement
attempts than to adopt the rule urged by Guerrero, which here
would penalize a person attempting to pursue an outstanding
debt who did little more than respond to a threat by a debtor’s
attorney to file a lawsuit for violations and damages. This is
a perverse result that Congress could never have intended, and
its only effect can be to make debt collectors in this circuit
extremely reluctant to respond to any settlement negotiations
or offers made by attorneys on behalf of their clients, or, for
that matter, to extend unilaterally an offer of settlement to a
debtor’s attorney.
G.
Because we hold that the district court erred in concluding
that RJM continued collection efforts in violation of the Act,
we must address the district court’s conclusion that even if
RJM had ceased collection efforts, the Act nevertheless
required it to verify the alleged debt.
[11] The relevant provision of the Act, section 1692g(b),
states, “If the consumer notifies the collector in writing within
the thirty-day period . . . that the debt . . . is disputed . . . the
debt collector shall cease collection of the debt . . . until the
debt collector obtains verification of the debt or a copy of a
judgment[.]” (emphasis added). On this subject, the plain lan-
guage of the statute is clear. When a debt is disputed, collec-
tion efforts must stop until the debt is verified. Once the debt
10352 GUERRERO v. RJM ACQUISITIONS
is verified, collection efforts may continue. Nothing in the
provision suggests an independent obligation to verify a dis-
puted debt where the collector abandons all collection activity
with respect to the consumer.
[12] We agree with the Seventh Circuit’s interpretation of
this provision in Jang v. A.M. Miller & Assocs., 122 F.3d 480(7th Cir. 1997). In Jang, consumer plaintiffs claimed that
defendants, two debt collection agencies, violated the Act
because they never verified the alleged debts after plaintiffs
disputed them. Id. at 482. The Seventh Circuit, affirming the
district court’s grant of defendants’ motion to dismiss, noted
correctly that the Act “does not require debt collectors to actu-
ally provide validation. Rather, it requires that the debt collec-
tor cease all collection activity until it provides the requested
validation to the debtor.” Id.A collector, notified that a debt is disputed, thus has a
choice. As the Court in Jang put it, the collector “may provide
the requested validations and continue their [sic] debt collec-
tion activities, or [it] may cease all collection activities.” Id.at 483 (citing Smith v. Transworld Systems, Inc., 953 F.2d
1025, 1031 (6th Cir. 1992). It would make little sense to
impose an independent obligation to verify an alleged debt on
a collector who, for example, decides a disputed debt is not
worth the effort and chooses to close or sell the account. Or,
as the court in Jang noted, on a collector who, upon receiving
a dispute notice, realizes the consumer does not in fact owe
the debt and so abandons all costly collection efforts.
[13] Here, once attorney Paer notified RJM that Guerrero
disputed the debt, RJM ceased all collection efforts directed
at Guerrero, and instead responded as requested to Paer’s
demand letter. RJM was therefore under no obligation to ver-
ify the alleged debt at that time.
H.
[14] When defending against a claim under the Act, a debt
collector may recover attorneys’ fees and costs upon a district
GUERRERO v. RJM ACQUISITIONS 10353
court’s finding that the consumer brought the action in bad
faith and for purposes of harassment. See 15 U.S.C.
§ 1692k(a)(3). We are inclined to find Guerrero’s counsel’s
aggressive use of the Act unworthy of commendation, and are
skeptical of his claim that even he, an experienced consumer
protection attorney, found the two letters confusing and mis-
leading. Nevertheless, Guerrero’s argument that the letters
would mislead the least sophisticated debtor is minimally col-
orable. RJM offers no evidence, other than its conclusory
assertion that Guerrero’s claims were frivolous, to support a
finding that Guerrero’s claims were necessarily brought in
bad faith and with the purpose of harassing RJM. In view of
a lack of Ninth Circuit authority on these issues, the district
court did not clearly err in finding Guerrero brought his suit
in good faith, and did not abuse its discretion in denying RJM
attorneys’ fees.
[15] However, because we reverse the district court’s con-
clusion that RJM violated the Act, we hold that its award of
attorneys’ fees to Guerrero was in error.
IV
The Act was meant to shield debtors from abusive collec-
tion practices, but it was never intended to shift the balance
of power between debtors and creditors such that a debt col-
lector cannot work with a debtor’s attorney to settle claims
without exposing itself to liability out of proportion to the
debt allegedly owed. Nor was it intended as a sword to be
brandished by debtors who have retained counsel — the very
debtors least in need of the Act’s protections. RJM Acquisi-
tions did not violate the Act in its June 14 letter to Paer, or
in its original letters to Guerrero. Consequently, we
REVERSE and REMAND with instructions to vacate the
award of attorneys’ fees to Guerrero and to enter judgment on
both Counts I and II10 in favor of RJM Acquisitions.11
10
The merits of Count II, alleging violations of HRS § 480-2, depend on
our resolution of the merits of Count I, counsel for each party having stip-
ulated to the element of damages sustained as required by HRS § 480-2.
11
Guerrero’s request for attorneys’ fees on appeal is denied.
10354 GUERRERO v. RJM ACQUISITIONS
W. FLETCHER, concurring in part, dissenting in part:
I agree with much of the majority’s opinion. However, I
disagree with its conclusion that a communication between a
debt collector and a debtor’s attorney is not actionable as a
“false, deceptive, or misleading representation” under the Fair
Debt Collection Practices Act (“FDCPA” or “Act”). 15
U.S.C. § 1692e. I also disagree with its conclusion that the
letter sent by the debt collector in this case, RJM Acquisitions
LLC (“RJM”), to the debtor’s attorney was not an attempt to
collect a debt. See id. § 1692g(b). The majority’s conclusions
are inconsistent with the plain language of the statute, with
appellate case law interpreting that language, and with the
policy of the statute.
I. Factual Background
The factual background of this case is recounted in some
detail in the majority opinion. For purposes of this dissent,
only the following need be stated.
On May 20, 2002, RJM sent two nearly identical letters to
Kenneth Guerrero, at two separate addresses in Hawaii,
attempting to collect an asserted debt of $1,291.86. Guerrero
then contacted an attorney, who wrote a letter to RJM on June
10, 2002. The attorney’s letter requested payment of $3,000
to Guerrero, threatened litigation if that amount were not paid
within ten days, and requested verification of the debt. The
letter requested that RJM send the verification and other com-
munications to the attorney rather than to Guerrero.
RJM responded in a letter to Guerrero’s attorney on June
14, 2002. In its entirety, the body of RJM’s letter stated:
RJM Acquisitions LLC is in receipt of a recent fax
you sent dated June 10, 2002, concerning the above
referenced account. Please be advised that RJM
GUERRERO v. RJM ACQUISITIONS 10355
Acquisitions LLC has purchased this account from
Citibank (SD), N.A.
In response to your fax, please be guided by the
following. A Shell Oil account was opened August
12, 1993, in the name of Kenneth J. Guerrero, social
security # XXX-XX-XXXX. The last payment was
posted October 2, 1998.
We are in the process of complying with your
request to verify the above referenced account. Same
will be sent to you upon receipt.
RJM Acquisitions LLC respectfully maintains that
it has violated no laws. RJM Acquisitions LLC is not
a collection agency and therefore, not subject to the
Fair Debt Collection Practices Act. The only
attempted contact we had with your client is by our
letter dated May 18, 2002 [sic].
Additionally, enclosed please find relevant infor-
mation in response to your fax.
The current balance is $1,291.86. Please contact
this office to discuss this matter.
We have enclosed a postage paid return enve-
lope for your convenience.
(Emphasis in original.) At the bottom of its letter, below the
signature line and in the same typeface as the body of the let-
ter itself, RJM wrote, “This is an attempt to collect a debt.
Any information obtained will be used for that purpose.”
No other communications are at issue.
II. My Disagreements with the Majority
Congress passed the FDCPA in 1978 to respond to the
“widespread and serious national problem” of “debt collection
10356 GUERRERO v. RJM ACQUISITIONS
abuse.” S. Rep. No. 95-382, at 2, 4 (1977), as reprinted in
1977 U.S.C.C.A.N. 1695, 1696, 1698. Congress intended that
the FDCPA serve as a “remedial statute aimed at curbing
what Congress considered to be an industry-wide pattern of
and propensity towards abusing debtors.” Clark v. Capital
Credit & Collection Servs., Inc., 460 F.3d 1162, 1171 (9th
Cir. 2006).
According to the majority, whenever a debtor is repre-
sented by an attorney none of the protections of the FDCPA
protect the debtor against false, misleading, or abusive com-
munications by the debt collector, so long as the communica-
tions are directed to the attorney. The majority’s conclusion
is inconsistent with the purpose of the FDCPA. More to the
point, its conclusion is inconsistent with the plain statutory
text.
The FDCPA is a multi-part statute, with a number of provi-
sions regulating what a debt collector may do. Two provisions
specifically mention attorneys for debtors, specifying that if a
debtor retains an attorney a debt collector must communicate
with the attorney rather than the debtor except in narrowly
defined circumstances. 15 U.S.C. §§ 1692b(6), 1692c(a)(2).
Other provisions prohibit harassment or abuse, § 1692d; pro-
hibit “any false, deceptive, or misleading representation,”
§ 1692e; prohibit “unfair or unconscionable means” of col-
lecting debts, § 1692f; require that the debt collector “cease
collection of [a disputed] debt” during a requested verification
of the debt, § 1692g(b); require that any suit be brought in
specified venues, § 1692i; and prohibit the use of deceptive
forms, § 1692j.
Given these provisions, it is impossible to conclude that all
otherwise prohibited conduct is permitted merely because it is
directed at a debtor’s attorney. For example, § 1692d(1) pro-
hibits “[t]he use or threat of use of violence or other criminal
means to harm the physical person, reputation, or property of
any person.” Further, § 1692i(a) requires that a legal action to
GUERRERO v. RJM ACQUISITIONS 10357
enforce a debt be brought in the district in which the con-
sumer resides or signed the contract sued upon or, in the case
of a secured interest in real property, in the district in which
the property is located. It simply cannot be the case that such
things as threats of violence communicated through a debtor’s
attorney and suits in inconvenient forums are no longer for-
bidden by the FDCPA as soon as the debtor retains an attor-
ney.
There are two provisions of the FDCPA at issue in this case
— § 1692e, which forbids “any false, deceptive, or mislead-
ing representation,” and § 1692g(b), which requires cessation
of “collection of the debt” during verification of a disputed
debt. Even though the majority rejects Guerrero’s claims
under both sections, its analysis is based almost exclusively
on § 1692g(b) and on one district court case interpreting that
section. In my view, the majority errs in concluding that
§ 1692e provides no protection against false, deceptive, or
misleading representations to a debtor’s attorney. Indeed, I
think the majority would almost certainly abandon its conclu-
sion that § 1692e provides no such protection if it were to
analyze § 1692e on that section’s own terms. In my view, the
majority also errs in concluding that indirect collection efforts
aimed at a debtor’s attorney are not covered by the prohibition
against collection efforts pending verification of the disputed
debt under § 1692g(b). I discuss §§ 1692e and 1692g(b) in
turn.
A. “False, Deceptive, or Misleading” Statements under
§ 1692e
1. Coverage of § 1692e
For three reasons, I conclude that communications between
a debt collector and an attorney representing a debtor are cov-
ered by § 1692e.
First, the text of the FDCPA clearly requires that conclu-
sion. Section 1692e provides, “A debt collector may not use
10358 GUERRERO v. RJM ACQUISITIONS
any false, deceptive, or misleading representation or means in
connection with the collection of any debt.” For purposes of
the FDCPA, a “debt collector” is “any person who . . . regu-
larly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due.” 15 U.S.C.
§ 1692a(6) (emphasis added). A “representation” may be
made by means of a “communication.” See, e.g., id.
§ 1692e(8) (prohibiting “[c]ommunicating or threatening to
communicate to any person credit information which is
known . . . to be false”); id. § 1692e(9) (prohibiting “use or
distribution of any written communication which simulates or
is falsely represented to be [an official] document”); id.
§ 1692e(11) (prohibiting “failure to disclose in the initial . . .
communication with the consumer . . . that the debt collector
is attempting to collect a debt”). A “communication” is
defined as the “conveying of information regarding a debt
directly or indirectly to any person through any medium.” Id.
§ 1692a(2) (emphasis added).
These provisions make clear that the prohibition contained
in § 1692e against “any false, deceptive, or misleading repre-
sentation . . . in connection with the collection of any debt”
is not limited to representations made directly to debtors. By
its plain terms, § 1692e bars “any false, deceptive, or mislead-
ing representation,” whether it is made to the consumer or to
a third party, so long as the representation is made “in connec-
tion with the collection of a debt.” The majority’s assertion
that “communications directed only to a debtor’s attorney . . .
are not actionable under the Act,” Maj. Op. at 10345, is
impossible to square with the Act’s prohibition on such repre-
sentations when made “directly or indirectly to any person
through any medium.”
There is nothing in the text of the FDCPA to indicate that
attorneys representing debtors are excluded from the class of
third parties to whom a debt collector may not make a false,
deceptive, or misleading representation. To the contrary,
§ 1692c(a) specifically provides that, where a debtor is repre-
GUERRERO v. RJM ACQUISITIONS 10359
sented by an attorney, the debt collector shall direct all “com-
munication” to the attorney, absent permission to
communicate directly with the debtor. A proper reading of the
text therefore dictates that § 1692e, which regulates categori-
cally the contents of communications by the debt collector,
covers the “communication” to the debtor’s attorney
described in § 1692c(a)(2). See Gustafson v. Alloyd Co., Inc.,
513 U.S. 561 (1995) (“[T]he normal rule of statutory con-
struction [is] that identical words used in different parts of the
same act are intended to have the same meaning.”) (internal
quotation marks and citation omitted).
Second, the United States Supreme Court and two courts of
appeals have read § 1692e as applying to communications to
attorneys representing debtors. In Heintz v. Jenkins, 514 U.S.
291 (1995), the debtor, Darlene Jenkins, borrowed money
from a bank and then defaulted on the loan. The bank sued
Jenkins in state court to recover the debt. As part of an effort
to settle the suit, an attorney for the bank wrote a letter to Jen-
kins’s attorney. Jenkins then brought suit against the bank’s
attorney and his law firm, alleging that the letter to her attor-
ney was a “ ‘false representation of . . . the . . . amount . . .
of any debt’ ” in violation of § 1692e(2)(A). Heintz, 514 U.S.
at 293 (quoting 15 U.S.C. § 1692e(2)(A)) (alterations in origi-
nal). The defendants moved to dismiss under Federal Rule of
Civil Procedure 12(b)(6) for failure to state a claim, on the
ground that the FDCPA did not apply to a lawyer who
attempts to collect a debt through litigation. Id. at 294. The
Supreme Court unanimously affirmed the Seventh Circuit’s
reversal of the district court order granting the motion to dis-
miss, holding that “[t]he Act does apply to lawyers engaged
in litigation.” Id. In so doing, the Court assumed, quite cor-
rectly in my view, that a false representation sent to a debtor’s
attorney by a debt collector violates § 1692e(2)(A).
Further, in Dikeman v. National Educators, Inc., 81 F.3d
949 (10th Cir. 1996), an employee of a debt collector commu-
nicated with an attorney representing two debtors in an
10360 GUERRERO v. RJM ACQUISITIONS
attempt to collect overdue rent and other charges. Id. at 950.
The debtors sued the debt collector and several of its employ-
ees under the FDCPA, claiming that the communication was
a “ ‘false or misleading misrepresentation’ ” in violation of
§ 1692e(11). Id. at 951. The Tenth Circuit affirmed a jury ver-
dict in favor of the defendants, but not on the ground that a
communication to a debtor’s attorney is not covered by
§ 1692e. Rather, the court affirmed on the ground that the
communication was not false or misleading because the attor-
ney, as a sophisticated professional, would not have misun-
derstood it. Id. at 953-54.
Finally, in Sayyed v. Wolpoff & Abramson, 485 F.3d 226(4th Cir. 2007), the law firm of Wolpoff & Abramson
(“W&A”) sued Farid Sayyed in state court to collect a debt.
Id. at 228. Sayyed, in turn, sued W&A for violation of the
FDCPA, alleging, inter alia, that W&A violated
§ 1692e(2)(A) by falsely stating the amount of the debt. Id. at
229. W&A argued that § 1692e does not apply to communica-
tions to a debtor’s attorney. Id. at 232. The Fourth Circuit
squarely rejected that argument. Noting that the FDCPA both
contemplates communications with debtors’ attorneys and
defines “communication” expansively, the court concluded
that a false statement to a debtor’s attorney “plainly qualifies
as an indirect communication to the debtor.” Id. at 232-33. It
then wrote, “If the statute left any room for doubt about this
issue, Heintz resolved it. Heintz itself involved a communica-
tion from a debt collection attorney to debtor Darlene Jenkins’
counsel, not to Jenkins herself. . . . Thus, plainly, the FDCPA
covers communications to a debtor’s attorney.” Id. at 233.
The majority brushes these cases aside, relying instead on
dictum from one court of appeals case and on several district
court cases. The appellate case is Kropelnicki v. Siegel, 290
F.3d 118 (2d Cir. 2002), in which the Second Circuit declined
to entertain an FDCPA claim based on the Rooker-Feldman
doctrine. The court noted in dictum, without citation to either
Heintz or Dikeman, “Where an attorney is interposed as an
GUERRERO v. RJM ACQUISITIONS 10361
intermediary between a debt collector and a consumer, we
assume the attorney, rather than the FDCPA, will protect the
consumer from a debt collector’s fraudulent or harassing
behavior. However, this is not an issue on which we need to
rule today.” Id. at 128.
The only district court opinion discussed (as opposed to
string-cited) by the majority is Zaborac v. Phillips & Cohen
Assocs., Ltd., 330 F. Supp. 2d 962 (N.D. Ill. 2004). But the
issue in Zaborac was not whether communications from a
debt collector to a debtor’s attorney were covered by the
“false, deceptive, and misleading representation” provision of
§ 1692e. Rather, the issue was whether settlement negotia-
tions between the attorneys for the two sides while a debt was
being verified constituted “collection of the debt” within the
meaning of § 1692g(b). Id. at 966. The district court in
Zaborac held that the settlement negotiations in that case did
not constitute “collection” under § 1692g(b) and were thus
permitted while verification of the debt was still pending. Id.
at 966-67. But Zaborac’s holding on the meaning of “collec-
tion” under § 1692g(b) does not resolve the question whether
a debt collector is forbidden by § 1692e to make a “false,
deceptive, or misleading representation” to a debtor’s attor-
ney.
Third, if notwithstanding § 1692e debt collectors are free to
make false, deceptive, or misleading representations to debt-
ors’ attorneys, debtors are left vulnerable to the very abuses
that the FDCPA was intended to redress. For example,
assume that a debt collector sends to a debtor’s attorney false
documents purporting to verify a debt. In such a case, the
attorney might discover the truth and protect the debtor, but
she might not. Even if the attorney does discover the truth,
she will likely have spent time and money doing so. If
§ 1692e does not forbid sending false documents to the debt-
or’s attorney, the debtor will have to pay the attorney’s fees
and expenses out of his or her own pocket. On the other hand,
if § 1692e forbids such communications with the debtor’s
10362 GUERRERO v. RJM ACQUISITIONS
attorney, the debtor will be able to recover damages and attor-
ney’s fees. See 15 U.S.C. § 1692k(a)(1), (3).
Under the majority’s reading of § 1692e, a debtor is pro-
tected against false, deceptive, or misleading representations
only so long as she does not retain an attorney. As soon as an
attorney for the debtor enters the picture, the debt collector is
free to send false, deceptive, and misleading communications
to the debtor’s attorney without fear of any damage judgment
or award of attorney’s fees. That is, as soon as the attorney
enters the picture, the debtor rather than the debt collector will
have to bear the burden imposed by any such false, deceptive,
or misleading communications from the debt collector. Such
a result is manifestly contrary both to common sense and to
the policy underlying the FDCPA.
2. Application of § 1692e to Letter from RJM
For the foregoing reasons, I would hold that RJM’s June 14
letter to Guerrero’s attorney is covered by § 1692e. However,
I would not apply the least sophisticated debtor standard to
determine whether RJM’s representations to Guerrero’s attor-
ney were false, deceptive, or misleading. Rather, following
the Tenth Circuit’s decision in Dikeman, I would hold that the
standard of what constitutes a “false, deceptive, or misleading
representation” has a different application depending on
whether the communication is directed to the attorney or the
consumer.
In Dikeman, a debt collector attempting to collect a debt
contacted the attorney representing two debtors. When the
debt collector provided verification of the debt to the debtors’
attorney, it did not state that it was attempting to collect a debt
and that any information obtained would be used for that pur-
pose. The debtors sued the debt collector, alleging that the
omission of such a statement violated § 1692e(11) which (as
it then read) required that a debt collector “disclose clearly in
all communications made to collect a debt . . . that the debt
GUERRERO v. RJM ACQUISITIONS 10363
collector is attempting to collect a debt and that any informa-
tion obtained will be used for that purpose.” Dikeman, 81
F.3d at 951 (quoting 15 U.S.C. § 1692e(11) [1995]).
The Tenth Circuit held that the failure to provide such a
statement, in a communication to an attorney, did not violate
§ 1692e. In the court’s view, “the fact of the debt verification
and its content, viewed in context, was adequate to disclose
to an attorney hired to represent the debtor that the debt col-
lector was attempting to collect a debt and that any informa-
tion obtained would be used for that purpose.” Id. at 954. The
court explained:
The legal implications of communicating with a debt
collector would be especially within the professional
competence of a lawyer hired to represent a client’s
interests in the collection process, and the fact that
a communication is made to collect a debt is some-
thing that the lawyer’s professional expertise would
allow him or her to discern easily on facts such as
these.
Id. at 953.
I agree with the approach taken in Dikeman. It makes sense
to read the statute in a practical way, asking not whether the
communication is false, deceptive, or misleading in the
abstract, but whether it is so to the person to whom it is
addressed. A communication that is false, deceptive, or mis-
leading to a consumer may not be so to an attorney. Such an
approach both protects debtors and remains true to the statu-
tory text.
The passage in RJM’s June 14 letter to which Guerrero
objects is the sentence stating that RJM “is not a collection
agency and therefore, not subject to the Fair Debt Collection
Practices Act.” RJM’s statement that it is not a “collection
agency” is, in one sense, true. As the district court found,
10364 GUERRERO v. RJM ACQUISITIONS
RJM is “neither licensed nor registered as a collection agency
in the State of Hawaii.” But RJM’s legal conclusion that it
was “therefore” not a debt collector covered by the FDCPA
hardly follows.
If RJM’s statement had been made to Guerrero, I would
have no hesitation in concluding that it was “false, deceptive,
or misleading” within the meaning of § 1692e. But the state-
ment was made to Guerrero’s attorney rather than to him.
Given that RJM’s statement was made to a debtor’s attorney,
specifically hired because of his professional expertise in debt
collection matters, I would hold that the statement — as made
to the attorney — was not “false, deceptive, or misleading.”
It was not a statement that might have taken the attorney time
and money to evaluate and contest. Rather, it was a legal con-
tention that the attorney was able to evaluate and reject
quickly and easily. I would therefore hold that while RJM’s
communication to Guerrero’s attorney was covered under
§ 1692e, it did not violate that section.
B. Obligation to Verify Debt under § 1692g
Section 1692g(a)(4) provides that “[w]ithin five days after
the initial communication with a consumer in connection with
the collection of any debt, a debt collector shall” give the con-
sumer “written notice containing”
a statement that if the consumer notifies the debt col-
lector in writing within the thirty-day period that the
debt, or any portion thereof, is disputed, the debt col-
lector will obtain verification of the debt or a copy
of a judgment against the consumer and a copy of
such verification or judgment will be mailed to the
consumer by the debt collector[.]
Section 1692g(b) further requires
If the consumer notifies the debt collector in writing
within the thirty-day period described in subsection
GUERRERO v. RJM ACQUISITIONS 10365
(a) of this section that the debt, or any portion
thereof, is disputed . . . the debt collector shall cease
collection of the debt, or any disputed portion
thereof, until the debt collector obtains verification
of the debt or a copy of a judgment . . . and a copy
of such verification or judgment . . . is mailed to the
consumer by the debt collector. Collection activities
and communications that do not otherwise violate
this subchapter [Subchapter V. Debt Collection Prac-
tices] may continue during the 30-day period
referred to in subsection (a) of this section unless the
consumer has notified the debt collector in writing
that the debt, or any portion of the debt, is disputed
....
(Emphasis added.)
After receiving RJM’s two initial letters, Guerrero asked
for verification of the asserted debt in his attorney’s June 10
letter, in accordance with § 1692g(b). RJM responded in its
June 14 letter to Guerrero’s counsel, “We are in the process
of complying with your request to verify the above referenced
account. Same will be sent to you upon receipt.” RJM also
wrote, “the current balance is $1,291.86. Please contact this
office to discuss this matter. We have enclosed a postage
paid return envelope for your convenience.” (Emphasis in
original.) Finally, at the bottom of the letter, RJM wrote,
“This is an attempt to collect a debt. Any information
obtained will be used for that purpose.”
Guerrero contends that RJM had not verified the debt when
it wrote the June 14 letter, and that RJM was therefore obliged
under § 1692g(b) to “cease collection of the debt.” He con-
tends further that the June 14 letter was “collection of the
debt” within the meaning of § 1692g(b). The district court
agreed with Guerrero, but the majority reverses. According to
the majority, a settlement attempt is not “collection of [a]
debt” within the meaning of § 1692g(b) if the debtor is repre-
10366 GUERRERO v. RJM ACQUISITIONS
sented by an attorney. However, according to the majority, a
settlement attempt is “collection of [a] debt” if the debtor is
not represented.
I am somewhat sympathetic to the general policy concerns
expressed by the majority, and, indeed, am very sympathetic
to its concerns as they relate to the facts of this case. As a
general matter, there may be some sense in allowing two
attorneys — one representing the debt collector and the other
representing the debtor — to enter into settlement negotia-
tions while a debt is still being verified. In this particular case,
it is hard to like the aggressive stance and tactics of Guerre-
ro’s lawyer and hard to see the harm caused by RJM’s June
14 letter.
But policy concerns are not the same thing as statutory lan-
guage. The plain meaning of § 1692g is that any “collection
of the debt,” whether direct or indirect, is prohibited until the
debt has been verified. When a debt collector receives a
request under § 1692g(a) to verify a debt, it has two choices.
It may decide not to verify the debt and to abandon any
attempt to collect the debt. See Jang v. A.M. Miller & Assocs.,
122 F.3d 480, 483 (7th Cir. 1997) (debt collector gave up all
attempts to contact debtor and actually returned debtor’s file
to original creditor). Or it may decide to verify the debt in
order to pursue collection activities. But if it decides to verify
the debt, it must cease collection activity during the verifica-
tion process and resume collection activity only after the debt
has been verified. 15 U.S.C. § 1692g(b).
The majority refuses to read the statute as it is written.
According to the majority, indirect collection activity aimed
at a debtor’s attorney is permitted under § 1692g(b) while a
debt is being verified. Its opinion states that upon receipt of
Guerrero’s request for verification, RJM “ceased all direct
collection activity from Guerrero.” Maj. Op. at 10335
(emphasis added). The statute does not make such a distinc-
tion. The majority does not deny that RJM engaged in “col-
GUERRERO v. RJM ACQUISITIONS 10367
lection activity” in sending its June 14 letter to Guerrero’s
attorney, but it approves such activity because it is indirect
and aimed at the attorney rather than the debtor. But there is
nothing in the text of § 1692g(b) that prohibits “direct” collec-
tion but permits “indirect” collection. Nor is there anything in
the text that permits sending a “collection” letter to a debtor’s
attorney, even while forbidding sending an equivalent “collec-
tion” letter directly to an unrepresented debtor.
Although I can see policy reasons for writing the statute
differently, I would follow the statute as it is written. The fact
that the statute is written clearly is reason enough to follow
it. In addition, the Supreme Court in Heintz, surveying the
legislative history of the statute, observed that Congress had
considered and rejected alternative language that would have
immunized from FDCPA liability a debt collector’s lawyer’s
attempts “ ‘to contact third parties in order to facilitate settle-
ments.’ ” 514 U.S. at 297 (quoting H.R. Rep. No. 99-405, at
11 (1985), as reprinted in 1986 U.S.C.C.A.N. 1752, 1760).
The Court explained that Congress had declined to draw a line
in the FDCPA “between ‘legal’ activities and ‘debt collection’
activities.” Id.Finally, there are good policy reasons supporting the statute
as written. There is nothing particularly onerous about requir-
ing a debt collector to cease debt collection activities —
including attempts at settlement with the debtor’s attorney —
until the debt is verified. The standard for verification is not
very demanding. See, e.g., Clark, 460 F.3d at 1173-74;
Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999). In
most cases, the waiting period will not be long. In those cases
where the waiting period is extended because the debt is diffi-
cult to verify, that very difficulty is a reason to wait. Requir-
ing all collection efforts, including settlement offers, to cease
prior to verification helps to ensure that both parties have
accurate information about the claim being settled. See S.
Rep. No. 95-382, at 4 (1977), as reprinted in 1977
U.S.C.C.A.N. 1695, 1699 (verification is intended to “elimi-
10368 GUERRERO v. RJM ACQUISITIONS
nate the recurring problem of debt collectors dunning the
wrong person or attempting to collect debts which the con-
sumer has already paid”); Goswami v. Am. Collections Enter.,
Inc., 377 F.3d 488, 496 (5th Cir. 2004) (public interest in set-
tlement does not trump FDCPA provisions).
Section 1692g(b) provides a simple bright-line rule: All
“collection of the debt” must cease pending verification of the
debt. Full stop. There are sound policy reasons for having
such a bright-line rule. There is no necessity to distinguish
between cases in which the debtor is, or is not, represented by
counsel. There is no necessity to distinguish between bona
fide settlement negotiations and harassment, hardball tactics,
or threats of injury designed to coerce settlement. If verifica-
tion has been requested, all collection activity must cease
pending verification. The rule is easy to understand and easy
to follow.
In this case, it is undisputed that Guerrero properly
requested verification of the debt under § 1692g(a). In
response, RJM sent a letter on June 14 in which it stated that
it was in the process of obtaining verification, thus making
clear that as of the date of the letter, the obligation to cease
collection activities applied. In that same letter, RJM stated
that the “current balance” of the account was $1,291.86, the
same amount given in its two initial dunning letters to Guer-
rero; it stated that it was enclosing “a postage paid return
envelope for your convenience”; and it stated, “This is an
attempt to collect a debt.” RJM’s letter could hardly have
been clearer. It was trying to collect the asserted debt. One
can characterize the letter as an attempt to settle the debt, even
though that is not what the letter says. But that does not mat-
ter. Section 1692g(b) makes no exception for attempts at “set-
tlement,” and it forbids “collection of the debt, or any
disputed portion thereof” pending verification.
I would therefore hold that in sending its June 14 letter to
Guerrero, RJM violated § 1692g(b).
GUERRERO v. RJM ACQUISITIONS 10369
III. Attorney’s Fees
Section § 1692k(a) provides that “any debt collector who
fails to comply with any provision” shall pay the debtor “any
actual damage sustained,” “such additional damages as the
court may allow, but not exceeding $1,000,” and, “in the case
of any successful action to enforce the foregoing liability, the
costs of the action, together with a reasonable attorney’s fee
as determined by the court.” The district court here con-
cluded, “On the basis of the above findings, and particularly
the findings with respect to Defendant’s false and misleading
representations, . . . Plaintiff is entitled to statutory damages
of $1,000.00 for the FDCPA violations.” No other damages
were awarded to Guerrero. Based on Guerrero’s success in
winning statutory damages, the district court also awarded
him $43,428.00 in attorney’s fees and $1,809.21 in costs.
I concur in that portion of the majority’s opinion holding
that the two otherwise identical letters that RJM sent to Guer-
rero’s home and post office box addresses were not false,
deceptive, or misleading simply because the account and file
numbers listed on one letter ended with an “a” and those on
the other letter with a “b.” In my view, even the least sophisti-
cated debtor would realize that these letters referred only to
a single account due. I also agree with the majority, although
based on a different rationale, that RJM’s June 14 communi-
cation to Guerrero’s attorney did not violate § 1692e. In con-
trast to the majority, I would uphold the district court’s ruling
that RJM failed to cease collection activity pending verifica-
tion as required by § 1692g(b).
Because I would hold that Guerrero prevailed on his claim
that RJM violated § 1692g(b), I would also hold that he is eli-
gible for statutory damages, attorney’s fees, and costs under
§ 1692k(a). However, I would vacate the district court’s exist-
ing award of statutory damages, attorney’s fees, and costs and
remand for reconsideration consistent with the degree of suc-
cess Guerrero ultimately achieved. See, e.g., Zagorski v. Mid-
10370 GUERRERO v. RJM ACQUISITIONS
west Billing Servs., Inc., 128 F.3d 1164, 1166-67 (7th Cir.
1997) (per curiam); Carroll v. Wolpoff & Abramson, 53 F.3d
626, 630 (4th Cir. 1995).
Conclusion
Based upon the plain language of the FDCPA, the case law
interpreting the statute, and Congress’s underlying policy, I
would hold that communications or collection activities
directed at a debtor’s attorney are actionable under §§ 1692e
and 1692g. On the facts of this case, I would reverse the dis-
trict court’s holding that RJM violated § 1692e but affirm its
holding that RJM violated § 1692g(b).