Rahier v. Thunderbird Collection Specialists Incorporated

Opinion

WO

Wendy Rahier, No. CV-22-00141-TUC-JGZ

Plaintiff, ORDER

v.

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

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 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 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 to Rahier’s use of the CRRG.

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 For the foregoing reasons, the Court concludes that TCS is entitled to summary judgment as a matter of law. IT IS ORDERED: 1. Plaintiff’s Motion for Partial Summary Judgment (Doc. 22) is DENIED. 2. Defendant’s Motion for Summary Judgment (Doc. 24) is GRANTED. 3. Plaintiff's Counsel’s Motion to Withdraw (Doc. 20) is DENIED as moot. 4. The Clerk of Court must enter judgment accordingly and close its file in this action. Dated this 11th day of July, 2023. □ pod Soya ; Honorable Jennify ve Zfpps United States District Judge 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 prove a violation of the FDCPA, the Court does not consider this affirmative defense.

-6-