NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 28 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
TRISHA SPRAYBERRY, No. 21-36000
Plaintiff-Appellant, D.C. No. 3:17-cv-00111-SB
v. MEMORANDUM* PORTFOLIO RECOVERY ASSOCIATES, LLC,
Defendant-Appellee.
TRISHA SPRAYBERRY, No. 21-36001
Plaintiff-Appellant, D.C. No. 3:17-cv-00112-SB
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC,
Appeal from the United States District Court for the District of Oregon Marco A. Hernandez, Chief District Judge, Presiding
Argued and Submitted June 14, 2023 Portland, Oregon
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: TALLMAN, RAWLINSON, and SUNG, Circuit Judges. Concurrence by Judge SUNG.
Trisha Sprayberry brought two putative class-action lawsuits—which we
consolidated for purposes of oral argument—against Portfolio Recovery Associates,
LLC (PRA) for violating the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.
§§ 1692–1692p. Sprayberry incurred debt on two store-branded credit cards, one
for Target (No. 21-36000) and one for Walmart (No. 21-36001). After Sprayberry
stopped making payments, PRA bought her debt from the banks which had extended
her credit under those credit card agreements. Starting in January 2016, PRA sent
Sprayberry two sets of collection letters. Sprayberry contends that by the time PRA
sent the first letters, the debts were time-barred under Oregon’s four-year statute of
limitations for the sale of goods. See OR. REV. STAT. § 72.7250(1). Sprayberry
argues the collection letters violated the FDCPA because they failed to disclose the
debts were time-barred.
PRA moved for summary judgment, contending that, because a six-year
statute of limitation applies for claims for an “account stated” under Oregon law, its
collection letters were sent within the statute of limitations. Alternatively, PRA
argued it was entitled to summary judgment because it had conclusively met the
elements of the “bona fide error” exception to FDCPA liability. See 15 U.S.C. §
1692k(c). The district court held that the bona fide error defense applied and granted
summary judgment to PRA. Sprayberry now appeals. We have jurisdiction under
2 28 U.S.C. § 1291, and we affirm.
We need not consider whether Sprayberry’s debts were time-barred under
Oregon law because, even if they were, the district court correctly held that PRA is
entitled to summary judgment on the bona fide error defense. Our court recently
held that “mistakes about the time-barred status of a debt can be bona fide errors”
for purposes of the FDCPA. Kaiser v. Cascade Cap., LLC, 989 F.3d 1127, 1140
(9th Cir. 2021). And the undisputed facts in the record establish that PRA has
“show[n] by a preponderance of evidence that the violation was not intentional and
resulted from a bona fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.” 15 U.S.C. § 1692k(c); see also Urbina
v. Nat’l Bus. Factors Inc., 979 F.3d 758, 763 (9th Cir. 2020) (setting out the elements
of a bona fide error defense).
We reject Sprayberry’s argument that PRA’s violation was “intentional.”
Sprayberry contends it is not enough for PRA to show it did not intend to violate the
law—it must also show the underlying acts were unintentional. But as Sprayberry
seemingly recognizes, such a rule is in direct conflict with Kaiser, where we noted
that by “reliev[ing] liability for certain ‘unintentional’ violations,” of the FDCPA,
the bona fide error defense “function[s] similarly to a mens rea requirement.” 989
F.3d at 1139. The testimony of PRA’s legal counsel for Oregon establishes that he
was subjectively unaware of the possibility that a four-year statute of limitations
3 could apply to store-branded credit card accounts, and Sprayberry points to no
evidence contradicting his testimony. There is therefore no genuine dispute about
the fact that PRA did not intentionally violate the FDCPA.
We also disagree with Sprayberry’s claim that PRA failed to maintain
procedures reasonably adapted to avoid a statute of limitations error. As the district
court recognized, PRA’s counsel testified that he reviewed and analyzed statutes and
case law in Oregon to determine that a six-year statute of limitations applied in 2012,
that his analysis “would have gone through compliance and general counsel”
departments to double-check his research, and that PRA has a “systematic approach”
in place to determine whether the law regarding a statute of limitations had changed
over time. PRA also requires all employees to undergo regular compliance training
regarding statute of limitations issues and does not file collection lawsuits on
accounts that are within 90 days of expiration. These procedures were reasonably
adapted to avoid a statute of limitations error. See Urbina, 979 at 763 (describing
procedures that allowed a debt collector to successfully invoke the bona fide error
defense).
PRA was under no obligation to show it had considered Sprayberry’s specific
legal theory that store-branded credit card agreements are contracts for the sale of
goods. “To qualify for the bona fide error defense under the FDCPA, the debt
collector has an affirmative obligation to maintain procedures designed to avoid
4 discoverable errors.” Reichert v. Nat’l Credit Sys., Inc., 531 F.3d 1002, 1007 (9th
Cir. 2008) (emphasis added). As of January 2016, no court anywhere—much less
in Oregon—had held in a published opinion that a store-branded credit card
agreement qualifies as a contract for the sale of goods. Sprayberry points to Gray v.
Suttell & Associates, 123 F. Supp. 3d 1283 (E.D. Wash. 2015), but while the Gray
court observed that in “limited circumstances” store-branded credit cards
agreements “may” be considered a contract for the sale of goods, id. at 1291, it
ultimately granted summary judgment on other grounds, see id. at 1293-94, 1299.
Like the district court, we “cannot point to any additional research or analysis PRA
could have performed or any additional resources it could have invested to determine
which statute of limitations applied.”
Indeed, the legal question remains unresolved under Oregon law. Sprayberry
cannot show as a matter of fact that PRA even erred in concluding that the six-year
statute applied. As the district court properly noted, “the applicable statute of
limitations is . . . an unsettled question under Oregon law.”
AFFIRMED.
5 FILED Sprayberry v. Portfolio Recovery Associates, No. 21-36000 & No. 21-36001 AUG 28 2023 MOLLY C. DWYER, CLERK SUNG, Circuit Judge, concurring: U.S. COURT OF APPEALS
I agree with the majority that the district court’s decision should be affirmed,
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 28 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
TRISHA SPRAYBERRY, No. 21-36000
Plaintiff-Appellant, D.C. No. 3:17-cv-00111-SB
v. MEMORANDUM* PORTFOLIO RECOVERY ASSOCIATES, LLC,
Defendant-Appellee.
TRISHA SPRAYBERRY, No. 21-36001
Plaintiff-Appellant, D.C. No. 3:17-cv-00112-SB
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC,
Appeal from the United States District Court for the District of Oregon Marco A. Hernandez, Chief District Judge, Presiding
Argued and Submitted June 14, 2023 Portland, Oregon
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: TALLMAN, RAWLINSON, and SUNG, Circuit Judges. Concurrence by Judge SUNG.
Trisha Sprayberry brought two putative class-action lawsuits—which we
consolidated for purposes of oral argument—against Portfolio Recovery Associates,
LLC (PRA) for violating the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.
§§ 1692–1692p. Sprayberry incurred debt on two store-branded credit cards, one
for Target (No. 21-36000) and one for Walmart (No. 21-36001). After Sprayberry
stopped making payments, PRA bought her debt from the banks which had extended
her credit under those credit card agreements. Starting in January 2016, PRA sent
Sprayberry two sets of collection letters. Sprayberry contends that by the time PRA
sent the first letters, the debts were time-barred under Oregon’s four-year statute of
limitations for the sale of goods. See OR. REV. STAT. § 72.7250(1). Sprayberry
argues the collection letters violated the FDCPA because they failed to disclose the
debts were time-barred.
PRA moved for summary judgment, contending that, because a six-year
statute of limitation applies for claims for an “account stated” under Oregon law, its
collection letters were sent within the statute of limitations. Alternatively, PRA
argued it was entitled to summary judgment because it had conclusively met the
elements of the “bona fide error” exception to FDCPA liability. See 15 U.S.C. §
1692k(c). The district court held that the bona fide error defense applied and granted
summary judgment to PRA. Sprayberry now appeals. We have jurisdiction under
2 28 U.S.C. § 1291, and we affirm.
We need not consider whether Sprayberry’s debts were time-barred under
Oregon law because, even if they were, the district court correctly held that PRA is
entitled to summary judgment on the bona fide error defense. Our court recently
held that “mistakes about the time-barred status of a debt can be bona fide errors”
for purposes of the FDCPA. Kaiser v. Cascade Cap., LLC, 989 F.3d 1127, 1140
(9th Cir. 2021). And the undisputed facts in the record establish that PRA has
“show[n] by a preponderance of evidence that the violation was not intentional and
resulted from a bona fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.” 15 U.S.C. § 1692k(c); see also Urbina
v. Nat’l Bus. Factors Inc., 979 F.3d 758, 763 (9th Cir. 2020) (setting out the elements
of a bona fide error defense).
We reject Sprayberry’s argument that PRA’s violation was “intentional.”
Sprayberry contends it is not enough for PRA to show it did not intend to violate the
law—it must also show the underlying acts were unintentional. But as Sprayberry
seemingly recognizes, such a rule is in direct conflict with Kaiser, where we noted
that by “reliev[ing] liability for certain ‘unintentional’ violations,” of the FDCPA,
the bona fide error defense “function[s] similarly to a mens rea requirement.” 989
F.3d at 1139. The testimony of PRA’s legal counsel for Oregon establishes that he
was subjectively unaware of the possibility that a four-year statute of limitations
3 could apply to store-branded credit card accounts, and Sprayberry points to no
evidence contradicting his testimony. There is therefore no genuine dispute about
the fact that PRA did not intentionally violate the FDCPA.
We also disagree with Sprayberry’s claim that PRA failed to maintain
procedures reasonably adapted to avoid a statute of limitations error. As the district
court recognized, PRA’s counsel testified that he reviewed and analyzed statutes and
case law in Oregon to determine that a six-year statute of limitations applied in 2012,
that his analysis “would have gone through compliance and general counsel”
departments to double-check his research, and that PRA has a “systematic approach”
in place to determine whether the law regarding a statute of limitations had changed
over time. PRA also requires all employees to undergo regular compliance training
regarding statute of limitations issues and does not file collection lawsuits on
accounts that are within 90 days of expiration. These procedures were reasonably
adapted to avoid a statute of limitations error. See Urbina, 979 at 763 (describing
procedures that allowed a debt collector to successfully invoke the bona fide error
defense).
PRA was under no obligation to show it had considered Sprayberry’s specific
legal theory that store-branded credit card agreements are contracts for the sale of
goods. “To qualify for the bona fide error defense under the FDCPA, the debt
collector has an affirmative obligation to maintain procedures designed to avoid
4 discoverable errors.” Reichert v. Nat’l Credit Sys., Inc., 531 F.3d 1002, 1007 (9th
Cir. 2008) (emphasis added). As of January 2016, no court anywhere—much less
in Oregon—had held in a published opinion that a store-branded credit card
agreement qualifies as a contract for the sale of goods. Sprayberry points to Gray v.
Suttell & Associates, 123 F. Supp. 3d 1283 (E.D. Wash. 2015), but while the Gray
court observed that in “limited circumstances” store-branded credit cards
agreements “may” be considered a contract for the sale of goods, id. at 1291, it
ultimately granted summary judgment on other grounds, see id. at 1293-94, 1299.
Like the district court, we “cannot point to any additional research or analysis PRA
could have performed or any additional resources it could have invested to determine
which statute of limitations applied.”
Indeed, the legal question remains unresolved under Oregon law. Sprayberry
cannot show as a matter of fact that PRA even erred in concluding that the six-year
statute applied. As the district court properly noted, “the applicable statute of
limitations is . . . an unsettled question under Oregon law.”
AFFIRMED.
5 FILED Sprayberry v. Portfolio Recovery Associates, No. 21-36000 & No. 21-36001 AUG 28 2023 MOLLY C. DWYER, CLERK SUNG, Circuit Judge, concurring: U.S. COURT OF APPEALS
I agree with the majority that the district court’s decision should be affirmed,
but I write separately to explain how I reach that conclusion differently. In my
opinion, the district court erred in granting summary judgment to PRA pursuant to
the “bona fide error” defense. Even so, because it is reasonably predictable that the
Oregon Supreme Court would apply a six-year statute of limitations to PRA’s debt
collection claims against Sprayberry, I would affirm the district court’s grant of
summary judgment on that basis.
I agree with the majority that PRA’s violation was not intentional. I am not
convinced, however, that PRA carried its burden with respect to the bona fide error
defense. The bona fide error defense is an affirmative defense, and the debt
collector has the burden of proof. Reichert v. Nat’l Credit Sys., Inc., 531 F.3d
1002, 1006 (9th Cir. 2008). The debt collector must show by a preponderance of
the evidence that it maintained and actually implemented “procedures reasonably
adapted to avoid any such error.” Id.; 15 U.S.C. § 1692k(c). The bona fide error
defense typically arises when a debt collector makes a mistake of fact, not a
mistake of state law that is treated as a mistake of fact. We only recently held that a
mistake of state law can be treated as a mistake of fact, so there are not any Ninth
Circuit cases that apply the bona fide error affirmative defense to a mistake of state law. See Kaiser v. Cascade Cap., LLC, 989 F.3d 1127, 1140 (9th Cir. 2021).
The best guidance for applying the bona fide error defense to a mistake of
law is Johnson v. Riddle, 443 F.3d 723 (10th Cir. 2006). In Johnson v. Riddle, the
Tenth Circuit applied the same rigorous standard that we apply to conventional
mistakes of fact and held that the defendant was not entitled to the bona fide error
defense as a matter of law. Id. at 730. Even though the defendant’s attorney
conducted some legal research, the court denied summary judgment because a
reasonable trier of fact could find that the procedures were not rigorous enough to
avoid liability under the FDCPA. Id.
Applying the bona fide error standard here, I conclude that PRA did not
meet its burden of showing that it maintained “procedures reasonably adapted to
avoid” state statute of limitations errors like the one alleged here. 15 U.S.C. §
1692k(c). PRA’s counsel only broadly asserted that his analysis “would have gone
through compliance and general counsel” and that PRA has a “systematic
approach” to determining whether the applicable statutes of limitations change
over time. PRA’s counsel provided no evidence of his legal research nor any
details of the procedures used for either reviewing or updating his research on state
statutes of limitations. PRA also did not provide any evidence that it actually
implements the asserted review procedure. Such conclusory assertions do not
suffice to establish the bona fide error defense. See Reichert, 531 F.3d at 1007 (“If
2 the bona fide error defense is to have any meaning in the context of a strict liability
statute, then a showing of ‘procedures reasonably adapted to avoid any such error’
must require more than a mere assertion to that effect.”).
Even though I conclude PRA is not entitled to the “bona fide error” defense
as a matter of law, I would affirm the district court’s grant of summary judgment
on the alternate ground that it is reasonably predictable that the Oregon Supreme
Court would apply the six-year statute of limitations to PRA’s debt collection
claims against Sprayberry. In mixed transactions, Oregon courts analyze which
aspect of the transaction the legal claim is most closely related to. Chaney v. Fields
Chevrolet Co., 264 Or. 21, 25 (1972). Here, PRA’s debt collection actions against
Sprayberry are more closely related to Sprayberry’s credit agreements with third-
party financers than to Sprayberry’s use of that credit to purchase goods at the
retail stores themselves. Furthermore, because we recognize “Oregon’s preference
for interstate uniformity when interpreting the U.C.C.,” Kaiser, 989 F.3d at 1133, it
is unlikely that Oregon would join the only other state to adopt Sprayberry’s view.
See Midland Funding, LLC v. Thiel, 144 A.3d 72 (N.J. Super. Ct. App. Div. 2016).
I therefore would affirm the district court on the ground that the six-year statute of
limitations applies to PRA’s claims against Sprayberry.