Chapter 3 Class Action Complaint Challenging False Threat of Foreclosure PL00Ch03

8/4/2019 Chapter 3 Class Action Complaint Challenging False Threat of Foreclosure PL00Ch03

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Chapter 3 Class Action Complaint Challenging False Thr eat

of Foreclosure

Edward A. Icove is a principal in the firm of Smith and Condeni Co., L.P.A.,Cleveland, Ohio. Mr. Icove was a VISTA attorney and legal services attorney with theCincinnati Legal Aid Society and Southeastern Ohio Legal Services. He has served asa Board Member and Vice-President of the Cleveland Legal Aid Society. He hashandled numerous individual and class consumer cases in both state and federalcourts. See, e.g., Barney v. Holzer Clinic, Inc., 110 F.3d 1207 (6th Cir. 1997) (ECOA);Smith v. Transworld Systems, Inc., 952 F.2d 1025 (6th Cir. 1992) (FDCPA, adopting the"least sophisticated" consumer standard in the Sixth Circuit); Shorts v. Palmer, 155F.R.D. 172 (S.D. Ohio 1994) (FDCPA); and Lewis v. Marlin, Clearinghouse No. 53021(S.D. Ohio 1999) (FDCPA). A Cleveland collection attorney recently complained thatEd was a "champion of the poor."

Mr. Icove was admitted to the Ohio Bar in 1977. His bar admissions include Ohio,the Northern and Southern Districts of Ohio, the Sixth Circuit Court of Appeals, and theUnited States Supreme Court. He is a member of various bar and other associations,including the Federal Bar Association and the National Association of ConsumerAdvocates, Ohio State Legal Services Association's and the Cleveland Legal AidSociety's Consumer Task Force, and NACA's FDCPA e-mail group.

This chapter contains a class action complaint challenging a collection attorney'sfalse threat of foreclosure on a home for a hospital bill. Under Ohio law, a lien on ahome for a hospital bill can be enforced only when the home is sold or transferred, soforeclosure is precluded. The complaint also includes claims that the defendant omittedthe notice required by 15 U.S.C. 1692e(11) regarding the debt collection purpose ofthe letters. SeeNational Consumer Law Center, Fair Debt Collection 5.5.7, 5.5.12,5.5.13 (4th ed. 2000).

The complaint ( 3.1) raises claims under both the Fair Debt Collection Practices Actand the Ohio UDAP statute. Since the statute of limitations is longer for the Ohio UDAPclaim, the complaint defines a larger class for that claim. Section 3.2 is a set ofrequests for admissions and interrogatories and 3.3 is a set of requests for productionof documents. Both focus on the facts necessary to establish liability and certify thecase as a class action. A motion for summary judgment on the FDCPA claims, asupporting brief, and a reply brief are included as 3.4, 3.5, and 3.6. The reply briefdeals extensively with a unique issue raised by the defendant: that the threat of

foreclosure was not an FDCPA violation because the state law prohibiting foreclosurefor hospital bills was unconstitutional.

The court declined to certify the class, but in a separate opinion, Lewis v. Marlin,Clearinghouse No. 53021 (S.D. Ohio 1999), ruled in favor of the plaintiffs on the meritsof the FDCPA claim. The court held that a threat of foreclosure was the clear import ofthe statements in the collection letters that the creditor's available remedies "includeforeclosure and sale of your home" and that the defendant would be "forced to proceedwith any and all of the remedies available" unless the debtor made payment


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arrangements within seven days. These threats of action that the defendant could nottake and did not intend to take violated the FDCPA. The falsity of the defendant's threatto foreclose was unaffected by his claim that the statute prohibiting foreclosure wasunconstitutional, since he had not challenged the constitutionality of the statute beforesending the threatening letters.

3.1 Complaint

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

KIRK DOUGLAS, and

ALICE DOUGLAS, and

AUSTIN POWERS,

Individually and on behalf of all others

similarly situated,

Plaintiffs,

against,

MICHAEL S. MARLIN and

COSHOCTON MEMORIAL

HOSPITAL,

Defendants.

CASE NO.

CLASS ACTION COMPLAINT: UNLAWFUL

DEBT PRACTICES

I. JURISDICTION

1. This Court has jurisdiction under the Federal Fair Debt Collection Practices Act

("FDCPA"), 15 U.S.C. 1692k, and pursuant to supplemental jurisdiction, 28 U.S.C. 1367.

II. INTRODUCTION

2. This action challenges unfair and deceptive collection practices and seeks statutory

remedies pursuant to the FDCPA, 15 U.S.C. 1692ket. seq. and the Ohio Consumer Sales

Practices Act ("OCSPA"), O.R.C. 1345.01 et. seq.

III. PARTIES

3. Plaintiffs Kirk Douglas, Alice Douglas, and Austin Powers are persons residing in

Coshocton County, Ohio, and are consumers as defined in 15 U.S.C. 1692a(3) and O.R.C.

1345.01(D).


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4. Defendant Michael S. Marlin ("Defendant Marlin") is an attorney licensed to practice

law in the State of Ohio, is a debt collector as defined in 15 U.S.C. 1692a(4), and is a

supplier as defined in O.R.C. 1345.01.

5. Defendant Coshocton Memorial Hospital is a supplier as defined in O.R.C.

1345.01(C).

IV. CLASS ALLEGATIONS

6. Plaintiffs bring this action individually, and pursuant to Federal Civil Rules 23(a) and

(b)(2) and/or (b)(3), 15 U.S.C. 1692k(a) and Ohio Rev. Code 1345.09(B), as a class

action. The class which Plaintiffs represent consists of all consumers who have or will receive

from Defendant Marlin a standard computer-generated letter (Exhibits "A" and "B" attached

hereto and incorporated herein by reference) to collect on judgments entered against them in

favor of Defendant Coshocton Memorial Hospital. The first subclass of plaintiffs is composed

of consumers who have or will receive the standard computer-generated letter from Defendant

Marlin since June 7, 1996 (Fair Debt Collection Practices Act). The second subclass of

plaintiffs is composed of consumers who have or will receive the standard computer-generated

letter from Defendant Marlin since June 7, 1995 (Ohio Consumer Sales Practices Act).

7. The members of the class are so numerous that joinder of all parties is impracticable.

At this time, this precise number cannot be determined. However, after preliminary

investigation, and upon information and belief, there appears to be over 160 members of the

class.

8. There are questions of law or fact common to the class, including whether the letters

violate 15 U.S.C. 1692g(e)(5), (10), and/or (11), and whether the Exhibits are deceptive,and what relief is appropriate.

9. The Plaintiffs claims are typical of the claims of the class members. Defendant Marlin

routinely issues the collection letters which, upon information and belief, are computer

generated.

10. The named Plaintiffs will fairly and adequately protect the interests of the class in that

they have a personal desire to vindicate the rights of the class and they have retained competent

counsel to represent the class.

11. The considerations of Federal Civil Rule 23(b)(2) support class certification because theDefendants and their agents have acted or refused to act on grounds generally applicable to the

class, thereby making appropriate final injunctive and declaratory relief with respect to the

class as a whole.

12. The considerations of Federal Civil Rule 23(b)(3) support class certification as (a) the

class members would generally not have an interest in controlling a separate action; (b) no

previous litigation has resolved any issues raised by this action; (c) a single forum is desirable;

and (d) a class action will not be too difficult to manage.


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V. FIRST CLAIM FOR RELIEF

13. On or about June 7, 1997, Defendant Marlin initiated communication with Plaintiffs,

Kirk and Alice Douglas, through the letter attached as Exhibit "A", and threatened foreclosure

and sale of their home, and/or attachment of their bank accounts unless they contacted

Defendant Marlin within seven (7) days from the date of the letter in order to make finalarrangements to pay the judgment.

14. On or about July 22, 1997, Defendant Marlin initiated communication with Plaintiff,

Austin Powers, through the letter attached as Exhibit "B", and threatened foreclosure and sale

of his home, and/or attachment of his bank accounts unless he contacted Defendant Marlin

within seven (7) days from the date of the letter in order to make final arrangements to pay the

judgment.

15. Ohio Rev. Code 2329.66(A)(1)(a) provides that after Defendants obtain a judgment,

they can file a lien upon the Plaintiffs property, but they are not entitled to enforce the lien

until the property has been sold or otherwise transferred by Plaintiffs (other than to a surviving

spouse or surviving minor child).

16. Contrary to the threats in Exhibits "A" and "B", Defendants have not taken any further

action to enforce the debts.

17. Defendant Marlin violated the FDCPA in connection with the collection of debts, in

several ways, including, but not limited to:

a. Threatening to take action that could not legally be taken or that was not intended to

be taken in violation of 15 U.S.C. 1692e(5).

b. Using false representations and deceptive means to collect or attempt to collect a

judgment in violation of 15 U.S.C. 1692e(10).

c. Failing to disclose in post-judgment collection letters that he is attempting to collect

a debt and that any information obtained will be used for that purpose in violation of 15

U.S.C. 1692e(11).

VI. SECOND CLAIM FOR RELIEF

18. At all times relevant herein, Defendant Marlin acted within the scope of his authority as

an agent for Defendant Coshocton Memorial Hospital, with its knowledge and consent.

19. The debts arise out of consumer transactions between the Plaintiffs and Defendant

Coshocton Memorial Hospital.

20. Defendants have knowingly committed unfair, deceptive and unconscionable acts

and/or practices in violation of O.R.C. 1345.02 and/or 1345.03.


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21. As a result of Defendants actions and inactions, Plaintiffs are entitled to relief as

provided for by O.R.C. 1345.09.

DEMAND FOR RELIEF

WHEREFORE, Plaintiffs demand judgment against Defendants as follows:

a. Enter an order that the FDCPA and CSPA claims shall be maintained as a class

action pursuant to Federal Rules of Civil Procedure 23(b)(2) and/or 23(b)(3).

b. Enter declaratory judgment in favor of Plaintiffs providing that Defendant Marlin

has violated the FDCPA and that Defendants have violated the CSPA.

c. Enter an injunction restraining Defendant Marlin from further violations of the

FDCPA and enter an injunction restraining Defendants from further violations of the

CSPA.

d. Enter a judgment against Defendant Marlin and in favor of the FDCPA subclass for

the maximum amount of statutory damages under 15 U.S.C. 1692k(a).

e. Enter a judgment against Defendants, jointly and severally, for the maximum relief

available under O.R.C. 1345.09.

f. Award Plaintiffs attorneys fees and costs.

g. Grant Plaintiffs any such other relief as is proper.

Respectfully submitted,

Attorney for Plaintiff

3.2 Requests For Admission



EASTERN DIVISION

KIRK DOUGLAS, et. al.,Plaintiffs,

v.

MICHAEL S. MARLIN, et. al.,

Defendants.

CASE NO.

PLAINTIFFS' FIRST SET OF

REQUESTS FOR ADMISSION

AND INTERROGATORY TO

DEFENDANT MICHAEL S. MARLIN


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REQUESTS FOR ADMISSION

Pursuant to Rule 36 of the Federal Rules of Civil Procedure, Plaintiffs submit the following

request for admissions to Defendant Michael S. Marlin to be answered in writing, under oath,

within thirty (30) days after service upon you. In answering this discovery, you must inquire

of your attorneys, agents, employees or other representatives, to ascertain and divulge anyinformation which is in their possession and control. These requirements mandate that you

review any documents that are relevant to each request for admission.

1. Liability depends upon the Court' s determination as to whether or not Defendant

Michael S. Marlin has violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692ket.

seq.

ANSWER:

2. Liability depends on the Court' s determination as to Consumer Sales Practices Act, Ohio

Rev. Code 1345.01 et. seq.

ANSWER:

3. Members of the class described in Paragraph 6 of the Complaint are so numerous that

joinder of all parties is impractical.

ANSWER:

4. The claims of the named Plaintiffs are typical of the claims of the class members.

ANSWER:

5. Plaintiffs have retained competent counsel to represent the class.

ANSWER:

6. If the Court finds that Defendant Michael S. Marlin has acted illegally then final

injunctive and declaratory relief would be appropriate with respect to the putative class as a

whole.

ANSWER:

7. No previous litigation has resolved any issues raised in this action.

ANSWER:

8. The transactions involving the putative class are defined in Ohio Rev. Code

1345.01(D).ANSWER:

9. Defendant Michael S. Marlin is a supplier as defined in Ohio Rev. Code 1345.01(C).

ANSWER:

10. This case is subject to the Ohio Consumer Sales Practices Act, Ohio Rev. Code

1345.01 et. seq.

ANSWER:


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11. This case is subject to the Fair Debt Collection Practices Act, 15 U.S.C.1692k, et.

seq.

ANSWER:

12. Exhibits "A" and "B" (attached to the Complaint) were used by Defendant Michael S.Marlin approximately ten times between 1995 and July, 1997.

ANSWER:

13. Defendant Michael S. Marlin used Exhibit "A" and "B" in an attempt to collect debts

from debtors who owned real property but had no garnishable wages.

ANSWER:

14. Exhibits "A" and "B" are authentic.

ANSWER:

15. Exhibits "A" and "B" are admissible in evidence.

ANSWER:

16. Defendant Michael S. Marlin has a pattern or practice of using Exhibits "A" and "B" in

consumer transactions.

ANSWER:

17. Plaintiffs are persons residing in Coshocton County, Ohio.

ANSWER:

18. Plaintiffs are consumers as defined in 15 U.S.C. 1692a(3).ANSWER:

19. Plaintiffs are consumers as defined in Ohio Rev. Code 1345.01(D).

ANSWER:

20. There are questions of law or fact common to the class, including whether the letters

violate the Fair Debt Collection Practices Act, 15 U.S.C. 1692ket. seq.

ANSWER:

21. There are common questions of law or fact to the class, including whether Exhibits "A"

and "B" are deceptive.ANSWER:

22. There are common questions of law or fact, including what relief is appropriate.

ANSWER:

23. Defendant Michael S. Marlin sued Plaintiffs on accounts with Defendant Coshocton

Memorial Hospital.

ANSWER:


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24. Plaintiffs' accounts with Defendant Coshocton Memorial Hospital were for medical

services.

ANSWER:

25. Defendant Michael S. Marlin obtained judgments against Plaintiffs on the accounts they

had with Defendant Coshocton Memorial Hospital for medical services.

ANSWER:

INTERROGATORY

Pursuant to Rule 33 of the Federal Rules of Civil Procedure, Plaintiffs submit the following

interrogatory to be answered in writing, under oath, within thirty (30) days after service upon

you.

1. If your response to any of the foregoing requests for admissions is anything other than

an unqualified admission, state each and every reason why you do not admit the request of

admission.

ANSWER:

Attorney for Plaintiffs

CERTIFICATE OF SERVICE

I hereby certify that the original and one (1) copy of the foregoing document was

personally served upon Brent M. Buckley, Esq., BUCKLEY, KING & BLUSO, Attorney for

Defendant, Michael S. Marlin,[Address]. A copy was also served by regular U.S. Mail upon

Thomas I. Blackburn, Esq., BUCKLEY, KING & BLUSO, Attorney for Defendant, Michael

S. Marlin, [Address], Michael Manning and Brent W. Shenk, OWENS & MANNING,

Attorneys for Defendant Coshocton Memorial Hospital, [Address], Rebecca A. Spainhoward,

Esq., Attorney for CBC Companies, [Address], on this 26th day ofMarch, 1998.

Attorney for Plaintiffs

3.3 First Request For Pr oduction of Documents

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

KIRK DOUGLAS, et al.,

Plaintiffs,

)

)

)

)

PLAINTIFFS' FIRST REQUEST FOR

THE PRODUCTION OF DOCUMENTS

TO DEFENDANT MICHAEL S. MARLIN


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v.

MICHAEL S. MARLIN, and

COSHOCTON MEMORIAL

HOSPITAL,

Defendant andThird-Party

Plaintiff,

v.

CREDIT BUREAU OF NEWARK,

a Division of CBC Companies, Inc.,

Third-Party Defendant.

Now come the Plaintiffs, by and through the undersigned counsel, pursuant to Rule 34 of

the Federal Rules of Civil Procedure and request that Defendant Marlin produce the documents

set forth below at the offices of Plaintiffs' counsel, [Address], on March 2, 1998 at 9:00 a.m.,

for the purpose of inspection and copying by the undersigned counsel and his agents.

"Document" means and includes, without limitation, the original, or absent original, a true

copy of:

Paper or other material containing notations, dates or drawings from which information

can be perceived; audio or video recordings or films of any nature; and/or computer

data storage materials of any nature.

Without limitation, this definition applies to letters, memoranda, telegrams and other forms of

correspondence, or communications of all kinds; to contracts, memoranda, notes, work papers,

books, ledgers, minutes, telephone logs and records and all other records of occurrences,

thoughts or conversations; to actual audio recordings or films or photographs; to drawings,

graphs, charts, blueprints, or any other visual representations; to computer tapes, discs or any

other storage material. These document requests are continuing in nature so as to require

supplemental production if Defendant Marlin discovers or obtains further documents responsive

to these requests after production has been made. Such supplemental production shall be made

upon notice to Plaintiffs' attorneys no later than thirty (30) days after such documents come into

Defendant Marlin' s custody, control, possession or are discovered by Defendant Marlin orwithin ten (10) days prior to any court proceeding in this case, whichever is earlier.

Unless otherwise specified in a particular paragraph, the time period covered by this request

is June 9, 1995 to the present. Throughout this request:

a) "Plaintiffs" shall mean Kirk Douglas, Alice Douglas, and Austin Powers;

b) "Defendant Marlin" shall mean Defendant Michael S. Marlin;


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c) "Defendant Hospital" shall mean Defendant Coshocton Memorial Hospital;

d) "Third-Party Defendant Credit Bureau" shall mean Third-Party Defendant

Credit Bureau of Newark, a Division of CBC Companies, Inc.

e) A "communication" shall mean the conveying of information regarding a debt directly

or indirectly to any person through any medium.

DOCUMENT REQUEST

1. A copy of any document which shows Defendant Marlin' s status as a corporation,

partnership, sole proprietorship or joint venture.

2. A copy of any communication sent by Defendant Marlin at any time on or after June 9,

1995 to any individual seeking or demanding the payment of a debt on behalf of a client of

Defendant Marlin.

3. All documents sent to Defendant Marlin by Defendant Hospital or Third-Party

Defendant Credit Bureau with respect to the alleged debts of Plaintiffs.

4. All documents sent by Defendant Marlin to Plaintiffs or any other persons (including

Defendant Hospital or Third-Party Defendant Credit Bureau) with respect to the alleged debts

of Plaintiffs.

5. All documents indicating the agreement under which Defendant Marlin was hired torepresent Defendant Hospital, Third-Party Defendant Credit Bureau, or any other creditor with

respect to Plaintiffs' alleged debts.

6. All documents referred to in your affidavit dated January 21, 1998, which is attached to

your Brief in Opposition to Plaintiffs' Motion for Class Certification.

7. All documents relating to the Plaintiffs' alleged debts or Defendant Marlin' s attempts to

collect the same.

8. Copies of all documents (including but not limited to policy manuals and instructions)

which Defendant Marlin utilizes regarding collection practices and procedures or by whichDefendant Marlin instructs his staff as to collection practices and procedures.

9. All bills for professional services rendered by Defendant Marlin to Defendant Hospital

and/or Third-Party Defendant Credit Bureau.

10. All documents relating to the Plaintiffs which are indexed, filed, or retrievable under

their names or any number, symbol, or designation of code (such as a loan number, social

security number) assigned to them or to their transactions for the alleged debts.


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11. Any and all insurance agreements or policies under which any person or entity carrying

on any insurance business may be liable to satisfy part or all of a judgment which may be

rendered in this action or may be required to indemnify or reimburse for payments made to

satisfy the judgment.

12. A complete copy of all of Defendant Marlin' s income tax returns for 1995, 1996 and

1997.

13. A complete copy of all financial statements provided by Defendant Marlin to any

financial institution, governmental entity, or other person regarding Defendant Marlin' s

financial status for 1995, 1996 and 1997.

14. Any and all exhibits, documents or records which you intend to introduce as evidence

in this case or attach to a dispositive motion.

In lieu of appearance at the appointed time with the originals of the aforementioned

documents, the Plaintiffs will accept copies of the originals if they are sent by U.S. Mail,

postage prepaid, to Plaintiffs' counsel, 526 Superior Avenue, East, [Address]. Plaintiffs

reserve the right to inspect and subpoena the original documents.

Respectfully submitted,



An original and one copy of this document were duly served by hand delivery upon Brent

Buckley, BUCKLEY, KING & BLUSO, Attorneys for Defendant Michael S. Marlin, at

[Address], and to the following by regular U.S. mail, postage prepaid, Michael Manning,

Attorney for Defendant and Third-Party Plaintiff Coshocton Memorial Hospital at OWENS &

MANNING, [Address], and Credit Bureau of Newark c/o William B. Price, [Address] on this

30th day of January 1998.



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3.4 Plaintiffs Motion For Par tial Summar y Judgment



EASTERN DIVISION

KIRK DOUGLAS, et. al.,

Plaintiffs,

v.


Defendants.

)

)

)

)

)

)

)

)

)

CASE NO.

PLAINTIFFS' MOTION FOR

PARTIAL SUMMARY JUDGMENT AND

MEMORANDUM IN SUPPORT

Plaintiffs, by and through counsel, and pursuant to Federal Civil Rule 56, respectfully

move that this Court issue an order that they are entitled to partial summary judgment against

Defendant Michael S. Marlin on the issue of his liability under the Fair Debt Collection

Practices Act because there are no disputes as to any of the material facts and they are entitled

to judgment as a matter of law. In support of this motion, Plaintiffs submit the attached

memorandum, and Responses to Plaintiffs First Set of Requests for Admissions, and

Declaration of Fact.


MEMORANDUM IN SUPPORT OF MOTION

I. INTRODUCTION

Plaintiffs filed this class action under the Fair Debt Collection Practices Act, 15 U.S.C.

1692 et. seq. ("FDCPA"). There is no question as to the material facts. Defendant Michael

S. Marlin ("Defendant Marlin"), an attorney, sent consumers a standard computer-generated

letter (Exhibits "A" and "B" attached to Plaintiffs' complaint) demanding payment on a

judgment taken by him on behalf of Defendant Coshocton Memorial Hospital ("Defendant

Hospital") for medical services provided by Defendant Hospital to Plaintiffs. The letters

provide, inter alia, that a judgment lien was placed on the Plaintiffs' property, and that in order

to collect this judgment, Defendant Hospital' s remedies include "Foreclosure and sale of your

home." The letters further provide that:

If at all possible, my clients would like to avoid taking any of these drastic

actions against you. However, they cannot permit this account to remain unpaid.

Consequently, unless you contact me within seven (7) days from the date of this letter

in order to make firm arrangements to pay this judgment, I will be forced to proceed

with any and all of the remedies available.


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Defendant admits that he is a "debt collector" as defined by 15 U.S.C.

1692a(4), that Plaintiffs are "consumers" as defined in 15 U.S.C. 1692a(3), as well

as the following allegations in the complaint:

* * *

13. On or about June 7, 1997, Defendant Marlin initiated communication

with Plaintiffs, Kirk and Alice Douglas, through the letter attached as Exhibit

"A", and threatened foreclosure and sale of their home, and/or attachment of

their bank accounts unless they contacted Defendant Marlin within seven (7)

days from the date of the letter in order to make final arrangements to pay the

judgment.

14. On or about July 22, 1997, Defendant Marlin initiated communication

with Plaintiff, Austin Powers, through the letter attached as Exhibit "B", and

threatened foreclosure and sale of his home, and/or attachment of his bank

accounts unless he contacted Defendant Marlin within seven (7) days from the

date of the letter in order to make final arrangements to pay the judgment.

* * *

16. Contrary to the threats in Exhibits "A" and "B", Defendants have

not taken any further action to enforce the debts.

See Defendant Marlin' s January 23, 1998 answer, paragraphs 4, 13, 14, and 16: and Response

Nos. 18, 23, 24, and 25 to Plaintiffs' First Set of Requests for Admissions (Exhibit "1").

Plaintiffs request that this Court enter an order granting them partial summary judgment againstDefendant Marlin on their FDCPA claim for the following three reasons.

II . ARGUMENTS

The FDCPA states that its purpose, in part, is "to eliminate abusive debt collection

practices by debt collectors." 15 U.S.C. 1692(e). It is designed to protect consumers from

unscrupulous collectors, whether or not there is a valid debt. Baker v. G.C. Services Corp.,

677 F.2d 775, 777 (9th Cir. 1982). The FDCPA broadly prohibits unfair or unconscionable

collection methods; conduct which harasses, oppresses or abuses any debtor; and any false,

deceptive or misleading statements, in connection with the collection of a debt; it also requires

debt collectors to give debtors certain information. 15 U.S.C. 1692d, 1692e, and 1692f."Congress intended the [FDCPA] be enforced primarily by consumers." F.T.C. v. Shaffner,

626 F.2d 32, 35 (7th Cir. 1980). The FDCPA must be enforced "as Congress has written it."

Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992). The violations in this case are as

follows.

First, Defendant Marlin' s letter threatened to take action that legally cannot be taken or

that is not intended to be taken; and used false, misleading or deceptive means in connection

with the collection of the judgments in violation of 15 U.S.C. 1692e(5) and 1692e(10). This


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letter is to be reviewed based upon the "least sophisticated consumer standard." See Smith v.

Transworld, Inc., 953 F.2d 1025, 1028-1029 (6th Cir. 1992). An unsophisticated consumer

would believe that the letter was threatening the foreclosure of his/her home unless "firm

arrangement" to pay the judgment was made within seven (7) days of the date of the letter.

The FDCPA protects Plaintiffs from "the threat [from a debt collector] to take anyaction that cannot legally be taken or that is not intended to be taken." 15 U.S.C. 1692e(5).

Ohio Rev. Code 2329.66(A)(1)(a) provides a homestead exemption from Defendant Marlin

foreclosing upon the property of the Plaintiffs or the class they represent. Ohio Rev. Code

2329.66(A)(1)(a) does not preclude Defendant Marlin from placing a judgment lien on

Plaintiffs' property. The statute:

. . . only delays the enforcement of the lien until the property is sold or otherwise

transferred by the owner or in accordance with other applicable laws to a person or

entity other than the surviving spouse or surviving minor children of the judgment

debtor. . .

Defendants' threat to foreclose on Plaintiffs' property was contrary to Ohio Rev. Code

2329.66(A)(1)(a) and was never pursued. The least sophisticated consumer would be misled

by Defendant Marlin's statement that his remedies included foreclosing on their homes.

Other courts have held that analogous practices violated the FDCPA. See Oglesby v.

Rothche, 1993 WL 460841, No. C 4183 (N.D. Ill. 1993) (Exhibit "2") (threat to garnish all

wages and attach all property); Woolfork v. Van Ru Credit Corp., 783 F. Supp. 724 (D. Conn.

1990) (oppressive list of post-judgment remedies); Seabrook v. Onondaga Bureau v. Med.

Econ., Inc., 705 F. Supp. 81 (N.D. N.Y. 1989) (threat to garnish wages in excess of amounts

permitted under federal law); and Cacace v. Lucas, 775 F. Supp. 502 (D. Conn. 1990); (letterstating that litigation could result in seizure of real estate and bank account deceptive).

Additionally, the fact that Defendant Marlin did not foreclose on Plaintiffs' homes or

take other steps to enforce the judgments violated 15 U.S.C. 1692e(5)d and 1692e(10). The

Third Circuit upheld as a violation of 1692e(5) an attorney' s threat of suit if payment was not

received in ten days, where the collections attorney took no such action. Graziano v. Harrison,

950 F.2d 107 (3rd Cir. 1991). The debt collector' s 48-hour notice, where no action was taken,

was held to be a violation of this section by the Second Circuit. Pipiles v. Credit Bureau of

Lockport, Inc., 886 F.2d 22 (2nd Cir. 1989).

Defendant Marlin' s threat to foreclose was never pursued. In fact, he did not take anyfurther action to enforce the debts. See Defendant Marlins Answer paragraph 16. The least

sophisticated consumer would be misled by Defendant Marlin' s letter. Thus, Defendant Marlin

has violated 15 U.S.C. 1692e(5) and 1692e(10).

Defendant Marlin' s letter also violated 15 U.S.C. 1692e(11). Prior to December 30,

1996, 1692e provided, in pertinent part:

[T]he following conduct is a violation of this section:


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(11) . . . the failure to disclose clearly in all communications made to collect a debt or

to obtain information about a consumer, that the debt collector is attempting to collect a

debt and that any information obtained will be used for that purpose.

The Sixth Circuit Court of Appeals, considering the application of the above provision,held that in an initial communication the debt collection warning must be repeated or

paraphrased. Frey v. Gangwish, 970 F.2d 1516 (6th Cir. 1992). See also: Tolentino v.

Friedman, 46 F.3d 645 (7th Cir. 1995); Dutton v. Wolpoff & Abramson, 5 F.3d 649 (3d Cir.

1993); Carroll v. Wolpoff & Abramson, 961 F.2d 459 (4th Cir. 1992), cert. denied505 U.S.

905 (1992); Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 26 (2d Cir. 1989);

Emanuel v. American Credit Exchange, 870 F.2d 805, 808 (2d Cir. 1989); Pressley v. Capital

Credit & Collection Services, Inc., 760 F.2d 922, 925 (9th Cir. 1985); Hulshizer v. Global

Credit Services, Inc., 728 F.2d 1037, 1038 (8th Cir. 1984). Cf. Pressley v. Capital Credit &

Collection Services, Inc., 760 F.2d 922, 926 (9th Cir. 1985).

The United States Supreme Court has held that the courts are bound to follow the

language of the Act. Heintz v. Jenkins, 514 U.S. 291(1995).

Consumers sometimes do not receive first notices, and thus, follow-up letters

may often provide them with their first notice of the debt collection process. In our

view, it follows that requiring the disclosure requirements of 1692e(11) in follow-up

letters furthers congressional intent to prevent the abuse of debtors.

Carroll v. Wolpoff & Abramson, 961 F.2d at 461. As Judge Mahoney stated for the Second

Circuit "even if there were little discernible judgment in repetition, Congress could exercise its

legislative judgment to adopt a reasonable margin of safety to ensure its remedial goal." Pipilesv. Credit Bureau of Lockport, Inc., 886 F.2d at 27. See also Frey v. Gangwish, 970 F.2d at

1520. Therefore, Defendant Marlin violated 15 U.S.C. 1692e(11) as to Plaintiff Austin

Powers and those class members who received letters from Defendant Marlin which were dated

prior to December 30, 1996. See Defendant Marlin' s October 29, 1996 letter to Plaintiff Austin

Powers attached to counsel' s declaration of fact (Exhibit "3").

Furthermore, Defendant Marlin violated 15 U.S.C. 1692e(11) as amended. See Pub.

L. No. 104-204, Omnibus Consolidated Appropriations Act of 1996, 2305 (September 30,

1996). Effective December 30, 1996, this section provides that a debt collector must disclose

"in subsequent communications that the communication is from a debt collector." Nowhere on

Exhibits "A" and "B" is there any disclosure that Defendant Marlin is a debt collector. Thismandatory disclosure is similar to the requirement under the Truth-In-Lending Act (prior to the

passage of the Simplification Act) that a creditors failure to identify itself violated 15 U.S.C.

1638(a)(1) and 12 C.F.R. 226.18(a). See, e.g., In re Wilson, 411 F. Supp. 751 (S.D. Ohio

1975); First National Bank of Cincinnati v. Williams, 19 Ohio Ops.3d 250 (App. Hamilton,

1980) (identification of only one of two creditors (auto dealer and assignee bank) on the face of

a contract violates the Act); andAugusta v. Marshall Motor Co., 453 F. Supp. 912 (N.D. Ohio

1977) (a creditor is sufficiently identified by its name and emblem on the contract, the

contracts description of it as an assignee, and later correspondence).


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Without making the disclosure to the Plaintiffs on the letters, they, as least sophisticated

consumers, would not know that Defendant Marlin was a debt collector. Not all attorneys are

debt collectors. See 15 U.S.C. 1692a(4) andHeintz v. Jenkins, supra. The debt collector

disclosure furthers the Congressional intent to insure that follow-up letters with consumers

disclose on the face of the letter that it was generated by a debt collector. Therefore, DefendantMarlin violated the FDCPA by his failure to identify himself as a debt collector on the letters to

the Plaintiffs and the class they seek to represent.



A copy of this document was personally served upon Brent Buckley, Esq., BUCKLEY,

KING & BLUSO, Attorneys for Defendant Michael S. Marlin, at [Address]; a copy sent by

regular U.S. mail, postage prepaid, to: Thomas I. Blackburn, Esq., BUCKLEY, KING &

BLUSO, [Address]; Michael Manning, Esq., Attorney for Defendant and Third-Party Plaintiff

Coshocton Memorial Hospital at OWENS & MANNING, [Address]; and Rebecca A.

Spainhoward, Esq., [Address], Attorney for Third Party Defendant Credit Bureau of Newark

on this 30th day of June, 1998.

3.5 Plaintiffs' Reply Memorandum


FOR THE SOUTHERN DISTRICT COURT OF OHIO

EASTERN DIVISION

KIRK DOUGLAS, et. al.

Plaintiffs,

v.


Defendants.

)

)

)

)

)

)

)

)

)

CASE NO.

PLAINTIFFS' REPLY MEMORANDUM

TO DEFENDANT MARLIN' S

MEMORANDUM CONTRA TO

PLAINTIFFS' FIRT MOTION FOR

SUMMARY JUDGMENT

I. INTRODUCTION

Plaintiffs filed this class action under the Fair Debt Collection Practices Act, 15 U.S.C.

1692 et. seq. ("FDCPA") and the Ohio Consumer Sales Practices Act, Ohio Rev. Code

("First Motion") on the issue of Defendant Michael S. Marlin' s ("Defendant Marlin") liability

under 15 U.S.C. 1692e(5), 1692e(10), and 1692e(11). The focus of the motion was

Defendant Marlin' s use of a standard computer-generated letter (Exhibits "A" and "B" attached

to Plaintiffs' complaint) ("foreclosure letter") demanding payment against consumers on


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judgments taken by him on behalf of Defendant Coschocton Memorial Hospital for medical

services provided by Defendant Hospital to Plaintiffs.

An informational letter to Plaintiff Austin K. Powers (Plaintiff Powers) was also submitted

with the First Motion as an example of Defendant Marlin' s liability under 1692e(11) of other

letters Defendant Marlin sent to consumers and information letters to other class members arealso filed in the Evidentiary Appendix A ("A-A-) pgs. A-2, A-5-A-6, A-8-A-9, A-12-A15, A-

184-A-199). 1

On October 5, 1998, Defendant Marlin filed a memorandum Contra ("Memo. Contra") to

the First Motion. On October 7, 1998, Defendant Marlin and his secretary Linda Benjamin,

were deposed. Their depositions and the deposition exhibits are filed with this Court, and are

referred to as "Marlin Depo.", "Benjamin Depo.", and Depo. Exhibits" respectively. This

reply memorandum deals with each of Defendant Marlin' s arguments in order.

II. ARGUMENTS

A. The Foreclosure Letter Violated 15 U.S.C. 1692e(5) and/or 1692e(10)

Defendant Marlin claims that the foreclosure letter did not violate the FDCPA because a "plain

and simple reading" "reveals that rather than threatening to bring a foreclosure action" he

"stated that [his client-not he] would like to ' avoid taking' [these drastic] action[s] against

you." Memo. Contra at 2; Depo. Exhibits 1, 2, 2A, and 3; and Appendix A pgs. A-2, A-5-A-

6, A-12-A15, A-17-A18. defendant Marlin' s position is without merit for various reasons.

First, a "plain and simple reading" of the letter is not how Defendant Marlin characterizes

it. The letter threatens foreclosure and "all the of the remedies available" unless firmarrangements are made within seven (7) days of the date of the letter. It is false and

misleading to represent that foreclosure is a remedy because it is not permitted under state law.

See First Motion 3-5 and Ohio Rev. Code 2329.66(A)(1)(a) (providing a homestead

exemption against foreclosure for medical bills).

Second, defendant Marlin disregards and fails to apply the "least sophisticated consumer

standard." See Smith v. Transworld, Inc., 953 F.2d 1025, 1028-1029 (6th Cir, 1992); and

Lewis v. ABC Business Services, Inc., 135 F.3d 389, 400 (6th Cir. 1998). "This objective

standard is designed to protect all consumers, ' the gullible as well as the shrewd, ' while at the

same time protecting debt collectors fro liability for ' bizarre or idiosyncratic interpretations of

collection notices.' " Maguire v. Citicorp Retail Services, Inc., 147 F.3d 232, 236 (2d Cir.1998). An unsophisticated consumer would believe that the letter was threatening foreclosure

on his/her home unless "firm arrangement" to pay the judgment made within seven (7) days of

the date of the letter.

Third, contrary to defendant Marlin' s claim, a determination of whether a violation of the

FDCPA occurred must be based upon a review of the clear wording of the entire letter , not

just the words "avoid taking [the post judgment action]"/ It is how the consumer views the

1See also Depo. Exhibits 1, 2, 2A, 3, and 6 (pages 2 and 3).


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letter (not how defendant Marlin views the letter) that is the focus of the application of the

FDCPA.

Fourth, Kleczy v. First Federal Credit Control, Inc., 21 Ohio App.3d 56 (Geauga Cty.

Court 1984), is not controlling. The FDCPA protects Plaintiffs from "the threat [from a debt

collector] to take any action that cannot legally be taken or that is not intended to be taken." 15U.S.C. 1692e(5). The Kleczy case only held that the words" avoid further action" are not

sufficiently threatening as to constitute a violation of 1692a(5). In Kleczy, the debt collector

sent additional letters to consumer, but took no legal or other further action. See Kleczy, 21

Ohio App.3d at 61. Thus, the FDCPA was not violated in Kleczy because sending additional

letters was "further action," and the implied threat to take legal action did not in an of itself

constitute harassing or abusive behavior.

By contrast, the letters in this case were sent after judgment and the filing of a judgment

lien upon consumer' s home. The letters threatened foreclosure and "any and all of the

remedies available" unless the consumer contacted Defendant Marlin within seven (7) days.

Moreover, foreclosure actions in this case could not legally be taken. See First Motion at 3-5

and Ohio rev. Code 2329.66(A)(1)(a).

Moreover, defendant Marlin ignores that federal courts' interpretation of federal law is

entitled to more weight than state cases. Kleczy, a state case, was decided prior to Smith v.

Transworld, Inc., supra, which adopted the widely accepted "least sophisticated consumer

standard" in the Sixth Circuit. Thus, this standard was not applied in Kleczy.

Furthermore, Defendant Marlin has never filed a foreclosure action after sending out the

letters. Marlin Depo. At 80; Benjamin Depo. At 23. He admits in his Answer that he took no

further action to collect the debts against Plaintiffs. See Defendant Marlin's Answer para. 16.Defendant Marlin conceded in his deposition, affidavit, and Memo. Contra, that he never

intended to take any collection activity until after he conducted an investigation. Marlin Depo.

At 76, Defendant Marlin's Affidavit paragraph 3; and Memo. Contra at 8. Thus, the

statement in this letter is false, deceptive and/or misleading.

"What is left is the inescapable conclusion that [Defendant Marlin] had no intention of

[filing a foreclosure action] and the threatened [action] was merely a tactic to frighten

unsophisticated debtors into action." Oglesby v. Rotche, 1993 WL 460841 at *7, No. C 4183

(N.D. Ill. 1993) (attached to First Motion at Exhibit "2"). 2 "An unsophisticated consumer

getting a letter from an ' attorney,' knows that the price of poker has just gone up [especially

after a judgment has been taken][because the attorney] is in a better position to get a debtor' sknees knocking." Alvia v Rubin, 84 F.3d 222, 229 (7th Cir. 1996). See also Bentley v. Great

Lakes Collection Bureau, 6 F.3d 60 (2d Cir. 1993)(collection letter' s statement that the

creditor had authorized whatever legal means necessary to collect the debt implied that legal

proceedings were imminent when they were not and would mislead the least sophisticated

consumer in violation of 1692e(5)); Crossley v. Lieberman, 868 F.2d 570-571 (3rd Cir.

1989)(attorney letter threatening foreclosure contrary to time parameters of state law

2As Defendant Marlin explained: "If they're going to respond [to the latter] they respond quickly." Marlin Depo. At

79. Plaintiffs Powers and Kirk Douglas did "quickly" respond to the letter. Marlin Depo. At 79.


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constituted violation of 1692e(5) and (10)); and United States v. First Fed. Credit Control

Inc., Case No. C79-2274 (N.D. Ohio 1982)(attached)(letter threatening referral for suit or

action to representatives and did not file out-of-town. Letters threatening referral to an

attorney for suit were deceptive in the 99% of the cases where the collector did not sue.).

Thus Defendant Marlin has violated 1692e(5).

The fact that Defendant Marlin did not foreclose on Plaintiffs' homes or take steps to

enforce the judgments if contact was not made within seven (7) days violated 15 U.S.C.

1692e(5) and/or 1692e(10). The Third Circuit upheld as a violation pf 1692e(5) an

attorney' s threat of suit if payment was not received in tend days, where the collections

attorney took no such action. Graziano v. Harrison, 950 F.2d 107 (3rd Cir. 1991). The debt

collector' s 48-hour notice, where no action was taken, was held to be a violation of this section

by the Second Circuit. Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22 (2d Cir. 1989).

See also Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1177-78 (11th Cir. 1985); and Crossley

v. Lieberman, 868 F.2d 566, 571 (3rd Cir. 1989); and Sluys v. Hand, 831 F. Supp. 321, 326-

327 (S.D.N.Y. 1993).

Whether the words in the letter are "not sufficiently threatening" is irrelevant. The "least

sophisticated consumer" standard requires that the representations be false, deceptive and/or

misleading. This objective standard does not take into consideration the subjective test

suggested by Defendant Marlin. No case law supports his position.

Defendant Marlin admitted at his deposition that action was "not necessarily" taken within

seven (7) days of sending out the letter because he may not have been "able to look at and file

that quickly" and that "sometimes it required follow-up." Marlin Depo. at 76. In fact, he did

not take any further action to enforce the debts. See Defendant Marlin' s Answer para. 16.

The least sophisticated consumer would be misled by Defendant Marlin' s letter. DefendantMarlin ignores the interpretation of the letter which violated the FDCPA. Even if the

interpretation of his own letter is reasonable (keeping in mind that an interpretation should be

made against him because he wrote the letter), "collection notices can be deceptive if they are

open to more than one reasonable interpretation, at least one of which in inaccurate." Clomon

v. Jackson, 988 F.2d 1314 (2d Cir. 1993); see also Dutton v. Wolhar, 809 F. Supp. 1357

(N.D. Ga. 1997). Thus, Defendant Marlin has violated 15 U.S.C. 1692e(5) and/or

1692e(10).

B. Ohio Revised Code 2329.66 Is Constitutional

Defendant Marlin argues that Ohio Rev. Code 2329.66 is unconstitutional because oneOhio court of appeals held that a portion of the garnishment statute, Ohio rev. Code

2716.021 and 2716.051 (which limited the amount of disposable income subject to garnishment

by health care judgment creditors), violated the creditor' s right o equal protection of the law

under the Fourteenth Amendment of the United States Constitution and Article I, section 2 of

the Ohio Constitution. See Community Physical Therapy v. Wayt, 93 Ohio App.3d 612 (Stark


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Cty. 1994) ("Wayt").3 Defendant Marlin then concludes that that the threat "could not be

considered a threat to take action which legally could not be taken because [he] was not

legitimately prohibited by law from such a foreclosure action." Memo. Contra at 6-7.

Ohio Rev. Code 2329.66(A)(1)(a) provides a homestead exemption from Defendant

Marlin foreclosing upon the property of the Plaintiffs and the class the represent. Ohio Rev.Code 2329.66(A)(1)(a) does not preclude Defendant Marlin from placing a judgment lien on

the Plaintiffs' property. The statute:

only delays the enforcement of the lien until the property is sold or otherwise

transferred by the owner or in accordance with other applicable laws to a person or

entity other than the surviving spouse or surviving minor children of the judgment

debtor

This legislative enactment enjoys a presumption of constitutionality. See, e.g., Beatty v. Akron

City Hosp., 67 Ohio St.2d 483, 493 (1993). This Court "must apply all presumptions and

pertinent rules of construction so as to uphold, if at all possible" Ohio Rev. Code

2329.66(A)(1)(a). State v. Dorso, 4 Ohio St.3d 61 (1983). The statute can only be declared

invalid if Defendant Marlin can prove "beyond a reasonable doubt" that it is unconstitutional.

Cincinnati Bd. of Edn. v. Walter, 58 Ohio St.2d 368, 376 (1979).

In Ohio the test to be applied is the rational-basis analysis. The Court must uphold the

statute's classification unless it is "wholly irrelevant to [the] achievement of the state's

purpose." Menefee v. Queen City Metro, 49 Ohio St.3d 27, 29 (1990). The test of whether

Ohio Rev. Code 2326.66(A)(1)(a)' s classification is based upon a rational-basis is "whether

any state of facts, either known, or which can be reasonably assumed, support the

classification. If the question is at least debatable, then the decision is a legislative one and theclassification will be upheld." State v. Babcock, 7 Ohio App.3d 104, 106 (Franklin Cty. 1982).

In the case at bar, Defendant Marlin cannot meet his burden of proof beyond a reasonable

doubt for various reasons. First, the competent evidence before this Court does not support

Defendant Marlin' s claim. He is not free to make a threat that violates state law. He cannot

ignore the law and claim that he does not have to follow it. The statute is presumed to be

constitutional unless it is held unconstitutional.

At his deposition, Defendant Marlin maintained his position solely upon Wayt.4 He was

aware that the Tenth District Court of Appeals found the stature constitutional, but he was not

aware of the other three Ohio court of appeals that found the statute constitutional. See St.Ann's Hospital v. Arnold, 109 Ohio App.3d 363 (Franklin Cty. 1996), motion to certify

3Defendant Marlin does not have standing to raise the constitutionality of Ohio Rev. Code 2329.66. He never filed

a declaratory judgment or other action to do so. He cannot freely ignore the law. He either has to follow it, or attack

it. His claimed ability to foreclose on a consumer's property is therefore false, deceptive and/or misleading.4 Defendant Marlin failed to acknowledge that in Waytno brief was filed in opposition to the challenge of the

statute's constitutionality. The debtor waspro se and not represented on appeal. The quote Defendant Marlin relies

upon in Waytis misplaced. Memo. Contra at 5. "Overwhelming governmental interest" is akin to a compelling

governmental interest. No suspect classification or fundamental right is at stake. Therefore, Waytapplied wrong

legal test to the statute.


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denied, 76 Ohio St.3d 1437 (1996); Lima Memorial Hospital v. Dardio, 1995 WL 641285,

No. I-95-38 (Allen Cty. 1995); Wooster Community Hospital v. Anderson, 108 Ohio App.3d

90 (Wayne Cty. 1996); and Marlin Depo. at 101-103.

Despite Defendant Marlin' s claim that the statute is unconstitutional, he never contacted the

Ohio Attorney General' s Office, his state representative, anyone in the state legislature, oranyone else 9except his clients) to express his opinion. Marlin Depo. at 103-106. Moreover,

Marlin Depo. at 113-114. Therefore, Defendant Marlin has not provided this Court with

competent evidence to meet his burden of proof on this issue.

Second, the strong presumption in favor of the statute's constitutionality is supported by the

legislature' s actions. It is true that the statute was enacted "contemporaneously" with above

cited garnishment provisions after the Waytdecision, but it did not repeal Ohio Rev. Code

2329.66(a)(1)(a). See also Marlin Depo. at 103. By this action, the legislature reaffirmed its

position that Ohio Rev. Code 2329.66(a)(1)(a) is constitutional.

Third, legislative rationale supports the statute's constitutionality. Assuming (as does

Defendant Marlin) that the legislature' s rationale for the garnishment statute and for this statute

are the same, Ohio Rev. Code 2329.66(a)(1)(a) is constitutional. It is not irrational for the

legislature to decide that people do not have to choose between health care and losing their

homes. The "purpose of ensuring expanded access to affordable health coverage for Ohio

citizens, especially those citizens who cannot afford health care insurance" is a legitimate

governmental interest. St. Ann's Hospital v. Arnold, 109 Ohio App.3d at 566-567. Ohio Rev.

Code 2329.66(a)(1)(a) furthers this goal by ensuring Ohio citizens' access to affordable

medical care by allowing them to live in their homes during their lives, while "enabl[ing]

providers of health care services and supplies to collect the entire amount of the debt owed

[with 10% statutory interest after their death]." Id. Thus, Defendant Marlin' s constitutionalitydefense/counterclaim is without merit.

C. Defendant Marlin' s Intent Is Irrelevant To Whether He Violated The FDCPA

Defendant Marlin claims that Plaintiffs must prove that he intended to violate the FDCPA

in order for them to establish liability under 15 U.S.C. 1692e(5) and 1692(e)10 "by

threatening to take action which [he] allegedly never intended to take." Memo. Contra at 7.

Defendant Marlin' s argument is without merit because the FDCPA is a strict liability statute.

It imposes liability for any failure to comply without regard to the collector' s intent. See, e.g. ,

Baker v. G.C. Services Corp., 667 F.2d 775 (9th Cir. 1982); Bentley v. Great Lakes

Collection Bureau, supra; Stojanovski v. Strobl & Manoogian, 783 F. Supp. 319 (E.D. Mich.1992); O'Connor v. Check Rite, Ltd., 973 F. Supp. 1010, 1020 (D. Colo. 1997). The rationale

underlying the imposition of strict liability is explained in Russell v. Equifax A.R.S., 74 F.3d

30, 35 (2d Cir. 1996) as follows:

[I]n the general context of consumer protection - of which the Fair Debt Collection

Practices Act is a part - it does not seem unfair to require that one who deliberately

goes perilously close to an area of proscribed conduct shall take the risk that he may

cross the line.


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Therefore, defendant Marlin' s intent is irrelevant to whether he violated the FDCPA.

However, the "extent to which [Defendant Marlin' s] noncompliance was intentional" is one of

the factors to be taken into consideration when this Court sets the amount of statutory damages.

See 15 U.S.C. 1692k(b). 5

When this Court does determine the damages issue (which will be presented at trial), other

factors will have to be taken into consideration to determine his intent, including, but not

limited to, the following: Defendant Marlin never has filed a foreclosure action against a

consumer. Marlin Depo. at 70; Benjamin Depo. at 23. Further, Defendant Marlin' s alleged

lack of intent does not apply to other violations of the FDCPA, including 15 U.S.C.

1692e(11) or 1692e(10). Also, his alleged lack of intent is to be viewed from the least

sophisticated consumer' s perspective, not from his after-the-fact justification of his actions.6

Defendant Marlin claims that in every instance he reviews each file and decides whether or

not to take further action. Memo. Contra at * and Defendant Marlin' s Affidavit paragraph 3.

This argument concedes a violation of the FDCPA. The letters are sent before any

investigation. Defendant Marlin did not intent to take any action in the letter until after letter

was sent and after the investigation. This, the statement in the letters regarding future action is

false, deceptive and/or misleading in violation of the FDCPA.

D. Defendant Marlin' s Letters To Plaintiff' s And the Class Violated 15 U.S .C. 1692e9(11)

After December 30, 1996

Defendant Marlin argues that subsequent communications with consumers comply with

1692e(11)' s requirements that he disclose "that communication is from a debt collector." In

doing so, Defendant Marlin disregards the plain meaning of the statute, Plaintiffs' argument ,and citation of authority on this issue. First Motion at 6-7. Instead, he argues that even the

least sophisticated consumer would realize that the letters were from "an identified attorney in

an attempt to collect a judgment on behalf on an identified client" and therefore, he "more than

substantially comp[lied] with the requirement that he disclose in the letters that the letters are

from a debt collector. " Memo. Contra at 12. In doing so, he disregards two basic tenets of

the FDCPA- that are: (1) not all attorneys are debt collectors, 15 U.S.C. 1692a(4) (only

those who "regularly" collect debts for third parties); and (2) courts are bound to follow the

language of the FDCPA. Heintz v. Jenkins, 514 U.S. 291 (1995).

5Assuming, arguendo, that intent is an element of 1692e(5), defendant Marlin cannot rely upon his after-the-fact

justification of his actions. FTC Office Staff Commentary 807(5) specifically provides that action threatened must

be intended or action ordinarily taken by collector. Defendant Marlin never took the threatened action (foreclosure

on property) against Plaintiffs or any other consumer. Therefore, as a matter of law, he never intended to take the

threatened action.6

Defendant Marlin's reliance uponHiggins v. Capital Credit Services, Inc., 762 F. Supp. 1128, 1137 (D. Del. 1991)

is misplaced. Higgins dealt with one incident. Defendant Marlin has been in the collection business since the 1970s

or 1980s. Marlin Depo. at 11-15, 23-24. He has never filed a foreclosure action. UnlikeHiggins, where one

incident was extrapolated, Defendant Marlin has a proven track record. His empty threat was used to intimidate

because he never filed a foreclosure. This constitutes false, deceptive and/or misleading conduct in violation of the

FDCPA..


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In this case, Exhibits "A" and "B", Depo. Exhibits 2 pages 2-4, and Evidentiary Appendix

pages A-17 - A-18, and A-201 - A-215 respectively provide this Court with competent

evidence on this issue. Nowhere in any of these letters is there any information upon which a

least sophisticated consumer could determine that the communications were from a debt

collector, rather than an attorney attempting to collect a judgment or provide additional

information on behalf of a client. Defendant Marlin's inference upon evidence not provided inthe letter does not constitute competent evidence. To adopt Defendant Marlin' s interpretation

of 1692e(11) would disregard the express words of the FDCPA, and render 1692(e)11

meaningless. The FDCPA must be enforced "as Congress has written it." Frey v. Gangwish,

970 F.2d 1516 (6th Cir. 1992).

Additionally, the cases relied upon Defendant Marlin, in fact support the Plaintiffs'

position. Dutton v. Wolpoff & Abramson, 5 F.3d 649 (3rd Cir. 1993); Pipiles v. Credit

Bureau of Lockport, Inc., 886 F.2d 22, 26 (2d Cir. 1989) all held that 1692e(11) (prior to

the amendment) required that in an initial communication the debt collection warning must be

repeated or paraphrased in subsequent communications with consumers. Thus, these cases

likewise require that Defendant Marlin disclose "that the communication is from a debt

collector."

To comply with 1692e(11), all Defendant Marlin had to do was disclose that he was a

debt collector. The statement: "this letter is from a debt collector" would have complied with

1692e(11). The letters do not contain the words "debt collector" or any similar language.

Marlin Depo. at 71. Therefore, Defendant Marlin violated 1692e(11).

Finally, Defendant Marlin claims that he complied with 1692e(11) after the filing of this

case. Marlin Depo. at 65-67, 70-71; 84-85, 89, 115-116; Benjamin Depo. at 17-22. This claim

does not moot Plaintiffs' claims for injunctive4 relief. Voluntary discontinuance of achallenged practice does not render moot the power or need to adjudicate the legality of these

practices, and to enjoin their future use, to prevent resumption of those practices at a later

date. Northeast Florida General Contractors Assoc. v. The City of Jacksonville, 508 U.S. 656,

661-663 (1993); City of Mesquite v. Alladin's Castle, Inc., 455 U.S. 283, 289 (1982).

Furthermore, the evidence produced in discovery indicates that this claim is false. See, e.g. ,

Evidentiary Appendix A pg. A-210 - A-215.

E. Defendant Marlin's Letters To Plaintiff s And The Class Violated 15 U.S.C. 1692e(11)

Before December 30, 1996

Defendant Marlin argues that he did not violate 1692e(11) prior to December 30, 1996amendment because: (1) counsel' s declaration under 28 U. S.C. 1746 does not constitute

competent evidence under Federal Rule 56; (2) FDCPA' s statute of limitation bars the claim;

and (3) this Court should follow Pressley v. Capital Credit & Collection Services, Inc., 760

F.2d 922, 926 (9th Cir. 1985) ("Pressley"). These arguments are without merit.

First, a declaration of fact has been determined by Congress to be an affidavit. Defendant

Marlin does not dispute the authenticity of the October 29, 1996 letter to Plaintiff Powers. It


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was produced by Defendant Marlin. Marlin Depo. at 84; and Depo. exhibit 6. It constitutes an

admission against interest under Federal Evidence Rule 804(b)(3).

Second, Plaintiff Powers' 1692e(11) claim is not time-barred by the statute of limitation.

It was provided as an example of 1692e(11) violation. 7 This action was commenced within

one year of Defendant Marlin' s letter to Plaintiff Powers (Depo. Exhibit 6 pg. 3) dated,December 2, 1996. See 15 U.S.C. 1692e(11) prior to the amendment. See Evidentiary

Appendix A pgs. A-11 - A-15 and A 184 - A-199. Therefore, the 1692e(11) claim is not

time-barred for Plaintiff Powers of the class he seeks to represent.

Third, Pressley is not the law in our Circuit. The Sixth Circuit Court of Appeals,

considering the application of 1692e(11) prior to the amendment, held that in an initial

communication the debt collection warning must be repeated or paraphrased in subsequent

communications. Frey v. Gangwish, 970 F.2d 1516, 1519-1520 (6th Cir. 1992). Defendant

Marlin testified that he had not read Frey. Marlin Depo. at 116. His Memo. Contra

demonstrates that he did not read the First Motion. Frey is cited in the First Motion along with

cases from six other courts of appeals that specifically reject Pressley. 8Defendant Marlin's

position is not only contrary to law, but it constitutes a Federal Civil Rule 11 sanction.

More importantly, there is no factual dispute regarding the 1692e(11) violation. Both

Defendant Marlin and Linda Benjamin admitted at their depositions that Defendant Marlin did

not comply with the requirements of 1692e(11) prior to the filing of this action. Marlin

Depo. at 64067, 70-71, 84-85, 89, 115-116; Benjamin Depo. at 17-22. Therefore, this Court

should enter summary judgment against Defendant Marlin on this issue.

F. There is No Dispute Of Material Fact Regarding The Letters And Their Content Which

Defendant Marlin Sent to Plaintiffs And The Class They Seek To Represent, And

1. Defendant Marlin does not present an issue of material fact regarding the application

of the least sophisticated consumer standard.

There is no dispute of fact regarding the letters and their content which Defendant Marlin

sent to Plaintiffs and the class they seek to represent. The application of the least sophisticated

consumer standard is an issue of law. Plaintiffs submit that the least sophisticated consumer

would consider the letter to constitute a threat of foreclosure unless firm arrangements to pay

the judgment are mad within seven (7) days.

7A violation of the FDCPA constitutes a violation of the CSPA. SeeCelebrezze v. United Research, Inc., 19 Ohio

App.3d 49 (Summit Cty. 1984) (FDCPA's distant forum provision incorporated into CSPA); and Williams, Ohio

Consumer Law, 2.67, 83-84 (1198). The CSPA has a two-year statute of limitation. Ohio Rev. Code 1345.10(C)

Therefore, the October 29, 1996 letter is evidence of the CSPA violation.8SeeTolentino v. Friedman, 46 F.3d 645 (7th Cir. 1995);Dutton v. Wolpoff & Abramson, 5 F.3d 649 (3d Cir. 1993);

Carroll v. Wolpoff & Abramson, 961 F.2d 459 (4th Cir. 1992), cert. denied, 505 U.S. 905 (1992); Pipiles v. Credit

Bureau of Lockport, Inc., 870 F.2d 805, 808 (2d Cir. 1989); Pressley v. Capital Credit & Collection Services, Inc.,760 F.2d 922, 925 (9th Cir. 1985); andHulshizer v. Global Credit Services, Inc., 728 F.2d 1037, 1038 (8th Cir.

1984).


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Defendant Marlin admits that during his many years as a collection attorney, he never filed

a foreclosure action. He does not decide what action, if any, to take until after the letters are

sent and after any investigation. Whether he violated the FDCPA is a question of law. Even

if Defendant Marlin' s self-serving interpretation could be considered reasonable, courts "have

held that collection notices can be deceptive if they are open to more than one reasonable

interpretation, at least one of which is inaccurate." Clomon v. Jackson, 988 F.2d 1314 (2dCir. 1993); see also Dutton v. Wolhar, 809 F. Supp. 1130 (D. Del. 1992) ("least sophisticated

debtor is not charged with gleaning the more subtle of the two interpretations" of collection

notice); and Schimmel v. Slaughter, 975 F. Supp. 1357 (N.D. Ga. 1997) (attorney letter

stating that garnishment was available "after judgment was obtained" could convey to the least

sophisticated consumer the impression that a judgment was a virtual certainty and therefore

was deceptive).

Accordingly, the Sixth Circuit Court of Appeals has affirmed the granting of summary

judgment by trial courts which have applied this standard. See Smith v. Transworld, Inc., 953

F.2d 1025, 1028-1029 (6th Cir. 1992); andLewis v. ABC Business Services, Inc., 135 F.3d

389, 400 (6th Cir. 1998). Therefore, this Court should hold as a matter of law that Defendant

Marlin' s foreclosure letter violates the FDCPA.

2. Defendant Marlin' s intent is not relevant to a determination of liability for his violation

of 1692e(10) and there are no material issues of fact as to the 1692e(10) violation.

The word "intent" is not contained in 1692e(10). Whether the letter was "false, deceptive

or misleading" is a legal determination. There is no dispute as to content of the letters sent to

Plaintiffs and the class they seek to represent. The letters threaten foreclosure and indicate that

these and other remedies may be pursued unless firm arrangements to pay the judgment are

made within seven (7) days. The least sophisticated consumer would find the letter to be"false, deceptive or misleading." Defendant Marlin never initiated a foreclosure action against

the Plaintiffs or any other consumer. He has produced no evidence that would support his

claim that a foreclosure and other post-judgment action would be initiated within seven (7)

days against Plaintiffs or the class they seek to represent. Therefore, this Court should hold as

a matter of law that Defendant Marlin violated 1692e(10).

3. Defendant Marlin' s intent is not relevant to a determinat ion of liability under

1692e(5).

As explained above, the FDCPA is a strict liability statute. It is to be determined from the

consumers' -- not Defendant Marlin' s perspective. Defendant Marlin' s intent is only relevantto the issue of damages. The issue of damages is not being presented to the Court at this time.

Therefore, this Court should hold as a matter of law that Defendant Marlin violated

1692e(5).


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4. Defendant Marlin' s intent is not relevant to a determinat ion of liability under

1692e(11); and there are no material issues of fact as to his violation of 1692e(11), either

before or after the December 30, 1996 amendment.

There is no dispute as to the content of the letters sent by Defendant Marlin to Plaintiffs

and the class they seek to represent. The word "intent" is not contained in 1692e(11).Defendant Marlin does not argue that his "intent" is relevant to the determination. Both

Defendant Marlin and Linda Benjamin admitted at their depositions that Defendant Marlin did

not comply with the requirements of 1692e(11) prior to the filing of this action. Marlin

violated 1692e(11) before and after the December 30, 1996 amendment is a question of law.

Defendant has not produced any evidence of a material dispute as to the facts. An application

of the least sophisticated consumer test to the letters mandates a finding that Defendant Marlin

violated 1692e(11) before and after the amendment.



A copy of this document was personally served upon Brent Buckley, Esq., BUCKLEY,

KING & BLUSO, Attorneys for Defendant Michael S. Marlin, at [Address]; a copy sent by

regular U.S. mail, postage prepaid, to: Thomas I. Blackburn, Esq., BUCKLEY, KING &

BLUSO, [Address]; Michael Manning, Esq., Attorney for Defendant and Third-Party Plaintiff

Coshocton Memorial Hospital at OWENS & MANNING, [Address]; and Rebecca A.

Spainhoward, Esq., [Address], Attorney for Third party defendant Credit Bureau of Newark

on this ___ day of November, 1998.

Chapter 3 Class Action Complaint Challenging False Threat of Foreclosure PL00Ch03

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Transcript of Chapter 3 Class Action Complaint Challenging False Threat of Foreclosure PL00Ch03