Debt Collector Wins Summary Judgment in 11th Circuit Envelope Case with Spokeo Assist

Last week, the U.S. District Court, Southern District of Florida, granted Defendant’s motion for summary judgement in Martell vs. ARS National Services, Inc., the latest in a string of envelope cases alleging FDCPA violation for the display of a barcode.

The full text of the decision can be found here.

Background

Plaintiff Efran Martell claimed that ARS violated the FDCPA when it sent him a collection letter on approximately June 11, 2014 to collect a debt owed to Department Stores National Bank. Martell alleged that the envelope contained a glassine window through which his name and address, and a barcode “reveal[ing] [his] account number,” appeared. He claimed that the barcode’s visibility violated the FDCPA, which prohibits a debt collector from “using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or telegram…” 15 U.S.C. 1692f(8).

ARS answered the complaint, and filed a motion for judgment on the pleadings. The Court subsequently ordered the Parties to submit supplemental briefings in light of the Supreme Court’s Spokeo v. Robins decision. The Spokeo case involved a “people search engine” company, and related to an alleged privacy violation under the Fair Credit Reporting Act. The decision by the Court affirmed that an injury in fact “must be both concrete and particularized,” and that the demands of Article III of the US Constitution may not be met merely by a procedural violation.

[Editor’s note: A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial.]

There are no material facts in dispute in this case. The only thing the barcode displays (if scanned) is a number that references the Plaintiff, and no other data such as name or amount of the debt.

The decision

This is the Eleventh Circuit’s first ruling on the “benign language” exception to 1692f(8). The Court writes that it is persuaded by the host of other courts finding that the presence of a barcode and its embedded account number on an envelope do not violate the FDCPA. The only information revealed by the barcode is an account number, and “[n]umerous courts. . .have rejected the contention that the mere presence of a reference number- a string of random digits-creates an actionable violation under the FDCPA.” (Rodriguez v. I.C. Sys, 2d Cir. 2016)

The Court also closely considered the Douglass case (3d Cir. 2014), which found the Defendant in violation of the FDCPA. However it was concluded that case was different because an account number was visible through the glassine window and the barcode, if scanned, also revealed the consumer’s name and amount of her debt. The Third Circuit declined in that case to address the “benign exception” because these other facts implicated privacy concerns.

The Court in this case in fact also rejected the Third Circuit’s argument that the appearance of the account number on the outside of the envelope is a violation, saying:

“It is illogical for the Act to be concerned with the eventuality that an enterprising third party would obtain, investigate, and decipher an account number's meaning when simply googling the return address would show that the recipient received a debt collection letter. Gardner, 140 F. Supp. 3d at 323; Brooks, 2015 WL 6828142, at *6. Indeed, “if the Act were concerned with the display of information that could if diligently investigated, disclose a recipient's debtor status, it would not permit return addresses-or, arguably, the use of the mails-at all." Gardner, 140 F. Supp. 3d at 323; see also Brooks, 2015 WL 6828142, at *6.”

For these reasons, the Court granted ARS’s motion for judgment and closed the case.

insideARM Perspective

It seems that there is increasing agreement among the courts that visible barcodes constitute “benign language” and therefore do not represent violations of the FCCPA.  insideARM has recently published about a string of positive “envelope” decisions for the ARM industry, including:

Missouri Federal Court Says ‘Benign’ Language on Envelope Does Not Violate FDCPA – January 2016

Industry Gets Favorable Ruling in Debt Collection Envelope Case – August 2016

U.S. District Court Rules Letter with Internal Reference Number Does Not Violate FDCPA – September 2016