Romine v. Diversified Collection Services, Inc.
155 F.3d 1142, 98 Daily Journal DAR 10057, 98 Cal. Daily Op. Serv. 7250 (1998)
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Rule of Law:
A company that regularly provides a service to debt collectors which involves directly contacting debtors to obtain their private information for the collector's use and conveying debt collection messages engages in the indirect collection of a debt, qualifying it as a "debt collector" under the Fair Debt Collection Practices Act (FDCPA).
Facts:
- Diversified Collection Services (DCS), a debt collection agency, entered into a service agreement with Western Union for its Automated Voice Telegram (AVT) service, which Western Union marketed specifically to the credit and collections industry.
- DCS provided Western Union with Steve C. Romine's name and address, but neither party knew his telephone number.
- Western Union sent Romine a mailgram titled "NOTIFICATION OF PERSONAL DELIVERY TELEGRAM HELD FOR DELIVERY," stating it could not deliver the message without his phone number to confirm his identity.
- In response, Romine called the toll-free number provided by Western Union.
- A Western Union operator requested and obtained Romine's name, address, and unlisted telephone number, which was also captured by a caller ID system.
- After obtaining this information, the operator read Romine a debt collection message prepared by DCS.
- Western Union subsequently provided Romine’s unlisted telephone number to DCS.
- DCS then used the newly-acquired telephone number to contact Romine on several occasions.
Procedural Posture:
- Steve C. Romine filed a class action complaint against Western Union and Diversified Collection Services (DCS) in the U.S. District Court, alleging violations of the FDCPA.
- Western Union filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6), arguing it was not a 'debt collector' under the statute.
- The district court treated the motion as one for summary judgment and granted it, dismissing Western Union from the case.
- The district court then certified the partial dismissal for immediate appeal pursuant to Fed. R. Civ. P. 54(b).
- Romine (Appellant) appealed the district court's judgment dismissing Western Union to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does a telecommunications company that regularly provides a service to debt collectors, which involves contacting debtors to obtain their unlisted telephone numbers and relaying debt collection messages, qualify as a 'debt collector' through its indirect attempts to collect a debt under the Fair Debt Collection Practices Act (FDCPA)?
Opinions:
Majority - Hug, Chief Judge
Yes. A company that regularly provides such services qualifies as a debt collector under the FDCPA because its activities constitute an indirect attempt to collect a debt. The court reasoned that the term 'debt collector' under the FDCPA is broad and includes those who 'indirectly' attempt to collect debts. Western Union’s AVT service was specifically marketed as a 'collections service' to 'stimulate recoveries.' Its actions went beyond those of a mere messenger; it used the urgency associated with the Western Union name to deceptively elicit debtors' unlisted phone numbers under the false pretense of 'confirming' an identity, when in fact it did not possess the numbers to begin with. This conduct, combined with relaying the collection message and providing the newly acquired phone number to the collection agency, was an integral part of the debt collection process, thus bringing Western Union within the scope of the FDCPA.
Dissenting - Fernandez, Circuit Judge
No. Western Union did not act as a debt collector, even indirectly, because its actions did not constitute debt collection. The dissent argued that while Western Union's behavior was devious and cynical, its service was limited to transmitting the actual debt collector's message and obtaining a telephone number. The collection of a telephone number is not the same as the collection of a debt. Therefore, while Romine may have other legal claims against Western Union for its deceptive practices, a cause of action under the FDCPA is inappropriate because Western Union did not engage in debt collection.
Analysis:
This decision significantly broadens the scope of who can be considered a 'debt collector' under the FDCPA. It establishes that third-party service providers, not just traditional collection agencies, can be held liable if their services are an integral and regular part of the debt collection process, particularly if they involve deceptive practices. The ruling puts vendors on notice that simply acting as an intermediary or information gatherer for a debt collector does not automatically insulate them from FDCPA liability. This precedent requires courts in future cases to look at the substance and purpose of a company's actions rather than its formal business classification to determine FDCPA applicability.
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