On July 31, Judge J. Michael Seabright, in the District of Hawaii, denied a Defendant debt collector’s motion for summary judgment. In doing so, the Court rejected the Defendant’s argument that it could rely on an informal email from a state agency regarding compliance advice.
Previously, DNF Associates, LLC (“DNF”) had filed a lawsuit against Plaintiff Ronald Viernes seeking to collect a debt. In response, Viernes filed a class action lawsuit against DNF for its failure to register as a debt collector with the state of Hawaii. Per Viernes, by failing to register, DNF violated both state law and the Fair Debt Collection Practices Act (FDCPA). DNF moved for summary judgment, arguing that it never communicated with Viernes because DNF’s lawyers, not DNF, filed the debt collection lawsuit. DNF also argued that it was not required to register as a debt collector and cited its email communication with a state employee as support. The Court rejected both arguments, ruling that DNF could absolutely be held liable for communications sent on its behalf and that because the email upon which DNF relied explicitly stated that it was “not legal advice,” DNF had failed to meet is burden at summary judgment.
Hawaii, like many states, requires debt collectors to register with the Hawaii Department of Commerce and Consumer Affairs (the “DCCA”). Although DNF never disputed its debt collector status for purposes of the FDCPA, DNF opted not to register with the DCCA. In support, DNF relied on an email from a DCCA employee outlining Hawaii’s registration requirements. DNF, however, ignored the second half of the email, which stated: “[The DCCA] will not provide legal advice . . . . Should you believe that you are exempt from registering with the State of Hawaii, then the burden of proof would be upon you to show that registration was not necessary in the event of an investigation.”
Thus, DNF proceeded without registering at its own risk. Per Judge Seabright, because the email was explicitly not “legal advice,” the email was “insufficient for DNF to “meet its burden at summary judgment.”
Judge Seabright also rejected DNF’s argument that the debt collection complaint did not qualify as a communication with Viernes because DNF’s attorneys filed the lawsuit, not DNF. Not only did the Judge Seabright disagree with DNF’s interpretation of its cited authority, he also held that DNF’s position “belies basic principal-agency principles between a lawyer and a client.” Judge Seabright noted that “[u]nder DNF’s theory, any filings in court, including this court, could never be attributed to the client whom attorneys represent[.] That cannot be.”
Judge Seabright’s ruling echoes the approach taken by other District Courts, which have similarly held that failure to register as a debt collector before filing a collection lawsuit could violate the FDCPA. See, e.g., Buhler v. BCG Equities, LLC, No. 2:19-cv-00814 (D. Utah Feb. 24, 2020).