Ditty v. CheckRite, Ltd., Inc., 973 F. Supp. 1320 (D. Utah 1997) (attorney liability under FDCPA).

973 F.Supp. 1320 (1997)

Rebecca H. and Bryan J. Ditty, et al., Plaintiffs,
v.
Checkrite, Ltd., Inc., et al., Defendants.

Civil No. 2:95-CV-430C.
United States District Court, D. Utah, Central Division.
August 11, 1997.

*1324 Lester A. Perry, Kesler & Rust, Salt Lake City, UT, for Petitioners.  Daniel P. Shapiro, Goldberg, Kohn, Bell, Black, Roosenbloom & Moritz, Ltd., Chicago, IL, Mark O. Morris, Snell & Wilmer LLP, Salt Lake City, UT, Paul C. Droz, Blackburn & Stoll LC, Salt Lake City, UT, for Respondents.

AMENDED MEMORANDUM DECISION AND ORDER

CAMPBELL, District Judge.

This matter is before the court on the parties' cross-motions for summary judgment. A hearing on the parties' motions was held on April 29, 1997. Lester Perry appeared on behalf of plaintiffs, Mark Morris and Julie Thomas appeared on behalf of CheckRite,[1] and Paul Droz and Dori Petersen appeared on behalf of Richard H. DeLoney (sometimes "DeLoney") and DeLoney & Associates, L.L.C. ("DeLoney & Associates"). Having fully considered the arguments of counsel presented at the hearing, the memoranda and supporting materials submitted by the parties, and the applicable legal authorities, the court now enters this Memorandum Decision and Order.

I. BACKGROUND

Plaintiffs are individuals who wrote bad checks for retail purchases in amounts ranging from $2.85 to $46.68. These checks were referred by various merchants to CheckRite for collection. CheckRite sent two collection letters to plaintiffs and subsequently relinquished collection efforts to DeLoney & Associates, the law firm representing CheckRite. DeLoney & Associates sent a third 1325*1325 letter, which informed each plaintiff that their dishonored check "ha[d] been referred by CheckRite to our law firm for litigation." The letter went on to state that the matter could be settled, out of court, for the sum of the face amount of the check, a $15.00 service charge, and an amount ranging from $73.00 to $83.00 listed as "Legal Consideration for Covenant not to Sue." The letter sent to the Dittys also warned of a potential civil action for the amount of the check and stated that other actions, "including fraud in the inducement, negligent misrepresentation, civil shoplifting, or theft by check may also be considered." This warning was not included in the letters sent to the other plaintiffs. In addition to providing check collection services, CheckRite maintains a nationwide check verification system that allows subscribers to access a database to determine whether a check writer has written bad checks in the past.

Richard DeLoney established DeLoney & Associates in September 1994. From the date of its formation until February or March of 1996, DeLoney & Associates was organized as a limited liability company under Utah law. In approximately March 1996, DeLoney & Associates reorganized as a Utah professional corporation.[2] Richard DeLoney has always been the firm's sole attorney. He authored the collection letters sent to the plaintiffs, trained the firm's collection agents, and determined the settlement amounts offered to plaintiffs. DeLoney & Associates collected dishonored checks for CheckRite in the states of Utah, Arizona, and Washington. CheckRite was the firm's largest client, generating one-third to one-half of the firm's income. Between July 1, 1994 and May 9, 1995, CheckRite referred to DeLoney & Associates approximately 9,025 dishonored checks written by Utah residents. During this period, DeLoney & Associates filed twenty-four lawsuits in connection with its collection work for CheckRite. This total included actions for fraud in the inducement, negligent misrepresentation, and civil shoplifting; however, none of the fraud, misrepresentation, or shoplifting actions were filed before DeLoney & Associates sent its March 6, 1995 collection letter to the Dittys.

DeLoney & Associates collected dishonored checks for CheckRite pursuant to an oral agreement negotiated by Richard DeLoney and Neil Auerbach, CheckRite's Senior Vice-President. Under the agreement, when DeLoney & Associates settled an account, CheckRite was to receive the face amount of the dishonored check plus $20.00; DeLoney & Associates was entitled to the remainder of the settlement proceeds.

CheckRite's Salt Lake City offices and DeLoney & Associates occupied space in the same office building. Accounts were referred by CheckRite to the firm electronically, and once the referral was made, DeLoney & Associates was able to access CheckRite's computer system to review account information. Upon receiving an account referral, DeLoney & Associates' computer system automatically generated a collection letter addressed to the writer of the dishonored check.

Plaintiffs'[3] Third Amended Complaint asserts claims under the Fair Debt Collection Practices Act ("FDCPA" or "Act"), 15 U.S.C. §§ 1692-1692o (1982 & Supp.1997), claims under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681u (1982 & Supp.1997), and various state law causes of action[4] against CheckRite, DeLoney & Associates, and Richard H. DeLoney.[5] Plaintiffs 1326*1326 previously sought summary judgment against CheckRite, DeLoney & Associates, and Richard DeLoney; the latter two defendants previously moved to dismiss plaintiffs' initial complaint. These prior motions presented some of the issues now raised by the pending motions. On January 25, 1996, the court denied the prior motions on the ground that the record did not permit a legal finding that collection of dishonored checks falls outside the coverage of the FDCPA. Order, January 25, 1996 (Docket No. 76).

II. STANDARD OF REVIEW

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court must construe all facts and reasonable inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986): Pueblo of Santa Ana v. Kelly, 104 F.3d 1546, 1552 (10th Cir.1997). The fact that the parties have filed cross-motions for summary judgment does not affect the applicable standard. Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir.1993).

Once the moving party has carried its burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by ... affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) (quoting Fed. R.Civ.P. 56(e)). The non-moving party must "make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. at 2552. The mere existence of a scintilla of evidence in support of the non-moving party's case is insufficient; there must be evidence on which the jury could reasonably find for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).

III.  DISCUSSION

The following issues are raised by the pending motions: (1) the scope of the FDCPA, that is, whether the obligation created by a dishonored check is a "debt" as defined by the Act; (2) if the Act does apply, whether defendants' conduct violated it; (3) whether defendants violated the FCRA; (4) whether CheckRite may be held liable for the actions of its attorney; (5) whether Richard DeLoney may be held personally liable for the collection activities of DeLoney & Associates; (6) whether plaintiffs are entitled to injunctive relief; and (7) whether the FDCPA claims of plaintiffs Crandall and Robison are cognizable under the Act.

A.  Scope of the FDCPA

The FDCPA prohibits a debt collector from using certain abusive practices to collect a "debt;" therefore, the Act's scope is necessarily limited by its definition of this term. The Act defines a "debt" as:

any obligation or alleged obligation to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes whether or not such obligation has been reduced to judgment.

15 U.S.C. § 1692a(5). Defendants maintain that the Act is not implicated here because a dishonored check does not involve an offer or extension of credit, a condition defendants argue must be read into the definition of "debt."

Three circuits have addressed the breadth of the FDCPA's definition of "debt:" the Third Circuit in Zimmerman v. HBO Affiliate Group, 834 F.2d 1163 (3d Cir.1987), the Seventh Circuit in Bass v. Stolper, Koritzinsky, Brewster & Neider, 111 F.3d 1322 (7th Cir.1997),and the Ninth Circuit in Charles v. Lundgren & Assocs., P.C., 119 F.3d 739 (9th Cir.1997). In Zimmerman, the defendant cable television companies demanded that plaintiffs pay for allegedly pirated microwave television signals. Plaintiffs sued, arguing, inter alia, that the defendants' collection methods ran afoul of the FDCPA. Affirming the district court's dismissal of plaintiffs' FDCPA claims, the Third Circuit first determined 1327*1327 that the term "transaction" in the Act's definition of "debt" did not include asserted tort liability, but rather included only contractual or consensual consumer exchanges. Zimmerman, 834 F.2d at 1168. Pirating cable television signals, reasoned the court, did not constitute such an exchange. Id. The court then added, without discussion or analysis, that a "debt" under the FDCPA arises from "the same type of transaction as is dealt with in all other subchapters of the Consumer Credit Protection Act, i.e., one involving the offer or extension of credit to a consumer." Id. However, Zimmerman did not address the issue here — whether the obligation created by a dishonored check constitutes a "debt" under the Act.

In Bass, the Seventh Circuit confronted this issue and addressed many of the same arguments advanced by defendants.  Beginning with the text of the FDCPA itself the court determined that the Act's definition of "debt" was clear, unambiguous, and devoid of any condition mandating that a "debt" involve an offer or extension of credit.  Bass, 111 F.3d at 1325-26.  Thus, "[a]s long as the transaction creates an obligation to pay, a debt is created."  Id. at 1325.  The court concluded that a check creates just such an obligation to pay, and should the check be dishonored, the obligation remains.  Id.  Looking beyond the Act's terms, the court determined that "the [FDCPA's] legislative history, provides an unequivocal statement of the drafters' intent on this issue: [T]he committee intends that the term 'debt' include consumer obligations paid by check or other non-credit consumer obligations."'  Id. at 1327 (quoting H.R.Rep. No. 95-131, 95th Cong. 1st Sess., 4 (March 29, 1977)), U.S. Code Cong. & Admin. News at 1695, 1698.  In light of the Act's language and legislative history, the court rejected the notion that the Act's codification as an amendment to the Consumer Credit Protection Act ("CCPA"), 15 U.S.C. §§ 1601-1615, evidenced congressional intent to limit coverage of the Act to debts arising from credit transactions.  Id. at 1328.  The court found the statutory structure unpersuasive "in light of the continuing expansion of the CCPA's protective landscape," and observed that "[a]lthough the CCPA as originally enacted may have focused on consumer protection in credit-based financial transactions, amendments to the Act suggest an enlargement of the CCPA to include consumer protections in other financial arenas."  Id.  The location of these amendments, including the FDCPA, "as amendments to the CCPA evidence the nature of the CCPA as a set of functionally free-standing acts united not by their regulation of credit transactions, but by their goal of providing protection to consumers in a variety of potentially abusive financial situations." Id. Distinguishing Zimmerman, the court observed that the Third Circuit's sweeping conclusion was based solely on the Act's placement in the CCPA and considered neither the unambiguous language of the Act's definition of "debt" nor the Act's legislative history, factors that the Seventh Circuit found probative of Congress' intent. Id. at 1326.

Charles represents the most recent appellate examination of the FDCPA's coverage. Finding the Seventh Circuit's reasoning in Bass to be "sound," the Ninth Circuit concluded that "[a] dishonored check constitutes an FDCPA `debt,' and therefore the FDCPA prohibits check collectors from using abusive practices." Charles, 119 F.3d at 742.

This court joins the Seventh and Ninth Circuits in reaching the same conclusion. Accordingly, defendants' motions for summary judgment are denied on this issue.

B.  FDCPA Claims

Plaintiffs allege that defendants violated the Act by: (1) attempting to collect excessive fees; (2) violating plaintiffs' debt validation rights; (3) making a variety of threats and misleading representations; (4) and improperly using CheckRite's check verification system (also claimed to be a violation of the FCRA).

1.  Excessive Fees

Plaintiffs maintain that defendants' attempts, in some instances successful, to collect amounts significantly greater than the face amounts of plaintiffs' dishonored checks violated § 1692f(1) of the Act, which prohibits "[t]he collection of any amount ... unless such amount is expressly authorized by the agreement creating the debt or permitted by 1328*1328 law" and violated § 1692e, which prohibits "any false, deceptive, or misleading representation or means in connection with the collection of any debt."[6] It is clear that plaintiffs never authorized defendants, by agreement or otherwise, to collect the fees they sought. Therefore, unless such fees are permitted by Utah law, defendants' collection efforts violated § 1692f(1). See Patzka v. Viterbo College, 917 F.Supp. 654, 659 (W.D.Wis.1996); Newman v. Checkrite, 912 F.Supp. 1354, 1367-68 (E.D.Cal.1995).

Utah's dishonored instruments statute, Utah Code Ann. §§ 7-15-1 to -3 (1995), allows the holder of a dishonored check to "impose a service charge that may not exceed $15." § 7-15-1(2). The drawer of a dishonored check may be liable for a sum greater than the face amount of the check, plus the service charge, only if a civil collection action is filed. § 7-15-1(3). CheckRite never itself attempted to collect excessive fees. Its collection letters requested from each plaintiff only the face amount of the dishonored check plus a $15.00 service charge. However, as discussed more fully infra, Part III.D, CheckRite may incur vicarious liability under the Act for violations of § 1692f(1) committed by DeLoney & Associates.

It is undisputed that DeLoney & Associates attempted to collect fees greater than $15.00 through the "covenant not to sue" practice without first having filed suit. Indeed, the very goal of the letter sent by the firm to plaintiffs was to settle their accounts short of actual litigation. The dishonored instruments statute is clear: Until a civil action is filed, fees in excess of $15.00 may not be charged. Therefore, the fees DeLoney & Associates attempted to collect were not permitted by Utah law and, in fact, violated Utah law.

DeLoney & Associates argues that because it could have sued plaintiffs for civil conversion or shoplifting instead of proceeding under the dishonored instruments statute, the $15.00 limit of Utah Code Ann. § 7-15-1(2) does not apply. However, the firm's own conduct makes clear that it was proceeding under the dishonored instruments statute, for its collection letter, sent to each plaintiff, listed a "service charge" in the amount of $15.00. Richard DeLoney testified in his deposition that this figure was used because it was the specific amount allowed by Utah Code Ann. § 7-15-1(2). Further, to accept DeLoney & Associates' argument would permit holders of dishonored checks to easily avoid the provisions of the dishonored instruments statute. Such a result would undermine the effectiveness of the statute and would be inconsistent with Utah Legislature's intention that dishonored checks be governed by the specific procedures outlined in the statute.

Because the excessive fees charged by DeLoney & Associates were neither expressly authorized by the plaintiffs nor permitted by Utah law, they violated § 1692f(1) of the Act. Plaintiffs are entitled to summary judgment on this issue.[7]

2.  Thirty-Day Validation Period

Section 1692g requires a debt collector to inform a debtor of his or her right to dispute the validity of a debt. 15 U.S.C. § 1692g(a). This notice must be provided in the debt collector's initial communication with the debtor, or within five days following the initial communication, and must notify the debtor of the amount of the debt, the creditor to whom the debt is owed, and that unless the validity of the debt is disputed in writing within thirty days, the debt collector will assume that the debt is valid. Id. The 1329*1329 validation language may not be contradicted or overshadowed by the remainder of the letter containing the validation notice or by language in future communications. Robinson v. Transworld Systems, Inc., 876 F.Supp. 385, 391 (N.D.N.Y.1995) (internal citations omitted). CheckRite included the required validation notice in its first letter to plaintiffs. Likewise, the letter sent by DeLoney & Associates contained a validation notice. Both validation notices provided the information required by the Act; however, the collection letter sent by DeLoney & Associates also stated that "[n]otwithstanding your right to dispute the validity of the debt within this thirty (30) day period, we may not delay in instituting a collection lawsuit, except as otherwise required by the Fair Debt Collection Act." Plaintiffs contend that this additional language violated § 1692g because, according to plaintiffs, that provision prohibits all collection efforts until the thirty-day validation period has passed. Defendants argue that § 1692g simply requires that any ongoing collection efforts cease once a debtor disputes a debt within the thirty-day period. The court agrees with defendants.

Section 1692g contains no express requirement that collection efforts be delayed until the thirty-day period has passed. Instead, the statute states that if the debtor disputes a debt, "the debt collector shall cease collection of the debt." 15 U.S.C. § 1692g(b) (emphasis added). To accept plaintiffs' reading of § 1692g would require the court to limit the provision in a manner directly contrary to its clear and unambiguous terms. This the court cannot do, for "absent any `indication that doing so would frustrate Congress's clear intention or yield patent absurdity, [the court's] obligation is to apply the statute as Congress wrote it.'" Hubbard v. United States, 514 U.S. 695, 703, 115 S.Ct. 1754, 1759, 131 L.Ed.2d 779 (1995) (quoting BFP v. Resolution Trust Corp., 511 U.S. 531, 570, 114 S.Ct. 1757, 1778, 128 L.Ed.2d 556 (1994) (Souter, J., dissenting)).

Plaintiffs also claim that the collection letter sent by DeLoney & Associates to the Dittys violated § 1692g because the validation notice, which appeared on the reverse side of the letter, was "overshadowed" by language on the letter's front side.[8]  Plaintiffs' argument is flawed, however, because it ignores the fact that the letter, dated March 6, 1995, was not the "initial communication" made with the Dittys. Rather, the "initial communication" with the Dittys was CheckRite's January 19, 1995 letter. Section 1692g does not require another debt collector, undertaking collection efforts after a validation notice has been timely sent, to provide additional notice and another thirty-day validation period. More than thirty days passed between the time CheckRite sent its initial letter and the time DeLoney & Associates sent its letter. Therefore, the Dittys' right to dispute the validity of the debt expired before the DeLoney & Associates letter was sent. The validation language contained therein was gratuitous and did not violate § 1692g.

Accordingly, defendants are granted summary judgment on plaintiffs' claims based on § 1692g.

3.  Threats and Misleading Representations

Plaintiffs claim that defendants' use of the "covenant not to sue" practice violated various provisions of § 1692e which make unlawful the use of deceptive practices in the collection of debts. By representing that they were seeking funds as a "covenant not to sue" or "settlement offer," argue plaintiffs, defendants misrepresented the amounts they were lawfully permitted to collect under the dishonored instruments statute. Defendants contend that all they conveyed to plaintiffs were offers to settle legal disputes and that public policy favors the resolution of legal disputes short of actual litigation.

The court analyzes the challenged statements under the "least sophisticated consumer" standard. This standard "ensure[s] that the FDCPA protects all consumers, the gullible as well as the shrewd." Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.1993). Additionally, the least sophisticated consumer standard is the most widely accepted test used to determine whether a collection letter violates § 1692e. Id. (listing 1330*1330 federal district and circuit courts that have adopted the standard).

The collection letters sent by CheckRite did not contain any false, misleading, or deceptive statements in violation of § 1692e. They simply informed the debtor of the amount due, listed a $15.00 service fee, and advised the debtor that he or she may incur additional liability in the form of attorney fees and court costs if CheckRite referred the dishonored check to outside counsel for litigation. The letter also estimated the debtor's potential liability.

The letters sent by DeLoney & Associates were not equally benign. Each letter purported to make a settlement offer comprised of the face amount of the check, a $15.00 service charge, and a figure listed as "Legal Consideration for Covenant Not to Sue." The letters failed to advise debtors that the dishonored instruments statute prohibited the collection of any amount greater than the face amount of the check, plus a $15.00 service fee, unless a lawsuit was filed. Given this omission and defendants' efforts to collect excessive fees under the guise of a covenant not to sue, the court finds that no reasonable juror could conclude that defendants' mailings did not falsely represent the amounts defendants could lawfully collect, in violation of §§ 1692e(2)(A) & (10).

The letter sent by DeLoney & Associates to the Dittys differed slightly from that sent to the other plaintiffs and must be considered separately. The letter warned the Dittys not only of the possibility of a civil action for the amount of the check but that "[o]ther actions, including fraud in the inducement, negligent misrepresentation, civil shoplifting, or theft by check may also be considered."[9]  Plaintiffs claim that these statements violated § 1692e(5) because each constituted a "threat to take [an] action that cannot legally be taken or that is not intended to be taken".

At the time DeLoney & Associates sent the letter to the Dittys, the firm had never prosecuted a claim for civil shoplifting or theft by check. However, Richard DeLoney testified in his deposition that at the time the Ditty letter was sent, his research led him to conclude that such actions could be maintained. Mr. DeLoney also testified that after the Ditty letter was sent, actions of this type were filed against certain other debtors.

Defendants maintain that the letter's statement that "other actions ... may be considered" did not threaten legal action, but rather advised the Ditty's, in good faith, of their potential liability. While the letter does not explicitly state that an action will be brought against the Dittys, a reasonable jury applying the least sophisticated consumer standard could conclude that the letter's warning that "other actions ... may be considered" threatened suit. See United States v. National Financial Services, Inc., 98 F.3d 131, 137-38 (4th Cir.1996) (affirming summary judgment for plaintiffs on claim that statements regarding possible legal action violated §§ 1692e(5) & (10), even when creditor did not intend to file suit), Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d Cir.1993) (finding statement that creditors "have instructed us to proceed with whatever legal means is necessary" could be interpreted by least sophisticated consumer as threat of imminent suit). Nevertheless, because Richard DeLoney's research led him to conclude that the actions listed in the Ditty letter could be maintained and he did file such actions after mailing the letter, and because Utah law makes the passing of bad checks a criminal offense in some circumstances, the court concludes that there are disputed issues of fact regarding defendants' intent in warning the Dittys of their potential liability. The record also does not permit the court to determine as a matter of law how the least sophisticated consumer would interpret DeLoney & Associates' warning that other actions might be brought against plaintiffs.

Accordingly, because the letters sent to plaintiffs by DeLoney & Associates contained false, misleading, or deceptive statements in violation of § 1692e, plaintiffs are granted summary judgment on this issue. However, factual issues prevent the court from determining whether additional statements contained in DeLoney & Associates' letter to the 1331*1331 Dittys also violated § 1692e. Letters sent by CheckRite to plaintiffs did not violate § 1692e; thus, CheckRite's motion for summary judgment is granted as to plaintiffs' claim that CheckRite violated § 1692e directly.[10]  As discussed more fully infra,Part III.D, CheckRite may be held vicariously liable for violations of § 1692e committed by DeLoney & Associates.

4.  Check Verification System

Plaintiffs allege that by placing plaintiffs' names on CheckRite's check verification system, defendants: (1) made impermissible third party communications in violation of § 1692c(b) of the FDCPA, and (2) reported false information in violation of § 1681e(b) of the FCRA and § 1692e(8) of the FDCPA.[11]

a. Third Party Communications

Section 1692c(b) prohibits a debt collector from communicating, "in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector." It is undisputed that CheckRite disseminated information regarding plaintiffs' dishonored checks to its merchant-subscribers via its nationwide verification network. The court concludes that these communications were undertaken, at least in part, "in connection with" CheckRite's efforts to collect on plaintiffs' dishonored checks. Indeed, CheckRite's first collection letter to plaintiffs warned that "[d]ata from this check has been entered into our computer. Certain data (in coded form) may be reported to our member merchants and may affect your check cashing privileges. This data will be cleared upon receipt of your prompt payment." (Emphasis added). While CheckRite may have had some legitimate business purpose for making such communications, it is clear that the practice was also designed to provide CheckRite with additional leverage in collecting the debts created by plaintiffs' dishonored checks. The court also concludes that CheckRite's subscribers were not within the class of third parties to whom such communications may be made under § 1692c(b).

Therefore, whether CheckRite is liable under § 1692c(b) turns on whether CheckRite itself is a "consumer reporting agency" for purposes of its check verification activities. If so, argues CheckRite, § 1692c(b) is not implicated by debt-related communications from CheckRite the "debt collector" to CheckRite the "consumer reporting agency." As discussed more fully infra, Part III.C, the record does not permit the court to determine whether CheckRite is or is not a "consumer reporting agency" as a matter of law.

Plaintiffs also argue that DeLoney & Associates is liable under § 1692c(b) for the placement of plaintiffs' names on the check verification system. In support of this contention, plaintiffs rely on the fact that DeLoney & Associates could accept a debtor's partial payment in full satisfaction of the covenant not to sue. Plaintiffs also point to CheckRite's practice of not removing a particular debtor's name from the verification system until being notified by DeLoney & Associates that the debtor's account had settled. The court does not find these facts compelling. The record is clear that CheckRite alone administered the verification system. CheckRite placed names on the system, and CheckRite, in its discretion, removed names from the system. DeLoney & Associates' role was simply to notify CheckRite that a particular account had settled; whether the name associated with that account was actually removed, however, was CheckRite's decision. In addition, even if the notifications given by DeLoney & Associates to CheckRite were considered "communications" for purposes of 1332*1332 § 1692c(b), such communications occurred not "in connection" with the collection of debts, but rather after the debts had been collected.

That DeLoney & Associates incurs no direct liability from the check verification system does not end the inquiry, for if found to be engaged in a joint venture with CheckRite, the firm may be held liable for unlawful third party communications committed by CheckRite. "Joint venturers stand in the same relationship to each other as partners." Rogers v. M.O. Bitner Co., 738 P.2d 1029, 1034 (Utah 1987) (citing Kemp v. Murray, 680 P.2d 758, 759 (Utah 1984)). Thus, principles governing liability among partners apply. Id. Utah Code Ann. § 48-1-10 provides:

Where by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his copartners loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.

Holding DeLoney & Associates liable as CheckRite's joint venturer would require two predicate findings: (1) that CheckRite and DeLoney & Associates were engaged in a joint venture, and (2) that CheckRite violated § 1692c(b) by placing plaintiffs' names on its verification system. However, as discussed more fully supra, Part III.B.4.a, and infra,Parts III.C & III.D.1, factual issues preclude making either finding at the summary judgment stage.

Accordingly, because the court cannot determine, as a matter of law, whether CheckRite was a "consumer reporting agency" or whether DeLoney & Associates is liable for any alleged violations of § 1692c(b), summary judgment is denied on this issue.

b. False Information

Section 1692e(8) prohibits "[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false[.]" Plaintiffs allege that defendants violated this provision by failing to disclose to subscribes of CheckRite's verification system that defendants had demanded from plaintiffs a fee, in the form of a covenant not to sue, that exceeded the amount defendants were authorized to collect under Utah law. CheckRite argues that plaintiffs have not shown that any false information was disclosed. DeLoney & Associates maintains that it played no role in the administration of the verification system. The court finds that summary judgment is inappropriate on this issue because neither plaintiffs nor defendants have presented any admissible evidence regarding the substance of the communications allegedly made to CheckRite's subscribers. Without knowing what "credit information," if any, was communicated to the subscribers, the court cannot determine whether such communications were known or should have been known to be false, in violation of § 1692e(8).

Accordingly, summary judgment is denied on this issue.

C.  FCRA Claims

FCRA liability attaches to "consumer reporting agencies" in their preparation and dissemination of "consumer reports" and to certain "users" of such reports. DiGianni v. Stern's, 26 F.3d 346, 348 (2d Cir.), cert. denied, 513 U.S. 897, 115 S.Ct. 252, 130 L.Ed.2d 173 (1994). Plaintiffs contend that defendants are "consumer reporting agencies" subject to the FCRA's regulations and obligations. As used in the FCRA, a "consumer reporting agency" is:

any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

15 U.S.C. § 1681a(f). "[T]he term refers to firms that are in the business of assembling and evaluating consumer credit information[,] `... a function which involves more than receipt and retransmission of information identifying a particular debt.'" Id. at 349 (quoting D'Angelo v. Wilmington Medical Ctr., Inc., 515 F.Supp. 1250, 1253 (D.Del. 1981)).

1333*1333 The little evidence in the record regarding CheckRite's verification activities does not reveal whether CheckRite acted merely as a conduit for debt-related information or as something more. The parties' unsupported allegations that CheckRite was or was not a consumer reporting agency are not sufficient to meet their respective burdens on summary judgment.

The record does reveal, however, that DeLoney & Associates was not a "consumer reporting agency" under the FCRA. There is no evidence that the law firm was in the business of assembling or evaluating consumer credit information. Rather, the record indicates that the firm simply notified CheckRite that a particular account had been settled. Merely furnishing information about a particular debt does not draw DeLoney & Associates within the definition of a "consumer reporting agency" Id. at 348-49; Rush v. Macy's New York Inc., 775 F.2d 1554, 1557 (11th Cir.1985); D'Angelo, 515 F.Supp. at 1253.

Because the record at this stage does not permit the court to determine, as a matter of law, whether CheckRite was a "consumer reporting agency," the court denies CheckRite's and plaintiffs' motions as they pertain to plaintiffs' FCRA claims. Because DeLoney & Associates was not a "consumer reporting agency" as defined by the FCRA, its motion for summary judgment is granted as to plaintiffs' FCRA claims.

D.  CheckRite's Vicarious Liability

While the FDCPA itself is silent on the issue of vicarious liability, a debt collector may be held vicariously liable under the Act for the conduct of its attorney. Newman v. Checkrite California, Inc., 912 F.Supp. 1354, 1370 (E.D.Cal.1995) (citing Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1516 (9th Cir.1994)); see also Martinez v. Albuquerque Collection Servs., 867 F.Supp. 1495, 1502 (D.N.M.1994); Kimber v. Federal Financial Corp., 668 F.Supp. 1480, 1486 (M.D.Ala. 1987); 17 Am.Jur.2d, Consumer Protection § 200 (1990).