A case out in California is attempting to test the limits of what defines a consumer debt, at least as far as the Fair Debt Collection Practices Act is concerned. The issue is so thorny that a District Court judge has denied competing motions for summary judgment from both the plaintiff and the defendant, ruling that it is up to a jury to decide.
A copy of the ruling in the case of Kershner v. Hillcrest, Davidson & Associates can be accessed by clicking here.
What the debt is for is not in question. What is in question is whether that debt is a consumer debt, as defined by the FDCPA. The plaintiff, who was running for city council in Auburn, Calif., took out an ad in local football programs for an event he was hosting. The details of the event changed and the plaintiff attempted to contact the printer to change the ad, but was unsuccessful. Since the ad included incorrect information, the plaintiff opted not to pay the printer, which hired the defendant to collect on the unpaid debt. A commercial collector contacted the plaintiff and left a voicemail on his cell phone attempting to collect on the debt. The collector also left a message on the plaintiff’s father’s landline and sent multiple text messages to the plaintiff. The collector threatened to notify the mayor of Auburn and the city council if the debt was not paid.
The plaintiff filed suit, alleging the defendant engaged in abusive collection practices in violation of the FDCPA. The defendant countered that the debt does not meet the definition of “debt” in the FDCPA — which defines it as “any obligation or alleged obligation of a consumer 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.”
The plaintiff argued that his debt is analogous to student loan debt and that it is a consumer debt because he “incurred the debt for the purpose of personal growth and career advancement rather than with a profit motive or other business-related purpose.”
No federal court has ever ruled on whether a debt incurred during a political campaign is a consumer debt or not, and Judge Troy Nunley of the District Court for the Eastern District of California is going to let a jury decide.
“Although Plaintiff purchased the advertising to raise money, the Court cannot say as a matter of law that Plaintiff’s purpose was primarily commercial,” Judge Nunley wrote. “A political campaign is inherently different than a for-profit business. Further, it is undisputed that Plaintiff instructed GCM to bill him personally, did not register as a campaign committee with the State of California, and paid all campaign-related expenses from his personal bank account. Defendant argues Plaintiff’s conduct is akin to a business investment and emphasizes Plaintiff would be receiving a salary if elected. … Plaintiff further asserts his motive in running for city council was solely to serve his community and he had no interest in, or need for, the salary the position paid.”
