                    United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 99-3227
                                 ___________

William E. Duffy,                    *
                                     *
            Appellant,               *
                                     *
      v.                             *
                                     *
Kevin W. Landberg, Attorney at       *
Law; New Concepts Business           *
Services, Sued as New Concepts       *
Business Services, Inc., a           *
Minnesota Corporation,               *
                                     *
          Appellees,                 *
________________________             *   Appeal from the United States
                                     *   District Court for the District
Susan M. Quaderer                    *   of Minnesota.
                                     *
            Appellant,               *
                                     *
      v.                             *
                                     *
Kevin W. Landberg, Attorney at       *
Law; New Concepts Business           *
Services, Sued as New Concepts       *
Business Services, Inc., a           *
Minnesota Corporation,               *
                                     *
          Appellees,                 *
________________________             *
                                     *
Dennis G. Hacken,                   *
                                    *
             Appellant,             *
                                    *
      v.                            *
                                    *
Kevin W. Landberg, Attorney at      *
Law; New Concepts Business          *
Services, Sued as New Concepts      *
Business Services, Inc., a          *
Minnesota Corporation,              *
                                    *
             Appellees.             *
                               ___________

                              Submitted: March 13, 2000

                                   Filed: May 25, 2000
                                    ___________

Before RICHARD S. ARNOLD, BEAM, and MURPHY, Circuit Judges.
                           ___________

BEAM, Circuit Judge.

       In this consolidated appeal, William Duffy, Dennis Hacken, and Susan Quaderer
(collectively "debtors") appeal the district court's entry of summary judgment in favor
of Kevin Landberg and New Concepts Business Services (New Concepts). Debtors
commenced this action pursuant to the Fair Debt Collection Practices Act, 15 U.S.C.
§§ 1692, et seq. (FDCPA). The district court denied debtors' motions for partial
summary judgment and granted New Concepts' motion for summary judgment. We
reverse and remand.




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I.    BACKGROUND

       This case is before us for the second time and we will only briefly recount the
factual and procedural history. See Duffy v. Landberg, 133 F.3d 1120 (8th Cir. 1998)
(Duffy I). The dispute originated from letters sent to debtors by New Concepts in an
attempt to collect on bad checks written by debtors. Debtors brought this action
alleging several statements in the letters mischaracterized the extent of their liability
under Minnesota law, and thus violated the FDCPA. In Duffy I, we held third-party
attempts to collect payment on a dishonored check could be "debt collection practices"
within the meaning of the FDCPA and remanded the case to the district court for
further proceedings. 133 F.3d at 1124. The district court subsequently granted
summary judgment in favor of New Concepts, finding that nothing in the letters sent
by New Concepts to collect the debts was unauthorized by Minnesota law.

II.   DISCUSSION

       The FDCPA prohibits debt collectors from using "any false, deceptive, or
misleading representation or means in connection with the collection of any debt." 15
U.S.C. § 1692e. The Act prohibits debt collectors from using unfair means to collect
a debt, including "[t]he collection of any amount (including any interest, fee, charge,
or expense incidental to the principle obligation) unless such amount is expressly
authorized by the agreement creating the debt or permitted by law." 15 U.S.C. §
1692f(1). Further, it is a violation of the FDCPA to threaten to "take any action that
cannot legally be taken." 15 U.S.C. § 1692e(5). In evaluating whether a debt
collection letter is false, misleading or deceptive, the letter must be viewed through the
eyes of the unsophisticated consumer. See Jang v. A.M. Miller and Assoc., 122 F.3d
480, 483 (7th Cir. 1997).

       The letters sent to all three debtors were virtually identical, the only difference
being the amount of the debt. The debtors allege the letters violated the statute because

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New Concepts demanded a $100 civil penalty, a $20 service charge, a $10 collection
charge, and interest charges. Further, the New Concepts' letter stated that in the event
the parties proceeded to litigation, it would seek "in addition to the aforementioned full
recovery, all court costs, service of process costs, attorney's fees, and such other
remedy as the court may grant." The district court found the $100 civil penalty, $20
service charge, and $10 collection fee were all authorized by the Minnesota statute
governing civil liability for the issuance of bad checks. See Minn. Stat. Ann. § 332.50.



       With regard to the interest charges, the district court acknowledged the charges
were "slightly inaccurate" according to the percentage rates in Minnesota Statute §
549.09. Under the rates in section 549.09, the interest charges were overstated by
$1.29 for Hacken, $1.84 for Duffy, and $.65 for Quaderer. However, the district court
determined that because New Concepts' letter only requested payment of approximately
one half of the cumulative charges to satisfy the debtors' accounts, "the insignificant
overstatement of interest charges [did] not violate the FDCPA." Finally, the district
court determined the statement in the letters concerning attorney fees did not actually
constitute an attempt to collect such fees and, consequently, did not violate Minnesota
law.

      We agree with the district court that the $20 service charge and $10 collection
fee were both authorized by Minnesota law. See Minn. Stat. Ann. § 332.50 Subd. 2(d)
($20 service charge allowed), Subd. 2(e) (up to $30 for cost of collection). However,
we disagree with the court's analysis regarding the $100 civil penalty, attorney fees and
the overstated interest calculation.

       New Concepts' letters to debtors state that in addition to being liable for the
amount of the bounced check, "Minnesota state law provides the following . . . civil
penalty in the amount of $100.00." However, Minnesota law actually provides that
the issuer of a dishonored check is liable for "the amount of the check plus a civil

                                           -4-
penalty of up to $100 or up to 100 percent of the value of the check, whichever is
greater." Minn. Stat. Ann. § 332.50 Subd. 2(a) (1) (emphasis supplied). Although the
distinction between saying a debtor is liable under Minnesota law for $100 and the
actual provision that the debtor is liable for up to a $100 civil penalty is a subtle one,
we find there is, in fact, a difference. It is not certain that a Minnesota court would
impose the entire $100 penalty in any given situation. In fact, it is probably unlikely
in the case of a $10 bad check.

       Further, the Minnesota statute provides that after notice is sent to the debtor but
before the case has been heard by the court, the collector "shall settle the claim if the
[debtor] gives the [collector] the amount of the check plus court costs, any service
charge owed under paragraph (d), and reasonable attorney fees if provided for under
paragraph (a), clause (3)." Minn. Stat. Ann. § 332.50 Subd. 2(c) (emphasis supplied).
Therefore, the debtor is liable for up to a $100 civil penalty, but only if the parties
proceeded to hearing by the court. The statute requires the collector to settle the claim
for court costs, the $20 service charge, and attorney fees, if applicable, if the case has
not yet been heard by the court. New Concepts' letter included the entire $100 civil
penalty as part of the amount debtors could pay to satisfy the debt without proceeding
to court. This violated the FDCPA because it was a misleading representation of
Minnesota law. See 15 U.S.C. § 1692e.

      Next, it is clear that attorney fees would not have been recoverable in an action
against debtors under Minnesota law because the amounts of the dishonored checks
were less than $1,250. See Minn. Stat. Ann. § 332.50 Subd. 2(a)(3).1 Thus, the

      1
          The statute reads:

      Whoever issues any check that is dishonored . . . is liable to the holder
      for:
           ...


                                           -5-
statement in the letters was a violation of the statute because it was a threat to take an
"action that cannot legally be taken" under Minnesota law. 15 U.S.C. § 1692e(5).

       This conclusion is especially true in light of the unsophisticated consumer
standard, which is described as a standard "designed to protect consumers of below
average sophistication or intelligence without having the standard tied to 'the very last
rung on the sophistication ladder.'" Taylor v. Perrin, Landry, deLaunay & Durand, 103
F.3d 1232, 1236 (5th Cir. 1997) quoting Gammon v. GC Servs. Ltd. Partnership, 27
F.3d 1254, 1257 (7th Cir. 1994). This standard protects the uninformed or naive
consumer, yet also contains an objective element of reasonableness to protect debt
collectors from liability for peculiar interpretations of collections letters. See Jang, 122
F.3d at 483-84. The unsophisticated consumer would likely be led to believe that New
Concepts would collect attorney fees if the parties went to court. Nor is this a peculiar
interpretation of the letter, because it clearly states that New Concepts would seek
attorney fees in the event legal action was commenced. Accordingly, New Concepts
violated the FDCPA by threatening to seek attorney fees in the event the parties
proceeded to litigation.

      Finally, although the interest calculations were admittedly only slightly
overstated, the letters seeking these overstated interest charges were nonetheless an
attempt to collect interest not permitted by law, and therefore a violation of the plain
language of section 1692f(1).


       (3) reasonable attorney fees if the aggregate amount of dishonored checks
       issued by the issuer to all payees within a six-month period is over
       $1,250.

Minn. Stat. Ann. § 332.50 Subd. 2 (a) (3).

      It is undisputed that the amounts of the dishonored checks written by plaintiffs
were: Duffy - $25.00, Hacken - $11.38, and Quaderer - $24.40.

                                            -6-
III.   CONCLUSION

      Because New Concepts violated the FDCPA with regard to the $100 civil
penalty, the threat to seek attorney fees, and the interest owed by debtors, we reverse
and remand with directions to the district court to enter partial summary judgment in
favor of debtors, and for further proceedings to determine damages and costs.

       A true copy.

             Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                         -7-
