Bates v. C & S Adjusters, Inc.

Facts

Bates incurred a debt while he lived in the Western District of Pennsylvania. The creditor, a corporation with its principal place of business in that district, referred the account to C & S Adjusters, Inc. (C & S), a local collection agency that transacts no regular business in New York. Meanwhile, Bates had moved to the Western District of New York. C & S mailed a collection notice to Bates at his Pennsylvania address. The Postal Service forwarded the notice to his new address in New York. C & S did not deliberately direct a communication to the New York district. After receiving the notice, Bates sued C & S in the Western District of New York. He alleged violations of the Fair Debt Collection Practices Act, a federal statute that regulates bill collectors, and demanded statutory damages, costs and attorney's fees. In its answer, C & S asserted two affirmative defenses (defenses that can defeat a claim even if its allegations are true). It also counterclaimed for costs, alleging that the action was instituted in bad faith and for purposes of harassment. The facts relevant to venue, meaning the proper district for the lawsuit, were not in dispute. The court noted that C & S appears not to have marked the notice with instructions not to forward it.

Issues

1. Is venue proper under 28 U.S.C. § 1391(b)(2) in the district where the debtor lives and to which a collection agency's notice was forwarded, when the agency did not deliberately send the notice there?
2. Under the Fair Debt Collection Practices Act, is receipt of a collection notice a substantial part of the events giving rise to the claim?

Holding

Receipt of a collection notice is a substantial part of the events giving rise to a claim under the Fair Debt Collection Practices Act. Venue was therefore proper in the Western District of New York, where Bates received the forwarded notice, even though C & S did not deliberately direct it there.