Altman v. J.C. Christensen & Associates, Inc.
2015 U.S. App. LEXIS 7980
| 2d Cir. | 2015Background
- Plaintiff Isaac Altman received a debt-collection letter from J.C. Christensen offering settlement options that quantified the dollar and percentage "savings" if he accepted reduced-payment or lump-sum offers.
- The Letter stated specific savings (e.g., settle now for $3,155.43, "a savings of 48%") relative to the outstanding account balance of $6,068.13.
- Altman sued under the Fair Debt Collection Practices Act (FDCPA), alleging the Letter was deceptive because it did not warn that forgiven debt may be taxable, which could reduce the net savings.
- The district court dismissed the complaint under Rule 12(c); Altman appealed.
- The Second Circuit applied the "least sophisticated consumer" standard and considered whether the failure to disclose potential tax consequences made the settlement-savings representation false or misleading.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether stating savings from a settlement without warning of possible tax consequences violates FDCPA § 1692e | Altman: Representing dollar/% savings is misleading because discharged debt may be taxable, so net savings could be less than stated | J.C. Christensen: Savings statement accurately describes reduction of the outstanding balance; FDCPA does not require disclosure of potential tax consequences | Court: No violation — the savings statement is not deceptive under the least sophisticated consumer standard; no affirmative tax-disclosure requirement |
| Whether Ellis v. Cohen & Slamowitz controls | Altman: Ellis allowed a similar claim to survive dismissal, supporting his theory | J.C. Christensen: Ellis is unpersuasive and distinguishable; the Letter here plainly describes savings "on your outstanding account balance" | Court: Rejects Ellis as persuasive authority for imposing a tax-disclosure duty |
Key Cases Cited
- Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360 (2d Cir. 2005) (describes the "least sophisticated consumer" standard)
- Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993) (articulates objective "least sophisticated consumer" test)
- Hayden v. Paterson, 594 F.3d 150 (2d Cir. 2010) (standard of review for Rule 12(c) judgment on the pleadings)
- Ellis v. Cohen & Slamowitz, LLP, 701 F. Supp. 2d 215 (N.D.N.Y. 2010) (district court allowed similar tax-disclosure theory to survive dismissal)
- Landes v. Cavalry Portfolio Servs., LLC, 774 F. Supp. 2d 800 (E.D. Va. 2011) (holding no FDCPA duty to disclose potential tax consequences when stating settlement savings)