Derosa v. CAC Financial Corp.
278 F. Supp. 3d 555
E.D.N.Y2017Background
- Derosa opened an R' Us/Synchrony MasterCard in 2010, fell behind in 2014, and the account was assigned to CAC for collection.
- CAC sent a June 7, 2015 letter (plaintiff says she did not receive) and an August 7, 2015 collection notice (received) stating a single balance of $2,863.52.
- Neither letter broke the balance into principal, interest, or fees, nor stated whether interest or fees would continue to accrue or whether payment of the stated balance would satisfy the debt.
- Derosa sued under the FDCPA § 1692e, arguing the August 2015 letter was deceptive because it failed to disclose whether the balance could increase due to interest/fees (relying on Avila).
- CAC responded that it did not seek interest or fees and the stated balance was static while CAC collected the debt.
- Cross-motions for summary judgment were filed; the district court granted CAC’s motion and denied Derosa’s.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a collector must affirmatively state a static balance will not increase | Derosa: Avila requires disclosure whether balance may increase; letter is ambiguous | CAC: Balance was static; it did not seek interest/fees so no disclosure was required | Court: No—Avila requires disclosure only when balance may increase; static balance need not be qualified |
| Whether the August 2015 letter was misleading under the least sophisticated consumer standard | Derosa: Letter is open to multiple reasonable interpretations (static, may increase, may or may not increase) | CAC: Letter plainly states amount due; least sophisticated consumer would read it at face value | Court: No—alternative readings are idiosyncratic; letter not misleading |
| Whether failure to use Avila’s safe-harbor language is per se FDCPA violation | Derosa: Collector should have used safe-harbor language or stated payment-in-full terms | CAC: Safe-harbor language is not required and could be misleading if no interest accrues | Court: No—safe-harbor not mandatory; its absence here is not a violation |
| Appropriateness of summary judgment on FDCPA claim | Derosa: Factual disputes about notice content and interpretation warrant judgment for plaintiff | CAC: No genuine issue; objective least-sophisticated-consumer test favors defendant | Court: Summary judgment for CAC; no material fact showing a misleading notice |
Key Cases Cited
- Avila v. Riexinger & Assocs., LLC, 817 F.3d 72 (2d Cir. 2016) (FDCPA requires disclosure that balance may increase when it can increase)
- Carlin v. Davidson Fink LLP, 852 F.3d 207 (2d Cir. 2017) (collection notice that references possible fees/interest must explain how they accrue)
- Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993) (articulating the least sophisticated consumer standard)
- Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996) (definition and limits of the least sophisticated consumer)
- McStay v. I.C. Sys., Inc., 308 F.3d 188 (2d Cir. 2002) (reasonableness preserved within least sophisticated consumer standard)