KNIGHT AKA FLEMING v. AR RESOURCES, INC.
2:20-cv-07495-JMV-LDW
| D.N.J. | Mar 1, 2021Background
- Plaintiff Marquita Knight allegedly incurred a medical debt and received a March 9, 2020 collection letter from AR Resources, Inc. on behalf of Union Emergency Med Assoc.
- The Letter stated: “our client is a credit reporting client. Your credit report may have a negative impact if we do not hear from you.”
- Knight filed a putative class action under the FDCPA alleging the Letter was deceptive under § 1692e because it implies both AR Resources and the creditor would report the debt and it's unclear whether anyone actually would.
- Defendant moved to dismiss under Fed. R. Civ. P. 12(b)(6) arguing the plaintiff’s interpretation is idiosyncratic and the Letter is not false or misleading.
- The District Court found the Letter ambiguous as to who might report but concluded the statements were neither false nor materially misleading and that plaintiff failed to plead lack of intent or inability to report.
- The complaint was dismissed without prejudice with 30 days to amend; failure to amend would result in dismissal with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Letter violated §1692e (e(10)/e(5)) by implying both entities would report to credit agencies | Knight: wording implies AR Resources and/or creditor will report; ambiguous and deceptive to least sophisticated debtor | AR Resources: interpretation is bizarre/idiosyncratic; statement is not false; either party could report | Court: Letter could be read two ways but neither reading is false or deceptive; §1692e claim fails |
| Whether the ambiguity was material (would affect debtor decision) | Knight: identity of the reporting party could affect decision to pay | AR Resources: common expectation that nonpayment may harm credit; no material difference alleged | Court: plaintiff did not sufficiently allege materiality; ordinary warning about credit impact is not misleading here |
| Whether plaintiff sufficiently alleged that defendant lacked intent or legal ability to report (relevant to e(5)) | Knight (in briefing): argued defendant legally cannot double-report (not pleaded) | AR Resources: such allegations are not in the complaint and cannot be credited on dismissal | Court: Court refused to consider new allegations raised only in briefing; complaint lacks allegations that defendant did not intend or could not report |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (limits on conclusory pleading; plausibility)
- Caprio v. Healthcare Revenue Recovery Group, LLC, 709 F.3d 142 (3d Cir. 2013) (FDCPA construed broadly; materiality and reporting context)
- Riccio v. Sentry Credit, Inc., 954 F.3d 582 (3d Cir. 2020) (post-Caprio en banc decision affecting FDCPA analysis)
- Rosenau v. Unifund Corp., 539 F.3d 218 (3d Cir. 2008) (least sophisticated debtor standard)
- Knight v. Midland Credit Management Inc., [citation="755 F. App'x 170"] (3d Cir. 2018) (ambiguity in use of “report” can be misleading)
- Schultz v. Midland Credit Management, Inc., 905 F.3d 159 (3d Cir. 2018) (conditional language can be misleading when inapplicable)
- Brown v. Card Service Ctr., 464 F.3d 450 (3d Cir. 2006) (actionable where collector threatens action it does not intend to take)
- Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014) (elements required for FDCPA claim)
- Wilson v. Quadramed Corp., 225 F.3d 350 (3d Cir. 2000) (limits on the least-sophisticated-consumer standard)