POLLAK v. PORTFOLIO RECOVERY ASSOCIATES, LLC
3:15-cv-04025
D.N.J.Jan 17, 2018Background
- PRA purchases charged-off consumer credit-card debts and uses a separate "Litigation Department" that sends standardized LL1 and LL2 letters before any attorney review; LL2 is always sent before referral to counsel.
- LL1 letters (sent automatically on transfer to Litigation Department) offered settlement options, stated a 30-day deadline, warned of "potential legal action," and included a front-page disclaimer: “At this time, no attorney within the Litigation Department has personally reviewed the particular circumstances of your account.”
- Pollak (U.S. Bank account) and Beneli (Citibank account) received LL1 then LL2; PRA did not have attorney review prior to LL1 mailings; PRA later sued Pollak and prepared but paused suit regarding Beneli after a dispute.
- Plaintiffs brought consolidated putative class actions under the FDCPA, alleging LL1 letters violated 15 U.S.C. § 1692e (subsections (3), (5), (10)); parties cross-moved for summary judgment and Plaintiffs moved for class certification.
- The court denied summary judgment on whether LL1 threatened imminent litigation (§ 1692e(5) and § 1692e(10)) because a reasonable juror could view the LL1 as either a mere settlement offer or a threat; but granted summary judgment to PRA as to claims that LL1 falsely implied attorney involvement (§ 1692e(3)) and that stating the account was transferred to the Litigation Department was false.
- The court certified two New Jersey classes (U.S. Bank and Citibank recipients) under Rule 23(b)(3), finding the class definitions ascertainable and that common questions predominate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LL1 threatened imminent legal action in violation of § 1692e(5) | LL1’s deadlines, references to Litigation Department, and warnings of "potential legal action" created false urgency and threatened imminent suit PRA did not intend to bring | LL1 was a settlement offer; conditional language and later litigation (in Pollak) show no false threat | Denied summary judgment to both sides; jury must decide whether LL1 conveyed an imminent/threatening litigation threat. If jury finds threat, PRA violated § 1692e(5). |
| Whether LL1 violated § 1692e(10) by deceptive means (including 30-day deadline) | The deadline and language created a false sense of a one-time offer and misleading urgency, violating § 1692e(10) | Deadline and "We are not obligated to renew this offer" safe-harbor mean no deception | Denied summary judgment to both sides on 30-day-deadline/deception claim; outcome depends on jury finding about whether LL1 threatened immediate litigation. |
| Whether stating "Account Transferred to Litigation Department" was false/deceptive under § 1692e(10) | Phrasing implied escalation and increased likelihood of suit though status unchanged | True: accounts were transferred to Litigation Department and that change made litigation possible | GRANTED to PRA: statement was not false; transfer did change status and made litigation a possibility. |
| Whether referencing "Litigation Department" or implying attorney involvement violated § 1692e(3) | Repeated references and department label would mislead least-sophisticated debtor into thinking an attorney reviewed the file | Letter expressly disclaimed attorney review on the front, and it was not on attorney letterhead or signed by counsel | GRANTED to PRA: front-page disclaimer sufficiently dispelled implication of attorney involvement; no § 1692e(3) violation as matter of law. |
Key Cases Cited
- Brown v. Card Serv. Ctr., 464 F.3d 450 (3d Cir. 2006) (conditional language can still be read as threatening; whether threat was reasonable is a fact question)
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir. 2010) (a letter from a "Legal Department" can be read as threatening; conditional phrasing does not preclude § 1692e(5) liability)
- Lesher v. Law Offices of Mitchell N. Kay, P.C., 650 F.3d 993 (3d Cir. 2011) (disclaimers ineffective if they contradict the main message; placement and clarity matter)
- Rosenau v. Unifund Corp., 539 F.3d 218 (3d Cir. 2008) (signing as a "Legal Department" can imply attorney involvement and mislead the least-sophisticated debtor)
- Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993) (mass-produced letters on attorney letterhead/signature can mislead if attorneys are not meaningfully involved)
- Greco v. Trauner, Cohen & Thomas, LLP, 412 F.3d 360 (2d Cir. 2005) (a clear, prominent disclaimer that no attorney has personally reviewed the account can avoid § 1692e(3) liability)
- Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055 (9th Cir. 2011) (conditional language without explanatory detail does not shield a letter from being construed as threatening)