Case Information
‐ ‐ cv In the
United States Court of Appeals
for the Second Circuit A UGUST T ERM No. ‐
Y VETTE V ANGORDEN ,
Plaintiff Appellant , S ECOND R OUND L IMITED P ARTNERSHIP , Defendant Appellee
On Appeal United States District Court Eastern District New York
A RGUED : M ARCH D ECIDED : J ULY
Before: C ABRANES R AGGI Circuit Judges Vilardo, District Judge [*] ‐ Round, ________________ On appeal judgment United States District Court for Eastern District New York (Feuerstein, J. ), plaintiff challenges dismissal her Fair Debt Collection Practices Act complaint, which charges defendant representations unfair practices seeking payment on already settled debt. U.S.C. §§ 1692e(2), (10), 1692f(1). Plaintiff argues district erred concluding she could claim defendant had advised her debt, see id. 1692g, she did do.
V ACATED AND R EMANDED .
DAVID N. MCDEVITT, Thompson Consumer Law Group, PLLC, Mesa, Arizona, for Plaintiff Appellant SHANNON MILLER (Thomas Robert Dominczyk, Donald S. Maurice, Jr., Maurice Wutscher, LLP, Flemington, New Jersey, brief ), Maurice Wutscher, LLP, Wayne, Pennsylvania, Defendant Appellee
R EENA R AGGI Circuit Judge :
Plaintiff Yvette sued defendant collector Limited Partnership (“Second Round”), violating Fair Collection Practices Act (“FDCPA”), et seq. sending representing she still owed money she had settled five years earlier, requesting 2186 ‐ Vangorden Round, Ltd. P’ship
payment debt. She now appeals from June 21, judgment United States District Court for Eastern District New York (Sandra J. Feuerstein, Judge ), dismissing her complaint for failure claim. See Vangorden No. CV 6227(SJF)(AKT), WL 4350438, *4 (E.D.N.Y. 20, 2017). Because we conclude alleged plausible claims, vacate judgment dismissal remand this case district court for further proceedings consistent opinion.
BACKGROUND
We draw stated facts from Vangorden’s complaint letters attached thereto. Fed. R. Civ. P. 10(c); Carlin Davidson Fink 207, (acknowledging that, motion dismiss, may consider documents attached complaint).
I. Settlement Underlying Debt 2011, New York resident Yvette owed personal
credit card $1,631.61 (the “Debt”) Synchrony Bank. Synchrony Bank offered settle $571.20, informing Vangorden, October 27, letter attorney, upon receipt proposed settlement amount, would consider account paid report credit bureaus “the ‘account [was] paid full less than full balance.’” Compl. Ex. A. On November plaintiff paid Synchrony Bank $571.20, thus satisfying terms settlement set creditor.
Vangorden Second Round,
II. Second Round Pursues Payment of Debt
Almost five years later, on May 25, 2016, Second which “purchases debts allegedly in default intent collecting debts profit,” id. ¶19, purchased Vangorden’s settled Debt from Synchrony Bank.
One month later, on June sent Vangorden letter (the “June Letter”), [2] listed a “current outstanding balance” $1,365.39 and requested payment amount use “detachable remittance voucher” or “online payment application.” Id. Ex. B. The also included toll free contact telephone number and following notice:
Unless you notify this office within days after receiving this notice you dispute validity this or any portion thereof, this office will assume this valid. If you notify this office writing within days receiving this notice you dispute validity or portion thereof, this office will obtain verification obtain copy judgment and mail you copy such judgment verification.
Id quoted text tracks collectors must provide consumers regarding their validity debt. 1692g(a). Finally, June Letter warned Vangorden “may report information about [her] account credit bureaus,” information “may already appear [her] credit report.” Compl. Ex. B.
Vangorden Second Round, Ltd. P’ship
Vangorden did notify Second she disputed Debt.
III. Procedural History
On November 9, 2016, Vangorden filed lawsuit, charging with violating falsely representing character, amount, and legal status Debt, see U.S.C. 1692e(2); using representations connection debt, see id. 1692e(10); attempting collect amount expressly authorized agreement law, see id. 1692f(1). complaint, Vangorden asserts “the least sophisticated confused as whether she owed money Debt” and, “[r]ather than seek legal help, . may feel intimidated simply pay amount demanded.” Compl. ¶¶37–38. She seeks actual damages, well as attorneys’ fees, costs, interest. See 1692k.
On June 2017, district court granted motion dismiss complaint Fed. R. Civ. P. 12(b)(6). district determined that, even Letter misrepresented settled outstanding, Vangorden could plausible violation same notified Vangorden Debt, she failed do. WL *4. timely appealed. 2186 v.
DISCUSSION
I. Standard Review
This “review[s] de novo district court’s grant a motion to dismiss.” Deutsche Bank Nat’l Tr. Co. Quicken Loans Inc. , F.3d 861, (2d Cir. 2015). To survive motion dismiss, complaint must allege facts sufficient “state claim relief plausible face.” Ashcroft Iqbal U.S. 662, (2009) (internal quotation marks omitted). In deciding whether complaint satisfies standard, we “accept[] all factual allegations complaint true, draw[] all reasonable inferences plaintiff’s favor.” Shomo City New York (2d Cir. 2009) (internal quotation marks omitted).
II. Sections Claims deciding whether states plausible claim, we begin with text three statutory sections which she relies. Federal Hous. Fin. Agency UBS Ams. (“In construing statute, begin plain language, giving all undefined terms their ordinary meaning.”). First, 1692e(2)(A) prohibits “[t]he false representation character, amount, or legal status any debt.” Second, 1692e(10) prohibits “[t]he use any representation . . . collect attempt collect debt.” Finally, 1692f(1) prohibits “[t]he collection any amount [on debt] . unless amount expressly authorized by agreement creating permitted law.”
Precedent instructs us construe text liberally effectuate overriding purpose, “to ‘eliminate abusive collection practices collectors, insure those collectors who refrain using abusive Vangorden
practices are competitively disadvantaged, promote consistent State action protect consumers against abuses.’” Avila Riexinger & Assocs., LLC F.3d (2d Cir. (quoting 1692(e)). Thus, this court held that sections here at issue are mutually exclusive because, although they “share goal of protecting consumers abuse collectors,” they each target “different type[s] of misconduct.” Arias Gutman, Mintz, Baker & Sonnenfeldt LLP 2017). While 1692e “mainly targets practices that take advantage of debtor’s naivete or lack of legal acumen,” 1692f aims at “practices that give collector an unfair advantage over debtor or are inherently abusive.” Id. at 136. Toward these ends, each proscribe “non exhaustive” list of specific unfair practices, recognizing that same conduct may support claims brought multiple subsections. Id. at 135– 36.
The conduct here issue transmittal Vangorden its June Letter representing she had outstanding Debt obligation $1,365.39 its request payment Debt. Vangorden alleges misrepresented indebtedness because she had settled Debt some five years earlier paying creditor requested settlement amount $571.20. On review motion dismiss, we must assume truth these facts. When we make assumption here, conclude plausibly pleaded Letter falsely represented “the character, amount, legal status” violation 1692e(2). “a strict liability statute” and, thus, there no need plaintiff plead prove collector’s misrepresentation obligation intentional. Arias Gutman, Mintz, Baker Sonnenfeldt sum, pleaded *8 17 2186 v.
facts plausibly asserting misrepresentation of her Debt obligation, § 1692e(2) claim should not have been dismissed under Fed. R. Civ. P. 12(b)(6). See generally Easterling v. Collecto, Inc. , F.3d 229, 234–35 (2d Cir. 2012) (concluding that collection letter’s statement that was “‘ineligible for bankruptcy discharge’” was because plaintiff “at all times fully retained seek bankruptcy discharge”); cf. DiMatteo Sweeney, Gallo, Reich & Bolz, L.L.P. , F. App’x 7, (2d Cir. 2015) (summary order) (concluding “assertion rent was unpaid was false” purposes of § claim because governing law unclear whether landlord could lawfully refuse payment co tenant).
Further, Letter, after allegedly misstating Vangorden’s obligation, requested payment of Debt, conclude has plausibly alleged both used “false representation” in collection effort in violation 1692e(10), attempted collect amount “expressly authorized by agreement creating or permitted by law” violation 1692f(1). See Arias Gutman, Mintz, Baker Sonnenfeldt (identifying “collection an invalid debt” one 1692f’s “list unfair practices”). As latter, has recognized 1692f’s numbered subsections are “examples” conduct manifesting “unfair or unconscionable” means collection identified section’s first sentence. Gallego Northland Grp. 2016). Thus, by pleading defendant attempted collect amount authorized agreement permitted law, plaintiff stated plausible claim 1692f(1) without need further allegations unfairness unconscionability. generally Campbell MBI Assocs. F. Supp. 3d (E.D.N.Y. (observing “[b]y terms, 1692f(1) prohibits any amount not expressly authorized by agreement creating or permitted by law,” and holding that 1692f(1) claim does require demonstration of violation of “general proscription” on use of “unfair unconscionable” means set forth in first sentence of section (emphasis in original)).
Our conclusion Vangorden’s pleadings plausible claims within statutory text consistent with rulings by our sister circuits. McLaughlin Phelan Hallinan Schmieg, F.3d 240, Cir. 2014) (holding where facts construed most favorably plaintiff indicated obligation was less than amount stated in defendant’s letter, plaintiff stated plausible claim for misrepresentation amount violation 1692e(2), (10)); Stratton Portfolio Recovery Assocs., LLC (6th Cir. 2014) (holding where defendant lacked collect interest debt, statement contrary was false representation character amount debt); Russell Absolute Collection Servs., (4th (affirming judgment plaintiff where statement had been satisfied face and, thus, misrepresented character, amount, legal status debt).
On appeal, does contest Vangorden’s allegation June Letter misrepresented Debt obligation. Nor does dispute misrepresentation, coupled request payment, can fall within plain language three cited provisions. Rather, argues that, here, inclusion Letter mandated both (1) takes technical falsity amount character outside sphere actionable misrepresentation contemplated 1692f; (2) precludes even least sophisticated being misled to the issue. We proceed to explain why these arguments do persuade.
III. Section 1692g Notice Does Not Preclude from Stating Plausible Claims Sections and
As already noted supra the FDCPA requires debt collectors to advise consumers of their right to dispute an asserted debt writing “within thirty days after receipt of the notice.” 1692g(a)(3). consumer must further be advised if it does do so, “the debt will be assumed to be valid by the debt collector.” Id. But the consumer does dispute the debt, the debt collector “will obtain verification the debt or copy of judgment against the consumer and copy verification or judgment will be mailed to the collector.” Id. 1692g(a)(4). Moreover, collector statutorily obliged to “cease debt” until it “obtains verification copy judgment, name address original creditor,” mails information consumer. Id. 1692g(b). argues evident this
scheme—which affords consumers right debts, precludes efforts collect disputed debts until verified, affords presumption validity undisputed debts—that FDCPA does obligate collectors verify debts prior s ending initial communications consumers. It therefore follows there can no liability initial misrepresentation accompanied dispute.
Like Third Fourth Circuits, reject argument nothing text suggests debtor’s *11 17 2186 v.
ability to a § 1692e § 1692f claim “is dependent upon the debtor first disputing validity the accordance with § 1692g.” Russell v. Absolute Collection Servs., Inc. , 763 F.3d at 392 [4th Cir.]; see McLaughlin v. Phelan Hallinan & Schmieg, LLP, F.3d at 247– [3d Cir.] (holding “statute’s text provides no indication Congress intended to require debtors to dispute their debts under § 1692g before filing suit under § 1692e”). The language § 1692g conditional, identifying a collector’s obligations “ [i]f ” consumer disputes debt. 1692g(b) (emphasis added). Third Circuit observed language suggests “disputing debt” pursuant 1692g “option[]” available consumers, condition precedent bringing action. McLaughlin Phelan Hallinan & Schmieg, LLP , F.3d at 247. If, instead, Congress had “intended collector’s liability hinge upon debtor’s” first disputing pursuant 1692g, one might expect “it would have so indicated with conspicuous language effect.” Russell Absolute Collection Servs., , F.3d This conclusion comports remedial nature statute solicitude least sophisticated consumer. McLaughlin Phelan Hallinan Schmieg (“Imposing prerequisite absence statutory language requiring would undermine FDCPA’s protection unsophisticated debtors, who have no reason suspect they would be prevented filing suit concerning deceptive communications consequence failing invoke optional validation procedure.”); see generally Russell Equifax A.R.S. (holding claims should reviewed considering “how least sophisticated consumer”—not “average, everyday, common consumer—understands notice”).
17 2186 Second
In urging otherwise, points to the FDCPA’s “specific presumption a debt is valid, subject to a properly conveyed dispute validation.” Appellee Br. 14. In fact, what the relevant text does impose a notice obligation the collector to inform consumer that, if consumer does not dispute the debt, it “will be assumed to be valid by collector.” 15 U.S.C. § 1692g(a)(3). We do not think a notice requirement can reasonably be construed require extension presumption other sections FDCPA—such as 1692f—that make no mention it. Cf. Loughrin United States S. Ct. (2014) (observing “when Congress includes particular language in one section statute but omits in another . . . this Court presumes Congress intended difference meaning” (internal quotation marks alterations omitted)). any event, argument undermined by
language stating consumer’s “failure . dispute validity under [§ 1692g] may be construed admission liability consumer.” U.S.C. 1692g(c). Given explicit protection consumers who do dispute their debts, “it would anomalous conclude debtor forfeits his ability bring lawsuit simply debtor failed invoke 1692g’s discretionary validation procedures.” Russell Absolute Collection Servs., Indeed, conclude otherwise have perverse effect “immunizing” collector’s statements after days does within time frame. McLaughlin Phelan Hallinan Schmieg, 248; see generally § 1692k(d) (establishing one year statute limitations § 1692e § 1692f claims). nevertheless maintains Vangorden’s receipt 1692g must be held to foreclose § §
claims 1692g rendered “superfluous.” Appellee Br. 7; see Carlin Davidson Fink LLP at (recognizing “that courts should avoid statutory interpretations render provisions superfluous” (internal quotation marks omitted)). The concern misplaced. As Third Circuit observed, consumers who can challenge misrepresented obligations other provisions FDCPA still have incentive debts pursuant 1692g because provision “enable[s] debtors cheaply quickly resolve disputes collectors,” well as “facilitate[] exchange information, [which] may ultimately help debtors bolster their FDCPA claims.” McLaughlin Phelan Hallinan Schmieg, at
Bleich Revenue Maximization Grp., F. Supp. 2d (E.D.N.Y. 2002), relied both district court, although controlling, took different view. It concluded consumers who ignored validation procedure could pursue FDCPA claims “[t]o allow lawsuits discourage use detailed procedure.” Id. 500–01. district reasoned Congress “likely” included 1692g’s validation procedures “avoid . litigation.” Id. (“The specific procedure validation must have been intended avoid litigation based solely debt’s validity communicated agency creditor.”). That not, however, what Congress said when enacted FDCPA. Instead, Congress observed 1692g’s validation procedures *14 17 2186 Second “eliminate the recurring problem debt collectors . . .
attempting to collect debts which the consumer has already paid.” S. Rep. No. 95 382, 4 (1977), as reprinted in 1977 U.S.C.C.A.N. 1695, 1699. In sum, contrary to Bleich , relevant legislative history focused on minimizing certain conduct by collectors, not enforcement actions by consumers. [4]
Our rejection Second argument is further reinforced by 1692k(c), states that a “debt collector may not held liable . if collector shows a preponderance evidence that [a] violation was not intentional resulted a bona fide error notwithstanding maintenance procedures reasonably adapted avoid such error.” 1692k(c). short, FDCPA’s text does not make consumer exhaustion dispute procedures a condition precedent a consumer or claim; rather, language affords collectors an affirmative defense claims if they can show that their actions were bona fide intentional. Thus, we need not quarrel with Second Second Round’s assertion FDCPA “‘anticipates that not all debts can will be verified’” and that, “‘in real world, creditors collectors make mistakes, sometimes initiate collection activities against persons who do not owe debt.’” Appellee Br. (quoting Jang A.M. Miller & Assocs. (7th 1997)). We conclude only protection FDCPA affords collectors those circumstances affirmative defense stated in § 1692k(c), not immunity from suit inferred from provision § 1692g.
Accordingly, conclude neither compliance with § 1692g allegedly misstating obligation Vangorden, nor Vangorden’s failure avail herself § 1692g verification procedures, precluded matter law stating plausible claims 1692e § 1692f.
IV. Vangorden’s Claims Do Not Fail Least Sophisticated
Consumer Standard argues even who fails act on 1692g notices could plausible claims, not done so here because even “least sophisticated consumer” could not misled Letter. The pleadings do support conclusion. Vangorden v.
“[A] collection notice can be misleading it is open more than one reasonable interpretation, at least one is inaccurate.” Avila Riexinger & Assocs., LLC , F.3d at (internal quotation marks omitted); see Russell Equifax A.R.S. F.3d at Here, the Letter’s only interpretation is misleading; it told that she had an outstanding debt obligation. fact, that obligation had been settled some five years earlier. This held that even partial misstatement a consumer’s debt obligation can misleading FDCPA. Avila Riexinger Assocs., LLC at (observing that accurate statement balance due, “without notice amount already increasing due accruing interest other charges, can mislead least sophisticated into believing payment amount stated will clear account”). conclusion applies even more force where collection does more than misstate extent consumer’s debt obligation; misstates very existence such obligation.
Nor misrepresentation rendered less false misleading fact debt had existed one time, but had been settled consumer. As persuasively argues, upon receipt misstating obligation and requesting payment, consumer—and, particularly, least sophisticated consumer—might question whether she had indeed satisfied make payment anew “out fear and confusion.” Appellant Br. 8; see Russell Absolute Collection Servs., (observing “hypothetical least sophisticated consumer” interpret statement account outstanding “to mean remains legally due owing[,] . [despite plaintiff having] fully paid debt”; thus, statement “‘has been satisfied’ face misrepresents character, amount, legal status debt,” plaintiff states valid Vangorden Second claim (some internal quotation marks alterations
omitted)).
Section 1692g notice that consumer could dispute debt, thereby triggering verification obligations debt collector, warrants no different conclusion because, at same time that Second Round gave such notice, it also told her that it “may report information about your account credit bureaus,” that “information may already appear on your credit report.” Compl. Ex. B (emphasis added). A least sophisticated consumer who was so advised might understand dispute misstated but, nevertheless, pay out fear that there was already an adverse effect on credit would continue long as obligation remained outstanding. A 1692g hardly mitigates misrepresentation when it sends sort “contradictory message” consumer. Russell Equifax A.R.S. at (holding least sophisticated consumer could misled communication provided dispute notice, but also advised consumer he did claim but, rather, paid within days, agency would post his credit file). urging otherwise, argues its own intent bears how least sophisticated consumer would understand Letter. fails demonstrate how would have understood attempt collect here was good faith. Cf. Hart FCI Lender Servs., (observing “hard put” understand how understand collector’s professed purpose sending issue). No matter. As have already explained, supra 14–15, intent relevant motion dismiss, but only affirmative defense.
Thus, notwithstanding the Letter’s inclusion § 1692g notice, we conclude the could mislead least sophisticated consumer about misstated obligation. We, therefore, adhere our conclusion pleaded plausible § 1692e and § claims, should not have been dismissed.
CONCLUSION
To summarize, we conclude as follows: 1. Where, as here, collector misreports debt obligation consumer she no longer owes, and requests payment debt, consumer plausibly alleges violations U.S.C. 1692e and § 1692f, notwithstanding fact collector
advised consumer required id. 1692g, consumer did exercise right.
2. Inclusion U.S.C. here does prevent plaintiff plausibly pleading that, least sophisticated consumer standard, defendant’s communication misleading unfair id. 1692f. Because FDCPA strict liability statute, required plead mens rea plausible claims.
Rather, collector’s intent relevant element affirmative defense afforded 1692k(c).
Accordingly, we VACATE judgment district court dismissing plaintiff’s complaint, REMAND case district further proceedings consistent opinion.
[*] Judge Lawrence J. Vilardo, United States District Court Western District New York, sitting designation.
[1] GE Capital Retail Bank, predecessor Synchrony Bank.
[2] Although addressed both law firm, Letter was sent directly Vangorden. It first, only, communication between Round.
[3] We emphasize requirement, see 1692g(a), not, appears suggest, safe harbor.
[4] Other district cases relied on Round are equally unpersuasive insofar they rely on Bleich ’s reasoning or assume FDCPA mens rea requirement that have since rejected. Arias Gutman, Mintz, Baker Sonnenfeldt F.3d
[5] Thus, cannot fault “mak[ing] no allegation had knowledge, was otherwise aware,” “had allegedly been settled Synchrony,” Appellee Br. 25, does require plead mens rea claim; rather, allows collector avoid liability upon its proof violation intentional its actions were taken good faith, see Randolph IMBS, (7th Cir. 2004) (acknowledging “debt collector’s false statement presumptively wrongful” under “even speaker ignorant truth; but collector exercises care avoid making statements defense 1692k(c)”). Insofar parties’ briefs mens rea, issue properly pursued remand. Our task review Rule 12(b)(6) motion “is test, streamlined fashion, formal sufficiency plaintiff’s statement claim relief without resolving contest regarding substantive merits.” Halebian Berv (internal quotation marks omitted).
[6] event, Jang does help because inapposite facts. Plaintiffs there alleged defendants mailed dunning letters containing 1692g notices knowing “that they would never provide verification” disputed debts because they simply return those accounts creditors. Jang A.M. Miller Assocs. 482. Jang dismissed plaintiff’s statement claim, reasoning collection agencies had “technically complied” does require verification; instead, collector can simply cease disputed debt. Id. By contrast, Vangorden’s claims are based alleged misrepresentations obligations.