Summary
holding that statement that "[p]ayment in full is due now" contradicts and overshadows a collection letter's validation notice giving a consumer thirty days to dispute the debt
Summary of this case from Wyler v. Computer Credit, Inc.Opinion
99-CV-3087 (JG)
December 8, 2000
ADAM J. FISHBEIN, Uniondale, New York, Attorney for Plaintiff.
EDWARD B. GELLER, New Hyde Park, New York, Attorney for Defendant.
MEMORANDUM AND ORDER
Plaintiff Mayer Unger brought this action against the National Revenue Group, Ltd. ("NRG"), alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). Plaintiff has moved for partial summary judgment pursuant to Fed.R.Civ.P. 56(c). He ultimately seeks $1000 in statutory damages, costs, and attorney's fees, but has left the issue of statutory damages for trial or inquest. For the reasons set forth below, plaintiffs motion is granted in part and denied in part.
BACKGROUND
Plaintiff is a consumer who allegedly incurred a personal debt at Miamonides Medical Center in the amount of $248.81. NRG, a collection agency, sent a letter dated December 5, 1998, to Unger stating that"Payment in full is due now. The amount of the debt will be considered valid unless you contact our office to dispute the amount within (30) days." The letter also contained, below the typewritten "signature" of NRG, the following "Validation Notice":
This is an attempt to collect a debt. Any information obtained will be used for that purpose. Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume that the debt is valid. If you notify this office, in writing within 30 days from receiving this notice, this office will obtain verification of the debt or obtain a copy of judgment and mail you a copy of such judgment or verification. If you request this office, in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor if different from the current creditor. The Federal Trade Commission suggest, in a non-binding commentary, that the Fair Debt Collection Practices Act permits the institution of legal action prior to the expiration of the aforementioned 30 day period. If you do not pay this debt in frill, this office or local attorney may begin legal action in 30 days.
Plaintiff claims that defendant violated the FDCPA in several ways. First, plaintiff alleges that the validation notice required by the statute is in small print and is overshadowed by other contradictory statements, and therefore violates 15 U.S.C. § 1692g by presenting the validation information in an unclear and ineffective manner. Plaintiff also alleges that defendant violated the same section by sending a second letter to Unger only 21 days after the first one, which "improperly assum[ed] the validity of the debt within the first thirty day period." (Memorandum of Law in Support of Plaintiffs Motion for Summary Judgment, at 2.) Second, plaintiff claims that both these § 1692g violations constitute violations under § 1692e. Third, plaintiff alleges that the collection letters violate the FDCPA by threatening legal action the agency did not intend to take. I address each of these claims below.
Copies of the letters are attached as addenda.
DISCUSSION
A. The Summary Judgment Standard
Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In determining whether material facts are in dispute, courts must resolve all ambiguities and draw all inferences in favor of the non-moving party. See Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998).
The moving party bears the initial burden of demonstrating the absence of any genuine issues of material fact. See Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir. 1994). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. In the language of the Rule, the nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (quoting Fed.R.Civ.P. 56(e)) (citations and footnote omitted). The non-moving party cannot survive a properly supported motion for summary judgment by resting on its pleadings without offering "`any significant probative evidence tending to support the complaint.'" Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 290 (1968)). Moreover, the moving party is not required to affirmatively disprove unsupported assertions made by the nonmovant. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "Conclusory allegations, conjecture, and speculation . . . are insufficient to create a genuine issue of fact." Kerzer, 156 F.3d at 400 (citing D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir.), cert. denied, 524 U.S. 911 (1998)).
B. Plaintiffs Claims Under the FDCPA
1. Section 1692g — The Overshadowing Claim
Section 1692g(a) of the FDCPA requires that an independent debt collector soliciting payment provide the consumer with a detailed "validation notice" (i.e., notice of the means by which to challenge the validity of the debt) within five days of the initial communication. If "a notice contains language that "overshadows or contradicts' other language informing [the] consumer of her rights, it violates the [FDCPA]." Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996) (quoting Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir. 1991)). In making this determination, courts apply an objective standard measured by the effect of the challenged notice on the "least sophisticated consumer." Id. Thus, "[a] debt collection notice is overshadowing or contradictory if it fails to convey the validation information clearly and effectively and thereby makes the least sophisticated consumer uncertain as to her rights." Savino v. Computer Credit, Inc., 164 F.3d 81, 85 (2d Cir. 1998) (citing Russell, 74 F.3d at 35). The plaintiff need not establish that the contradiction is threatening. See Russell, 74 F.3d at 35.
Specifically, § 1692g(a) provides:
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the customer a written notice containing —
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the customer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request within the thirty day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
It is undisputed that the December 5, 1998, letter contained a validation notice. The sole issue is whether it was overshadowed or contradicted by other language either within that letter or the one that followed it. Plaintiff contends that the notice was "overshadowed" in two different ways: (1) in the first letter, dated December 5, 1998, the statement "Payment in full is due now," is followed by language that both confuses the validation language substantively and appears in larger print structurally; and (2) in the second letter, dated December 26, 1998, the validation language assumes the validity of the debt before the thirty-day period has passed. I agree that defendant violated § 1692g in both these ways.
In Russell, a debt collection agency sent a consumer a letter stating "IF YOU DO NOT DISPUTE THIS CLAIM (SEE REVERSE SIDE) AND WISH TO PAY IT WITHIN THE NEXT 10 DAYS WE WILL NOT POST THIS COLLECTION TO YOUR FILE." 74 F.3d at 32. The back side of the letter contained a validation notice as required by § 1692g(a). See id. The district court concluded that the agency did not threaten the consumer's credit rating if it did not receive payment within ten days and granted summary judgment to the agency. See id. at 34. The Second Circuit reversed, holding that the district court erred in requiring the consumer to prove a threatening contradiction and that the letter did not convey the validation information "effectively." Id. at 35.
Two years later, the Second Circuit considered this issue again. InSavino v. Computer Credit, Inc., the debt collector mailed the consumer an initial debt collection notice stating that the consumer must make "immediate payment" or provide "a valid reason" for the failure to do so. 164 F.3d at 84. Below the body of the letter, the consumer was further advised, "PLEASE SEE IMPORTANT NOTICE ON BACK," which referred to the validation notice printed on the back of the letter. Id. The district court granted the consumer's motion for summary judgment on the ground that the demand for immediate payment contradicted the validation notice on the opposite side, and the Second Circuit affirmed, relying onRussell, See id. at 85. Noting that "the request for immediate payment did not, standing alone, violate the FDCPA," the Court held that the violation consisted of the debt collector's "decision to ask for immediate payment without also explaining that its demand did not override the consumer's rights under Section 1962g to seek validation of the debt." Id. at 85-86. The Court explained that the debt collector "could have both sought immediate payment and complied with the Act simply by inserting into the text of its letter transitional language that referred the addressee to the validation notice." Id. at 86.
The Court provided the following examples of acceptable language: Although we have requested that you make immediate payment or provide a valid reason for nonpayment, you still have the right to make a written request, within thirty days of your receipt of this notice, for more information about the debt. Your rights are described on the reverse side of this notice. Our demand for immediate payment does not eliminate your right to dispute this debt within thirty days of receipt of this notice. If you choose to do so, we are required by law to cease our collection efforts until we have mailed that information to you. Your rights are described on the reverse side of this notice.
Savino, 164 F.3d at 86.
Here, there is no such "transitional language." Although the validation notice in this case appeared on the front of the letter, as opposed to that at issue in Savino and Russell, I cannot conclude that its placement obviated the need for the required explanation. It was both physically separated from the erroneous statement that payment in full was "due now" and in considerably smaller typeface. See Sokoiski v. Trans Union Corp., 53 F. Supp.2d 307, 314 (E.D.N.Y. 1999) (concluding that the request for immediate action overshadowed the validation notice notwithstanding that it appeared on the front of the letter). Based on this omission as well as the contradictory message of the follow-up letter, I conclude that the least sophisticated consumer would be confused as to his or her rights.See, Barrientos v. Law Offices of Mark L. Nichter, 76 F. Supp.2d 510, 514 (S.D.N.Y. 1999) (statement that law office was authorized "to take any lawful action we deem necessary to collect this debt" and demand to "make payment today so we can put this matter to rest" contradicted prior letter containing the validation notice, and thus, violated § 1692g);Desantis v. Roz-Ber, Inc., 51 F. Supp.2d 244, 251 (E.D.N.Y. 1999) (implicit threat that the consumer must either remit payment in full or arrange settlement or he will not receive cooperation from the collection agency overshadowed the validation notice in violation of § 1692g);Wiener v. Bloomfield, 901 F. Supp. 771, 775 (S.D.N.Y. 1995) (a "threat that litigation would be prepared if no response were received within ten days, the heading suggesting that litigation already had been commenced, and the notation in a box on the bottom of the letter reading `DEADLINE: 03/11/95'" overshadowed the validation notice, in violation of § 1962g).
In sum, I conclude that NRG violated § 1692g by contradicting the validation notice in a manner that would confuse the least sophisticated consumer as to his or her rights.
2. Section 1692e — The False or Misleading Misrepresentation Claims
Section 1692e provides that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. In determining whether a collection letter violates this section, courts apply the "least sophisticated consumer" standard discussed above. Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993). Plaintiff contends that NRG violated two separate subsections of § 1692e. The following discussion addresses each claim in turn.
a. Section 1692e(10)
Section 1692e(10) prohibits "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. 15 U.S.C. § 1692e(10). "A collection notice is deceptive when it can be reasonably read to have two or more different meanings, one of which is inaccurate." Russell, 74 F.3d at 35. Further, the fact that a notice's language is "vague or uncertain will not prevent it from being held deceptive under § 1692e(10) of the Act." Id.
Plaintiff argues that the previously-discussed violation of § 1692g also violates § 1692e(10). I agree. As discussed above, a consumer reading NRG's letter could have concluded that she or he did not have the right to contest the validity of the debt and did not have the full thirty-day period to pay it, despite the contrary language in the validation notice. I conclude, therefore, that the least sophisticated consumer would read these statements to have two different meanings, one of which is inaccurate. I therefore grant plaintiffs request for relief under § 1692e(10).
b. Section 1692e(5)
Section 1692e(5) prohibits "[t]he threat to take any action that cannot legally be taken or that is not intended to be taken." 15 U.S.C. § 1692e(5). Plaintiff contends that NRG violated this subsection by implying that legal action would commence shortly, despite the absence of any intention to do so. He argues that because the underlying debt here is valued at $248.81, and because NRG had not brought any lawsuits for any amount under $300 within the past year, NRG had no intention of bringing a lawsuit in this particular situation. Specifically, he claims that NRG's use of the language, "If you do not pay this debt in full, this office or local attorney may begin legal action in thirty days," creates an implicit threat, in violation of § 1692e(5). (Plaintiffs Motion for Summary Judgment, at 9.)
In order to establish a violation of § 1692e(5) in circumstances like those here, "plaintiff would have to show that a lawsuit — a routine debt collection device where negotiations fail — could be ruled out." Sluys v. Hand, 831 F. Supp. 321, 327 (S.D.N.Y. 1993). This may be established, for example, where "a creditor had a fixed practice of not bringing suits against customers in order to promote good will, or had advertised an unlimited satisfaction guarantee inconsistent with such lawsuits." Id. The plaintiff bears the burden of proving the defendant's intent. See Wiener, 901 F. Supp. at 777.
Plaintiff has failed to sustain that burden. While it is undisputed that no lawsuits have thus far been brought for debts under $300, it does not follow, as a matter of law, that defendants would not have brought a lawsuit in this case. I therefore deny plaintiffs request for relief under FDCPA § 1692e(5).
CONCLUSION
For the foregoing reasons, plaintiffs motion is granted in part and denied in part. A status conference will be held on December 20, 2000, at 11:30 a.m.