PAUL A. ENGELMAYER, District Judge:
Plaintiff Anthony Papetti alleges that, in February 2015, defendant Rawlings Financial Services, LLC ("RFS") sent him a debt collection letter that violated the Fair
On October 2, 2014, Papetti's health insurance plan with Oxford Health Plans ("Oxford") was terminated; he then substituted Horizon Blue Cross Blue Shield of New Jersey ("Horizon") as his primary health insurance provider. Dkt. 16. On November 9, 2014 and again on November 24, 2014, Papetti filled a prescription at Duane Reade Pharmacy ("Duane Reade"). Compl. ¶¶ 17-18. For reasons unknown to Papetti, Duane Reade mistakenly submitted his claims to his former insurer, Oxford, rather than his current insurer, Horizon. Id. ¶ 20. Oxford in turn paid these claims. Id. ¶ 21.
As a result, Papetti incurred an obligation to Oxford, which became due some time before February 6, 2015. Id. 23-24. Once the obligation became overdue, Oxford, as the creditor, transferred the obligation to a debt collector, RFS. Id. ¶¶ 26-27. On February 6, 2015, RFS sent Papetti two documents enclosed in a single envelope. Id. 28, 38. The first was a debt collection letter, see Dkt. 1, Ex. A ("Debt Collection Letter"), which is reproduced below.
As is evident, the debt collection letter was printed on RFS letterhead, and was addressed to Anthony Papetti. Id. At the top, the letter's header stated, in bolded capital letters:
Id. The debt collection letter then said, "If you did not have health insurance coverage during these dates of fill, Oxford has also asked Rawlings to process reimbursements due," and thereafter directed the recipient to contact RFS by calling the telephone number provided to "discuss the payment options available." Id.
The substance of the debt collection letter ended by instructing the recipient to
Finally, at the very bottom, the debt collection letter included a detachable section, which instructed the recipient to detach it, include payment of the obligation, and return it to RFS. See Debt Collection Letter.
The second document sent by RFS to Papetti was a validation notice, which read as follows:
Dkt. 1, Ex. B ("Validation Notice").
The validation notice stated that RFS would assume that the debt was valid unless the recipient "notif[ied]" RFS, in writing and within 30 days, "that the debt or any portion thereof is disputed." Id. The validation notice then stated that the communication was "from a debt collector and is an attempt to collect a debt," and it provided details of both prescriptions that Papetti had filled at Duane Reade. Id.
The validation notice was enclosed in the same envelope as the debt collection letter, but it does not appear that it was stapled or otherwise affixed to the collection letter. See Compl. ¶ 38. As is evident, unlike the collection letter, the validation notice did not contain the RFS letterhead, nor was it addressed to Papetti.
On April 15, 2015, Papetti filed the Complaint, alleging that RFS violated the FDCPA on two grounds: by (1) failing to effectively provide a validation notice, in violation of 15 U.S.C. § 1692g, and (2) using a "false, deceptive, or misleading representation or means in connection with the collection of any debt," in contravention of 15 U.S.C. § 1692e. Compl. ¶ 42.
On May 12, 2015, RFS moved to dismiss the Complaint, and filed a brief and declaration
On a motion to dismiss, the Court must accept the factual allegations contained in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Court may look to the complaint as well as to any documents attached to it as exhibits or incorporated by reference. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir.2002). To survive a motion to dismiss, a plaintiff must plead sufficient factual allegations "to state a claim for relief that is plausible on its face," Twombly, 550 U.S. at 570, 127 S.Ct. 1955, meaning that the complaint must include "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged," and not merely an "unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Further, "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Ultimately, if the plaintiff's claims have not been "nudged ... across the line from conceivable to plausible, [the] complaint must be dismissed." Twombly, 550 U.S. at 570, 127 S.Ct. 1955.
Congress enacted the FDCPA in 1977 in response to evidence of widespread abuses in debt collection practices, 15 U.S.C. § 1692(a), finding that "less ethical debt collectors threaten[ed] consumers with violence, use[d] profane or obscene language, ma[de] telephone calls at unreasonable hours, impersonate[d] public officials and lawyers, disclose[d] debtors' personal affairs to employers and engage[d] in other sorts of unscrupulous practices." Russell v. Equifax A.R.S., 74 F.3d 30, 33 (2d Cir. 1996) (citing S.Rep. No. 95-382, 95th Cong., 1st Sess. 2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1696). The FDCPA aimed to eliminate such practices by barring the use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt," and by setting forth a non-exhaustive list of practices that fall within this category. 15 U.S.C. § 1692e; see also Jacobson v. Healthcare Fin. Servs. Inc., 516 F.3d 85, 91 (2d Cir.2008) ("[T]he [FDCPA]'s overarching purpose [is that] of deterring deceptive conduct.").
In applying the FDCPA, the Second Circuit has stated that "the Act is primarily a consumer protection statute, and [it has] consistently interpreted the statute with that congressional object in mind." Id. at 96. Thus, in assessing whether a debt collector has violated the FDCPA, courts apply an objective standard based on how the "least sophisticated consumer" would interpret the communication in question. Id. at 90; see also, e.g., Russell, 74 F.3d. at 34 (holding that "the test is how the least sophisticated consumer... understands the notice he or she receives"); Kramsky v. Mark L. Nichter, P.C., 166 F.Supp.2d 912, 915 (S.D.N.Y. 2001) ("To effectuate Congress's intent to
The FDCPA is a strict liability statute. Ellis v. Solomon & Solomon, P.C., 591 F.3d 130, 135 (2d Cir.2010). Therefore, a single violation is sufficient to establish liability, see Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d Cir.1993), and the statute does not require a showing that the debt collector engaged in intentional conduct, see Russell, 74 F.3d at 33. Rather, "the degree of a defendant's culpability may only be considered in computing damages." Ellis, 591 F.3d at 135 (quoting Bentley, 6 F.3d at 63) (internal quotation marks omitted).
In a further effort to protect consumers, the FDCPA establishes certain specific rights of consumers. Relevant to this motion, the FDCPA "gives the consumer the right to dispute a debt claimed by a debt collector." Jacobson, 516 F.3d at 89. If, within 30 days of receiving the collection letter, the consumer notifies the debt collector in writing that she disputes the validity of any portion of the debt, the debt collector must stop collection activity, and cannot resume until it has "obtained verification... and has mailed a copy of the verification to the consumer." Id.; see also 15 U.S.C. § 1692g(b). The FDCPA does not assume that the consumer "is aware of her right to require verification of the debt. Instead, the Act requires the debt collector, as the party in the better position to know the law, to inform the consumer of that right." Jacobson, 516 F.3d at 90. Thus, the FDCPA states that the debt collector must, in the form of a validation notice, "give[] the consumer the information necessary to challenge the debt allegedly owed before making payment," Russell, 74 F.3d at 32-33, which includes the amount of the consumer's debt, the channels available to dispute it, and the identity of the creditor, see 15 U.S.C. § 1692g. The debt collector must send this validation notice "[w]ithin five days after the initial communication with a consumer in connection with the collection of any debt." Id. The Second Circuit has held that even if a debt collector provides the consumer with such a validation notice, the collector may still violate the FDCPA when its communication "contains language that `overshadows or contradicts' other language informing a consumer of her rights," which, as a result, would make the least sophisticated consumer "uncertain" as to those rights. Russell, 74 F.3d at 34-35 (quoting Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir.1991)); see also Savino v. Computer Credit, Inc., 164 F.3d 81, 85 (2d Cir.1998); Clomon, 988 F.2d at 1319.
Generally, to recover under the FDCPA, the plaintiff must satisfy three threshold requirements: "(1) the plaintiff must be a `consumer,' (2) the defendant must be a `debt collector,' and (3) the defendant must have committed some act or omission in violation of the FDCPA." Suquilanda v. Cohen & Slamowitz, LLP, No. 10 Civ. 5868(PKC), 2011 WL 4344044,
As to the third requirement, Papetti argues that RFS's debt collection letter violated two sections of the FDCPA. Papetti Br. 2. First, it violated § 1692g because the least sophisticated consumer would have been left uncertain as to his right to dispute the validity of the debt by, inter alia, the separate enclosure of the validation notice, despite the debt collection letter's indication that it was printed on the reverse side. Id. at 9. Second, RFS violated § 1692e because the least sophisticated consumer could have reasonably interpreted the debt collection letter in two or more different ways, one of which was inaccurate, thereby rendering the letter deceptive within the meaning of the FDCPA. Id. at 10-11.
As noted, the FDCPA requires that a debt collector, when seeking payment, provide the consumer with a detailed validation notice pursuant to § 1692g(a). The validation notice must, using unambiguous language, clearly inform the consumer of his rights; it is "not enough for a debt collection agency simply to include the proper debt validation notice in a mailing to a consumer — Congress intended that such notice be clearly conveyed." Russell, 74 F.3d at 35 (emphasis added); see also Jacobson, 516 F.3d at 90 (noting that debt collector "has the obligation, not just to convey the information, but to convey it clearly"). The Second Circuit "recognize[s] there are many cunning ways to circumvent § 1692g under cover of technical compliance, but purported compliance with the form of the statute should not be given sanction at the expense of the substance of the Act." Russell, 74 F.3d at 35 (internal citations omitted). Thus, a validation notice violates the FDCPA if it contains "language that `overshadows or contradicts' other language informing a consumer" of her right to dispute the validity of the debt, such that the least sophisticated consumer becomes "uncertain as to her rights." Id. at 34-35 (quoting Graziano, 950 F.2d at 111); see also Jacobson, 516 F.3d at 90.
As explained below, the Court holds that Papetti has stated a claim for a violation of § 1692g because of the combination of multiple shortcomings in RFS's communications, the central one being the errant "misdirection" in the debt collection letter
RFS's debt collection letter establishes, among other things, that (1) Papetti has a debt that is
As the Second Circuit has noted, debt collectors should expect the consumer to follow clear instructions in debt collection letters. For instance, in McStay v. I.C. System, Inc., the Circuit held that "when a prominent instruction in the body of the letter warns that there is important information on the reverse side, a reasonable
The consumer, once misdirected to turn to the reverse side of the letter to find "important information," cannot be expected to know, with certainty, that the separately enclosed document in fact contains this "important information." The consumer cannot even be expected to know what the undescribed "important information" is. The Second Circuit has held that a debt collector may not assume that the consumer is aware of her right to dispute the validity of the debt at all; thus, the debt collector, "as the party in the better position to know the law," must clearly inform the consumer of such a right. Jacobson, 516 F.3d at 90.
Here, RFS had the responsibility to clearly convey to Papetti his right to dispute the validity of his debt. This included placing the relevant information in the location that RFS chose to specify — indeed, RFS chose to specify that location in prominent type. Clomon, 988 F.2d at 1319 ("Courts have found collection notices misleading where they employ formats ... which tend to obscure important information that appears in the notice.").
In this Court's view, a typical recipient of RFS's communications could be left with any of several reasonable conclusions upon reading the letter. These include the following: (1) he could assume that he had not received the "important information" due to RFS's printing or mailing error; (2) he could be unsure whether he had received the "important information," and thus might, for instance, call RFS to inquire about his rights and repayment options; or (3) he could assume that RFS had made a mistake and, in fact, the "important information" was on the separately enclosed page. RFS, of course, urges the third reading, and it is surely a reading at which a recipient could arrive. But it would be reasonable, too, to draw the other two readings. And under either, the consumer would be left unsure as to the nature and scope of his rights, whether to credit the validation notice, and whether he had received all the information he was intended to receive — and to which he was entitled. But under the statute, the consumer should not need to guess; information must be conveyed "clearly and effectively." Savino, 164 F.3d at 85; see also Jacobson, 516 F.3d at 90; Russell, 74 F.3d at 35. Where, as here, a consumer may be left confused as among different reasonable interpretations, he has a valid claim under the FDCPA. See, e.g., Savino, 164 F.3d at 85. And where, as here, the debt collector prominently, and erroneously, draws the consumer's attention away from the information conveying the consumer's rights, the consumer has a valid claim for overshadowing. Cf. Jacobson, 516 F.3d at 91; Russell, 74 F.3d at 35.
Furthermore, it is significant here that several other aspects of the RFS's communications arguably exacerbated the "misdirection."
In sum, Papetti has stated a claim because RFS's debt collection letter "fails to convey the validation information clearly and effectively and thereby makes the least sophisticated consumer uncertain as to her rights." Savino, 164 F.3d at 85; accord Jacobson, 516 F.3d at 90; DeSantis v. Computer Credit, Inc., 269 F.3d 159, 161 (2d Cir.2001) ("Even if a debt collector conveys the required information, the collector nonetheless violates the Act if it conveys that information in a confusing or contradictory fashion so as to cloud the required message with uncertainty.").
RFS makes three arguments in opposition. None is persuasive. The first is that, based on Papetti's Complaint, "there is no question that PAPETTI saw the validation notice, knew it was a validation notice, and read the validation notice." RFS Br. 13 (citing Compl. ¶ 39). This is irrelevant. The question is not whether Papetti subjectively understood the notice; it is whether the least sophisticated consumer, objectively, would understand the notice. See Jacobson, 516 F.3d at 91 ("In order to prevail, it is not necessary for a plaintiff to show that she herself was confused by the communication she received;
RFS's second argument is that "it is not unreasonable to require, even the least sophisticated consumer, to read collection notices with some care," and that here, the validation notice clearly conveys the required information to the consumer. RFS Br. 13. RFS's principle is correct: Even the least sophisticated consumer must read collection notices with some care. See, e.g., Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360, 363 (2d Cir.2005). But, assuming that the least sophisticated consumer exercised such care, he would notice that the debt collector in this case had not. He would notice an error — a blank page where he was supposed to find "important information." And he would likely be left uncertain whether he indeed possessed whatever the "important information" was.
RFS's third argument is that the case law permits its manner of presentation, because the Second Circuit has approved placing the validation notice on the reverse side of the debt collection letter, see McStay, 308 F.3d at 191, and the Eastern District of New York has approved of placing the validation notice on a separate page, see Cavallaro v. Law Office of Shapiro & Kreisman, 933 F.Supp. 1148, 1151 (E.D.N.Y.1996). RFS Reply Br. 4-6. Both cases, however, are easily distinguished.
In McStay, the debt collection letter explicitly instructed the recipient, as in this case, to
Similarly, in Cavallaro, the Eastern District of New York approved of providing a validation notice in a separately enclosed document where that document was, as in this case, the only other document in the envelope. 933 F.Supp. at 1153-54. But there was no "misdirection" in Cavallaro, and — unlike in this case — the other aspects of the validation notice helped ensure that the consumer knew that the second sheet of paper had important information: The validation notice named the creditor, clearly stated the amount of the debt, was specifically addressed to the plaintiff, and was marked "Notice." Id. at 1151, 1153-54. The text and context of the communications in Cavallaro therefore differ importantly from those in this case. In sum, all of RFS's arguments are unconvincing.
The FDCPA prohibits the use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. This provision, too, is evaluated from the perspective of the least sophisticated consumer. See, e.g., Bentley, 6 F.3d at 62; Clomon, 988 F.2d at 1318. The Second Circuit has noted "the broad sweep of this provision," stating that "it should be emphasized that the use of any false, deceptive, or misleading representation in a collection letter violates § 1692e — regardless of whether the representation in question violates a particular subsection of that provision." Clomon, 988 F.2d at 1320. The Second Circuit has held that, typically, a debt collection letter "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 (citing Clomon, 988 F.2d at 1319). However, courts may consider only reasonable interpretations in making such a determination, as the least sophisticated consumer standard "does not extend to every bizarre or idiosyncratic interpretation by a debtor." Schweizer v. Trans Union Corp., 136 F.3d 233, 237 (2d Cir.1998) (citation and internal quotation marks omitted); see also Clomon, 988 F.2d at 1319 ("[C]ourts have consistently applied the least-sophisticated-consumer standard in a manner that protects debt collectors against liability for unreasonable misinterpretations of collection notices.").
Significantly, courts in this Circuit have held that "the standard for determining a violation of § 1692e(10) is essentially the same as that for § 1692g." Foti v. NCO Fin. Sys., Inc., 424 F.Supp.2d 643, 666-67 (S.D.N.Y.2006); see also Russell, 74 F.3d at 35; Vera v. Trans-Conti. Credit & Collection Corp., No. 98 Civ. 1866(DC), 1999 WL 163162, at *4 (S.D.N.Y. Mar. 24, 1999) ("For essentially the same reasons that [the Court] conclude[s] that the debt violation notice violates § 1692g(a)(3), [it] also conclude[s] that the notice violates § 1692e(10)."); Tipping-Lipshie v. Riddle, No. 99 Civ. 4646(LDW), 2000 WL 33963916, at *4 (E.D.N.Y. Mar. 2, 2000) (citing Vera for proposition that a "misleading validation notice violates both sections 1692g and 1692e(10)").
Consistent with this precedent, the Court concludes that Papetti has stated a claim for a violation of § 1692e, as well. As explained in the preceding section, there are at least three reasonable ways to construe RFS's communications, two of which are inaccurate. See supra, pp. 350-52. Papetti therefore has stated a claim. Russell, 74 F.3d at 35; Clomon, 988 F.2d at 1319; Foti, 424 F.Supp.2d at 666-67. And, as discussed, the two inaccurate interpretations are reasonably arrived at because the consumer's understandable confusion is due to following the debt collector's clear directions. See Miller, 321 F.3d at 310; McStay, 308 F.3d at 191.
Separately, the Court is troubled by the distinction in clarity between the "you owe us" portion of the letter and the "here are your rights" portion of the letter. Here, the debt collector states — in clear and unmistakable language, and often in prominent typeface — that the consumer owes a
RFS's motion to dismiss the Complaint is, accordingly, denied in full.
For the foregoing reasons, the Court denies RFS's motion to dismiss. The Clerk of Court is respectfully directed to terminate the motion pending at docket number 10.
This case will now proceed to discovery. By
Finally, the Court notes that Papetti has also filed a motion for class certification in this case, see Dkt. 3, but he has requested that briefing on that motion "be stayed pending discovery as to class issues." Dkt. 4, at 1. In their proposed case management plan, the parties shall address their preferred timing as to the briefing of this motion.
SO ORDERED.
