Filed: Jul. 27, 2018
Latest Update: Mar. 03, 2020
Summary: 17-2186-cv Vangorden v. Second Round, Ltd. P’ship In the United States Court of Appeals for the Second Circuit AUGUST TERM 2017 No. 17-2186-cv YVETTE VANGORDEN, Plaintiff-Appellant, v. SECOND ROUND, LIMITED PARTNERSHIP, Defendant-Appellee. On Appeal from the United States District Court for the Eastern District of New York ARGUED: MARCH 6, 2018 DECIDED: JULY 27, 2018 Before: CABRANES and RAGGI, Circuit Judges, Vilardo, District Judge.* Judge Lawrence J. Vilardo, of the United States District Cou
Summary: 17-2186-cv Vangorden v. Second Round, Ltd. P’ship In the United States Court of Appeals for the Second Circuit AUGUST TERM 2017 No. 17-2186-cv YVETTE VANGORDEN, Plaintiff-Appellant, v. SECOND ROUND, LIMITED PARTNERSHIP, Defendant-Appellee. On Appeal from the United States District Court for the Eastern District of New York ARGUED: MARCH 6, 2018 DECIDED: JULY 27, 2018 Before: CABRANES and RAGGI, Circuit Judges, Vilardo, District Judge.* Judge Lawrence J. Vilardo, of the United States District Cour..
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17‐2186‐cv
Vangorden v. Second Round, Ltd. P’ship
In the
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2017
No. 17‐2186‐cv
YVETTE VANGORDEN,
Plaintiff‐Appellant,
v.
SECOND ROUND, LIMITED PARTNERSHIP,
Defendant‐Appellee.
On Appeal from the United States District Court
for the Eastern District of New York
ARGUED: MARCH 6, 2018
DECIDED: JULY 27, 2018
Before: CABRANES and RAGGI, Circuit Judges, Vilardo, District Judge.*
Judge Lawrence J. Vilardo, of the United States District Court for the Western District of
*
New York, sitting by designation.
17‐2186‐cv
Vangorden v. Second Round, Ltd. P’ship
________________
On appeal from a judgment of the United States District Court
for the Eastern District of New York (Feuerstein, J.), plaintiff
challenges the dismissal of her Fair Debt Collection Practices Act
complaint, which charges defendant with false representations and
unfair practices in seeking payment on an already settled debt. See 15
U.S.C. §§ 1692e(2), (10), 1692f(1). Plaintiff argues that the district court
erred in concluding that she could not state a claim because defendant
had advised her of her right to dispute the debt, see id. § 1692g, which
she did not do.
VACATED AND REMANDED.
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, on
the brief), Maurice Wutscher, LLP, Wayne,
Pennsylvania, for Defendant‐Appellee.
REENA RAGGI, Circuit Judge:
Plaintiff consumer Yvette Vangorden sued defendant debt
collector Second Round, Limited Partnership (“Second Round”), for
violating the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq., by sending her a letter representing that she still owed
money on a debt that she had settled five years earlier, and requesting
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Vangorden v. Second Round, Ltd. P’ship
payment of that debt. She now appeals from the June 21, 2017
judgment of the United States District Court for the Eastern District
of New York (Sandra J. Feuerstein, Judge), dismissing her complaint
for failure to state a claim. See Vangorden v. Second Round, Ltd. P’ship,
No. 16‐CV‐6227(SJF)(AKT), 2017 WL 4350438, at *4 (E.D.N.Y. June 20,
2017). Because we conclude that Vangorden has alleged plausible
FDCPA claims, we vacate the judgment of dismissal and remand this
case to the district court for further proceedings consistent with this
opinion.
BACKGROUND
We draw the stated facts from Vangorden’s complaint and the
letters attached thereto. See Fed. R. Civ. P. 10(c); Carlin v. Davidson
Fink LLP, 852 F.3d 207, 212 (2d Cir. 2017) (acknowledging that, on
motion to dismiss, court may consider documents attached to
complaint).
I. Settlement of the Underlying Debt
In 2011, New York resident Yvette Vangorden owed a personal
credit card debt of $1,631.61 (the “Debt”) to Synchrony Bank.
Synchrony Bank offered to settle the Debt for $571.20, informing
Vangorden, in an October 27, 2011 letter to her attorney, that upon
receipt of that proposed settlement amount, it would consider the
account paid and would report to credit bureaus that “the ‘account
[was] paid in full for less than the full balance.’” Compl. Ex. A.1 On
November 14, 2011, plaintiff paid Synchrony Bank $571.20, thus
satisfying the terms of settlement set by her creditor.
1 The letter is from GE Capital Retail Bank, a predecessor of Synchrony Bank.
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II. Second Round Pursues Payment of the Debt
Almost five years later, on May 25, 2016, Second Round, which
“purchases debts allegedly in default with the intent of collecting the
debts for profit,” id. at ¶19, purchased Vangorden’s settled Debt from
Synchrony Bank.
One month later, on June 22, 2016, Second Round sent
Vangorden a letter (the “June Letter”), 2 which listed a “current
outstanding balance” on the Debt of $1,365.39 and requested payment
in that amount by use of a “detachable remittance voucher” or “online
payment application.” Id. at Ex. B. The letter also included a toll‐free
contact telephone number and the following notice:
Unless you notify this office within 30 days after
receiving this notice that you dispute the validity of this
debt or any portion thereof, this office will assume this
debt is valid. If you notify this office in writing within 30
days from receiving this notice that you dispute the
validity of this debt or any portion thereof, this office will
obtain verification of the debt or obtain a copy of a
judgment and mail you a copy of such judgment or
verification.
Id. The quoted text tracks the statutory notice that debt collectors
must provide consumers regarding their right to dispute the validity
of a debt. See 15 U.S.C. § 1692g(a). Finally, the June Letter warned
Vangorden that Second Round “may report information about [her]
account to credit bureaus,” and that such information “may already
appear on [her] credit report.” Compl. Ex. B.
2 Although addressed to both Vangorden and a law firm, the June Letter was sent directly
to Vangorden. It was the first, and only, communication between Vangorden and Second
Round.
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Vangorden v. Second Round, Ltd. P’ship
Vangorden did not notify Second Round that she disputed the
Debt.
III. Procedural History
On November 9, 2016, Vangorden filed this lawsuit, charging
Second Round with violating the FDCPA by falsely representing the
character, amount, and legal status of the Debt, see 15 U.S.C.
§ 1692e(2); using false representations in connection with the
collection of a debt, see id. § 1692e(10); and attempting to collect a debt
amount not expressly authorized by agreement or law, see id.
§ 1692f(1). In her complaint, Vangorden asserts that “the least
sophisticated consumer would be confused as to whether she owed
any money on the Debt” and, “[r]ather than seek legal help, . . . may
feel intimidated and simply pay the amount demanded.” Compl.
¶¶37–38. She seeks statutory and actual damages, as well as
attorneys’ fees, costs, and interest. See 15 U.S.C. § 1692k.
On June 20, 2017, the district court granted Second Round’s
motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6). The
district court determined that, even if the June Letter misrepresented
the settled Debt as outstanding, Vangorden could not state a plausible
FDCPA violation because the same letter notified Vangorden of her
right to dispute the Debt, which she failed to do. See Vangorden v.
Second Round, Ltd. P’ship, 2017 WL 4350438, at *4.
Vangorden timely appealed.
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Vangorden v. Second Round, Ltd. P’ship
DISCUSSION
I. Standard of Review
This court “review[s] de novo a district court’s grant of a motion
to dismiss.” Deutsche Bank Nat’l Tr. Co. v. Quicken Loans Inc., 810 F.3d
861, 865 (2d Cir. 2015). To survive a motion to dismiss, a complaint
must allege facts sufficient to “state a claim to relief that is plausible
on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal
quotation marks omitted). In deciding whether a complaint satisfies
this standard, we “accept[] all factual allegations in the complaint as
true, and draw[] all reasonable inferences in the plaintiff’s favor.”
Shomo v. City of New York, 579 F.3d 176, 183 (2d Cir. 2009) (internal
quotation marks omitted).
II. Sections 1692e and 1692f Claims
In deciding whether Vangorden states a plausible FDCPA
claim, we begin with the text of the three statutory sections on which
she relies. See Federal Hous. Fin. Agency v. UBS Ams. Inc., 712 F.3d 136,
141 (2d Cir. 2013) (“In construing a statute, we begin with the plain
language, giving all undefined terms their ordinary meaning.”). First,
§ 1692e(2)(A) prohibits “[t]he false representation of the character,
amount, or legal status of any debt.” Second, § 1692e(10) prohibits
“[t]he use of any false representation . . . to collect or attempt to collect
any debt.” Finally, § 1692f(1) prohibits “[t]he collection of any
amount [on a debt] . . . unless such amount is expressly authorized by
the agreement creating the debt or permitted by law.”
Precedent instructs us to construe FDCPA text liberally to
effectuate the overriding statutory purpose, which is “to ‘eliminate
abusive debt collection practices by debt collectors, to insure that
those debt collectors who refrain from using abusive debt collection
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Vangorden v. Second Round, Ltd. P’ship
practices are not competitively disadvantaged, and to promote
consistent State action to protect consumers against debt collection
abuses.’” Avila v. Riexinger & Assocs., LLC, 817 F.3d 72, 75 (2d Cir.
2016) (quoting 15 U.S.C. § 1692(e)). Thus, this court has held that the
FDCPA sections here at issue are not mutually exclusive because,
although they “share the goal of protecting consumers from abuse by
debt collectors,” they each target “different type[s] of misconduct.”
Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP, 875 F.3d 128, 135 (2d
Cir. 2017). While § 1692e “mainly targets practices that take
advantage of a debtor’s naivete or lack of legal acumen,” § 1692f aims
at “practices that give the debt collector an unfair advantage over the
debtor or are inherently abusive.” Id. at 136. Toward these ends,
§ 1692e and § 1692f each proscribe a “non‐exhaustive” list of specific
unfair practices, with this court recognizing that the same conduct
may support claims brought under multiple subsections. Id. at 135–
36.
The conduct here at issue is Second Round’s transmittal to
Vangorden of its June Letter representing that she had an outstanding
Debt obligation of $1,365.39 and its request for payment of that Debt.
Vangorden alleges that the letter misrepresented her indebtedness
because she had settled the Debt some five years earlier by paying the
creditor its requested settlement amount of $571.20. On review of a
motion to dismiss, we must assume the truth of these facts. When we
make that assumption here, we conclude that Vangorden plausibly
pleaded that the June Letter falsely represented “the character,
amount, or legal status” of her Debt in violation of § 1692e(2). The
FDCPA is “a strict liability statute” and, thus, there is no need for a
plaintiff to plead or prove that a debt collector’s misrepresentation of
a debt obligation was intentional. See Arias v. Gutman, Mintz, Baker &
Sonnenfeldt LLP, 875 F.3d at 134. In sum, because Vangorden pleaded
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Vangorden v. Second Round, Ltd. P’ship
facts plausibly asserting Second Round’s misrepresentation of her
Debt obligation, her § 1692e(2) claim should not have been dismissed
under Fed. R. Civ. P. 12(b)(6). See generally Easterling v. Collecto, Inc.,
692 F.3d 229, 234–35 (2d Cir. 2012) (concluding that collection letter’s
statement that debt was “‘ineligible for bankruptcy discharge’” was
false because plaintiff “at all times fully retained her right to seek
bankruptcy discharge”); cf. DiMatteo v. Sweeney, Gallo, Reich & Bolz,
L.L.P., 619 F. App’x 7, 9 (2d Cir. 2015) (summary order) (concluding
that “assertion that rent was unpaid was not false” for purposes of
§ 1692e claim because governing law was unclear as to whether
landlord could lawfully refuse payment from co‐tenant).
Further, because the June Letter, after allegedly misstating
Vangorden’s Debt obligation, requested payment of the Debt, we
conclude that Vangorden has plausibly alleged that Second Round
both used a “false representation” in a debt collection effort in
violation of § 1692e(10), and attempted to collect a debt amount not
“expressly authorized by the agreement creating the debt or
permitted by law” in violation of § 1692f(1). See Arias v. Gutman,
Mintz, Baker & Sonnenfeldt LLP, 875 F.3d at 135 (identifying “collection
of an invalid debt” as one of § 1692f’s “list of unfair practices”). As to
the latter, this court has recognized that § 1692f’s numbered
subsections are “examples” of conduct manifesting the “unfair or
unconscionable” means of debt collection identified in the section’s
first sentence. Gallego v. Northland Grp. Inc., 814 F.3d 123, 125 (2d Cir.
2016). Thus, by pleading that defendant attempted to collect an
amount not authorized by agreement or permitted by law, the
plaintiff has stated a plausible claim under § 1692f(1) without need
for further allegations of unfairness or unconscionability. See generally
Campbell v. MBI Assocs., 98 F. Supp. 3d 568, 582 (E.D.N.Y. 2015)
(observing that “[b]y its terms, § 1692f(1) prohibits the collection of
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Vangorden v. Second Round, Ltd. P’ship
any amount which is not expressly authorized by the agreement
creating the debt or permitted by law,” and holding that § 1692f(1)
claim does not require demonstration of violation of “general
proscription” on use of “unfair or unconscionable” collection means
set forth in first sentence of section (emphasis in original)).
Our conclusion that Vangorden’s pleadings state plausible
FDCPA claims within the statutory text is consistent with rulings by
our sister circuits. See McLaughlin v. Phelan Hallinan & Schmieg, LLP,
756 F.3d 240, 246 (3d Cir. 2014) (holding that where facts construed
most favorably to plaintiff indicated that debt obligation was less than
amount stated in defendant’s letter, plaintiff stated plausible claim for
misrepresentation of debt amount in violation of § 1692e(2), (10));
Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 451 (6th Cir.
2014) (holding that where defendant lacked right to collect interest on
debt, statement to contrary was false representation of character and
amount of debt); Russell v. Absolute Collection Servs., Inc., 763 F.3d 385,
395 (4th Cir. 2014) (affirming judgment for plaintiff where statement
that debt had not been satisfied was false on face and, thus,
misrepresented character, amount, and legal status of debt).
On this appeal, Second Round does not contest Vangorden’s
allegation that the June Letter misrepresented her Debt obligation.
Nor does it dispute that such a misrepresentation, coupled with a
request for payment, can fall within the plain language of the three
cited statutory provisions. Rather, Second Round argues that, here,
its inclusion in the June Letter of the debt dispute notice mandated by
§ 1692g both (1) takes any technical falsity as to the amount or
character of the Debt outside the sphere of actionable
misrepresentation contemplated by § 1692e and § 1692f; and
(2) precludes even the least sophisticated consumer from being
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Vangorden v. Second Round, Ltd. P’ship
misled as to the Debt at issue. We proceed to explain why these
arguments do not persuade.
III. Second Round’s Section 1692g Notice Does Not Preclude
Vangorden from Stating Plausible Claims under Sections
1692e and 1692f
As already noted supra at 4, the FDCPA requires debt collectors
to advise consumers of their right to dispute an asserted debt in
writing “within thirty days after receipt of the notice.” 15 U.S.C.
§ 1692g(a)(3). The consumer must further be advised that if it does
not do so, “the debt will be assumed to be valid by the debt collector.”
Id. But if the consumer does dispute the debt, 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.” Id. § 1692g(a)(4). Moreover,
the debt collector is statutorily obliged to “cease collection of the
debt” until it “obtains verification of the debt or a copy of a judgment,
or the name and address of the original creditor,” and mails that
information to the consumer. Id. § 1692g(b).
Second Round argues that it is evident from this statutory
scheme—which affords consumers the right to dispute debts,
precludes efforts to collect disputed debts until verified, and affords
a presumption of validity to undisputed debts—that the FDCPA does
not obligate debt collectors to verify debts prior to sending initial
communications to consumers. It therefore follows that there can be
no FDCPA liability for an initial debt misrepresentation that is
accompanied by a § 1692g notice of the right to dispute.
Like the Third and Fourth Circuits, we reject this argument
because nothing in the text of the FDCPA suggests that a debtor’s
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Vangorden v. Second Round, Ltd. P’ship
ability to state a § 1692e or § 1692f claim “is dependent upon the
debtor first disputing the validity of the debt in accordance with
§ 1692g.” Russell v. Absolute Collection Servs., Inc., 763 F.3d at 392 [4th
Cir.]; see McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d at 247–
48 [3d Cir.] (holding that “statute’s text provides no indication that
Congress intended to require debtors to dispute their debts under
§ 1692g before filing suit under § 1692e”). The language of § 1692g is
conditional, identifying a debt collector’s obligations “[i]f” the
consumer disputes a debt. 15 U.S.C. § 1692g(b) (emphasis added).
The Third Circuit has observed that such language suggests that
“disputing a debt” pursuant to § 1692g is an “option[]” available to
consumers, not a condition precedent to the consumer bringing a
§ 1692e or § 1692f action. McLaughlin v. Phelan Hallinan & Schmieg,
LLP, 756 F.3d at 247. If, instead, Congress had “intended for a debt
collector’s liability under the FDCPA to hinge upon a debtor’s” first
disputing the debt pursuant to § 1692g, one might expect “it would
have so indicated with conspicuous language to that effect.” Russell
v. Absolute Collection Servs., Inc., 763 F.3d at 392. This conclusion
comports with the remedial nature of the statute and its solicitude for
the least sophisticated consumer. See McLaughlin v. Phelan Hallinan &
Schmieg, LLP, 756 F.3d at 248 (“Imposing a § 1692g dispute
prerequisite in the absence of any statutory language requiring it
would undermine the FDCPA’s protection of unsophisticated
debtors, who would have no reason to suspect that they would be
prevented from filing suit concerning deceptive communications as a
consequence of failing to invoke the optional statutory validation
procedure.”); see generally Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d
Cir. 1996) (holding that FDCPA claims should be reviewed by
considering “how the least sophisticated consumer”—not “average,
everyday, common consumer—understands the notice”).
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Vangorden v. Second Round, Ltd. P’ship
In urging otherwise, Second Round points to the FDCPA’s
“specific presumption that a debt is valid, subject to a properly
conveyed dispute of its validation.” Appellee Br. 14. In fact, what the
relevant text does is impose a notice obligation on the debt collector
to inform the consumer that, if the consumer does not dispute the
debt, it “will be assumed to be valid by the debt collector.” 15 U.S.C.
§ 1692g(a)(3). We do not think such a notice requirement can
reasonably be construed to require extension of the presumption to
other sections of the FDCPA—such as § 1692e and § 1692f—that make
no mention of it.3 Cf. Loughrin v. United States, 134 S. Ct. 2384, 2390
(2014) (observing that “when Congress includes particular language
in one section of statute but omits it in another . . . this Court presumes
that Congress intended a difference in meaning” (internal quotation
marks and alterations omitted)).
In any event, Second Round’s argument is undermined by
language in the FDCPA stating that a consumer’s “failure . . . to
dispute the validity of a debt under [§ 1692g] may not be construed
by any court as an admission of liability by the consumer.” 15 U.S.C.
§ 1692g(c). Given this explicit protection of consumers who do not
dispute their debts, “it would be anomalous to conclude that the
debtor forfeits his or her ability to bring a lawsuit under the FDCPA
simply because the debtor failed to invoke § 1692g’s discretionary
validation procedures.” Russell v. Absolute Collection Servs., Inc., 763
F.3d at 393. Indeed, to conclude otherwise would have the perverse
effect of “immunizing” a debt collector’s false statements after 30 days
if a consumer does not dispute the debt within that time frame.
McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d at 248; see
3 We emphasize that § 1692g notice is a statutory requirement, see 15 U.S.C. § 1692g(a), not,
as Second Round appears to suggest, a safe harbor.
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Vangorden v. Second Round, Ltd. P’ship
generally 15 U.S.C. § 1692k(d) (establishing one‐year statute of
limitations for § 1692e and § 1692f claims).
Second Round nevertheless maintains that Vangorden’s receipt
of a § 1692g notice must be held to foreclose her § 1692e and § 1692f
claims if § 1692g is not to be rendered “superfluous.” Appellee Br. 7;
see Carlin v. Davidson Fink LLP, 852 F.3d at 213 (recognizing “that
courts should avoid statutory interpretations that render provisions
superfluous” (internal quotation marks omitted)). The concern is
misplaced. As the Third Circuit has observed, consumers who can
challenge misrepresented debt obligations under other provisions of
the FDCPA still have an incentive to dispute debts pursuant to
§ 1692g because that provision “enable[s] debtors to cheaply and
quickly resolve disputes with debt collectors,” as well as to
“facilitate[] the exchange of information, [which] may ultimately help
debtors bolster their FDCPA claims.” McLaughlin v. Phelan Hallinan
& Schmieg, LLP, 756 F.3d at 248.
Bleich v. Revenue Maximization Grp., Inc., 233 F. Supp. 2d 496
(E.D.N.Y. 2002), relied on by both Second Round and the district
court, although not controlling, took a different view. It concluded
that consumers who ignored § 1692g validation procedure could not
pursue FDCPA claims because “[t]o allow such lawsuits would
discourage use of the detailed statutory procedure.” Id. at 500–01.
The district court reasoned that Congress “likely” included § 1692g’s
validation procedures in the FDCPA to “avoid . . . litigation.” Id. at
500 (“The specific procedure for debt validation must have been
intended to avoid FDCPA litigation based solely on the debt’s validity
as communicated to the collection agency by the creditor.”). That is
not, however, what Congress said when it enacted the FDCPA.
Instead, Congress observed that § 1692g’s validation procedures
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Vangorden v. Second Round, Ltd. P’ship
would “eliminate the recurring problem of debt collectors . . .
attempting to collect debts which the consumer has already paid.” S.
Rep. No. 95‐382, at 4 (1977), as reprinted in 1977 U.S.C.C.A.N. 1695,
1699. In sum, contrary to Bleich, the relevant legislative history
focused on minimizing certain conduct by debt collectors, not
enforcement actions by consumers.4
Our rejection of Second Round’s argument is further reinforced
by § 1692k(c), which states that a “debt collector may not be held liable
. . . if the debt collector shows by a preponderance of evidence that [a]
violation was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adapted
to avoid any such error.” 15 U.S.C. § 1692k(c). In short, the FDCPA’s
text does not make consumer exhaustion of § 1692g dispute
procedures a condition precedent to a consumer § 1692e or § 1692f
claim; rather, the statutory language affords debt collectors an
affirmative defense to such claims if they can show that their actions
were bona fide and not intentional.5 Thus, we need not quarrel with
4 Other district court cases relied on by Second Round are equally unpersuasive insofar as
they rely on Bleich’s reasoning or assume an FDCPA mens rea requirement that we have
since rejected. See Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP, 875 F.3d at 134.
5 Thus, Second Round cannot fault Vangorden for “mak[ing] no allegation that Second
Round had knowledge, or was otherwise aware,” that her Debt “had allegedly been settled
with Synchrony,” Appellee Br. 25, because the FDCPA does not require a consumer to
plead mens rea to state a claim; rather, it allows the debt collector to avoid liability upon its
proof that the violation was not intentional or that its actions were taken in good faith, see
Randolph v. IMBS, Inc., 368 F.3d 726, 728 (7th Cir. 2004) (acknowledging that “debt
collector’s false statement is presumptively wrongful” under FDCPA “even if the speaker
is ignorant of the truth; but a debt collector that exercises care to avoid making false
statements has a defense under § 1692k(c)”). Insofar as the parties’ briefs dispute mens rea,
that issue is properly pursued on remand. Our task on review of a Rule 12(b)(6) motion
“is to test, in a streamlined fashion, the formal sufficiency of the plaintiff’s statement of a
claim for relief without resolving a contest regarding its substantive merits.” Halebian v.
Berv, 644 F.3d 122, 130 (2d Cir. 2011) (internal quotation marks omitted).
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Vangorden v. Second Round, Ltd. P’ship
Second Round’s assertion that the FDCPA “‘anticipates that not all
debts can or will be verified’” and that, “‘in the real world, creditors
and debt collectors make mistakes, and sometimes initiate collection
activities against persons who do not owe a debt.’” Appellee Br. 15
(quoting Jang v. A.M. Miller & Assocs., 122 F.3d 480, 483 (7th Cir.
1997)). We conclude only that the protection the FDCPA affords debt
collectors in those circumstances is the affirmative defense stated in
§ 1692k(c), not an immunity from suit inferred from the dispute notice
provision of § 1692g.6
Accordingly, we conclude that neither Second Round’s
compliance with § 1692g in allegedly misstating a Debt obligation to
Vangorden, nor Vangorden’s failure to avail herself of § 1692g
verification procedures, precluded her as a matter of law from stating
plausible FDCPA claims under § 1692e and § 1692f.
IV. Vangorden’s Claims Do Not Fail the Least Sophisticated
Consumer Standard
Second Round argues that even if a consumer who fails to act
on § 1692g notices could state plausible § 1692e and § 1692f claims,
Vangorden has not done so here because even the “least sophisticated
consumer” could not be misled by the June Letter. The pleadings do
not support that conclusion.
6 In any event, Jang does not help Second Round because it is inapposite on its facts.
Plaintiffs there alleged that defendants mailed dunning letters containing § 1692g notices
knowing “that they would never provide verification” for disputed debts because they
would simply return those accounts to creditors. Jang v. A.M. Miller & Assocs., 122 F.3d at
482. The Jang court dismissed plaintiff’s false statement claim, reasoning that the collection
agencies had “technically complied” with the FDCPA because § 1692g does not require
verification; instead, a debt collector can simply cease collection of a disputed debt. Id. at
481. By contrast, Vangorden’s claims are based on alleged misrepresentations as to her
debt obligations.
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Vangorden v. Second Round, Ltd. P’ship
“[A] collection notice can be misleading if it is open to more
than one reasonable interpretation, at least one of which is
inaccurate.” Avila v. Riexinger & Assocs., LLC, 817 F.3d at 75 (internal
quotation marks omitted); see Russell v. Equifax A.R.S., 74 F.3d at 35.
Here, the June Letter’s only interpretation is misleading; it told
Vangorden that she had an outstanding debt obligation. In fact, that
obligation had been settled some five years earlier. This court has
held that even a partial misstatement of a consumer’s debt obligation
can be misleading under the FDCPA. See Avila v. Riexinger & Assocs.,
LLC, 817 F.3d at 76 (observing that accurate statement of balance due,
“without notice that the amount is already increasing due to accruing
interest or other charges, can mislead the least sophisticated
consumer into believing that payment of the amount stated will clear
her account”). The conclusion applies with even more force where a
collection notice does more than misstate the extent of a consumer’s
debt obligation; it misstates the very existence of such an obligation.
Nor is such a misrepresentation rendered less false or
misleading by the fact that the debt had existed at one time, but had
been settled by the consumer. As Vangorden persuasively argues,
upon receipt of a debt collection letter misstating a debt obligation
and requesting payment, a consumer—and, particularly, a least
sophisticated consumer—might question whether she had indeed
satisfied the debt and make payment anew “out of fear and
confusion.” Appellant Br. 8; see Russell v. Absolute Collection Servs.,
Inc., 763 F.3d at 395 (observing that “hypothetical least sophisticated
consumer” would interpret statement that account was outstanding
“to mean that the debt remains legally due and owing[,] . . . [despite
plaintiff having] fully paid her debt”; thus, because statement that
debt “‘has not been satisfied’ is false on its face and misrepresents the
character, amount, and legal status of the debt,” plaintiff states valid
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17‐2186‐cv
Vangorden v. Second Round, Ltd. P’ship
FDCPA claim (some internal quotation marks and alterations
omitted)).
Section 1692g notice that the consumer could dispute the debt,
thereby triggering verification obligations for the debt collector,
warrants no different conclusion because, at the same time that
Second Round gave Vangorden such notice, it also told her that it
“may report information about your account to credit bureaus,” and
that such “information may already appear on your credit report.”
Compl. Ex. B (emphasis added). A least sophisticated consumer who
was so advised might understand her right to dispute the misstated
debt but, nevertheless, pay the debt out of fear that there was already
an adverse effect on her credit that would continue as long as the
obligation remained outstanding. A § 1692g notice hardly mitigates
a debt misrepresentation when it sends this sort of “contradictory
message” to the consumer. Russell v. Equifax A.R.S., 74 F.3d at 34
(holding that least sophisticated consumer could be misled by
communication that provided § 1692g debt dispute notice, but also
advised consumer that if he did not dispute claim but, rather, paid it
within 10 days, agency would not post collection to his credit file).
In urging otherwise, Second Round argues that its own intent
bears on how a least sophisticated consumer would understand the
June Letter. Second Round fails to demonstrate how Vangorden
would have understood that its attempt to collect the Debt here was
in good faith. Cf. Hart v. FCI Lender Servs., Inc., 797 F.3d 219, 226 (2d
Cir. 2015) (observing that court was “hard put” to understand how
consumer would understand debt collector’s professed purpose for
sending letter at issue). No matter. As we have already explained,
supra at 14–15, Second Round’s intent is relevant not on a motion to
dismiss, but only as an affirmative defense.
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Vangorden v. Second Round, Ltd. P’ship
Thus, notwithstanding the June Letter’s inclusion of § 1692g
notice, we conclude that the letter could mislead a least sophisticated
consumer about the misstated Debt obligation. We, therefore, adhere
to our conclusion that Vangorden has pleaded plausible § 1692e and
§ 1692f claims, which should not have been dismissed.
CONCLUSION
To summarize, we conclude as follows:
1. Where, as here, a debt collector misreports a debt obligation
to a consumer that she no longer owes, and requests payment on
that debt, the consumer plausibly alleges violations of 15 U.S.C.
§ 1692e and § 1692f, notwithstanding the fact that the debt collector
advised the consumer of her right to dispute the debt as required by
id. § 1692g, and that the consumer did not exercise that right.
2. Inclusion of 15 U.S.C. § 1692g notice here does not prevent
plaintiff from plausibly pleading that, on a least sophisticated
consumer standard, defendant’s debt communication was
misleading and unfair under id. § 1692e and § 1692f.
3. Because the FDCPA is a strict liability statute, a consumer is
not required to plead mens rea to state plausible FDCPA claims.
Rather, a debt collector’s intent is relevant as an element of the
affirmative defense afforded by 15 U.S.C. § 1692k(c).
Accordingly, we VACATE the judgment of the district court
dismissing plaintiff’s FDCPA complaint, and we REMAND the case
to the district court for further proceedings consistent with this
opinion.
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