Recently a Memorandum of Decision was issued granting a Motion to Dismiss in an action involving one of Pastore & Dailey’s financial services clients. Below is a summary of the well written decision by Judge Spatt.
The plaintiff alleged claims under the Fair Debt Collection Practices Act (“FDCPA”) and the New York General Business Law § 349, as well as common law causes of action. On behalf of the defendant, a major national credit provider, we filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted, which was granted by the court.
The District Court first addressed whether the defendant qualified as a debt collector under the FDCPA, and found that it did not. The FDCPA prohibits deceptive and misleading practice by “debt collectors” and defines debt collectors as those engaged in “any business the principal purpose of which is the collection of any debts.” Creditors, however, are defined as “any person who offers or extends credit creating a debt or to whim a debt is owed.” The defendant is a creditor under the statute and the FDCPA limits its application to debt collectors.
The distinction between debt collectors and creditors under the FDCPA has one exception however; it is referred to as the “false name” exception. The false name exception is when a creditor attempts to collect its own debt by using “any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.” 15 U.S.C. § 1692a(6). This would mean a creditor could be liable under the FDCPA if they were to use a pseudonym or alias in attempting to collect their debts.
The plaintiff attempted to assert that the defendant’s conduct fell under the false name exception because under the facts proffered by the plaintiff, the defendant allegedly held themselves out to be someone else in communicating with a third party. The court rejected this theory of liability.
The false name standard has been found to be whether “the least sophisticated consumer would have the false impression that a third party was attempted collect the debt.” Maguire v. Citicorp Retail Services, 147 F.3d 232, 236 (2d Cir. 1998). It was apparent that the defendant never utilized a false name in communicating with the consumer plaintiff, and under the Maguire standard, a court must look to the communications with the debtor to determine whether the false name exception applies. Defendant’s communications with the debtor were not misleading or under a false name.
Thus, the Court concluded that Defendant was not a debt collector under the FDCPA, despite the false name exception, and accordingly granted our Motion to Dismiss the FDCPA causes of action.
After granting our Motion on the above grounds, The District Court also considered the additional reasons asserted for why the Plaintiff’s claims failed. Even if our client was considered a debt collector, Plaintiff’s claims under Section 1692e of the FDCPA failed because the communications from Defendant’s offices were nothing more than attempts to learn the correct contact information for Plaintiff’s attorney, rather than any false representations or deceptive attempts to collect a debt. The District Court found our position meritorious as to Plaintiff’s claims under Sections 1692e(9) and(10), stating that even if the defendant were a debt collector, those claims would be dismissed for failure to state a claim. The Court found that “once again the Plaintiff has failed to provide any authority for the theory that a debt collector can be liable for communications made to a party that is not the debtor, even though tangentially related to the collection of the debt.” (Memorandum of Decision, p. 13).
The District Court declined to address any of the state or common law causes of action.
Tags: Commercial Litigation, Consumer Credit, Firm Victory, Joseph Pastore
Bankruptcy Court Holds the Plain Meaning of a Security Agreement Dictates
Connecticut’s Data Privacy Breach Notification Law Gets a Facelift