Another Overshadowing FDCPA Claim Bites the Dust

Another day, another overshadowing claim filed by a specific plaintiffs' firm bites the dust in the Eastern District of New York (EDNY). In the past several months, this firm's frequently-filed claim that the format of the letter overshadows the consumer's validation rights—required by section 1692g of the Fair Debt Collection Practices Act (FDCPA)—has been continuously rejected by EDNY. iA Case Law Tracker subscribers got the full breakdown and analysis in the subscriber-only CLT Week in Review newsletter—want in on the fun? Sign up here. On Friday of last week, you can add another one to that list. 

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So, What Happened?

In Jackson v. POM Recoveries, Inc., the defendant sent a collection letter to the plaintiff regarding a past due balance incurred for his daughter's medical treatment at a New York hospital. The front page of the letter states that the debt may be covered in part or in its entirety by the plaintiff's insurance carrier if the plaintiff was qualified. The letter directed the plaintiff to fill out the back portion of the letter if he feels he qualifies and return it in an enclosed envelope. 

Below this statement, the letter provides the plaintiff with a disclosure of his 1692g validation rights. This statement was in a bold, capitalized typeface and was in its own separate paragraph. 

On the back of the letter, there is a paragraph titled "Assignment and Release Authorization," which assigns the benefits to which the plaintiff is entitled—referring to the insurance payment—to the creditor and indicates that plaintiff understands he is financially responsible for charges not covered by the assignment.

Through his counsel—a plaintiffs' firm that files massive amounts of FDCPA litigation in EDNY and other jurisdictions—plaintiff filed a complaint alleging that the assignment and release authorization overshadows his 1692g validation rights because (1) a reader might overlook or forego his right to dispute and conclude that the insurance provider will pay the debt, and (2) the reader might think that signing and returning the assignment and release authorization is time-sensitive. The court summarized the claims as:

The essence of the plaintiff’s argument is that the letter was purposefully designed to “fool consumers” into giving up their validation rights.

The Court Found No Overshadowing

The parties filed cross-motions for summary judgment, and the court sided with the debt collector. The court's ruling on the overshadowing claim is simple:

It would be particularly difficult for even the least sophisticated consumer to miss the validation notice, because it is written in capital letters, in bold typeface, centered and set apart from the other text. . .This validation notice clearly and correctly informs the plaintiff that he has the right to dispute the validity of the debt within 30 days. 

The court continues:

The fact that the notice is preceded by a paragraph advising the debtor that some or all of the debt may be covered by his insurance carrier does not overshadow or contradict the more prominently displayed validation notice. . .The least sophisticated consumer is expected to make “basic, reasonable and logical deductions and inferences” about the collection letter. A debtor making reasonable inferences and possessing at least a “rudimentary” knowledge of the world would not agree to be financially responsible for any portion of a debt he did not believe he owed.

(Internal citation omitted.)

The decision also goes into detail about how the wording of the letter refutes the plaintiff's claim. The letter states that the insurer "may" pay the debt "provided" that the plaintiff qualifies. The court found that a "least sophisticated consumer would understand that he could contest the debt instead of providing insurance information and agreeing to pay the uncovered balance."

Overall, the court granted defendant's motion for summary judgment and denied plaintiff's cross-motion.

Attorney Fees Request Denied

Defendant moved for attorney fees and costs under the FDCPA's 1692k (a)(3) provision, which allows the court to grant such remedy if the action was brought in bad faith and for the purpose of harassment. The court denied this request because the FDCPA provision runs against the party, not his counsel. The court noted that defendant's request was based on plaintiff's counsel's tactics:

[T]he defendant focuses on plaintiff’s counsel, Barshay Sanders, PLLC, to which it refers derisively as “the BS law firm,” and claims that the firm is “notorious for alleging baseless allegations in regard to the 30 day dispute/verification rights” and has filed “hundreds upon hundreds” of FDCPA actions. 

The court did not comment on this tactic, other than to state that plaintiff's counsel's alleged actions here do not qualify as support for granting fees/costs under 1692k. (Editor's Note: An attorney's actions for bringing baseless claims can, however, be subject to sanctions under the Federal Rules of Civil Procedure. Check out our Case Law Tracker to track when attorneys fees/sanctions like this are granted.)

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