The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
MARK GOLDEN and GENEVA GOLDEN, )
on behalf of themselves and all )
others similarly situated, )
)
Plaintiffs, )
) 1:20-cv-00627
v. )
)
HIGGINS BENJAMIN, PLLC, )
)
Defendant. )
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, Chief District Judge.
This is a putative class action by Plaintiffs Mark Golden and
Geneva Golden, on behalf of themselves and all others similarly
situated, against Defendant Higgins Benjamin, PLLC (“Higgins”), a
law firm, alleging violations of the Fair Debt Collection Practices
Act (“FDCPA”), 15 U.S.C. § 1692 et seq. Before the court is
Higgins’ motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). (Doc. 6.) For the reasons set forth below,
the motion will be denied.
I. BACKGROUND
Higgins is a law firm engaged in the collection of debts.
(Doc. 1 ¶ 14.) On April 22, 2020, Higgins sent Plaintiffs a
collection letter, commonly known as a dunning letter, to collect
a total balance of $903.05 in allegedly overdue homeowners’
association fees. (Id. ¶¶ 18, 21; Doc. 1-1.) The letter, which
Plaintiffs have attached to their complaint, reads in relevant
part:
You are notified as follows in accordance with the
[FDCPA]: This law firm is a debt collector. This letter
is an attempt to collect a debt and any information
obtained will be used for that purpose. Unless you
dispute the validity of this debt, or any portion, within
30 days after receipt of this letter, the debt will be
assumed to be valid. If you notify us in writing within
30 days after receipt of this letter that this debt, or
any portion, is disputed, we will obtain verification of
the debt or a copy of any judgment, and a copy of such
verification or judgment will be mailed to you. If you
notify us in writing within the 30 day period that the
debt, or any portion, is disputed or if you request the
name and address of the original creditor, our firm will
cease collection of the debt, or any disputed portion,
until we obtain verification of the debt or a copy of a
judgment, or the name and address of the original
creditor, and a copy of such verification or judgment,
or name and address of the original creditor is mailed
to you. Upon your written request within the 30 day
period, our firm will provide you with the name and
address of the original creditor, if different from the
current creditor.
(Doc. 1-1 at 5 (emphasis added).)
On July 8, 2020, Plaintiffs filed this action against
Higgins, alleging one violation of the FDCPA. (Doc. 1.) Higgins
moved to dismiss Plaintiffs’ cause of action for failure to state
a claim. (Doc. 6.) Plaintiffs responded in opposition, and
Higgins replied. (Docs. 8, 10.) The motion is now fully briefed
and ready for resolution.
II. ANALYSIS
A. Legal Standard
Federal Rule of Civil Procedure 8(a)(2) provides that a
complaint must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P.
(8)(a)(2). Under Federal Rule of Civil Procedure 12(b)(6), “a
complaint must contain sufficient factual matter . . . to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, (2007)). A claim is plausible “when
the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. In considering a Rule 12(b)(6) motion,
a court “must accept as true all of the factual allegations
contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94
(2007) (per curiam), and all reasonable inferences must be drawn
in the plaintiff’s favor. Ibarra v. United States, 120 F.3d 472,
474 (4th Cir. 1997). However, mere legal conclusions are not
accepted as true, and “[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678.
B. Violation of § 1692g(a)
The sole claim raised by Plaintiffs alleges a violation of 15
U.S.C. § 1692g(a), which provides in pertinent part:
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 consumer a written
notice containing . . .
(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[.]
“Congress included the debt validation provisions in order to
guarantee that consumers would receive adequate notice of their
legal rights.” Miller v. Payco–General Am. Credits, Inc., 943
F.2d 482, 484 (4th Cir. 1991). To determine whether notice is
adequate, the court applies the “least sophisticated consumer”
standard. See United States v. Nat'l Fin. Servs., Inc., 98 F.3d
131, 139 (4th Cir. 1996). This standard ensures that the FDCPA
protects all consumers — “the gullible as well as the shrewd.”
Id. at 136. “[T]he fact that a false statement may be obviously
false to those who are trained and experienced does not change its
character, nor take away its power to deceive others less
experienced.” Id. (quoting F.T.C. v. Standard Educ. Soc'y, 302
U.S. 112, 116 (1937)). However, the least sophisticated consumer
isn’t “tied to the very last rung on the [intelligence or]
sophistication ladder.” Garcia-Contreras v. Brock & Scott, PLLC,
775 F. Supp. 2d 808, 817 (M.D.N.C. 2011) (quoting Gonzalez v.
Kay, 577 F.3d 600, 603 (5th Cir. 2009)) (alteration in original).
The least sophisticated consumer standard both protects naive
consumers and “prevents liability for bizarre or idiosyncratic
interpretations of collection notices by preserving a quotient of
reasonableness and presuming a basic level of understanding and
willingness to read with care.” Id. (quoting Nat'l Fin. Servs., 98
F.3d at 136). Under the “least sophisticated consumer” standard,
a statement is false or misleading if “it can be reasonably read
to have two or more meanings, one of which is inaccurate.”
Kirkpatrick v. TJ Servs., Inc., 379 F. Supp. 3d 539, 541 (E.D. Va.
2019) (citing decisions from the Second, Third, Sixth, and Ninth
Circuits applying the same standard, but noting that the Fourth
Circuit “has not opined on the issue”); see also Laporte v. Midland
Funding LLC, No. 5:19-CV-000073, 2020 WL 2814184, at *3 (W.D. Va.
May 29, 2020). The test requires a court to consider a statement's
“capacity . . . to mislead,” such that “evidence of actual
deception is unnecessary.” Nat'l Fin. Servs., 98 F.3d at 139.
Plaintiffs do not dispute that the dunning letter, in
accordance with the requirements of 15 U.S.C. § 1692g(a), notifies
them that the debt will be assumed valid in the absence of a timely
dispute and that the debt referenced was the homeowners’
association fees. Plaintiffs allege, however, that the letter
fails to comply with 15 U.S.C. § 1692g(a)(3) because it “fails to
inform Plaintiff[s] that the Debt will be assumed to be valid by
Defendant.” (Doc. 1 ¶ 26 (emphasis in original); see Doc. 1-1 at
5 (“Unless you dispute the validity of this debt, or any portion,
within 30 days after receipt of this letter, the debt will be
assumed to be valid.”).) Plaintiffs allege that this failure could
lead the least sophisticated consumer to be “uncertain about what
entity will make the assumption and for what purpose.” (Id. ¶ 53;
Doc. 8 at 4.) Plaintiffs assert, in the absence of language
indicating the identity of who will assume the debt to be valid,
“that the least sophisticated consumer could be misled into
believing that their debt will be determined to be valid by a
court, credit reporting agency, or other authority.” (Doc. 8 at
5–6 (internal quotation marks and punctuation omitted).) In
response, Higgins argues that the absence of identifying language
in the relevant sentence is not misleading because the letter
clearly indicates that Higgins “is a debt collector.” (Doc. 7 at
5.) Higgins refers to other portions of the same paragraph which
indicate the responsibilities of the firm in relation to the debt
and asserts that, taken together, the letter makes clear that only
the firm will assume the debt to be valid. (Id.)
As Higgins correctly argues, there is no requirement in the
FDCPA that a debt collector quote the statute's language
verbatim. See Kirkpatrick, 379 F. Supp. 3d at 542; Emanuel v. Am.
Credit Exch., 870 F.2d 805, 808 (2d Cir. 1989). When reviewing a
debt collection notice, the court must review the document as a
whole in order to evaluate whether the notice would sufficiently
inform a least sophisticated debtor of their rights under the
FDCPA. Garcia-Contreras, 775 F. Supp. 2d at 817–18; Smith v.
Dynamic Recovery Sols. LLC, No. 2:19-CV-00135-DCN, 2019 WL
2368460, at *5 (D.S.C. June 5, 2019). “The test for whether the
collection letter violates § 1692g is whether the letter, taken as
a whole, would confuse the unsophisticated consumer about his or
her rights.” Orr v. Westport Recovery Corp., 941 F. Supp. 2d 1377,
1382 (N.D. Ga. 2013) (quoting Farley v. Diversified Collection
Servs., Inc., No. 98–2108, 1999 WL 965496, at *3 (N.D. Ill.
September 30, 1999)).
“[I]n reading a statute, [the court must] assume all language
has a purpose. Thus, the language of the ‘debt collector’ in each
section must have a purpose.” Galuska v. Collectors Training Inst.
of Ill., Inc., No. 3:07–CV–2044, 2008 WL 2050809, at *5 (M.D. Pa.
May 13, 2008). By including the term “by the debt
collector,” § 1692g(a)(3) expressly intended the notice to convey
the specific validation limitation to the consumer — that the debt
would be assumed valid by only the debt collector and only for
collection purposes. See Harlan v. NRA Group, LLC, Civil Action
No. 10–cv–0324, 2011 WL 500024, at *3–4 (E.D. Pa. Feb. 9, 2011).1
“The statutorily required validation notice is intended to convey
to the consumer that failure to dispute the debt permits the debt
collector to proceed for collection purposes on the ‘temporary
fiction’ that the debt is valid [, that f]ailure to dispute a debt
1 The dunning letter’s statement in Harlan that the debt would be
“presumed” (rather than “assumed”) to be valid provided an additional
deficiency. Nevertheless, the omission of “by the debt collector”
created sufficient uncertainty to state a claim. Id. at *4.
has no legal effect on a debtor's rights . . . [and that i]n any
subsequent collection action, the burden would remain on the debt
collector . . . to prove the validity of the debt.” Id.
This court has not previously addressed whether the absence
of identifying language in relation to the assumption of validity
in a collection letter renders the notice misleading. However, in
Fariasantos v. Rosenberg & Assocs., LLC, the Eastern District of
Virginia faced this very question. See 2 F. Supp. 3d 813 (E.D.
Va. 2014). In that case, the plaintiff received a dunning letter
that stated, “Unless you dispute this debt or any part thereof,
within 30 days after receiving this notice, the debt will be
assumed as valid.” Id. at 816. The plaintiff alleged that the
letter was misleading, and the court agreed. Viewing the dunning
letter holistically, the court found that the letter’s use of “this
office” and “we” elsewhere in the same paragraph failed to
sufficiently make clear that it was only the debt collector who
would assume the debt to be valid. Id. at 823. Rather, the key
sentence, worded passively, was considered to “obscure” the
identity of who would consider the debt to be valid and for what
purposes. Id. The court explained that to read in an identity
would be to “assume the presence and import of words that are
simply not there.” Id. Thus, “even in light of the surrounding
sentences and the general context of the [l]etter,” the court
found, it “cannot extract substantive meaning from a sentence that
was drafted in a way that obscures such meaning.” Id.
Here, as with the letter in Fariasantos, the key sentence is
worded passively, fails to identify who is to assume that the debt
is valid, and does not indicate the purposes for which the
assumption is to be made. Further, nothing in the context or
language of the surrounding paragraph indicates that it is the
debt collector who will assume the validity of the debt and only
for collection purposes. Although Higgins is not required to use
“magic words” in order to comply with the FDCPA, it “must include
some language that makes clear it is only the debt collector that
may assume validity and only for collection purposes; otherwise
the debtor is left uncertain about what entity will make the
assumption and for what purpose.” Harlan, 2011 WL 500024, at
*3. “When read in the context of the entire [letter], the phrase
‘will be [assumed] valid’ and the subsequent omission of any
reference to the entity that will be ‘[assuming]’ the debt [might]
confuse or mislead the least sophisticated debtor into believing
that her debt would be determined to be valid by an entity of
authority [other than the debt collector].” Orr, 941 F. Supp. 2d
at 1382 (quoting Smith v. Hecker, No. CIV.A. 04-5820, 2005 WL
894812, at *6 (E.D. Pa. Apr. 18, 2005)) (alterations in original).2
2 Smith’s dunning letter is distinguishable in that it noted that the
debt would be “assessed” (rather than “assumed”) valid. But the
defendant’s motion to dismiss was nevertheless denied because the letter
also failed to indicate that it was only the debt collector, not others,
who would make that determination. Id. at *6.
Here, the exclusion in the key sentence of the statutory language
regarding the identity of who may assume the debt to be valid or
the purposes of that assumption is sufficient to state a violation
of the FDCPA.
In support of its position that the language is not
misleading, Higgins relies on Vitullo v. Mancini, in which an
argument similar to that of the Plaintiffs was found to be
“unavailing.” See 684 F. Supp. 2d 747, 757 (E.D. Va. 2010).
However, that decision did not explain its reasoning in detail and
did not focus exclusively on the absence of the contested language
here. Further, since Vitullo was decided, other judges in the
same district have twice accepted the argument made by Plaintiffs
here. See Fariasantos, 2 F. Supp. 3d 813; DeCapri v. Law Offs. of
Shaprio Brown & Alt, LLP, No. 3:14CV201-HEH, 2014 WL 4699591, at
*6 (E.D. Va. Sept. 19, 2014). So have the vast majority of courts
that have considered the issue. See Orr, 941 F. Supp. 2d at 1382;
Sevela v. Kozeny & McCubbin, L.C., No. 8:18CV390, 2018 WL 10228300,
at *5 (D. Neb. Nov. 29, 2018); Allah-Mensah v. Law Off. of Patrick
M. Connelly, P.C., No. CV PX-16-1053, 2016 WL 6803775, at *8 (D.
Md. Nov. 17, 2016); Philip v. Sardo & Batista, P.C., No. CIV.A.
11-4773 SRC, 2011 WL 5513201, at *5 (D.N.J. Nov. 10, 2011)
(rejecting multiple references to “we” and “this office” as
sufficient to comply with the statutory requirement); Harlan, 2011
WL 500024, at *3; Galuska, 2008 WL 2050809, at *6; Hecker, 2005 WL
894812, at *6; Guerrero v. Absolute Collection Serv., Inc., No.
1:11-CV-02427-JEC, 2011 WL 8183860, at *4 (N.D. Ga. Oct. 6, 2011);
Koch v. Atkinson, Diner, Stone, Mankuta, & Ploucha, P.A., No. 11-
80894-CIV, 2011 WL 4499100, at *3 (S.D. Fla. Sept. 27, 2011); see
also McWilliams v. Advanced Recovery Sys., Inc., 174 F. Supp. 3d
936, 943-44 (S.D. Miss. 2016).
Higgins argues that any ambiguity regarding the assuming
entity is eliminated by the statement, “This law firm is a debt
collector,” and the use of identifying phrases, “we,” “us,” and
“our firm” in other sentences in the relevant paragraph. However,
viewing Higgins’s debt collection letter as a whole, and from the
perspective of the least sophisticated consumer, the presence of
identifying language elsewhere in the same paragraph, combined
with the conspicuous absence in the key sentence, does not
eliminate the ambiguity but may increase the tendency to be
misleading. As other courts interpreting similar language have
found, the least sophisticated consumer could read this absence to
indicate that the debt would be assumed valid by an entity other
than the firm. See, e.g., Fariasantos, 2 F. Supp. 3d at 823;
Philip, 2011 WL 5513201, at *5 (“In fact, the notice could be read
as confusing or misleading because of the fact that ‘I’ and ‘this
office’ was used so frequently in other contexts within the notice
but not used after the clause regarding the assumption of the
validity of the debt.”); Galuska, 2008 WL 2050809, at *5 (“[T]he
notice could be read as confusing or misleading because of the
fact that ‘we’ and ‘this office’ was used so frequently in other
contexts within the notice, but not mentioned in the context of
the sentence regarding the assumption of the debt.”).
Plaintiffs are therefore correct that the phrases “we,” “us,”
and “our firm” do not sufficiently inform a least sophisticated
consumer that the assumption of the debt is limited to Higgins and
not some other entity such as a credit reporting agency or court.
In light of the absence of identifying language as to the key
sentence here, Plaintiffs have sufficiently stated a claim for
violations of the FDCPA upon which relief may be granted.
III. CONCLUSION
For the reasons stated,
IT IS THEREFORE ORDERED that Defendant’s motion to dismiss
(Doc. 6) is DENIED.
/s/ Thomas D. Schroeder
United States District Judge
January 4, 2021