CHENG v. SRA ASSOCIATES, INC.

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

CAMDEN VICINAGE

__________________________________

:

WILSON CHENG, STANISLAW :

GRISHIN, AND MARITZA :

ALVARADO, individually and on behalf :

of all those similarly situated, : Civil No. 18-13705 (RBK/JS)

:

Plaintiffs, : OPINION

:

v. :

:

SRA ASSOCIATES, INC. d/b/a SRA :

Associates of New Jersey, :

:

Defendant. :

__________________________________ :

KUGLER, United States District Judge:

THIS MATTER comes before the Court on Plaintiffs Wilson Cheng, Stanislaw Grishin, and

Maritza Alvarado’s putative class action claim against Defendant SRA Associates, Inc., for

violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq, and

Defendant’s subsequent Motion to Dismiss [Doc. No. 5] for failure to state a claim upon which

relief can be granted. Fed. R. Civ. P. 12(b)(6). For the reasons set forth in the Opinion below,

Defendant’s motion is GRANTED.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This is a case about alleged violations of the FDCPA. Plaintiffs Wilson Cheng, Stanislaw

Grishin, and Maritza Alvarado (“Plaintiffs”) are consumers under the FDCPA and received

letters from a third-party debt collector, Defendant SRA Associates, Inc. On August 28, 2018,

Plaintiffs filed a Complaint before this Court challenging these collection letters. Plaintiffs’

Complaint (“Compl.”) [Doc. No. 7].

The letters currently before the Court have three relevant components: a header, a body,

and an attached notice provision. Id. at Ex. A, Ex. B, Ex. C. The header contains Defendant

SRA’s company name, address, and toll-free telephone number, as well as relevant details

regarding the current creditors. Id. The body provides instructions for remitting payment either

by mail or via a payment website. Id. Finally, the notice provision, under the body of the letter,

comprises a single paragraph titled “IMPORTANT CONSUMER NOTICE.” Id. The notice

states, in full:

Unless you notify this office within 30 days after receiving this notice that you

dispute the validity of the debt or any portion thereof, this office will assume this

debt is valid. If you notify this office in writing within 30 days after 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 the judgment and

mail you a copy of such judgment or verification. If you request this office in

writing within 30 days after receiving this notice, this office will provide you with

the name and address of the original creditor, if different from the current

creditor.

Id.

Plaintiffs argue that the letters violate two provisions of the FDCPA. Specifically, they

allege that the notices do not make it explicitly clear that a dispute of the debt must be submitted

in writing, and that as such, the letters violate sections 1692g(a)(3) and 1692e(10). Id. at ¶¶ 34,

56. Plaintiffs assert that inclusion of Defendant’s contact information in the header of the letter

creates confusion under the least sophisticated debtor standard. In addition, Plaintiffs claim

Defendant’s telephone number, along with a statement that payments may be sent to Defendant’s

address as listed in the header, create confusion such that the least sophisticated consumer would

be uncertain of her obligation to appeal the debt by writing to the same address. Id. at ¶¶ 26–27,

37. Plaintiffs also seek class certification for themselves and for similarly situated class

members in New York who received letters from Defendant between September 2017 and

September 2018, as well as damages and fees pursuant to 15 U.S.C. 1692(k) and Rule 23. Id. at

7.

Defendant filed the instant motion to dismiss on November 9, 2018. Def.’s Mot. to

Dismiss (“Def.’s Mot.”) [Doc. No. 5]. Defendant argues that Plaintiffs’ interpretation of the

collection letters is “bizarre and idiosyncratic,” that the letters adequately instruct debtors on

procedures to dispute a debt, and that the letters are neither false nor deceptive. Def.’s Mot. at 1–

2. Defendant therefore contends that their collection letter contains the requisite information

pursuant to the FDCPA. Id.

II. LEGAL STANDARDS

A. Rule 12(b)(6) Standard

Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss an action for failure to

state a claim upon which relief can be granted. When evaluating a motion to dismiss, “courts

accept all factual allegations as true, construe the complaint in the light most favorable to the

plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff

may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.

2009) (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d. Cir. 2008)). In other

words, a complaint survives a motion to dismiss if it contains sufficient factual matter, accepted

as true, to “state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 570 (2007).

To make this determination, courts conduct a three-part analysis. Santiago v. Warminster

Township, 629 F.3d 121, 130 (3d Cir. 2010). First, the Court must “tak[e] note of the elements a

plaintiff must plead to state a claim.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)).

Second, the Court should identify allegations that, “because they are no more than conclusions,

are not entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 680). “Threadbare

recitals of the elements of a cause of action, supported by mere conclusory statements, do not

suffice.” Id. (quoting Iqbal, 556 U.S. at 678). Finally, “when there are well-pleaded factual

allegations, a court should assume their veracity and then determine whether they plausibly give

rise to an entitlement for relief.” Id. (quoting Iqbal, 556 U.S. at 679). A complaint cannot

survive a motion to dismiss where a court can only infer that a claim is merely possible rather

than plausible. Id.

B. FDCPA

Congress enacted the FDCPA in 1977 to address the “abundant evidence of the use of

abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. §

1692(a). Congress expressly stated that the FDCPA’s purpose is to “eliminate abusive debt

collection practices by debt collectors” and “to insure [sic] that those debt collectors who refrain

from using abusive debt collection practices are not competitively disadvantaged.” 15 U.S.C. §

1692e. Because the FDCPA is a remedial statute, courts construe its language broadly. Brown v.

Card Service Center, 464 F.3d 450, 453 (3d Cir. 2006).

To prevail on an FDCPA claim, a plaintiff must prove that (1) the plaintiff is a consumer,

(2) the defendant is a debt collector, (3) the challenged conduct involves the defendant’s attempt

to collect a debt as statutorily defined, and (4) the defendant has violated a provision of the

FDCPA in attempting to collect the debt. Douglass v. Convergent Outsourcing, 765 F.3d 299,

303 (3d Cir. 2014).

Section 1692g(a)(3) of the FDCPA describes the requirement to provide notice to the

consumer of procedures to dispute a debt (the “validation notice”). Specifically, “[w]ithin five

days after the initial communication with a consumer in connection with the collection of any

debt, a debt collector shall . . . send the consumer a written notice containing . . . a statement that

unless the consumer, within thirty days after receipt of the notice, disputes the validity of the

debt . . . the debt will be assumed to be valid by the debt collector . . . .” 15 U.S.C. §

1692g(a)(3). The requirements of section 1692g(a), including provision of notice regarding

dispute procedures, ensure that consumers “receive adequate notice of their rights under the

law.” Wilson v. Quadramed Corp., 225 F.3d 350, 354 (3d Cir. 2000). Because the Third Circuit

has interpreted section 1692g(a)(3) to require “that any dispute, to be effective, must be in

writing,” debt collectors must inform debtors that they may dispute their claims in writing only.

Graziano v. Harrison, 950 F.2d 107, 112 (3d Cir. 1991).

The collection activities or communication of the collector “may not overshadow or be

inconsistent with the disclosure of the consumer’s right to dispute the debt . . . .” 15 U.S.C. §

1692(b). Therefore, the notice must effectively convey the writing requirement. A

communication contradicts, or does not effectively convey the writing requirement, when “it

provides information inconsistent with the consumer’s right to dispute the debt.” Wilson, 225

F.3d at 356. To determine whether notice has been effectively conveyed and whether the writing

requirement is clear, or if it has been overshadowed or contradicted, this Court must evaluate the

notice from the perspective of the “least sophisticated debtor.” Id. at 354.

The least sophisticated debtor standard is designed to protect “all consumers, the gullible

as well as the shrewd.” Brown, 464 F.3d at 454. Accordingly, “[t]he least sophisticated debtor

standard requires more than ‘simply examining whether particular language would deceive or

mislead a reasonable debtor’ because a communication that would not deceive or mislead a

reasonable debtor might still deceive or mislead the least sophisticated debtor.” Id. (quoting

Wilson, 225 F.3d at 354). Nevertheless, the FDCPA 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.” Wilson, 225 F.3d at

354–55 (quotations and citations omitted). For example, even the least sophisticated debtor is

presumed to have read a collection letter in its entirety. Caprio v. Healthcare Revenue Recovery

Grp., LLC, 709 F.3d 142, 149 (3d Cir. 2013); Campuzano–Burgos v. Midland Credit Mgmt.,

Inc., 550 F.3d 294, 299 (3d Cir. 2008).

Section 1692e(10) of the FDCPA prohibits “[t]he use of any false representation or

deceptive means to collect or attempt to collect any debt or to obtain information concerning a

consumer.” “A debt collection letter is deceptive where it can be reasonably read to have two or

more different meanings, one of which is inaccurate.” Rosenau v. Unifund Corp., 539 F.3d 218,

222 (3d Cir. 2008) (citing Brown, 464 F.3d at 455 (internal quotation marks and citation

omitted)). However, “[w]hen allegations under 15 U.S.C. § 1692e(10) are based on the same

language or theories as allegations under 15 U.S.C. § 1692g, the analysis of the § 1692g claim is

usually dispositive.” Riccio v. Credit Collection Services, No. 17-8889, 2019 WL 979159, at *6

(D.N.J. Feb. 28, 2019) (quoting Caprio, 709 F.3d at 154). See also Cruz v. Financial

Recoveries, No. 15–0753, 2016 WL 3545322, at *4 (D.N.J. June 28, 2016) (“[W]hen language is

upheld pursuant to [s]ection 1692g, that analysis is usually dispositive for [s]ection 1692e.”).

III. DISCUSSION

A. Section 1692g(a)(3)

Plaintiffs contend that Defendant’s collection letter violates section 1692g(a)(3) by

failing to clearly convey the requirement that all disputes be made in writing. Plaintiffs allege

that the letter “discourages written disputes [by] only providing a mailing address for payments.”

Compl. at ¶ 36. Plaintiffs contend that this text, coupled with Defendant’s “conspicuous”

inclusion of a toll-free telephone number in the letter’s header, “encourages Plaintiff[s] to call

Defendant,” causing the least sophisticated consumer to be “confused as to what she must do to

effectively dispute the alleged debt.” Id. at ¶¶ 26, 35, 38. The least sophisticated consumer

could, according to Plaintiffs, believe that she could dispute the debt by calling the toll-free

number or, alternatively, could only write to Defendant at the provided address if she were

discharging her debt. Id. at ¶¶ 39-40. Taken collectively, Plaintiffs argue, the letter provides

inadequate notice of the writing requirement under section 1692g(a)(3).

This Court is not convinced by Plaintiffs’ arguments that the inclusion of a toll-free

number and invitation to use the Defendant’s mailing address for payments overshadows or

contradicts the language in the consumer notice such that the least sophisticated consumer would

be confused about her right to dispute the validity of the debt in writing. The FDCPA requires

that debt collectors inform a debtor of her right to dispute the validity of any debt for at least

thirty days. 15 U.S.C. § 1692g(a)(3). The Third Circuit has held that for a dispute to be valid, it

must be in writing. Graziano, 950 F.2d at 112. Therefore, the first question this Court must

answer is whether the validation notice in the debt collection letter at hand satisfies the

requirement that collectors notify the debtor of the writing requirement to dispute a debt.

A plain reading of the disputed paragraph of text is enough to show that Defendant

effectively conveyed the writing requirement for disputing a debt. The Court recognizes that the

validation notice could be clearer by qualifying the first sentence, about dispute of debt, with an

additional “in writing” clause. Instead, Defendant’s verification notice mirrors FDCPA sections

1692g(a)(3)-(5), including 1692g(a)(3)’s silence on the method of dispute. As with sections

1692g(a)(3)-(5), the overall message of the validation notice is still apparent, and the paragraph

successfully conveys the writing requirement, even from the perspective of the least

sophisticated debtor. Written dispute is clearly the debtor action required to trigger verification

of the debt.

This Court’s interpretation of the letter is well supported by Third Circuit precedent.

Most obviously, the Third Circuit has rejected challenges to substantially similar validation

notice language in other debt collection letters. In Szczurek v. Professional Management, Inc.,

the Third Circuit was faced with a nearly identical validation notice that closely mirrored the

statutory language of sections 1692g(a)(3)-(5).1 627 Fed. App’x 57, 59 (2015). That the Court

in Szczurek took no issue with the now-contested notice, while not dispositive, is telling of the

Third Circuit’s views on the notice’s sufficiency. For these reasons, this Court concludes that

the collection letter’s validation notice effectively conveyed the writing requirement for

disputing the validity of a debt.

Having determined that the Defendant’s validation notice met the Third Circuit’s

requirement that collectors effectively convey the writing requirement to dispute a debt, the next

question this Court must face is whether the collection letter’s inclusion of a toll-free telephone

number and invitation to use the Defendant’s listed address for submission of payments

1 Unless, within 30 days after receipt of this notice, you dispute the validity of the debt or any portion thereof, we

will assume the debt to be valid. If, within 30 days after your receipt of this notice, you notify us in writing that the

debt or any portion thereof is disputed, we will obtain a verification of the debt or, if the debt is founded upon a

judgment, a copy of any such judgment, and we will mail to you a copy of such verification or judgment. If the

original creditor is different from the creditor named above, then upon your written request within 30 days after the

receipt of this notice we will provide you with the name and address of the original creditor.

overshadowed or contradicted the writing requirement. Plaintiffs contend that these features

might result in confusion for the least sophisticated consumer as to the writing requirement.

This Court does not agree that these features overshadow or contradict the writing

requirement. While Defendant included a toll-free telephone number in the letter’s header, it

was not conspicuously displayed as Plaintiffs’ allege. It was neither in larger font, nor was it

accompanied by an explicit invitation to call Defendant to dispute a debt or for any other

purpose. Even if this Court accepted—which it does not—that the telephone number was

conspicuous and implicitly encouraged Plaintiffs to call the Defendant, this Court finds

compelling Judge Wolfson’s recent opinion explaining that encouragement to call the collector,

with no connection to dispute of the debt, is not improper under section 1692g(a). Credit

Collection Services, 2019 WL 979159, at *6 (“[T]he mere inclusion of contact information other

than a debt-collector’s mailing address does not in itself create a claim under 15 U.S.C §

1692g.”) (internal citation omitted). Thus, contrary to Plaintiffs’ bald assertion, the inclusion of

the Defendant’s telephone number is not equivalent to an encouragement to call to dispute the

validity of a debt. Likewise, the invitation to send payment to the same address listed in the

letter’s header does not imply that the address may be used for no other purpose. The least

sophisticated debtor is still presumed to have read the entire notice. Caprio, 709 F.3d at 149.

Even if the debtor were confused by the inclusion of the telephone number in conjunction

with the reference to send payments to Defendant’s above-posted address, it would become

obvious upon reading the validation notice that disputes must be in writing. It would require a

“bizarre and idiosyncratic” interpretation of the letter as a whole to conclude that the header’s

telephone number and instructions for mailing payment overrode the validation notice’s explicit

rules governing a dispute. Wilson, 225 F.3d at 354–55. Sufficient procedures for dispute of debt

are those explicitly established by the FDCPA and prescribed by the Defendant’s letter; neither

this Court nor the least sophisticated debtor is at liberty to read other required procedures into the

letter. Therefore, the letter’s inclusion of Defendant’s telephone number and instructions for

sending payment to Defendant’s mailing address do not impermissibly contradict or overshadow

the writing requirement.

The Court considers Plaintiffs’ remaining arguments wholly unpersuasive. For example,

Plaintiffs’ reliance on—and request that this Court follow—the reasoning in Cadillo v.

Stoneleigh Recovery Associates is not to the contrary. In Cadillo, one Court in this District held

that the use of the word “if” rather than “unless” in a validation notice (“If you notify this office

in writing within 30 days . . . that you dispute the validity of this debt . . . .”) could confuse the

least sophisticated consumer. No. 17-7472, 2017 WL 6550486, at *3 (D.N.J. Dec. 21, 2017).

Such reasoning is not binding on this Court. But even if it was, the collection letter Plaintiffs

received from Defendant did not preface the writing requirement with the word “if,” and

therefore this argument does not support Plaintiffs’ position.

Finally, this Court rejects Plaintiffs’ plea for it to rewrite the law. Specifically, Plaintiffs

argue that the Third Circuit’s holding in Graziano that disputes of debt must be in writing is

inherently inconsistent with the statute, contending that section 1692g(a)(3) “specifically allows

a consumer to dispute the validity of an alleged debt orally.” Pl. Opp. Memo [Doc. No. 6] (“Pl.

Memo”) at 2. Even if this Court agreed—which it does not—this kind of jurisprudential

redrawing undercuts relationship between a District and Appellate Court. The Third Circuit

carefully considered this issue, and expressly rejected Plaintiffs’ statutory reading of section

1692g(a)(3), holding that failure to read a writing requirement into section 1692g(a)(3) would be

“incoherent” given that 1692g(a)(4)-(5) codify the debt collector’s required response to a written

dispute. Graziano, 950 F.2d at 112. This Court, as a District Court reliant on Third Circuit

precedent, cannot, as Plaintiffs suggest, disregard the Circuit’s interpretation.

For the reasons stated above, this Court finds that Defendant’s collection letter

sufficiently met the Third Circuit’s requirement that Defendant inform Plaintiffs of the writing

requirement for disputes, and that the language contained in the remainder of the letter neither

overshadowed nor contradicted the writing requirement. Accordingly, Plaintiffs have failed to

state a claim upon which relief can be granted under section 1692g(a)(3).

B. Section 1692e

Because Plaintiffs cannot prevail on their claim under section 1692g(a)(3), they likewise

cannot succeed under section 1692e(10). Plaintiffs contend that because of the uncertainty

outlined in the allegations under section 1692g(a)(3), the least sophisticated consumer would be

uncertain of her right to dispute the debt. Compl. at ¶¶ 51–54. Plaintiffs assert that because

Defendant’s letter creates this uncertainty, it is deceptive and thus violates section 1692e(10). Id.

at ¶¶ 55-60.

Even if this Court were to find that the section 1692g(a)(3) was not dispositive for

the section 1692e(10) analysis, the letters here are neither false nor deceptive because the

disputed language cannot be “reasonably read to have two or more different meanings, one of

which is inaccurate.” Rosenau, 539 F.3d at 222. As previously discussed, the collection letter’s

inclusion of Defendant’s telephone number and instructions for sending payment to Defendant’s

mailing address did not impermissibly contradict or overshadow the writing requirement.

Defendant’s validation notice concisely laid out the requirements for making a dispute, and

neither the inclusion of the telephone number nor the instructions for sending payment to

Defendant’s mailing address could be understood as creating a second, alternative meaning upon

which a debtor could rely.

In making their section 1692e(10) claim, Plaintiffs rely on the same arguments regarding

the telephone number and the payment address as they relied on in their section

1692g(a)(3) claim. Thus, this Court “must reach the same conclusion with respect to the claim

brought under § 1692e(10).” Caprio, 709 F.3d at 155. Plaintiffs have failed to argue any

additional grounds with respect to their section 1692e(10) claim, and the disputed portions of

Defendant’s letter are neither false nor deceptive. As such, this Court finds that Plaintiffs have

failed to state a claim upon which relief can be granted.

C. Class Action under Rule 23

Plaintiffs purport to represent all those similarly situated in the state of New York who

received substantially similar letters from Defendant during the period September 10, 2017

through September 10, 2018. Because Plaintiffs have failed to state a claim upon which relief

can be granted, this Court need not address the merits of Plaintiffs’ Rule 23 arguments.

IV. CONCLUSION

For the reasons stated above, this Court GRANTS Defendant’s motion to dismiss

Plaintiffs’ putative class action complaint for failure to state a claim.

Dated: 05/30/19 s/ Robert B. Kugler

ROBERT B. KUGLER

United States District Judge