The Second Circuit was relatively quiet when it came to the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA) in 2020, but when it did issue opinions, several were quite impactful in our industry.
Most significant was its decision to side with the Ninth Circuit and its broad interpretation of an automatic telephone dialing system which likely helped set the stage for the Supreme Court to resolve the split in 2021. The following is a chronological report of the Second Circuit’s opinions in FDCPA and TCPA cases.
Isaac v. NRA Grp., LLC, 798 Fed. Appx. 693 (2d Cir. 2020)
The Second Circuit affirmed the judgment of the district court that found that collection letters were not required to include the disclosures required by 15 U.S.C. 1692g(a) because they were not the initial communications sent to the debtors by the debt collector.
Bryan v. Credit Control, LLC, 954 F.3d 576 (2d Cir. 2020)
The Second Circuit reversed the dismissal of an FDCPA complaint based upon the alleged failure to identify the creditor to whom the debt is owed as required by 15 U.S.C. 1692g(a)(2).
The letter in issue identified the creditor as Kohl’s, the department store who has private label credit cards that are issued in partnership with Capital One Bank. Even though Kohl’s serviced the accounts and issued all billing statements in their name, the cardmember agreement provided that Capital One was the “creditor and issuer” of the account.
Based upon the language of the cardmember agreement, the Second Circuit held that Capital One was actually the creditor to whom the debt was owed and that the letter should have identified it as such.
Duran v. La Boom Disco, Inc., 955 F.3d 279 (2d Cir. 2020)
In a text messaging case, the Second Circuit threw its hat into the ring to define automatic telephone dialing system (ATDS) under the TCPA. Since the opinion opened by defining the TCPA as having been enacted to “cure America of that ‘scourge of modern civilization’: telemarketing,” one could see where this opinion was headed and the Second Circuit joined the Ninth Circuit in holding that an ATDS need only have the capacity to store or produce telephone numbers to be called, using a random or sequential number generator.
Thus, in the Second Circuit, a predictive dialer is an ATDS. On the human intervention prong, the court took a narrow view and reasoned that click to send was not sufficient human intervention because the system still dials the numbers.
Chaperon v. Sontag & Hyman, PC, 819 Fed. Appx. 61 (2d Cir. 2020)
The Second Circuit affirmed the dismissal of a complaint based on a claim that an initial letter did not quote the language of 15 U.S.C. 1692g(a) verbatim. Specifically, the plaintiff challenged the failure to quote that portion of 1692g(a)(3) and (4) which permits a debtor to dispute “any portion” of a debt when the collection letter did not include the “any portion” language.
Citing to its own prior precedent as well as an opinion from the Sixth Circuit on this very issue, the Second Circuit held that there is no requirement that letters quote the statute verbatim so long as the notices are given effectively.
Wagner v. Chiari & Ilecki, LLP, 973 F.3d 154 (2d Cir. 2020)
In a wrong debtor case, the Second Circuit reversed a district court’s granting of summary judgment based on a bona fide error defense finding that a reasonable jury could find that the defendant did not maintain proper procedures to avoid the specific error that occurred in this case.
Mizrachi v. Wilson, 2020 U.S. App. LEXIS 35189 (2d Cir. Nov. 5, 2020)
The Second Circuit reversed the dismissal of a complaint based on a letter that allegedly overshadowed the validation notice of 1692(g)(a). Specifically, the letter which advised that the matter had been referred to the law firm to file suit stated, in all capital letters “THERE MAY BE NO FURTHER NOTICE OR DEMAND IN WRITING FROM [WILSON] PRIOR TO THE FILING OF SUIT.”
The Second Circuit held that even though there was no date restriction on the filing of the suit or the debtor’s ability to dispute the debt, the threat of the suit and its consequences could mislead a debtor into believing that immediate payment was the only way to avoid these consequences thus overshadowing the debtor’s validation rights.
Helpful Opinions e.g. “Check the Fine Print”
The Second Circuit definitely did not make any new friends among debt collectors with its bombshell TCPA opinion in Duran but offered a few helpful opinions under the FDCPA with Isaac, holding that the requirements of 1692g only apply to the initial communication and not subsequent letters and Chaperon, which held that one need not quote 1692g verbatim in collection letters so long as the validation notice is still conveyed effectively.
But Bryan will make collectors check the fine print with their clients to make sure they know the correct legal entity for whom they are collecting. Mizrachi is another in a long line of threatened suit overshadowing cases that should cause concern for collection attorneys. Finally Wagner may make summary judgment on a bona fide error defense very difficult and make all such cases jury questions.