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Diaz v. Midland Funding LLC

United States District Court, D. New Jersey

September 22, 2017

CARLA DIAZ, Plaintiff,



         The Amended Complaint filed by plaintiff Carla Diaz in this removed case alleges defendant Midland Funding, LLC ("Midland") violated the Fair Debt Collection Practices Act (the "FDCPA"), 15 U.S.C. § 1692 et seq. in two ways: via an unlawful demand for attorney's fees and an unauthorized disclosure of Diaz's Social Security number ("SSN"). Midland moves pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss the Complaint for failure to state a claim upon which relief may be granted (ECF no. 7), and for sanctions (ECF no. 8). For the reasons stated herein, the motion to dismiss is granted, but the motion for sanctions is denied.

         The Complaint

         The allegations of the Amended Complaint assumed to be true for purposes of the motion to dismiss, may be summarized as follows:

         Carla Diaz allegedly owed a past-due obligation on a Citibank/Sears credit card account. (AC ¶ 14 & Ex. A (Collection Cplt.))[1] Midland, a debt collector (AC ¶¶ 9-10), acquired the debt by assignment.

         On approximately December 18, 2015, Midland filed a collection action against Diaz in New Jersey Superior Court, Law Division, Special Civil Part, Bergen County. (AC ¶¶ 17-18 & Ex. A (Collection Cplt.)) The Collection Complaint asserted causes of action for breach of contract, unjust enrichment, and account stated. The prayer for relief reads as follows:

WHEREFORE, Plaintiff demands judgment against Defendant in the sum of $1, 196.05 together with costs and disbursements of this action, attorneys' fees, and such otfier further relief as this Court may deem just and proper.

         (Collection Cplt., text following ¶ 19)

This language is alleged to be "materially false, deceptive, and misleading." Specifically, "it falsely states that Midland is legally and/or contractually allowed to charge attorney's fees." (AC ¶ 28) In fact, the Complaint alleges, the collection of attorney's fees is unlawful; in addition, Midland does not incur reimbursable attorney's fees when it uses in-house counsel. (AC ¶¶ 31. 32)
The Complaint next alleges that the Collection Complaint incompletely redacted Ms. Diaz's SSN. Specifically, it redacted the first five digits, thus publicly disclosing the final four digits of the SSN. (AC ¶¶ 34-36) This, alleges Diaz, violated N.J. Ct. R. l:38-7(b) ("Confidential Personal Identifiers"), which requires that only three digits be revealed. (See AC ¶¶ 40-41)[2] More precisely, it seems that the body of die Collection Complaint permissibly disclosed only three digits of the SSN (see Collection Cplt. p. 1); an exhibit to the complaint, a printout of credit information, seems to be the source of the "four digit" allegation (Collection Cplt. Ex. Al, ECF no. 1-1 at 23). Because the entire SSN is masked by Diaz in her federal court submission, however, it is difficult to tell.

         This action, originally filed in State court, was removed to federal court on March 23, 2017. (ECF no. 1) Earlier the same day, Diaz had amended her complaint to add allegations relating to incomplete redaction of her Social Security number. Diaz's Amended Complaint alleges a single cause of action under FDCPA, 15 U.S.C. §§ 1692e and 1692f, as well as various subsections thereunder. (AC ¶¶ 46-52) It seeks damages, attorney's fees, and costs.

         Legal Standard

         Under Fed.R.Civ.P. 12(b)(6), the defendant, as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n. 9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014).[3]

         Federal Rule of Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Ml. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiffs right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570; see also West Run Student Housing Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013). That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement'. . . it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.


         A. FDCPA Claim Based on Prayer for Attorney's Fees

         I first consider the claim that the Collection Complaint's prayer for attorney's fees violated the FDCPA.

         To state a claim under the FDCPA, a plaintiff must allege that "(1) she is a consumer, (2) the defendant is a debt collector, (3) the defendant's challenged practice involves an attempt to collect a 'debt' as the Act defines it, 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); see also Piper v. PortnoffLaw Assocs., Ltd., 396 F.3d 227, 232 (3d Cir. 2005); Johns v. Northland Grp., Inc., 76 F.Supp.3d 590, 597 (E.D. Pa. 2014).

         As for element 4-a violation of a provision of the FDCPA-the Complaint cites numerous sections and subsections. Most pertinent to the attorney's-fees allegation would be the following: 15 U.S.C. § 1692e (blanket prohibition on use of a "false, deceptive, or misleading representation or means in connection with the collection of any debt."); id. § 1692e(10) ("The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer."); id. § 1692f(1) (prohibiting "collection of any amount. . . unless such amount is expressly authorized by the agreement creating the debt or permitted by law.").

         The plaintiff stresses that in misleading-representation cases, courts routinely apply the "least sophisticated debtor" standard when "analyzing] the communication giving rise to the FDCPA claim." Kaymark v. Bank of Am., N.A., 783 F.3d 168, 174 (3d Cir. 2015) (quoting Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008)). The Third Circuit explained that standard in Jensen v. Pressler & Pressler.

Although the least sophisticated debtor standard is "lower than the standard of a reasonable debtor, " it "preserv[es] a quotient of reasonableness and presum[es] a basic level of understanding and willingness to read with care." Id. (quoting Wilson v. Quadramed Corp., 225 F.3d 350, 354-55 (3d Cir.2000)). In so doing, it "give[s] effect to the Act's intent to 'protect[ ] the gullible as well as the shrewd, ' " Campuzano-Burgos v. Midland Credit Mgmt, Inc., 550 F.3d 294, 298 (3d Cir.2008) (second alteration in original) (quoting Brown, 464 F.3d at 453).
The standard is an objective one, meaning that the specific plaintiff need not prove that she was actually confused or misled, only that the objective least sophisticated debtor would be. See Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98, 103 (1st Cir.2014) f[T]he FDCPA does not require that a plaintiff actually be confused."); Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d Cir. 1993) ("We apply an objective test based on the understanding of the least sophisticated consumer' in determining whether a collection letter violates section 1692e."). Thus, "the FDCPA enlists the efforts of sophisticated consumers ... as 'private attorneys general' to aid their less sophisticated counterparts, who are unlikely themselves to bring suit under the Act, but who are assumed by the Act to benefit from the deterrent effect of civil actions brought by others." Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 91 (2d Cir. 2008).

         791 F.3d 413, 418-19 (3d Cir. 2015). See also Brown v. Card Serv. Ctr., 464 F.3d 450, 454 (3d Cir. 2006) ("[A]ny lender-debtor communications potentially giving rise to claims under the FDCPA . . . should be analyzed from the perspective of the least sophisticated debtor.").[4]

         The misleading or wrongful communication in the Collection Complaint is alleged to be this:

         WHEREFORE, Plaintiff demands judgment against Defendant in the sum of $1, 196.05 together with costs and disbursements of this action, attorneys'fees, and such other further relief as this Court may deem just and proper.

         (Collection Cplt., text following ¶ 19; italic emphasis added.)

         Midland persuasively contends that this cannot be regarded as "misleading" or as an attempt to collect amounts not "permitted by law." See 15 U.S.C. §§ 1692e, 1692f. This Collection Complaint was filed in New Jersey Superior Court, Special Civil Part.[5] In Special Civil Part, an award of fees is not only permitted, but required, as part of the taxation of costs in favor of a prevailing plaintiff:

There shall be taxed by the clerk of the Superior Court, Law Division, Special Civil Part in the costs against the judgment debtor, a fee to the attorney of the prevailing party, of five per centum (5%) of the first five hundred dollars ($500.00) of the judgment, and two per centum (2%) of any excess thereof.

         N.J. Stat. Ann. § 22A:2-42. See also Chase Bank USA, N.A. v. Staffenberg, 419 N.J.Super. 386, 398, 17 A.3d 239 (App.Div. 2010).

         It is for this reason that courts in this District have dismissed similar FDCPA claims-in one case, brought by this very attorney against this very defendant. See Garcia v. Midland Funding LLC, No. 16-5248, 2017 WL 215971, at *1 (D.N.J. Jan. 7, 2017) (dismissing similar complaint against Midland) (Linares, J.); Scioli v. Goldman & Warshaw P.C,651 ...

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