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Schwartz v. Sherloq Revenue Solutions, Inc.

United States District Court, D. New Jersey

August 7, 2019

LAZER SCHWARTZ, individually and on behalf of all others similarly situated, Plaintiff,
v.
SHERLOQ REVENUE SOLUTIONS, INC. and MERCHANTS ASSOCIATION COLLECTION DIVISION INC., Defendants.

          OPINION

          WILLIAM J. MARTINI, U.S.D.J.

         Plaintiff Lazer Schwartz, individually and on behalf of all those similarly situated, [1]brings this action against Defendants Sherloq Revenue Solutions, Inc. and Merchants Association Collection Division Inc. for violations of the Fair Debt Collection Practices Act (“FDCPA”). Now before the Court is Defendants' motion to dismiss Plaintiff's Amended Complaint or stay the action. ECF No. [11] (“Motion”). For the reasons set forth below, the Motion is GRANTED.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Defendants Sherloq Revenue Solutions, Inc. and Merchants Association Collection Division Inc. are Florida consumer debt collection corporations. Compl. ¶ 7-9. Plaintiff Lazer Schwartz (“Plaintiff”) is an individual consumer who accrued a personal credit card debt (“the Debt”). Compl. ¶ 5, 14-15. After defaulting on his payments, the Debt was assigned or transferred to Defendants for collection. Compl. ¶ 16. On December 4, 2018, Defendants contacted Plaintiff by letter (“the Letter”) in an effort to collect the Debt. Compl. ¶ 17. The Letter was the first communication Plaintiff received from the Defendants and stated:

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this 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 a judgment and mail a copy of such judgment or verification to you. If you request of 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.

Compl. ¶ 22. The Letter also provided a toll-free telephone number accompanied by the words “Get in Touch.” Compl. ¶ 18-21.

         Based on these facts, Plaintiff filed the operative Amended Complaint on April 18, 2019. ECF No. [7]. Plaintiff alleges that Sherloq Revenue Solutions, Inc. (“SRS”) and Merchants Association Collection Division Inc. (“Merchants”) violated two sections of the FDCPA: 15 U.S.C. § 1692g(a)(3) by failing to provide proper notice of Plaintiff's right to dispute the Debt, and 15 U.S.C. § 1692e by using misleading representations in their attempts to collect the Debt. Compl. ¶ 25, 53. According to Plaintiff, the Letter misleads the “least sophisticated consumer” into believing that a consumer may dispute the Debt orally over the phone as opposed to in writing. Compl. ¶ 22, 26-28.

         II. THE INSTANT MOTION

         On May 2, 2019 Defendants filed the Motion seeking dismissal of this action. ECF Nos. [11] & [12]. Defendants make four arguments in support of dismissal. First, Defendants argue the Court should dismiss this action with prejudice because Plaintiff named “Sherloq Financial” and not Sherloq Revenue Solutions, Inc. ECF No. [12] at 10. Next, Defendants address the merits of the Letter, arguing it fully complies with the FDCPA's “least sophisticated consumer” standard, is not confusing or misleading, and clearly conveys to readers that any debt must be disputed in writing. Id. at 11-16. Third, Defendants argue that even though they have complied with the Third Circuit's requirement that a debt collector must inform a consumer that any debt disputes must be submitted in writing, Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991), Graziano has been effectively overruled by two recent United States Supreme Court decisions and need not be followed. Id. at 17. Finally, Defendants argue that the Court should stay disposition of the Motion pending the Third Circuit's decision in Riccio v. Sentry Credit, Inc., No. 18-1463.

         In opposition to the Motion, Plaintiff argues that whether he has named the correct party is an issue of fact that cannot be resolved at the pleadings stage on a 12(b)(6) motion. ECF No. [13] at 11. Plaintiff also argues that he has properly stated a claim for violations under the FDCPA because the Letter violates the “least sophisticated consumer” standard, is confusing, and does not clearly convey how the debt must be disputed. Id. at 13.

         III. DISCUSSION [2]

         A. THE FDCPA AND THE WRITING REQUIREMENT

         Congress enacted the FDCPA to ensure the elimination of abusive debt collection practices. Evankavitch v. Green Tree Serv'g, LLC, 793 F.3d 355, 360 (3d Cir. 2015). To succeed on an FDCPA claim, a plaintiff must demonstrate that “(1) [the plaintiff 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.” Reynolds v. Encore Receivable Mgmt., Inc., No. CV172207JMVMF, 2018 WL 2278105, at *2 (D.N.J. May 18, 2018) (quoting Douglass v. Convergent Outsourcing, 765 F.3d 299, 303 (3d Cir. 2014)).

         Section 1692g(a) of the FDCPA requires that a debt collector give a “validation notice” to a consumer including: (1) the amount of the debt, (2) the name of the creditor the debt is owed, (3) a statement that unless the consumer, within thirty days of receipt of the notice, disputes the validity of the debt, it will be presumed to be valid, (4) a statement that if the consumer disputes the debt in writing within thirty days, the debt collector will verify and mail a copy to the consumer of the debt owed, and (5) a statement that upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if it's different from the current creditor. 15 U.S.C. § 1692g(a); see also Hooks v. Forman, Holt, Eliades & Ravin, LLC, 717 F.3d 282, 286 (2d Cir. 2013); Riggs v. Prober & Raphael, 681 ...


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