Western District Rules Statement in Summons is False but Not Material and Thus Does Not Violate FDCPA

A debt collector sued a consumer in a state court proceeding. The summons served on the consumer stated, "If you do not respond to the attached Complaint within the applicable time limitation stated above a Judgment will be entered against you, by default, for the relief demanded in the Complaint, without further notice to you." [Emphasis added].

The consumer sued the collector in federal court,[1] claiming that the collector could not, in fact, obtain a judgment against him without giving "further notice," because to do so would be contrary to the requirement of CPLR § 3215(g)(3) that in actions based on nonpayment of a contractual obligation, "an affidavit shall be submitted that additional notice has been given … before the entry of such judgment." The consumer alleged that the statement in the summons therefore violated §§ 1692e, 1692e(5), 1692e(10) and 1692(f) of the Fair Debt Collections Practices Act (FDCPA).

The defendant moved for judgment on the pleadings under Fed. R. Civ. P. § 12(c), asserting that the language of the summons did not violate the FDCPA, and even if it did, the violation was not material.

In its decision, the court summarized the relevant provisions of the FDCPA. Section 1692e provides that a debt collector may not use false, deceptive or misleading means in connection with the collection of any debt. Subsection 1692e(5) prohibits making a "threat to take any action that cannot legally be taken or that is not intended to be taken," and subsection 1692e(10) prohibits the use of any false representation to collect or attempt to collect a debt.

To determine whether a violation of 1692e had occurred, the court applied "the least sophisticated consumer" test, the standard used in the 2^nd Circuit. As stated by the court, the "purpose of this objective standard is to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd." The court also noted numerous Western District of New York cases that have held that an alleged false statement must be material in order to violate the FDCPA. Thus, stated the court, "to state a claim for relief, a statement that is technically false must also be one that would confuse or mislead the unsophisticated consumer in a material way."

After reviewing the full text of CPLR § 3215, the court concluded that, based on that statute's plain language, "a default judgment should not be entered unless and until the plaintiff sends the requisite 'additional notice,' confirms by way of affidavit that it has done so, and at least 20 days have passed since that notice was given. As such, I find the contested statement is technically false." In so doing, the court rejected defendant's defense that in certain circumstances, a default judgment may be entered where the debtor received the additional notice prior to the summons and complaint, or not all. The court agreed that such situations may arise, but that fact does not render the contested statement universally true.

The court then moved to the second part of its analysis, whether the false statement was material. The standard the court applied is that "statements are material if they influence a consumer's decision to pay a debt, or if they would impair the consumer's ability to challenge the debt." Here, stated the court, "there is no plausible basis to conclude that the technically false statement to which Plaintiff objects would influence an unsophisticated consumer to pay a debt he otherwise would not pay, or impair his ability to challenge the debt."

To reach this conclusion, the court noted that plaintiff did not allege that he was misled, nor did the complaint allege how the statement "would either coerce an unsophisticated consumer to act against his interest or lull him into activity to his detriment. The most that can be assumed, continued the court, is that the statement would inform even the least sophisticated consumer that he has a specified time in which to act, and prompt him to consult with an attorney, answer the complaint pro se, or take some other action to protect his interests."

As to plaintiff's 1692f claim, the court held that because it had found the contested statement was not material, "plaintiff necessarily fails to state a claim under this provision."