Much Ado About … Not Very Much: FDCPA Plaintiff Wins $500 Judgment After Nearly Two Years of Litigation

On July 22, U.S. District Judge Allyne Ross awarded summary judgment to a plaintiff who brought suit under the Fair Debt Collections Practices Act (FDCPA). The victory, however, could be Pyrrhic. Over the course of 20 months of litigation, what began as a five-count purported class action was whittled down to one individual claim that yielded a $500 statutory damages award. Anything short of a full award of attorneys' fee - that issue has been referred to Magistrate Judge Vera Scanlon - will likely leave the 'victorious' plaintiff (and her attorneys) more than a little unsatisfied.

The case involves an attempt by L J Ross Associates, Inc. (LJRA) to collect a $543 debt owed by plaintiff Lea Rosen. LJRA first notified Rosen of the debt in an October 2018 letter, and subsequently, Rosen's husband made a $100 payment that lowered the amount due to $443. One month later in November, LJRA called Rosen and spoke to her husband (Rosen does not speak English). During the call, the LJRA representative informed Mr. Rosen of the $443 balance, and the parties discussed an installment payment plan. When LJRA's representative asked Mr. Rosen whether his wife had received LJRA's October 2018 letter, Mr. Rosen answered 'no.' The LJRA representative stated she would send Rosen a 'validation letter.' It is this letter that led to the lawsuit: Not only did it assert the original $543 debt instead of the current $443 balance, but it also was dated November 21, 2018 and labeled as 'an attempt to collect a debt.'

Rosen filed suit in September 2019 and amended her complaint in December 2019. She ultimately asserted five FDCPA claims, on behalf of a purported class, based on LJRA (1) creating confusion about the deadline to submit a written dispute; and (2) overstating the amount owed. LJRA successfully moved to dismiss the two claims concerning the dispute deadline; the parties later stipulated to the dismissal of two more. By September 2020, only one claim under 15 U.S.C. § 1692e remained, and Rosen dropped her class allegations in November 2020.

On summary judgment, Judge Ross held that LJRA's November letter violated the FDCPA because '[u]nder the least sophisticated consumer standard, a reasonable consumer … could interpret [it] as an attempt to collect' the $543 debt. Rosen v. L J Ross Assocs., No. 1:19-cv-05516, 2021 U.S. Dist. LEXIS 137073, at *12 (E.D.N.Y. July 22, 2021). She was unpersuaded by LJRA's arguments that it had previously communicated the actual $443 balance by telephone and that the November letter was merely a copy of the October one. She likewise rejected LJRA's claim to be exempt from liability under the bona fide error defense, finding that 'the record lacks sufficient evidence that defendant maintained 'procedures reasonably adapted to avoid any such error.'' Id. at *14 (quoting 15 U.S.C. § 1692k(c)). The court did not award any actual damages, presumably because Rosen did not experience any. The court did, however, award $500 in statutory damages under § 1692k(a)(2)(A).

Notably, the court did not address whether a plaintiff like Rosen, who did not experience actual harm, can nonetheless have standing to recover statutory damages. (Indeed, Rosen did not recall ever reading the November letter.) It therefore remains to be seen how the Supreme Court's recent decision in TransUnion LLC v. Ramirez - in which the Court reiterated that 'Article III standing requires a concrete injury even in the context of a statutory violation' - may affect future cases like Rosen's. 141 S. Ct. 2190, 2205 (2021) (quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1543 (2016)).