Judge Dismisses FDCPA Class for Lack of Standing Related to SOL Disclosure

A District Court judge in New York has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit, ruling the plaintiff lacked standing to sue after arguing that a violation of state law cause the alleged FDCPA infraction.

A copy of the ruling in the case of Gregg v. SN Servicing Corp., can be accessed by clicking here.

The plaintiff received collection letters from the defendant that included a state-mandated notice regarding the statute of limitations, which is required when a collector knows or has reason to know that the statute of limitations has expired on the underlying debt. The disclosure must inform the consumer “the debt collector believes that the statute of limitations applicable to the debt may be expired” in a clear and conspicuous fashion.

The plaintiff’s argument is that the disclosure puts the burden of determining whether the statute of limitations had expired on the consumer, not the collector. The plaintiff, who did not make a payment or otherwise take any action after receiving the letter, filed suit, alleging the disclosure violated the FDCPA.

While this case has been progressing, the Supreme Court issued its ruling in TransUnion v. Ramirez, so Judge Brian M. Cogan of the District Court for the Eastern District of New York ordered supplemental briefings to determine if the plaintiff had standing to sue in this case.

While the plaintiff got “closer” to alleging he suffered an informational injury by alleging the disclosure required him to perform a task that the defendant was legally required to perform, the complaint doesn’t allege that the plaintiff did anything, like attempt to calculate if the statute of limitations had lapsed, Judge Cogan noted.

As well, the injury would not have occurred unless the state regulation requiring the disclosure existed in the first place. “State law cannot piggyback on a federal statute (here, the FDCPA) to create an Article III injury that would not otherwise exist,” Judge Cogan wrote.

The plaintiff also argued that some members of the class may have made payments and thus suffered a concrete injury, but the named plaintiff needed to have suffered the same injury, too, Judge Cogan ruled, granting the motion to dismiss.

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