In what many in the accounts receivable management industry fear is a nightmare scenario, plaintiffs who lose cases in federal court, especially if found not to have standing to sue, then turn and file the exact same case in state court, hoping the threshold to have standing is lower and therefore making it more likely that the suit will not get tossed. A plaintiff learned the hard way that this strategy is not always going to work, after a state court judge in New Jersey followed his federal counterpart in granting a defendant’s motion to dismiss a Fair Debt Collection Practices Act case that accused the defendant of allegedly sending a misleading collection letter.
A copy of the — brief — ruling granting the motion to dismiss in the case of Pistone v. Halsted Financial Services can be accessed by clicking here.
Last year, a District Court judge in New Jersey granted the defendant’s motion to dismiss when it was sued in a class action after sending the plaintiff a collection letter in which it offered to settle a debt for 80% of the full balance that was owed. The plaintiff’s issue was that the 20% discount applied to only one of the two settlement offers mentioned in the letter. Because the second option did not offer a 20% savings, the letter was therefore deceptive and misleading, the plaintiff alleged. But Judge Michael A. Shipp ruled that even a least sophisticated consumer would not have been confused by the contents of the letter, pointing out that it “clearly” offered two separate options and “simple logic” dictated that only one of those can equal the 20% discount.
The plaintiff refiled the case in state court, making the same allegations, and Judge Craig Wellerson made the same determination as Judge Shipp, dismissing the complaint.