Ceban v. Capital Mgmt. Servs., L.P.

• Decision Date: 17 January 2018
• Docket Number: 17-CV-4554 (ARR) (CLP)
• Parties: JULIAN CEBAN, Plaintiff, v. CAPITAL MANAGEMENT SERVICES, L.P., Defendant.
• Court: U.S. District Court — Eastern District of New York

JULIAN CEBAN, Plaintiff, v. CAPITAL MANAGEMENT SERVICES, L.P., Defendant.

17-CV-4554 (ARR) (CLP)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

January 17, 2018

OPINION & ORDER

ROSS, United States District Judge:

Plaintiff Julian Ceban brings this action against defendant Capital Management Services, L.P. ("CMS"), alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Specifically, plaintiff claims that the statement, "[t]his settlement may have tax consequences" in the debt collection letter that he received was deceptive and misleading and constituted an unfair debt collection practice. Defendant has moved to dismiss plaintiff's complaint for lack of standing and failure to state a claim upon which relief can be granted, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), respectively. Although I conclude that plaintiff has standing, I dismiss plaintiff's complaint for the reasons explained below.

BACKGROUND

Plaintiff is a consumer who allegedly incurred a personal debt to Barclays Bank Delaware for $1,999.87. Compl. ¶ 9, ECF No. 1; see Pl.'s Mem. of Law in Opp'n to Def.'s Mot. to Dismiss ("Pl.'s Opp'n") Ex. A, ECF No. 13-8. On or around August 6, 2016, plaintiff received a collection letter from CMS, a debt collector, concerning his outstanding debt. See Compl. ¶ 10. The letter stated, in relevant part, that CMS was "authorized to accept less than the full balance due as settlement on the above-mentioned account" and invited plaintiff to "[p]lease contact [CMS's] representatives to discuss a potential settlement . . . ." Pl.'s Opp'n Ex. A. The letter concluded as follows: "This settlement may have tax consequences. If you are uncertain of the tax consequences, consult a tax advisor." Pl.'s Opp'n Ex. A; Compl. ¶ 11.

Plaintiff initiated this action on August 2, 2017, alleging that the inclusion of the tax consequences language in the collection letter rendered the letter false, deceptive, and misleading in violation of 15 U.S.C. § 1692e and its subsections. See Compl. ¶ 19. Plaintiff also alleged violations of 15 U.S.C. § 1692d, which prohibits harassing conduct in connection with collecting a debt, and 15 U.S.C. § 1692f, which prohibits the use of unfair or unconscionable means to collect a debt. Id. Specifically, plaintiff claims that the tax statement "implies that every settlement has tax implications" and "misleads the consumer as to the impact of attempting to settle the matter for less than what the Defendant claims is owed." Id. ¶¶ 12, 14. Plaintiff further argues that the letter "fails to disclose to consumers that there is a distinction between forgiveness of principal and interest in regards to IRS reporting requirements." Id. ¶ 15. Because of these alleged violations, plaintiff says that he has been damaged and is entitled to relief under 15 U.S.C. § 1692k. Id. ¶¶ 17, 20.

Defendant now moves to dismiss plaintiff's complaint for lack of standing under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim upon which relief may be granted under Federal Rule of Civil Procedure 12(b)(6).

STANDARDS OF REVIEW

I. Federal Rule of Civil Procedure 12(b)(1) Standard

Federal Rule of Civil Procedure 12(b)(1) provides for dismissal when a federal court lacks jurisdiction over the subject matter of a claim. Fed. R. Civ. P. 12(b)(1). An objection to a plaintiff's standing "is properly made on a Rule 12(b)(1) motion." Zirogiannis v. Seterus, Inc., 221 F. Supp. 3d 292, 297 (E.D.N.Y. 2016) (quoting Tasini v. N.Y. Times Co., Inc., 184 F. Supp. 2d 350, 354 (S.D.N.Y. 2002)), aff'd, No. 17-140-CV, 2017 WL 4005008 (2d Cir. Sept. 12, 2017); see also City of New York v. MilhelmAttea & Bros., Inc., 550 F. Supp. 2d 332, 340 (E.D.N.Y. 2008) ("As standing is 'a limitation on the authority of a federal court to exercise jurisdiction,' it is properly addressed within the context of a Rule 12(b)(1) motion." (quoting All. for Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 89 n.6 (2d Cir. 2006))). To survive a motion to dismiss under 12(b)(1), a plaintiff "must allege facts that affirmatively and plausibly suggest that it has standing to sue." Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011). The plaintiff bears the burden of doing so by a preponderance of the evidence. See Zirogiannis, 221 F. Supp. 3d at 298. In deciding a Rule 12(b)(1) motion, the court "must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff." Raila v. United States, 355 F.3d 118, 119 (2d Cir. 2004).

II. Federal Rule of Civil Procedure 12(b)(6) Standard

Under Rule 12(b)(6), a party may move to dismiss a claim that does not state a claim to relief. Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss under 12(b)(6), a complaint "must contain sufficient factual matter . . . to state a claim to relief that is plausible on its face." Cty. of Erie v. Colgan Air, Inc., 711 F.3d 147, 149 (2d Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The complaint's allegations "must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering a motion to dismiss made pursuant to Rule 12(b)(6), the court must construe a complaint liberally, "accepting all factual allegations . . . as true, and drawing all reasonable inferences in the plaintiff's favor." Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d Cir. 2013) (quoting Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009)). However, the court is "not bound to accept as true a legal conclusion couched as a factual allegation," Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555), and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice," id.

DISCUSSION

I. The FDCPA

Congress enacted the FDCPA "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). Among other provisions of the statute, the FDCPA broadly provides that a debt collector may not "engage in any [harassing] conduct . . . in connection with the collection of a debt," id. § 1692d, "use any false, deceptive, or misleading representation or means in connection with the collection of any debt," id. § 1692e, or "use unfair or unconscionable means to collect or attempt to collect any debt," id. § 1692f.

The Second Circuit has set forth two principles that guide interpretation of the FDCPA. First, "[b]ecause the FDCPA is remedial in nature," courts must construe its terms "in liberal fashion if the underlying Congressional purpose is to be effectuated." Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP, 875 F.3d 128, 134 (2d Cir. 2017) (quoting Vincent v. Money Store, 736 F.3d 88, 98 (2d Cir. 2013)). Second, courts must evaluate debt collection practices from the perspective of the "least sophisticated consumer." Avila v. Riexinger & Assocs., LLC, 817 F.3d 72, 75 (2d Cir. 2016) (quoting Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993)). This hypothetical consumer is a "naïve" and "credulous" person. Altman v. J.C. Christensen & Assocs., Inc., 786 F.3d 191, 193 (2d Cir. 2015) (quoting Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360, 363 (2d Cir. 2005)). She does not have "the astuteness of a 'Philadelphia lawyer' or even the sophistication of the average, everyday, common consumer." Avila, 817 F.3d at 75 (quoting Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996)). However, she is "neither irrational nor a dolt." Ellis v. Solomon & Solomon, P.C., 591 F.3d 130, 135 (2d Cir. 2010) (citing Russell, 74 F.3d at 34); see also Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir. 2009) ("The unsophisticated consumer isn't a dimwit. She may be uninformed, naïve, [and] trusting, . . . but shehas rudimentary knowledge about the financial world, and is capable of making basic logical deductions and inferences" (internal quotation marks omitted)). Indeed, the Second Circuit "has been careful not to conflate lack of sophistication with unreasonableness." Ellis, 591 F.3d at 135.

"[B]ecause the least sophisticated consumer standard is objective, the determination of how the least sophisticated consumer would view language in a defendant's collection letter is a question of law." Quinteros v. MBI Assocs., Inc., 999 F. Supp. 2d 434, 437 (E.D.N.Y. 2014) (quoting Castro v. Green Tree Servicing LLC, 959 F. Supp. 2d 698, 707 (S.D.N.Y. 2013)). The defendant has moved to dismiss plaintiff's suit for lack of standing and failure to state a claim. I will address each in turn.

II. Plaintiff has Standing.

Defendant contends that this Court lacks subject matter jurisdiction because the plaintiff does not have standing to assert his claims. See Mem. of Law in Supp. of Def.'s Mot. to Dismiss ("Def.'s Mem. of Law"), ECF No. 13-1, at 3-5. More precisely, defendant argues that plaintiff failed to allege that he suffered a concrete injury as a result of the defendant's alleged violations of the FDCPA. See id. at 4. The Court disagrees.

Article III of the Constitution limits the jurisdiction of the federal courts to "cases" and "controversies." U.S. Const. art. III, § 2, cl. 1. "This limitation is effectuated through the requirement of standing." Cooper v. U.S. Postal Serv., 577 F.3d 479, 489 (2d Cir. 2009). Standing is "the threshold question in every federal case, determining the power of the court to entertain the suit." Warth v. Seldin, 422 U.S. 490, 498 (1975). "To satisfy the 'irreducible constitutional minimum' of Article III standing, a plaintiff must demonstrate (1) 'injury in fact,' (2) a 'causal connection' between that injury and the complained-of conduct, and (...