Opinion
Civil Action 6:22-3731-TMC
05-05-2023
Eve Williams, individually and on behalf of all others similarly situated, Plaintiff, v. Resurgent Capital Services, L.P., and LVNV Funding, LLC, Defendants.
REPORT OF MAGISTRATE JUDGE
KEVIN F. MCDONALD, UNITED STATES MAGISTRATE JUDGE
This matter is before the court on the defendants' motion to dismiss and/or compel arbitration pursuant to Federal Rule of Civil Procedure 12(b)(3) and 12(b)(6) (doc. 9). This motion was referred to this court by order of the Honorable Timothy M. Cain, United States District Judge (doc. 19).
I. BACKGROUND AND FACTUAL ALLEGATIONS
According to the complaint, Eve Williams ("Williams") incurred a debt to Credit One Bank, N.A. ("Credit One"), which at some point became delinquent (doc. 1, compl. ¶¶ 21, 25). Credit One subsequently sold or otherwise assigned the debt to LVNV Funding, LLC ("LVNV"), who contracted with Resurgent Capital Services, L.P. ("Resurgent") (collectively "defendants") to collect the debt (id. ¶¶ 25-26). On October 29, 2021, Resurgent sent a letter to Williams, informing her that “Resurgent Capital Services L.P. manages the above referenced account for LVNV Funding LLC and has initiated a review of the inquiry recently received either directly or from Credit Control LLC, the current servicer of this account” (“review language”) (doc. 1-1 at 2). Moreover, the letter states, "For further assistance, please contact one of our Customer Service Representatives toll-free at 1-866-464-1187" (id.). Under bold text instructing Williams to, "Please read the following important notices as they may affect your rights" the letter provides as follows:
Unless you notify us within 30 days after receiving this notice that you dispute the validity of this debt, or any portion of it, we will assume this debt is valid. If you notify us in writing within 30 days after receiving this notice that you dispute the validity of this debt, or any portion of it, we will obtain verification of the debt or obtain a copy or a judgment and mail you a copy of such judgment or verification. If you request of us in writing, within 30 days after receiving this notice, we will provide you with the name and address of the original creditor, if different from the current creditor.(Id.) (“validation notice language”).
Based on this letter, Williams, individually and on behalf of all others similarly situated, filed a class action complaint against the defendants on October 27, 2022, alleging three counts of violations of the Fair Debt Collection Practices Act ("FDCPA") pursuant to 15 U.S.C. §§ 1692e, 1692f, and 1692g (doc. 1). On November 18, 2022, the defendants filed a motion to dismiss and/or compel arbitration (doc. 9). Williams filed a response on December 23, 2022 (doc. 14), and the defendants filed a reply on January 9, 2023 (doc. 17). On February 7, 2023, Judge Cain referred the defendants' motion to dismiss to the undersigned for a report and recommendation (doc. 19). This matter is now ripe for review.
II. APPLICABLE LAW AND ANALYSIS
A. Motion to Dismiss
1. Standard of Review
“The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint.” Williams v. Preiss-Wal Pat III, LLC, 17 F.Supp.3d 528, 531 (D.S.C. 2014) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). Rule 8(a) sets forth a liberal pleading standard, which requires only a" ‘short and plain statement of the claim showing the pleader is entitled to relief,' in order to ‘give the defendant fair notice of what . . . the claim is and the grounds upon which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41,47 (1957)). “In assessing the sufficiency of a complaint, [the court] assume[s] as true all its well-pleaded facts and draw[s] all reasonable inferences in favor of the plaintiff.” Nanni v. Aberdeen Marketplace, Inc., 878 F.3d 447, 452 (4th Cir. 2017) (citing Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009)). “[T]he facts alleged ‘must be enough to raise a right to relief above the speculative level' and must provide ‘enough facts to state a claim to relief that is plausible on its face.'" Robinson v. American Honda Motor Co., Inc., 551 F.3d 218, 222 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 555, 570). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted).
“In deciding whether a complaint will survive a motion to dismiss, a court evaluates the complaint in its entirety, as well as documents attached or incorporated into the complaint.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011). The court may consider such a document, even if it is not attached to the complaint, if the document “was integral to and explicitly relied on in the complaint,” and there is no authenticity challenge. Id. (quoting Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999)). See also Int'l Assn of Machinists & Aerospace Workers v. Haley, 832 F.Supp.2d 612, 622 (D.S.C. 2011) (“In evaluating a motion to dismiss under Rule 12(b)(6), the Court . . . may also ‘consider documents attached to . . . the motion to dismiss, so long as they are integral to the complaint and authentic.'”) (quoting Sec'y of State for Def. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007)). Rule 12(d) states: “If on a motion under Rule 12(b)(6) . . ., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d).
"Congress enacted the FDCPA to eliminate abusive debt collection practices and to ensure that debt collectors who refrain from such practices are not competitively disadvantaged." In re Dubois, 834 F.3d 522, 526 (4th Cir. 2016) (citing 15 U.S.C. § 1692(a), (e)). To state a claim under the FDCPA, a plaintiff must allege that “(1) [she] has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA." Boosahda v. Providence Dane, LLC, 462 Fed.Appx. 331, 333 n.3 (4th Cir. 2012) (citation and internal quotation marks omitted).
The defendants do not challenge that they are debt collectors under the Act or that they were seeking to collect a debt that Williams originally owed to Credit One, but they argue that Williams has not sufficiently pled that they violated the FDCPA (see doc. 9-1 at 3-7). In her first count, Williams argues that the defendants violated Section 1692e of the FDCPA by using false representations and/or deceptive means to collect the debt through the letter it sent her (doc. 1, compl. ¶¶ 75-79).
Section 1692e forbids the use of "any false, deceptive, or misleading representation or means" in debt collection and provides a non-exhaustive list of prohibited conduct, including "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." 15 U.S.C. § 1692e(10). "Whether a communication is false, misleading, or deceptive in violation of § 1692e is determined from the vantage of the 'least sophisticated consumer.'" Powell v. Palisades Acquisition XVI, LLC, 782 F.3d 119, 126 (4th Cir. 2014) (citation and internal quotation marks omitted). "Under this standard, we consider how a ‘naive' consumer would interpret the statement." Elyazidi v. SunTrust Bank, 780 F.3d 227, 234 (4th Cir. 2015) (citing United States v. Nat'l Fin. Servs., Inc., 98 F.3d 131, 136 (4th Cir.1996)). This standard "is intended to ensure that ‘the gullible as well as the shrewd' are not deceived by communications from a debt collector." Ramsay v. Sawyer Prop. Mgmt. of Md. LLC, 593 Fed.Appx. 204, 208 (4th Cir. 2014) (quoting Nat'l Fin. Servs, 98 F.3d at 136). "However, we do not give credit to ‘bizarre or idiosyncratic interpretations'; we assume a ‘quotient of reasonableness and ... a basic level of understanding and willingness to read with care.'" Elyazidi, 780 F.3d at 234 (quoting Nat'l Fin. Servs., 98 F.3d at 136).
Williams submits that the defendants used false representations and/or deceptive means to collect the debt at issue by including the review language and the validation notice language (docs. 1, compl. ¶; 14 at 8-14). Williams asserts that "the [l]etter initially leads [her] to believe that her account is currently under review and that she does not need to dispute the debt, but the thirty-day dispute notice immediately below it suggests the opposite by stating that she has thirty days to dispute the debt with . . . Resurgent" (doc. 1, compl. ¶ 38). Williams argues that the least sophisticated consumer would be unable to determine what her current rights are and what, if anything, she must do to dispute the alleged debt (id. ¶ 43; doc. 14 at 8-14).
The undersigned disagrees and finds that, from the perspective of the least sophisticated consumer, the statements in the letter are not false, misleading, or deceptive. The letter makes clear that (1) Resurgent recently began a review of the inquiry and (2) Williams has 30 days to dispute the debt if she believes it to be invalid. The statement about initiating a review of the inquiry speaks of just that - a review and not a debtor's dispute of a debt. Further, this review language cannot reasonably be interpreted as informing Williams that she does not need to take any actions. The remainder of the letter makes that clear, providing, under a bold heading entitled "Please read the following important notices as they may affect your rights[,]" that Resurgent would assume that the debt was valid unless Williams disputed its validity within 30 days. See Ramsay, 593 Fed.Appx. at 208-209 (noting that "[w]hile the FDCPA protects the uninformed consumer, courts nevertheless presum[e] a basic level of understanding and willingness to read with care" and that "courts must remain mindful not to "conflate lack of sophistication with unreasonableness."). As set out above, the FDCPA was designed in part to eliminate abusive debt collection practices. There are simply no allegations reflecting that here.
Williams cites to Schwebel v. Resurgent Capital Services, L.P., C/A No. 19-cv-8821 (KMK), 2020 WL 5663382 (S.D.N.Y. Sept. 23, 2020) to support her claim (doc. 14 at 13-14). In that case, the court found that the plaintiff's claims under Sections 1692e(10) and 1692g of the FDCPA were sufficient to survive a motion to dismiss based on very similar review language and validation notice language because the least sophisticated consumer might interpret the two statements as suggesting that he need not file a written dispute in order to maintain his validation rights. Schwebel, 2020 WL 5663382, at *2, 6. However, as noted by the defendants, the Honorable Donald C. Coggins, Jr., United States District Judge for the District of South Carolina, recently found nearly identical language to not be false, misleading, or deceptive and that "no reasonable person no matter how unsophisticated could be confused." See Clay v. Resurgent Cap. Servs., L.P., C/A No. 6:19-cv-1004-DCC (D.S.C. 2020) (doc. 19, transcript at 14:8-10). For the reasons discussed above, the undersigned does not find Schwebel to be persuasive and recommends that the district court grant the defendants' motion to dismiss this claim.
In her second count, Williams alleges that the defendants violated Section 1692f of the FDCPA by unfairly and contradictorily advising Williams of her right to dispute the debt (doc. 1, complaint ¶ 83). Section 1692f provides that "[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f.
Williams argues this claim should not be dismissed because the defendants did not address her allegations regarding Section 1692f in its motion (doc. 14 at 9-10). However, the defendants specifically moved to dismiss Williams' claim pursuant to Section 1692f and stated that she "failed to allege any unfair or unconscionable means used by the Defendants in collecting a debt in violation of 15 U.S.C. § 1692f" (doc. 9 at 1). Moreover, Williams bases her claim in her complaint on the defendants' validation notice language, which the defendants addressed in their motion in detail (see doc. 9-1 at 3-7). The defendants also addressed this claim in its reply in support of its motion to dismiss (doc. 17 at 5-7). Accordingly, Williams' argument is without merit. In addition, for the reasons discussed with regard to her claim pursuant to Section 1692e, the undersigned finds that Williams has failed to state a claim that the defendants' language in the letter involved unfair or unconscionable means to attempt to collect debt. Therefore, the undersigned also recommends that the district court grant the defendants' motion with respect to this claim.
In her third count, Williams argues that the defendants violated Section 1692g of the FDCPA (doc. 1, compl. ¶¶ 87-88). Section 1692g provides that "[w]ithin five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall . . . send the consumer a written notice containing[,]" among other items, "a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector[.]" 15 U.S.C. § 1692g(a)(3). Section 1692g continues by noting that "[a]ny collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt or request the name and address of the original creditor." Id. § 1692g(b). Williams does not dispute that the defendants provided her with notice of her rights under Section 1692g but rather argues that the defendants overshadowed the notice about disputing the validity of the debt through its review language and its inclusion of Resurgent's telephone number with an instruction to call for further assistance (docs. 1, compl. ¶¶ 87-88; 14 at 14-16). Regarding the telephone number, Williams contends that it is plausible that a least sophisticated consumer would believe that a telephone call would suffice to exercise her rights (doc. 14 at 15).
The undersigned finds that neither the review language nor the inclusion of the telephone number for further assistance overshadows the notice about disputing the validity of the debt. As set out above, the review language is not misleading or deceptive. Further, the notice about disputing the validity of the debt is directly under a bold heading instructing Williams to read the following notice. In addition, the least sophisticated consumer would not read this letter as stating that a telephone call would suffice to exercise her rights. The letter does not state that calling the telephone number exercises any rights, but the plain language reflects that it is a number provided simply "[f]or further assistance." In contrast, the heading with the notice about disputing the validity of the debt instructs Williams to read the following notices "as they may affect your rights." Moreover, the defendants have highlighted a number of cases in which courts have found that the inclusion of a customer service telephone number does not contradict or overshadow the notices required by Section 1692g. See, e.g., Terran v. Kaplan, 109 F.3d 1428, 1434 (9th Cir. 1997) ("[T]he request that the alleged debtor immediately telephone a collection assistant does not overshadow the language in the notice that the alleged debtor has thirty days in which to dispute the debt. The validation notice immediately follows the language regarding an immediate telephone call."); Wallace v. Capital One Bank, 168 F.Supp.2d 526, 529 (D. Md. 2001) ("[A] debt collector does not violate § 1692g merely by providing a telephone number in the letter containing the debt validation notices."). Williams again relies on Schwebel to support this claim, where the court found it plausible that the least sophisticated consumer could interpret the review language and telephone number as overshadowing the validation notice language. 2020 WL 5663382, at *7. However, for the reasons discussed above, the undersigned does not find that case persuasive and recommends that the district court grant the defendants' motion to dismiss Williams' claim pursuant to Section 1692g.
III. CONCLUSION AND RECOMMENDATION
Wherefore, based upon the foregoing, the undersigned recommends that the district court grant the defendants' motion to dismiss pursuant to Rule 12(b)(6) (doc. 9).
Because the undersigned recommends that the complaint be dismissed pursuant to Rule 12(b)(6), the defendants' alternative argument that arbitration should be compelled will not be addressed (see doc. 9-1 at 8-17).
IT IS SO RECOMMENDED.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
250 East North Street, Suite 2300
Greenville, South Carolina 29601
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).