MEDINA v. ALLIANCEONE RECEIVABLES MANAGEMENT, INC.
MEMORANDUM SIGNED BY HONORABLE HARVEY BARTLE, III ON 1/19/2017. 1/19/2017 ENTERED AND COPIES E-MAILED.(ahf)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
MILTON J. MEDINA
January 19, 2017
Plaintiff Milton J. Medina has filed this putative
class action under the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. §§ 1692 et seq.
Receivables Management, Inc. has moved to dismiss the amended
complaint for lack of subject matter jurisdiction or in the
alternative for judgment on the pleadings.
Plaintiff alleges that defendant, a debt collector
under 15 U.S.C. § 1692a(6), sent a letter to him in which it
sought to settle for $222.28 a debt of $341.97 owed by him to
Department Store National Bank on his Macy’s credit card.
the letter, defendant stated, among other things, “Our client
Department Store National Bank will report forgiveness of debt
as required by IRS regulations.”
Plaintiff claims that this
statement is deceptive and misleading because, contrary to the
letter, the IRS reporting requirement is not mandatory under all
circumstances where a debt or part of a debt is forgiven.
According to the amended complaint, there are a number of
exceptions to the IRS reporting requirement.
One of those
exceptions excludes the need to report where the forgiveness
does not exceed $600.00.
26 C.F.R. § 1.6050P-1(a).
appears to be the situation here.
In support of its motion to dismiss for lack of
subject matter jurisdiction, defendant first argues that
plaintiff does not have standing under Article III of the
In Spokeo, Inc. v. Robins, a case involving the
Fair Credit Reporting Act, the Supreme Court reiterated the
Our cases have established that the
“irreducible constitutional minimum” of
standing consists of three elements. Lujan,
504 U.S. at 560, 112 S.Ct. 2130. The
plaintiff must have (1) suffered an injury
in fact, (2) that is fairly traceable to the
challenged conduct of the defendant, and
(3) that is likely to be redressed by a
favorable judicial decision.
. . .
To establish injury in fact, a plaintiff
must show that he or she suffered “an
invasion of a legally protected interest”
that is “concrete and particularized” and
“actual or imminent, not conjectural or
hypothetical.” Lujan, 504 U.S. at 560,
112 S.Ct. 2130 (internal quotation marks
136 S.Ct. 1540, 1547-48 (2016).
To be concrete, the injury must be “de facto,” that is
it must actually exist.
Id. at 1548.
can also satisfy the concreteness test.
“The risk of real harm”
Id. at 1549.
The overriding purpose of the FDCPA is “to eliminate
abusive debt collection practices by debt collectors.” 15 U.S.C.
Those abusive debt collection practices included the
use of “any false, deceptive, or misleading representation or
means in connection with the collection of any debt.”
The FDCPA gives a consumer the right to sue for
damages for any violation.
15 U.S.C. § 1692k.
The injury to the consumer alleged here is the false
and misleading statement made by the debt collector in an effort
to collect or settle the consumer’s debt obligation.
is designed to protect the consumer from the inherent harm
caused when a debt collector, in seeking to collect a debt, is
not straight with the consumer but instead makes a false or
deceptive statement to achieve its purpose.
declaration in the letter about a requirement to report the
consumer’s resolution of the debt to the IRS creates a
particularized and concrete injury, at the very least
unnecessary fear and anxiety on the part of the consumer.
the harm may be intangible, it involves a de facto injury
The FDCPA was enacted to provide redress for such
See In re Nichelodeon Consumer Privacy Litig.,
827 F.3d 262, 273-74 (3d Cir. 2016).
Defendant’s argument to
the contrary would gut the salutary purpose of the FDCPA.
Plaintiff has standing to bring this action.
Defendant further maintains that even if plaintiff has
standing, the letter that it sent to plaintiff was not false or
misleading as a matter of law.
Defendant seeks judgment on the
pleadings under Rule 12(c) of the Federal Rules of Civil
For this purpose, we accept as true all well-pleaded
facts in the amended complaint.
Caprio v. Healthcare Revenue
Recovery Group, 709 F.3d 142, 146-47 (3d Cir. 2013); Fowler v.
UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
The relevant language of the letter in issue, as noted
above, reads “Our client Department Store National Bank will
report forgiveness of debt as required by IRS regulation.”
defendant concedes that it would not have to notify the IRS of
any debt forgiveness here.
Instead, defendant argues that the
plain meaning of the letter’s use of the words as required is
that the forgiveness of the debt will be reported to the IRS
only if or to the extent required by the IRS regulations.
course, the words only if or to the extent do not appear in the
Plaintiff counters that as required means because
Under this reading, the sentence in the letter is
1. Rule 12(c) provides, “After the pleadings are closed – but
early enough not to delay trial – a party may move for judgment
on the pleadings.” Fed. R. Civ. P. 12(c).
clearly false. Thus, the pivotal question is what the definition
of as is.
The dictionary tells us that as can mean when and can
also mean because.
Webster’s III New Int’l Dictionary 125
Our Court of Appeals has explained in Brown v. Card
Serv. Cent. that the least sophisticated debtor or consumer
standard must be applied in determining whether a statement is
false or deceptive:
The least sophisticated debtor standard
requires more than “simply examining whether
particular language would deceive or mislead
a reasonable debtor” because a communication
that would not deceive or mislead a
reasonable debtor might still deceive or
mislead the least sophisticated debtor.
Quadramed, 225 F.3d at 354 (internal
quotation marks and citation omitted). This
lower standard comports with the basic
purpose of the FDCPA: as previously stated,
to protect “all consumers, the gullible as
well as the shrewd,” “the trusting as well
as the suspicious,” from abusive debt
464 F.3d 450, 454 (3d Cir. 2006).
The standard is an objective
Jensen v. Pressler & Pressler, 791 F.3d 413, 419 (3d Cir.
The fact-finder could easily find that the sentence in
issue was deceptive or misleading to the least sophisticated
debtor or consumer.
Such a debtor or consumer, or indeed any
debtor or consumer, could reasonably understand that the
collection agency was required to report to the IRS the
forgiveness of any part of the $341.79 debt.
recipient of the letter could rightly interpret as to mean not
when but because, that is that the IRS reporting requirement was
mandatory for any debt forgiveness.
Under the circumstances
defendant presented an inaccurate and thus a deceptive statement
of the law.
26 C.F.R. § 1.6060p-1.
Our Court of Appeals has
reiterated in Brown that “a debt collection letter is deceptive
where ‘it can be reasonably read to have two or more different
meanings, one of which is inaccurate.’”
464 F.3d at 455
(quoting Wilson v. Quadramed Corp., 255 F.3d 350, 354 (3d Cir.
This is exactly the situation alleged here.
Under the circumstances, the motion of the defendant
to dismiss for lack of subject matter jurisdiction or in the
alternative for judgment on the pleadings fails.
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