It is very uncommon for a ruling at the District Court level in a Fair Debt Collection Practices Act case to not only have a Table of Contents, but one with sections and subsections, even if it is a class action. At the start, that’s a sign that this is not your ordinary ruling. But, in what is good news for the industry, at the end of that 28-page ruling is the judge granting the defendant’s motion to dismiss because the plaintiffs lacked standing to sue.
The Background: The two plaintiffs received collection letters from the defendant before March 2020 that informed the plaintiffs that the defendant might “take additional collection efforts” if there was no response to the letter within seven days. Among those efforts was reporting the debt to the credit reporting agencies. The plaintiffs allege that the defendant had a policy of waiting 60 days before credit reporting, thus making the seven-day statement an unfair attempt to collect on the debt.
Why This Case is Different: While this seemed like an open-and-shut case on the grounds the plaintiffs lacked standing to sue because they didn’t do anything after receiving the letter other than to give it to an attorney, the plaintiffs put forth what Judge Michael E. Farbiarz of the District Court for the District of New Jersey called a “novel” theory. That theory is that there has been a traditional anchor tort called “unreasonable debt collection” and the plaintiffs put forth 10 cases to prove their theory.
- But eight of those cases concern torts that have no meaningful connection to unreasonable debt collection, Judge Farbiarz ruled. The other two cases trace back to a case from the Texas Supreme Court back in 1954.
- Judge Farbiarz then goes through a lengthy, and I mean lengthy, discourse on whether a 70-year old tort should still hold up today, ultimately ruling that the plaintiffs did not demonstrate that the tort of unreasonable debt collection is a traditional cause of action in American courts.
