A District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case filed by a plaintiff who claimed the defendant violated the statute by filing a collection lawsuit to recover a debt she alleged was void, while declining, at least for now, to sanction the plaintiff’s counsel for pursuing a second nearly identical case against the same defendant.
The background: The plaintiff owed a past-due debt that passed through a series of transactions before being purchased by the defendant’s client, a debt buyer.
- The plaintiff alleged that one of the intermediary transactions involved an entity that was not properly licensed in New Jersey, rendering the debt void.
- After the debt buyer purchased the debt, the defendant filed a collection lawsuit in New Jersey state court on its behalf.
- The plaintiff then filed suit in federal court, alleging the defendant violated the FDCPA by attempting to collect the purportedly void debt. She claimed the collection lawsuit deprived her of “truthful, non-misleading, information” and caused “emotional damages like stress, anxiety and embarrassment.”
- The same plaintiff filed a separate lawsuit against the same defendant over a different debt, raising substantially similar claims. A different judge dismissed that case in March for lack of standing.
- The defendant moved to dismiss this case for lack of standing and also sought sanctions and attorney’s fees, arguing it had sent the plaintiff’s counsel a letter outlining Third Circuit precedent that it contended foreclosed the plaintiff’s legal theories, yet the complaint was not withdrawn.
The ruling: Judge Claire C. Cecchi of the District Court for the District of New Jersey granted the motion to dismiss, leaning heavily on the earlier ruling involving the same parties, which she called instructive.
- On the informational injury claim, Judge Cecchi noted the plaintiff alleged that filing the collection lawsuit necessarily deprived her of information, but never specified what legally required information was actually withheld. That was not enough to establish standing.
- The emotional injury claim fared no better. The plaintiff did not allege how the stress, anxiety, and embarrassment manifested or how the defendant’s conduct specifically caused them.
- In her opposition brief, the plaintiff argued she suffered a monetary injury because she was forced to retain attorneys to defend the collection action. The judge declined to consider that argument because those allegations were not in the complaint, which cannot be amended through a brief.
- The complaint was dismissed without prejudice, and the plaintiff was given 30 days to file an amended complaint addressing the deficiencies.
- Judge Cecchi denied the request for sanctions and fees without prejudice, reserving the right to revisit the issue, but reminded counsel of “the need to avoid frivolous and duplicative litigation.”
