New York Federal Court Denies Defendants’ Motion for Reconsideration or Leave to File Interlocutory Appeal of Court Order Denying Motion to Dismiss FDCPA Claim

The United States District Court for the Southern District of New York recently denied defendants’ motion for reconsideration of the Court’s order denying defendants’ motion to dismiss plaintiff’s claim alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et seq. or, alternatively, their request for certification to file an interlocutory appeal.  See Toohey v. Portfolio Recovery Assocs., LLC, 2017 WL 2271548 (S.D.N.Y. 2017).  In the case, plaintiff alleged that, after she defaulted in a state debt collection lawsuit initiated by defendants, defendants submitted an affidavit of merit that was allegedly false, deceptive, or misleading.  Specifically, plaintiff argued that the affidavit gave the impression that defendants had reviewed account-level documentation evidencing her debt when they did not even possess any such documentation.  Plaintiff alleged that the submission of the affidavit allowed defendants to obtain a default judgment against plaintiff, which they used to garnish plaintiff’s wages.  Upon her discovery of this issue, plaintiff filed a putative class action alleging, among other claims, a violation of the FDCPA for the allegedly false affidavit.  Defendants moved to dismiss the action, and the Court dismissed some of plaintiff’s claims, but not her claims under the FDCPA.  Defendants moved for reconsideration or, alternatively, requested certification to file an interlocutory appeal.

Defendants’ motion for reconsideration contained four arguments: (1) plaintiff’s lawsuit was filed after the expiration of the FDCPA’s one-year statute of limitations and equitable tolling does not apply; (2) plaintiff lacks standing because she failed to adequately plead a concrete injury-in-fact; (3) plaintiff inappropriately relied on a Consent Order entered with the Consumer Financial Protection Bureau to make her allegations; and (4) FDCPA liability cannot be predicated on good faith representations made to a court, rather than a debtor.  With respect to the first, third and fourth arguments, the Court found that defendants failed to demonstrate that the Court overlooked any matters or controlling authority warranting reconsideration of the Court’s initial decision.  With respect to defendants’ argument about standing, the Court held that the Supreme Court’s Spokeo decision makes clear that plaintiff has alleged a violation of a procedural right that resulted in a concrete harm: plaintiff alleged that defendants submitted a false, deceptive, or misleading affidavit to procure a judgment that they would otherwise have been unable to obtain.  Therefore, the Court found that plaintiff did allege that defendants’ purported FDCPA violation changed the outcome of the state-court collection action, thereby genuinely harming her.  Finally, the Court denied defendants’ request for certification to file an interlocutory appeal, holding that defendants fail to establish a “substantial ground for difference of opinion” sufficient to grant interlocutory appeal. 

For an analysis of the original decision, please click here

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com or Clarissa Gomez at cgomez@riker.com.