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New York Federal District Court Holds Communications to Attorneys Not Actionable Under the FDCPA

A plaintiff seeking to recover damages for purportedly misleading communications to his attorney saw his claims dismissed by the U.S. District Court for the Eastern District of New York after the judge determined that such communications were not actionable under the FDCPA. In Vernot v. Pinnacle Credit Services, LLC, 2017 U.S. Dist. LEXIS 14835 (E.D.N.Y. 2017), Anderson Vernot alleged that upon reviewing his credit report and discovering Pinnacle Credit Services, LLC’s tradeline, he engaged Asset Protection and Management, Inc. for credit repair services. Mr. Vernot subsequently sent Pinnacle a letter of dispute and an executed limited power of attorney notifying Pinnacle of APM’s representation. An APM employee later contacted Pinnacle to inquire about Mr. Vernot’s account. According to Mr. Vernot’s complaint, Pinnacle informed APM that APM “needed to contact another agency,” and that “no other information was available.” Mr. Vernot claimed that this conversation violated the FDCPA because Pinnacle “claimed deceptively and deceitfully that no information was available and Plaintiff must contact another entity.” Pinnacle moved to dismiss Mr. Vernot’s complaint, arguing that Mr. Vernot lacked standing to bring his claims due to the absence of any injury-in-fact, and that even if Mr. Vernot had standing, he failed to state claims for which relief could be granted.

Although the court rejected Pinnacle’s Spokeo argument and concluded that an alleged violation of § 1692e that is materially misleading to the least sophisticated consumer satisfies the “injury-in-fact” requirement, the court nonetheless dismissed Mr. Vernot’s claims, finding that Mr. Vernot failed to allege facts to support a plausible claim that Pinnacle violated §§ 1692e and 1692f of the FDCPA. After rejecting Mr. Vernot’s characterization of the conversation between Pinnacle and APM as “shockingly unjust or unfair” and noting that Pinnacle’s statements to APM were not materially false or misleading, the court held that even if Pinnacle’s statements ran afoul of §§ 1692e or f of the FDCPA, they were nonetheless not actionable under the statute because they were made not to Mr. Vernot, but to his counsel.

In its holding, the court acknowledged the Seventh Circuit’s application of the “competent lawyer” standard in Evory v. RJM Acquisitions Funding, LLC, 505 F.3d 769 (7th Cir. 2007), by which courts determine whether a communication would mislead a competent attorney rather than the least sophisticated consumer. But the court declined to apply the “competent lawyer” standard to this case, noting instead that while the Second Circuit has yet to address the issue of communications between debt collectors and a consumer’s counsel, the Second Circuit “has expressed ‘grave reservations’ about finding ‘alleged misrepresentations to attorneys for putative debtors’ to constitute FDCPA violations.” Citing to Kropelnick v. Siegel, 290 F.3d 118, 127 (2d Cir. 2002), the court agreed with the Second Circuit that “[w]here an attorney is interposed as an intermediary between a debt collector and a consumer, we assume the attorney, rather than the FDCPA, will protect the consumer from a debt collector’s fraudulent or harassing behavior.” On this basis, the court held that the FDCPA did not apply to Pinnacle’s conversation with APM.

This holding deepens the split among courts regarding the standard by which communications to consumers’ counsel are evaluated under the FDCPA by rejecting the notion that such communications are actionable at all. However, this remains the minority view. While the opinion helpfully acknowledges the role of counsel as a buffer between debt collector and consumer (and tacitly questions how a consumer could be damaged by statements made not to him, but to his lawyer), collectors should nonetheless remain vigilant when speaking with consumers’ attorneys and representatives.