E.D.N.Y. Judge Warns Frequent-Filer Plaintiffs' Firm: Continue Filing Frivolous Cases Like This and You'll Get Sanctioned

You can add Judge Frederic Bock to the list of judges within the Eastern District of New York (E.D.N.Y.) who are getting tired of the endless, hyper-technical "lawyer's cases" that come across their dockets alleging Fair Debt Collection Practices Act (FDCPA) violations. Last week in an order that dismissing the case of Leifer v. United Collection Bureau, Inc., Judge Bock stopped short of issuing sanctions against the firm but gave a stern warning to Barshay Sanders PLLC about filing frivolous litigation.

Editor's Note: The iA Case Law Tracker—an invaluable litigation defense tool—lets you quickly see in a matter of seconds how many times this and other plaintiffs' firms have been similarly called out by judges. Try it out for free!

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Facts of the case

In Leifer, the defendant debt collection agency sent a collection letter to the plaintiff that included three settlement offers. The three offers included two different statements about the payment: either the payment needs to "be received by [date]," or "in the event you pay [amount due] by [date]." The letter also states that "all offers are contingent upon the clearance of funds."

To accept one of these offers, the letter states that he or she should—among other payment options—"mail a copy of this letter with your payment, or payments, to the below payment address." The top of the letter contains the defendant's name, office address, and website. The bottom of the letter includes a PO Box address captioned as "please return this portion with payment" and "remit to."

Plaintiff, through the law firm Barshay Sanders, filed an FDCPA lawsuit alleging two arguments:

That the letter fails to inform the consumer whether the payment must be sent by the consumer or received by the debt collector by the specified debt; and
That the letter doesn't clearly state which of the addresses the payments should be sent to.

The court dismisses the claims

The court dismissed the first claim regarding whether payment needs to be received by or sent by the specific date, citing two recent court decisions by his fellow E.D.N.Y. judges who dismissed similar claims. First, Judge Bock found that there is only one reasonable reading of this letter—that the payment needs to be received by the date listed, and, in this case, the offer is contingent upon the clearance of the funds. Second, even if the plaintiff read ambiguity into the letter, the court states that "the perceived ambiguity in this case would only cause Mr. Leifer to transmit payment slightly early," which means "he has failed to establish materiality."

The court was even less impressed with the claim regarding the addresses:

Even the least sophisticated consumer would have no trouble determining that they should send or "remit payment" to the PO Box address as clearly instructed in the letter. No consumer would believe they should send payment to themselves, even though the consumer's own address is listed on the letter. Nor is the defendant's corporate address at the top of the letter confusing to the least sophisticated consumer.

Calling out the plaintiffs' firm

Judge Bock then cites Judge Cogan, who "wisely observed" that hyper-techincal cases such as this "are far afield from the original intent behind the FDCPA. . . Rather, this is a 'lawyer's case,' by which I mean that it alleges a defect of which only a sophisticated lawyer, not the least sophisticated consumer, would conceive." (Emphasis added by Judge Bock.)

The court, while denying to impost sanctions, ends the decision with these two poignant statements:

The defendant further moves for Rule 11 sanctions, as well as fees and costs pursuant to 28 U.S.C. § 1927 and 15 U.S.C. § 1692k(a)(3). Defendant's counsel points to the litigation in Solovyova, which involved the same defendant and law firms - Gordon & Rees LLP for the defendant and Barshay Sanders PLLC for the plaintiff. Defendant's counsel argues Judge Dearie's decision in Solovyova, combined with a docket entry in Solovyova suggesting that defendant's request for sanctions in that matter "offer[ed] a tempting option to th[e] Court" means that sanctions, fees and costs should be awarded in this case, which is substantially similar. The Court shares Judge Dearie's concerns. Although sanctions will not be imposed at this time, plaintiff's counsel is on notice that similar cases of this nature will undoubtedly result in the imposition of sanctions.

(Emphasis added, internal citation omitted.)

Defendant's motion to dismiss for failure to state a claim is GRANTED. Defendant's motion for costs, fees, and Rule 11 sanctions is DENIED, but the law firm of Barshay Sanders, PLLC is hereby WARNED that frivolous litigation may lead to the imposition of sanctions in the future.

(Emphasis added.)

insideARM Perspective

We've written about this issue for a long time here on insideARM—most poignantly in our article, "The True Cost of Litigation: The ARM Industry's Dilemma and One Company's Response." It's encouraging when judges also begin to recognize this trend.

One great tool that debt collectors and their defense counsel can use to help them in defending claims like these is the iA Case Law Tracker: a revolutionary tool designed to make legal research for the debt collection industry ridiculously easy. The intuitive search parameters let you search our database of court decisions summaries by plaintiffs' counsel, claim, jurisdiction, and other parameters so you can narrow down your situation and best determine how to proceed. The easy-to-read summaries are written without legalese so that attorneys and non-attorneys alike can understand the court decisions in seconds, rather than wasting hours upon hours on legal research.

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