Alert July 23, 2013

New York Federal Court Rejects Class Action Alleging FDCPA Violations

The United States District Court for the Eastern District of New York dismissed a class action alleging that a law firm hired to conduct foreclosures violated both the Fair Debt Collection Practices Act and recently enacted New York statutes requiring pre-foreclosure settlement conferences. Plaintiffs, homeowners facing foreclosure, alleged that defendant violated the FDCPA by failing to provide them with a request for judicial intervention form used to arrange the pre-foreclosure settlement conference.

Recognizing that “[n]ot every violation of state or city law amounts to a violation of the FDCPA,” the Court dismissed the claims as a matter of law, explaining that because the alleged activity did not violate a specific provision of the FDCPA, nor any analogous provision of New York law, the failure to provide the required form was not actionable as an unfair debt collection practice. The Court further noted its hesitation, under principles of comity, to rule that the FDCPA would subsume comparable provisions of New York law governing debt collection—particularly in light of the ongoing judicial foreclosure suits at issue while the federal case was pending, and the unsettled nature of the appropriate remedy for failing to provide the required form. The Court also dismissed the one state-law claim, alleging violation of a New York statute prohibiting “deceptive act[s] or practice[s],” declining supplemental jurisdiction, but noted that the dismissal was without prejudice to plaintiffs’ pursuit of such a claim in state court.