What is a sufficient disclaimer regarding the statute of limitations on time-barred debt? Courts across the country continue to wrestle with this question in a variety of contexts, including oral disclosures made to consumers over the phone. In Jones v. Synergetic Communications, Inc., the U.S. District Court for the Southern District of California dismissed plaintiff Stephen Jones’ claims that Synergetic’s disclaimer was misleading, finding that Jones had not plausibly alleged a violation of the Fair Debt Collection Practices Act.
Jones allegedly incurred a debt of $691.60 to AT&T Mobility. Synergetic was contracted to attempt to collect the debt after Jones defaulted on his obligation. Synergetic sent Jones a letter offering to “settle” the debt at a discounted amount of $276.64. Because the statute of limitations had run, in the final sentence of the letter, Synergetic stated: “The law limits how long you can be sued on a debt. Because of the age of your debt, the creditor listed on the debt will not sue you for it … .”
Jones filed a class action lawsuit against Synergetic claiming that the offer to “settle” a time-barred debt violated the FDCPA because it would be deceptive and misleading to the least sophisticated consumer. The court rejected Jones’ claim.
Jones argued that the disclaimer language stating that Synergetic “will not sue” was misleading because it implied that Synergetic had decided not to sue instead of Synergetic being prohibited from suing due to the debt being beyond the statute of limitations. Jones relied on the Seventh Circuit case Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679 (7th Cir. 2017) and its progeny.
However, the Court distinguished Pantoja as inapposite because in that case the collection letter omitted the first part of the disclaimer and only including the second sentence. Further, the Court looked at the letter’s language and found that the disclaimer explicitly explained that the statute of limitations had run when it stated that “[t]he law limits how long you can be sued on a debt.”
While it did not explicitly defer to an agency interpretation, the Court also noted that both the Consumer Financial Protection Bureau and the Federal Trade Commission – the two agencies tasked with enforcing the FDCPA – have required debt collectors, in publicly filed consent decrees, to use the very same language that Synergetic used in the letter to Jones.
Having evaluated the complete language of the disclaimer, the Court concluded that the letter could not have been misleading to the least sophisticated consumer, and thus such claims must be dismissed.
This is a significant victory for the debt collection industry and describes a growing trend of district courts distinguishing the Pantoja holding as inapposite to situations in which the debt collector has included both sentences of the disclaimer. Further, it demonstrates that courts are willing to dismiss such statute of limitations disclaimer claims on a motion to dismiss because such claims are meritless as a matter of law. Troutman Sanders will continue to monitor this developing area of the law.