Getting FDCPA Complaints Dismissed Using Twombly and Iqbal

FDCPA lawsuits are being filed by the thousands in federal courts across the country, and a lot of the complaints look strangely similar. These complaints are long on legal conclusions, but short on facts describing what allegedly happened to the consumer and when. Many complaints do little more than identify the parties and assert that various sections of the Act have been violated. Is this enough state a valid FDCPA claim? Not anymore.

For years, the conventional wisdom was that filing motions to dismiss in federal court was usually a waste of time and money, because the notice pleading standards were so liberal. More recently, however, collectors have successfully obtained dismissals of formulaic FDCPA claims, relying on the Supreme Court’s decisions in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (“Twombly”) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (“Iqbal”). Armed with the more exacting analytical framework established Twombly and Iqbal, district courts across the country have been taking a closer look at the FDCPA complaints that are flooding their courthouses. The courts appear to be granting motions to dismiss with increasing regularity.

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint may be dismissed if it fails “to state a claim upon which relief can be granted.” Fed. R. Civ. Proc. 12(b)(6). The Federal Rules of Civil Procedure provide little guidance on what a plaintiff must do to “state a claim” for relief, other than Rule 8, which says that a complaint must set forth a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. Proc. 8(a)(2). For years, federal courts emphasized that this was an extremely “liberal” pleading standard, and until recently, the leading Supreme Court case on the subject, Conley v. Gibson, 355 U.S. 41, 45-46 (1957), was repeatedly cited for proposition that no motion to dismiss should be granted “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id.

All of this changed recently, however, beginning with the Supreme Court’s decision in Twombly, which expressly rejected the “no set of facts” language used in Conley. See Twombly, 550 U.S. at 562-63. The Court clarified that although “detailed factual allegations” are not required at the pleading stage, “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 550 U.S. at 555. The complaint must contain factual allegations, and they “must be enough to raise a right to relief above the speculative level.” Id. There must be sufficient facts plead to state a claim to relief that is “plausible on its face.” Id. at 570.

The Court refined its analysis even further in Iqbal, where it reiterated that Rule 8 of the Federal Rules of Civil Procedure requires “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” See Iqbal, 129 S. Ct. at 1949. Only a complaint that states “a plausible claim for relief” can survive a motion to dismiss. Id. “A claim has facial plausability when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. . . . The plausability standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. A complaint that contains facts which are “merely consistent with” defendant’s liability is not sufficient, because it “stops short of the line between possibility and the plausibility of entitlement to relief. Id. (citations and quotation marks omitted).

The court should not assume the truth of legal conclusions in the complaint. See Iqbal at 1949. Thus, the first step when evaluating a motion to dismiss is to identify the legal conclusions, because they “are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. at 1950. Next, with respect to any “well-pleaded factual allegations” in the complaint “a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. The determination of whether a plausible claim for relief has been stated is “a context-specific task” that requires a court to “draw on its judicial experience and common sense.” Id. The Ninth Circuit recently observed: “In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (internal quotation marks omitted).

District courts located across the country have used Twombly and Iqbal to dismiss FDCPA claims that merely contain formulatic allegations commonly used by consumer attorneys. See, e.g., Jackson v. ASA Holdings, LLC, _ F.Supp.2d _, 2010 WL 4449367, *6 (D.D.C. Nov. 8, 2010) (dismissing section 1692d claim where complaint “does little more than parrot the language of the statute in conclusory fashion”); Brown v. Hosto & Buchan, PLLC, _ F.Supp.2d _, 2010 WL 4352932, *5 (W.D. Tenn. Nov. 2, 2010) (dismissing section 1692c(a)(2) claim that merely recited “the statutory language almost word for word.”); Franke v. Global Credit and Collection Corp., 2010 WL 4449373 (D. Conn. Nov. 1, 2010) (dismissing complaint that was “bare of any specific facts that would support a claim” under sections 1692d, 1692e, 1692f or 1692g); Sierra v. Rubin & Debski, P.A., 2010 WL 4384216, *2-3 (S.D. Fla. Oct. 28, 2010) (allegations that collector filed suit with proper documentation to support the debt did not state a claim under section 1692d or 1692f); Lopez v. Rash Curtis & Assoc., 2010 WL 3505079, *2-3 (E.D. Cal. Sept. 3, 2010) (allegations that defendant was a “debt collector” who falsely threatened to sue, garnish the plaintiff’s wages and add $10,000 in legal fees to the debt did not state a claim under section 1692e or 1692f of the FDCPA); Clemente v. IC Systems, Inc., 2010 WL 3855522, *1-2 (E.D. Cal. Sept. 29, 2010) (allegations that Plaintiff does not owe the money, yet Defendant “constantly and continuously places collection calls seeking and demanding payment” and “hangs up before Plaintiff or Plaintiff’s voicemail answers” failed to state a claim under section 1692d(5) of the FDCPA: “defendants cannot be expected to craft a responsive pleading when plaintiff fails to allege the date or contents of even one call that defendant allegedly made. ) (citation and quotation marks omitted); Velazquez v. Arrow Financial Services LLC, 2009 WL 2780372, *1-3 (S.D. Cal. Aug. 31, 2009) (allegations that defendant filed suit on a debt that was not owed, without reasonable investigation into debt, and knowing it would be unable to prove its case, did not state claim under section 1692e(2), e(5) or e(10) of FDCPA); Dokumaci v. MAF Collection Services, 2010 WL 1507014, *1 (M.D. Fla. April 14, 2010) (dismissing complaint that failed to plead sufficient facts suggesting plaintiff was a “debtor” and that defendant was a “debt collector”); see also Zigdon v. LVNV Funding, LLC, 2010 WL 1838637, *12 (N.D. Ohio April 23, 2010) (under Iqbal, FDCPA class action complaint contained insufficient factual allegations to support equitable tolling or fraudulent concealment).

The Eastern District of California has repeatedly refused to enter default judgments in favor a well-known consumer law firm, because under Twombly and Iqbal, that firm’s FDCPA complaints have not met the minimum pleading requirements. See Johnson v. National Recovery Group, LLC, 2010 WL 1992636, *2 (E.D. Cal. May 14, 2010) (“the Court finds that the merits and sufficiency of the Complaint are severely lacking. This is a recurring issue with Plaintiff's counsel. Indeed, the Court recently and repeatedly cautioned Plaintiff's counsel about insufficient, conclusory allegations in similar FDCPA actions. . . . It is apparent that the Court's previous admonitions have gone unheeded, because the Complaint and claims in this action suffer from even greater deficiencies.”). The court in Johnson held, for example, that an allegation that “Defendant constantly and continuously placed collection calls to Plaintiff seeking and demanding payment for an alleged debt” was insufficient to state a claim under section 1692d(5) of the FDCPA, because “the factual allegations fail to identify (1) the ‘called number,’ (2) the number of calls made to demonstrate repeated, constant and/or continuous calls, (3) when the calls were made and over what period of time, (4) the content of the conversations, if any, (5) the alleged debt, and (6) the link between the caller and the Defendant debt collector.” Id. at *3.

The Supreme Court’s decisions in Twombly and Iqbal provide district court judges with a powerful screening device to help weed out FDCPA claims that lack facial plausibility. Collectors should consider filing motions to dismiss when they are served with FDCPA complaints that do little more than track the language of the Act and claim that the collector violated it.