A court decision popped up in the Eastern District of New York yesterday that outlines the intricacies—and, quite frankly, inefficiencies—of certain civil litigation procedures. Watson v. Midland Credit Mgmt., Inc., No. 2:18-cv-2400 (E.D.N.Y. June 19, 2019) deals with Avila safe harbor language, or the lack thereof, in collection letters.


Midland Credit Management (Midland) sent an almost-identical collection letter to a group of plaintiffs. The letter listed a current balance and three discounted payment options, but no interest disclosure language since the accounts were not accruing interest. The first two discounted payment options provided specific dollar amounts and due dates to settle the account, but the third offered an option to set up monthly payments “as low as” a certain dollar amount.

Plaintiffs sued, and Midland filed a motion to dismiss.

The court denied the motion to dismiss for a technically-correct (but practically-inefficient) legal nuance: since the complaint alleged that interest was accruing, then for a motion to dismiss, the court needs to take this fact as true. If interest was indeed accruing, then the third payment option—monthly payments “as low as” a certain dollar amount without a due date—does not satisfy the second prong of Avila, which requires a clear statement of an exact amount to be paid by a precise date.

However, the court noted:

[I]f, in fact, as Defendant claims, interest and other fees are no longer accruing on Plaintiffs' debts, then, under Taylor, the letters would not be misleading. See 886 F.3d at 215 (holding that failure to disclose that a debt is no longer accruing interest or other fees is not a Section 1692e violation). However, this cannot be addressed on a Rule 12(b)(6) motion.

insideARM Perspective

Two things stand out about this case.

First and foremost: interest was not accruing on the account. This was brought up in Midland’s motion to dismiss. Per Taylor v. Financial Recovery Services, Inc. and other cases that have come after it, it means there is no violation. We know that the ultimate result here will be dismissal or summary judgment in favor of defendant. (And if not, could you imagine the Second Circuit’s exasperation on having to hear this issue again? It seems that the litigation wheels keep spinning on an issue that has already been thoroughly litigated in New York.

Second: from a reasonable reading, even if interest was accruing on the account, the letter complies with the second prong of Avila. It lists two payment options that tell the consumer exactly what to pay and by what date to satisfy the account, which satisfied Avila according to other judges in the Eastern District of New York. Avila doesn’t require that every payment option needs to be this exact.

It's exhausting.

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[Editor's Note: iA Perspective updated at 1:11 PM Eastern.]