Shapiro v. Riddle, 351 F.3d 63 (2d Cir. 2003)

Dec 01, 2003

OUTCOME: 2nd Circuit affirmed lower court's ruling for Riddle.

I served as Managing Attorney and Compliance counsel for Riddle & Associates at the time of this case. The case was mentioned in an article by Manuel Newburger, Esq, Barron & Newburger, PC, "Pre-Judgme ... nt Collection of Legal Fees, A Right Without a Remedy?", the Journal of Texas Consumer Law, 2012. Mr. Newburger is a preeminent and nationally renowned attorney in the area of debt collection and creditors' rights. He wrote the following: In Shapiro v. Riddle, the defendant law firm was retained by one of its clients to recover a $309.76 debt allegedly owed by Shapiro. The agreement between Shapiro and the creditor provided: If we are required to use a collection agency or attorney to collect money that you owe to us . . ., you agree to pay the reasonable cost of collection or other action. These costs might include, but are not limited to, the costs of the collection agency, reasonable attorney fees, and court costs. Riddle sent a collection letter to Shapiro, in which Riddle demanded the balance of the debt, together with an additional $98 in “attorney/collection costs.” Shapiro sued, alleging that the inclusion of a demand for fees violated 15 U.S.C. sections 1692e(2) and 1692f(1). In the words of the Second Circuit, “[t]he principal issues on appeal are whether the $98 charge was expressly allowed by the agreement and, if so, whether the inclusion of the charge in the letter was a false representation because the charge was unreasonable.” The Second Circuit affirmed the district court’s decision that answered “yes” to the first of those questions and “no” to the second. What made Riddle’s victory possible was the fact that it presented evidence to the district court of the eighteen-step procedure that it employed, before sending out debt-collection letters to ensure that: (1) an agreement between a debtor and creditor authorized the debt collection; (2) Riddle had the requisite and accurate information on a debtor’s account; (3) a debtor had no legal defenses, such as bankruptcy, to assert against his or her debt; (4) a debtor’s account met Riddle’s criteria, such as minimum balance due and whether partial payment has been made; and (5) a collection letter to the debtor complied with the FDCPA, based upon the determination of Riddle’s full-time compliance attorney. Both the district court and the Second Circuit concluded that the $98 charge was reasonable in light of the undisputed evidence of Riddle’s work on Shapiro’s case.