The United States Court of Appeals for the Second Circuit decided in Ellis v. Solomon and Solomon PC, 591 F.3d 130 (2d Cir. 2010) that without an explanation of the relationship between a collection lawsuit and the Fair Debt Collection Practices Act (FDCPA) required notice, a consumer could reasonably conclude being taken to court overrides any other out-of-court rights the debtor may have. The Court ruled that a validation notice is surpassed when the consumer is served with a lawsuit that does not clarify a lawsuit has no effect on the information contained in the validation notice. Debt collectors who sue during the notice period are suggested to provide an explanation of the lawsuit's impact in the validation notice and in the summons and complaint, clarifying lawsuit commencement does not eclipse the rights contained in the validation notice.
The FDCPA requires a debt collector, within five days of its initial communication with a consumer to send a written "validation notice" setting forth the person's right to dispute the debt. The individual has 30 days to send a notice to the debt collector if he disputes. During the 30 days, the debt collector may continue collections as long as activities are not inconsistent with the validation notice disclosures.
In Ellis v. Solomon and Solomon PC, Citibank hired a law firm to collect debtor Janet Ellis's alleged credit card debt. Solomon & Solomon, a law firm, sent the FDCPA required notice advising her of the debt and informing her that she had 30 days to dispute its validity. Otherwise the firm would assume the debt was valid.
After the validation notice was sent, but within the 30 days, Solomon & Solomon served Ellis with a collection lawsuit. The summons instructed Ellis about the need to file an appearance and alert insurance carriers. In neither the validation notice nor the lawsuit papers did the law firm inform Ellis about the effect the suit had on her validation rights.
Sample clarifying language from Thomas v. Law Firm of Simpson & Cybak, 392 F.3d 914, 919-20 (7th Cir. 2004):
This advice pertains to your dealings with me as a debt collector. It does not affect your dealings with the court, and in particular it does not change the time at which you must answer the complaint. The summons is a command from the court, not from me, and you must follow its instructions even if you dispute the validity or amount of the debt. The advice in this letter also does not affect my relations with the court. As a lawyer, I may file papers in the suit according to the court's rules and the judge's instructions.
