Opinion
Case No. 2:03-CV-81.
March 9, 2006
OPINION AND ORDER
Plaintiff, Tracy Passa ("plaintiff"), acting on behalf of herself and a putative class of plaintiffs, alleges that defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, ("FDCPA"), Ohio's Consumer Sales Practices Act, O.R.C. § 1345.01 et seq., ("OCSPA"), the civil forfeiture provisions of Ohio's RICO Act, O.R.C. § 2923.31 et seq., ("ORA"), 42 U.S.C. § 1983 ("Section 1983") and that they engaged in fraudulent representation under Ohio law in connection with the City of Columbus' "Check Resolution Program." Named as defendants are the City of Columbus, Buckeye Check-Cashing, Inc. and BCCI Management Co. dba Check$mart ("Check$mart"), Quick Cash Advance, Inc. dba Quick Cash USA ("Quick Cash") and Cash Till Payday, Ltd. dba Always Payday ("Cash Till Payday").
With the consent of the parties, 28 U.S.C. § 636(c), this matter is before the Court on the Motion to Dismiss of Defendant Quick Cash, Doc. No. 43 and the Motion to Dismiss of Defendant Cash Till Payday, Ltd., Doc. No. 45. For the reasons that follow, both motions to dismiss are DENIED.
I. PROCEDURAL BACKGROUND
Plaintiff originally filed this action on January 27, 2003, on behalf of herself and all others similarly situated. The original Complaint named as defendants the City of Columbus and the Columbus City Prosecutor's Office. On March 21, 2003, these defendants filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Doc. No. 6. On May 20, 2003, this Court granted that motion. Doc. No. 14. Plaintiff appealed that decision to the United States Court of Appeals for the Sixth Circuit, which vacated this Court's Opinion and Order and remanded the action. Doc. No. 21.
The appellate court concluded that this Court had improperly relied upon matters outside the pleadings without converting the motion to one for summary judgment, which would have given the parties the opportunity to supplement their memoranda prior to the Court's ruling. Id. Thereafter, and consistent with that mandate, this Court denied the defendants' motion to dismiss. Doc. No. 25.
On April 8, 2005, plaintiff was granted the opportunity to amend the Complaint. Doc. No. 25. On June 3, 2005, plaintiff filed the Amended Complaint. Doc. No. 33. The Amended Complaint does not name the Columbus City Prosecutor's Office as a defendant, but does add defendants Check$mart, Quick Cash and Cash Till Payday.
On July 1, 2005, Quick Cash filed an Answer to the Amended Complaint, Doc. No. 42, and the Motion to Dismiss by Defendant Quick Cash, Doc. No. 43. In that motion, Quick Cash argues that this Court lacks subject matter jurisdiction over plaintiff's claims against it.
On July 22, 2005, Cash Till Payday filed its Motion to Dismiss of Defendant Cash Till Payday, Ltd. Doc. No. 45. In that motion, Cash Till Payday argues that this Court lacks subject matter jurisdiction to hear plaintiff's claims against it.
II. FACTS
Plaintiff is a resident of Noble County, Ohio. Amended Complaint, at ¶ 18. Plaintiff obtained several "pay day" loans from Check$mart, a business located in Zanesville, Ohio, and licensed to make such loans pursuant to O.R.C. § 1315.35 et seq. Id., at ¶¶ 19-22, 57. Check$mart required plaintiff to issue postdated checks to serve as collateral for these loans. Id., at ¶¶ 23, 59. Plaintiff paid all such loans with the exception of one that became due on May 8, 2002. Id., at ¶¶ 26, 63. Plaintiff informed Check$mart that she could not pay the loan and that her postdated check would be dishonored if negotiated. Id., at ¶ 65. After plaintiff did not pay the May 8, 2002, loan, Check$mart nevertheless attempted to negotiate the postdated check issued as collateral. Id., at ¶¶ 29, 65. Plaintiff's checking account contained insufficient funds to cover the check. Id., at ¶¶ 65, 66.
The City of Columbus maintains a Check Resolution Program through the Dispute Resolution Unit of the City Attorney's Office. Id., at ¶ 26. That program provides mediation services to merchants and their allegedly delinquent customers. Id., at ¶¶ 27-32. Merchants who are eligible to participate in the Check Resolution Program file a certified case submission application with the prosecutor's office in Columbus, Ohio. Id., at ¶ 32. The case submission is automatically accepted and a hearing date is docketed. Id., at ¶ 36. Notices are then mailed from the prosecutor's office to the alleged delinquent customers requesting that they appear at the Franklin County Municipal Court to resolve a complaint made against them about a dishonored check. Id.
On July 11, 2002, plaintiff received a notice indicating that Check$mart had scheduled a mediation through the Check Resolution Program, to be held on July 31, 2002, at 4:30 p.m., in an attempt to resolve a dispute related to a dishonored check. Id., at ¶¶ 76-78 and Exhibit 9, pg. 1 attached to Amended Complaint. On August 6, 2002, the City of Columbus sent a second notice to plaintiff, indicating that because she had not appeared at the first scheduled mediation, another mediation would be held on August 14, 2002. Id., at ¶ 80 and Exhibit 9, pg. 3, attached to Amended Complaint.
Plaintiff contends that Check$mart had actual notice that her bank account did not contain sufficient funds to cover the check. Id., at ¶ 61. Thus, plaintiff concludes that she did not commit the criminal offense of knowingly negotiating a check for which she lacked sufficient funds. Id., at ¶ 48 (citing O.R.C. § 2913.11(B)). Instead, plaintiff contends that she defaulted on a consumer loan for which a postdated check served as collateral. Id., at ¶¶ 68-71 (citing O.R.C. § 1315.35 et seq.). This type of default, plaintiff asserts, is subject to only civil liability, not criminal liability. Id. Plaintiff alleges that the City of Columbus illegally "lent Check$mart its official status and authority to assist Check$mart in collecting this consumer payday loan. . . ." Id., at ¶ 76.
Plaintiff alleges that the City of Columbus made at least one such communication to approximately 20,000 persons at the certified requests of Check$mart, Quick Cash and Cash Till Payday. Id. at 7. Plaintiff also alleges that Quick Cash and Cash Till Payday engaged in the same conduct with their customers as Check$mart did with her. Id., at ¶¶ 7, 8. Plaintiff contends that all defendants violated the FDCPA, the OCSPA, the ORA, Section 1983 and the tort laws of Ohio based on their participation in the City of Columbus' Check Resolution Program. Id., at ¶¶ 84-118.
III. STANDARD OF REVIEW
Quick Cash and Cash Till Payday move to dismiss plaintiff's claims against them, arguing specifically that plaintiff lacks the requisite standing to assert claims against them. Although the movants refer either to a "failure to state a claim" or to "Rule 12(b)(6)," a motion to dismiss for lack of standing is properly analyzed under Rule 12(b)(1) since "`standing is thought of as a jurisdictional matter, and a plaintiff's lack of standing is said to deprive a court of jurisdiction.'" Moeckel v. Caremark RX Inc., 385 F. Supp.2d 668, 672 (M.D. Tenn 2005) (quoting Ward v. Alternative Health Delivery Sys., 261 F.3d 624, 626 (6th Cir. 2001)).
"A Rule 12(b)(1) motion can either attack the claim of jurisdiction on its face, in which case all allegations of the plaintiff must be considered as true, or it can attack the factual basis for jurisdiction, in which case the trial court must weigh the evidence and the plaintiff bears the burden of proving that jurisdiction exists." Id. (citing DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir. 2004), and RMI Titanium Co. v. Westinghouse Electric Corp., 78 F.3d 1125; 1133-35 (6th Cir. 1996)); see also Howard v. Whitbeck, 382 F.3d 633, 636 (6th Cir. 2004). In a facial challenge, "the Court applies the same standard applicable to Rule 12(b)(6) motions." Chamber of Commerce v. Ohio Elections Comm'n, 135 F. Supp. 2d 857, 860 (S.D. Ohio 2001) (citing Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)).
In the instant case, Quick Cash and Cash Till Payday offer no evidence in support of their argument that plaintiff lacks standing, nor do they call upon the Court to resolve any disputed facts. Thus, the Court concludes that Quick Cash and Cash Till Payday have actually mounted a "facial challenge" not a "factual challenge" to subject matter jurisdiction in this case. The Court will therefore analyze the motions to dismiss under Rule 12(b)(6).
A motion to dismiss under Rule 12(b)(6) attacks the legal sufficiency of the complaint. Roth Steel Prod. v. Sharon Steel Co., 705 F.2d 134, 155 (6th Cir. 1983). In determining whether dismissal on this basis is appropriate, the complaint must be construed in the light most favorable to the plaintiff, and all well-pleaded facts must be accepted as true. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Bower v. Federal Express Corp., 96 F.3d 200, 203 (6th Cir. 1996); Misch v. The Cmty. Mutual Ins. Co., 896 F. Supp. 734, 738 (S.D. Ohio 1994). A claim will be dismissed if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
Thus, this Court will grant a motion to dismiss under Rule 12(b)(6) if the complaint is without merit because of an absence of facts or law to support the claims in it, or if on the face of the complaint there is an insurmountable bar to relief. See generally, Rauch v. Day Night Mfg. Corp., 576 F.2d 697, 702 (6th Cir. 1978).
IV. ANALYSIS
In their motions to dismiss, Quick Cash and Cash Till Payday argue that plaintiff lacks standing to assert claims against them because she had no dealings with them. In opposition, plaintiff does not deny that she had no dealings with Quick Cash or Cash Till Payday and admits that her alleged injury was caused only by the City of Columbus and Check$mart. Plaintiff argues, however, that there are two exceptions to standing that apply to class actions in certain circumstances, both of which would serve to confer upon her the standing necessary to her assertion of claims against Quick Cash and Cash Till Payday. Plaintiff's Memo Contra Quick Cash's Motion to Dismiss, at 4; Plaintiff's Memo Contra Cash Till Payday's Motion to Dismiss, at 4. Quick Cash and Cash Till Payday concede certain exceptions to standing in the context of certain class actions; They maintain, however, that neither exception applies to the instant action. This Court disagrees.
"In its constitutional dimension, standing imports justiciability: whether the plaintiff has made out a `case or controversy' between himself and the defendant within the meaning of Art. III." Warth v. Seldin, 422 U.S. 490, 498 (1975). See also Raines v. Byrd, 521 U.S. 811, 818 (1997); NRA of Am. v. Magaw, 132 F.3d 272, 279 (6th Cir. 1997). "This is the threshold question in every federal case, determining the power of the court to entertain the suit." Warth, 422 U.S. at 498; Grendell v. Ohio Supreme Court, 252 F.3d 828, 832 (6th Cir. 2001); Allstate Ins. Co. v. Thrifty Rent-A-Car Sys., 249 F.3d 450, 456 (6th Cir. 2001); Coyne ex rel. Ohio v. American Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999).
Even when a case falls within the parameters of Article III jurisdiction, a party claiming standing must also demonstrate that prudential considerations do not further limit the exercise of a court's power to hear a case. Stevenson v. J.C. Bradford Co., 277 F.3d 838, 852-53 (6th Cir. 2002) (citing as an example Warth, 422 U.S. at 498). "`Any inquiry into a litigant's standing to sue involves examination of both constitutional limitations and prudential restrictions.'" Id. (citing Allstate Ins. Co., 249 F.3d at 456). Broadly speaking, there are three prudential limits on standing ordinarily counseling against the exercise of jurisdiction: (1) alleging a generalized grievance not particular to the plaintiff; (2) asserting the legal rights and interests of a third party; and (3) claiming an injury outside the zone of interests of the statute providing the cause of action. Id. (citing as an example Valley Forge Christian Coll. v. Americans United for Separation of Church State, Inc., 454 U.S. 464, 474-75 (1982)).
With regard to standing in the class action context, the United States Court of Appeals for the Sixth Circuit has observed:
Standing is a prerequisite to bringing suit, and nothing in Fed.R.Civ.P. 23 alters this requirement. In LaMar v. H B Novelty Loan Company, 489 F.2d 461, 462 (9th Cir. 1973), the Ninth Circuit Court of Appeals held that a plaintiff "cannot represent those having causes of action against other defendants against whom the plaintiff has no cause of action and from whose hands he suffered no injury." This is true even though the plaintiff may have suffered an injury identical to that of the other parties he is representing. Id. at 466. The court did, however, recognize two exceptions to this principle that each member of a plaintiff class must have a cause of action against each defendant:
(1) Situations in which all injuries are the result of a conspiracy or concerted schemes between the defendants at whose hands the class suffered injury; and
(2) Instances in which all defendants are juridically related in a manner that suggests a single resolution of the dispute would be expeditious.Thompson v. Bd. of Educ., 709 F.2d 1200, 1204 (6th Cir. 1983). It is these two exceptions, commonly referred to as "the LaMar exceptions," on which plaintiff relies.
In Payton v. County of Kane, 308 F.3d 673 (7th Cir. 2002), the United States Court of Appeals for the Seventh Circuit applied the LaMar exceptions to standing in the class action context. In Payton, the plaintiff and five other former arrestees who had been released on bail from Illinois county jails filed a class action challenging the counties' practice (authorized by Illinois law) of imposing a fee in addition to bail as a condition for release. Id. at 675. The plaintiffs moved for the certification of a plaintiff class that included all individuals affected by the procedure in nineteen (19) named counties; the defendants moved to dismiss the entire case. Id. The district court granted the motion to dismiss and denied as moot the motion for class certification. Id. The appellate court, relying on La Mar, supra, reversed and remanded:
LaMar held that a plaintiff without a cause of action against a specific defendant cannot "`fairly and adequately' protect the interests of those who do have such causes of action," for purposes of Rule 23(a). [ La Mar, 489 F.2d] at 466 (citations omitted). Nevertheless, and relevantly to our case, the court went on to hold that if the plaintiffs as a group — named and unnamed — have suffered an identical injury at the hands of several parties related by way of a conspiracy or concerted scheme, or otherwise "juridically related in a manner that suggests a single resolution of the dispute would be expeditious," the claim could go forward. Id.
. . . .
Post- LaMar cases from other courts have suggested that if all the defendants took part in a similar scheme that was sustained either by a contract or conspiracy, or was mandated by a uniform state rule, it is appropriate to join as defendants even parties with whom the named class representative did not have direct contact.Id. at 678-79 (citations omitted).
Much like the plaintiffs in Payton, plaintiff in the instant case alleges that all the named defendants acted in concert, resulting in injury to the named plaintiff — i.e., the named defendants all participated in the city's administration of its Check Resolution Program, by which the city's authority served to collect defaulted consumer loans and allegedly usurious fees and charges. Amended Complaint, ¶¶ 26-56, 87, 88, 95-97, 99-104. Plaintiff further alleges that she, like all members of the putative class, was personally subjected to these practices as part of an ongoing course of conspiracy and continuing enterprise. Id. at ¶¶ 3-17. Plaintiff asserts the claims against Quick Cash and Cash Till Payday as co-conspirators and joint tortfeasors under Fed.R.Civ.P. 23 and defines the putative class to include
all persons who at any time on or after January 1, 2001 were or will be the subject of a debt collection communication from and through the City of Columbus' Check Resolution Program in connection with an attempt to obtain payment of a "payday" loan allegedly owed Check$mart, Quick Cash USA or [Cash Till Payday] under a loan agreement governed by R.C. 1315.35-1315.44.Id. at ¶ 4. As so framed, plaintiff and the putative class allege similar injury by operation of the same concerted practice, i.e., defendants' participation in the city's Check Resolution Program.
This case, like Payton,
is not a case where the named plaintiff is trying to piggy-back on the injuries of the unnamed class members. That, of course, would be impermissible, in light of the fact that "a named plaintiff cannot acquire standing to sue by bringing his action on behalf of others who suffered injury which would have afforded them standing had they been named plaintiffs; it bears repeating that a person cannot predicate standing on injury which he does not share. Standing cannot be acquired through the back door of a class action." Allee v. Medrano, 416 U.S. 802, 828-29 (1974) (Burger, C.J., dissenting). See also O'Shea v. Littleton, 414 U.S. 488, 494 (1974); Bailey v. Patterson, 369 U.S. 31, 32-33 (1962).
These putative representatives were personally injured by the operation of the very same statute that caused the injuries to all other members of the proposed class.Payton, 308 F.3d at 682.
This Court therefore concludes that the La Mar exceptions serve to confer upon plaintiff the standing necessary to her assertion of claims against Quick Cash and Cash Till Payday.
WHEREUPON, in light of the forgoing analysis, the Motion to Dismiss of Defendant Quick Cash, Doc. No. 43 and the Motion to Dismiss of Defendant Cash Till Payday, Ltd., Doc. No. 45, are hereby DENIED.