Winters v. Portfolio Recovery Associates, Llc

MOTION to Dismiss for Failure to State a Claim

S.D. Ill.August 23, 2016

131447865v1 0989066 11005785v1 0989066 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS RHONDA WINTERS f/k/a RHONDA DIESEN, Plaintiff, v. PORTFOLIO RECOVERY ASSOCIATES, L.L.C., Defendant. ) ) ) ) ) ) ) ) ) ) Case No. 3:16-cv-00647-NJR-DGW DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT AND MEMORANDUM OF LAW Defendant, PORTFOLIO RECOVERY ASSOCIATES, LLC (“PRA”), by its attorneys, Vitaly Libman of Hinshaw & Culbertson LLP, pursuant to Federal Rule of Civil Procedure 12(b)(6), moves to dismiss Plaintiff’s Complaint. In support of said Motion, Defendant sets forth its reasons in the incorporated Memorandum of Law. Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 1 of 12 Page ID #24 2 11005785v1 0989066 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT Defendant, PORTFOLIO RECOVERY ASSOCIATES, LLC (“PRA”), by and through its attorneys, Vitaly Libman of Hinshaw & Culbertson LLP, and pursuant to Federal Rule of Civil Procedure 12(b)(6), respectfully request that this Court dismiss Plaintiff's Complaint with prejudice, and in support thereof, states as follows: INTRODUCTION Plaintiff's Complaint alleges violations of the Fair Debt Collection Practices Act ("FDCPA") based upon a letter dated May 12, 2016, addressed to Plaintiff's instant counsel Mr. David Levin, but mailed to his former law firm where he had worked approximately three months prior.1 Ex. A. (letter dated 5/12/2016 from PRA to David B. Levin). Dkt. #1, Plaintiff's Complaint at ¶14-15. Plaintiff alleges that this letter constitutes a communication with a third-party in violation of 15 U.S.C § 1692b and § 1692c of the FDCPA. Plaintiff's Complaint at ¶¶18-25. As discussed in greater detail below, Plaintiff's Complaint should be dismissed for at least the following reasons: (1) the letter was not a communication "in connection with the collection of a debt" as defined and required to pursue a claim under the FDCPA; and (2) the letter was a communication with Plaintiff's attorney Mr. Levin and was not a communication with a third-party. 1 Plaintiff does not attach this correspondence, which forms the sole basis of her claims, to her complaint. See Dkt. #1, Plaintiff's Complaint. PRA has attached this correspondence as Exhibit A, and it is proper for the Court to consider it. Venture Associates Corp. v. Zenith Data Systems Corp., 987 F.2d 429, 431 (7th Cir. 1993). This rule is intended to prevent a plaintiff from avoiding dismissal by purposefully constructing complaints to avoid including facts which warrant dismissal, allowing a defendant to attach documents to a motion to dismiss that are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim. Id. Were it not for the exception, a plaintiff could evade dismissal under Rule 12(b)(6) simply by failing to attach to his complaint a document that proved that his claim had no merit. Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002). See also Mele v. Fed. Reserve Bank of N.Y., 359 F.3d 251, 255 n. 5 (3rd Cir.2004); General Electric Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997) (collecting cases). PRA did not include in Exhibit A the enclosures it sent to Mr. Levin with its May 12, 2016 correspondence, as these contain personal identifiers and financial information for Plaintiff. Defense counsel will make these available to the Court upon its request by filing the same under seal. Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 2 of 12 Page ID #25 3 11005785v1 0989066 SUMMARY OF ALLEGATIONS AND LAWSUITS On September 23, 2013, Plaintiff filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Southern District of Illinois, and on January 8, 2014, an order of discharge was entered. Plaintiff's Complaint at ¶9. On April 4, 2016, Defendant PRA filed a collection suit against Plaintiff in the Circuit Court of Clinton County, Illinois, case number 16-SC-59. Plaintiff's Complaint at ¶11. Plaintiff's counsel sent a letter via fax on May 9, 2016 to the attorneys representing PRA in the Clinton County collection suit notifying them that Plaintiff believed the account PRA was seeking to collect had been discharged in Plaintiff's bankruptcy. Plaintiff's Complaint at ¶12.2 On May 10, 2016, PRA obtained a default judgment against Plaintiff in the Clinton County collection suit. Plaintiff's Complaint at ¶13. On May 12, 2016, PRA sent a response letter addressed to Plaintiff's counsel Mr. Levin at the mailing address of Mr. Levin's former law firm. Plaintiff's Complaint at ¶14. Plaintiff alleges that in doing so, Defendant "disclosed the existence of the alleged debt to at least one employee of that law firm, which is not representing Plaintiff in this matter (nor in any other matter)." Plaintiff's Complaint at ¶14. Pursuant to these allegations, Plaintiff claims that PRA violated sections 15 U.S.C § 1692c and § 1692b of the FDCPA. Plaintiff's Complaint at ¶¶18-25. Specifically, in Counts I, II, and III of the Complaint, Plaintiff claims the letter sent May, 12, 2016 addressed to Plaintiff's counsel Mr. Levin, was a communication "with a person other than Plaintiff" which violated §§ 1692b(1), b(2), and b(6), because: 1.) the letter identified Defendant company to a third-party "without having been expressly requested to do so"; 2.) stated that "Plaintiff owes an alleged debt"; and 3.) PRA sent the communication "after Defendant had been advised that Plaintiff was represented by an attorney with respect to the alleged debt." Plaintiff's Complaint at ¶¶18-23. Count IV of the Complaint 2 Plaintiff was mistaken in her belief, although this fact is not relevant to the instant motion. Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 3 of 12 Page ID #26 4 11005785v1 0989066 makes a similar claim, alleging PRA violated § 1692c(b) by "communicating with a person other than Plaintiff in connection with the collection of the alleged debt without a proper purpose." Plaintiff's Complaint at ¶¶24-25. Plaintiff's claim that a letter addressed to Plaintiff's Counsel Mr. David Levin but mistakenly sent to Plaintiff counsel's former firm was a "communication with a third-party" in violation of the FDCPA is wholly without merit because the letter at issue was not sent "in connection with the collection of a debt," and because Defendant properly sent a letter to Plaintiff's counsel in compliance with the FDCPA. Plaintiff's Complaint does not accurately plead a violation that the statute would be able to remedy, and it constitutes an overly broad reading of what the FDCPA was meant to protect against. This Court should dismiss Plaintiff's entire Complaint with prejudice. LEGAL STANDARD Federal Rule of Civil Procedure 12(b)(6) states that a defendant may seek dismissal of a claim if the plaintiffs complaint "fails to state a claim upon which relief can be granted.'' Fed. R. Civ. P. 12(b)(6). In deciding a motion to dismiss, the court accepts all well-pleaded facts as true and views them in the light most favorable to the claimant. Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007). The Court's inquiry is "whether the complaint contains 'enough facts to state a claim to relief that is plausible on its face."' Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). A complaint must offer more than merely an ''unadorned, the-defendant-unlawfully harmed-me accusation." Ashcraft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim of relief that is plausible on its face."' Id. Plaintiff's Complaint does none of the preceding. Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 4 of 12 Page ID #27 5 11005785v1 0989066 ARGUMENT I. Plaintiff's claim under 15 U.S.C § 1692c(b) must fail because it was not a communication made "in connection with the collection of a debt." Plaintiff's claim under 15 U.S.C. § 1692c(b) must fail because Plaintiff has not put forth any allegations that would state a claim under the statute. Importantly, 15 U.S.C. § 1692c(b) requires a communication be made "in connection with the collection of any debt." For a communication to be "in connection with the collection of a debt," an animating purpose of the communication must be to induce payment by the debtor. Grden v. Keikin Ingber & Winters PC, 643 F.3d 169, 173 (6th Cir. 2011) citing Gburek v. Litton Loan Serv. LP, 614 F.3d 380, 385 (7th Cir. 2010). More specifically, sending a letter in response to a consumer's dispute of the debt is "not 'in connection with the collection of a debt,' but [is] instead simply a ministerial act meant to verify the debt… as required under § 1692g." Duby v. Shermeta, Adams & Von Allmen, P.C., 2012 WL 6705413, *8 (E.D. Mich. Dec. 26, 2012). Plaintiff fails to state a claim under 15 U.S.C. §1692c(b) for several reasons. First, the letter unequivocally states, "This communication is made for the limited purpose of responding to your dispute and is NOT an attempt to collect at debt." Ex. A. (emphasis in original). As is explained in Duby, PRA obviously did not send this letter "in connection with the collection of a debt." Id. In addition, the letter was not sent for the "animating purpose… to induce payment by the debtor," as no such language is present anywhere in the letter. Ex. A. The language in the letter, coupled with the point of law that a response to a consumer's dispute of a debt is not a communication made "in connection with the collection of any debt" makes it clear that the letter was not a prohibited communication under the FDCPA. As the Northern District of Illinois has aptly stated, one simply needs to "just look" at "what has just been said." See Infante v. Portfolio Recovery Associates, LLC, Case: 1:16-cv-06926, court docket Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 5 of 12 Page ID #28 6 11005785v1 0989066 attached hereto as Exhibit B, at p. 2. In Infante, the Court, just six days after the plaintiff's Complaint was filed and prior to any action by the Defendant issued a sua sponte memorandum order. Id. Like in this case, the Infante court addressed a letter sent by PRA in response to a debtor's dispute of the underlying debt which included identical language as that in the instant letter, "This communication is made for the limited purpose of responding to your dispute and is not an attempt to collect at debt." Id., Dkt. #1, Attachment 1, Ex. D. In line with Duby, the Court stated in its sua sponte memorandum that, "Portfolio's responsive communication was solely in response to one of the matters that Infante's letter asserted [the dispute letter]." Id., Dkt. #5, p. 2. Further, the Court explained that "there is frankly no way in which that inquiry could be considered by anyone -- even the unsophisticated consumer referred to in the caselaw -- as an effort to collect the debt." Id. The Court then referenced the inclusion of the language of the letter that states that the communication is "not an attempt to collect at debt" as a part of its analysis. Id., at 1. The Court cautioned Plaintiff's counsel by stating that "the Complaint poses a serious question as to its viability."3 Id. at 1. The Northern District's analysis under similar facts in Infante, and in line with Duby is quite illustrative to this case. Plaintiff has not sufficiently pled that the alleged letter is one that was sent in violation of the FDCPA. II. Plaintiff's claims for violations under 15 U.S.C § 1692c(b) and additionally under § 1692b must be dismissed, because the May 12, 2016 letter was addressed to Plaintiff's counsel Mr. Levin and was not a communication with a third-party. Plaintiff also alleges that PRA's May 12 letter addressed to Plaintiff's counsel but mailed to his former law firm constitutes a communication "with a person other than Plaintiff" in violation of 15 U.S.C § 1692b(1), § 1692b(2), and § 1692b(6), by: 1). "identifying the name of the Defendant company while communicating with a person other than Plaintiff without having been expressly 3 Less than three weeks after Judge Shadur issued his memorandum order, Defendant filed a motion to dismiss Plaintiff's Complaint. Immediately after this filing, Plaintiff voluntarily dismissed her case. See Ex. B at docket #10-14. Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 6 of 12 Page ID #29 7 11005785v1 0989066 requested to do so"; 2). "by communicating with a person other than Plaintiff and stating to such person that Plaintiff owes an alleged debt"; and 3). "by communicating with a person other than Plaintiff after Defendant had been advised Plaintiff was represented by an attorney with respect to the alleged debt." Plaintiff's Complaint at ¶¶18-25. Plaintiff's claims that Defendant violated 15 U.S.C. § 1692c(b) and § 1692(b) must be dismissed as they have no basis in law. As a threshold matter, 15 U.S.C. § 1692b requires that "any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall" comply with the next six sub points of the statute. Plaintiff makes no allegation, nor would the alleged letter support any allegation, that Defendant communicated with anyone "for the purpose of acquiring location information about the consumer." Ex. A. Additionally, PRA's correspondence at issue addressed and mailed to Plaintiff's counsel at his former law firm's address does not constitute a prohibited communication with a third-party person other than Plaintiff. See Wisdom v. Wakefield & Associates, Inc., 2016 WL 3747586, *3 (D. Utah July 11, 2016) (holding there was no factual basis to conclude defendant engaged in improper third- party communication in violation of FDCPA § 1692b and § 1692c, where defendant addressed a letter to plaintiff, mailed it to his father's address, and his father opened the letter and discovered plaintiff's debt). In its decision, the Wisdom court noted that there were no allegations that the defendant creditor made any attempts to communicate with a third-party about plaintiff's debt, only that defendant sent a letter addressed to plaintiff to the home of plaintiff's father, and the father opened it, which the court concluded was not a plausible allegation of a prohibited third-party communication under the FDCPA. Id. Like in Wisdom, Plaintiff's allegations make clear that PRA addressed and forwarded correspondence regarding Plaintiff's account to Plaintiff's (instant) counsel only, not to any third-party. Id. Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 7 of 12 Page ID #30 8 11005785v1 0989066 Other districts have reached the same conclusions in situations involving letters addressed to plaintiff debtors but sent to the wrong address. See Strouse v. Enhanced Recovery Co., 956 F. Supp. 2d 627, 634 (E.D. Pa. 2013) (letters sent by defendant to the house of plaintiff's parents where plaintiff had not resided for several years were not prohibited third-party communications, because defendant addressed all its communications to either the plaintiff or her counsel); See also Duran v. Midland Credit Mgt., Inc., 2016 WL 3661538, at *3 (S.D.N.Y. June 30, 2016) (holding defendant creditor did "communicate with" third-party in violation of FDCPA where it sent a sealed envelope addressed to plaintiff, but was actually sent to plaintiff's brother's address, and the brother opened the letter.). The court's decision in Strouse is important because it focuses the inquiry on whom the defendant had attempted to communicate with. The Strouse court concluded that because defendant "did not attempt to communicate with the alleged third parties, or any other person (aside from plaintiff's counsel) directly," defendant did not violate the FDCPA because the letter was sent to the wrong location. Strouse, 956 F. Supp. 2d at 634. As in Strouse, Defendant here attempted to send a letter only to Plaintiff and that too, in the care of her counsel, which she alleges was sent to the wrong address. Addressing a letter to Plaintiff's counsel at the law firm he had left a few months prior that his former colleagues apparently deemed proper to open and review is not conduct that is prohibited by the FDCPA. Like in Strouse, PRA "did not attempt to communicate with… any other person directly." Id. Perhaps even more illustrative is Duran v. Midland Credit Mgt., Inc. In Duran, the defendant sent a letter addressed to plaintiff, to the plaintiff's brother's house. Duran, 2016 WL 3661538 at *1. Importantly, plaintiff had never resided at that address, had never given that address to defendant, had never had a credit account that used that address, and had never opened a joint credit account with his brother. Id. Despite the mailing to plaintiff's brother's address with no connection Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 8 of 12 Page ID #31 9 11005785v1 0989066 whatsoever to the plaintiff himself, the Court concluded that "a debt collector who addresses a sealed envelope to a consumer… does not 'communicate… with any person other than the consumer' 'in connection with the collection of a debt.'" Id. at *3. The Court underscored its reasoning by explaining that it would go beyond the FDCPA's purview to find liability "when a debt collector sends a letter to the consumer at the correct address, but a third party, for example, steals the letter in violation of federal criminal law, [or] receives the letter due to a mistake by the post office." Id. Far from the acceptable letter situation in Duran was the Defendant's alleged action in this case of mailing a letter to Plaintiff's counsel, whom it knew to be Plaintiff's counsel, at an address that Plaintiff's counsel had utilized relatively recently. Furthermore, outside the context of written communications, many courts have similarly rejected claims that collectors are liable for inadvertent disclosures to third parties. See Peak v. Prof. Credit Serv., 2015 WL 7862774 (D. Or. Dec. 2, 2015) (concluding that a negligence standard is correct for third party disclosures under the FDCPA, because "no matter how careful a debt collector is, there is always some risk a third party will intercept the communication."); Mostiller v. Chase Asset Recovery Corp., 2010 WL 335023, at *3 (W.D.N.Y. Jan. 22, 2010) (concluding that no third party communication took place because there was no allegation of intent by defendant to embarrass the consumer, and "The FDCPA was intended to protect against deliberate disclosures to third parties as a method of embarrassing the consumer, not to protect against the risk of an inadvertent disclosure"); Mark v. J.C. Christensen & Associates, Inc., 2009 WL 2407700, at *5 (D. Minn. Aug. 4, 2009) ("The FDCPA was intended to protect against deliberate disclosures to third parties as a method of embarrassing the consumer . . . not to protect against the risk of an inadvertent disclosure that could occur). Plaintiff alleges that the letter at issue caused the debt to be disclosed to at least one employee at Plaintiff's counsel's former firm. Plaintiff's Complaint at ¶14. However, notably absent Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 9 of 12 Page ID #32 10 11005785v1 0989066 from Plaintiff's Complaint are any allegations identifying this mystery employee at the former firm, allegations that Defendant intended to communicate with someone other than Plaintiff's counsel, allegations that Defendant addressed the letter to someone other than Plaintiff or her counsel, allegations that Defendant deliberately sent the letter to the wrong address, allegations that Plaintiff has the same name as her counsel or the unidentified person that opened the letter, or allegations that the person that opened the letter was confused as to whom the letter was addressed to. Although the Complaint contains no further details, the alleged violation presumably arose when a third-party at Mr. Levin's former law firm opened the letter under their own volition, in spite of the fact it was addressed to Mr. Levin personally, and in violation of federal law. Importantly, the cases previously surveyed dealt with situations in which the Defendant allegedly sent a letter to the Plaintiff directly, a more concerning set of facts than like those at issue here where Defendant allegedly sent a letter to Plaintiff's counsel, whom it knew to be her counsel, in response to a request. As Peak, Durand, and Winters make clear, the consequences of a letter that was addressed to Plaintiff's counsel being opened by a third party in violation of federal law could not have been reasonably foreseen by Defendant, and thus Plaintiff's Complaint does not state a claim for a violation of either 15 U.S.C. § 1692b or § 1692c of the FDCPA. Notwithstanding the fact that Plaintiff has not pled sufficiently that either statute is applicable, this alleged letter was still not sent to a third party in a way that would violate 15 U.S.C. § 1692c(b) or § 1692b, as it was addressed to Plaintiff's attorney, a party specifically addressed in 15 U.S.C. § 1692c(b). Plaintiff makes no allegations "before the court that the Defendant attempted to communicate with a third party" about Plaintiff's debt. Wisdom, 2016 WL 3747586, at *3. As the Court in Duran stated, "a debt collector who addresses a sealed envelope to a consumer, as Defendant allegedly did here, does not 'communicate… with any person other than the consumer' 'in connection with the collection of a debt.' Duran, 2016 WL 3661538, at *3. Not only was the Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 10 of 12 Page ID #33 11 11005785v1 0989066 alleged letter not a communication in connection with the collection of any debt, but it was sent to Plaintiff's counsel in response to Plaintiff's dispute. The absence of the former fact, and the presence of the latter fact makes it impossible for Plaintiff to state a claim under either section of the statute. Because the alleged letter does not qualify as a communication, let alone one with a third party, Defendant is not in violation of the FDCPA, and Plaintiff's claims must be dismissed. Strouse, 956 F.Supp.2d at 635. CONCLUSION WHEREFORE, Defendant, PORTFOLIO RECOVERY ASSOCIATES, LLC, respectfully requests this Court dismiss Plaintiff's Complaint in its entirety, with prejudice, and for any other relief in their favor this Court deems appropriate. Respectfully submitted, HINSHAW & CULBERTSON LLP s/ Vitaly Libman Vitaly Libman #6313357 Email: vlibman@hinshawlaw.com Hinshaw & Culbertson LLP 521 West Main Street, Suite 300 P.O. Box 509 Belleville, IL 62222-0509 Tel: 618-277-2400 Attorneys for Defendant Portfolio Recovery Associates, LLC CERTIFICATE OF SERVICE I hereby certify that on [insert date], I electronically filed with the Clerk of the U.S. District Court, Southern District of Illinois, the foregoing Defendant’s Motion to Dismiss Plaintiff’s Complaint and Memorandum of Law by using the CM/ECF system, which will send notification of such filing(s) to: David B. Levin #6212141 Law Offices of Todd M. Friedman, P.C. One South Dearborn Street, Suite 2100 Chicago, IL 60603 Email: dlevin@toddflaw.com s/ Vitaly Libman Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 11 of 12 Page ID #34 12 11005785v1 0989066 Case 3:16-cv-00647-NJR-DGW Document 12 Filed 08/23/16 Page 12 of 12 Page ID #35 Exhibit 1 Case 3:16-cv-00647-NJR-DGW Document 12-1 Filed 08/23/16 Page 1 of 3 Page ID #36 Case 3:16-cv-00647-NJR-DGW Document 12-1 Filed 08/23/16 Page 2 of 3 Page ID #37 Case 3:16-cv-00647-NJR-DGW Document 12-1 Filed 08/23/16 Page 3 of 3 Page ID #38 Exhibit 2 Case 3:16-cv-00647-NJR-DGW Document 12-2 Filed 08/23/16 Page 1 of 4 Page ID #39 Case 3:16-cv-00647-NJR-DGW Document 12-2 Filed 08/23/16 Page 2 of 4 Page ID #40 Case 3:16-cv-00647-NJR-DGW Document 12-2 Filed 08/23/16 Page 3 of 4 Page ID #41 Case 3:16-cv-00647-NJR-DGW Document 12-2 Filed 08/23/16 Page 4 of 4 Page ID #42