Martinez v. Integrated Capital Recovery, LLC

513 F.Supp.3d 1219

Brandon MARTINEZ, Individually and on behalf of all others similarly situated, Plaintiff,

v.INTEGRATED CAPITAL RECOVERY, LLC, DNF Associates LLC, and Does 1-25, Defendants.

Case No. 20-CV-00582-AWI-SAB

United States District Court, E.D. California.

Signed January 12, 2021

Filed January 13, 2021

Raphael Deutsch, PHV, Pro Hac Vice, Stein Saks PLLC, Hackensack, NJ, Jonathan Aaron Stieglitz, Law Office of Jonathan A. Stieglitz, Los Angeles, CA, for Plaintiff.

Brendan Hoffman Little, PHV, Pro Hac Vice, Lippes Mathias Wexler Friedman LLP, Buffalo, NY, Jeff Wiley Poole, Hamrick & Evans, LLP, Burbank, CA, for Defendants.

ORDER GRANTING DEFENDANT DNF ASSOCIATES LLC'S MOTION TO DISMISS COMPLAINT

Anthony W. Ishii, SENIOR DISTRICT JUDGE

INTRODUCTION

Plaintiff Brandon Martinez brings this action individually and on behalf of others similarly situated alleging claims under the Fair Debt Collection Protection Act ("FDCPA") against Integrated Capital Recovery ("ICR") and DNF Associates LLC ("DNF" and, together with ICR, "Defendants") based on a debt collection notice stating that a service fee may be applied to payments made by credit card or debit card. Doc. No. 1. Now before the Court is DNF's motion to dismiss under for lack of subject matter jurisdiction, under Federal Rule of Civil Procedure 12(b)(1) and failure to state a claim under Rule 12(b)(6).¹ The Court has deemed the motion suitable for decision without oral argument, pursuant to Local Rule 230(g). For the reasons set forth below, the motion will granted.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Brandon Martinez is a resident of Merced County, California. Doc. No. 1 ¶ 7. ICR and DNF engage in the collection of debts originally incurred to third parties. Id. ¶¶ 8-11.

At some point prior to December 2, 2019, a debt was "allegedly" incurred to Build Card—Republic Bank, in connection with a transaction by Martinez of a "personal, family or household" nature. Doc. No. ¶¶ 25-26. Build Card-Republic Bank sold or assigned the debt to DNF who in turn contracted ICR to collect it. Id. ¶ 29.

On or about December 2, 2019, ICR mailed a letter to Martinez calling for several biweekly payments in the amount of $50.05, and a final payment of $56.77, to pay off a $757.47 sum. Doc. No. 1-2 at 2. The letter also states: "A service fee of $9.95 may be charged for payments if paying by Credit/Debit card depending on consumer's location and applicable contractual documents." Id. at 2. Martinez states that the $9.95 service fee "was not authorized by the agreement creating the debt or permitted by law" and Martinez "did not agree" to the charge. Doc. No. 1 ¶¶ 33-34.

Based on these allegations, Martinez brings two claims under the FDCPA against DNF and ICR, individually and on behalf of those similarly situated. First, Martinez alleges that the statement regarding the service fee constituted use of a false representation in collection of a debt, in violation of 15 U.S.C. §§ 1692e and 1692e(10). Doc. No. 1 ¶¶ 38-42. Second, Martinez alleges that the statement regarding the service fee "unfairly advised" him that he owed more money than the amount of the debit and constituted an attempt to collect an amount not expressly authorized by the agreement creating the debt or permitted by law, in violation of 15 U.S.C. §§ 1692f and 16292f(1). Id. ¶¶ 43-47.

DNF now brings a motion to dismiss under Rule 12(b)(1) for lack of standing and under Rule 12(b)(6) for failure to state a claim on which relief can be granted.

DNF'S MOTION

DNF argues that Martinez lacks the injury-in-fact required for standing because he fails to allege that he paid the service fee or that he made payment to ICR by credit card or debit card. Doc. No. 6 at 6:16-24.² Further, DNF contends that Martinez's complaint is based entirely on ICR's December 2, 2019 letter and that Martinez has failed to allege that DNF itself engaged in conduct that violates the FDCPA or that DNF is vicariously liable for ICR's conduct. Id. at 17:16-24.

Martinez argues in opposition that he has suffered an "informational injury" in violation of the FDCPA and that courts have recognized "deception ... in unlawfully attempting to collect a servicing fee" as an intangible injury sufficient to confer standing, even in the absence of the concrete harm of paying the fee. Doc. No. 6 at 9:24-10:6. More specifically, Martinez contends that the statement regarding the service fee put him "at risk of paying a fee which Defendants could not legally collect"; "at risk of foregoing the convenience of using [his] credit or debit card to pay by phone"; and at risk of failing to make payment "for lack of ready money." Id. at 20:16-21:9. Further, Martinez contends that the Third Circuit and Ninth Circuit have held that a debt buyer such as DNF can be held vicariously liable for the actions of an unaffiliated debt collector acting on its behalf. Id. at 21:12-22.

LEGAL FRAMEWORK

Rule 12(b)(1) provides for dismissal of a complaint for "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). A Rule 12(b)(1) challenge may be either factual or facial. Edison v. United States, 822 F.3d 510, 517 (9th Cir. 2016) ; Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). "A factual challenge ‘rel[ies] on affidavits or any other evidence properly before the court’ to contest the truth of the complaint's allegations." Courthouse News Serv. v. Planet, 750 F.3d 776, 780 (9th Cir. 2014) (quoting St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989) ). In a facial attack, by contrast, "the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction." Edison, 822 F.3d at 517 (quoting Safe Air, 373 F.3d at 1039 ). In resolving a facial attack, all factual allegations in a complaint are taken as true. See Lacano Invs., LLC v. Balash, 765 F.3d 1068, 1071 (9th Cir. 2014).

Standing doctrine, for its part, stems from Article III of the United States Constitution, which limits the subject matter jurisdiction of federal courts to "actual cases or controversies." Spokeo, Inc. v. Robins, 578 U.S. 330, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635, as revised (May 24, 2016) (citing Raines v. Byrd, 521 U.S. 811, 818, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997) ). "The doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong." Id. (citations omitted). The " ‘irreducible constitutional minimum’ of standing consists of three elements." Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). "The plaintiff must have (1) suffered an injury-in-fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Id. (citations omitted). "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561, 112 S.Ct. 2130 ; FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990) (citations omitted); see also, Spokeo, 136 S. Ct. at 1547 ("Where, as here, a case is at the pleading stage, the plaintiff must ‘clearly ... allege facts demonstrating’ each element." (quoting Warth v. Seldin, 422 U.S. 490, 518, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ).

"To establish injury-in-fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent,’ not ‘conjectural or hypothetical.’ " Spokeo, 136 S. Ct. at 1548 (quoting Lujan, 504 U.S. at 560, 112 S.Ct. 2130 ). A plaintiff does not "automatically" satisfy the injury-in-fact requirement "whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right." Id. at 1549. Congress does, however, "ha[ve] the power to define injuries ... that will give rise to a case or controversy where none existed before," Lujan, 504 U.S. at 580, 112 S.Ct. 2130 (opinion concurring in part and concurring in judgment), and may "elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law." Id. at 578, 112 S.Ct. 2130. Thus, "the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact. In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified." Spokeo, 136 S. Ct. at 1549 (citations omitted) (emphasis original).

DISCUSSION

For the reasons set forth below, the Court finds that Martinez lacks standing for his FDCPA claims.

I. Applicable Law

A. Standing for Claims Under the FDCPA

Congress enacted the FDCPA in 1977 "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(a), (e) ; see also, Wade v. Regional Credit Ass'n, 87 F.3d 1098, 1099 (9th Cir. 1996) (discussing purpose of the FDCPA). Further, "Congress intended to achieve its goal of regulating debt collectors’ conduct by motivating consumers to bring enforcement actions if they are the targets of unlawful collection efforts." Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1118 (9th Cir. 2014), as amended on denial of reh'g and reh'g en banc (Oct. 31, 2014).

Since the Supreme Court's 2016 decision in Spokeo Inc. v. Robins , a majority of courts have found that Congress elevated violations of the FDCPA—including, specifically, violations of Sections 1692e and 1692f —to the status of legally cognizable injury sufficient to confer standing, with no additional showing of harm. See Pisarz v. GC Servs. Ltd. P'ship, 2017 WL 1102636, at *5 (D.N.J. Mar. 24, 2017) (collecting cases); Linehan v. Allianceone...