Wright v. AR Res., Inc.

JAVONTAE WRIGHT, individually and on behalfof all others similarly situated, Plaintiff, v. AR RESOURCES, INC., PREMIUM ASSET RECOVERY CORP.,and JOHN DOES 1-25, Defendants.

Case No.: 8:20-cv-985-T-33CPT

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

July 31, 2020

ORDER

This cause comes before the Court pursuant to the Motion to Dismiss Plaintiff's Complaint filed by Defendant Premium Asset Recovery Corporation ("PARC") on May 27, 2020 (Doc. # 9) and the Motion to Dismiss Complaint filed by Defendant AR Resources, Inc. ("ARR"), on June 3, 2020 (Doc. # 12). PARC has joined in ARR's Motion. (Doc. # 34). Plaintiff Javontae Wright responded on July 7, 2020. (Doc. ## 25, 26). For the reasons given below, PARC's Motion is granted and ARR's Motion is granted in part and denied in part as set forth herein.

I. Background

On April 29, 2020, Wright initiated this putative class action lawsuit against Defendants for violations of the Fair Debt Collection Practices Act (the "FDCPA"). (Doc. # 1). According to the complaint, Wright allegedly incurred a debt to "the EMA of Tampa Bay - St. Joes North." (Id. at ¶ 23). Wright alleges that PARC is the current owner of the debt and an alleged debt collector under the FDCPA. (Id. at ¶¶ 10, 27). PARC then contracted with ARR, also allegedly a debt collector, to collect the debt. (Id. at ¶ 27).

To that end, on May 8, 2019, ARR sent Wright an initial collection letter. (Id. at ¶ 29). The May 8 letter, which Wright attached to her complaint, stated the balance of the debt, explained that the debt had been sold to PARC, and that ARR had been contracted to collect the outstanding balance. (Doc. # 1-1). After explaining the ways in which Wright could pay the balance, the letter stated: "Please be advised that our client is a credit reporting client. Your credit report may have a negative impact if we do not hear from you." (Id.). Immediately below that sentence, the May 8 letter also contained the following language, in the same font as the rest of the letter but emphasized in bold:

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume that the debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of the debt or any portion thereof, this officewill obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.

This is an attempt to collect a debt and any information obtained will be used for that purpose. This communication is from a debt collector.

(Id.).

According to Wright, the language about a potential negative impact on her credit report "completely overshadows" the rest of the notice "by scaring Plaintiff into making payment immediately to avoid a 'negative impact' credit reporting instead of exercising his statutory right to dispute the debt as provided by the FDCPA." (Doc. # 1 at ¶¶ 34-35). In addition, Wright alleges that the "negative impact" language "coerces payment," and is "deceptive and misleading" as well as "confusing and threatening." (Id. at ¶¶ 36-38).

Based on these allegations, Wright claims that Defendants have violated the FDCPA, specifically 15 U.S.C. § 1692e (Count I) and 15 U.S.C. § 1692g (Count II). (Id. at ¶¶ 43-52). Wright also purports to bring these claims on behalf of the following class, pursuant to Federal Rule of Civil Procedure 23:

[A]ll individuals with addresses in the state of Florida, to whom Defendant [ARR] sent a collection letter attempting to collect a consumer debt, on behalf of defendant [PARC], that included deceptive threats regarding negative impact of the credit report . . ., which letter was sent on or after a date one (1) year prior to the filing of this action and on or before a date twenty-one (21) days after the filing of this action.

(Id. at ¶¶ 13-14).

Defendants have now each filed Motions to Dismiss the complaint, to which Wright has responded. (Doc. ## 9, 12, 25, 26). The Motions are ripe for review.

II. Legal Standard

On a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts as true all the allegations in the complaint and construes them in the light most favorable to the plaintiff. Jackson v. Bellsouth Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further, the Court favors the plaintiff with all reasonable inferences from the allegations in the complaint. Stephens v. Dep't of Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir. 1990). But,

[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Courts are not "bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986). Generally, the Court must limit its consideration to well-pled factual allegations, documents central to or referenced in the complaint, and matters judicially noticed. La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).

III. Analysis

To succeed on a claim under the FDCPA, the plaintiff must establish that (1) the plaintiff has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA. McCray v. Deitsch & Wright, P.A., 343 F. Supp. 3d 1209, 1214-15 (M.D. Fla. 2018). Neither party disputes that Wright has been the object of collection activity, but PARC argues that Wright has insufficiently pled its status as a debt collector under the FDCPA because the allegations onthat point are "conclusory and formulaic recitations of the FDCPA's statutory language." (Doc. # 9 at 6). For its part, ARR concedes for purposes of the Motion that it is a debt collector but argues that it has not violated the FDCPA. (Doc. # 12 at 4). Specifically, ARR argues that cases from other Circuits demonstrate that the "credit reporting" language in the May 8 letter does not overshadow a debtor's understanding of his rights or violate the FDCPA under the prevailing least-sophisticated-consumer standard. (Id. at 4-10).

A. Whether PARC is a debt collector under the FDCPA

The FDCPA defines "debt collector" as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). Accordingly, an entity can be considered a "debt collector" either through the "principal purpose" definition or the "regularly collects" definition. See Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1315 (11th Cir. 2015) (noting that "one of the two statutory standards" under Section 1692a(6) "must be met" before an entity can qualify as a "debt collector").

To state a claim under the statute, plaintiffs must plausibly allege "sufficient factual content to enable the court to draw a reasonable inference that [the defendant] meets the FDCPA's definition of 'debt collector' and is thus subject to the Act." Kurtzman v. Nationstar Mortg. LLC, 709 F. App'x 655, 658-59 (11th Cir. 2017).

Wright responds that PARC (1) holds itself out as a debt collector through its website and numerous lawsuits; (2) is clearly a debt collector due to its purchase of the debt here and subsequent action of contracting debt collection to ARR; and (3) can be held vicariously liable for ARR's debt-collection activities. (Doc. # 26 at 4-10).

The problem with Wright's first contention is that, while PARC's website may very well contain the statements he cites and PARC may have filed the lawsuits he lists, none of this information is contained in the complaint. And the Court is disinclined to consider documents in ruling on a motion to dismiss that were attached for the first time to a plaintiff's response in opposition. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1368 (11th Cir. 1997) (explaining that, in general, courts cannot consider anything beyond the face of the complaint and documents attached thereto when analyzing a motion to dismiss).

The Court reads Wright's second and third arguments together, as the only way PARC could be vicariously liable for the actions of ARR is due to the fact that PARC purchased the debt here and then hired another entity, ARR, to do the actual collecting.

Numerous courts have held that an entity that itself meets the definition of a debt collector may be held vicariously liable for unlawful collection activities carried out by another on its behalf. See Long v. Pendrick Capital Partners II, LLC, 374 F. Supp. 3d 515, 534-35 (D. Md. 2019) (collecting cases). However, vicarious liability cannot be imposed when the principal company itself does not meet the definition of "debt collector." Deutsche Bank Trust Co. Americas v. Garst, 989 F. Supp. 2d 1194, 1202 (N.D. Ala. 2013) (citing Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379 (3d Cir. 2000) (abrogated on other grounds by Henson v. Santander Consumer USA, Inc., 137 S. Ct. 1718 (2017))); see also Davidson, 797 F.3d at 1316 (in a...