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McLain v. Head Mercantile Co., Inc.

United States District Court, M.D. Louisiana

August 28, 2017

BARBARA McLAIN, on behalf of herself and all others similarly situated



         I. Introduction

         This matter comes before the Court on Defendant The Head Mercantile Co., Inc. d/b/a The HMC Group a/k/a The SOS Group's (“Defendant”) Motion to Dismiss or for Summary Judgment. (Doc. 16.) Plaintiff Barbara McLain, on behalf of herself and others similarly situated (“Plaintiff”), filed an opposition in which she addressed the motion to dismiss on the merits, and argued that Defendant's motion for summary judgment was premature. (Doc. 27.) Defendant filed a reply brief arguing that its Rule 56 motion is ripe for consideration and addressing the merits of Plaintiff's opposition. (Doc. 30.) After conducting limited discovery responsive to the issues raised on summary judgment, and with leave of Court (see Doc. 36), Plaintiff filed a supplemental opposition responding on the merits to the summary judgment motion. (Doc. 37.) Defendant subsequently filed a supplemental reply brief. (Doc. 38.) After careful consideration of the law, facts, and arguments of the parties, for the reasons set forth below, Defendant's motion to dismiss is DENIED AS MOOT and its motion for summary judgment is GRANTED IN PART and DENIED IN PART.

         II. Background

         Defendant is an Ohio corporation doing business as a debt collection agency. (Docs. 16 at 1; 16-1 at 1.) On or around June 9, 2014, Defendant registered with the Louisiana Secretary of State's office to do business in Louisiana under the name “The HMC Group” and provided its correct domicile and Ohio mailing address. (Docs. 16 at 1-2; 16-1 at 1.) On or about December 8, 2016, Defendant updated its registration with the Louisiana Secretary of State's office to reflect its new “doing business as” name: “The SOS Group, ” and once again provided the same Ohio domicile mailing address. (Docs. 16 at 2; 16-1 at 1-2, 5-7.)

         Plaintiff is a Louisiana resident who claims that she is “allegedly obligated to pay a debt owed or due, or asserted to be owed or due a creditor other than Defendant.” (Doc. 1 at 3.) Specifically, Plaintiff's debt arose out of medical services she received from Ochsner Health System (“Ochsner”) between August 12, 2015 and February 4, 2016. (Docs. 16 at 2; 16-1 at 2.) Each time Plaintiff sought medical services at Ochsner, she signed documentation that contained the following provision:

Acceptance of Financial Responsibility: I agree that in consideration of the services and supplies that have been or will be furnished to the patient, I am hereby obligated to pay all charges made for or the account of the patient according to the standard rates (in effect at the time the services and supplies are delivered) established by Ochsner, including its Patient Financial Assistance Policy to the extent it is applicable. I understand that I am responsible for all charges, or portions thereof, not covered by insurance or other sources…

(Docs. 16 at 2; 16-1 at 9; 37-1 at 3.)

         Ochsner employed Defendant's services to collect outstanding debts from its patients, including Plaintiff. In connection with her debt, Defendant sent Plaintiff a letter dated March 30, 2016, in which Defendant identified itself as “The SOS Group fka The HMC Group.” (Docs. 1 at 4; 1-1 at 2.) Plaintiff received a second letter from Defendant dated July 20, 2016; this letter also reflected that it was from “The SOS Group fka The HMC Group”. (Docs. 1 at 4; 1-2 at 2.) Specifically, as evidenced by the letters attached as exhibits to Plaintiff's complaint, these letters identify the sender as “The SOS Group” in the body of the letter, but include the “The SOS Group fka The HMC Group” language in the top left corner of the letter. (Docs. 1-1 at 2; 1-2 at 2.) The address under both headings is the same, and reflects Defendant's proper Ohio domicile address. (Docs. 1-1 at 2; 1-2 at 2.) In her complaint, filed November 22, 2016, Plaintiff avers that a “query of the Louisiana Secretary of State's website does not produce any business filings under ‘The SOS Group.'… [or] under ‘The SOS Group fka The HMC Group.'”[1] (Doc. 1 at 4.)

         In both the March 30, 2016 and July 20, 2016 letters, Defendant offers various options through which the recipient debtor may pay his or her debt, including an option to pay online or via a toll-free number to pay either by credit/debit card or via check by phone. (Docs. 1 at 5; 1-1 at 2; 1-2 at 2.) The letters further state that “[a] $2.00 convenience fee applies to checks by phone.” (Docs. 1-1 at 2; 1-2 at 2.) They direct the debtor to make checks payable to “The SOS Group.” (Docs. 1 at 5; 1-1 at 2; 1-2 at 2.)

         Plaintiff argues that the letter, which improperly identifies Defendant as “The SOS Group” and which imposes $2.00 convenience fee associated with payment of checks by phone, violates various provisions of the Federal Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., which “Congress enacted [] to ‘eliminate abusive debt collection practices, to ensure that debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers'”. (Doc. 1 at 2 (quoting Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577 (2010) (citing 15 U.S.C. § 1692(e)).) Plaintiff maintains that these letters are based upon a form or template that Defendant sends as its initial communication to a consumer in connection with its collection of a debt. (Id. at 5.) She avers that Defendant has used this form letter to send collection notices to at least forty (40) individuals in Louisiana within the one year preceding the filing of the complaint. (Id. at 6.) Plaintiff seeks to represent the following class of individuals: “All persons in the State of Louisiana to whom Defendant sent, within one year before the date of this complaint and in connection with the collection of a debt, a collection letter based upon the Template.” (Id.)

         In her complaint, Plaintiff alleges that Defendant violated six provisions of the FDPCA: first, that Defendant violated Section 1692e(2)(B) “by falsely representing that it could legally charge a $2.00 fee for payments made by check over the telephone and for falsely representing that it was entitled to collect the Debt from Plaintiff when they are not licensed in the state as required under Louisiana state law.” (Id. at 9.)

         Second, she argues that Defendant violated Section 1692e(5) when it “threaten[ed] to take an action against Plaintiff that cannot be legally taken or that was not actually intended to be taken, including by taking a $2.00 fee for payments made by check over the telephone and for attempting to collect the Debt from Plaintiff when they are not licensed” in Louisiana, as required by law. (Id. at 10.)

         Third, Plaintiff claims that Defendant violated Section 1692e(10) “by using false, deceptive, or misleading representations or means to collect or attempt to collect a debt, ” including by the use of a name not registered with the Secretary of State and by “attempting to collect a $2.00 fee for payments made by check over the telephone which they are not entitled to charge”. (Id. at 11.)

         Fourth, Plaintiff avers that Defendant violated Section 1962e(14), which “forbids the ‘use of any business, company, or organization name other than the true name of the debt collector's business, company or organization'” because it “attempt[ed] to collect under the business name ‘The SOS Group' when this name is not registered with the Louisiana Secretary of State as required by state law and is a name other than the true name of the debt collector's business, company, or organization.” (Id. at 13.)

         Fifth, Plaintiff argues that Defendant violated Section 1692f, which prohibits a debt collector from employing “unfair or unconscionable means to collect or attempt to collect any debt” because Defendant “engag[ed] in unfair or unconscionable means to collect or attempt to collect any debt from Plaintiff by attempting to collect a debt without complying with Louisiana's registration requirements.” (Doc. 1 at 14-15 (citing 15 U.S.C. § 1692f) (internal quotation marks omitted)).)

         Lastly, in her sixth cause of action, Plaintiff avers that Defendant violated Section 1692f(1) “by attempting to collect an amount from Plaintiff that is not expressly authorized by the agreement creating the debt nor permitted by law, including by attempting to collect a $2.00” convenience fee for checks by phone “when, upon information and belief, Defendant is not expressly authorized or permitted by law to charge that amount.” (Id. at 16.)

         III. Discussion

         a. Standard

         i. Rule 12(b)(6)

         On a motion to dismiss for failure to state a claim under Rule 12(b)(6), the Court “must accept as true all of the factual allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). “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). The Supreme Court expounded upon the Twombly standard, explaining that “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' “Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. It follows that “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show [n]'-‘that the pleader is entitled to relief.' Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). Assessing the certainty of facts supporting a plaintiff's claim, “the court is permitted to look at evidence in the record beyond simply those facts alleged in the complaint and its proper attachments.” Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238) (5th Cir. 2009)).

         ii. Rule 56

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). If the mover bears his burden of showing that there is no genuine issue of fact, “its opponent must do more than simply show that there is some metaphysical doubt as to the material facts ... [T]he nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.' ” See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587 (1986) (internal citations omitted). The non-mover's burden is not satisfied by “conclusory allegations, by unsubstantiated assertions, or by only a ‘scintilla' of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations and internal quotations omitted). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.' ” Matsushita Elec. Indus. Co., 475 U.S. at 587. Further:

In resolving the motion, the court may not undertake to evaluate the credibility of the witnesses, weigh the evidence, or resolve factual disputes; so long as the evidence in the record is such that a reasonable jury drawing all inferences in favor of the nonmoving party could arrive at a verdict in that party's favor, the court must deny the motion.

Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263 (5th Cir. 1991).

         b. Parties' Arguments

         i. Defendant's Motion to Dismiss or for Summary Judgment (Doc. 16)

         Defendant argues it is entitled to dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) or, alternatively, to summary judgment pursuant to Rule 56. In broad strokes, the crux of Defendant's argument is as follows:

Plaintiff is attempting to expand the scope of the Fair Debt Collection Practices Act, 15 U.S.C. §1692, et seq. Plaintiff's complaint does not allege actionable misconduct by Defendant. She claims she and purported class members were damaged, not from “collection” efforts or deceptive practices, but because: (a) a mistaken belief that under Louisiana law, SOS must be “licensed” (which it is not) and “registered” (which it is) and (b) because SOS offered her a voluntary option, which she never accepted or even responded to, i.e, to make payments via a “check by phone” in exchange for a $2.00 “convenience fee, ” a practice which is lawful under Louisiana law.

(Doc. 16 at 1 (emphasis original).) It notes that Plaintiff “never visited, called or spoke with anyone at SOS”, nor did she answer a telephone call from SOS, nor did she communicate with SOS in writing. (Id. at 2-3.) Plaintiff did not make payment to SOS by credit card or check, nor did she authorize any check by phone payment to Defendant; she never incurred or paid the $2.00 convenience fee or pay any other fee of any kind to Defendant. (Id. at 3; Doc. 16-3 at 7 (citing, e.g., Szczurek v. Professional Mgmt., Inc., 627 Fed.App'x. 57 (3d Cir. 2015); Benali v. AFNI, Inc., 15-3605, 2017 WL 39558 (D. N.J. Jan. 4, 2017)).) Accordingly, Defendant insists that Plaintiff has not adequately alleged an injury sufficient to confer Article III standing to bring suit against it, either individually or on behalf of a putative class. (Doc. 16 at 3.) It insists that its letter did not create the “risk of confusion, deception, or misleading anyone because both the collection notices correctly state SOS's registered Louisiana name and correct Ohio address.” (Id.) It further argues that Plaintiff's claims arising out of the convenience fee are misguided and “are based on nothing more than ‘hyper-technical' mistaken claims of falsehoods and bare statutory violations” which do not confer standing in this Court. (Id.)

         Alternatively, Defendant argues that if the Court finds Plaintiff has standing in this matter, it is nonetheless entitled to dismissal or summary judgment because all of her claims are based upon a nonexistent licensing requirement and a misunderstanding of Louisiana's registration requirement. (Id.) Defendant explains that the former Louisiana Collection Agency Regulation Act, La. R.S. 9:3576.1 et seq., which required entities to obtain a license before acting as a collection agency, was repealed in its entirety on August 15, 2003 through La. Acts. 2003, No. 638, § 1. (Id.) Since August 2003, Louisiana has not required its collection agencies to be licensed; rather, they need only register with the Secretary of State. (Id.) Accordingly, Defendant avers that Plaintiff's claims arising out of SOS's failure to obtain a license fail as a matter of law. (Id.)

         Next, Defendant argues that Plaintiff's claims arising out of Defendant allegedly using a name that is not registered with the Louisiana Secretary of State is misguided. It insists that it complied with La. R.S. 9:3534.1B, “which simply requires that the collection agency ‘register' with the Secretary of State. [Defendant] properly registered to do business in Louisiana in 2014 under the name ‘The HMC Group.'” (Id. at 3-4.) Defendant insists it complied with the statute because both collection letters sent to Plaintiff “correctly identify Defendant as ‘The SOS Group fka The HMC Group, ' at the correct Ohio address.” (Id. at 4 (emphasis original).) It further alleges that “[t]here was no risk of confusion, deception, or misleading anyone, because Defendant's true business name and original Louisiana d.b.a. name were properly registered when it mailed the collection notices at issue” and accordingly, Plaintiff's claims concerning the licensing and registration requirements must fail. (Id.)

         Defendant also argues that Plaintiff's claims that arise out of the $2.00 convenience fee fail as a matter of law for three reasons; first, Plaintiff never paid the fee; second, such fees are lawful in Louisiana; and third, Plaintiff's contract with Ochsner provided for such fees, and she agreed to accept responsibility for same by signing the contract. (Id. (citing Alexandria Emp't Serv., Inc. v. Box, 282 So.2d 776, 779 (La.App. 3 Cir. 1973); State v. Moss, 48, 289 (La.App. 2 Cir. 2013), 127 So.3d 979, 983; New Orleans & N. R. Co. v. La. Pub. Serv. Com., 164 So.2d 300, 310 (1964); La. R.S. § 40:1322 B, § 47:532.1, and § 49:316.1.) With respect to the contract argument, Defendant points to language in Plaintiff's contract that states, “I understand that I am responsible for all charges, or portions thereof, not covered by insurance or other sources.” (Doc. 16 at 4 (citing 16-1 at 2, 9).) Because the “check-by-phone convenience fee is a ‘charge… not covered by insurance or other sources…, ” for which Plaintiff accepted contractual responsibility, ” such contract defeats Plaintiff's claim. (Id.) Additionally, Defendant insists the imposition of a convenience fee for a check by phone is a lawful practice under Louisiana law, which does not prohibit collection agencies from imposing such fees. (Id.) It points to the fact that several Louisiana statutes explicitly authorize state agencies and attorneys to collect similar fees, and therefore, the collection of such fees by a collection agency is tacitly endorsed by Louisiana law. (Doc. 16-3 at 15 (citing La. R.S. § 40:1322 B, § 47:532.1, §49:316.1; La. State Bar Association Rules of Professional Conduct Committee PUBLIC Opinion 12-RPCC-0191 (November 29, 2012)).)

         In sum, Defendant insists that nothing in the collection notices it sent to Plaintiff was inaccurate or misleading, to her or the “hypothetical unsophisticated consumer” and that all of her claims are premised upon erroneous factual or legal notions. (Id. at 5; Doc. 16-3 at 7 (citing Hrivnak v. NCO Portfolio Mgmt., 994 F.Supp.2d 889, 900 (N.D. Ohio 2014)).) It avers that Plaintiff has suffered no concrete injury, and thus lacks Article III standing to sue, and even if she had such standing, she has failed to state a claim upon which relief can be granted. (Id.) Accordingly, it insists that her claims must be dismissed or disposed of via summary judgment.

         ii. Plaintiff's Opposition (Doc. 27)

         Plaintiff prefaces her opposition by characterizing the case as follows:

[t]his case is about a consumer who received a collection letter that attempted to collect an additional “convenience fee” not allowed by the contract or by law, and was sent by a debt collector who failed to clearly convey its identity. Defendant's collection letters would, therefore, leave the least sophisticated consumer guessing about important information regarding her debt.

(Doc. 27 at 1.)

         In her initial opposition, Plaintiff argues that Defendant's motion for summary judgment is premature and that she needs time to conduct discovery before the Court should consider the evidence attached to Defendant's motion (namely, the contract between Plaintiff and Ochsner).[2](Id. at 4.) She attaches a Rule 56(d) declaration authored by Plaintiff's counsel that sets forth the reasons for the delay and requests additional time to conduct discovery before reaching the merits of Defendant's summary judgment. (See Doc. 27-1.)

         Turning to the merits of Defendant's motion under Rule 12(b)(6), Plaintiff insists that she has Article III standing because she has suffered an injury in fact. (Doc. 27 at 6.) Specifically, under the FDCPA, “Plaintiff has a legally protected interest in avoiding misleading or unfair attempts to collect the debt.” (Id. (citing 15 U.S.C. §§ 1692e, 1692f).) She argues that Congress enacted the FDCPA precisely to protect consumers from the misleading collection notices that she received, and that the FDCPA's protections are broad and far-reaching to ensure debt collectors cannot use “false, misleading, or unfair practices in connection with the collection, or attempted collection, of any debt.” (Id. at 7 (citing 15 U.S.C. §§ 1692e, 1692f).) She avers that Defendant's notice, which contained an optional $2.00 convenience fee that it was not permitted to impose, is the exact type of harm the FDCPA was enacted to prevent. (Id.) She insists her injury was both concrete (the receipt of the collection notices that violate the FDCPA) and particularized (it happened to her; it “is not hypothetical or generalized”). (Id. at 7-8.) Plaintiff cites a litany of cases in which courts have found that Plaintiffs alleging similar FDCPA violations have standing to bring such claims. (Id. at 8 (citing In re Robinson, 554 B.R. 800, 809-10 (Bankr. W.D. La. 2016); Sayles v. Advanced Recovery Sys., Inc., 14-911, 2016 WL 4522822, at *2 (S.D.Miss. Aug. 26, 2016); Dunham v. Portfolio Recovery Associates, LLC, 663 F.3d 997, 1002 (8th Cir. 2011); Graf v. Pinnacle Asset Grp., LLC, 14-1822, 2015 WL 632180, at *2 (D. Minn. Feb. 12, 2015); Baker v. G. C. Servs. Corp., 677 F.2d 775, 777 (9th Cir. 1982)).)

         Plaintiff insists that the Supreme Court's decision in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016) did not overrule four decades of FDCPA caselaw that found plaintiffs with similar claims to those at issue here had standing. (Id. at 9.) She claims that “Spokeo specifically pointed to misleading communications as an example of injuries-in-fact that create standing” and notes that Spokeo cited Havens Realty Corp. v. Coleman, 455 U.S. 363, 364 (1982) in support of the proposition that “the deprivation of a right not to be ‘the object of a misrepresentation made unlawful' by a statute satisfies the injury-in-fact requirement. (Id. at 9-10 (citing Spokeo, 136 S.Ct. at 1553 (citing Havens)).) She insists that under this jurisprudence, one who “has been the object of a prohibited misrepresentation has ‘suffered injury in precisely the form the statute was intended to guard against, and therefore has standing to maintain a damages claim.'” (Id. at 10.) Furthermore, Plaintiff notes that post-Spokeo cases arising under the FDCPA have “overwhelmingly” concluded that the Plaintiff had standing to bring such claims. (Id. at 10-11 (citing, e.g., Church v. Accretive Health, Inc., 15-15708, 654 Fed. App'x 990 (11th Cir. 2016); Saenz v. Buckeye Check Cashing of Illinois, 16-6052, 2016 WL 5080747 at *2 (N.D. Ill. Sept. 20, 2016); Masson v. Pioneer Credit Recovery, Inc., 16-1887, 2017WL 819099, at *3 (E.D. La. Mar. 2, 2017); In re Robinson, 554 B.R. 800, 809-10 (Bankr. W.D. La. 2016); Sayles, 14-911, 2016 WL 4522822, at *2-3).)

         Plaintiff argues that the FDCPA is a strict liability statute that is “liberally construed in favor of the consumer” and that jurisprudence directs the Court to evaluate her claims under the “least sophisticated consumer” standard. (Id. at 12-13 (quoting Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (internal citation omitted)).) Turning to the individual claims, Plaintiff avers that Defendant violated Section 1692f(1) by attempting to collect an amount not expressly authorized by the contract giving rise to the debt or otherwise permitted by state law. (Id. at 13.) She argues that “as permitted by law” under the FDCPA necessarily means an affirmative authorization and that the Court cannot infer tacit endorsement by the state as a result of silence on the matter. (Id. at 14 (citation omitted).) She cites a host of district court cases that have concluded the attempt to collect a convenience fee when not explicitly authorized by the contract or by state law constitutes a violation of Section 1692f(1). (Id. (citing Weast v. Rockport Fin., LLC, 115 F.Supp.3d 1018, 1019 (E.D. Mo. July 17, 2015); Quinteros v. MBI Assocs., Inc., 999 F.Supp.2d 434, 436 (E.D.N.Y. 2014); Shami v. Nat'l Enter. Sys., 09-722, 2010 WL 3824151 at *2-4 (E.D.N.Y. Sept. 23, 2010).

         Moreover, she argues that the fact that the convenience fee is imposed in only one of the multiple options for payment does not absolve Defendant of liability under the statute because it has no bearing on the issue “that Defendant attempted to collect a fee it was not legally entitled to collect.” Plaintiff distinguishes the cases Defendant relies upon in its motion, arguing that the cases that “allowed a convenience fee did so on the basis that the debt collector was passing through an expense that was charged by an independent entity.” (Id. at 15 (citing Lewis v. ACB Bus. Servs., Inc., 911 F.Supp. 290, 293 (S.D. Ohio 1996)).) She argues such is not the case here, nor has Defendant alleged such circumstances here. (Id.) Simply stated, the collection letter Defendant sent Plaintiff included a $2.00 convenience fee to pay via check by phone; such fee was not expressly authorized by law or by contract, and therefore it violates Section 1692f(1). (See Id. at 16.) She notes that Defendant has cited no law or jurisprudence that would allow it- as a private entity debt collector- to impose such fee. (Id.)

         Plaintiff also argues that the fact she did not actually pay the convenience fee is of no consequence because the statute prohibits both actual collection and attempts to collect such fees. (Id. at 17 (citation omitted.) She notes this is consistent with the language of the FDCPA itself, because Section 1692f “states that the specifically enumerated sections do not ‘limit[] the general application' against the use of ‘unfair or unconscionable means to collect or attempt to collect any debt.'” (Id. at 17-18 (citing 15 U.S.C. ยง 1692f ...

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