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Johnston v. Midland Credit Management

United States District Court, W.D. Michigan, Southern Division

January 26, 2017

CHRIS JOHNSTON, Plaintiff,
v.
MIDLAND CREDIT MANAGEMENT, et al., Defendants.

          OPINION

          HON. ROBERT HOLMES BELL, Judge

         Plaintiff brings an action under the Fair Debt Collection Practices Act (“Act”), alleging false, deceptive, and misleading statements in violation of 15 U.S.C. § 1692e. Defendants are Midland Credit Management (“MCM”), Plaintiff's debt servicer, Midland Funding, Plaintiff's debt owner, and Encore Capital Group, their parent company. Defendants have filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). (ECF No. 31.) Plaintiff has filed a response (ECF No. 33) and Defendants have filed a reply (ECF No. 34).

         I.

         The relevant facts are not in dispute. Plaintiff incurred credit card debt totaling $1, 406.43. He failed to make his monthly payments and defaulted. On February 24, 2016, MCM sent a letter to Plaintiff, which stated that he had been pre-approved for a discount program to pay off his debt and provided him with three repayment options. (Am. Compl.

         Ex. A, ECF No. 21-1, PageID.131.) The first option listed a discount rate of 90% and required one payment of $140.64 due on March 25, 2016. (Id.) The second option listed a blank discount rate percentage and a monthly payment of $0.00 due on March 25, 2016. (Id.) The third option provided monthly payments as low as $50 per month, but requested that the recipient of the letter call for more details. (Id.) At issue is Defendants' statement in the second option. After receiving the letter, Plaintiff retained counsel, who advised Plaintiff to call MCM and indicate that he wanted to proceed with the second option.

         Plaintiff followed counsel's advice, and on March 24, 2016, he spoke with two MCM representatives. (ECF No. 21-2, PageID.137, PageID.141.) During the calls, Plaintiff told both representatives that he had spoken with his attorney, who advised him to take the zero-dollar payment option. In response, an MCM customer-service representative explained that there was an error in the letter he received; the second option had not populated correctly. (Id. at PageID.142.) The representative also explained that the first option was still available and offered to speak with Plaintiff's attorney about it. (Id.) Plaintiff rejected the first option and stated that he only wanted the zero-dollar payment option. (Id.) Again, the representative reminded Plaintiff that the second option was an error, but the first option was still available. (Id.) Plaintiff once more confirmed that the only option was the 90-percent discount and ended the call. (Id.)

         Plaintiff's amended complaint alleges that the second option in the letter was false, misleading, or deceptive, in violation of the Act's §§ 1692e(10) and 1692e. Defendants filed a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) and for failure to state a claim upon which relief can be granted under Rule 12(b)(6). Defendants also argue that Plaintiff cannot plead facts to support the requirements of a class action under Rules 23(a) and 23(b).

         II.

         A. Standing

         A plaintiff invoking federal jurisdiction bears the burden of establishing the “irreducible constitutional minimum” of standing under Article III by demonstrating (1) an injury in fact, (2) fairly traceable to the challenged conduct of the defendant, and (3) likely to be redressed by a favorable judicial decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). “‘It is settled that Congress cannot erase Article III's standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing.'” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547-48 (2016) (quoting Raines v. Byrd, 521 U.S. 811, 820 n.3 (1997)). “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). A concrete injury must be “de facto; that is, [it must] actually exist.” Id. Simply alleging a “bare procedural violation” does not satisfy the concrete-harm requirement. Id. at 1550. Although intangible injuries “can nevertheless be concrete, ” id. at 1549, Plaintiff must suffer “real” and “not abstract” injury, id. at 1556. Further, “not all inaccuracies cause harm or present any material risk of harm.” Id. at 1550.

         B. Rule 12(b)(6)

         Under Federal Rule of Civil Procedure 8(a), a complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Detailed factual allegations are not required, but “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). When assessing a 12(b)(6) motion, the Court must accept all of Plaintiff's factual allegations as true and construe the complaint in the light most favorable to Plaintiff. Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009). The Court must determine whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.

         “If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). Defendants attached Plaintiff's Rule 26(a) disclosures as an exhibit to their motion to dismiss, but only refer to the exhibit to support their 12(b)(1) motion. Therefore, the Court will only consider Defendants' exhibit for the 12(b)(1) motion, and will assess both grounds for relief under the motion-to-dismiss standard.[1]

         III. ...


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