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Genova v. IC System, Inc.

United States District Court, D. New Jersey

May 25, 2017

ADRIANE GENOVA, on behalf of herself and others similarly situated, Plaintiff,
v.
IC SYSTEM, INC. and JOHN DOES 1-25, Defendants.

          OPINION

          HON. MADELINE COX ARLEO, UNITED STATES DISTRICT JUDGE

         THIS MATTER comes before the Court on Defendant IC System, Inc.'s (“Defendant”) motion to dismiss Plaintiff Adriane Genova's (“Plaintiff”) Amended Complaint. Dkt. No. 10. For the reasons set forth below, the motion is GRANTED in part and DENIED in part.

         I. Background[1]

         In this putative class action lawsuit, Plaintiff alleges that Defendant used unfair and unconscionable means to attempt to collect a debt, in violation of the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq.

         At some time prior to September 29, 2015, Plaintiff incurred a debt to Preventive Healthcare Association (“PHA”). Am. Compl. ¶ 17. Subsequently, PHA hired Defendant to collect the debt, which it alleged was past due. Id. ¶¶ 21, 23. On September 29, 2015, Defendant sent a letter to Plaintiff in an attempt to collect on the debt. Id. ¶ 24. Among other things, the front of the letter included the following information:

Principal Due: $326.83
Collection Charge Due: $55.56
BALANCE DUE: $382.39

Id. ¶ 27 (emphasis in original).

         The $55.56 Collection Charge (“Collection Charge”) was a 17% contingent fee, which represented Defendant's anticipated compensation if it successfully collected on the debt. Id. ¶¶ 28-32. Because Defendant had not yet recovered any funds from Plaintiff at the time the letter was sent, it was not then entitled to any contingent fee and Plaintiff was not liable for any such fee. Id. ¶¶ 33-24. In addition, the collection charge purportedly bears no relation to and is substantially greater than costs actually incurred by Defendant or PHA in their attempts to collect the debt. Id. ¶ 35. Plaintiff contends that Defendant has transmitted thousands of similar letters to consumers. Id. ¶ 36.

         On September 15, 2016, Plaintiff filed a Complaint against Defendant. Dkt. No. 1. On October 25, 2016, Defendant filed a motion to dismiss the Complaint. Dkt. No. 10. On November 7, 2016, Plaintiff filed an Amended Complaint. Dkt. No. 7. The Amended Complaint alleges that Defendant's representation that Plaintiff owed the Collection Charge violated 15 U.S.C. §§ 1692e, 1692e(2)(A), 1692e(5), 1692e(10), 1692f, and 1692f(1) because the fee was not yet incurred and was not expressly authorized by the contract underlying the debt. Am. Compl. ¶¶ 38-40, 44-48, 49-53. In other words, Defendant's letter misled consumers by creating the false impression that it had incurred a collection fee, when in fact it had not. Id. ¶ 37.

         On November 21, 2016, Defendant filed a motion to dismiss the Amended Complaint. Dkt. No. 10. In its motion to dismiss, Defendant makes five primary arguments: (1) that Plaintiff does not have Article III standing to maintain this action; (2) that Plaintiff's claims fail because the Collection Charge was expressly authorized by the contract underlying her debt; (3) that Plaintiff's claims fail because Defendant's alleged misstatement was not “material”; (4) that Plaintiff's claims under Section 1692f must be dismissed as duplicative of her claims under Section 1692e; and (5) that Plaintiff's class allegations must be struck because she cannot satisfy Rule 23's numerosity and ascertainability requirements. Each of these will be addressed in turn.

         II. Analysis

         A. Article III Standing

         Defendant first argues that the Amended Complaint must be dismissed because Plaintiff's alleged statutory harm under the FDCPA is insufficient to demonstrate an injury-in-fact. The Court disagrees.

         Article III of the United States Constitution limits the jurisdiction of federal courts to actual “cases” or “controversies.” U.S. Const., art. III, § 2. To establish Article III standing, a plaintiff must demonstrate: (1) an “injury in fact”; (2) a “causal connection between the injury and the conduct complained of”; and (3) a likelihood “that the injury will be redressed by a favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992) (quotations omitted). To establish an 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, Inc. v. Robins, 136 S.Ct. 1540, 1548 (2016) (quoting Lujan, 504 U.S., at 560). To be “particularized, ” an injury “must affect the plaintiff in a personal and individual way.” Id. (quotation omitted). A “concrete” injury is “de facto; that is, it must actually exist.” Id. (quotations omitted).

         The Supreme Court recently declared in Spokeo, Inc. v. Robins that “Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies 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. In this way, a “bare procedural violation, divorced from any concrete harm, ” cannot satisfy Article III's injury-in-fact requirement. Id. Relying on these pronouncements, Defendant contends that Spokeo “changed the landscape for class action litigation based on technical violations of federal statutes.” Def.'s Br. at 8, Dkt. No. 10-1. So the argument goes, because Plaintiff merely received a letter containing a misstatement of a debt-but did not actually pay it-her alleged harm only amounts to a “bare procedural violation” of the FDCPA and is insufficiently concrete to confer Article III standing. Id.[2]

         But as the Third Circuit has repeatedly observed, Spokeo did not transform the requirements for standing. See In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 637-38 (3d Cir. 2017) (“[W]e do not believe that the Court so intended to change the traditional standard for the establishment of standing . . . .”); In re Nickelodeon Consumer Privacy Litig., 827 F.3d 262, 273 (3d Cir. 2016), cert. denied sub nom. C. A. F. v. Viacom Inc., 137 S.Ct. 624 (2017) (“The Supreme Court's recent decision in Spokeo, Inc. v. Robins does not alter our prior analysis . . . .”). In fact, Spokeo itself reaffirmed that Congress “‘has the power to define injuries' . . . ‘that were previously inadequate in law, '” and thus may pass “‘statutes creating legal rights, the invasion of which creates standing, ' even absent evidence of actual monetary loss.” In re Horizon, 846 F.3d at 636, 638 (quoting Spokeo, 136 S.Ct. at 1549 and In re Google Inc. Cookie Placement Consumer Privacy Litigation, 806 F.3d 125, 134 (3d Cir. 2015)) (emphasis removed). In such cases-where the plaintiff alleges a statutory violation-the Court must determine whether Congress has “elevat[ed]” the harm “to the status of legally cognizable injur[y].” Spokeo, 136 S.Ct. at 1549 (quotations omitted).

         Following Spokeo, numerous courts have considered whether a violation of the FDCPA can give rise to a concrete injury under Article III. These courts have noted that Congress enacted the FDCPA to “eliminate abusive debt collection practices by debt collectors” and promote further action to “protect consumers against debt collection abuses.” 15 U.S.C. § 1692. It follows that “[t]he right congress sought to protect in enacting this legislation was . . . not merely procedural, but substantive and of great importance.” Blaha v. First National Collection Bureau, No. 16-2291 (D.N.J. Nov. 10, 2016), Slip Op., at *16. Accordingly, the vast majority of courts have concluded that violations of the FDCPA give rise to injuries that are sufficiently concrete to confer standing under Article III. See, e.g., Fuentes v. AR Res., Inc., No. 15-7988, 2017 WL 1197814, at *5 (D.N.J. Mar. 31, 2017) (“[T]his Court joins the overwhelming majority of courts that have determined that FDCPA violations under §§ 1692e and 1692f give rise to concrete, substantive injuries sufficient to establish Article III standing.”) (quotation omitted); Pisarz v. GC Servs. Ltd. P'ship, No. 16-4552, 2017 WL 1102636, at *5 (D.N.J. Mar. 24, 2017) (noting that “[s]ince Spokeo was decided, the overwhelming majority of courts that have faced Article III standing challenges in FDCPA cases . . . have determined that a violation of the FDCPA produces a ‘concrete injury'”) (quotation omitted).

         In fact, a number of courts have specifically held that where, as here, a debt collector demands collection costs or other fees before they are incurred and if not authorized by the contract, the alleged FDCPA violation constitutes an injury-in-fact under Article III. As recently explained by a court in this district:

Plaintiff has a substantive, statutory right under the FDCPA to be free from false or deceptive information in connection with the collection of a debt, which is alleged to have been infringed by Defendant's representation that it was entitled to charge a fee that is alleged to be neither authorized by law nor permitted by the contractual terms of Plaintiff's underlying debt instrument. Plaintiff was thus placed at risk of economic injury by potentially being deceived into paying a fee that was legally barred. . . . Accordingly, even after Spokeo, because Congress has defined statutory injuries under the FDCPA that do not require actual, pecuniary injury, where, as in the case of the receipt of a ...

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