Bodor v. Maximus Fed. Servs., CIVIL 5:19-cv-05787-JMG

CourtUnited States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
Writing for the CourtJOHN M. GALLAGHER United States District Court Judge
PartiesJAIMARIA BODOR, Individually and on behalf of all others similarly situated Plaintiffs, v. MAXIMUS FEDERAL SERVICES, INC. Defendant.
Decision Date22 October 2021
Docket NumberCIVIL 5:19-cv-05787-JMG

JAIMARIA BODOR, Individually and on behalf of all others similarly situated Plaintiffs,
v.

MAXIMUS FEDERAL SERVICES, INC.
Defendant.

CIVIL No. 5:19-cv-05787-JMG

United States District Court, E.D. Pennsylvania

October 22, 2021


MEMORANDUM OPINION

JOHN M. GALLAGHER United States District Court Judge

OVERVIEW

Plaintiff Jaimaria Bodor alleges her 2018 tax return was improperly seized by the U.S. government due to a lapse by Defendant Maximus Federal Services, Inc. (“Maximus”), a purported collector of student loan debt, in violation of the Fair Debt Collection Practices Act (“FDCPA”). Before the Court is Defendant's Motion for Summary Judgment, which the Court denies for the reasons discussed below.

I. BACKGROUND AND ALLEGATIONS OF PLAINTIFFS

Plaintiff asserts a claim individually and on behalf of a class of similarly situated persons against Defendant for engaging in abusive, deceptive, and unfair debt collection practices prohibited by the FDCPA, 15 U.S.C. §1692. Am. Compl. ¶4, ECF No. 29.

The Department of Education, Office of Federal Student Aid (“FSA”), administers student financial aid programs authorized under Title IV of the Higher Education Act of 1965. 79 Stat.

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1219. In 2013, FSA entered into a contract with Defendant, a government services company, to operate, maintain, and continue development of FSA's Debt Management and Collection System, (“DMCS”). Defendant's Statement of Facts (“DSOF”) ¶ 1, ECF No. 64-1. DMCS is used to service FSA's portfolio of defaulted student loans. Id. Congress requires federal agencies to refer delinquent nontax debt, such as defaulted student loan debt, to the U.S. Department of the Treasury (“Treasury”) for collection, including through administrative offset, which means withholding funds payable by the United States to satisfy a debt. 31 U.S.C. § 3716(c)(6); DSOF ¶ 7-8 n.1. Pursuant to this authority, Treasury operates a centralized Treasury Offset Program (“TOP”), see 31 C.F.R. § 285.5(a)(1), which offsets payments, such as tax refunds, that are intended to be made to a delinquent student loan borrower and applies those payments to any delinquent debts held by FSA. DSOF ¶ 7 n.1.

In 2012, Plaintiff took out two federal loans in order to attend a school owned by the now-defunct for-profit education company, Corinthian Colleges. Plaintiff's Statement of Facts (“PSOF”) ¶ 123, ECF No. 69-3. In 2014, after allegedly receiving an inadequate education, Plaintiff defaulted on her loans. PSOF ¶124. Under the Higher Education Act, federal loan borrowers, like Plaintiff, are eligible for loan discharge if the college or university for which the loans were obtained misled them. Am. Compl. ¶ 19.

On March 13, 2019, Plaintiff filed a Borrower Defense to Repayment Application ("BD") to stop collections on her loans, with the specific goal of preventing the forced collection of her 2018 tax refund. PSOF ¶ 127. Once a borrower files a BD application, their loan is stayed from collection. Defendant's Motion for Summary Judgment (“Def. MSJ”) 9, ECF No. 64. Defendant is responsible for manually recognizing and applying BD tags to a borrower's account to prevent the DMCS system from referring an account to a private collection agency (“PCAs”) or to

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Treasury for a TOP offset. DSOF ¶ 15; Def. MSJ 21. On April 25, 2019, Plaintiff's 2018 tax refund of $79.00 was improperly withheld because Defendant delayed in applying a BD tag to her account. PSOF ¶ 132. The withholding of Plaintiff's tax refund resulted in this lawsuit.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is properly granted when 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). Facts are material if they “might affect the outcome of the suit under the governing law.” Physicians Healthsource, Inc. v. Cephalon, Inc., 954 F.3d 615, 618 (3d Cir. 2020) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute as to those facts is genuine if the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. (quoting Anderson, 477 U.S. at 248). “We view all the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor.” Id. (internal quotation marks and citation omitted).

The party moving for summary judgment must first “identify[] those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks omitted). In response, the nonmoving party must “designate specific facts showing that there is a genuine issue for trial.” Id. at 324 (internal quotation marks omitted). “The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmovant].” Daniels v. Sch. Dist. of Phila., 776 F.3d 181, 192 (3d Cir. 2015) (quoting Anderson, 477 U.S. at 252).

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III. DISCUSSION

A. Standing

Defendant first argues that Plaintiff lacks standing to bring forth her claim. To establish standing under Article III of the Constitution, a plaintiff must (1) demonstrate an injury in fact, which is a harm that is (a) both concrete and actual or imminent, and (b) not conjectural or hypothetical; (2) show causation, which is a fairly traceable connection between the alleged injury in fact and the alleged conduct of a defendant; and (3) demonstrate redressability, which is a substantial likelihood that the requested relief will remedy the alleged injury in fact. See Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 771 (2000). “The requirements for standing do not change in the class action context.” In re Horizon Healthcare Servs. Data Breach Litig., 846 F.3d 625, 634 (3d Cir. 2017). “Named plaintiffs, [such as Plaintiff], who represent a class must allege and show that they personally have been injured.” Id.

Defendant claims that Plaintiff can demonstrate neither a concrete injury nor causation to establish standing. Def. MSJ 17. As to the injury element, Defendant argues that Plaintiff did not sustain an injury because the $79.00 that was mistakenly seized from her 2018 tax refund was returned to her six months later. Plaintiff's Opposition to Defendant's Motion for Summary Judgment (“POMSJ”) 14, ECF No. 69-2. Plaintiff counters that she suffered direct personal harm by losing the use of her money and the ability to earn interest for six months. Id. The Court finds that Plaintiff has suffered an injury. “So long as an injury affects the plaintiff in a personal and individual way, the plaintiff need not suffer any particular type of harm to have standing.” In re Horizon Healthcare Servs. Data Breach Litig., 846 F.3d 625, 636 (3d Cir. 2017). “For standing purposes, a loss of even a small amount of money is ordinarily an injury.”

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Czyzewski v. Jevic Holding Corp. 137 S.Ct. 973, 983 (2017). “In fact, several sister circuits have held that temporary loss of use of money is itself a sufficiently concrete injury to establish standing.” Pontes v. Rowan Univ., 2021 WL 4145119, at *8 n.5 (3d Cir. Sept. 13, 2021) (citing cases). Plaintiff's claims to economic loss, even temporary, is a concrete and actual injury sufficient to establish standing.

Defendant next claims that Plaintiff cannot show that her injury was caused by its conduct. Def. MSJ 19. The Court finds sufficient causation exists in the record. Article III's causation requirement is “akin to ‘but for' causation in tort and may be satisfied even where the conduct in question might not [be] a proximate cause of the harm.” Finkelman v. NFL, 810 F.3d 187, 193 (3d Cir. 2016) (citation omitted). An “indirect causal relationship will suffice, ” provided there is a “fairly traceable connection between the alleged injury in fact and the alleged conduct of the defendant.” Id. at 193-194. Defendant says its role was limited to the application of an electronic tag to Plaintiff's account on April 29, 2019, four days after Treasury garnished her 2018 tax refund. Def. MSJ 19. However, without Defendant's delay in applying this tag, Plaintiff's tax refund would not have been garnished. Said otherwise, but for Defendant's failure to timely tag Plaintiff's account, Plaintiff's tax refund would not have been seized.

Defendant also argues that it was a victim of external factors beyond its control, meaning that any injury to Plaintiff is not “fairly traceable” to Defendant's conduct. Def. MSJ 19. Defendant's emphasis on external intervening forces is not persuasive. The traceability requirement is met even where intervening events sever the chain of proximate causation between the conduct and the injury at issue. See Edmonson v. Lincoln Nat'l Life Ins. Co., 725 F.3d 406, 418 (3d Cir. 2013). “But for” is a lesser standard than proximate cause and “but for” causation is all that is needed for standing purposes. Defendant's conduct has met that standard and satisfied the causation requirement necessary to establish standing.

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B. FDCPA

Having rejected Defendant's standing argument, the Court now turns to the substance of Plaintiff's FDCPA claims. Defendant first moves for summary judgment on the grounds that it did not engage in “debt collection activity, ” a threshold requirement for FDCPA claims. Defendant then argues that it did not violate §1692(e) because it never communicated with Plaintiff, and similarly argues that it did not engage in any unfair or unconscionable debt collection practices in violation of §1692(f). Defendant further contends that, even if it did violate the FDCPA, it is still entitled to summary judgment because it meets the requirements for a bona fide error defense. Finally, Defendant...

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