Farmer v. Optio Sols.
| Docket Number | 22-cv-00907-EMC |
| Decision Date | 31 August 2022 |
| Parties | JAMIE FARMER, Plaintiff, v. OPTIO SOLUTIONS, LLC, Defendant. |
| Court | U.S. District Court — Northern District of California |
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
Before the Court is the Rule 12(b)(6) motion by Defendant Optio Solutions, LLC, doing business as Qualia Collection Services (“Defendant”) to dismiss Plaintiff Jamie Farmer's (“Plaintiff”) First Amended Complaint (“FAC”) in this class action related to an allegedly misleading debt collection letter. Plaintiff brings various claims under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”), the California Rosenthal Fair Debt Collection Practices Act § 1788, et seq., and the California Business and Professions Code § 17200 et seq.
Defendant collects defaulted consumer debts owed to other creditors. (Docket No. 18 (FAC) at ¶ 21.) It sent Plaintiff-a Wisconsin resident-a letter collecting her allegedly defaulted Kohl's credit card debt incurred for personal, family, and household purposes. (Id. at ¶¶ 23-26; Docket No. 18-1 (FAC Ex. A).) The relevant portion of the letter states:
(emphasis added).
The FAC challenges these statements on two grounds: (1) The sentence “We are willing to settle your account for 50% of the balance due” falsely implies that Defendant has the authority to decide the condition of the debt settlement when only the creditor does (the “Authority Theory”). (FAC ¶¶ 31-32.) (2) Defendant's statement that it is not obligated to renew the offer is false, deceptive, and misleading because it must extend the offer deadline beyond 45 days (the “Renewal Theory”). (Id. at ¶ 35.) According to the FAC, the debt's creditor contractually requires Defendant to settle the debt for 50% of the balance due during the entire time when Defendant collects on an account. (Id. at ¶¶ 28-35.) In other words, Defendant must always renew the offer, contrary to the letter's statement that it is “not obligated” to do so. The letter, Plaintiff alleges, “unfairly influences [her] and least [sophisticated] consumer's decision to accept the creditor's offer” and “deprived [her] of truthful, non-misleading, information.” (Id. at ¶¶ 37, 39.)
Plaintiff filed her initial complaint on February 14, 2022. Besides the Renewal Theory, the initial complaint alleged that the itemized “Balance Due” in the letter gave an allegedly false impression that the debt was increasing (the “Balance Due Theory”). (Id. at ¶¶ 36-46.) Defendant moved to dismiss, and Plaintiff amended her complaint in response. (Docket Nos. 8, 18.) In the FAC, Plaintiff dropped the Balance Due Theory and added the Authority Theory described above. Defendant again moved to dismiss for failing to state a claim under Rule 12(b)(6). (Docket No. 19.) In the briefings, the parties only focused on the Renewal Theory.
At the hearing for the motion to dismiss, the Court raised questions about Plaintiff's Article III standing sua sponte-in particular, whether Plaintiff sufficiently alleged injury. “Plaintiff stated that she has suffered only intangible harm (stress) because of Defendant's alleged conduct,” and she “took no action in reliance upon the alleged false statement and was not in a position to pay off the loan even as offered.” (Docket No. 33 (Minute Order).) The Court ordered the parties to file concurrent supplemental briefing on standing, and they have done so.
A court may not decide the merits of the case without subject matter jurisdiction which requires the plaintiff have Article III standing. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93-95 (1998). The Court has “an independent obligation to examine jurisdictional issues such as standing sua sponte.” Wilson v. Lynch, 835 F.3d 1083, 1090 n.2 (9th Cir. 2016) (quotation and alteration omitted).
Article III requires plaintiff to show “(i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.” TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2203 (2021). Plaintiff 's injury in fact must be “concrete”-that is, “real, and not abstract.” Spokeo, Inc. v. Robins, 578 U.S. 330, 340 (2016) (“Spokeo I”). The party invoking the federal judicial power “has the burden of establishing the facts necessary to support standing.” Tailford v. Experian Info. Sols., Inc., 26 F.4th 1092, 1099 (9th Cir. 2022).
Whether an injury in fact is “concrete” depends on the kind of harm alleged. Under Spokeo I, “traditional tangible harms, such as physical harms and monetary harms” will “readily qualify as concrete injuries under Article III.” TransUnion, 141 S.Ct. at 2204. “Various intangible harms can also be concrete.” Id. To decide whether intangible injuries are sufficiently “concrete,” a court must consider “both history and the judgement of Congress.” Robins v. Spokeo, Inc., 867 F.3d 1108, 1113 (9th Cir. 2017) (“Spokeo II”).
To determine whether a plaintiff has suffered a concrete intangible injury due to a defendant's failure to comply with a statutory requirement, the Ninth Circuit outlined a two-step test: “(1) whether the statutory provisions at issue were established to protect [a plaintiff's] concrete interests (as opposed to purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests.” Tailford, 26 F.4th at 1099 (alteration in original) (quoting Spokeo II, 867 F.3d at 1113).
The parties agree that the Ninth Circuit's two-step framework applies here. (Docket No. 34 ( ) at 3-4 (citing two-step framework); Docket No. 35 ( ) at 4 (same).) They also agree that the Court should consider what has been called the “close relationship” inquiry. (See Pltf. Suppl. Br. at 3 () (quotation and alteration omitted); Def. Suppl. Br. at 4 (“[I]ntangible harms are traditionally only deemed concrete if the plaintiff's alleged injury bears a ‘close relationship' to the sort of harms traditionally recognized by American Courts.”) (quotation omitted).) Accordingly, the Court, in applying the Ninth Circuit's framework, must determine whether there is a historical or common-law analog to Plaintiff's alleged injury traditionally recognized by American courts.
15 U.S.C. § 1692f. All of Plaintiff's FDCPA claims are predicated on the Defendant's statements-at-issue as described in the background section.
Plaintiff asserts two types of harm. First, although not alleged in the FAC, Plaintiff's counsel represented at the hearing that Plaintiff has suffered stress. (Docket No. 33.) Second, the FAC alleges that Defendant's letter “deprived Plaintiff of truthful, non-misleading, information in connection with [Defendant's] attempt to collect a debt” (FAC at ¶ 39)-in other words, informational injury.
In her supplemental brief, Plaintiff predicates her standing only based on the first type of harm. (See Pltf. Suppl. Br. at 6-7 ().) Notably, the Ninth Circuit has signaled that “the doctrine of informational injury does not apply” to FDCPA Section 1692e violations. Adams v. Skagit Bonded Collectors, LLC, 836 Fed.Appx. 544, 546 n.2 (9th Cir. 2020). Therefore, the Court only addresses Plaintiff's alleged harm of emotional stress.
Defendant observes that the Seventh Circuit “ha[s] expressly rejected ‘stress' as constituting concrete injury following an FDCPA violation.” Wadsworth v. Kross Lieberman & Stone, Inc., 12 F.4th 665, 668 (7th Cir. 2021) (quoting Pennell v. Global Tr. Mgmt., 990 F.3d 1041, 1045 (7th Cir. 2021)). But “[t]he Ninth Circuit has not yet considered whether . . . allegations of intangible harm-emotional distress, loss of personal reputation, and loss of personal time-without more, suffice as concrete injury-in-fact for standing purposes in a FDCPA case in view of TransUnion.” ...
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