Velez v. Portfolio Recovery Assocs., Inc.

• Decision Date: 25 July 2012
• Docket Number: No. 4:12CV00143 AGF.,4:12CV00143 AGF.
• Citation: 881 F.Supp.2d 1075
• Parties: Aida VELEZ, Plaintiff, v. PORTFOLIO RECOVERY ASSOCIATES, INC., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

881 F.Supp.2d 1075

Aida VELEZ, Plaintiff,

v.PORTFOLIO RECOVERY ASSOCIATES, INC., Defendant.

No. 4:12CV00143 AGF.

United States District Court,

E.D. Missouri,

Eastern Division.

July 25, 2012.

Richard A. Voytas, Jr., James W. Eason, Eason and Voytas, LLC, St. Louis, MO, for Plaintiff.

Patrick T. McLaughlin, Spencer Fane, LLP, St. Louis, MO, for Defendant.

MEMORANDUM AND ORDER

AUDREY G. FLEISSIG, District Judge.

Plaintiff Aida Velez asserts claims under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692k et seq., and the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227 et seq., against Defendant Portfolio Recovery Associates, Inc. (“PRA, Inc.”) arising out telephone and mailed communications related to the collection of consumer debt. Plaintiff, a Missouri resident, originally filed this action in the Circuit Court for St. Charles County, Missouri, and Defendant removed it to this Court pursuant to 28 U.S.C. § 1441(a). Now before the Court is Defendant's motion to dismiss for lack of personal jurisdiction. Pursuant to Plaintiff's request, the Court held a hearing on the motion, at which the parties offered argument, exhibits, and testimony. For the reasons set forth below, Defendant's motion to dismiss will be granted and Defendant's request for attorney's fees will be denied.

The record before the Court indicates the following:

Plaintiff received numerous dunning phone calls regarding a consumer debt. The calls were placed to her cell phone in St. Charles, Missouri, from an automatic telephone dialing system. The callers identified themselves as “Portfolio Recovery Associates.” See Plaintiff's Affidavit (Doc. No. 8–1.). Plaintiff alleges that the calls came from multiple numbers blocked by caller identification and that she recorded one of the calls. Plaintiff also received a collection letter regarding the purported debt from an entity identifying itself as “Portfolio Recovery Associates, LLC.” Id. Plaintiff alleges that the methods employed by PRA, Inc. to recover the debt violated the FDCPA and the TCPA in numerous respects.

Defendant, PRA, Inc., operates a website site at www. portfolio recovery. com. Information at the website indicates that Defendant “operates through its subsidiaries,” is engaged in the business of debt collection, and that “[u]nless otherwise specified herein, references to Portfolio Recovery Associates or the Company may refer to Portfolio Recovery Associates, Inc. or any of its wholly owned subsidiaries.” Doc. Nos. 8–1, ¶ 6; 8–2, pg. 1. The term “Portfolio Recovery Associates” as defined on the website includes a reference to Defendant, but makes no mention of the LLC. (Doc. No. 8–2, pg. 1.)

Defendant PRA, Inc. is a publicly-traded corporation, incorporated in Delaware, with its principal place of business in Virginia. It is a holding company that does not maintain offices, employees or a registered agent in Missouri. Nor does it engage in the collection of consumer debt or conduct any other business in Missouri. See Affidavit of Judith Scott. (Doc. No. 7–1.) Recent SEC filings made on behalf of Defendant provide that it is engaged in the business of debt collection and is the sole member of Portfolio Recovery Associates, LLC (“the LLC”). (Doc. Nos. 10–2, p. 6 and 10–6, p. 1.) The LLC is a separate related entity that Defendant contends is the proper party defendant in this action. On two occasions, before and during the hearing, Defendants offered Plaintiff the opportunity to substitute the LLC as the party defendant and agreed to waive service on that entity. Plaintiff refused these offers. (Doc. No. 9–2.)

Mr. Christopher Lagow, deputy general counsel of the LLC, testified at the hearing with respect to the relationship between Defendant and the LLC. He testified that Defendant is a holding company indirectly engaged in debt collection, that LLC is a wholly-owned subsidiary, and that Defendant and the LLC share interlocking directorates and consolidated financial statements. Defendant and the LLC maintain separate payrolls for their own employees. Defendant has 25–30 employees, none of whom make debt collection calls, and does not employ debt collection attorneys. Although the LLC operates the call centers, LLC employees do not identify themselves with the “LLC” designation when they make phone calls.

Lagow further testified that the LLC, as a subsidiary of the holding company, performs certain functions including collection mailings and the operation of call centers. The LLC is engaged in the business of debt collection, purchasing receivables and collecting on them. The LLC is responsible for the litigation of all suits arising from its collection activities and is capitalized by the debt it collects. Mr. Lagow's rough estimate of the value of the LLC's collections in 2011 was between tens and hundreds of millions of dollars.

Defendant moves to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(2), for lack of personal jurisdiction, asserting a lack of minimum contacts with Missouri and no basis for the exercise of either specific or general personal jurisdiction. Defendant further contends that it is not a debt collector within the meaning of the FDCPA.¹

Plaintiff contends that Defendant is in fact a debt collector because its website and SEC filings identify it as such. Plaintiff further asserts that Defendant's reliance upon the separation of functions between itself and the LLC is specious, and that Defendant and the LLC are so interrelated as to be alter egos or agents of one another for purposes of the Court's exercise of personal jurisdiction in this matter.

Legal Standard: Rule 12(b)(2) Motion to Dismiss

To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing of personal jurisdiction by pleading facts sufficient to support a “reasonable inference that the defendant[ ] can be subjected to jurisdiction within the state.” K–V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591–92 (8th Cir.2011) (internal quotation and citations omitted). The court must view the evidence in the light most favorable to the party asserting personal jurisdiction. Romak USA, Inc. v. Rich, 384 F.3d 979, 983 (8th Cir.2004). Although the evidentiary showing required at the prima facie stage is minimal, that showing must be supported by affidavits and exhibits and not by the pleadings alone. K–V Pharm. Co., 648 F.3d at 592. The party espousing jurisdiction carries the ultimate burden of proof and once the court holds an evidentiary hearing, personal jurisdiction must be proved by a preponderance of the evidence. Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 646–47 (8th Cir.2003) (citing Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991)).

Personal jurisdiction may be specific or general. Specific jurisdiction arises “when a defendant, through its contacts with the forum, purposefully avails itself of the privilege of conducting business in the forum,” and the plaintiff's claim “aris[es] out of or relat[es] to the defendant's contacts with the forum.” Pangaea v. Flying Burrito, LLC, 647 F.3d 741, 745–46 (8th Cir.2011) (internal quotation omitted); see also Viasystems, Inc. v. EBM–Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 593 (8th Cir.2011). General jurisdiction exists when a defendant has “ ‘continuous and systematic’ ” contacts with the forum state so as “to render [the defendant] essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, ––– U.S. ––––, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 317, 66 S.Ct. 154, 90 L.Ed. 95 (1945)).

Where, as here, the court's subject matter jurisdiction is premised upon a federal statute ² or other federal question, rather than diversity of citizenship, a prima facie case for personal jurisdiction requires two elements. Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987). First, the plaintiff must demonstrate that haling the defendant into court accords with the Due Process Clause. Id. Second, the plaintiff must show that the defendant is amenable to service of process from the court in question. Id. (“There also must be a basis for the defendant's amenability to service of summons.”); see also Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350, 119 S.Ct. 1322, 143 L.Ed.2d 448 (1999) (“In the absence of service of process (or waiver of service by the defendant), a court ordinarily may not exercise power over a party the complaint names as defendant.”) (citation omitted). Pursuant to Fed.R.Civ.P. 4(k)(1),³ serving a summons “establishes personal jurisdiction over a defendant ... when authorized by a federal statute.” ⁴Fed.R.Civ.P. 4(k)(1)(C). The FDCPA, however, provides neither an independent basis for personal jurisdiction nor nationwide service of process. Thoennes v. Masari Investments, LLC, No. 092822SC, 2009 WL 4282807, at *2 (N.D.Cal. Nov. 25, 2009) (holding that 15 U.S.C. § 1692k(d), the basis for subject matter jurisdiction under the FDCPA, does not obviate the requirement for personal jurisdiction) (citing Sluys v. Hand, 831 F.Supp. 321, 325 (S.D.N.Y.1993) (“A non-restrictive approach toward forum determination under the Act is set forth in 15 USC § 1692k(d), which does not expand personal jurisdiction parameters but indicates that they should not be construed in an unduly restrictive way in cases under the Act.”)).

In addition, 15 U.S.C. § 1692k(d) is clearly a jurisdictional provision, and does not address or provide for nationwide service of process. Cf. Wallace v. Mathias, 864 F.Supp.2d 826, 832–33 (D.Neb.2012); see also Omni Capital, 484 U.S. at 106, 108 S.Ct. at 411 (“Congress knows how to authorize nationwide service of process when it wants to provide for it. That Congress failed to do so here argues forcefully that such authorization was not...