United States District Court, D. Utah, Central Division
NICOLE K. GUNTHER, on behalf of herself and the proposed Class, Plaintiff,
MIDLAND CREDIT MANAGEMENT, INC. and MIDLAND FUNDING, LLC, Defendants.
MEMORANDUM DECISION AND ORDER GRANTING IN PART, AND
DENYING IN PART, DEFENDANTS' MOTION TO DISMISS
WADDOUPS, United States District Judge.
matter arises under the Fair Debt Collection Practices Act,
15 U.S.C. § 1692 et seq. (FDCPA) and comes
before the court through Defendants Midland Credit
Management, Inc's (Midland Credit) and Midland Funding,
LLC's (Midland Funding) Motion to Dismiss Plaintiff
Nicole Gunther's (Ms. Gunther) Complaint. (ECF No. 11.) The
court heard oral argument on the motions on February 14,
2018, taking the matter under advisement. After carefully
considering the parties' briefs and oral arguments, the
court GRANTS in part, and DENIES in part, Midland's
Motion to Dismiss.
Gunther . . . acquired a Target National Bank account.”
(Compl. ¶ 13, ECF No. 2-1 at 3.) “[Ms.] Gunther
made purchases on the Target National Bank account, resulting
in an outstanding balance.” (Compl. ¶ 14, ECF No.
2-1 at 3.) “At some point after the . . . debt was in
default, Target National Bank . . . transferred Gunther's
account to Midland Funding.” (Compl. ¶ 17, ECF No.
2-1 at 3.) Midland Funding acquired this debt after the
statute of limitations had expired. (See Compl.
¶ 26, ECF No. 2-1 at 4.) “After acquiring [Ms.
Gunther's] debt, Midland Funding then attempt[ed] to
collect the purchased [time-barred] debt . . . through . .
. Midland Credit, ” a collection agency. (See
Compl. ¶¶ 19-20, ECF No. 2-1 at 3.) Midland Credit
began collection efforts by “sen[ding] Gunther a
collection letter.” (Compl. ¶ 21, ECF No. 2-1 at 4.)
the top of the letter, in a black box, are the words
“CHOOSE THE OPTION THAT WORKS FOR YOU, ” written
in white ink. (Compl. Ex. A ECF No. 2-2) (emphasis in
original). Immediately below this box, the letter informs the
reader that the correspondence is regarding “Target
National Bank.” (ECF No. 2-2.) The letter then
addresses Ms. Gunther:
Congratulations! You have been
pre-approved for a discount program
designed to save you money. Act now to maximize your savings
and put this debt behind you by calling (877) 434-3697. Pay
online today at www.midlandcreditonline.com.
(ECF No. 2-2) (emphasis in original). The letter then
presents three boxes, containing three “options.”
(ECF No. 2-2.) Option 1 offers “40% OFF” the
advertised balance and contains the words “You Pay Only
$195.38;” Option 2 offers “20% OFF” if Ms.
Gunther were to elect to make “3 Monthly Payments of
Only $86.83;” and Option 3 offers Ms. Gunther to make
“Monthly Payments As Low As” “$50 per
month, ” and invites Ms. Gunther to call Midland
“to discuss [her] options and get more details.”
(ECF No. 2-2.) Below these three boxes are the words
“[if] these options don't work for you, call one of
our Account Managers to help you set up a payment plan that
does.” (ECF No. 2-2.) To the right of these three boxes
is another box that provides: “Benefits of Paying . . .
[s]ave up to $130.25.” (ECF No. 2-2.) Finally, at the
bottom of the letter is a disclosure that provides:
The law limits how long you can be sued on a debt and how
long a debt can appear on your credit report. Due to the age
of this debt, we will not sue for it or report payment or
non-payment of it to a bureau.
(ECF No. 2-2.)
Gunther, in her first claim for relief, alleges that Midland
violated the Fair Debt Collection Practices Act (FDCPA) in
two different ways. First, she alleges that Midland
“engaged in unfair and deceptive acts and practices in
violation of” 15 U.S.C. §§ 1692e-f, “by
taking assignments of time barred debt for collection in
violation of Utah law.” (Compl. ¶ 38, ECF No. 2-1 at
6.) Ms. Gunther's position is that “[u]nder Utah
law collectors such as [Midland] may only take assignments of
debts for collections if the debt is not time barred. See UT
ST § 12-1-8[.]” (Compl. ¶ 26, ECF No. 2-1 at
4.) In support, Ms. Gunther cites the Utah Collection
Agencies Act (UCAA). Ms. Gunther alleges that “Defendants
took an assignment of Gunther's alleged debt [after] it
was time barred.” (Compl. ¶ 26, ECF No. 2-1 at 4.)
It appears that Ms. Gunther is arguing that a violation of
the UCAA results in a violation of the FDCPA. Second, she
alleges that Midland “engaged in unfair and deceptive
acts and practices” in violation of 15 U.S.C.
§§ 1692e-f by sending letters, which attempt to
settle time-barred debts, without sufficiently disclosing
that the debts are time-barred and by suggesting that payment
on the time-barred debt will save the consumer money.
(See Compl. ¶ 38, ECF No. 2-1 at 6); (ECF No.
15 at 17) (“Defendants' dunning letter violates
these statutes by . . . misrepresenting to the consumer that
payment on a debt that is no longer enforceable will save
to the Complaint's second claim for relief, Ms. Gunther
alleges that Midland violated the Utah Consumer Sales
Practice Act (UCSPA) by engaging in deceptive practices.
(Compl. ¶¶ 43-44, ECF No. 2-1 at 7-8.) Ms. Gunther
appears to allege that Midland violated the UCSPA in two
different ways. First, she appears to allege that Midland
engaged in deceptive practices when Midland demanded payment
from Ms. Gunther on “debts not legally assigned to
them.” (Compl. ¶ 44, ECF No. 2-1 at 7.) Second,
she appears to allege that Midland engaged in deceptive
practices by “failing to disclose that a voluntary
payment may revive or toll the statute of limitations.”
(Compl. ¶ 44, ECF No. 2-1 at 7.)
Gunther commenced this action on May 24, 2017 by filing a
proposed Class Action Complaint in state court. (ECF No. 2-1
at 11.) Midland then filed notice of removal on June 28,
2017, based on federal question jurisdiction. (ECF No. 2.)
The case was assigned to this court on that date.
Complaint, Ms. Gunther alleges under the FDCPA that she is a
“consumer, ” that both Midland Funding and Midland
credit are “debt collectors, ” that Defendants
were engaged in the collection of debt, and that Midland used
deceptive representations in connection with those collection
efforts. Ms. Gunther seeks statutory and actual damages under
the FDCPA, attorney's fees, litigation expenses, cost of
suit, Certification of “the FDCPA Class, ” and
her appointment as the class representative. (Compl.
¶60, ECF No. 2-1 at 10-11.) Ms. Gunther also seeks
Certification of “the Utah Class, ” her
appointment as the Utah Class's representative, and
“declaratory and injunctive relief against Defendants
to stop Defendants from harming consumers and providing them
with an unfair advantage over its competitors by engaging in
collection efforts for debt not legally owed to it; including
a preliminary and permanent injunction.” (Compl.
¶60, ECF No. 2-1 at 10-11.)
31, 2017, Midland filed the Motion to Dismiss Plaintiff's
Complaint. (ECF No. 11.) On September 5, 2017, Ms. Gunther
filed an opposition, (ECF No. 15) and on October 3, 2017,
Midland filed a reply. (ECF No. 19.) The court heard oral
argument on the motions on February 14, 2018. (ECF No. 27.)
12(b)(6) of the Federal Rules of Civil Procedure governs
motions to dismiss for failure to state a claim for which
relief can be granted. “To survive a motion to dismiss,
a complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible
on its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id. In reviewing a 12(b)(6) motion, the court
“accept[s] as true all well-pleaded factual allegations
in a complaint and view[s] these allegations in the light
most favorable to the plaintiff.” Smith v. United
States, 561 F.3d 1090, 1098 (10th Cir. 2009).
Ultimately, the issue “is not whether the plaintiff
will prevail, but whether the plaintiff is entitled to offer
evidence to support [the plaintiff's] claims.”
Beedle v. Wilson, 422 F.3d 1059, 1063 (10th Cir.
2005) (citations omitted) (internal quotation marks omitted).
enacted the FDCPA in 1977 due to “abundant evidence of
the use of abusive, deceptive, and unfair debt collection
practices.” 15 U.S.C. § 1692(a). The purpose of
the FDCPA was “to eliminate abusive debt collection
practices by debt collectors, to insure that those debt
collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote
consistent State action to protect consumers against debt
collection abuses.” 15 U.S.C. § 1692(e). Because
the FDCPA is considered to be a remedial statute, “it
should be construed liberally in favor of the
consumer.” Johnson v. Riddle, 305 F.3d 1107,
1117 (10th Cir. 2002).
here, the Act prohibits using “any false, deceptive, or
misleading representations or means” in connection with
the collection of a debt, 15 U.S.C. § 1692e, and any
“unfair or unconscionable means” to collect or
attempt to collect a debt. 15 U.S.C. § 1692f. Each of
these provisions provides a non-exhaustive list of potential
violations. Misleading representations under section 1692e
include: “[t]he false representation of the character,
amount, or legal status of any debt, ” 15 U.S.C. §
1692e(2)(A); “[t]he threat to take any action that
cannot legally be taken or that is not intended to be taken,
” 15 U.S.C. § 1692e(5); and “[t]he use of
any false representation or deceptive means to collect or
attempt to collect any debt or to obtain information
concerning a consumer.” 15 U.S.C. § 1692e(10).
analyzing a claim under the FDCPA, the “overwhelming
majority of Courts of Appeals” have applied some form
of the “least sophisticated consumer.” See
Jensen v. Pressler & Pressler, 791 F.3d 413, 419 n.3
(3d Cir. 2015). “The Tenth Circuit appears to have
never explicitly embraced-but certainly never disclaimed-the
standard.” Id. In an unpublished decision, the
Tenth Circuit recognized that other circuits apply an
objective standard when analyzing FDCPA claims,
“measured by how the ‘least sophisticated
consumer' would interpret the notice from the debt
collector.”Ferree v. Marianos, No. 97-6061,
1997 WL 687693, at *1 (10th Cir. Nov. 3, 1997) (citation
omitted); see also Fouts v. Express Recovery Servs.,
Inc., 602 Fed.Appx. 417, 421 (10th Cir. 2015) (applying
the “least sophisticated consumer” standard).
Based on this guidance from the Tenth Circuit, the court
applies the least sophisticated consumer standard to Ms.
Gunther's claims. The inquiry under the standard is
“how the least sophisticated consumer-one not having
the astuteness of a [lawyer] or even the sophistication of
the average, everyday, common consumer-understands the notice
. . . she receives.” Ferree, 129 F.3d at *1
(quoting Russell v. Equifax A.R.S., 74 F.3d 30, 34
(2d Cir.1996)). “The basic purpose of the
least-sophisticated-consumer standard is to ensure that the
FDCPA protects all consumers, the gullible as well as the
shrewd.” Clomon v. Jackson, 988 F.2d 1314,
1318 (2d Cir. 1993).
Collection of Time-Barred Debts Under the FDCPA (First
noted above, Ms. Gunther, in her first claim for relief,
alleges that Midland violated the FDCPA in two different
ways-(1) by taking assignments of time-barred debt for
collection in violation of Utah law and (2) by sending
dunning letters that attempt to settle time-barred debs
without sufficiently disclosing that the debts are time
barred, and by suggesting that payment on the time-barred
debt will save the letter's recipient money.
A Violation of the UCAA Does Not Provide a Basis ...