Civil Litigation

What Constitutes a “Sufficient Factual Basis” to Support a Claim under the FDCPA?

Federal courts are routinely confronted with the question of whether a plaintiff has alleged sufficient facts under the FDCPA “to raise a right to relief above the speculative level” necessary to survive a Rule 12(b)(6) motion to dismiss.  Recently, a Maryland federal district court addressed the sufficiency of various factual allegations levied against a debt collection law firm and its managing member under the FDCPA.  See Murdoch v. Rosenberg & Associates, LLC, Case No. 12-cv-2234, 2013 U.S. Dist. LEXIS 40825, at *4 (D. Md. Mar. 22, 2013).

In Murdoch, the plaintiff filed multiple claims against a debt collection law firm (“Rosenberg LLC”) and its managing member and partner (“Rosenberg”) (collectively, “the Defendants”) alleging the Defendants violated federal and state consumer protection laws on a class-wide basis.  Specifically, Rosenberg LLC’s form debt collection notices, one of which Rosenberg LLC sent to Murdoch, allegedly violated the FDCPA.  The Defendants filed motions to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted.

With regard to Rosenberg individually, the court granted Rosenberg’s motion to dismiss as to all FDCPA claims because Murdoch failed to state a claim against Rosenberg in her individual capacity.  Simply put, Murdoch did not allege sufficient facts to hold Rosenberg individually liable for alleged business conducted in furtherance of her LLC.  Murdoch failed to allege sufficient factual support in her Complaint that Rosenberg personally violated any section of the FDCPA (or state collection laws) as a “debt collector” or otherwise.  Merely alleging that Rosenberg is the managing member of the debt collection law firm responsible for various FDCPA violations, and that she managed a debt collection operation that violated the FDCPA is not enough to survive a motion to dismiss.  Although Rosenberg’s name appeared on the form letter at issue, the Complaint failed to allege that “Rosenberg took sufficient personal action with respect to Murdoch or her debt in order to state a plausible claim under any section of the FDCPA.”  Id. at *7 (emphasis added).  Thus, the Court dismissed all claims against Rosenberg individually for failure to state a claim.

The Murdoch Court also found another independent ground for dismissing all claims against Rosenberg for conduct allegedly committed in furtherance of Rosenberg LLC.   The Court held that Murdoch’s Complaint failed to allege any basis for the Court to pierce the LLC’s veil, or make any allegations of fraud such that Rosenberg could be liable for conduct allegedly performed in furtherance of her LLC.

The Court also addressed Murdoch’s claims against Rosenberg LLC.  Rosenberg LLC’s motion to dismiss argued that Murdoch failed to state a claim under the FDCPA because the Complaint lacked any allegations that Rosenberg LLC: (i) created a false belief that it was involved in collecting a debt and (ii) committed any of the eight offenses enumerated in 15 U.S.C. § 1692f, or alleged any “unfair or unconscionable” misconduct beyond that which Murdoch asserted violated other provisions of the FDCPA.  The Court held that Murdoch’s Complaint defeated her own claim under 15 U.S.C. § 1692j, because it alleged that Rosenberg LLC was involved in the collection of her debt.  Moreover, the form letter in question stated that Rosenberg LLC was, in fact, involved in collecting a debt.

The Murdoch Court also held that Murdoch failed to “specifically identify how” Rosenberg LLC’s conduct was unfair or unconscionable under 15 U.S.C. § 1692f, and such failure warranted dismissal of Murdoch’s claim on that count.  Murdoch did not allege that Rosenberg LLC used any of the eight means listed in 15 U.S.C. § 1692f, or otherwise allege misconduct other than that which she asserted violated other provisions of the FDCPA.  Merely asserting in a conclusory fashion that “[d]efendant’s standard debt collection notices violate the [FDCPA], specifically 15 U.S.C. §§ 1692j(a), 1692e(3), 1692e(10), and 1692f” did not establish an entitlement to relief.

The Court did find, however, that Murdoch’s claims under 15 U.S.C. § 1692e – only against Rosenberg LLC – were enough to survive a motion to dismiss.  The Court based this conclusion on the fact that Murdoch’s Complaint alleged that Rosenberg LLC violated 15 U.S.C. §§ 1692e(3) and (10) by sending the debt collection notice at issue to her.

This decision serves as a model for testing the sufficiency of a complaint under the FDCPA.  Moreover, it analyzes a plaintiff’s obligation to allege sufficient facts in order to survive a motion to dismiss when asserting a claim against both a debt collection law firm and its managing partner.


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