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Velez v. Healthcare Revenue Recovery Group, LLC

United States District Court, M.D. North Carolina

April 24, 2017

GRACIANO VELEZ, on behalf of himself and all others similarly situated, Plaintiffs,
HEALTHCARE REVENUE RECOVERY GROUP, LLC, d/b/a ARS Account Resolution Services, Defendant.



         Presently before this court is a Motion to Dismiss filed by Defendant Healthcare Revenue Recovery Group, LLC, (“HRRG”) d/b/a ARS Account Resolution Services (“ARS”) (“Defendant”). (Doc. 6.) Plaintiff Graciano Velez (“Plaintiff”) has responded, (Doc. 13), and Defendant has replied. (Doc. 15.) This matter is now ripe for resolution, and for the reasons stated herein, Defendant's motion to dismiss will be granted. Also before the court is Plaintiff's Motion to Strike or in the Alternative for Leave to File Surreply to Defendant's Motion to Dismiss (Doc. 16) to which Defendant has responded (Doc. 17). For the reasons stated herein, Plaintiff's motion will be denied.

         I. BACKGROUND

         A. Facts

         Plaintiff “is a natural person obligated, or allegedly obligated, to pay a debt owed or due, or asserted to be owed or due a creditor other than Defendant.” (Complaint (“Compl.”) (Doc. 1) ¶ 30.) Plaintiff incurred this debt primarily for medical purposes. (Id. ¶ 31.)

         Plaintiff identifies Defendant as “Healthcare Revenue Recovery Group, LLC, d/b/a ARS Account Resolution Services.” (Id. ¶ 1.) Plaintiff further identifies Defendant as “an entity which at all relevant times was engaged, by use of the mails and telephone, in the business of collecting a ‘debt' from Plaintiff, as defined by 15 U.S.C. § 1692a(5)” and as a “‘debt collector' as defined by 15 U.S.C. § 1692a(6).” (Id. ¶¶ 26-27.)

         Plaintiff alleges that “[o]n April 23, 2015, Defendant sent Plaintiff a letter in connection with the collection of the Debt.” (Id. ¶ 33.) “In the April 23, 2015 letter, Defendant refers to itself as ARS or Account Resolution Services.” (Id. ¶ 35.) Plaintiff further alleges that “ARS or Account Resolution Services” is neither registered as a “fictitious name for Defendant” nor “licensed as a collection agency” in the State of North Carolina. (Id. ¶¶ 36-37.)

         Plaintiff alleges that “[t]he April 23, 2015 letter is based on a form or template [the ‘Template'] where Defendant refers to itself by ARS or Account Resolution Services, ” which “Defendant has used . . . to send collection notices to at least 40 individuals in the State of North Carolina within one year prior to the filing of this complaint.” (Id. ¶¶ 42-43.) It is as a result of this letter that Plaintiff files the present class action lawsuit “on behalf of himself and all others similarly situated.” (Id. ¶ 44.) “Specifically, Plaintiff seeks to represent the following class of individuals: All persons located in the State of North Carolina to whom Defendant sent, within one year before the date of this complaint and in connection with the collection of a debt, a collection letter based upon the Template.” (Id.) Plaintiff alleges that he satisfies the requirements to initiate a class action and to serve as the class representative. (Id. ¶¶ 45-61.)

         B. Claims

         Plaintiff's first claim alleges a violation of 15 U.S.C. § 1692e, in which Plaintiff argues Defendant violated the statute “by using the name ARS or Account Resolution Services, when those names are not registered in the state of North Carolina and are not the true names of Defendant's business.” (Id. ¶ 66.)

         Plaintiff's second claim alleges a violation of 15 U.S.C. § 1692f, in which Plaintiff argues Defendant violated the statute “by engaging in unfair or unconscionable means to collect or attempt to collect any debt from Plaintiff . . . without complying with North Carolina's requirement to use the name of a registered collection agency within North Carolina and identifying their permit number.” (Id. ¶ 71.)

         Plaintiff's remaining claims arise under state law and allege violations of N.C. Gen. Stat. § 58-70-110 and N.C. Gen. Stat. § 75-54. The state law claims include two claims pled in the alternative, depending upon whether the Defendant is or is not a “collection agency.” (Pl.'s Resp. to HRRG's Mot. to Dismiss) (“Pl.'s Resp.”) (Doc. 13) at 14 n.2.)

         Plaintiff requests that he be certified as the class representative and that the Complaint be designated as “the operable complaint for class purposes.” (See Compl. ¶¶ 66, 71, 74, 77.) For each claim, Plaintiff requests appropriate statutory damages as well as attorneys' fees and costs. (Id.)


         “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 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible provided the plaintiff provides enough factual content to enable the court to reasonably infer that the defendant is liable for the misconduct alleged. Id. The pleading setting forth the claim must be “liberally construed” in the light most favorable to the nonmoving party, and allegations made therein are taken as true. Jenkins v. McKeithen, 395 U.S. 411, 421 (1969).

         However, “the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege any facts [that] set forth a claim.” Estate of Williams-Moore v. Alliance One Receivables Mgmt., Inc., 335 F.Supp.2d 636, 646 (M.D. N.C. 2004).

         Rule 12(b)(6) protects against meritless litigation by requiring sufficient factual allegations “to raise a right to relief above the speculative level” so as to “nudge[] the[] claims across the line from conceivable to plausible.” Twombly, 500 U.S. at 555, 570; see Iqbal, 556 U.S. at 662.

         Under Iqbal, the court performs a two-step analysis. First, the court separates factual allegations from allegations not entitled to the assumption of truth (i.e., conclusory allegations, bare assertions amounting to nothing more than a “formulaic recitation of the elements”). Iqbal, 556 U.S. at 681. Second, the court determines whether the factual allegations, which are accepted as true, “plausibly suggest an entitlement to relief.” Id. “At this stage of the litigation, a plaintiff's well-pleaded allegations are taken as true and the complaint, including all reasonable inferences therefrom, are liberally construed in the plaintiff's favor.” Estate of Williams-Moore, 335 F.Supp.2d at 646.


         A. Plaintiff Satisfies the Standing Requirement

         In its motion to dismiss, Defendant argues that “[d]ismissal of this lawsuit is warranted because the Court is deprived of subject matter jurisdiction based on the Plaintiff's lack of standing under Article III of the United States Constitution and similar prescriptions of North Carolina state law.” (Def.'s Mem. of Law in Supp. of Mot. to Dismiss) (“Def.'s Mem.”) (Doc. 7) at 5.) Defendant argues that “[t]here is not a single allegation in the Complaint to support that the Plaintiff experienced a concrete and particularized injury as a result of the Defendant's alleged conduct. That is unsurprising because the only conduct being complained of is a name on a piece of paper.” (Id. at 7.) Defendant argues that “[t]here is no plausible way that a name, on its own, could inflict a concrete and particularized injury of the type that would confer standing.” (Id.)

         Plaintiff responds that “[t]he legally protected interests in this case are the right under § 1692e and the NCCPA [North Carolina Collection Agency Act] not to be the target of misleading communications, and the right under § 1692f not to be the target of unfair or unconscionable collection practices.” (Pl.'s Resp. (Doc. 13) at 15.) Plaintiff argues that Defendant violated this right because “[t]he letter failed to use HRRG's true name, thereby actually invading his legally protected interest in receiving that information. Additionally, the letter's use of a name other than HRRG's true name similarly invaded Plaintiff's legally protected interest in being free from misrepresentations.” (Id. at 16.)

         Defendant replies that “the Plaintiff cannot demonstrate he has suffered a particularized or concrete injury.” (Def.'s Reply to Pl.'s Resp. to Def.'s Mot. to Dismiss (“Def.'s Reply”) (Doc. 15) at 3.) Defendant argues that “[t]he concreteness requirement for standing provides that a plaintiff may not ‘allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.'” (Id. at 5) (citing Spokeo, Inc. v. Robins, 578 U.S.,, 136 S.Ct. 1540, 1549 (2016)).

         Article III standing requires:

(1) an injury in fact (i.e., a “concrete and particularized” invasion of a “legally protected interest”); (2) causation (i.e., a “fairly . . . trace[able]” connection between the alleged injury in fact and the alleged conduct of the defendant); and (3) redressability (i.e., it is “likely” and not merely “speculative” that the plaintiff's injury will be remedied by the relief plaintiff seeks in bringing suit).

         David v. Alphin, 704 F.3d 327, 333 (4th Cir. 2013) (quoting Sprint Commc'ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 273-74 (2008)). Defendant only contests the first prong, that is, whether Plaintiff has suffered an “injury in fact.” (Id.)

         “The Fourth Circuit has yet to address the issue of whether a plaintiff must suffer an actual economic loss to bring suit under the FDCPA [Fair Debt Collection Practices Act], but several circuits which have considered the issue have found that no actual economic loss is required in order to have standing under the FDCPA.” Brown v. Transurban USA, Inc., 144 F.Supp.3d 809, 827 (E.D. Va. 2015) (citing Keele v. Wexler, 149 F.3d 589, 593-94 (7th Cir. 1998) (“The FDCPA does not require proof of actual damages as a precursor to the recovery of statutory damages.”); Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1116 (9th Cir. 2014) (“The alleged violation of [the plaintiff]'s statutory rights stems solely from the defendants' having mailed to him their collection letters, and that injury would be redressed by an award of statutory damages, which the FDCPA makes available to prevailing consumers.”); Robey v. Shapiro, Marianos & Cejda, L.L.C., 434 F.3d 1208, 1212 (10th Cir. 2006) (“Accordingly, [the plaintiff] has been injured under the terms of the FDCPA and can seek legal redress of his claims under that act. He has thus satisfied the ‘injury in fact' and other requirements of constitutional standing.”); Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 307 (2d Cir. 2003) (“Thus, courts have held that actual damages are not required for standing under the FDCPA.”); see Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 448-49 (6th Cir. 2014) (“A plaintiff does not . . . have to have suffered actual damages.” (citations omitted)).

         Plaintiff and Defendant extensively dispute the significance and application of Spokeo throughout their briefs. (See Def.'s Mem. (Doc. 7) at 6-7; Pl.'s Resp. (Doc 13) at 15-19; Def.'s Reply (Doc. 15) at 2-5.) This court is most persuaded by the reasoning set forth by another district court within the Fourth Circuit in the case Biber v. Pioneer Credit Recovery, Inc., Case No. 1:16-cv-804, 2017 WL 118037 (E.D. Va. Jan. 11, 2017):

Not surprisingly, in the wake of Spokeo, the overwhelming majority of courts have held that FDCPA claims similar to [the plaintiff]'s are sufficient to satisfy Article III's requirement that a plaintiff establish an injury in fact. The underlying logic in these opinions is (i) that Congress, in the FDCPA, created a right to accurate debt-related information and non-abusive collection practices, and (ii) that a debt collector's false, misleading, deceptive, or abusive conduct concretely harms a debtor by detrimentally affecting that debtor's decisions regarding his debt. In other words, § 1692e provides certain debtors a right to be free from false, deceptive, or misleading conduct or representations by debt collectors, precisely because such conduct or representations may cause harm or a material risk of harm. Thus, in many instances, violations of § 1692e differ significantly from the innocuous, bare “procedural violations” described by the Supreme Court in Spokeo.

Id. at *3 (collecting cases). This court concludes similarly to Biber, that “[t]he ‘injury in fact' suffered by Plaintiffs under the FDCPA is not any actual economic loss, but rather being subjected to the allegedly ‘unfair and abusive practices' of [the] Defendants.” Transurban USA, 144 F.Supp.3d at 827; seeAllah-Mensah v. Law Office of Patrick M. Connelly, P.C., Civil Action No. PX-16-1053, 2016 WL 6803775, at *8 (D. Md. Nov. 17, 2016) (‚ÄúDefendant's factual challenge to standing asserts that Plaintiff's request for statutory damages is proof of a lack of concrete injury. But the FDCPA's right to information through a strict ...

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