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McAdory v. M.N.S & Associates, LLC

United States District Court, D. Oregon, Portland Division

November 3, 2017

JILLIAN MCADORY, an Individual Residing in Multnomah County, Plaintiff,
M.N.S & ASSOCIATES, LLC, and DNF ASSOCIATES, LLC, foreign limited liability companies, Defendants.

          Kelly D. Jones Kelly D. Jones, Attorney at Law, Kevin A. Mehrens Law Office of Kevin A. Mehrens Attorneys for Plaintiff

          Jordan M. New The Law Office of Jordan Michael, Brendan H. Little Lippes Mathias Wexler Friedman LLP Attorneys for Defendant

          OPINION & ORDER

          MARCO A. HERNÁNDEZ, United States District Judge

         In this Fair Debt Collection Practices action, Defendant DNF Associates, LLC moves to dismiss Plaintiff Jillian McAdory's Amended Complaint, arguing that (1) DNF cannot be a “debt collector” as defined by the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (“FDCPA”), and (2) even if DNF can be a “debt collector” under the statute, Plaintiff failed to plausibly allege that DNF is a “debt collector.” Because I agree with DNF's first argument, I grant DNF's motion.


         The issue at hand revolves around a consumer debt Plaintiff incurred with Kay Jewelers, a non-party, which Kay Jewelers subsequently sold to DNF. Am. Compl. ¶¶ 3, 8, ECF 16. Plaintiff alleges that DNF is vicariously liable for allegedly illegal debt collection activities taken by M.N.S. Id. at ¶ 20. The following facts are taken from Plaintiff's First Amended Complaint.

         In late November 2016, Plaintiff first learned of DNF in a letter sent to her by a non-party company called First Choice Assets, LLC. Id. at ¶ 9. The letter stated that Plaintiff “owed a debt to DNF that originated with Kay Jewelers.” Id. Because Plaintiff had never heard of DNF, she ignored the letter. Id. On February 24, 2017, Plaintiff received a voice message that did not identify the caller nor reference any debt, instead stating the call was in regards to “asset verification.” Id. at ¶ 9. The message scared Plaintiff into returning the call, during which Plaintiff spoke with someone who identified himself as M.N.S. agent Michael Shaw. Id. at ¶ 13. Shaw implied he was a lawyer and indicated that Plaintiff was about to be sued for unpaid debt. Id.

         In later calls and emails with M.N.S., Plaintiff agreed to pay the debt. Id. at ¶¶ 14-18. Then, in May 2017, Plaintiff filed this action, alleging that M.N.S. had violated multiple provisions of the FDCPA. Id. at ¶ 22. Furthermore, Plaintiff alleges that DNF was itself a debt collector and was vicariously liable for M.N.S.'s violations of the statute. Id. at ¶ 20. Plaintiff alleges that DNF purchases defaulted consumer debts, and then “contracts with a myriad of other physical debt collectors across the country, ” supplying information necessary to facilitate the collection of those debts. Id. at ¶ 6. Plaintiff further alleges that the third parties “make contact with alleged debtors, in DNF's name, and at DNF's direction, ” operating within parameters set by DNF. Id. In response, DNF moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that it cannot be held vicariously liable as DNF does not meet the statutory definition of “debt collector.”


         A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept all material facts alleged in the complaint as true and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012). However, the court need not accept unsupported conclusory allegations as truthful. Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir.1992); see also Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) ("we do not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations") (internal quotation marks and alterations omitted).


         The issues raised in Defendant's motion are (1) whether a debt purchaser such as DNF can possibly meet the definition of “debt collector” under the FDCPA, 15 U.S.C. § 1692a(6), and (2) if it can, did Plaintiff allege sufficient facts or actions taken by DNF to plausibly allege that DNF meets the statutory definition of “debt collector.” DNF argues that a debt purchaser who merely buys defaulted accounts and takes no affirmative action to collect on said debt can never meet the statutory definition of “debt collector.” Plaintiff counters that DNF does meet the statutory definition of “debt collector” as the principal purpose of DNF's business is “the acquisition and subsequent collection of defaulted debts.” Pl.'s Resp. 14, ECF 20.

         The FDCPA defines a debt collector at 15 U.S.C. § 1692a(6):

The term “debt collector” means any person [1] who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or [2] who regularly collects or attempts to collect, directly or ...

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