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Kaiser v. Cascade Capital LLC

United States District Court, D. Oregon, Portland Division

March 28, 2018

MICHAEL KAISER and MARGARET J. LOEWEN, on behalf of themselves and others similarly situated, Plaintiffs,



         On May 25, 2017, Magistrate Judge John V. Acosta issued his Findings and Recommendation [71] (“F&R”), in which he recommended that the Court (1) deny Defendants' Motion to Dismiss [19] pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction and (2) grant in part and deny in part Defendants' Motion pursuant to Rule 12(b)(6) for failure to state a claim.

         In particular, the Magistrate Judge recommended the Court grant Defendants' Rule 12(b)(6) Motion as to Plaintiff Margaret J. Loewen's claims under the Fair Debt Collection Practices Act (FDCPA) §§ 1692d, 1692e(5), 1692e(9), and 1692f(1); as well as Loewen's common-law intentional infliction of emotional distress (IIED) claim. The Magistrate Judge further recommended the Court deny Defendants' Rule 12(b)(6) Motion as to Loewen's claims under the FDCPA §§ 1692e, 1692e(2); 1692e(10); 1692f. Moreover, the Magistrate Judge recommended the Court find that the FDCPA is not unconstitutional, deny Defendants' Motion to Strike paragraph 18 of First Amended Complaint (FAC), and grant Defendants' Motion to Make More Definite and Certain.[1]

         On June 28, 2017, Loewen filed Objections [80] to the Magistrate Judge's F&R, and, on June 30, 2017, Defendants filed their own Amended Objections [81] to the F&R.[2] Defendants responded [82] to Loewen's Objections and, in turn, Loewen responded [83] to Defendants' Objections.

         On September 14, 2017, this Court directed the parties to clarify the record as to the relationship between the claims of Plaintiffs Kaiser and Loewen and for the Magistrate Judge to consider whether, in light of that clarification, this Court should proceed on the litigation of the Loewen's claims while Kaiser's claims were stayed pending arbitration.

         On December 19, 2017, the Magistrate Judge issued an Amended F&R [99] in which he memorialized the parties' clarification of the record as to the relationship between Plaintiffs' respective claims and recommended the Court proceed to consider Loewen's claims, including the original F&R [71]. No. party filed any objection to the Magistrate Judge's Amended F&R [99]. After review of the record the Court agrees with the Magistrate Judge's findings and recommendations contained in the Amended F&R, and, therefore, the Court ADOPTS the Magistrate Judge's Amended F&R [99] and proceeds to consideration of the original F&R [71] together with the parties' Objections thereto.

         For the reasons that follow, the Court ADOPTS in part and DECLINES TO ADOPT in part the Magistrate Judge's F&R [71]. The Court GRANTS in part and DENIES in part Defendants' Motion to Dismiss [19] for Failure to State a Claim. The Court denies Defendants' Motion insofar as it is based on Rule 12(b)(1). The Court grants in part Defendants' Motion insofar as it seeks dismissal of Plaintiff's FAC pursuant to Rule 12(b)(6), but denies in part Defendants' Rule (12)(b)(6) Motion to the extent that it seeks dismissal of Loewen's claims with prejudice. The Court DENIES Defendants' Motion to Strike and GRANTS Defendants' Motion to Make More Definite and Certain.

         The Court, therefore, DISMISSES Loewen's FAC [14] without prejudice pursuant to Rule 12(b)(6) with leave to amend in the event that Loewen can allege in good faith facts sufficient to address the pleading deficiencies identified in this Opinion and Order and in those portions of the F&R that the Court adopts.


         The magistrate judge makes only recommendations to the Court, to which any party may file written objections. The Court is not bound by the recommendations of the magistrate judge, but retains responsibility for making the final determination. The Court is generally required to make a de novo determination regarding those portions of the report or specified findings or recommendations as to which an objection is made. 28 U.S.C. § 636(b)(1)(C). However, the Court is not required to review, de novo or under any other standard, the factual or legal conclusions of the magistrate judge as to those portions of the F&R to which no objections are addressed. See Thomas v. Arn, 474 U.S. 140, 149 (1985); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003). While the level of scrutiny with which the Court is required to review the F&R depends on whether or not objections have been filed, in either case, the Court is free to accept, reject, or modify any part of the F&R. 28 U.S.C. § 636(b)(1)(C).


         Defendants and Loewen each object to the Magistrate Judge's F&R on several bases. Accordingly, the Court considers the parties' objections in turn.

         I. Article III Standing

         Defendants object to the Magistrate Judge's finding that Loewen has standing to bring her FDCPA claims under Article III of the United States Constitution.

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of standing, a plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) as revised (May 24, 2016). Plaintiff bears the burden of proof and must “‘clearly . . . allege facts demonstrating' each element.” Id. (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)). An injury in fact is one that is (a) concrete and particularized and (b) actual or imminent. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). For an injury to be particularized it “‘must affect the plaintiff in a personal and individual way.'” Spokeo, 136 S.Ct. at 1548 (quoting Lujan, 504 U.S. at 560 n.1).

         The parties' dispute centers on whether Loewen's injury was sufficiently “concrete” to confer Article III standing. “A ‘concrete' injury must be ‘de facto'; that is, it must actually exist.” Id. “‘Concrete' is not, however, necessarily synonymous with ‘tangible.'” Id. at 1549. “In determining whether an intangible harm constitutes injury in fact, both history and the judgment of Congress play important roles.” Id. Because “Article III standing requires a concrete injury even in the context of a statutory violation, ” a “bare procedural violation” does not meet Article III standing requirements. Id. at 1549-50. A sufficiently strong risk of harm, however, can satisfy the requirement of concreteness. Id.

         In Spokeo, the Supreme Court concluded the Ninth Circuit erred when it did not analyze the concreteness requirement separately from the particularity requirement. Id. at 1545. Accordingly, the Supreme Court remanded to the Ninth Circuit for further analysis of the standing issues in light of the Supreme Court's further explanation of the concreteness requirement. Id. at 1550.

         On remand, the Ninth Circuit explained “while [a plaintiff] may not show an injury-in-fact merely by pointing to a statutory cause of action, the Supreme Court also recognized that some statutory violations, alone, do establish concrete harm.” Robins v. Spokeo, Inc., 867 F.3d 1108, 1113 (9th Cir. 2017) (emphasis in original). The Ninth Circuit adopted the standard articulated by the Second Circuit: “‘[A]n alleged procedural violation [of a statute] can by itself manifest concrete injury where Congress conferred the procedural right to protect a plaintiff's concrete interests and where the procedural violation presents a risk of real harm to that concrete interest.'” Id. (quoting Strubel v. Comenity Bank, 842 F.3d 181, 190 (2d Cir. 2016)). Pursuant to that standard, the Ninth Circuit assessed the plaintiff's allegations under the following framework: “(1) whether the statutory provisions at issue were established to protect his concrete interests (as opposed to purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests.” Id.

         The Magistrate Judge found “Congress elevated to the status of a legally cognizable injury violation of a consumer's ‘right not to be the target of misleading debt collection communications, '” but noted the “misleading communication must be material.” F&R [71], at 9 (quoting Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1116 (9th Cir. 2014)). The Magistrate Judge found the allegations in this case met that standard and, therefore, concluded Loewen had Article III standing to pursue her FDCPA claims. Although the Court finds the standard that the Magistrate Judge applied to be similar to the standard the Ninth Circuit articulated in Robins (which the Ninth Circuit issued after the Magistrate Judge issued the original F&R), the Court comments additionally only to make clear that Loewen's allegations also meet the specific standard articulated in Robins.

         Plaintiff's factual allegations relevant to her FDCPA claims are relatively straightforward. The Magistrate Judge summarized those allegations as follows:

Loewen bought a car from McMullin Chevrolet Pontiac Inc. (“McMullin”) on December 6, 2007. (First. Am. Compl. (“FAC”), ECF No. 14, ¶ 16.) Loewen signed a retail installment contract that stated McMullin would sell the contract to Drive Financial Services. (Id.) Sometime before January 31, 2010, Loewen defaulted on the contract and the car was repossessed. (Id.)
Cascade hired GAT to collect debts Cascade had previously purchased.[3] (FAC ¶ 15.) On August 3, 2015, GAT sent Loewen a collection letter for payment of the remaining $3, 325.16 of her retail installment contract. (FAC ¶ 17.) GAT implied Cascade would file a lawsuit if Loewen did not pay her debt. (Id.)
On October 29, 2015, Defendants filed a lawsuit against Loewen in state court to collect on the debt. (FAC ¶ 19). Loewen sought the help of a bankruptcy attorney because she feared her government benefits would be taken away. (Id.) The bankruptcy lawyer dissuaded Loewen from filing bankruptcy because Loewen was “judgment proof.” (Id.) The bankruptcy attorney contacted Defendants on December 21, 2015. (Id.) On February 25, 2016, Defendants dismissed the lawsuit against Loewen. (Id.)
Loewen subsequently sued Defendants claiming that Defendants' filing of a time-barred lawsuit was a violation of the FDCPA. (FAC ¶ 27-28.) Loewen further claims that the filing of the lawsuit caused her anxiety. (FAC ¶ 20). Loewen claims that Defendants production of a “packet of papers” regarding the debt caused her additional anxiety. (FAC ¶ 18.)

F&R [71], at 2-3. Loewen contends Defendants' communications to her were materially misleading because the statute of limitations had run on Loewen's debt and, therefore, it was ...

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