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Chase v. Gordon, Aylworth & Tami, P.C.

United States District Court, D. Oregon

October 10, 2019

CARLTON CHASE, ERIC MACCARTNEY, and LUANNE MUELLER, individually and on behalf of others, Plaintiffs,
v.
GORDON, AYLWORTH & TAMI, P.C. and VISION INVESTIGATIVE SERVICE, Defendants.

          Michael Fuller, OlsenDaines, Kelly D. Jones, and Matthew Sutton, Of Attorneys for Plaintiffs.

          Xin Xu, Xin Xu Law Group, and Matthew R. Aylworth, Daniel N. Gordon, P.C., Of Attorneys for Defendants.

          OPINION AND ORDER

          MICHAEL H. SIMON, UNITED STATES DISTRICT JUDGE

         Plaintiffs Carlton Chase (“Chase”), Eric MacCartney (“MacCarthy”), and Luanne Mueller (“Mueller, ”) (collectively, “Plaintiffs”) bring this putative class action against Defendants Gordon, Aylworth & Tami, P.C. (“GAT”) and Vision Investigative Services (“Vision”) (collectively, “Defendants”). GAT is an Oregon law firm, and Vision is a wholly owned subsidiary of GAT. Plaintiffs allege that GAT violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, and Oregon's Unlawful Trade Practices Act (“UTPA”), Or. Rev. Stat. §§ 646.605-656. Plaintiffs also allege against both Defendants a claim for common law unjust enrichment. Defendants have moved to dismiss all claims asserted by Plaintiffs under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure and to dismiss Plaintiffs' state law claims (both statutory and common law) under Oregon's anti-SLAPP statute, Or. Rev. Stat. § 31.150. ECF 19. United States Magistrate Judge John Acosta issued Findings and Recommendations, recommending that this Court dismiss all claims based on both the Rooker-Feldman doctrine and issue preclusion and declining to address Defendants' anti-SLAPP arguments. ECF 37. Plaintiffs timely objected, requiring this Court to give this matter de novo review.[1] Defendants timely responded, and the Court heard oral argument. For the reasons stated below, the Court declines to adopt Judge Acosta's Findings and Recommendations and denies Defendants' motion to dismiss under Rules 12(b)(1) and 12(b)(6). This case is returned to Judge Acosta, who may consider Defendants' anti-SLAPP arguments asserted against Plaintiffs' state law claims.

         STANDARDS

         A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

         Federal courts are courts of limited jurisdiction. Gunn v. Minton, 568 U.S. 251, 256 (2013) (quotation marks omitted). As such, a court is to presume “that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted); see also Robinson v. United States, 586 F.3d 683, 685 (9th Cir. 2009); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of “subject-matter jurisdiction, because it involves a court's power to hear a case, can never be forfeited or waived.” United States v. Cotton, 535 U.S. 625, 630 (2002). An objection that a particular court lacks subject matter jurisdiction may be raised by any party, or by the court on its own initiative, at any time. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); Fed.R.Civ.P. 12(b)(1). The Court must dismiss any case over which it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3); see also Pistor v. Garcia, 791 F.3d 1104, 1111 (9th Cir. 2015) (noting that when a court lacks subject-matter jurisdiction, meaning it lacks the statutory or constitutional power to adjudicate a case, the court must dismiss the complaint, even sua sponte if necessary).

         A motion to dismiss for lack of subject matter jurisdiction brought under Rule 12(b)(1) may be either facial or factual. See Safe Air for Everyone, 373 F.3d at 1039. A facial attack on subject matter jurisdiction is based on the assertion that the allegations in the complaint are insufficient to invoke federal jurisdiction. Id. “A jurisdictional challenge is factual where ‘the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.'” Pride v. Correa, 719 F.3d 1130, 1133 n.6 (9th Cir. 2013) (quoting Safe Air for Everyone, 373 F.3d at 1039). When a defendant factually challenges the plaintiff's assertion of jurisdiction, a court does not presume the truthfulness of the plaintiff's allegations and may consider evidence extrinsic to the complaint. See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012); Robinson, 586 F.3d at 685; Safe Air for Everyone, 373 F.3d at 1039. A factual challenge “can attack the substance of a complaint's jurisdictional allegations despite their formal sufficiency.” Dreier v. United States, 106 F.3d 844, 847 (9th Cir. 1996) (citation and quotation marks omitted).

         B. Motion to Dismiss for Failure to State a Claim

         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 as true all well-pleaded material facts alleged in the complaint 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); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The court must draw all reasonable inferences from the factual allegations in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “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.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Mashiri v. Epstein Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quotation marks omitted).

         BACKGROUND

         GAT is a law firm based in Eugene, Oregon. Among its other clients, GAT represents creditors in debt collection lawsuits. In 2017, GAT filed three separate lawsuits in Oregon state court against Chase, MacCartney, and Mueller, the named Plaintiffs in this case. GAT filed these state court collection actions on behalf of its client Midland Funding LLC (“Midland”). In the state court actions, Midland, as the state court plaintiff, sought to collect on delinquent accounts owed by Chase, MacCarthy, and Mueller. The Plaintiffs here, who were the defendants in the state court collection actions, each received service of a state court summons and complaint. Each state court complaint alleged that the named defendant owed certain money to a creditor and that Midland purchased the defendant's relevant account or accounts from that creditor. In each state complaint, Midland sought the amount of the debt owed plus “costs and disbursements incurred herein.”

         Vision, a wholly owned subsidiary of GAT, served the defendants in the state collection actions (the named Plaintiffs here) by certified mail, return receipt requested, restricted delivery. The defendants in the state collection actions declined to appear in the state lawsuits, and the state court entered default judgments against them. After each entry of default, GAT filed a Statement of Costs with the relevant state court, but GAT did not serve those defendants with copies of the Statement of Costs. In each Statement of Costs, GAT requested, in addition to the filing fee, a fee of $45 for “Service Fees (expedited service).” Further, each Statement of Costs contained the following affirmative representation by GAT: “Expedited Service was necessary and the service fees set forth below [$45.00] reflect the actual costs of the service.” (Emphasis added.) The relevant state court allowed the requested costs, and each state court defendant (the named Plaintiffs here) ultimately paid in full the judgments against them, including the $45 fee for expedited service. Plaintiffs in this action contend that expedited service was not necessary, that $45 was not the actual cost of service, and that the fact that Vision was a wholly owned subsidiary of GAT was not disclosed.

         DISCUSSION

         Defendants, GAT and Vision, argue in their motion to dismiss that they already “litigated” the service fee issue in state court when the state court judge (or, perhaps, a clerk of the court) approved the Statement of Costs. Defendants further argue that when the named Plaintiffs here, Chase, MacCarthy, and Mueller, failed to appear in state court, they waived their rights to receive notice of the Statement of Costs as well as their rights to object in state court to the requested service fees. Thus, according to GAT and Vision, this Court lacks jurisdiction under the Rooker-Feldman doctrine and, further, issue preclusion bars Plaintiffs' claims.

         A. The Rooker-F ...


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