FORRESTER WINNE v. NATIONAL COLLEGIATE STUDENT LOAN TRUST 2005-1 et al
ORDER ON DEFENDANTS' MOTIONS TO DISMISS THE SECOND AMENDED COMPLAINT AND ON PLAINTIFFS' MOTION TO SUPPLEMENT granting 206 Motion to Supplement the Record ; granting 154 Motion to Dismiss for Failure to State a Claim; granting 155 Motion to Dismiss for Failure to State a Claim; granting 155 Motion to Dismiss for Lack of Jurisdiction; granting 167 Motion to Dismiss By JUDGE JON D. LEVY. (ccs)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
JANE C. FORRESTER WINNE,
STUDENT LOAN TRUST 2005-1,
ORDER ON DEFENDANTS’ MOTIONS TO DISMISS THE SECOND
AMENDED COMPLAINT AND ON PLAINTIFFS’ MOTION TO
Jane Forrester Winne, Sarah Coffey, Vickie McMullen, and Karin Hills filed a
Second Amended Complaint (“the Complaint”) on behalf of a putative class against
24 named defendants, alleging claims arising out of attempts to collect on student
loan debts. See ECF No. 112. Fifteen Defendants, including 13 of the 17 National
Collegiate Student Loan Trusts,1 Wilmington Trust Company, and The First
Marblehead Corporation, now known as Cognition Financial Corporation,2 have
moved to dismiss the claims against them. ECF No. 154; ECF No. 155; ECF No. 167.
1 National Collegiate Student Loan Trusts 2001-CP1, 2002-CP1, 2003-1, 2004-1, 2004-2, 2005-2,
2006-1, 2006-2, 2006-4, 2007-2, 2007-3, 2007-4, and National Collegiate Master Student Loan Trust
brought a joint motion to dismiss. ECF No. 154 at 1 n.1. National Collegiate Student Loan Trusts
2005-1, 2005-3, 2006-3, and 2007-1 did not join the motion to dismiss, and have filed answers to the
Second Amended Complaint. See ECF No. 125; ECF No. 156. For the sake of clarity, this opinion will
refer to the 13 National Collegiate Student Loan Trusts involved in the instant motion as “the Trusts.”
The Defendant identified in the Second Amended Complaint as “First Marblehead Corporation”
changed its name to Cognition Financial Corporation in May 2017. ECF No. 166 at 2. Taking its lead
from the briefs, however, this order will refer to this party as “First Marblehead Corporation.”
Plaintiffs have moved to supplement the record before the Court related to the
motions to dismiss with the deposition of Bradley Luke, an employee of Defendant
Transworld Systems, Inc., that was taken in a separate collection action filed against
two of the named Plaintiffs. ECF No. 206.
The Plaintiffs allege that they, along with other Maine residents, have been
the subject of unlawful and fraudulent student debt collection activities. They allege
that a large number of student loans purportedly owned by a series of National
Collegiate Student Loan Trusts are not collectible because the Trusts do not have a
lawful basis to collect on the loans, and that the collection efforts undertaken by the
Defendants violate state and federal law. Each of the named Plaintiffs borrowed
money to finance her education or the education of a family member. The student
loan debt was then sold by the original lender, and eventually acquired by one of the
National Collegiate Student Loan Trusts. Each of the named Plaintiffs asserts that,
beginning in 2014, she was contacted by an entity acting on behalf of a National
Collegiate Student Loan Trust, seeking to collect on a debt. The Plaintiffs allege that
these collection efforts violate the federal Fair Debt Collection Practices Act, 15
U.S.C.A. §§ 1692–1692p (2017), (“FDCPA”) the Maine Fair Debt Collection Practices
Act, 32 M.R.S.A. §§ 11001–11054 (2017), (“MFDCPA”) and the Maine Unfair Trade
Practices Act, 5 M.R.S.A. §§ 205-A–214 (2017), (“UPTA”) as well as constituting fraud
and breach of contract.
The Trusts move to dismiss the claims against them for lack of standing and
failure to state a claim. Wilmington moves to dismiss the claims against it for lack
of personal jurisdiction and failure to state a claim. First Marblehead moves to
dismiss the claims against it for lack of standing, lack of personal jurisdiction, and
failure to state a claim. I address each motion in turn.3
1. Motion to Dismiss for Failure to State a Claim
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
a complaint “must contain sufficient factual matter to state a claim to relief that is
plausible on its face.” Saldivar v. Racine, 818 F.3d 14, 18 (1st Cir. 2016) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (internal quotation marks and alterations
omitted). The court should accept all well-pleaded facts as true, while ignoring
conclusory legal allegations. Id. All reasonable inferences should be drawn in favor
of the non-moving party. Id. at 16. The complaint must contain facts that support a
reasonable inference “that the defendant is liable for the misconduct alleged.” Iqbal,
556 U.S. at 678. Determining the plausibility of a claim is a context-specific task that
requires the court “to draw on its judicial experience and common sense.” Saldivar,
818 F.3d at 18 (quoting Iqbal, 556 U.S. at 679) (quotation marks omitted). The
burden of demonstrating that the complaint does not state a claim for which relief
can be granted is on the Defendants. See 5B Charles Alan Wright & Arthur R. Miller
et al., Federal Practice and Procedure § 1357 (3d ed. 2017 Update).
This is the second order issued on motions to dismiss in this case. The first order granted the
motions to dismiss filed by Defendants Citizens Bank, N.A., and PNC Bank, N.A., and denied the
motion to dismiss filed by Defendant U.S. Bank National Association. See ECF No. 109.
Allegations of fraud are subject to the higher pleading standard of Federal Rule
of Civil Procedure Rule 9(b). See Fed. R. Civ. P. 9(b). The complaint must “be specific
about the ‘time, place, and content of an alleged false representation[.]’” Murtagh v.
St. Mary’s Reg’l Health Ctr., No. 1:12-cv-00160, 2013 WL 5348607, at *6 (D. Me. Sep.
23, 2013) (quoting Hayduk v. Lanna, 775 F.2d 441, 444 (1st Cir. 1985)).
conclusory allegations will not satisfy the particularity requirement. See Hayduk,
775 F.2d at 444. Rule 9(b) also requires that plaintiffs identify a basis for inferring
scienter on the part of the defendant. N. Am. Catholic Educ. Programming Found.,
Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir. 2009).
2. Motion to Dismiss for Lack of Personal Jurisdiction
A plaintiff has the burden of establishing the court’s personal jurisdiction over
a defendant. Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 674-75 (1st Cir. 1992). When
a defendant files a motion to dismiss for want of personal jurisdiction pursuant to
Rule 12(b)(2), “a district court may choose from among several methods for
determining whether the plaintiff has met its burden.” Baskin-Robbins Franchising
LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st Cir. 2016) (quoting Adelson v.
Hananel, 510 F.3d 43, 48 (1st Cir. 2007)) (internal quotation marks omitted). The
“most conventional” of these methods is the prima facie method, which “permits the
district court to consider only whether the plaintiff has proffered evidence that, if
credited, is enough to support findings of all facts essential to personal jurisdiction.”
Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir. 1995)
(quoting Boit, 967 F.2d at 675) (internal quotation marks omitted).
To satisfy the prima facie standard, the plaintiff must show that the
requirements of both the forum’s long arm statute and the due process clause of the
Constitution are satisfied. Boit, 967 F.2d at 675. The Maine long-arm statute extends
“to the fullest extent permitted by the due process clause” and therefore the
constitutional inquiry controls. Harlow v. Children’s Hosp., 432 F.3d 50, 57 (1st Cir.
2005) (quoting 14 M.R.S.A. § 704-A(1)).
Since the Supreme Court’s opinion in Int’l Shoe Co. v. State of Washington, 326
U.S. 310 (1945), courts have divided the personal jurisdiction analysis into two parts:
“general” and “specific” personal jurisdiction. Donatelli v. Nat’l Hockey League, 893
F.2d 459, 462-63 (1st Cir. 1990). General jurisdiction exists when the defendant has
engaged in “continuous and systematic activity” in the forum. Harlow, 432 F.3d at
64. Specific jurisdiction exists when “the cause of action . . . arises directly out of, or
is related to, the defendant’s forum-based contacts.” Id. at 60-61. For both categories
of personal jurisdiction, the defendant must have sufficient “minimum contacts” with
the forum; those contacts must be purposeful; and the exercise of jurisdiction must
be reasonable under the circumstances. Id. at 57.
3. Motion to Dismiss for Lack of Standing
Article III of the Constitution limits the judicial power to actual cases and
controversies. See Warth v. Seldin, 422 U.S. 490, 498 (1975). “One element of the
case-or-controversy requirement is that plaintiffs must establish that they have
standing to sue.” Kerin v. Titeflex Corp., 770 F.3d 978, 981 (1st Cir. 2014) (quotation
omitted). A plaintiff must plead three elements to satisfy the standing requirement:
injury in fact, traceability, and redressability.
Id. (citing Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61 (1992)). “Prudential considerations . . . demand that
there be ‘concrete adverseness which sharpens the presentation of issues.’” United
States v. Windsor, 133 S. Ct. 2675, 2680 (2013) (quoting Baker v. Carr, 369 U.S. 186,
204 (1962)). Therefore, courts are limited to deciding cases where the party seeking
review demonstrates “a personal stake in the outcome of the controversy.” Pollard v.
Law Office of Mandy L. Spaulding, 766 F.3d 98, 102 (1st Cir. 2014) (quoting Baker,
369 U.S. at 204).
Motion to Supplement the Record
The Trusts, Wilmington, and First Marblehead oppose Plaintiffs’ motion to
Wilmington and First Marblehead argue that consideration of the
deposition testimony would violate the principles underlying Federal Rule of Civil
Procedure 32 because they were not given notice of the deposition and did not have
the opportunity to be represented by counsel at its taking. Rule 32 states that a
deposition may be used against a party at a hearing or trial if “the party was present
or represented at the taking of the deposition or had reasonable notice of it.” Fed. R.
Civ. P. 32(a)(1)(A). By its terms, however, Rule 32 applies to the use of deposition
testimony at a hearing or trial, and therefore does not bar consideration of the
transcript in ruling on the instant motions. Accordingly, the Plaintiffs’ motion to
supplement is granted.
The Trusts’ Motion
The Trusts argue that the claims against them should be dismissed because
the Plaintiffs lack standing and because the Complaint fails to state a claim.
The Trusts assert that at least one named plaintiff in a putative class action
must have standing against each individual defendant, and that Plaintiffs have
admitted that they do not have standing to sue because they acknowledge that they
do not have individual claims against the 13 Trusts that brought the joint motion to
As a general rule in the First Circuit, named plaintiffs in a class action do not
have standing to assert claims against defendants who are not directly implicated in
the alleged harms suffered by those named plaintiffs. See Barry v. St. Paul Fire &
Marine Ins. Co., 555 F.2d 3, 13 (1st Cir. 1977). Plaintiffs suggest that this case fits
within an exception to the general rule that was referenced in Plumbers’ Union Local
No. 12 Pension Fund v. Nomura Asset Acceptance Corp., 632 F.3d 762, 770 (1st Cir.
2011). Plumbers’ Union stated that the general rule from Barry may be subject to a
“qualification,” on which it reserved judgment. Id. at 770. The court suggested that
where the claims of the named plaintiffs necessarily give them—not just
their lawyers—essentially the same incentive to litigate the counterpart
claims of the class members because the establishment of the named
plaintiffs’ claims necessarily establishes those of the other class
members. . . . the substance of the Article III concern may vanish even
if in form it might seem to persist.
Id. The court noted that “[t]he matter is one of identity of issues not in the abstract
but at a ground floor level.” Id.
Plumbers’ Union involved claims made by a putative class against eight trusts,
among other defendants. 632 F.3d at 765-66. The named plaintiffs had bought
mortgage-backed securities from two of the eight trusts, and brought claims alleging
that the trusts had made misleading statements about the securities in their
registration statements. Id. at 766. The court held that the plaintiffs did not have
standing to pursue claims against the six trusts from which they had not bought
securities, despite the fact that members of the putative class had presumably bought
securities from those six trusts, and the securities from those trusts were covered by
the same registration statements that covered the securities from the two trusts in
which the named plaintiffs had invested. Id. at 766, 771. The court held that “the
necessary identity of issues and alignment of incentives” was not present because
each trust was made up of assets from a different mix of banks, and “no named
plaintiff has a significant interest in establishing wrongdoing by the particular group
of banks that financed a trust from which the named plaintiffs made no purchases.”
Id. at 771.
In describing the “qualification” to the general rule in Plumbers’ Union, the
court suggested that a case with the requisite ground-floor-level identity of issues
“might include the kind of claims that were present in Payton [v. Cty. of Kane, 308
F.3d 673 (7th Cir. 2002)].” Id. at 770. In Payton, the named plaintiffs sued 19
counties on behalf of a putative class of arrestees released on bail, and challenged a
bail fee imposed by the counties pursuant to Illinois law. 308 F.3d at 675. The named
plaintiffs only had claims against two of the 19 counties, but the court suggested that
they may have standing to sue the other 17 counties because the “representatives
were personally injured by the operation of the very same statute that caused the
injuries to all other members of the proposed class.” Id. at 682. The court noted that
as long as some member of the putative class was injured by each named defendant,
the named plaintiffs would have standing to sue, because the “the constitutionality
of a bond fee . . . should not differ from one county to the next, when such a fee is
imposed pursuant to the same statute.” Id. at 680.
Plaintiffs assert that this case involves an identity of issues at a ground-floor
level because if they establish that the National Collegiate Student Loan Trusts, who
purportedly owned the named Plaintiffs’ loans, did not in fact have title to the loans
when they attempted to collect the debt, it will necessarily establish that the other
13 Trusts also did not have title to defaulted student loans that they attempted to
collect from other members of the putative class. Plaintiffs assert that none of the
Trusts have title to the defaulted student loans because the loans were all purchased
by The Education Resources Institute (“TERI”) pursuant to its approved bankruptcy
It is not clear from the Complaint, however, that such an identity of issues
necessarily exists in this case. As an initial matter, the question of whether the
Trusts have title to the loans is only one among several issues that the Court would
need to address in deciding whether the Trusts are liable. The Complaint alleges:
that the “Debt Collector Defendants” engaged in harassing and abusive collection
practices; that they made false representations concerning the actions they would
take in the event of non-payment; that they failed to disclose that they were
attempting to collect a debt; that they made false representations about conduct
committed by the Plaintiffs; that they used false documentation representing that
they are an agency of the United States; that they made false reports to credit
reporting agencies; and that they made false representations regarding the interest
rates on the loans, among many other allegations. Although these allegations are
fact-dependent, the Complaint contains no facts to support these conclusions as
against the 13 Trusts. To find an identity of issues between the claims against the
four Trusts who have answered the Complaint and the 13 Trusts who have no direct
relationship with the named Plaintiffs, the Court would have to find that the
similar. However, there is a complete absence of information in the Complaint from
which to infer that any collection efforts performed by the 13 Trusts were
substantially similar to the collection efforts by the four Trusts which are described
in the Complaint.
The Complaint further alleges that all 17 National Collegiate Student Loan
Trusts are made up of private student loans, and that all 17 Trusts are represented
by US Bank, as Special Servicer, and Wilmington, as Owner Trustee. It also alleges
that the 17 Trusts have collectively filed over 370 student loan collection cases in
Maine since 2011. It further alleges that all of the loans contained in the 17 Trusts
were guaranteed by TERI, and that after TERI filed for bankruptcy in 2008, TERI
purchased defaulted loans from the Trusts pursuant to its bankruptcy plan.
Plaintiffs assert that all of the loans that are the subject of this lawsuit were acquired
in this way by TERI, and that the Trusts therefore do not have title to the loans.
The Complaint also asserts, however, that the 17 Trusts were all created
separately, and do not share common beneficial ownership.4
As discussed below, Wilmington’s role as “Owner Trustee” does not denote actual ownership of the
Complaint’s factual averments refer generally and collectively to all 17 Trusts,
contrary to my order granting the Plaintiffs leave to file a Second Amended
Complaint.5 See ECF No. 110 at 18-19. There are no specific allegations that each of
the 13 Trusts who seek dismissal has attempted to collect on a defaulted student loan
that was purchased by TERI as part of its bankruptcy plan. The Plaintiffs allege that
each Trust has filed a collection case in Maine, and that each Trust owns at least
some of the loans that were purchased by TERI, but these allegations fall short of
demonstrating that each of the 13 Trusts has engaged in behavior that is identical to
the behavior of the four Trusts that allegedly harmed the named Plaintiffs.
This case is dissimilar to Payton, where each county’s bail fee was imposed
pursuant to the identical state statute. See 308 F.3d at 680. Especially in light of
the fact-dependent nature of the claims in the Complaint, Plaintiffs have not
demonstrated that there is a single policy or methodology that was necessarily
employed by each Trust in its collection efforts, such that if the named Plaintiffs are
successful on their claims against the four Trusts with whom they have a
relationship, they would necessarily establish liability on the part of the other 13
Trusts. This case is more similar to Plumbers’ Union, in which the First Circuit found
no standing. The Trusts share a common Owner Trustee and Special Servicer,
similar to the common depositor for the eight Plumbers’ Union trusts, but are distinct
entities made up of different assets that did not necessarily act in a manner identical
to that of the other four Trusts. See 632 F.3d at 771. Plaintiffs therefore have not
The order directed the Plaintiffs “not to refer generally to the defendants in the allegations made
in the Second Amended Complaint, but to instead identify in each averment the name or names of the
specific defendant or defendants the averment relates to.” ECF No. 110 at 19.
established that this case fits within the qualification contemplated by Plumbers’
Union, and have not demonstrated that they have standing to sue the 13 Trusts who
seek dismissal of the Complaint.
2. Failure to State a Claim
The Trusts further argue that the Complaint fails to state a claim against them
because it does not allege any specific actions by the Trusts. The Plaintiffs respond
that this argument “ignores the collective nature of the case,” presumably asking the
Court to infer that these 13 Trusts engaged in the same wrongdoing that is
specifically alleged on the part of the other four Trusts. See ECF No. 164 at 5.
Plaintiffs also assert for the first time in their sur-reply that each Trust named as a
Defendant in this case has filed a collection action in a Maine state court since 2011.
Factual allegations made for the first time in a responsive memorandum are
not properly considered in evaluating the sufficiency of a complaint under Rule
12(b)(6). See Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984)
(“[I]t is axiomatic that the complaint may not be amended by the briefs in opposition
to a motion to dismiss.”); see also Ortiz v. Jimenez-Sanchez, 98 F. Supp. 3d 357, 365
n.5 (D.P.R. 2015) (“But the plaintiffs cannot, of course, add allegations or claims by
furnishing them for the first time in an opposition to a motion to dismiss.”). Even if
I were to consider the allegation that each of the Trusts has filed a collection action
in state court, however, this additional allegation would not be sufficient to state a
plausible claim for relief under the causes of action alleged in the Complaint. The
Complaint does not contain any allegations specific to the 13 Trusts of unlawful or
abusive collection activities under the FDCPA or MFDCPA, of unfair or deceptive
practices under the UTPA, of false representations constituting fraud, or of the
breach of any contract. It therefore fails to state a plausible claim for relief against
the 13 Trusts.
Wilmington moves to dismiss the Complaint against it for lack of personal
jurisdiction and for failure to state a claim.
1. Personal Jurisdiction
Plaintiffs concede that the exercise of general personal jurisdiction over
Wilmington is not appropriate. Plaintiffs argue that the Court may exercise specific
personal jurisdiction over Wilmington based on Wilmington’s relationship with other
Defendants in the case who are alleged to have conducted debt collection activities in
A defendant’s contacts with a particular forum may be imputed to another
defendant for purposes of establishing specific personal jurisdiction where a sufficient
relationship exists between the two defendants.
In Daynard v. Ness, Motley,
Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 55 (1st Cir. 2002), the First Circuit
recognized that “[w]hether or not an agent is initially authorized to act on behalf of a
principal, the agent’s actions may be attributed to the principal, for purposes of
jurisdiction, if the principal later ratifies the agent’s conduct.” See also Jet Wine &
Spirits, Inc. v. Bacardi & Co., 298 F.3d 1, 10 (1st Cir. 2002) (attributing contacts of
subsidiary to parent corporation where plaintiff supported allegation of agency
relationship with disputed record evidence); Ameral v. Intrepid Travel Party, Ltd.,
128 F. Supp. 3d 382, 388 (D. Mass. 2015) (attributing contacts in light of apparent
agency relationship); New England College v. Drew University, No. 08-cv-00424, 2009
WL 3525596, at *4 (D.N.H. Oct. 23, 2009) (attributing contacts in light of evidence
that one defendant “authorized or at least ratified” second defendant’s actions). The
relationship at issue need not fit precisely within the confines of a specific agency
doctrine; the inquiry instead focuses on whether there is a sufficient relationship to
permit the exercise of jurisdiction under the due process clause, “not whether a
partnership, joint venture, or other particular agency relationship between the two
defendants exists.” Daynard, 290 F.3d at 56-57.
Plaintiffs assert that Wilmington contracted with Defendants U.S. Bank
National Association, Abrahamsen Ratchford, P.C., Turnstile Capital Management,
and Transworld Systems, Inc. to collect student debts in Maine. They assert that
Wilmington acts on behalf of the National Collegiate Student Loan Trusts in its
capacity as “Owner Trustee” of the Trusts. They allege that US Bank is Wilmington’s
agent, and argue that it is reasonable to infer that the Trusts’ collection efforts
against the named Plaintiffs were “directed and executed” by Wilmington. ECF No.
165 at 6. Plaintiffs seek to impute the other Defendants’ contacts with the state of
Maine to Wilmington in order to justify the exercise of personal jurisdiction in this
In response, Wilmington asserts that its role as “Owner Trustee” of the
National Collegiate Student Loan Trusts is a limited and ministerial one, and that it
does not exercise the degree of control over US Bank or any other Defendant
necessary to justify the imputation of jurisdictional contacts. Wilmington submitted
copies of the Trust Agreement, Administration Agreement, and Special Servicing
Agreement, which govern its relationship with the National Collegiate Student Loan
Trusts and the other Defendants, with its motion to dismiss. Wilmington contends
that these documents establish the limited role it plays as Owner Trustee of the
The Trust Agreement governs the relationship between Wilmington, as Owner
Trustee, and the National Collegiate Student Loan Trusts. Article VIII of that
agreement defines the “Authority and Duties of the Owner Trustee.” These duties
include executing and delivering documents on behalf of the Trusts and signing tax
returns and other filings. The Trust Agreement provides that “[t]he Owner Trustee
shall not have any duty or obligation to manage, make any payment in respect of,
register, record, sell, dispose of or otherwise deal with the Trust Property.” ECF No.
157-1 at 21, § 8.07. It further provides that any duties and responsibilities of the
Owner Trustee shall be deemed discharged to the extent that the Trusts’
Administrator has agreed to perform those duties in an Administration Agreement.
The relationship among the National Collegiate Student Loan Trusts,
Wilmington, and the Trusts’ Administrator, First Marblehead Data Services is
governed by an Administrative Agreement. The Administration Agreement defines
the duties of First Marblehead Data Services in its role as Administrator for the
Trusts, which include retaining and employing agents to collect on defaulted student
loans. But while the Administration Agreement provides that the Administrator
shall perform certain duties—including filing tax returns and reports—at the request
of, and in accordance with the directions of, the Owner Trustee, among other parties,
it does not provide any oversight authority to the Owner Trustee with respect to the
collection of defaulted loans. See ECF No. 157-2 at §§ 1(c)(i), 1(c)(iv). Furthermore,
the Administration Agreement specifically provides that the Administrator “shall not
be subject to the supervision of the Issuer or the Owner Trustee with respect to the
manner in which it accomplishes the performance of its obligations hereunder.” Id.
at § 5.
The Special Servicing Agreement was signed by Wilmington in its capacity as
Owner Trustee on behalf of the National Collegiate Student Loan Trusts, but
Wilmington is not a party to the Special Servicing Agreement, and that Agreement
does not define any rights, duties, or responsibilities of Wilmington.
The various agreements governing Wilmington’s relationship with the
National Collegiate Student Loan Trusts and the other Defendants demonstrate that
Wilmington does not exercise the type of control over the actions of the other
Defendants that would justify the imputation of their contacts with Maine to
Wilmington for jurisdictional purposes.
The documents support Wilmington’s
assertion that its role as Owner Trustee is a limited and ministerial one. There is
not enough information in the Complaint and the relevant documents to plausibly
infer that Wilmington has an agency-like relationship with any of the Defendants
that allegedly participated in the debt collection efforts against the named Plaintiffs
in this case. The most substantial relationship Wilmington has with another entity
acting on behalf of the Trusts is with First Marblehead Data Services, the
Administrator. This relationship, as defined by the Administration Agreement, does
not involve a sufficient level of control by Wilmington of First Marblehead Data
Services’ actions to justify the imputation of jurisdictional contacts. But even if it did,
First Marblehead Data Services is not a Defendant in this case and is not alleged to
have participated in the collection efforts against the named Plaintiffs.
Plaintiffs have therefore failed to show that a sufficient, agency-like
relationship exists between Wilmington and the other Defendants to justify the
imputation of jurisdictional contacts. The exercise of specific personal jurisdiction
over Wilmington is therefore not appropriate.
2. Failure to State a Claim
Wilmington also argues that the Complaint fails to state a plausible claim
against it because it cannot be personally liable for its actions as Owner Trustee, and
the Complaint does not contain factual allegations sufficient to support the
conclusory allegation that it qualifies as a debt collector under the FDCPA and
MFDCPA. Plaintiffs respond that Wilmington is vicariously liable for the actions of
the other Defendants by virtue of its asserted agency relationship with the National
Collegiate Student Loan Trusts and US Bank.
Although a defendant may sometimes be held vicariously liable for the actions
of its agents, see Oberther v. Midland Credit Mgmt., 45 F. Supp. 3d 125, 130-31 (D.
Mass 2014), the Plaintiffs have failed to demonstrate that an agency-like relationship
exists between Wilmington and the other Defendants in this case, as discussed above.
The Complaint therefore fails to state a plausible claim against Wilmington.
First Marblehead’s Motion
First Marblehead argues that the Court lacks personal jurisdiction over it, that
the Plaintiffs do not have standing to bring claims against it, and that the Complaint
fails to state a claim against it.
1. Personal Jurisdiction
Plaintiffs concede that the exercise of general personal jurisdiction is not
appropriate. They argue that the Court can exercise specific personal jurisdiction
over First Marblehead on the basis of contacts of other Defendants in this case,
imputed to First Marblehead based on the relationship among the Defendants.
Plaintiffs allege that First Marblehead is an agent of the Trusts, and that it employs
people in Maine to collect debts.
The Complaint also alleges, however, that First Marblehead resigned as
Special Servicer to the Trusts in 2012. Documents submitted by First Marblehead
make clear that it was in fact its subsidiary—First Marblehead Education
Resources—that acted as Special Servicer to the Trusts before 2012. See ECF No.
167-1 at 5. A different subsidiary of First Marblehead—First Marblehead Data
Services—acted as the administrator of the Trusts before being sold by First
Marblehead in 2012. Id. at 3-4. Any relationship that would support the imputation
of jurisdictional contacts therefore existed between First Marblehead’s subsidiaries
and the other Defendants, not between First Marblehead and the other Defendants.
Jurisdiction over a subsidiary is not a valid basis to exercise jurisdiction over the
parent corporation absent a showing of “control by the parent greater than that
normally associated with common ownership and directorship.” Donatelli, 893 F.2d
at 466 (quotation omitted). Plaintiffs have not made any allegations or offered any
evidence to demonstrate such control.
In any event, First Marblehead’s subsidiaries ceased having any relationship
with the other Defendants in this case in 2012, which is approximately two years
before the collection efforts alleged in the Complaint are said to have begun. See ECF
No. 112 at ¶¶ 55, 121, 177. At the time that the jurisdictional contacts that Plaintiffs
wish to impute to First Marblehead occurred, there was no relationship between First
Marblehead’s subsidiaries and the other Defendants.
Plaintiffs argue that First Marblehead’s maintenance of rights to a database
that has allegedly been used by other Defendants to conduct debt collection activities
supports the exercise of jurisdiction.
The deposition transcript submitted by
Plaintiffs with their motion to supplement, discussed above, mentions electronic
records affiliated with First Marblehead that are used by Transworld Systems, Inc.,
in connection with its debt collection efforts. But the Complaint, which asserts that
First Marblehead “maintained rights to a data base containing material information
about the Plaintiffs and all other student borrowers,” ECF No. 112 at ¶ 37, does not
allege that First Marblehead was responsible for creating or compiling the
information allegedly used by other Defendants to collect debts. And even if it did,
that would not be enough to establish jurisdiction. In Shirokov v. Dunlap, Grubb,
and Weaver, PLLC, No. 10-12043, 2012 WL 1065578, at *12 (D. Mass. Mar. 27, 2012),
the plaintiff alleged that as part of a copyright scheme, one defendant tracked and
compiled information about purported copyright infringers that it then provided to
other defendants for use in filing fraudulent lawsuits. The court held that, even if
true, these allegations were not sufficient to justify the exercise of personal
jurisdiction over the defendant, because they did not satisfy the relatedness or
purposeful availment requirements of the specific jurisdiction test. Id. at *15. The
allegation that First Marblehead maintained rights to a database that was used by
other entities to collect debts in Maine likewise fails to establish personal jurisdiction.
Plaintiffs also allege that First Marblehead procured loans made to Maine
students and securitized them, and that it receives payments as an unsecured
creditor of The Education Resource Institute’s bankruptcy proceedings. Neither of
those alleged actions gives rise to the Plaintiffs’ claims in this case, which are focused
on allegedly unlawful attempts to collect debt, and therefore neither is a basis for
exercising personal jurisdiction over First Marblehead. See Harlow, 432 F.3d at 6061 (“The evidence produced to support specific jurisdiction must show that the cause
of action either arises directly out of, or is related to, the defendant’s forum-based
Plaintiffs have failed to establish that the exercise of personal jurisdiction over
First Marblehead would be reasonable.
First Marblehead also argues that the Plaintiffs lack standing to bring claims
against it because they have not alleged that they were harmed in any way by First
Marblehead. In order to establish standing, a plaintiff must “show a sufficiently
direct causal connection between the challenged action and the identified harm.”
Katz v. Pershing, LLC, 672 F.3d 64, 71 (1st Cir. 2012). To the extent that the
Complaint mentions First Marblehead, it appears to refer to actions taken by First
Marblehead’s subsidiaries, in their former roles as Special Servicer and
Administrator for the Trusts. In any event, as mentioned above, First Marblehead’s
subsidiaries terminated their relationship with the Trusts in 2012, approximately
two years before the harms alleged in the Complaint. Further, as discussed above,
First Marblehead’s involvement in the securitization of the Plaintiffs’ loans and its
maintenance of rights to a database are not directly related to the harms alleged.
Plaintiffs have therefore not shown a direct causal connection between First
Marblehead’s actions and the alleged harms identified in the Complaint, as required
to demonstrate standing.
Plaintiffs do not respond to First Marblehead’s standing argument in their
responsive briefing. They instead suggest that the Court defer ruling on the standing
issue, claiming that Rule 12(b)(1) provides for “flexibility as to when and how [the
Court] determines whether it has jurisdiction.” ECF No. 202 at 16. While the First
Circuit has recognized that courts have broad authority to order discovery and
conduct evidentiary hearings in order to determine their own jurisdiction when
dealing with factual challenges to subject-matter jurisdiction, see Valentin v. Hosp.
Bella Vista, 254 F.3d 358, 363-64 (1st Cir. 2001), it has also admonished that “[a]
federal court must satisfy itself as to its jurisdiction, including a plaintiff’s Article III
standing to sue, before addressing his particular claims,” Pagán v. Calderón, 448 F.3d
16, 26 (1st Cir. 2006).
First Marblehead does not bring a factual challenge to
Plaintiffs’ standing; it instead argues that even accepting all of the allegations in the
Complaint as true, Plaintiffs have not demonstrated that they have standing to bring
claims against it. There is therefore no need to defer ruling on the standing question
pending additional fact-finding, as allowed under Valentin.
Plaintiffs have not shown that they have standing to bring claims against First
3. Failure to State a Claim
First Marblehead also asserts that the Complaint fails to state a claim against
it, under the standard of Rule 12(b)(6). It argues that the proposed claims under the
FDCPA and MFDCPA are barred by the one-year statute of limitations, that
Plaintiffs do not sufficiently allege that First Marblehead qualifies as a “debt
collector” under those statutes, and that Plaintiffs have failed to allege any unfair or
deceptive practice that would give rise to a claim under the Unfair Trade Practices
The Plaintiffs do not directly respond to the arguments about the statute of
limitations and the Unfair Trade Practices Act.
They argue instead that First
Marblehead’s alleged relationship with the other Defendants in this case provides a
basis for concluding that First Marblehead is a “debt collector” under the FDCPA and
MFDCPA. As discussed above with respect to the jurisdictional question, however,
Plaintiffs have failed to establish that a sufficient relationship existed between the
parties at the time of the alleged harm in order to hold First Marblehead liable for
the actions of any other Defendants.
The Complaint’s allegation that First
Marblehead is an agent of the Trusts, ECF No. 112 at ¶ 20, is the sort of conclusory
legal allegation that the Court should not accept as true. See Saldivar, 818 F.3d at
18. The allegation that “First Marblehead is a ‘debt collector’ as defined in 15 U.S.C.
§ 1692a(6) and 32 M.R.S.A. § 11002(6),” ECF No. 112 at ¶ 38, likewise states a bare
legal conclusion, and need not be credited by the Court. See Saldivar, 818 F.3d at 18.
The Complaint does allege that First Marblehead’s subsidiaries acted as Special
Servicer and Administrator for the Trusts prior to 2012, but that allegation does not
support a reasonable inference that a relationship existed between First Marblehead
and the other Defendants sufficient to hold First Marblehead liable for the
wrongdoing alleged in the Complaint, which took place in 2014 and later. Plaintiffs
have therefore failed to state a claim against First Marblehead.
For the foregoing reasons, Plaintiffs’ Motion to Supplement (ECF No. 206) is
GRANTED. The Motion to Dismiss filed by the 13 National Collegiate Student Loan
Trusts (ECF No. 154) is GRANTED. The Motion to Dismiss filed by Wilmington
Trust Company (ECF No. 155) is GRANTED. The Motion to Dismiss filed by The
First Marblehead Corporation, now known as Cognition Financial Corporation, (ECF
No. 167) is GRANTED.
Dated this 17th day of August 2017
/s/ JON D. LEVY
U.S. DISTRICT JUDGE
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