Yoder v. MSO Legal Partners, LLC et al

Filing 39

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 12/8/2017. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
ERIK YODER
:
v.

:

Civil Action No. DKC 16-0900

:
THE O’NEIL GROUP, LLC, et al.
:
MEMORANDUM OPINION
Presently

pending

and

ready

for

resolution

in

this

whistleblower retaliation case are a motion for summary judgment
filed by Defendants The O’Neil Group, LLC, MSO Legal Partners,
LLC,

and

William

O’Neil

(collectively,

“Defendants”)

and

a

motion for leave to file a surreply filed by Plaintiff Erik
Yoder (“Plaintiff”).

(ECF Nos. 33; 38).

The issues have been

fully briefed, and the court now rules, no hearing being deemed
necessary.

Local Rule 105.6.

For the following reasons, the

motions will be denied.
I.

Background
A.

Factual Background1

The O’Neil Group, LLC (“TOG”) was formed in 2011 to perform
foreclosure work for MCM Capital Partners, LLC (“MCM”), and its
related mortgage loan servicer BSI Financial (“BSI”).
33-2 ¶ 1; 36-2, at 8, 10).
1

(ECF Nos.

TOG created a national network of

Unless otherwise noted, the facts outlined here are
undisputed and construed in the light most favorable to
Plaintiff.

law firms to handle the legal work arising from MCM’s purchase
of

non-performing

investors.

mortgage

debts

on

(ECF No. 33-2 ¶ 1).

behalf

of

third-party

TOG hired the law firms,

oversaw their work, and reviewed and approved invoices for the
work that were then submitted to the loan servicer BSI.
The

standards

for

approval

or

rejection

of

(Id.).

invoices

provided by BSI to be implemented by Defendants.

were

(Id. ¶ 2).

BSI policy was that costs were to be billed as incurred and not
marked up.

(Id. ¶ 6).

In addition, BSI policy limited the

payment for title work to $350 for a full report and $175 for a
title update – known as the “allowable amount.” (ECF Nos. 33-2
¶¶ 2, 6; 33-5 ¶ 1; 36-7 ¶ 9).
law firms.

After BSI paid TOG, TOG paid the

(ECF No. 33-2 ¶ 1).

In late 2013, Defendant O’Neil and Terry Shanahan formed a
new

entity,

MSO

Legal

Partners,

LLC

(“MSO”),

foreclosure referrals in Maryland from BSI.
36-2, at 20, 25).

Defendants

handle

(ECF Nos. 33-2 ¶ 3;

In order to keep costs down, MSO used TOG

personnel for its staff.
2013,

to

hired

(ECF No. 33-2 ¶ 3).
Plaintiff,

an

In September

experienced

attorney, to run the foreclosure practice at MSO.

foreclosure

(ECF Nos. 33-

2 ¶¶ 4, 5; 36-2, at 24; 36-3, at 27-29; 36-5, at 9).

While

conducting an audit in early June 2014 to be filed in a mortgage
foreclosure
Defendants’

case

(the

administrative

“Windon
personnel
2

case”),
to

Plaintiff

provide

him

asked

with

the

relevant title report and title update invoices.
¶¶ 10, 12).

(ECF No. 36-7

Instead of providing the invoices as requested,

Sally Shanahan, an administrative employee and Mr. Shanahan’s
wife,

informed

Plaintiff

that

Defendants

billed

the

full

allowable amounts of $350 per title report and $175 per title
update.
employee,

(Id. ¶ 12).
confirmed

Kristin Ferraro, another administrative

that

information.

(Id.).

In

order

to

obtain the actual costs for title reports and updates in the
Windon case, Plaintiff contacted All Star Title, the company
that performed title reports and title updates in Defendants’
foreclosure cases.

Plaintiff was informed that All Star Title

billed $150 per title report until April 2014 when the price
increased to $250 per title report.
per title update.

(Id.).

All Star Title billed $15

With that information, Plaintiff

realized that Defendants had been billing BSI more than double
the actual cost for title reports and over 11 times the actual
cost for title updates.
Plaintiff

that

Defendants

(Id.).
billed

Mrs. Shanahan later informed
BSI

for

title

work

before

Defendants received any invoices from All Star, that BSI took 30
days to process and pay bills after receipt, and that Defendants
needed payments more quickly in order to pay their own expenses.
(Id. ¶ 14).
On June 12, 2014, Plaintiff sent an email to Mr. O’Neil
notifying him of the overbilling of costs and expressing his
3

belief that the practice was unlawful.
7 ¶ 13; 36-9).

(ECF Nos. 33-2 ¶ 12; 36-

That evening, Mr. O’Neil responded stating that

he was out of the office until the following week but that
“there should not be any mark up of costs . . . .
a look at this to make sure it’s right.”

So let’s take

(ECF No. 36-10).

Plaintiff and Mr. O’Neil had a meeting on June 17 to discuss the
billing error.
that

Defendants

(ECF No. 36-2, at 32).
“were

supposed

to

bill

Mr. O’Neil confirmed
the

actual

amount

charged,” as it had “always been the firm policy,” and that
“[Defendants] would have to refund the money [to BSI].”

(Id.).

Mr. O’Neil told Plaintiff that an investigation would be done to
“figure out how much the refund was supposed to be,” and that,
in regard to the process of creating invoices, “[Defendants] had
to change and/or implement a process since [Defendants] didn’t
appear to have one.”

(ECF Nos. 33-2 at 3, 24; 36-2, at 33).

That same day, Plaintiff sent an e-mail to Mr. O’Neil to ensure
that “within the next two weeks” BSI would be informed that
invoices for title work were submitted to them that did not
reflect actual costs, that BSI would be offered a refund, and
that BSI would agree to “remediate this billing error . . . by
correcting

or

reconciling

any

and

all

of

the

borrower’s

accounting of debt . . . so that none of the borrowers are
charged costs which were not actual.”

4

(ECF No. 36-13).

On June 18, Plaintiff sent an email to Mr. O’Neil regarding
a proposal by Mr. Shanahan to switch auctioneers from their
established vendor to an inexperienced vendor.

(ECF No. 36-14).

Plaintiff

stated

disagreed

with

the

proposal

and

that

if

Defendants were going to switch to an auctioneer that charged
higher costs and had less experience that it was appropriate
“within the rules of ethics” to obtain the consent of their
client BSI.

(Id.).

Mr. O’Neil became irate and requested that

Plaintiff “please refrain from the ethics lectures.”
36-15,

at

2).

Mr.

Shanahan

found

Plaintiff’s

(ECF No.
statements

“accusatory” and they “caused [him] considerable concern such
that [he] recommended to Mr. O’Neil that Plaintiff should be
asked to resign.”

(ECF Nos. 33-2 ¶ 21; 33-3 ¶ 8).

On June 27, Mr. O’Neil informed Plaintiff that he was not
firing him but that, due to the “financial condition of the
firm,” Defendants would not be able to continue paying Plaintiff
what they had been and that “[Plaintiff] would be better off
looking for another job.”

(ECF Nos. 33-2 ¶ 22; 36-2, at 39).

Mr. O’Neil told Plaintiff that he would not have to work while
he

was

looking

for

a

job,

and

Defendants

offered

to

pay

Plaintiff’s salary, commission, and benefits through the end of
July.

(ECF Nos. 33-2 ¶ 22; 36-7 ¶ 19).

by this news and walked out of the office.
36-7 ¶ 19).

Plaintiff was shocked
(ECF Nos. 33-2 ¶ 24;

Plaintiff did not tell Mr. O’Neil that he was
5

quitting his job.

(ECF No. 36-7 ¶ 20).

Subsequently, Plaintiff

and Mr. O’Neil arranged to meet on June 30 at the office.
No. 36-7 ¶ 21).

(ECF

However, Mr. Shanahan, rather than Mr. O’Neil,

was present at the meeting and informed Plaintiff that there was
no need for him to come into the office but that he could use
the office until the end of July.

(ECF Nos. 36-7 ¶ 21; 36-19).

Plaintiff subsequently e-mailed Mr. O’Neil regarding the meeting
with Mr. Shanahan.

(ECF Nos. 33-2, at 11; 36-19, at 2).

Mr.

O’Neil replied, attaching a resignation letter and stating, “you
will need to sign the attached. If you do not want to resign,
then I will accommodate your insistence that you be fired.
me know which of those two options you prefer.”
at

9-10;

36-18;

resignation letter.

36-19).

Plaintiff

refused

(ECF No. 36-7 ¶ 21).

Let

(ECF Nos. 33-2,
to

sign

the

Upon that action,

Defendants concluded that Plaintiff had quit and that his last
day of employment would be considered June 30, 2014.

Plaintiff

was paid his salary and commission up until June 30.

(ECF No.

33-2 ¶ 26).
B.
On

Procedural Background
March

25,

2016,

Plaintiff

filed

a

complaint

against

Defendants alleging unlawful termination of his employment in
violation of the employee protection (whistleblower) provision
of the Consumer Financial Protection Act of 2010, Section 1057
of the Dodd-Frank Wall Street Reform and Consumer Protection Act

6

(the “CFPA”), 12 U.S.C. § 5567.

(ECF No. 1).

for summary judgment on May 16, 2017.

Defendants moved

(ECF No. 33).

Plaintiff

submitted an opposition on June 19 (ECF No. 36), and Defendants
replied (ECF No. 37).

On July 17, Plaintiff filed the pending

motion for leave to file a surreply.
II.

(ECF No. 38).

Motion for Leave to File Surreply
Unless otherwise ordered by the court, surreply memoranda

are not permitted to be filed.
may

be

permitted

when

the

Local Rule 105.2(a).

moving

party

would

Surreplies

be

unable

to

contest matters presented to the court for the first time in the
opposing party's reply.

Lewis v. Rumsfeld, 154 F.Supp.2d 56, 61

(D.D.C. 2001).
In

his

motion

for

leave

to

file

a

surreply,

Plaintiff

contends that Defendants argue for the first time in their reply
that they held a subjective belief that their business faced
considerable

financial

and

personnel

issues

and

that

their

reasons for asking Plaintiff to look for another job should be
judged by what Defendants believed at the time to be true.
No. 38 ¶¶ 2-3).

(ECF

Plaintiff also argues that Defendants assert

for the first time in their reply that they never focused on the
economic impact of losing their client Woods Cove, but instead
on the fact that losing that client freed up Mr. Shanahan’s time
and Plaintiff’s services were no longer needed.

(Id. ¶¶ 4-5).

Defendants did not raise any new issues or legal theories in

7

their

reply

brief

and

merely

responded

to

arguments

in

Plaintiff’s opposition that “Defendants did not honestly believe
that their business was in decline” when Plaintiff was asked to
look for another job (ECF No. 36, at 33), and that “Defendants
cannot credibly maintain that Woods Cove had anything to do with
the . . . decision [to] terminate [Plaintiff]” (ECF No. 36, at
41).

Therefore, Plaintiff’s motion for leave to file a surreply

is denied.
III. Motion for Summary Judgment
A.

Standard of Review

A motion for summary judgment will be granted only if there
exists no genuine dispute as to any material fact and the moving
party

is

entitled

to

judgment

as

a

matter

of

law.

See

Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986);

Anderson

v.

Liberty

Lobby,

Inc.,

477

U.S.

242,

(1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008).
prevail

on

a

motion

for

summary

judgment,

the

moving

250
To

party

generally bears the burden of showing that there is no genuine
dispute as to any material fact.
248-50.

Liberty Lobby, 477 U.S. at

A dispute about a material fact is genuine “if the

evidence is such that a reasonable jury could return a verdict
for the nonmoving party.”
inquiry,

a

court

must

Id. at 249.

view

the

facts

In undertaking this
and

the

reasonable

inferences drawn therefrom “in the light most favorable to the

8

party

opposing

Zenith

Radio

the

motion,”

Corp.,

475

Matsushita

U.S.

574,

Elec.

587

Indus.

Co.

(1986)(quoting

v.

United

States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also
EEOC v. Navy Fed. Credit Union, 424 F.3d 397, 405 (4th Cir.
2005), but a “party cannot create a genuine dispute of material
fact

through

mere

speculation

or

compilation

of

inferences.”

Shin v. Shalala, 166 F.Supp.2d 373, 375 (D.Md. 2001) (citation
omitted).
B.

Analysis

The

CFPA

established

the

Bureau

of

Consumer

Financial

Protection (the “Bureau”) to promulgate regulations to enforce
“enumerated consumer laws”.

Calderone v. Sonic Houston JLR, LP,

2016 WL 6037239, at *3 (S.D. Tex. Oct. 14, 2016).
subject

to

the

Bureau’s

jurisdiction

.

.

.

“The laws

include,

among

others, . . . the Fair Debt Collection Practices Act (15 U.S.C.
§

1692,

et

seq.)[(the

“FDCPA”)].”

Procedures

for

Handling

Retaliation Complaints Under the Employee Protection Provision
of the CFPA, 81 Fed. Reg. 14374, 14375 (Mar. 17, 2016).
relevant

provision

of

the

CFPA

under

which

this

retaliation

claim was brought provides as follows:
No covered person or service provider
shall terminate or . . . cause to be
terminated . . . any covered employee . . .
by reason of the fact that such employee . .
. [has] provided, caused to be provided, or
is about to provide or cause to be provided,
information to the employer, the Bureau, or
any
other
State,
local,
or
Federal,
9

The

government authority or law enforcement
agency relating to any violation of, or any
act or omission that the employee reasonably
believes to be a violation of, any provision
of this title or any other provision of law
that is subject to the jurisdiction of the
Bureau, or any rule, order, standard, or
prohibition prescribed by the Bureau[.]
12 U.S.C. § 5567(a)(1).

In order to establish a prima facie

case of retaliation under the CFPA, a plaintiff has the burden
of

“showing

that

any

behavior

described

in

paragraphs

(1)

through (4) of subsection (a) was a contributing factor in the
unfavorable

personnel

5567(c)(3)(A)).

action

alleged

in

the

complaint.”

§

The plaintiff must establish a prima facie case

of retaliation by proving, by a preponderance of the evidence,
that “(1) he engaged in protected activity; (2) the employer
knew or suspected, either actually or constructively, that he
engaged

in

unfavorable

the

protected

personnel

or

activity;
employment

(3)

he

action;

suffered
and

(4)

an
the

protected activity was a contributing factor in the unfavorable
action.”

Rhinehimer v. U.S. Bancorp Investments, Inc., 787 F.3d

797, 805 (6th Cir. 2015); see also Feldman v. Law Enf’t Assocs.
Corp.,

752

F.3d

339,

344

(4th

Cir.

2014)

(setting

out

the

requirements for a retaliation claim under the Sarbanes-Oxley
Act

whistleblower

provision,

18

U.S.C.

§

1514A).

If

the

plaintiff makes out a successful prima facie case, the employer
must demonstrate, “by clear and convincing evidence, that the

10

employer would have taken the same unfavorable personnel action
in the absence of that behavior.”
Defendants

argue

that

they

12 U.S.C. § 5567(c)(3)(B).
are

entitled

to

judgment

in

their favor on Plaintiff’s retaliation claim because Plaintiff
cannot prove by a preponderance of the evidence that (1) he
engaged in protected activity; (2) he suffered an unfavorable
personnel action; and (3) that the protected activity was a
contributing factor in the unfavorable action.

(ECF No. 33-1,

at 5-6).
1.

Protected Activity

The FDCPA protects an employee who complains to an employer
about “any act or omission that the employee reasonably believes
to be a violation of [the FDCPA].”
Defendants

argue

that

Plaintiff

did

12 U.S.C. § 5567(a)(1).
not

engage

in

protected

activity because it was not objectively reasonable for Plaintiff
to believe that Defendants’ overbilling violated the FDCPA when
(1) “there is no evidence that any of the erroneous bills were
communicated

to

borrowers”;

(2)

“even

if

communicated,

the

errors were not material”; and (3) “the FDCPA contains a bona
fide error exception that applies here.”

(ECF No. 33-1, at 17).

“To satisfy the first element and establish that he engaged
in protected activity, an employee must show that he had both ‘a
subjective belief and an objectively reasonable belief’ that the
conduct he complained of constituted a violation of relevant

11

Welch v. Chao, 536 F.3d 269, 275 (4th Cir. 2008) (quoting

law.”

Livingston v. Wyeth, Inc., 520 F.3d 344, 352 (4th Cir. 2008)
(discussing

the

reasonable

belief

standard

under

analogous

language in the Sarbanes-Oxley Act whistleblower provision, 18
U.S.C.

§

Plaintiff

1514A)).
held

a

Here,

Defendants

subjective

do

belief

not

that

challenge
Defendants

that
were

violating the FDCPA when he sent an e-mail to Mr. O’Neil on June
12

regarding

the

overbilling

practice.

Instead,

Defendants

argue that it was not objectively reasonable for Plaintiff to
believe that Defendants’ overbilling violated the FDCPA.
[T]he issue of objective reasonableness
should be decided as a matter of law only
when
no
reasonable
person
could
have
believed that the facts [known to the
employee]
amounted
to
a
violation
or
otherwise justified the employee’s belief
that illegal conduct was occurring.
If, on
the other hand, reasonable minds could
disagree about whether the employee’s belief
was objectively reasonable, the issue cannot
be decided as a matter of law. . . . [T]he
reasonableness of the employee’s belief will
depend on the totality of the circumstances
known
(or
reasonably
albeit
mistakenly
perceived) by the employee at the time of
the complaint, analyzed in light of the
employee’s training and experience.
Rhinehimer, 787 F.3d at 811-12 (internal quotation marks and
citations omitted).
Plaintiff
prepared

in

explains
a

in

mortgage

his

declaration

foreclosure

case

that
“must

an

audit
include

documentation supporting all costs and expense[s],” including

12

the

costs

for
the

“quantify

title

remaining

mortgage holder.”

reports

and

sum

title

owed

by

updates,
the

(ECF No. 36-7 ¶ 11).

in

order

to

to

the

borrowers

The information is

important because “[n]o later than 24 hours before a sale, a
homeowner can reinstate his/her mortgage by paying the deficient
amount[]

[owed],”

and

“[c]osts

incurred

in

relation

to

the

foreclosure proceeding, such as title fees, would be included in
the amount required for reinstatement.”

(Id.).

Furthermore,

even if a borrower did not seek to reinstate the mortgage and
the

foreclosure

process

continued,

after

a

foreclosure

sale,

“[a] [j]udgment may then be entered against the borrowers for
any difference between the sale price and the amounts owed per
the audit,” resulting in a larger judgment due to the overstated
title fees.

(ECF No. 36, at 6).

Plaintiff stated in his email

to Mr. O’Neil that Defendants’ overbilling practice “[did] not .
. . fit into the regulatory environment in Maryland or Federal
lender oversight regarding its negative impact on the borrower’s
total debt,” and that from his experience “a no tolerance policy
exists

when

it

comes

to

inaccurate

fees

and

costs

ultimately accrue to a borrower’s deficiency judgment.”
No. 36-9).
included

at

that
(ECF

Not only could “nothing more than actual costs [] be
the

final

audit

stage,”

(ECF

No.

¶

11),

but

Defendants concede that this was BSI’s policy and “had always

13

been” their policy.

(ECF No. 33-2 ¶ 6; 33-3 ¶ 4; 36-2, at 32;

36-10).
Plaintiff
implicates
1692e(2)(A),

argues

at

least

that
four

1692e(2)(B),

Defendants’
separate

1692e(5),

overbilling

sections
and

of

1692f.2

practice

the

FDCPA:

The

FDCPA

prohibits a debt collector from using “any false, deceptive, or
misleading

representation

collection of any debt.”

or

means

§ 1692e.

in

connection

with

the

In this regard, the FDCPA

prohibits falsely representing the amount of any debt, falsely
representing any services rendered or compensation which may be
lawfully received by a debt collector for the collection of a
debt, and threatening to take legal action that cannot legally
2

The overbilling practice cannot alone violate both
sections 1692e and 1692f.
See Willis v. Green Tree Servicing,
LLC, No. WMN-14-3748, 2015 WL 1137681, at *7 (D.Md. 2015)
(stating that a complaint is deemed deficient under the FDCPA if
it does not identify any misconduct beyond that which the
plaintiff asserts violates other provisions of the FDCPA and
thus dismissing the plaintiff’s § 1692f claim); Penn v.
Cumberland, 883 F.Supp.2d 581, 594 (E.D.Va. 2012) (dismissing
the plaintiff’s § 1692f claim because the plaintiff did not
allege any conduct separate from the conduct that formed the
basis of his § 1692e claims); Johnson v. BAC Home Loans
Servicing,
LP,
867
F.Supp.2d
766,
782
(E.D.N.C.
2011).
Accordingly, the court will consider whether it was objectively
reasonable for Plaintiff to believe that Defendants’ conduct
violated § 1692e.
Plaintiff
also
states
incorrectly
that
Defendants’
overbilling is a violation of state law that is “made actionable
by the FDCPA” under § 1692e(5).
(ECF No. 36, at 19).
A
violation of state law “does not constitute a per se violation
of the [FDCPA]. . . . [T]he purported violation of a state []
law must violate the relevant FDCPA provision.”
Ademiluyi v.
PennyMac Mortg. Inv. Trust Holdings I, LLC, 929 F.Supp.2d 502,
524 (D.Md. 2013).
14

be taken.

§§ 1692e(2)(A); 1692e(2)(B); 1692e(5).

To trigger

civil liability against a debt collector, a consumer need only
prove one violation of the FDCPA.
Defendants
reasonable

first

for

argue

Plaintiff
FDCPA

that

to

because

§ 1692k(a).
it

was

believe

that

bills

payment.

Defendants state that they “submitted the erroneous

to

evidence

were

erroneous

presented

no

Defendants

the

ever

is

objectively

violating

were

there

not

any

that

the

borrowers

for

invoices to BSI for payment, not the debtor,” and “[w]hether BSI
chose to attempt to collect those amounts from the debtor was
not

Defendants’

Section

1692e

decision
does

not

to

make.”

require

(ECF

that

Loan

Mortg.

Corp.,

839

F.3d

33-1,

Defendants

erroneous amounts directly to the borrower.
Home

No.

354,

at

18).

present

the

See McCray v. Fed.
359

(4th

Cir.

2016)

(“[N]othing in [the] language [of the FDCPA] requires that a
debt collector’s misrepresentation [or other violative actions]
be made as part of an express demand for payment or even as part
of an action designed to induce the debtor to pay.”
omitted)).

(citation

“To be actionable under . . . the FDCPA, a debt

collector needs only to have used a prohibited practice ‘in
connection with the collection of any debt’ or in an ‘attempt to
collect any debt.’”
§ 1692e.

Id. (citations omitted); see also 15 U.S.C.

Although the billing errors identified by Defendants’

investigation ultimately were corrected before BSI collected or
15

attempted to collect the amount owed from the borrowers, the
temporal focus is at the time of the complaint.

The United

States Court of Appeals for the Fourth Circuit has construed the
reasonable

belief

of

a

violation

to

allow

for

a

reasonable

belief that the violation “may be complete, or it may be in
progress.”

See Boyer-Liberto v. Fountainbleau Corp., 786 F.3d

264, 282 (4th Cir. 2015) (construing the retaliation provision in
Title VII, 42 U.S.C. § 2000e-3(a)).

Plaintiff has presented

evidence that the overstated amount billed to BSI would have
ultimately

accrued

to

the

borrower

either

when

the

borrower

sought to reinstate the mortgage by paying the deficiency amount
owed or in the form of a deficiency judgment entered against the
borrower

after

a

foreclosure

sale.

Additionally,

there

is

evidence that once BSI received $17,225 from Defendants “as a
refund of improperly billed title report costs,” BSI “credited
each borrower’s account with the proper refund.”
at 26).

(ECF No. 33-2,

Thus, Plaintiff has put forth sufficient evidence that

the overstated costs did accrue to the borrowers’ BSI accounts
and would have remained on their accounts but for Plaintiff’s
detection of Defendants’ overbilling.

Drawing all reasonable

inferences in the light most favorable to Plaintiff, a jury
could find that it was objectively reasonable for Plaintiff to
believe

that

the

erroneous

bills

would

be

presented

to

borrowers, and thus, that an FDCPA violation was in progress.
16

the

Defendants

next

argue

that

it

was

not

objectively

reasonable for Plaintiff to believe that Defendants’ overbilling
violated the FDCPA because the billing errors were not material.
(ECF No. 33-1, at 19).

Plaintiff contends that, at the time he

engaged in his alleged protected activity, materiality was only
required as to § 1692e(2)(A).

(ECF No. 36, at 24).

The Fourth

Circuit recognizes that “[a]lthough Congress did not expressly
require that any violation of § 1692e be material, courts have
generally

held

representations’

that
must

violations
rest

on

grounded

material

in

‘false

representations,”

implicating a materiality requirement as to §§ 1692e(2)(A) and
1692e(2)(B) which both prohibit “false representations.”3

Warren

v. Sessoms & Rogers, P.A., 676 F.3d 365, 374 (4th Cir. 2012),
abrogated on other grounds by Campbell-Edwald Co. v. Gomez, 136
S.Ct. 663 (2016); see Hahn v. Triumph P'ships LLC, 557 F.3d 755,
757-58 (7th Cir. 2009) (“Materiality is an ordinary element of
any federal claim based on a false or misleading statement. . .
.

We do not see any reason why materiality should not be

equally required in an action based on § 1692e.”); Donohue v.
Quick

Collect,
3

Inc.,

592

F.3d

1027,

1033

(9th

Cir.

2010)

In Warren, the plaintiff’s allegations did not involve a
false
representation,
but
rather
a
failure
to
disclose
information.
Thus, the Fourth Circuit did not apply the
materiality requirement to the plaintiff’s claim, stating that
“whether a materiality requirement attaches to other violations
of § 1692e has no impact on [the plaintiff’s] allegations that
the defendants violated § 1692e(11).”
See Warren, 676 F.3d at
374.
17

(“[F]alse

but

non-material

representations

are

not

likely

to

mislead the least sophisticated consumer and therefore are not
actionable under §§ 1692e or 1692f.”); Miller v. Javitch, Block
& Rathbone, 561 F.3d 588, 596 (6th Cir. 2009) (rejecting the
plaintiff’s

§

1692e

claim

on

materiality

grounds).

Successively, in Lembach v. Bierman, 528 F.App’x 297, 303 (4th
Cir.

June

12,

2013),

the

Fourth

Circuit,

“persuaded

by

the

discussion in Warren and th[e] Court’s further citation to Hahn,
Donohue, and Miller,” concluded that “to plead a claim of false
representation under the FDCPA, the party must show that the
representations
extended

the

are

material.”

application

of

Another
the

judge

materiality

claims brought under §§ 1692e(5) and 1692f.

of

this

court

requirement

to

Stewart v. Bierman,

859 F.Supp.2d 754, 762 (D.Md. 2012)(“Although the Fourth Circuit
has not directly addressed the materiality requirement for FDCPA
claims arising under §§ 1692e(5) . . . or 1692f, this Court
concludes that a plaintiff bringing such a claim must plead
material violations in order to survive a motion to dismiss.”).
Accordingly,

materiality

is

required

in

order

for

it

to

be

objectively reasonable for Plaintiff to believe that Defendants’
overbilling practice violated the subsections of § 1692e cited
by Plaintiff.
If a representation would not mislead or deceive the least
sophisticated consumer with respect to the alleged debt, it is
18

not actionable under the FDCPA, even if it is technically false.
Penn v. Cumberland, 883 F.Supp.2d 581, 589 (E.D.Va. 2012); see
e.g., United States v. Nat’l Fin. Servs., Inc., 98 F.3d 131,
135-36, 139 (4th Cir. 1996); Stewart, 859 F.Supp.2d at 761.

For

a false representation to be material to sustain a claim under
the FDCPA, “it must affect [the least sophisticated] consumer’s
ability

to

make

alleged debt.”

intelligent

decisions

with

respect

to

the

Penn, 883 F.Supp.2d at 589; see Donohue, 592

F.3d at 1033-34; Hahn, 557 F.3d at 757-58.

The parties have not

cited

Plaintiff’s

to

any

authority

decided

before

alleged

protected activity that applies the materiality requirement to
an overstatement in the total amount of debt owed by a borrower.
In

the

cases

cited

by

Defendants,

Powell

v.

Palisades

Acquisition XVI, LLC, 782 F.3d 119, 127 (4th Cir. 2014), and
Conteh v. Shamrock Community Association, Inc., 648 F.App’x 377,
379-80 (4th Cir. May 19, 2016), the Fourth Circuit determined
materiality

by

first

calculating

the

difference

between

the

erroneous judgment and the correct judgment to calculate the
overstatement.
overstatement

The
by

the

court

then

actual

divided

amount

owed

the
to

amount

of

the

determine

the

overstatement as a percentage of the actual amount owed.

Using

that approach, the Fourth Circuit found the overstatements of
10.4% and 50% to be material.

See Powell, 782 F.3d at 127 (an

overstatement of more than 50 percent is “material under any
19

standard”); Conteh, 648 F.App’x at 379-80 (“While the degree of
the

alleged

overstatement

is

not

as

significant

as

the

overstatement in Powell, . . . an overstatement of 10.4% is
sufficient

to

be

important

to

how

the

least

sophisticated

consumer responds by causing confusion and a potential challenge
by the consumer to the writ.”).

In Powell, the Fourth Circuit

stated that “a de minimis misstatement of the total amount owed
might

not

amount.

be

actionable”

but

did

Powell, 782 F.3d at 127.

not

determine

a

threshold

Here, Plaintiff alleges that

Defendants charged BSI, and ultimately each mortgage borrower,
$350 for a title report and $175 for a title update when the
actual costs were $150 or $250 for a title report and $15 for a
title update.

Such overbilling would result in an overstatement

of $260 or $360 in the total amount of debt owed by a borrower.4
Defendants’ assumption that such an overstatement is immaterial,
without presenting any evidence of actual amounts owed, does not
demonstrate lack of materiality as a matter of law.
proper

context,

it

cannot

necessarily immaterial.

be

said

that

4

of

material

amounts

are

Moreover, Plaintiff’s complaint applied

to 106 borrower accounts, not just one.
dispute

these

Without the

facts

exists

as

Accordingly, a genuine
to

whether

it

was

Mr. O’Neil states in his declaration that, after
investigation into the total amount of erroneous billing, “the
largest overbilling amount was for one file at $350 and the
smallest overbilling error was $15. The most common error was
$100 to $200.” (ECF No. 33-2 ¶¶ 13-15).
20

objectively

reasonable

for

Plaintiff

to

believe

that

the

overstatements were material.
Defendants also argue that the overbilling errors were the
result of bona fide errors and thus are not actionable under the
FDCPA.

(ECF No. 33-1, at 22).

Section 1692k(c) of the FDCPA

provides that “[a] debt collector may not be held liable in any
action brought under this subchapter if the debt collector shows
by

a

preponderance

of

evidence

that

the

violation

was

not

intentional and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably adapted to avoid any
such error.”

15 U.S.C. § 1692k(c).

The bona fide error defense

is an affirmative defense that insulates debt collectors from
liability when they have in fact violated the FDCPA.

Webster v.

ACB Receivables Mgmt., Inc., 15 F.Supp.3d 619, 626 (D.Md. 2014).
It is not a defense to an action brought under the whistleblower
provision of CFPA.
protected

activity

To determine whether Plaintiff engaged in
under

the

CFPA,

the

relevant

inquiry

is

whether Plaintiff reasonably believed that Defendants’ conduct
violated the FDCPA, notwithstanding Defendants’ ability to avoid
liability for an actual violation.

Therefore, a genuine dispute

of material fact still exists as to whether Plaintiff engaged in
protected

activity

under

the

CFPA

entitled to judgment on that basis.

21

and

Defendants

are

not

2.

Unfavorable Personnel Action

Defendants

argue

that

they

are

entitled

to

judgment

in

their favor because “[Plaintiff’s] claims of retaliation cannot
be based on his voluntary quitting of his employment.”

(ECF No.

37, at 3).
The

CFPA

prohibits

the

termination

of

an

employee

who

provides information to his employer relating to an actual or
reasonably

perceived

5567(a)(1).
terminate
rather,

violation

of

the

FDCPA.

12

U.S.C.

§

Plaintiff has presented evidence that he did not
his

was

employment

terminated

with

by

Defendants

Defendants

voluntarily

involuntarily.

but,
After

Plaintiff e-mailed Mr. O’Neil regarding his June 30 meeting with
Mr. Shanahan, Mr. O’Neil responded by stating “you will need to
sign the attached [resignation letter]” and “[i]f you do not
want to resign, then I will accommodate your insistence that you
be fired.

Let me know which of those two options you prefer.”

(ECF No. 36-19).

Plaintiff did not sign the resignation letter

and Defendants considered Plaintiff’s employment terminated on
June

30.

Defendants

have

not

provided

any

evidence

Plaintiff terminated his employment voluntarily.

that

Mr. O’Neil’s

statements that Plaintiff could either resign or be fired are
evidence to the contrary.
fact

exists

as

to

whether

Thus, a genuine dispute of material
Plaintiff

22

suffered

an

unfavorable

personnel action and Defendants are not entitled to judgment on
that basis.
3.
Causal Connection Between Protected Activity and
Unfavorable Personnel Action
Defendants

next

argue

that

Plaintiff

cannot

prove

by

a

preponderance of the evidence that the protected activity was a
contributing

factor

in

his

alleged

personnel

action

because

“there is no evidence in the record other than proximity of
time.”
takes

(ECF No. 33-1, at 25-26).
the

about

adverse

the

employment

protected

action

activity,

connection between the two.

However, if the employer
“shortly

courts

may

after”
infer

learning
a

causal

Price v. Thompson, 380 F.3d 209,

213 (4th Cir. 2004), abrogation on other grounds recognized by
Waag v. Sotera Def. Sols., Inc., 857 F.3d 179, 192 (4th Cir.
2017).

Where

temporal

proximity

is

the

only

evidence

of

causation, however, “the temporal proximity must be very close,”
as it is here.

Clark Cty. Sch. Dist. v. Breeden, 532 U.S. 268,

273 (2001); see also Van Asdale v. Int’l Game Tech., 577 F.3d
989, 1001 (9th Cir. 2009) (concluding in a retaliation case under
the Sarbanes-Oxley Act that the plaintiffs “raised a genuine
dispute

of

material

fact

regarding

whether

their

protected

activity was a contributing factor to their terminations” based
on the proximity of their terminations “within weeks of their
alleged protected conduct”); Yartzoff v. Thomas, 809 F.2d 1371,
1376 (9th Cir. 1987) (holding that causation could be inferred
23

where the first adverse employment action took place less than
three months after an employee’s protected activity).

Here,

Defendants asked Plaintiff to look for another job on June 27
and considered his employment terminated on June 30, just weeks
after he notified Mr. O’Neil of Defendants’ overbilling practice
and

expressing

Therefore,
support

his

belief

Plaintiff

his

that

has

retaliation

put

it

was

forth

claim,

unlawful

sufficient

and

the

on

June

12.

evidence

to

shifts

to

burden

Defendants to demonstrate by clear and convincing evidence that
the employer would have taken the same unfavorable personnel
action in the absence of the plaintiff’s protected activity.
See 12 U.S.C. § 5567(c)(3)(B).
Defendants
personnel

argue

action

in

that
the

they

“would

absence

of

have

the

taken

protected

the

same

activity”

because, in June 2014, (1) “MSO faced dim prospects for future
work” when “MCM informed Defendants that it had been outbid” on
a large pool of loans, “so there would be no new referrals” (ECF
No. 33-1, at 27-28); (2) “a firm client for whom MSO did tax
lien foreclosure work told the firm to stop all work on their
behalf”

(ECF

No.

33-1,

at

28);

and

(3)

Plaintiff

raised

objections to Mr. Shanahan’s proposal to use the services of a
new auctioneer in which “the tone of his long screed emails and
suggestions

of

impropriety

raised

24

serious

concerns

among

the

partners

of

MSO

and

TOG

to

the

point

where

Mr.

Shanahan

recommended asking Plaintiff to resign” (ECF No. 33-1, at 28).
First, Defendants’ assertion that they would have taken the
same unfavorable personnel action because they lost a large pool
of MCM referrals in June 2014 is undermined by the evidence
presented

by

Plaintiff,

including:

Mr.

Shanahan’s

deposition

testimony that it is common for a foreclosure firm to have ebbs
and

flows

in

the

referral

process

(ECF

No.

36-3,

at

25);

Plaintiff’s declaration that, prior to June 27, he had a “full
case

load,”

“was

fully

occupied

with

foreclosure

work,”

and

“frequently worked long hours (beyond normal business hours)”
(ECF No. 36-7, at 9); and an e-mail from BSI Vice President and
Branch Manager Justin Wenk asking Mr. O’Neil, “What happen[ed]
with Erik and how are we proceeding to handle the pretty large
workload he had?”

(ECF No. 36-23).

Second, although Defendants

assert that Mr. Shanahan was devoting significant time to doing
tax lien foreclosure work for client Woods Cove and that “[w]ith
the cessation of this work, Mr. Shanahan, senior to Plaintiff,
would

have

more

time

available

for

the

Maryland

foreclosure

practice work, [] decreas[ing] the firm’s need for Plaintiff’s
services”
evidence

(ECF
that

No.
it

33-2

took

¶

20),

almost

18

both

parties

months

for

have
Mr.

presented

Shanahan

to

complete his existing work for Woods Cove (ECF Nos. 33-2 ¶ 20;
33-3

¶

7;

36-3,

at

32).

In
25

addition,

the

parties

have

stipulated that “[t]he loss of legal work from Woods Cove was a
peripheral point, and not a leading factor by any stretch, with
respect to [Mr. O’Neil’s] decision to request [Plaintiff] to
resign from his job.”

(ECF No. 36-26).

Lastly, Defendants

contend that a dispute between Plaintiff and partners Mr. O’Neil
and Mr. Shanahan about Mr. Shanahan’s proposal to use a new
auctioneer damaged the relationship between Plaintiff and the
partners.

(ECF Nos. 33-2 ¶ 21; 33-3 ¶ 8).

Mr. O’Neil testified

in deposition, however, that the sole justification for asking
Plaintiff to look for another job was economic (ECF No. 36-2, at
39, 40, 49, 50-51),
exists

as

to

and thus a genuine dispute of material fact

whether

the

dispute

Plaintiff to resign or be fired.

was

a

basis

for

asking

Defendants have failed to

present uncontradicted clear and convincing evidence that they
would have taken the same unfavorable personnel action in the
absence

of

Defendants’

Plaintiff’s
motion

for

protected
summary

activity.
judgment

on

Therefore,
Plaintiff’s

retaliation claim will be denied.
IV.

Conclusion
For the foregoing reasons, the motion for summary judgment

filed by Defendants and the motion for leave to file a surreply
filed by Plaintiff are denied.

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge
26