Bell v. Portfolio Recovery Associates, LLC et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendants' Motions to Dismiss 14 20 are GRANTED. This matter is DISMISSED with prejudice. LET JUDGMENT BE ENTERED ACCORDINGLY. (Written Opinion) Signed by The Hon. Paul A. Magnuson on 9/21/2018. (LLM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civ. No. 18-1027 (PAM/TNL)
Portfolio Recovery Associates, LLC,
and Rodenburg LLP,
MEMORANDUM AND ORDER
Civ. No. 18-1028 (PAM/HB)
Portfolio Recovery Associates, LLC,
and Rodenburg LLP,
This matter is before the Court on Defendants’ Motions to Dismiss these related
cases brought pursuant to the Fair Debt Collection Practices Act. For the following
reasons, the Motions are granted.
Plaintiff Danielle Bell lives in Cambridge, Minnesota. (Bell Am. Compl. (Docket
No. 4) ¶ 14.) Plaintiff Marline Blake lives in Minneapolis. (Blake Am. Comp. (Docket
No. 5) ¶ 14.) Bell and Blake each defaulted on a Home Depot credit card. (Bell Am.
Compl. ¶ 26; Blake Am. Compl. ¶ 25.) Bell also defaulted on two other consumer debts.
(Bell Am. Compl. ¶¶ 36, 49.) Defendant Portfolio Recovery Associates (“PRA”) bought
all of this debt and hired Defendant Rodenburg LLP to collect it. (Bell Am. Compl. ¶¶ 2728, 37-38, 50-51; Blake Am. Compl. ¶¶ 26-27.) Through Defendant Rodenburg LLP, PRA
ultimately initiated Minnesota state-court lawsuits against Plaintiffs.
Plaintiffs, PRA did not file a cost bond before serving them with the summons and
complaint, as Minn. Stat. § 549.18 requires nonresident defendants to do. (E.g., Blake Am.
Compl. ¶ 29.) The lawsuits have been dismissed; Blake asserts that the Hennepin County
court dismissed her case without prejudice for PRA’s failure to pay the cost bond. (Blake
Am. Compl. ¶¶ 31-32; Chester Decl. Ex. D.)
After receiving the summons and complaint for the lawsuit regarding her second
debt, Bell’s attorney informed PRA and Rodenburg that he was representing Bell as to “any
and all matters that come to your office regarding Ms. Bell.” (Bell Am. Compl. ¶ 44.)
Despite this, PRA served Bell directly with the summons and complaint for the third debt,
rather than communicating with her attorney. (Id. ¶ 54.)
Both Plaintiffs’ Amended Complaints contend that the failure to post a bond for
each lawsuit violated multiple provisions of the FDCPA, 15 U.S.C. §§ 1692d, 1692e,
1692e(10), 1692e(2)(A), 1692e(5), 1692e(6), and 1692f. (Bell Am. Compl. ¶¶ 84, 86, 87,
88, 90; Blake Am. Compl. ¶¶ 53, 55, 56, 57, 59.) In addition, Bell contends that the service
of the third lawsuit on her directly, rather than on her attorney, violated 15 U.S.C.
§§ 1692c(a)(2), 1692b(6), 1692d, and 1692f. (Bell Am. Compl. ¶¶ 58, 60, 63.) In her
response to the Motions, however, Bell withdrew her claim under § 1692b(6), but
continues to argue that PRA’s service of the third lawsuit on her rather than on her attorney
violated other provisions of the FDCPA. (Bell’s Opp’n Mem. at 18 n.2.)
Plaintiffs seek unspecified actual damages, statutory damages, attorney’s fees, and
costs. Although the body of their Complaints states that they are also requesting injunctive
relief “to restrain Defendants from the alleged abusive practices in the future” (Bell Am.
Compl. ¶ 105; Blake Am. Compl. ¶ 74), there is no such request in the prayer for relief of
Defendants now move to dismiss these lawsuits, arguing that Plaintiffs lack standing
and therefore there is no subject matter jurisdiction and that Plaintiffs have in any event
failed to state claims on which relief can be granted. Defendants also ask that the Court
declare the cost-bond requirement unconstitutional.
Defendants first argue that these cases should be dismissed for lack of standing,
because Plaintiffs cannot articulate any cognizable injury other than the bare procedural
violation of the FDCPA itself. Plaintiffs argue that they have alleged a cognizable injury
because they were “actually deprived of the protection of a bond” to which they were
entitled under Minnesota law. (Bell’s Opp’n Mem. at 11.) But it is not a cognizable injury
that Plaintiffs had to respond to a lawsuit without the alleged protection a $75 cost bond
Indeed, the cost-bond statute contains no requirement that the state-court
defendant be notified that a bond has been filed. Thus, Plaintiffs’ claim that they were
“thrust into a lawsuit that [they] had to respond to sooner than [they] otherwise should have
. . . without the protection Defendants were required to provide by Minn. Stat. § 549.18”
(Bell’s Opp’n Mem. at 22), is without merit.
However, Plaintiffs have alleged that they suffered emotional distress. This is, at
least at this stage, “sufficient to meet the ‘irreducible constitutional minimum’ of standing.”
Bartl v. Enhanced Recovery Co., No. 16cv252, 2017 WL 1740152, at *2 (D. Minn. May
3, 2017) (Ericksen, J.) (quotation omitted). Plaintiffs have standing to bring their FDCPA
Failure to State a Claim
The essence of Plaintiffs’ claims is that, by initiating the state-court lawsuits without
filing the cost bond, Defendants implied that they could initiate the lawsuits without a cost
bond. The cost-bond statute provides:
When an action is begun in the district court by a plaintiff who . . . is a
nonresident or a foreign corporation . . . such plaintiff shall file a bond to the
court administrator, before service of summons . . . in the sum of at least $75,
conditioned for the payment of all costs and disbursements that may be
adjudged against the plaintiff.
Minn. Stat. § 549.18. The failure to file a bond under § 549.18 may result in the dismissal
of the action with costs against the attorney, although a dismissal is not required. Id.
Plaintiffs first argue that they have stated a claim under the FDCPA because the
Eighth Circuit has found that a debt collector’s service of a notice of intent to garnish before
the state court entered a garnishment order was a violation of the FDCPA. Picht v. Jon R.
Hawks, Ltd., 236 F.3d 446, 451 (8th Cir. 2001). Plaintiffs claim that this case stands for
the proposition that a violation of Minnesota law can be a violation of the FDCPA. But
“[a]s a general matter, state collection law and the FDCPA are not coextensive—sections
1692e and 1692f are not federal enforcement mechanisms intended to reach every violation
of state collection law.” Haney v. Portfolio Recovery Assocs., L.L.C., 895 F.3d 974, 988
(8th Cir. 2016). In any event, the question is not whether violations of Minnesota law can
in general also be FDCPA violations. The question here is whether a violation of this
particular Minnesota law constitutes a violation of the FDCPA. It clearly does not.
Communicating directly with Bell
Minnesota law sets forth the requirements for service of a summons and complaint.
Service “shall be” made by “delivering a copy [of the summons and complaint] to the
individual personally or by leaving a copy at the individual’s usual place of abode with
some person of suitable age and discretion then residing therein.” Minn. R. Civ. P. 4.03(a).
An individual may also appoint an agent to receive service, and then “service may be made”
to that person. Id. Bell does not allege that she appointed her attorney as her agent for
purposes of service of process, and even if she had, the Rule does not require Defendants
to serve her attorney.
Bell’s contention that service of the summons and complaint on her rather than her
attorney constituted a violation of the FDCPA must be dismissed. Defendants complied
with Minnesota service requirements in serving their lawsuit, and the FDCPA specifically
allows communication with debtors represented by attorneys with the express permission
of the court. 15 U.S.C. § 1692c(a). Compliance with Minnesota’s service rules cannot be
a violation of the FDCPA.
Harrass, Oppress, or Abuse
Plaintiffs claim that Defendants’ failure to file the cost bond violates § 1692d, which
prohibits a debt collector from engaging in “any conduct the natural consequence of which
is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15
U.S.C. § 1692d. The section lists examples of prohibited conduct, and while the list is not
exclusive, it is instructive. The list includes the use or threat of violence, the use of obscene
language, publication of debtor’s names, and repeatedly calling the debtor. Id. § 1692d(1)(5).
Plaintiffs contend that by initiating the state-court lawsuits before complying with
the cost-bond statute, they had to respond to the state-court lawsuits sooner than they
otherwise would have. Plaintiffs cite not a single case holding that the failure to comply
with a bond requirement is harassing or abusive, because there is no such case. Their claim
under § 1692d must be dismissed.
Plaintiffs also claim that Defendants’ failure to file the cost bond violates §§ 1692e
and 1692e(10), which prohibit false representations in connection with the collection of a
debt and the use of false representations or deceptive means to collect a debt. Plaintiffs
note that the Eighth Circuit recently found that a debt collector’s misstatements about the
availability of interest to be charged constituted a plausible violation of § 1692e. Haney,
895 F.3d at 989. They contend that the Eighth Circuit has recognized that a debt collector’s
omissions, and not just acts, can constitute a violation of § 1692e. Whether this proposition
follows from the recent Haney decision is a matter of debate, but even if it does, “omitting”
to file a cost bond is not an omission akin to a false or misleading representation. At most,
the failure to file a cost bond is a failure to comply with an administrative, procedural
And the failure to comply with a procedural requirement is not an actionable
misrepresentation under the FDCPA. Moreover, as the Eighth Circuit recently held, the
FDCPA prohibits only material misrepresentations, not every false statement. Hill v.
Accounts Receivable Servs., LLC, 888 F.3d 343, 345-46 (8th Cir. 2018). Commencing a
lawsuit without posting a $75 bond is not a material representation of anything. Plaintiffs’
§ 1692e and 1692e(10) claims must be dismissed.
Character, Amount, or Legal Status
Section 1692e(2)(A) prohibits false and misleading representations regarding the
character, amount, or legal status of a debt. Plaintiffs argue that by not complying with the
cost-bond requirement, Defendants falsely represented the legal status of a debt, in that
“the suit could proceed without Defendant posting the cost bond it should have posted prior
to initiating the collection action.” (Bell’s Opp’n Mem. at 26.)
Filing an action without the cost bond says nothing about the underlying debt. This
claim borders on frivolous and will be dismissed.
Unfair or unconscionable means
Section 1692f prohibits the use of “unfair or unconscionable means to collect or
attempt to collect any debt.” Plaintiffs contend that service of a state-court lawsuit without
filing a cost bond is an unfair and unconscionable means. Unfair or unconscionable means
include things like attempting to collect a debt that was not owed. See, e.g., Demarais v.
Gurstel Chargo, P.A., 869 F.3d 685, 697 (8th Cir. 2017). Indeed, § 1692f is concerned
specifically with debt collectors attempting to take actions to collect a debt that they are
not allowed to collect. See, e.g., § 1692f(6)(1) (prohibiting a debt collector from taking or
threatening to take any nonjudicial action to effect dispossession of property if the debt
collector has no present right to possession of the property).
The failure to post a cost bond is not an “unfair or unconscionable means” to collect
a debt. Plaintiffs’ claim under this section must be dismissed.
Finally, Defendants challenge the constitutionality of the Minnesota cost-bond
statute, which requires only nonresident plaintiffs to post the $75 bond. They have
challenged the statute in the underlying state-court cases as well, and they represent that
the state court held a hearing on August 27, 2018, on their motion for a determination that
the statute is unconstitutional. (Rodenburg’s Bell Supp. Mem. at 23 n.3.)
Although Defendants provided notice to Minnesota’s Attorney General about their
constitutional challenge, federal law requires the Court itself to notify the state attorney
general that the constitutionality of a state statute has been questioned. Fed. R. Civ. P.
24(c); 28 U.S.C. § 2403 (providing that “the court shall” notify the attorney general and
“shall” permit the State to intervene). The Court has not yet done so. Moreover, given that
the Court concludes that Plaintiffs have failed to state a claim on which relief can be
granted, this is not the appropriate case to determine the constitutional issue. And because
this issue has been presented to the state court before being presented to this Court, it is in
any event the better course to allow the state court to rule on the issue. The Court will
therefore decline to consider this constitutional challenge to Minn. Stat. § 549.18.
Accordingly, IT IS HEREBY ORDERED that:
Defendants’ Motions to Dismiss in Bell v. Portfolio Recovery Assocs., No.
18cv1027, (Docket Nos. 14, 20) are GRANTED;
Defendants’ Motions to Dismiss in Blake v. Portfolio Recovery Assocs., No.
18cv1028, (Docket Nos. 20, 25) are GRANTED; and
This matter is DISMISSED with prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: September 21, 2018
s/ Paul A. Magnuson
Paul A. Magnuson
United States District Court Judge
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