ROSENZWEIG v. TRANSWORLD SYSTEMS INC.
Filing
27
OPINION. Signed by Magistrate Judge Mark Falk on 9/20/2016. (seb)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ARON ROSENZWEIG, on behalf of
himself and all other similarly situated
consumers,
Plaintiff,
v.
Civil Action No. 16-227 (JMV)
OPINION
TRANSWORLD SYSTEMS, INC.,
Defendant.
FALK, U.S.M.J.
Before the Court is Plaintiff’s motion for leave to file an amended complaint.
[ECF No. 18.] The motion is opposed. No argument is necessary. Fed. R. Civ. P. 78(b).
For the reasons stated below, Plaintiff’s motion is GRANTED.
BACKGROUND
On January 13, 2016, Plaintiff filed his complaint as a putative class action against
Defendant Transworld Systems, Inc. (“TSI”), alleging that it violated the Fair Debt
Collection Practices Act, 15 U.S.C. §1692, et seq., while attempting to collect a debt
owed to MTA Bridges and Tunnels EZ-Pass (“EZ-Pass”) arising out of an unpaid toll.
Plaintiff alleges that TSI engaged in deceptive collection practices by misrepresenting
that the debt was accruing interest and that other charges could accrue under state law.
Plaintiff’s theory is that the misrepresentations were made for purposes of compelling
immediate payment by threatening that the debt’s balance would increase.
On March 14, 2016, TSI answered the Complaint. No pre-answer, Rule 12 motion
to dismiss was made. [ECF No. 7.]
On May 5, 2016, the Undersigned held an initial conference and entered a
scheduling order, which provided, among other things, for the filing of any motions to
amend pleadings by June 22, 2016, and the close of discovery on December 20, 2016.
[ECF No. 11.]
On May 20, 2016, TSI wrote to the Court requesting leave to file a motion for
judgment on the pleadings pursuant to Rule 12(c). [ECF No. 13.]
On May 22, 2016, Plaintiff opposed the request and stated that TSI was not
responding to outstanding discovery requests. [ECF No. 14.]
On May 31 and June 8, 2016, the Undersigned held conferences to address the
status of the case and TSI’s request to make a dispositive motion. Plaintiff stated that
TSI’s motion could not be decided without discovery and that he intended to move for
leave to file an amended complaint.
On June 10, 2016, the Undersigned entered an Order setting a briefing schedule for
Plaintiff’s motion for leave to amend and temporarily staying discovery. [ECF No. 17.]
On June 20, 2016, Plaintiff filed the present motion to amend. He seeks
permission to file an amended complaint that adds approximately 20 paragraphs of
additional allegations to the original complaint and counts for violation of the New Jersey
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Consumer Fraud Act, N.J.S.A. § 56:8-2 (“NJCFA”) and the New Jersey Truth in
Consumer Warranty and Notice Act, N.J.S.A. 56:12-15 (“TCCWNA”).
TSI opposes the motion to amend claiming that Plaintiff has unduly delayed in
seeking to amend his complaint and that the proposed amendments are futile.1
DISCUSSION
A.
Legal Standard
Rule 15 provides that once a responsive pleading has been filed, “a party may
amend its pleadings only with the opposing party’s written consent or the court’s leave.”
Fed. R. Civ. P. 15(a)(2). Leave to amend is liberally granted unless there is: (1) undue
delay or prejudice; (2) bad faith; (3) dilatory motive; (4) failure to cure deficiencies
through previous amendment; or (5) futility. Foman v. Davis, 371 U.S. 178, 182 (1962).
The ultimate decision to grant or deny leave to amend is a matter committed to the court’s
sound discretion. See, e.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321,
330 (1970). The Third Circuit has “made clear that there is to be a liberal use of Rule 15
to amend complaints so as to state additional causes of action.” Leased Optical Dep’t,
Inc. v. Opti-Center, Inc., 120 F.R.D. 476, 479 (D.N.J. 1988) (quotes omitted).
1
TSI argues that all three claims in the amended complaint are futile, even though
only two (the NJCFA and TCCWNA claims) are being added through the amended
pleading. In other words, TSI has effectively sought a ruling that Plaintiff’s FDCPA
claim from the original pleading is futile, even though it is not being added to the case
through the proposed amendment, and even though it failed to make a pre-answer motion
to dismiss the claim.
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B.
Plaintiff’s Amendment
1.
No Undue Delay
“Delay alone . . . is an insufficient ground to deny an amendment, unless the delay
unduly prejudices the non-moving party.” Cornell & Co., Inc. v. Occupational Safety &
Health Review Comm’n, 573 F.2d 820, 823 (3d Cir. 1978); Boileau v. Bethlehem Steel
Corp., 730 F.2d 929, 938 (3d Cir. 1984) (district court erred in not permitting amendment
10 years after original complaint when there was no demonstrated prejudice). Delay is
only undue when it places a burden on the Court or causes prejudice to the non-moving
party. Marlowe Patent Holdings v. Dice Electronics, LLC, 293 F.R.D. 688, 695 (D.N.J.
2013).
Delay is not an issue in this case. The Complaint was filed in January 2016. The
initial conference was held in May. The Court’s initial scheduling order provided that
motions to amend were to be filed by June 22, 2016. Within a month of the scheduling
conference, Plaintiff expressed a desire to amend his complaint and the motion to amend
was filed prior to the deadline in the scheduling order. Moreover, there is no prejudice.
Little to no discovery has occurred and discovery is currently stayed. There is no delay on
the facts of this case, let alone “undue” delay that would support denial of leave to amend
2.
The Amendments are Not Clearly Futile
The futility analysis on a motion to amend compares to a Rule 12(b)(6) motion.
See In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1332 (3d Cir. 2002) (“An amendment
would be futile when ‘the complaint, as amended, would fail to state a claim upon which
relief could be granted.’”). For a complaint to survive dismissal, it “must contain
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sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662 (2009) (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570, (2007)). Given the liberal standard for the amendment of pleadings,
“courts place a heavy burden on opponents who wish to declare a proposed amendment
futile.” Pharmaceutical Sales and Consulting Corp. v. J.W.S. Delavau Co., Inc., 106 F.
Supp. 2d 761, 764 (D.N.J. 2000) (citations omitted). Although tracking Rule 12(b)(6),
Rule 15 futility does not contemplate substantive motion practice on the merits of the
claims:
If a proposed amendment is not clearly futile, then denial
of leave to amend is improper. This does not
require the parties to engage in the equivalent of
substantive motion practice upon the proposed new
claim or defense; this does require, however, that the
newly asserted defense appear to be sufficiently wellgrounded in fact or law that it is not a frivolous pursuit.
Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 468 (D.N.J.1990)
(emphases added) (citations omitted); see also 6 Wright, Miller & Kane Federal Practice
and Procedure, §1487 (2d ed. 1990). Effectively, this means that the proposed
amendment must be “frivolous or advance a claim or defense that is legally insufficient
on its face . . . .” Marlowe Patent Holdings, LLC v. Dice Electronics, LLC., 293 F.R.D.
688, 695 (D.N.J. 2013).
Plaintiff’s proposed amendments are not clearly futile.
First, Plaintiff does not add a FDCPA claim to the Amended Complaint; it was in
the original pleading. Indeed, at most, the amended complaint contains further
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allegations of fact supporting the claim. Thus, in this Court’s view, it is not proper for
TSI to challenge the FDCPA claim in opposing the motion to amend; rather, the time to
challenge it was on a pre-answer Rule 12 motion to dismiss or through a dispositive
motion at a later date. Nevertheless, even assuming it were appropriate to consider the
FDCPA claim, it is not clearly futile.
TSI’s futility argument rests on the notion that Plaintiff’s “financial obligation” at
issue is not a “debt” within the meaning of the FDCPA because it arose from a toll
violation. Specifically, TSI claims that the money owed was a “toll violation fine” and
not a “consumer debt” within the meaning of the FDCPA. This argument is principally
supported by an unpublished, not-precedential, non-binding 2008 decision from the
United States District Court for the Central District of California. See Yazo v. Law
Enforcement Sys. Inc., 2008 WL 4852965 (C.D. Cal. Nov. 7, 2008). Plaintiff attempts to
distinguish the decision, but simultaneously claims that it supports his position in various
ways. In addition, Plaintiff refers to other non-binding cases that could be construed to
decide the issue differently, see, e.g., Brown v. Transurban USA, Inc., 144 F. Supp. 3d
809, 842-43 (E.D. Va. 2015).
Clear futility is not established by citing an eight-year-old, unpublished district
court case from a different circuit. The Court would not hesitate to find futility if there
were some glaring defect in the proposed pleading—e.g., a claim barred by the statute of
limitations. But that is not the case here. Moreover, as Plaintiff points out, TSI’s
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argument that the “toll violation” is not a “debt” is somewhat confusing, as the letter TSI
sent to collect the toll violation expressly states that “[t]his is an attempt to collect a debt.”
(Compl., Ex. A, emphasis added; ECF No. 1-1.) For purposes of Rule 15, the Court
accepts the allegations in the proposed pleading as true and is concerned only with
definite frivolousness. Harrison Beverage, 133 F.R.D. at 468. This is not substantive
motion practice. And Plaintiff’s FDCPA claim is not on its face frivolous.
Plaintiff’s NJCFA and TCCWNA claims are also not plainly frivolous. Plaintiff
addresses the elements of each claim and explains how he has pleaded all of the
requirements necessary to proceed. (Pl.’s Reply Br. 15-20.) TSI, however, argues the
NJCFA claim is futile because this case does not involve fraud in connection with the sale
of merchandise or real estate. (Def.’s Br. 8-10.) Plaintiff plausibly counters that, in the
context of the statue, “merchandise” includes “toll debts” accrued through the use of a
consumer purchased EZ-Pass transponder. This dispute raises questions of pleading and
statutory interpretation that exceed the limited analysis that applies to a Rule 15 motion to
amend. In addition, it may include a factual dispute.
Similarly, TSI claims that the TCCWNA claim is futile because the statute applies
only to a “seller, lessor, creditor, lender or bailee” and it is none of these but simply a debt
collector. Plaintiff counters that TSI is either a creditor or a bailee, an issue that must be
explored through discovery. According to Plaintiff, if the debt has been purchased, TSI
would be the creditor; if it has not been purchased, TSI would be a bailee. Either way, he
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contends, the statute applies. Again, conclusively deciding this dispute in the context of a
motion to amend would exceed the proper scope of the amendment analysis.
In short, the claims and arguments presented do not reflect conspicuous futility. It
is possible that some (or all) of Plaintiff’s claims may ultimately fail. However, for
purposes of this motion and Rule 15, the Court cannot conclude that any aspect of the
proposed amendment is clearly futile.2
CONCLUSION
For the reasons set forth above, Plaintiff’s motion to amend is GRANTED.
Plaintiff’s amended pleading should be filed within 5 days. The filing of the amended
complaint provides Defendant with the opportunity to respond to the new pleading in any
manner it believes appropriate, including by filing a Rule 12 motion.
s/Mark Falk
MARK FALK
United States Magistrate Judge
DATED: September 20, 2016
2
Nothing in this Opinion suggests that any of Plaintiff’s claims would survive a
Rule 12 motion. As discussed, while there is similarity between Rule 15 futility and Rule
12, the standards are not the same.
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