Cottle v. Monitech, Inc.
Filing
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ORDER granting 13 Motion to Dismiss for Failure to State a Claim. Signed by US District Judge Terrence W. Boyle on 12/19/2017. (Stouch, L.)
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
No. 7:17-CV-137-BO
JESSICA COTTLE, on behalf of herself
and others similarly situated, ·
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Plaintiff,
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MONITECH, INC.,
Defendant.
ORDER
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This cause comes before the Court on defendant's motion to dismiss pursuant to Rules
12(b)(l) and 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff has responded, defendant
has replied, and the matter is ripe for ruling. For the reasons that follow, defendant's motion is
granted and this matter is dismissed.
BACKGROUND
Defendant is a maker and installer of ignition interlock devices, a device which prevents
a vehicle from operating if the driver's blood alcohol exceeds the legal limit established by the
state. In North Carolina, defendant leases its ignition interlock devices to individual drivers for
installation on their personal vehicles. On July 23, 2016, defendant installed one of its ignition
interlock devices in plaintiffs car. The same day, plaintiff signed an Install Verification and
Lease Agreement naming plaintiff as the lessee and defendant as the lessor. [DE l], Cmp. Ex. A.
The lease provided that the initial lease term was for twelve months for a total obligation of
$900. Id. The lease further provided that six payments of $150 would be required (paid every
sixty days), and that the first sixty-day payment of $150 was due on the day the lease was signed.
Id.
Plaintiff filed this action on July 3, 2017, as a putative class action against defendant for
failure to comply with the requirements of the Consumer Leasing Act of 1976 (CLA). 15 U.S.C.
§ 1667, et seq. In 1968, the Truth in Lending Act (TILA) was enacted to
assure a meaningful disclosure of credit terms so that the consumer will be able to
compare more readily the various credit terms available to him and avoid the
uninformed use of credit, and to protect the consumer against inaccurate and
unfair credit billing and credit card practices.
15 U.S.C. § 1601(a). The CLA was enacted as an amendment to the TILA to apply "truth-inlending protections to commercial leases." Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S.
50, 55 (2004) (citing 90 Stat. 257). Accordingly, the CLA
assure[ s] a meaningful disclosure of the terms of leases of personal property for
personal, family, or household purposes so as to enable the lessee to compare
more readily the various lease terms available to him, limit balloon payments in
consumer leasing, enable comparison of lease terms with credit terms where
appropriate, and to assure meaningful and accurate disclosures of lease terms in
advertisements.
15 U.S.C. § 1601(b).
In her complaint, plaintiff alleges that the terms of defendant's ignition interlock device
lease failed to comply with the CLA and its implementing regulations, specifically Regulation
M. 12 C.F.R. § 1013.1 et seq. Regulation M requires that disclosures in a lease be made in a
clear, conspicuous, and, for some specific disclosures, segregated manner.
Plaintiff further
alleges that the defendant's lease is not "substantially similar" to a model form provided in the
regulations as is required. Plaintiff brings her claims on behalf of herself and a putative class of
persons consisting of, inter alia, all persons to whom defendant has leased an ignition interlock
device for personal, family, or household purposes with an initial lease term of more than four
months and for which the lease is currently in force or was terminated on or after July 3, 2016.
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DISCUSSION
Defendant has moved to dismiss plaintiffs complaint in its entirety pursuant to Rules
12(b)(l) and 12(b)(6) of the Federal Rules of Civil Procedure.
Rule 12(b)(l) authorizes
dismissal for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(l). When subject matter
jurisdiction is challenged, the plaintiff has the burden of proving jurisdiction to survive the
motion. Evans v. B.F. Perkins Co., 166 F.3d 642, 647-50 (4th Cir. 1999). "In determining
whether jurisdiction exists, the district court is to regard the pleadings' allegations as mere
evidence on the issue, and may consider evidence outside the pleadings without converting the
proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R.R. Co. v.
United States, 945 F.2d 765, 768 (4th Cir. 1991). To this end, "the nonmoving party must set
forth specific facts beyond the pleadings to show that a genuine issue of material fact exists." Id
(citing Trentacosta v. Frontier Pacific Aircraft Indus., 813 F.2d 1553, 1558-59 (9th Cir. 1987)).
A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Papasan v. Allain,
478 U.S. 265, 283 (1986). When acting on a motion to dismiss under Rule 12(b)(6), "the court
should accept as true all well-pleaded allegations and should view the complaint in a light most
favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). A
complaint must allege enough facts to state a claim for relief that is facially plausible. Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Facial plausibility means that the facts
pled "allow[] the court to draw the reasonable inference that the defendant is. liable for the
misconduct alleged," and mere recitals of the elements of a cause of action supported by
conclusory statements do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
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As its concerns the Court's subject matter jurisdiction, the Court considers first
defendant's argument that plaintiff lacks Article III standing to bring her claims. U.S. Const. art.
III, § 2. The standing question is one that asks "whether the litigant is entitled to have the court
.decide the merits of the dispute or of particular issues."
Warth v. Seldin, 422 U.S. 490, 498
(1975). In order to establish Article III standing, a plaintiff must show "(1) it has suffered an
injury in fact; (2) there exists a causal connection between the injury and conduct complained of;
and (3) a favorable judicial ruling will likely redress the injury." Virginia ex rel. Cuccinelli v.
Sebelius, 656 F.3d 253, 268 (4th Cir. 2011) (internal quotation omitted). To demonstrate that she
has suffered an injury in fact, plaintiff must demonstrate that a legally protected interest has been
invaded, and that the invasion is both concrete and particularized as well as actual or imminent.
Lujan v. Deft. of Wildlife, 504 U.S. 555, 560 (1992).
In her complaint, plaintiff alleges generally that her lease agreement with defendant
failed to comply with Regulation M, failed to provide separate documentation with segregated
disclosures, and that defendant failed to provide certain required disclosures. The only injury
alleged by plaintiff is confusion; specifically, plaintiff alleges that after signing the lease she was
"confused as to certain of its provisions, including the total amount of money owed ... , whether
other charges may apply beyond her periodic payments ... , and whether she had the option to
purchase the leased property at the conclusion of the lease ...." Cmp.
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33. Plaintiff further
alleges that confusion is exactly the type of harm sought to be addressed by the CLA and its
implementing regulations. Cmp. ~ 34.
Recently, the Supreme Court has held that "a bare procedural violation, divorced from
any concrete harm, [does not] satisfy the injury-in-fact requirement." Spokeo, Inc. v. Robins, 136
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S. Ct. 1540, 1548 (2016), as revised (May 24, 2016); see also Dreher v. Experian Info. Sols.,
Inc., 856 F.3d 337, 344 (4th Cir. 2017). An informational injury, as is alleged here,
is a type of intangible injury that can constitute an Article III injury in fact.
However, a statutory violation alone does not create a concrete informational
injury sufficient to support standing. Rather, a constitutionally cognizable
informational injury requires that a person lack access to information to which he
is legally entitled and that the denial of that information creates a "real" harm
with an adverse effect. ... [A] plaintiff suffers a concrete informational injury
where he is denied access to information required to be disclosed by statute, and
he "suffers, by being denied access to that information, the type of harm Congress
sought to prevent by requiring disclosure."
Dreher, 856 F.3d at 345-46 (internal citations omitted) (emphasis in original).
While plaintiff has sufficiently alleged that defendant committed a statutory violation in
failing to segregate certain disclosures and failing to provide a lease substantially similar to the
model form, plaintiff has failed to sufficiently allege that she has suffered harm as a result of
defendant's alleged procedural violations.
As plaintiff correctly argues, the type of harm
Congress sought to prevent when enacting the TILA and the CLA was the deception,
misinformation, and obliviousness to the true costs of credit or lease terms which had been
encountered by inexperienced or uninformed consumers. Thomka v. A. Z. Chevrolet, Inc., 619
F.2d 246, 248 (3d Cir. 1980). Plaintiff, however, does not allege that she was misinformed or
deceived as to the terms of her lease with defendant, and plaintiffs allegation that she was
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confused as to certain lease terms is not the same as an allegation that she was oblivious as to the
true cost of her lease transaction.
Plaintiff has further failed to allege that defendant's procedural violations had any
adverse effect on her conduct in order to demonstrate an injury in fact. See Dreher, 856 F.3d at
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346-47 (distinguishing cases in which informational injury affected a plaintiffs conduct). She
has not alleged that she would have evaluated the terms of her lease differently, made a different
choice had she been presented with additional information, or in any way behaved other than she
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did had defendant not committed its alleged violations of the CLA. In sum, plaintiff has done no
more than allege a bare procedural violation and she has failed to demonstrate the requisite
injury in fact to confer Article III standing. Thus, although the TILA, and consequently the
CLA, "is a remedial consumer protection statute that is read liberally to achieve its goals,"
Phelps v. Robert Woodall Chevrolet, Inc., 306 F. Supp. 2d 593, 596 (W.D. Va. 2003), plaintiffs
complaint in this instance is properly dismissed.
CONCLUSION
For the foregoing reasons, defendant's motion to dismiss [DE 13] is GRANTED and this
action is DISMISSED in its entirety. The clerk is DIRECTED to close the file.
SO ORDERED, this
-'-i- day of December, 2017.
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TERRENCE W. BOYLE
UNITED STATES DISTRICT JUDGE
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