Linko et al v. American Education Services et al

Filing 9

MEMORANDUM (eo, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
ALLISON M. LINKO, and
NICHOLAS LINKO,

:
:
:
Plaintiffs,
:
:
v.
:
:
AMERICAN EDUCATION
:
SERVICES, PENNSYLVANIA
:
HIGHER EDUCATION
:
ASSISTANCE AGENCY, and JOHN :
DOES 1 - 10 and XYZ
:
CORPORATIONS,
:
:
Defendants.
:

No.

1:12-cv-355

Hon. John E. Jones III

MEMORANDUM
April 26, 2012
I.

INTRODUCTION
Before the court in the above-captioned action is the Motion to Dismiss of

the collective Defendants. (Doc. 4). The Motion is deemed unopposed pursuant to
Local Rule 7.5. For the reasons detailed herein, we will grant the Defendants’
Motion in its entirety and dismiss the Plaintiff’s Complaint with prejudice.
II.

FACTUAL BACKGROUND & PROCEDURAL HISTORY
In accordance with the standard of review applicable to a motion to dismiss,

the following facts are derived from the Plaintiffs’ Complaint and viewed in a light

most favorable to the Plaintiffs.
The Plaintiffs are Allison M. Linko and Nicholas Linko (“Plaintiffs”). (Doc.
1-1, ¶ 7). The Defendants are American Education Services (“AES”) and the
Pennsylvania Higher Education Assistance Agency (“PHEAA”).1 (Id. ¶ 8(a)-(b)).
At some time prior to 2011, Plaintiffs entered into a “consumer credit transaction”
which became the subject of the Defendants’ complained-of debt collection
activities. (Id. ¶ 18). When Plaintiffs’ account went into collections, the account
was referred to Defendants for purposes of collection. (Id. ¶ 19).
The Defendants contacted Plaintiffs at their residential phone number using
prerecorded automated telephone messages for the purposes of debt collection. (Id.
¶ 20). Plaintiffs aver in their Complaint that they at no time expressly consented to

receipt of artificial or prerecorded telephone messages from their creditor. (Id. ¶
22). After several prerecorded messages, Plaintiffs, through counsel, sent “two
separate cease and desist letters notifying Defendant(s) the Plaintiffs were
represented by an attorney, . . . furnishing such attorney’s full contact information,
. . . [and] request[ing] that Defendants stop the automated prerecorded calls to
Plaintiffs’ residential telephone line.” (Id. ¶ 24). Defendants received said letters,

1

Also named as Defendants are John Does 1-10 and X,Y,Z Corporations, whose names
and identities are not known to Plaintiff at this time. (Doc. 1-1, ¶ 8(c)-(d)).
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but the phone calls continued. (Id. ¶¶ 25-26).
On or about December 19, 2011, the Plaintiffs commenced this action by
filing a Writ of Summons with the Court of Common Pleas of Dauphin County.
(Doc. 1-1, Ex. A). On January 31, 2012, the Plaintiffs filed their Complaint. (Doc.
1-1, Ex. B). On February 24, 2012, the collective Defendants removed this action
to this Court. (Doc. 1).
On March 6, 2012, the Defendants filed the instant Motion to Dismiss (Doc.
4) was filed, and the Defendants timely filed a Brief in Support of said Motion on
March 20, 2012. (Doc. 6). Local Rule 7.5 requires that briefs in opposition be filed
within fourteen (14) days of receipt of the movant’s supporting brief; thus, the
Plaintiffs’ opposition papers were due to this Court on or before April 3, 2012. On
April 25, 2012, during a telephone call initiated by the Court, counsel for the
Plaintiffs advised that she does not intend to file an opposition brief. Accordingly,
pursuant to Local Rule 7.5, this Motion is deemed unopposed.
III.

STANDARD OF REVIEW
In considering a motion to dismiss pursuant to Rule 12(b)(6), courts “accept

all factual allegations as true, construe the complaint in the light most favorable to
the plaintiff, and determine whether, under any reasonable reading of the
complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny,
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515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche Holdings, Ltd., 292
F.3d 361, 374 n.7 (3d Cir. 2002)). In resolving a motion to dismiss pursuant to
Rule 12(b)(6), a court generally should consider only the allegations in the
complaint, as well as “documents that are attached or submitted with the
complaint, . . . and any matters incorporated by reference or integral to the claim,
items subject to judicial notice, matters of public record, orders, [and] items
appearing in the record of the case.” Buck v. Hampton Twp. Sch. Dist., 452 F.3d
256, 260 (3d Cir. 2006).
A Rule 12(b)(6) motion tests the sufficiency of the complaint against the
pleading requirements of Rule 8(a). Rule 8(a)(2) requires that a complaint contain
a short and plain statement of the claim showing that the pleader is entitled to
relief, “in order to give the defendant fair notice of what the claim is and the
grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While a complaint attacked by
a Rule 12(b)(6) motion to dismiss need not contain detailed factual allegations, it
must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. ___, 129 S. Ct. 1937,
1949 (2009). To survive a motion to dismiss, a civil plaintiff must allege facts that
“raise a right to relief above the speculative level . . . .” Victaulic Co. v. Tieman,
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499 F.3d 227, 235 (3d Cir. 2007) (quoting Twombly, 550 U.S. at 555).
Accordingly, to satisfy the plausibility standard, the complaint must indicate that
defendant’s liability is more than a “sheer possibility.” Iqbal, 129 S. Ct. at 1949.
“Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s
liability, it ‘stops short of the line between possibility and plausibility of
entitlement to relief.’ ” Id. (quoting Twombly, 550 U.S. at 557).
Under the two-pronged approach articulated in Twombly and later
expounded upon and formalized in Iqbal, a district court must first identify all
factual allegations that constitute nothing more than “legal conclusions” or “naked
assertions.” Twombly, 550 U.S. at 555, 557. Such allegations are “not entitled to
the assumption of truth” and must be disregarded for purposes of resolving a Rule
12(b)(6) motion to dismiss. Iqbal, 129 S. Ct. at 1950. Next, the district court must
identify “the ‘nub’ of the . . . complaint – the well-pleaded, nonconclusory factual
allegation[s].” Id. Taking these allegations as true, the district judge must then
determine whether the complaint states a plausible claim for relief. See id.
However, “a complaint may not be dismissed merely because it appears
unlikely that the plaintiff can prove those facts or will ultimately prevail on the
merits.” Phillips, 515 F.3d at 231 (citing Twombly, 550 U.S. at 556-57). Rule 8
“does not impose a probability requirement at the pleading stage, but instead
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simply calls for enough facts to raise a reasonable expectation that discovery will
reveal evidence of the necessary element.” Id. at 234.
IV.

DISCUSSION
The Plaintiffs’ Complaint charges the Defendants, in Count I, with violation

of the Telephone Consumer Protection Act, 47 U.S.C. § 227 et. seq., and in Count
II, with violation of Pennsylvania’s Fair Credit Extension Uniformity Act, 73 P.S.
§ 2270.1 et. seq., and Pennsylvania’s Unfair Trade and Consumer Protection Law,

73 P.S. § 201 et. seq. We address these arguments seriatim.
A.

Telephone Consumer Protection Act (“TCPA”)

Plaintiffs contend that the Defendants violated the TCPA by contacting
Plaintiffs on their residential telephone using prerecorded automated telephone
messages without first obtaining prior express consent to do so. A review of the
relevant case law and the regulations and rulings of the Federal Communications
Commission (“FCC”) clearly reveals that this claim fails as a matter of law.
The TCPA was enacted with the privacy-protective purpose of dealing with
“common-nuisance telemarketing.” ErieNet, Inc. v. Velocity Net, Inc., 156 F.3d
513, 514 (3d Cir. 1998). Section 227 of the TCPA provides that it shall be
unlawful for any person “to initiate any telephone call to any residential telephone
line using an artificial or prerecorded voice to deliver a message without the prior
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express consent of the called party, unless the call is initiated for emergency
purposes or is exempted by rule or order by the Commission under paragraph
(2)(B).” 47 U.S.C. § 227(b)(1)(B).
Section 227(b)(2) permits the FCC to issue orders and regulations exempting
certain communications from the prohibitions of Section 227(b)(1)(B). See id. §
227(b)(2)(B). As the Defendants aptly observe, calls made to a party with whom
the caller had an established business relationship are exempt from the TCPA’s
prohibitions against automated and prerecorded messages. 47 C.F.R. §
64.1200(a)(2)(iv). Further, the FCC has ruled that debt collection circumstances
necessarily “involve a prior or existing business relationship.” 7 FCC Rcd. 8752,
8771-72 (Oct. 16, 1992)). It further concluded that such calls “are exempt from the
TCPA’s prohibitions against prerecorded message calls because they are
commercial calls which do not convey an unsolicited advertisement and do not
adversely affect residential subscriber rights.” Id.
Plaintiffs admit that the Defendants were engaged in “collection activity”
and contacting them “for the purpose of collection” in their Complaint. (Doc. 1-1,
¶¶ 18-19). Thus, the Defendants’ contact with the Plaintiffs falls squarely within

the ambit of the TCPA’s long-established exemption for debt collection services.
Accordingly, the Plaintiffs’ TCPA claim fails as a matter of law and is dismissed
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with prejudice.
B.

Pennsylvania’s Fair Credit Extension Uniformity Act2 and Unfair
Trade Practices and Consumer Protection Law

Count II of Plaintiffs’ Complaint alleges violations of Pennsylvania’s Fair
Credit Extension Uniformity Act (“FCEUA”) and Unfair Trade and Consumer
Protection Law (“UTPCPL”). Both claims fail as a matter of law.
Plaintiffs’ claim under the FCEUA is subject to two critical, and dispositive,
defects. First, Defendant PHEAA is not a “debt collector” subject to the FCEUA.
The FCEUA defines a “debt collector” as a “person not a creditor . . . acting on
behalf of a credit, engaging or aiding directly in collective a debt owed or alleged
to be owed a creditor or assignee of a credit” and defines a “creditor” as one “to
whom a debt is owed or alleged to be owed.” 73 P.S. § 2270.3 (emphasis added).
The promissory note at issue makes clear that Defendant PHEAA owns the debt
and is thus not a “debt collector” subject to FCEUA in the manner contended by
Plaintiff. (Doc. 4, Ex. A). Second, the FCEUA expressly excludes from the term
“debt” any “amount owed to the United States or the Commonwealth.” 73 Pa. Stat.
§ 2270.3. As the Defendants point out, PHEAA, the owner of the debt, is a

2

Plaintiffs’ Complaint alleges violations of the “Pennsylvania Fair Trade Extension
Uniformity as Act.” (Doc. 1-1, ¶ ¶ 28, 11-14). We note briefly that this statute does not exist and,
for purposes of this Motion, assume that Plaintiffs refer to the Pennsylvania Fair Credit
Extension Uniformity Act.
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statutorily-created entity of the Commonwealth of Pennsylvania. See 24 Pa. Stat. §
5101. Thus, the debt subject to collection is owed to the Commonwealth and
expressly excluded from FCEUA.
Finally, we reach Plaintiffs’ claim for alleged violation of the Pennsylvania
UTPCPL. The UTPCPL is designed to protect consumers from fraudulent and
deceptive business practices and provides a private cause of action to “[a]ny person
who purchases or leases goods or services primarily for personal, family or
household purposes and thereby suffers any ascertainable loss of money or
property, real or personal, as a result of the use or employment by any person” of
any practice prohibited by the act. 73 P.S. § 201-9.2(a). The UTPCPL enumerates
twenty-one (21) prohibited practices which do not warrant recitation here. See id. §
201-2(4). Plaintiffs have failed to state any specific prohibited practice, and we
thus generously assume, for the Plaintiffs’ individual benefit rather than their
counsel’s, that they intended to proceed under the UTPCPL’s “catch-all” provision,
which prohibits“any other fraudulent or deceptive conduct which creates a
likelihood of confusion or of misunderstanding.” Id. § 201-2(4)(xxi).
Recently, in Moranski v. Encompass Ins. Co., 2011 U.S. Dist. LEXIS 13505
(M.D. Pa. Feb. 11, 2011), this Court held that to state a claim under the catch-all
provision, the Plaintiffs “must satisfy the elements of common law fraud.” Id. at
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*7. These elements are “(1) misrepresentation of a material fact; (2) scienter; (3)
intention by the declarant to induce action; (4) justifiable reliance by the party
defrauded upon the misrepresentation; and (5) damage to the party defrauded as a
proximate result.” Id. at *7-8 (quoting Colaizzi v. Beck, 895 A.2d 36, 39 (Pa.
Super. Ct. 2006)). Plaintiffs have altogether failed to plead a single element of
common law fraud in their Complaint, and thus their UTPCPL claim fails as a
matter of law.
V.

CONCLUSION
For all of the reasons articulated therein, we will grant the Defendants’

unopposed Motion to Dismiss (Doc. 4) and dismiss the Plaintiff’s Complaint in its
entirety for failure to state a claim for which relief can be granted pursuant to
Federal Rule of Civil Procedure 12(b)(6). An appropriate Order shall issue.

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