United States District Court, W.D. Pennsylvania
GIBSON UNITED STATES DISTRICT JUDGE.
action comes before the Court upon a motion to dismiss filed
by Defendants. (ECF No. 43.) Defendants move to dismiss with
prejudice the entirety of Plaintiff's
complaint. (Id.) For the reasons that
follow, Defendants motion will be GRANTED IN PART and DENIED
Court has jurisdiction over Plaintiff's federal claims
pursuant to 28 U.S.C. § 1331. The Court has supplemental
jurisdiction over the state law claims pursuant to 28 U.S.C.
§ 1367. Venue is proper under 28 U.S.C. § 1391(b)
because a substantial portion of the events giving rise to
the claims occurred in the Western District of Pennsylvania.
Crystal Aurandt, brings this case on behalf of herself and
members of a class, alleging that Defendants participated in
a scheme to defraud her and others similarly situated through
unlawful and usurious loans and unlawful debt collection
tactics. (ECF No. 35 ¶ 1.) The following facts are
alleged in the Amended Complaint, which the Court will accept
as true for the sole purpose of deciding the pending motion.
Carey V. Brown owned and/or controlled defendants CPS,
MYCASHNOW, CPD, SUPPORT SEVEN, OWLS NEST, DISCOUNT ADV.,
DISCOUNT ADV., PAYDAYMAX, MILLENIUM and ACH FEDERAL. These
companies marketed, underwrote, loaned, serviced, transacted
and collected on payday loans. (Id. ¶ 8.)
Defendant Ronald Beaver served as the CEO of the corporate
defendants and their affiliates. (Id. ¶ 9.)
Amended Complaint defines a payday loan as “a
short-term (typically a matter of weeks) high fee, closed-end
loan, traditionally made to consumers to provide funds in
anticipation of an upcoming paycheck.” (Id.
¶ 24.) A borrower obtaining a payday loan must either
provide a personal check to the lender or an authorization to
electronically debit the borrower's deposit account for
the loan amount and associated fee as security for the loan.
(Id. ¶ 24.) In order to obtain a payday loan,
the borrower is also required to provide the lender with
information including: his or her social security number,
phone number, income and employment details, and home
address. (Id. ¶ 25.) Payday loans involve
significant interest rates - which Plaintiff characterizes as
“usurious” - and “balloon” repayments
shortly after the loan is made. (Id. ¶ 27.) If
a borrower is unable to repay the full amount of the loan on
the due date, the lender typically gives the borrower the
option to “roll over” the loan balance by paying
another “fee, ” usually equal to the initial fee
at the time of loan funding. The cycle then continues until
such time as the borrower is either able to pay off the loan
in full or the borrower defaults on the loan. (Id.
and twelve other states and the District of Columbia have
outlawed payday loans. (Id. ¶ 31.) In
Pennsylvania, a consumer loan transaction for $50, 000 or
less is civilly usurious when it imposes an annual interest
rate exceeding 6% per annum and interest charged in excess of
this amount is void. 41 Pa. Stat. Ann. §§ 201, 502.
The Amended Complaint alleges that Defendants incorporated
shell corporations in Anguilla and operate online in order to
solicit payday loans to potential borrowers in states that
have banned payday loans. (Id. ¶¶ 33-34.)
addition to offering these illegal loans, Defendants also
attempted to collect on them using methods which allegedly
violate the Fair Debt Collection Practices Act (15 U.S.C.
§ 1692) and the portion of the Telephone Consumer
Protection Act designated as the Truth in Caller ID Act (47
U.S.C. § 227(e)). (Id. ¶ 35.)
Specifically, these methods include “spoofing”
phone numbers in order to make it appear that the call is
coming from governmental authorities rather than creditors.
(Id. ¶ 36.) Callers even went as far as to
impersonate law enforcement officials and threaten to arrest
borrowers if they did not repay what they owed. (Id.
about October 9, 2009, Plaintiff applied for and received a
payday loan from MyCashNow, Inc. for $190. (Id.
¶ 39.) “Although Plaintiff is of the belief that
the loan was repaid several years ago, Plaintiff was
contacted by agents or employees of MyCashNow on October 23,
2014 and told to pay a sum of $1, 100.” (Id.
¶ 40.) Individuals working on behalf of Defendants
called Plaintiff on her cell phone. The callers used spoofing
technology that caused the caller ID on Plaintiff's phone
to indicate that the call was coming from the Altoona Police
Department. (Id. ¶ 41.) The callers represented
that they were law enforcement and told Plaintiff that a
warrant was going to be issued for her arrest later that day,
unless she called Defendants and made payment arrangements.
(Id. ¶¶ 42-43.)
brings this lawsuit as a class action. She defines the class
All natural persons within the states of Arizona, Arkansas,
Connecticut, Georgia, Maryland, Massachusetts, New Jersey,
New York, North Carolina, Ohio, Pennsylvania, Vermont, West
Virginia and the District of Columbia who received a payday
loan that was illegal under the respective laws of their
states from one of the Defendants and were then subsequently
targeted by the Defendants' employees, agents or assigns
in a telephone debt collection scheme in violation of 15
U.S.C. § 1692. Members of this class can be identified
by records maintained by defendants.
(Id. ¶ 46.) And a sub-class as follows:
All Natural persons residing within the Commonwealth of
Pennsylvania who received a payday loan from one of the
Defendants which violated any Pennsylvania laws including
Pennsylvania Usury Laws and the Pennsylvania UTPCPL. Members
of this class can be identified by records maintained by
(Id. ¶ 46.)
brings six claims against all of the Defendants: (1)
violation of 18 U.S.C. § 1962(d) - civil RICO; (2) usury
under Pennsylvania law; (3) violation of the Fair Debt
Collection Practices Act (15 U.S.C. § 1692); (4) breach
of fiduciary duty and breach of implied duty of
confidentiality; (5) invasion of privacy; (6) violation of
Pennsylvania's Unfair Trade Practices Consumer Protection
Defendants moved to dismiss the original Complaint (ECF Nos.
1, 28-29), Plaintiff filed an Amended Complaint (ECF No. 35).
Defendants then filed a motion to dismiss the entirety of
Plaintiff's Amended Complaint, along with a supporting
brief. (ECF Nos. 43-44.) Plaintiff filed a brief in
opposition to Defendants' motion. (ECF No. 53) and
Defendants filed a reply brief (ECF No. 58.) The Court also
held oral argument on the motion. (ECF No. 67.) Accordingly,
this matter is now ripe for disposition.
Standard of Review
move to dismiss the complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6). The Federal Rules of Civil
Procedure require that a complaint contain “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule
12(b)(6) allows a party to seek dismissal of a complaint or
any portion of a complaint for failure to state a claim upon
which relief can be granted. Although the federal pleading
standard has been “in the forefront of jurisprudence in
recent years, ” the standard of review for a Rule
12(b)(6) challenge is now well established. Fowler v.
UPMC Shadyside, 578 F.3d 203, 209 (3d Cir. 2009).
determining the sufficiency of a complaint, a district court
must conduct a two-part analysis. First, the court must
separate the factual matters averred from the legal
conclusions asserted. See Fowler, 578 F.3d at 210.
Second, the court must determine whether the factual matters
averred are sufficient to show that plaintiff has a
“‘plausible claim for relief.'”
Id. at 211 (quoting Ashcroft v. Iqbal, 556
U.S. 662, 679 (2009)). The complaint, however, need not
include “‘detailed factual
allegations.'” Phillips v. County of
Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
the court must construe the alleged facts, and draw all
inferences gleaned therefrom, in the light most favorable to
the non-moving party. See id. at 228 (citing
Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653
(3d Cir. 2003)). However, “legal conclusions” and
“[t]hreadbare recitals of the elements of a cause of
action . . . do not suffice.” Iqbal, 556 U.S.
at 678. Rather, the complaint must present sufficient
“‘factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.'” Sheridan v. NGK Metals
Corp., 609 F.3d 239, 262 n.27 (3d Cir. 2010) (quoting
Iqbal, 556 U.S. at 678).
whether a plaintiff has shown a “plausible claim for
relief” is a context-specific inquiry that requires the
district court to “draw on its judicial experience and
common sense.” Iqbal, 556 U.S. at 679. The
relevant record under consideration includes the complaint
and any “document integral to or explicitly relied upon
in the complaint.” U.S. Express Lines, Ltd. v.
Higgins, 281 F.3d 383, 388 (3d Cir. 2002) (citing In
re Burlington Coat Factory Sec. Litig., 114 F.3d 1410,
1426 (3d Cir. 1997)). If a complaint is vulnerable to
dismissal pursuant to Rule 12(b)(6), the district court must
permit a curative amendment, irrespective of whether a
plaintiff seeks leave to amend, unless such amendment would
be inequitable or futile. Phillips, 515 F.3d at 236;
see also Shane v. Fauver, 213 F.3d 113, 115 (3d Cir.
move to dismiss the Amended Complaint in its entirety. The
Court will discuss the sufficiency of each claim in turn.