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Balon v. Enhanced Recovery Company, Inc.

United States District Court, M.D. Pennsylvania

August 28, 2017



          William J. Nealon United States District Judge.

         Plaintiff, Kariann Balon, filed a complaint against Defendant, Enhanced Recovery Company, Inc., in the Court of Common Pleas of Luzerne County, Pennsylvania, alleging that Defendant violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”). (Doc. 1). On March 8, 2016, Defendant removed the action to this Court. (Id.).

         On March 16, 2016, Defendant filed a Rule 12(b)(6) motion to dismiss Plaintiff's complaint. (Doc. 3). On June 2, 2016, Defendant's motion was denied. (Docs. 9, 10). On June 16, 2016, Defendant filed an answer to the complaint. (Doc. 11). On June 29, 2016, Defendant filed an amended answer. (Doc. 15).

         On July 25, 2016, Plaintiff filed a motion to strike the second and third affirmative defenses presented in the amended answer. (Doc. 18). On September 15, 2016, Plaintiff's motion to strike was granted. (Doc. 22). On October 6, 2016, Defendant filed a second amended answer. (Doc. 24).

         On December 28, 2016, Defendant filed a motion to dismiss the complaint for lack of subject matter jurisdiction and brief in support. (Docs. 27, 28). On that same date, Plaintiff filed a motion for summary judgment, statement of undisputed material facts, and brief in support. (Docs. 29, 30, 31). On January 11, 2017, Plaintiff filed a brief in opposition to Defendant's motion to dismiss. (Doc. 32). Also on January 11, 2017, Plaintiff filed a motion to remand the above-captioned action to state court. (Doc. 33). On January 18, 2017, Defendant filed a brief in opposition to Plaintiff's motion for summary judgment and response to Plaintiff's statement of undisputed material facts. (Docs. 34, 35). On January 25, 2017, Plaintiff filed a brief in support of her motion to remand. (Doc. 36). On that same date, Defendant filed a reply to Plaintiff's brief in opposition to Defendant's motion to dismiss. (Doc. 37). On February 1, 2017, Plaintiff filed a reply to Defendant's brief in opposition to Plaintiff's motion for summary judgment. (Doc. 38). On February 8, 2017, Defendant filed a brief in opposition to Plaintiff's motion to remand. (Doc. 39). On February 20, 2017, Plaintiff filed a reply to Defendant's brief in opposition to Plaintiff's motion to remand. (Doc. 40).

         In sum, there are currently three (3) motions pending before the Court, each of which has been fully briefed. See (Docs. 27-32, 34-35, 37-40). As discussed in more detail below, Defendant's motion to dismiss the complaint for lack of subject matter jurisdiction, (Doc. 27), and Plaintiff's motion to remand, (Doc. 33), will be denied. Plaintiff's motion for summary judgment, (Doc. 29), on the other hand, will be granted.


         A. Factual Allegations

         Plaintiff's complaint makes the following allegations: Defendant has attempted to collect a debt from Plaintiff on an “account that was identified by a number ending in 2418.” (Doc. 1-1, p. 2). “On or about February 9, 2015, [Defendant] caused to be mailed a letter addressed to Plaintiff.” (Id.). “The letter was an attempt to collect on the Account.” (Id.). The letter states, in part, that “any indebtedness of $600.00 or more, which is discharged as a result of a settlement, may be reported to the IRS as taxable income pursuant to the Internal Revenue Code 6050 (P) and related federal law.” (Id.). “The amount of the alleged debt at the time that the letter was sent was $798.67 . . . . [and] [t]he offer to settle was for $638.94.” (Id.). “[T]he amount of savings if the offer was accepted would be $159.73.” (Id. at pp. 2-3).

         B. Standard of Review

         “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree.” Id. (internal citations omitted).

         In this case, Defendant's motion is brought pursuant to Federal Rule of Civil Procedure 12(b)(1), which allows for the dismissal of an action for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). A Rule 12(b)(1) motion to dismiss can present facial and factual challenges to subject matter jurisdiction. See Hartig Drug Co. v. Senju Pharm. Co., 836 F.3d 261, 268 (3d Cir. 2016).

         When presented with a 12(b)(1) motion, “[a] district court has to first determine . . . whether [that] motion presents a ‘facial' attack or a ‘factual' attack on the claim at issue, because that distinction determines how the pleading must be reviewed.” Constitution Party of Pa. v. Aichele, 757 F.3d 347, 357 (3d Cir. 2014). In particular, “[a] facial 12(b)(1) challenge, which attacks the complaint on its face without contesting its alleged facts, is like a 12(b)(6) motion in requiring the court to ‘consider the allegations of the complaint as true.'” Hartig Drug Co., 836 F.3d at 268 (quoting Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006)).

         Where, as here, the moving party brings a factual challenge to subject matter jurisdiction, it “attacks allegations underlying the assertion of jurisdiction in the complaint, and it allows the defendant to present competing facts.” Hartig Drug Co., 836 F.3d at 268 (citing Aichele, 757 F.3d at 358). When presenting a factual challenge:

“the plaintiff [has] the burden of proof that jurisdiction does in fact exist, ” the court “is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case, ” and “no presumptive truthfulness attaches to [the] plaintiff's allegations . . . .”

Id. (alterations in original) (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). “And, when reviewing a factual challenge, ‘a court may weigh and consider evidence outside the pleadings.'” Id. (quoting Aichele, 757 F.3d at 358). “Therefore, a 12(b)(1) factual challenge strips the plaintiff of the protections and factual deference provided under 12(b)(6) review.” Id. (citing Davis v. Wells Fargo, 824 F.3d 333, 348-50 (3d Cir. 2016)). Notably, “a Rule 12(b)(1) factual evaluation ‘may occur at any stage of the proceedings, from the time the answer has been served until after the trial has been completed.'” Sprague v. Cortes, 2016 U.S. Dist. LEXIS 170463, at *29 (M.D. Pa. Dec. 9, 2016) (Mariani, J.) (quoting Mortensen, 549 F.2d at 891-92). “However, ‘[a] factual jurisdictional proceeding cannot occur until plaintiff's allegations have been controverted.'” Wayne Land and Mineral Grp., LLC v. Del. River Basin Comm'n, 2017 U.S. Dist. LEXIS 42622, at *24 (M.D. Pa. Mar. 23, 2017) (Mariani, J.) (quoting Mortensen, 549 F.2d at 892 n.17). Further, “‘[t]he party invoking federal jurisdiction bears the burden of establishing' the elements of standing and ‘each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.'” Patel v. Allstate N.J. Ins. Co., 648 F. App'x 258, 260 (3d Cir. 2016) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). At the motion to dismiss stage, “general factual allegations of injury resulting from defendant's conduct may suffice.” Lujan, 504 U.S. at 561. However, “‘[i]n response to a summary judgment motion . . . the plaintiff can no longer rest on such “mere allegations, ” but must “set forth” by affidavit or other evidence “specific facts, ” Fed.R.Civ.P. 56(e), which for purposes of the summary judgment motion will be taken to be true.'” Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 279 (3d Cir. 2014) (quoting Lujan, 504 U.S. at 561).

         C. Discussion

         Defendant argues in support of its Rule 12(b)(1) motion to dismiss that the Court lacks subject matter jurisdiction over Plaintiff's claims because she lacks standing under Article III of the United States Constitution. (Doc. 28, pp. 10, 14- 22). Defendant reaches this conclusion, at least in part, as a result of certain responses made by Plaintiff during discovery. (Doc. 28, pp. 4-6, 20-21); (Doc. 39, pp. 7-8). According to Defendant, a number of these discovery responses establish that Plaintiff has not suffered a concrete injury, which, as discussed in more detail below, is a requisite to establish Article III standing. (Id.). Clearly, since it relies on facts presented outside of the pleadings, Defendant presents a factual attack on the subject matter jurisdiction over Plaintiff's claim. Hartig Drug Co., 836 F.3d at 268 (citing Aichele, 757 F.3d at 358).

         In response, Plaintiff states that it is undisputed “that she has not suffered a concrete injury, and that jurisdiction is therefore not appropriate in federal court.[footnote omitted].” (Doc. 32, p. 1) (emphasis in original); see (Doc. 28, 10-22); (Doc. 33, p. 1); (Doc. 36, p. 1); (Doc. 37, p. 4). Rather, “Plaintiff does dispute whether Defendant is entitled to the relief it requests in its motion.” (Doc. 32, p. 1). According to Plaintiff, Defendant's request for dismissal should be denied “because Plaintiff's claim was initially filed in state court, the proper recourse here is remand rather than dismissal.”[1] (Id.).

         Importantly, however, the apparent agreement between the parties concerning Plaintiff's lack of standing under Article III is not dispositive. Rather, “federal courts ‘have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.'” Hartig Drug Co., 836 F.3d at 267 (quoting Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006); citing Nuveen Mun. Tr. ex rel. Nuveen High Yield Mun. Bond Fund v. WithumSmith Brown, P.C., 692 F.3d 283, 300 n.10 (3d Cir. 2012)). “A court's non-waiveable obligation to inquire into its own jurisdiction is most frequently exercised in the negative-that is, by questioning whether federal jurisdiction exists even when all parties assume that it does.” Id. “But ‘federal courts [also] have a strict duty to exercise the jurisdiction that is conferred upon them by Congress and ‘have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not.'” Id. (internal citations omitted). “‘[S]ubject-matter delineations must be policed by the courts on their own initiative, ' irrespective of whether that policing of jurisdictional authority is voiced in the positive or negative.” Id. (citing Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999)). “Thus, regardless of the acquiescence or wishes of the parties, we must question” the jurisdictional issue presented in this case. Id.; see Fuentes v. AR Res., Inc., 2017 U.S. Dist. LEXIS 48923, at *6 (D.N.J. Mar. 31, 2017) (“Although Defendant does not challenge Plaintiff's constitutional standing to sue, this Court has an independent obligation to confirm the existence of standing before proceeding to an adjudication of Plaintiff's claims.”) (citing Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007)).

         As discussed above, Defendant's instant motion argues that Plaintiff lacks Article III standing. “There are three well-recognized elements of Article III standing: First, an ‘injury in fact, ' or an ‘invasion of a legally protected interest' that is ‘concrete and particularized.'” In re Horizon Healthcare Servs. Data Breach Litig., 846 F.3d 625, 633 (3d Cir. 2017) (quoting Lujan, 504 U.S. at 560). “Second, a ‘causal connection between the injury and the conduct complained of[.]'” Id. (alteration in original) (quoting Lujan, 504 U.S. at 560). “And third, a likelihood ‘that the injury will be redressed by a favorable decision.'” Id. (quoting Lujan, 504 U.S. at 561).

         Here, as stated, both parties assert that Plaintiff lacks standing under Article III of the United States Constitution because she has not suffered an “injury-in-fact.” See (Doc. 28, pp. 14-22); (Doc. 32, p. 1); (Doc.33, p. 1); (Doc. 34, p. 12); (Doc. 36, p. 1); (Doc. 37, pp. 4, 8); (Doc. 38, p. 4). Specifically, Defendant contends that “Plaintiff has not suffered any actual injury, ” and, thus, “has failed to establish any concrete injury . . . .” (Doc. 28, p. 22). Similarly, Plaintiff “agrees that the Court does not have jurisdiction over this matter because Plaintiff has not suffered a ‘concrete' injury.” (Doc. 33, p. 1). Apparently, at the heart of this agreement is United States Supreme Court's recent decision in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). See (Doc. 28, pp. 14-22); (Doc. 33, p. 1).

         However, before addressing the Supreme Court's decision in Spokeo, it is important to discuss the United States Court of Appeals for the Third Circuit's discussion of Article III standing in In re Google Inc. Cookie Placement Consumer Privacy Litigation, 806 F.3d 125 (3d Cir. 2015). “The Google plaintiffs consisted of a class of persons who used two web browsers: Apple's Safari and Microsoft's Internet Explorer.” In re Nickelodeon Consumer Privacy Litig., 827 F.3d 262, 272 (3d Cir. 2016). “These browsers came with cookie-blocking options designed to protect users' privacy while they browsed the Internet.” Id. “In February of 2012, a Stanford graduate student revealed that Google and several other advertising companies had devised ways to evade these cookie-blocking options, even while touting publicly that they respected their users' choices about whether to take advantage of cookie-blocking technology.” Id. The plaintiffs in Google “filed a federal lawsuit alleging violations of the Wiretap Act, the Stored Communications Act, and the Computer Fraud and Abuse Act, ” along with claims brought under California law. Id.

         “The defendants moved to dismiss the entire complaint for lack of Article III standing and for failure to state any claim.” Google, 806 F.3d at 133-34. As summarized by the Third Circuit, “[w]ithout definitively resolving the standing challenge, the District Court agreed with the defendants that the allegations in the complaint did not give rise to any action, and on that basis dismissed the complaint under Rule 12(b)(6).” Id. at 134. The case was appealed to the United States Court of Appeals for the Third Circuit where the plaintiffs challenged “the dismissal of each of their nine claims, and the defendants renew[ed] their contention that the plaintiffs lack Article III standing.” Id.

         In addressing the defendants' “argument that the plaintiffs lack standing, ” the Third Circuit began by noting that “‘[t]he question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.'” Id. (quoting Storino v. Borough of Point Pleasant Beach, 322 F.3d 293, 296 (3d Cir. 2003)). “A core requirement of standing, ” the Third Circuit stated, “is that the plaintiff have suffered an injury in fact.” Id. The defendants in Google argued that the plaintiffs failed “to demonstrate injury in fact because” they made “insufficient allegations of pecuniary harm” Id. However, the Third Circuit determined that “[f]or purposes of injury in fact, the defendants' emphasis on economic loss is misplaced.” Id. According to the Third Circuit, “[i]n assessing injury in fact, we look for an ‘invasion . . . which is (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical.'” Google, 806 F.3d at 134. “Though the ‘injury must affect the plaintiff in a personal and individual way, '[footnote omitted] this standard does not demand that a plaintiff suffer any particular type of harm to have standing.” Id. (quoting Lujan, 504 U.S. at 560 n.1). “Consequently, and contrary to the contentions of the defendants, ” the Third Circuit concluded, “a plaintiff need not show actual monetary loss for purposes of injury in fact.” Id. “Rather, ” according to the Third Circuit, “‘the actual or threatened injury required by Art. III may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing.'” Id. (quoting Havens Realty Corp. v. Coleman, 455 U.S. 363, 373 (1982)).

         As for the Article III standing issue before the Third Circuit in Google, “[t]he plaintiffs . . . base[d] their claims on highly specific allegations that the defendants, in the course of serving advertisements to their personal web browsers, implanted tracking cookies on their personal computers.” Id. (emphasis in original). “Irrespective of whether these allegations state a claim, ” the Third Circuit determined, “the events that the complaint describes are concrete, particularized, and actual as to the plaintiffs.” Id. at 134-35. Further, the Third Circuit found that “[t]o the extent that the defendants believe that the alleged conduct implicates interests that are not legally protected, this is an issue of the merits rather than of standing.” Google, 806 F.3d at 135. As a result, the Third Circuit concluded that the plaintiffs established “injury in fact” and that it had “jurisdiction to address the merits of their claims.” Id.

         Subsequent to the Third Circuit's decision in Google, the United States Supreme Court addressed Article III standing in Spokeo, which, as noted, serves as the basis for the apparent agreement between the parties that Plaintiff lacks standing in this matter under Article III. See (Doc. 28, pp. 14-22); (Doc. 33, p. 1). In Spokeo, the Supreme Court stated the following in relation to the standing requirement found in Article III of the United States Constitution:

Our cases have established that the “irreducible constitutional minimum” of standing consists of three elements. Lujan, 504 U.S., at 560. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. . . . To establish injury in fact, a plaintiff must show that he or she suffered “an invasion of a legally protected interest” that is “concrete and particularized” and ...

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