United States District Court, D. Minnesota
N. ERICKSEN United States District Judge
Andrea Ferkingstad sued Defendant Accounts Receivable
Services, LLC (“ARS”) for violations of the Fair
Debt Collection Practices Act (“FDCPA”). She
alleges that when ARS sued her in Minnesota Conciliation
Court, ARS falsely represented the amount of a debt, falsely
represented that Allina Health System (“Allina”)
sold and assigned the debt to ARS, and provided Ferkingstad
false documents purporting to effect such a sale and
assignment. The matter is before the Court on ARS's
Motion to Dismiss under Rule 12(b)(6). (See Dkt. No.
12.) The Court decides to grant the Motion in part and deny
it in part because although Ferkingstad's false-amount
claim is not viable, she plausibly alleges claims relating to
the false sale and assignment representations.
filed a debt collection lawsuit against Ferkingstad in
Minnesota Conciliation Court on October 19, 2015.
(See Amend. Compl. ¶ 8, Dkt. No. 4.) The
statement of claim alleged that Ferkingstad was indebted to
ARS in the amount of $878.75 on an account stated, which
account Allina originally held and assigned to ARS.
(Id. ¶¶ 9-10.) It also explained that the
$878.75 figure was the sum of a $696.47 medical debt, plus
$182.28 in statutory interest. (See Dkt. No.
15-1.) Prior to the suit, Ferkingstad never
received a bill from Allina for exactly $878.75. (Amend.
Compl. ¶ 33.)
January 13, 2016, the Minnesota Conciliation Court held a
hearing on ARS's claim. (See Id. ¶ 11.)
Ferkingstad appeared with counsel, and ARS appeared through a
non-attorney representative. (Id. ¶¶
12-13.) At the hearing, ARS's representative provided
Ferkingstad with two documents: (1) a “Bill of Sale,
” and (2) “Exhibit 1A, ” which was attached
to the Bill of Sale. (Id. ¶¶ 17-20.) The
Bill of Sale refers to a separate “Purchase of Business
Agreement” for the sale of accounts from Allina to ARS
and is signed by an Allina representative. (Id.
¶¶ 20, 22.) It purports to transfer Allina's
rights in the accounts listed in Exhibit 1A. (See
Id. ¶ 23.) That Exhibit references only
Ferkingstad's account. (Id. ¶ 24.) ARS
dismissed its claim without prejudice at the hearing.
(Id. ¶¶ 14-15.)
ARS filed the conciliation court suit, Allina made a
“Bad Debt Final Referral” on Ferkingstad's
account. (Id. ¶ 28.) This referral shows that
Allina was still the owner of the debt when ARS sued
Ferkingstad; ARS had no right to collect on the debt at that
time. (Id. ¶¶ 29-31.)
MOTION TO STAY
briefing on ARS's Motion to Dismiss, Ferkingstad filed a
Motion to Stay the Motion to Dismiss until the Eighth Circuit
Court of Appeals rules in Hill v. Accounts Receivable
Servs., LLC, No. 16-CV-219 (DWF/BRT), 2016 WL 6462119
(D. Minn. Oct. 31, 2016), appeal docketed,
No. 16-4356 (8th Cir. Dec. 2, 2016). (See Dkt. No.
23.) Ferkingstad contends that the Hill case is
substantively different, but will resolve a common legal
issue: whether FDCPA false representation claims require an
element of materiality. (See Plaintiff's
Memorandum in Support of Her Motion to Stay (“Pl. Stay
Br.”) 2, Dkt. No. 25.) ARS opposes a stay.
(See Defendant's Response Memorandum in
Opposition to the Motion to Stay (“Def. Stay
Br.”), Dkt. No. 27.)
power to stay proceedings is incidental to the power inherent
in every court to control the disposition of the causes on
its docket . . . .” Landis v. N. Am. Co., 299
U.S. 248, 254 (1936). “The District Court has broad
discretion to stay proceedings as an incident to its power to
control its own docket.” Clinton v. Jones, 520
U.S. 681, 706 (1997) (citing Landis, 299 U.S. at
254). Exercising this broad discretion, the Court denies the
Motion to Stay because Ferkingstad has not established the
need for a stay pending the Hill appeal. See
Id. at 708 (“The proponent of a stay bears the
burden of establishing its need.”).
STANDARD OF REVIEW
considering Rule 12(b)(6) motions, the Court evaluates
whether the alleged facts are sufficient to “state a
claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). The Court accepts the alleged facts as true, drawing
all reasonable inferences in favor of the non-moving party.
See Id. “This tenet does not apply, however,
to legal conclusions or ‘formulaic recitation of the
elements of a cause of action'; such allegations may
properly be set aside.” Braden v. Wal-Mart Stores,
Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting
Iqbal, 556 U.S. at 678). After setting aside
conclusory allegations, the Court draws on “its
judicial experience and common sense” to determine if
the factual statements nudge a claim “across the line
from conceivable to plausible.” Iqbal, 556
U.S. at 679-80 (quoting Twombly, 550 U.S. at 570).
FDCPA makes it unlawful to use false, deceptive, or
misleading representations or means in connection with the
collection of any debt. 15 U.S.C. § 1692e. It
specifically outlaws false representations about the
character, amount, or legal status of any debt, §
1692e(2), and the use of false representations or deceptive
means to attempt to collect any debt, §
order to be actionable under the FDCPA, a false
representation must be such that it would harass, mislead, or
deceive an unsophisticated consumer. See Haney v.
Portfolio Recovery Assocs., L.L.C., 837 F.3d 918, 924
(8th Cir. 2016); Janson v. Katharyn B. Davis, LLC,
806 F.3d 435, 437 (8th Cir. 2015) (citing O'Rourke v.
Palisades Acquisition XVI, LLC, 635 F.3d 938, 945 (7th
Cir. 2011) (Tinder, J., concurring)); Hemmingsen v.
Messerli & Kramer, P.A., 674 F.3d 814, 819 (8th Cir.
2012) (also citing O'Rourke). This standard asks
whether a reasonable consumer of below-average sophistication
or intelligence would be misled or deceived by the false
representation. See Haney, 837 F.3d at 924;
Janson, 806 F.3d at 437; Peters v. Gen. Serv.
Bureau, Inc., 277 F.3d 1051, 1055 (8th Cir. 2002). In
some circumstances, a statement is clearly misleading or
deceptive on its face. See O'Rourke, 635 F.3d at
945. In other circumstances, the plaintiff must provide
evidence that unsophisticated consumers would likely be
misled by the false representation. See Id. Evidence
that the plaintiff was actually misled contributes to this
showing. See Janson, 806 F.3d at 437-38;
Hemmingsen, 674 F.3d at 819; O'Rourke,
635 F.3d at 945. When an attorney is interposed as an
intermediary between the ...