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Kinnick v. Med-1 Solutions, LLC

United States District Court, S.D. Indiana, Indianapolis Division

October 15, 2019

JASON KINNICK, Plaintiff,
v.
MED-1 SOLUTIONS, LLC, an Indiana limited liability company, Defendant.

          ORDER ON DEFENDANT'S MOTION TO DISMISS

          Tim A. Baker United States Magistrate Judge

         I. Introduction

         This matter is before the Court on Defendant Med-1 Solutions, LLC's Motion to Dismiss Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure [Filing No. 13]. Med-1 argues Plaintiff Jason Kinnick's claims must be dismissed for lack of subject matter jurisdiction. Kinnick's underlying claims stem from a letter Med-1 sent to Kinnick attempting to collect a debt that was part of a Chapter 7 bankruptcy filed by Kinnick and his spouse. Med-1 relies on the recent Seventh Circuit decision Casillas v. Madison Avenue Associates, Inc., 926 F.3d 329 (7th Cir. 2019), to support its argument that Kinnick has no standing to proceed with his claims.

         Under Casillas, Med-1 argues Kinnick lacks standing because his complaint asserts no more than a bare procedural violation of the Fair Debt Collection Practice Act (“FDCPA”), which fails to satisfy the injury-in-fact requirement of Article III. Kinnick counters that Casillas is factually inapposite and inapplicable to the facts at hand. The Court agrees that Casillas is distinguishable, as Kinnick's complaint alleges a substantive, not merely procedural, violation of the FDCPA. He alleges that he suffered the type of concrete harm the FDCPA seeks to prevent. Therefore, Med-1's motion to dismiss is denied.

         II. Background

         The following facts are drawn from Kinnick's complaint and accepted as true for the purposes of resolving Med-1's motion to dismiss. On March 12, 2019, Kinnick and his wife filed a Chapter 7 bankruptcy petition, which included various depts allegedly owed for medical services. [Filing No. 1, at ECF p. 2.] The bankruptcy court sent Med-1 an electronic notice of the bankruptcy on March 14, 2019. [Filing No. 1, at ECF p. 2.] On April 25, 2019, Med-1 sent Kinnick a collection letter demanding payment of a medical debt that was included in the bankruptcy. [Filing No. 1, at ECF p. 3.]

         Neither Kinnick nor Med-1 had any further contact beyond the collection letter until Kinnick filed the underlying lawsuit on June 25, 2019, alleging material FDCPA violations, including false and/or deceptive or misleading representations in connection with the collection of a debt. [Filing No. 1, at ECF p. 3.] Med-1's FDCPA violations were material because Med-1's “continued collection communications after [Kinnick] had filed for bankruptcy made [Kinnick] believe that his exercise of his rights through filing bankruptcy may have been futile and that he did not have the right to a fresh start that Congress had granted him under the Bankruptcy Code, as well as his rights under the FDCPA.” [Filing No. 1, at ECF p. 3.]

         III. Discussion

         Med-1 contends that Kinnick has not alleged that he suffered-or faced a real risk of suffering-concrete harm from Med-1's actions in this case. Thus, Med-1 argues that Kinnick's complaint must be dismissed for lack of standing pursuant to Fed.R.Civ.P. 12(b)(1), because it contains no more than “a bare procedural violation divorced from any concrete ha[r]m which fails to satisfy the injury-in-fact requirement of Article III.” [Filing No. 13, at ECF p. 1.]

The elements of standing are well settled: the plaintiff must allege an injury in fact that is traceable to the defendant's conduct and redressable by a favorable judicial decision. These requirements are rooted in Article III, which limits a federal court's authority to the resolution of “Cases” or “Controversies.” If the plaintiff does not claim to have suffered an injury that the defendant caused and the court can remedy, there is no case or controversy for the federal court to resolve.

Casillas, 926 F.3d at 333 (internal citations omitted). “[W]hen evaluating a facial challenge to subject matter jurisdiction under Rule 12(b)(1), a court should use Twombly-Iqbal's ‘plausibility' requirement, which is the same standard used to evaluate facial challenges to claims under Rule 12(b)(6).” Silha v. ACT, Inc., 807 F.3d 169, 174 (7th Cir. 2015). Thus, “[t]o survive a motion to dismiss, a complaint 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. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

         Med-1 relies on the Seventh Circuit's recent decision in Casillas. In Casillas, defendant debt collection company Madison Avenue Associates, “made a mistake.” Id. at 331. Madison sent plaintiff Casillas a debt collection letter describing the process for verifying a debt, as laid out in the FDCPA, but failed to specify that Casillas had to communicate in writing in order to trigger the statutory protections. Id. The Court concluded Casillas lacked standing to pursue her claims because she “alleged nothing more than a bare procedural violation of the [FDCPA].” Id. at 339. While the Seventh Circuit noted that the FDCPA “seeks to protect debtors from the use of abusive, deceptive, and unfair debt collection practices by many debt collectors[, ]” id. at 333 (internal citation and quotation marks omitted), the Court ultimately found Casillas lacked standing because she did not allege that Madison's actions harmed or posed any real risk of harm to her interests under the Act. Put another way, the Seventh Circuit concluded: “[b]ecause Madison's mistake didn't put Casillas in harm's way, it was nothing more than a bare procedural violation. Casillas had no more use for the notice than she would have had for directions accompanying a product that she had no plans to assemble.” Id. at 334 (internal citation and quotation marks omitted).

         The parties disagree on the impact Casillas has on the factual scenario at hand. Med-1 argues that Kinnick, like Casillas, did not allege that Med-1's actions harmed or posed any real risk of harm to him under the FDCPA, so it was nothing more than a bare procedural violation. [Filing No. 13, at ECF p. 4.] Kinnick counters that the harm in this case is different, so Casillas is inapplicable. Kinnick alleges not that Med-1 failed to inform him about a procedural requirement of the FDCPA, but that Med-1 deceptively and falsely sent him a letter collecting on a debt that was subject to bankruptcy and thus should have been shielded from collection attempts. Kinnick labels Med-1's collection letter as a false and/or deceptive or misleading statement and argues that Med-1's collection attempt harmed him because it destroyed the “fresh start” Congress intended that he should have been able to obtain when it enacted the Bankruptcy Code. [Filing No. 21, at ECF p. 1.]

         Casillas has been limited by the Seventh Circuit and distinguished in many district court decisions. A few weeks after handing down Casillas, the Seventh Circuit distinguished it in Lavallee v. MED-1 Solutions, LLC, 932 F.3d 1049 (7th Cir 2019). In Lavallee, the Court found the plaintiff had standing to pursue her claims and that the situation differed from Casillas in two important ways. Id. at 1053. First, the alleged statutory violation was meaningfully different, because the issue in Lavallee was not an incomplete notice but a complete lack of notice as to any of the required disclosures. Id. Second, Lavallee was already a defendant in another collection lawsuit when the statutory disclosure violation occurred, so she was at a “distinct disadvantage” because “[i]f she had known about her rights, she could have disputed and sought verification of the debts-thereby requiring Med-1 to cease the collection action and obtain verification.” Id. Thus, the Seventh Circuit reiterated that a bare allegation of a procedural violation typically ...


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