Antitrust Law Daily Wrap Up, PRIVACY—E.D.N.Y.: TCPA action against debt collection agency dismissed for failure to state a claim, (Mar 25, 2014)

By Edward L. Puzzo, J.D.

A Telephone Consumer Protection Act claim against a debt collection agency must be dismissed, based on the failure to state a claim and plaintiffs’ separate claim against the same defendant based upon the same set of facts pending in another federal district court, the federal district court in Brooklyn, New York has ruled (Baranski v. NCO Financial Systems, Inc., March 21, 2014, Glasser, L.).

Background. John Baranski, a Connecticut resident, and James LaCourte, a New York resident, brought this action on behalf of a putative class against NCO Financial Systems, Inc., a debt collection agency. They alleged that NCO used an automatic telephone dialing system (ATDS) to leave prerecorded debt collection voice messages on their cell phones, in violation of the Telephone Consumer Protection Act (TCPA). NCO moved to dismiss, and in response, plaintiffs filed an amended complaint. NCO alleged that the amended complaint was not timely, under Fed. R. Civ. P. 15(a)(1)(B).

Timeliness of amended complaint. The court noted that plaintiffs filed their amended complaint 37 days after NCO’s motion to dismiss, without the consent of NCO or the court. Since this was beyond the 21 days permitted to amend under Rule 15(a)(1), the amended complaint was untimely, the court ruled. However, in light of the liberal amendment policy underlying Rule 15, the court considered whether the proposed amendments would cure any deficiencies in the complaint, or whether amendment would be futile.

Stating a TCPA claim. A TCPA claim requires more than a bare allegation that the defendant used an ATDS, the court explained. Instead, the allegations must at least describe in laymen’s’ terms the facts or circumstances surrounding the calls that make it plausible that the calls were made with an ATDS, the court stated. The plaintiffs failed to allege a robotic sound in the caller’s voice, a lack of human response, or any facts supporting the inference that the calls were made without human intervention. Thus, the TCPA was not plausible on its face and had to be dismissed, the court ruled.

Separate action. Plaintiff LaCourte also filed a Fair Debt Collection Practices claim against NCO in the federal district court for the Southern District of New York based on the same debt collection activities. After most of his claims were dismissed in that case, LaCourte sought leave to amend his complaint to add TCPA claims, but the request to amend was denied as untimely. That case is currently being appealed.

NCO also sought to have the instant case dismissed on res judicata grounds, based on the dismissal of the case in the Southern District of New York. NCO asserted that, because the claims in the instant case arose out of the same phone calls that formed the basis for the Southern District of New York action, that decision had a preclusive effect. It claimed res judicata even though LaCourte did not assert his TCPA claim in that action, because all the allegations in the instant case were pleaded or could have been pleaded in the other case.

The court agreed. The court viewed as irrelevant LaCourte’s claims that the instant case claims were based on information learned after the complaint in the other case was filed. “Newly discovered evidence does not preclude the application of res judicata,” the court stated. The court also disagreed with LaCourt’s argument that the pending appeal in the other case made that judgment non-final for res judicata purposes. The appeal of the Southern District of New York decision is the proper vehicle for addressing the TCPA claims against NCO, the court stated, and therefore dismissed this claim.

The case is Civil Action No. 13 CV 6349 (ILG) (JMA).

Attorneys: Catherine Elizabeth Anderson (Giskan Solotaroff & Anderson, LLP) for John Baranski. David Israel (Sessions Fishman Nathan & Israel) for NCO Financial Systems, Inc.

Companies: NCO Financial Systems, Inc.

Cases: Privacy StateUnfairTradePractices NewYorkNews ConnecticutNews