DEFENDANT JTM CAPITAL MANAGEMENT, LLC’S RESPONSE TO PLAINTIFF’S SUPPLEMENTAL BRIEFPRELIMINARY STATEMENT As a result of oral argument on March 15, 2019, JTM Capital Management, LLC’s (“JTM”) Objection to Judge Schroeder’s Report and Recommendation, the Court ordered Plaintiff Theresa Mullery (“Plaintiff”) to submit the statutory definition of a debt collector in the each state where JTM is registered as a debt collector. (Dkt. 48). In addition, the Court permitted JTM an opportunity to file this response: (1) articulating why the Court can reach the question of whether JTM meets the definition of a debt collector on a motion to dismiss and presenting other cases that have done so; (2) addressing Plaintiff’s submission; and (3) responding to Plaintiff’s Motion for Leave to Cite Supplemental Authority (Dkt. 47). ARGUMENTI. WHETHER JTM CAN MEET THE STATUTORY DEFINITION DEBT COLLECTOR CAN BE DECIDED ON A MOTION TO DISMISSPlaintiff has the burden of pleading factual content sufficient to allow this Court to draw the reasonable inference that JTM is a debt collector subject to the Fair Debt Collection Practices Act (“FDCPA”). See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544. 556 (2007).Although the Court is required to accept as true all of the allegations contained in a complaint, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Taubenfliegel v. EGS Fin. Care, Inc., 2019 WL 1499856, at *1 (2d Cir. Apr. 4, 2019) (quoting Iqbal, 556 U.S. at 678). Instead, a claim is “facial[ly] plausibl[e] when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Merrill v. Schell, 279 F. Supp. 3d 438, 442 (W.D.N.Y. 2017) (quoting Sykes v. Bank of America, 723 F.3d 399, 403 (2d. Cir. 2013).In order to reach the question of whether JTM, a passive debt buyer, can meet the statutory definition of a debt collector, the Court must first conclude that the Complaint does not otherwise allege sufficient facts to plausibly contend JTM directly collected debt from Plaintiff.The pertinent factual allegations pertaining to JTM are:4. Defendant, JTM Capital Management, LLC (“JTM”), is a Delaware limited liability company that acts as a debt collector, as defined by §1692a of the FDCPA, because it regularly uses the mails and/or the telephone to collect, or attempt to collect, directly or indirectly, defaulted consumer debts that it did not originate. JTM operates a nationwide default debt collection business, and attempts to collect debts from consumers in virtually every state, including consumers in the State of Illinois. In fact, Defendant JTM was acting as a debt collector as that term is defined in the FDCPA, as to the defaulted consumer debt it attempted to collect from Plaintiff.5. Defendant JTM is a bad debt buyer that buys large portfolios of defaulted consumer debts for pennies on the dollar, which it then collects upon through other collection agencies. Defendant JTM’s principal, if not sole, business purpose is the collection of defaulted consumer debts originated by others.7. Moreover, Defendant JTM licensed as a collection agency in Illinois.10. Thereafter, Defendant JTM bought/obtained Ms. Mullery’s alleged Continental account, ignored the information in the account notes that told it, as the successor-in-interest, that it could no longer call or write Ms. Mullery, and had another debt collector, Northstar Location Services, send Ms. Mullery a collection letter, dated January 26, 2017, demanding payment of the Continental debt.(Dkt. 1).The only plausible conclusion that can be drawn from the Complaint is that Plaintiff alleges JTM is a debt buyer who outsources accounts to third parties for collection. During oral argument, the Court focused on the allegations included in Paragraph 4, specifically that JTM “directly or indirectly” collected defaulted consumer debts and that “JTM operates a nationwide default debt collection business, and attempts to collect debts from consumers in virtually every state.” (Dkt. 1,4). However, any allegation that JTM directly collects debt is unquestionably speculative — there is not a single fact articulated in the Complaint to make that those conclusions plausible.1To the contrary, the Complaint only alleges facts to support the conclusion that JTM is a debt buyer who outsources accounts to third parties for collection. Paragraph 5 of the Complaint explicitly alleges JTM is a debt buyer who buys portfolios of debt and collects upon, through other collection agencies. (Dkt. 1,5) (emphasis added). Standing alone, this allegation is similarly insufficient. However, it is then supported by facts. Specifically, Plaintiff alleges that her debt was purchased by JTM and then outsourced to a third party for collection. (Dkt. 1,10). The factual allegations articulated in the Complaint lead to a single conclusion — that Plaintiff alleges that JTM, a debt buyer who outsources accounts to third parties for collection, has a principal purpose of debt collection. As a result, the Court is able to reach the question of whether a passive debt buyer like JTM can meet the definition of a debt collector as a matter of law.Other courts have decided this, or closely related issues, on a motion to dismiss. McAdory v. M.N.S. & Associates, LLC, 2017 WL 5071263 (D. Or. Nov. 3, 2017), recons. denied, 2018 WL 1256482 (D. Or. Mar. 11, 2018) (appeal pending), the central case relied upon by JTM in its Motion to Dismiss, was also decided on a Motion to Dismiss. Id. There, the Court faced similar factual allegations to the allegations in this case. While parroting the “debt collector” language from the FDCPA, in substance, the plaintiff’s amended complaint alleged that the defendant DNF Associates, LLC, purchased portfolios of debt and outsourced accounts to third parties for collection. A copy of the Amended Complaint in McAdory is attached as Exhibit A,
