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Winne v. National Collegiate Student Loan Trust 2005-1

United States District Court, D. Maine

August 17, 2017

JANE C. FORRESTER WINNE, et al., Plaintiffs,



         Jane Forrester Winne, Sarah Coffey, Vickie McMullen, and Karin Hills filed a Second Amended Complaint ("the Complaint") on behalf of a putative class against 24 named defendants, alleging claims arising out of attempts to collect on student loan debts. See ECF No. 112. Fifteen Defendants, including 13 of the 17 National Collegiate Student Loan Trusts, [1] Wilmington Trust Company, and The First Marblehead Corporation, now known as Cognition Financial Corporation, [2] have moved to dismiss the claims against them. ECF No. 154; ECF No. 155; ECF No. 167. Plaintiffs have moved to supplement the record before the Court related to the motions to dismiss with the deposition of Bradley Luke, an employee of Defendant Transworld Systems, Inc., that was taken in a separate collection action filed against two of the named Plaintiffs. ECF No. 206.

         I. BACKGROUND

         The Plaintiffs allege that they, along with other Maine residents, have been the subject of unlawful and fraudulent student debt collection activities. They allege that a large number of student loans purportedly owned by a series of National Collegiate Student Loan Trusts are not collectible because the Trusts do not have a lawful basis to collect on the loans, and that the collection efforts undertaken by the Defendants violate state and federal law. Each of the named Plaintiffs borrowed money to finance her education or the education of a family member. The student loan debt was then sold by the original lender, and eventually acquired by one of the National Collegiate Student Loan Trusts. Each of the named Plaintiffs asserts that, beginning in 2014, she was contacted by an entity acting on behalf of a National Collegiate Student Loan Trust, seeking to collect on a debt. The Plaintiffs allege that these collection efforts violate the federal Fair Debt Collection Practices Act, 15 U.S.C.A §§ 1692-1692p (2017), ("FDCPA") the Maine Fair Debt Collection Practices Act, 32 M.R.S.A §§ 11001-11054 (2017), ("MFDCPA") and the Maine Unfair Trade Practices Act, 5 M.R.S.A. §§ 205-A-214 (2017), ("UPTA") as well as constituting fraud and breach of contract.

         The Trusts move to dismiss the claims against them for lack of standing and failure to state a claim. Wilmington moves to dismiss the claims against it for lack of personal jurisdiction and failure to state a claim. First Marblehead moves to dismiss the claims against it for lack of standing, lack of personal jurisdiction, and failure to state a claim. I address each motion in turn.[3]


         A. Legal Standards

         1. Motion to Dismiss for Failure to State a Claim

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint "must contain sufficient factual matter to state a claim to relief that is plausible on its face." Saldivar v. Racine, 818 F.3d 14, 18 (1st Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (internal quotation marks and alterations omitted). The court should accept all well-pleaded facts as true, while ignoring conclusory legal allegations. Id. All reasonable inferences should be drawn in favor of the non-moving party. Id. at 16. The complaint must contain facts that support a reasonable inference "that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. Determining the plausibility of a claim is a context-specific task that requires the court "to draw on its judicial experience and common sense." Saldivar, 818 F.3d at 18 (quoting Iqbal, 556 U.S. at 679) (quotation marks omitted). The burden of demonstrating that the complaint does not state a claim for which relief can be granted is on the Defendants. See 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2017 Update).

         Allegations of fraud are subject to the higher pleading standard of Federal Rule of Civil Procedure Rule 9(b). See Fed. R. Civ. P. 9(b). The complaint must "be specific about the 'time, place, and content of an alleged false representation[.]'" Murtagh v. St. Mary's Reg'l Health Ctr., No. 1:12-cv-00160, 2013 WL 5348607, at *6 (D. Me. Sep. 23, 2013) (quoting Hayduk v. Lanna, 775 F.2d 441, 444 (1st Cir. 1985)). Mere conclusory allegations will not satisfy the particularity requirement. See Hayduk, 775 F.2d at 444. Rule 9(b) also requires that plaintiffs identify a basis for inferring scienter on the part of the defendant. N. Am. Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir. 2009).

         2. Motion to Dismiss for Lack of Personal Jurisdiction

         A plaintiff has the burden of establishing the court's personal jurisdiction over a defendant. Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 674-75 (1st Cir. 1992). When a defendant files a motion to dismiss for want of personal jurisdiction pursuant to Rule 12(b)(2), "a district court may choose from among several methods for determining whether the plaintiff has met its burden." Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st Cir. 2016) (quoting Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007)) (internal quotation marks omitted). The "most conventional" of these methods is the prima facie method, which "permits the district court to consider only whether the plaintiff has proffered evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction." Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir. 1995) (quoting Boit, 967 F.2d at 675) (internal quotation marks omitted).

         To satisfy the prima facie standard, the plaintiff must show that the requirements of both the forum's long arm statute and the due process clause of the Constitution are satisfied. Boit, 967 F.2d at 675. The Maine long-arm statute extends "to the fullest extent permitted by the due process clause" and therefore the constitutional inquiry controls. Harlow v. Children's Hosp., 432 F.3d 50, 57 (1st Cir. 2005) (quoting 14 M.R.S.A. § 704-A(1)).

         Since the Supreme Court's opinion in Int'l Shoe Co. v. State of Washington, 326 U.S. 310 (1945), courts have divided the personal jurisdiction analysis into two parts: "general" and "specific" personal jurisdiction. Donatelli v. Nat'l Hockey League, 893 F.2d 459, 462-63 (1st Cir. 1990). General jurisdiction exists when the defendant has engaged in "continuous and systematic activity" in the forum. Harlow, 432 F.3d at 64. Specific jurisdiction exists when "the cause of action . . . arises directly out of, or is related to, the defendant's forum-based contacts." Id. at 60-61. For both categories of personal jurisdiction, the defendant must have sufficient "minimum contacts" with the forum; those contacts must be purposeful; and the exercise of jurisdiction must be reasonable under the circumstances. Id. at 57.

         3. Motion to Dismiss for Lack of Standing

         Article III of the Constitution limits the judicial power to actual cases and controversies. See Warth v. Seldin, 422 U.S. 490, 498 (1975). "One element of the case-or-controversy requirement is that plaintiffs must establish that they have standing to sue." Kerin v. Titeflex Corp., 770 F.3d 978, 981 (1st Cir. 2014) (quotation omitted). A plaintiff must plead three elements to satisfy the standing requirement: injury in fact, traceability, and redressability. Id. (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). "Prudential considerations . . . demand that there be 'concrete adverseness which sharpens the presentation of issues.'" United States v. Windsor, 133 S.Ct. 2675, 2680 (2013) (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)). Therefore, courts are limited to deciding cases where the party seeking review demonstrates "a personal stake in the outcome of the controversy." Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98, 102 (1st Cir. 2014) (quoting Baker, 369 U.S. at 204).

         B. Motion to Supplement the Record

         The Trusts, Wilmington, and First Marblehead oppose Plaintiffs' motion to supplement. Wilmington and First Marblehead argue that consideration of the deposition testimony would violate the principles underlying Federal Rule of Civil Procedure 32 because they were not given notice of the deposition and did not have the opportunity to be represented by counsel at its taking. Rule 32 states that a deposition may be used against a party at a hearing or trial if "the party was present or represented at the taking of the deposition or had reasonable notice of it." Fed.R.Civ.P. 32(a)(1)(A). By its terms, however, Rule 32 applies to the use of deposition testimony at a hearing or trial, and therefore does not bar consideration of the transcript in ruling on the instant motions. Accordingly, the Plaintiffs' motion to supplement is granted.

         C. The Trusts' Motion

         The Trusts argue that the claims against them should be dismissed because the Plaintiffs lack standing and because the Complaint fails to state a claim.

         1. Standing

         The Trusts assert that at least one named plaintiff in a putative class action must have standing against each individual defendant, and that Plaintiffs have admitted that they do not have standing to sue because they acknowledge that they do not have ...

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