Alexander v. Absolute Resolutions Corporation, 3:19-cv-03007

Background

In 2013 Alexander financed jewelry; the debt was assigned to Absolute Resolutions Corporation (ARC). ARC sued Alexander in Baxter County, Arkansas, on Feb. 18, 2018, seeking about $1,077.67. ARC was initially represented by W. Anderson Woodford of Lloyd & McDaniel.
On July 7, 2018 Alexander moved for summary judgment in state court, arguing ARC lacked a license from the Arkansas State Board of Collection Agencies (SBCA) as required by Ark. Code Ann. § 17-24-301.
Five days later ARC applied to the SBCA and paid $10,000—the statutory civil penalty that, if paid, allows the SBCA to "consider" the agency retroactively licensed back to the date it first became subject to licensure; the SBCA then issued a retroactive license.
Alexander filed this federal class action (Jan. 25, 2019) under the Fair Debt Collection Practices Act (FDCPA), alleging ARC (and related defendants, including ARC CEO Mark Naiman) violated 15 U.S.C. §§ 1692e and 1692f by filing the state-court suit before ARC was licensed.
ARC and Naiman moved to dismiss under Rule 12(b)(6), arguing (1) Arkansas statutory scheme precludes private causes of action and limits remedies to SBCA civil penalties and (2) the retroactive SBCA license moots any FDCPA claim; Naiman also argued against individual liability.
The district court denied the motion to dismiss, concluding Alexander adequately pleaded an FDCPA claim under § 1692e (general prohibition) and that factual issues (including Naiman’s individual liability) were for later stages.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether filing a collection suit while unlicensed under Arkansas law can violate the FDCPA	Alexander: Filing the state suit before a license was obtained constituted false/deceptive means in violation of § 1692e and unfair collection under § 1692f	ARC/Naiman: Arkansas law confines remedies to SBCA penalties and forecloses private actions; retroactive license cures any illegality	Court: State remedy limitation does not bar a federal FDCPA claim; complaint plausibly alleges § 1692e violation; motion denied
Whether ARC’s subsequent retroactive SBCA license moots FDCPA claim	Alexander: Retroactive licensing does not erase the alleged unlawful act at the time of filing	ARC: Payment and retroactive licensure eliminate unlawfulness and any FDCPA basis	Court: Retroactive license is a penalty-limiting mechanism, not an erasure of the prior alleged illegality; issue not dispositive at pleading stage
Whether § 1692e(5) requires a threat (versus actual unlawful action)	Alexander: The FDCPA’s general prohibition and § 1692e encompass actual filing of an unlawful suit; § 1692e(5) is illustrative	ARC: § 1692e(5) prohibits threats, not the undertaking of illegal actions; thus no violation alleged	Court: Regardless of subsections, Alexander sufficiently alleged a violation of § 1692e’s general ban on false/deceptive means; dismissal denied
Whether Naiman can be individually liable under the FDCPA	Alexander: Alleged Naiman is sole member/CEO, participated in and controlled collection activities, so may meet the FDCPA definition of debt collector	Naiman: FDCPA does not contemplate personal liability for officers/shareholders merely by position or ownership	Court: Allegations that Naiman was sole member/CEO and the only employee who solicits/collects permit reasonable inference of knowledge, participation, and control; individual liability survives pleading stage

Key Cases Cited

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must be plausible to survive 12(b)(6))
Ashcroft v. Iqbal, 556 U.S. 662 (Rule 8 requires more than labels and conclusions)
Haney v. Portfolio Recovery Assocs., LLC, 895 F.3d 974 (8th Cir.) (FDCPA is not coterminous with state law)
Currier v. First Resolution Inv. Corp., 762 F.3d 529 (6th Cir.) (treats § 1692e subsections broadly in context of FDCPA’s purpose)
LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir.) (state-law prohibition on suit can support § 1692e(5) claim)
White v. Goodman, 200 F.3d 1016 (7th Cir.) (FDCPA generally does not impose personal liability on officers/shareholders solely by role)
Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057 (7th Cir.) (similar limitation on personal liability under FDCPA)
Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433 (6th Cir.) (individuals may be liable under FDCPA if they meet statute’s definition of debt collector)
Hill v. Accounts Receivable Servs., LLC, 888 F.3d 343 (8th Cir.) (materiality inquiry for FDCPA misrepresentations)