ORDER
For the reasons stated below, Midland’s motion to dismiss, stay or transfer [21] and AIS’s motion to transfer [25] and, as construed, motion to dismiss [35] are denied.
MEMORANDUM OPINION
Plaintiff, on behalf of himself and others similarly situated, sued Midland Funding, LLC and American Infosource, L.P. alleging that they violated § 1692e(5) of the Fair Debt Collection Practices Act (“FDCPA”) when they filed a proof of claim in Plaintiffs Chapter 13 bankruptcy proceeding on an allegedly time-barred debt. Both Defendants move to dismiss
Facts
According to the complaint, Midland “is a bad debt buyer that buys up large portfolios of delinquent consumer debts for pennies on the dollar, which it then seeks to collect upon by filing proof of claims in consumer bankruptcies.” (Compl., Dkt. # 1, ¶ 5.) Further, “AIS operates a nationwide delinquent debt collection business, and attempts to collect debts from consumers in virtually every state, including consumers in the State of Illinois.” (Id. ¶ 6.) Under Illinois law, the statute of limitations for collecting delinquent credit card debt is five years from the date of last
Analysis
Midland’s Motion to Dismiss, Stay or Transfer
Midland moves to dismiss or, in the alternative, stay or transfer only the. claim against it (and not AIS) based on an earlier-filed class action in the Southern District of Alabama, Aledia Johnson v. Midland Funding, LLC, No. 1l:14-CV-00332 (S.D.Ala. July 14, 2014). Johnson is also a putative class action and seeks the same relief against Midland as the plaintiff and putative class here. (Midland’s Mot. Dismiss Stay Transfer, Dkt. #21, Ex. A, ¶¶ 21-23.) A motion to dismiss filed by Midland remains pending in that case and no motion for class certification has been filed.
The first-to-file rule cited by Midland “is viewed in this circuit not as a hard-and-fast rule, but rather as a question of comity over which the district court enjoys a great deal of discretion.” Askin v. Quaker Oats Co., No. 11 C 111,
As stated, in both this and the Johnson cases, the named and putative plaintiffs seek relief against Midland under the FDCPA for a nationwide class of all individuals as to whom Midland filed proofs of claim in bankruptcy cases for time-barred consumer debts. Therefore, regarding Midland, the Court finds the cases to be substantially similar, should a class be certified. However, as noted, a motion to dismiss is still pending in the Johnson case and no motion for class certification has been filed. The Johnson case may be dismissed or a class certification motion, if filed, could be denied. Indeed, the Johnson case is not significantly further along than this case. Therefore, the Court, in its discretion, declines to dismiss or stay this case at this time.
Midland also asks, in the alternative, that the Court transfer the case to the Southern District of Alabama.
When analyzing the second prong, the convenience of the parties and witnesses, also referred to as the private interests, the Court considers: (1) the plaintiffs choice of forum; (2) the situs of material events; (3) the convenience of the parties; and (4) the convenience of the witnesses. Am. Roller Co., LLC v. Foster Adams Leasing, LLP,
Under § 1404(a), the plaintiffs choice of forum is usually given “substantial weight ... particularly where it is also the plaintiffs home forum.” Midas,
... Defendants urge this court to similarly discount Plaintiffs choice [of forum]. The court is hesitant to adopt this approach. First, the Seventh Circuit has not endorsed this reasoning. Second, though Plaintiff has proposed nationwide classes, the class certification motion has not been briefed, and the court does not assume such a broad class will in fact ultimately be certified. In any event, unnamed class members presumably benefit from a class representative who is able to aggressively litigate their claims without significant inconvenience due to travel. Though the court acknowledges that potential class members could be inconvenienced by litigation in the Northern District of Illinois, that inconvenience to potential parties does not, at this stage, outweigh the “plaintiffs venue privilege.”
Id. at *3.
Regarding the situs of material events, the time-barred proof of claim was filed here. As to the convenience of the parties and witnesses, this district is more convenient to Plaintiff, who lives here. The case against Midland is pending in Alabama, thus it would be more convenient for it to litigate one case there. Presumably, however, Midland can easily transfer any discovery requests and responses as well as merits-related briefing to this case and vice versa. The parties gloss over the
As to the interests of justice, contrary to Midland’s assertion, conserving judicial resources is not a benefit that would result from a transfer to Alabama because this Court will still have the case against AIS on its docket and thus be required to expend resources overseeing the litigation and making substantive rulings regardless of the number of defendants. Both this Court and the Southern District of Alabama are familiar with the FDCPA, so that factor is neutral. In terms of the communities’ relationship to the proceedings, Plaintiff lives in this district and Midland filed its proof of claim in Plaintiffs bankruptcy proceeding pending in this district. Midland points to no relationship to Alabama other than that it is named as a defendant in the Johnson ease pending there. Therefore, this factor favors keeping the action here. Finally, while the Johnson case was filed first, for the reasons stated above, the Court does not believe this factor favors transfer at this time. Based on a consideration of all of the relevant factors, the Court concludes in its discretion that Midland has not, at this stage of the litigation, met its burden of establishing that the Southern District of Alabama is a clearly more convenient forum for litigating this case. Coffey v. Van Dorn Iron Works,
AIS’s Motion to Transfer
AIS seeks to transfer this case to the United States District Court for the Western District of Oklahoma because its nationwide proof of claim filing operation is run entirely out of Oklahoma City, Oklahoma. No similar case is pending in Oklahoma; thus, the order of filing is not at issue with respect to AIS’s motion. According to AIS, it prepares all proofs of claim, “scrubs” them for compliance with statutes of limitations, and electronically files them from its office in Oklahoma City. It notes that personnel with knowledge of the “scrubbing” procedures, including its Chief Operating Officer, Matt Sutherland, are located in Oklahoma City and that all of the relevant documents are there as well. The Court agrees that a transfer to Oklahoma would be more convenient for AIS, but AIS fails to show that it is a more convenient venue for the parties: Midland’s principal place of business appears to be in California and Plaintiff is in Illinois. More importantly, AIS does not point to the identity, location or testimony of any non-party witnesses who would benefit from a transfer to Oklahoma. Discovery materials can be easily transferred electronically from Oklahoma City to Chi
While it is true that the Western District of Oklahoma has fewer cases than the Northern District of Illinois and a shorter median number of months from filing to trial (AIS Mem. Support Mot. Transfer, Dkt. #26, at 12; id. at 26-2), this Court keeps a tight rein on its cases and moves them along at a speedy pace. Moreover, both this Court and the District Court for the Western District of Oklahoma have familiarity with the FDCPA. Having considered all of the relevant factors, the Court concludes that AIS has not met its burden of establishing that Oklahoma is a clearly more convenient venue than this district for litigating the instant case.
Defendants’ Motions to Dismiss for Failure to State a Claim
As stated, § 1692e(5) only precludes a “threat to take any action” while Plaintiffs complaint alleges that Defendants actually took the action of filing an untimely proof of claim. (Compl., Dkt. #1, ¶ 10.). Defendants contend that Plaintiff fails to allege a violation pursuant to the plain terms of § 1692e(5). See Bravo v. Midland Credit Mgmt., Inc., No. 14 C 4510,
However, the Seventh Circuit has held that filing an untimely lawsuit to collect a debt can constitute a violation of the FDCPA. Phillips v. Asset Acceptance, LLC,
Defendants also point to two recent rulings in this district which conclude that the filing of a proof of claim in a bankruptcy case with respect to a time-barred debt is sufficiently distinguishable from the filing of a lawsuit and does not constitute a violation of the FDCPA. In In re La-Grone, the court granted a motion to dismiss a complaint alleging violations under several sections of 1962e and f, including § 1692e(5), at issue here, as to a proof of claim on a time-barred debt. The La-Grone court noted important “differences between lawsuits filed against individuals and proofs of claim filed in bankruptcy cases, all indicating that the deception and unfairness of untimely lawsuits is not present in the bankruptcy claims process”:
First, in collection lawsuits, the debtors themselves must assert the statute of limitations in an answer. Debtors in bankruptcy cases, on the other hand, have the benefit of a trustee with a fiduciary duty to all parties to “examine proofs of claims and object to the allowance of any claim that is improper.” Second, a debtor in bankruptcy has much less at stake in the allowance of a proof of claim than a defendant facing the prospect of an adverse judgment in a collection lawsuit. A proof of claim does not result in collection from the debtor personally but seeks only a share in the total payments available to all of the debtor’s creditors ...
Third, in a collection lawsuit a consumer debtor would have to retain and likely pay for the services of a lawyer. Debtors in bankruptcy, by contrast, are likely from the outset of the case to be represented by an attorney who can both advise them about the existence of a statute of limitations defense and file an objection if the trustee does not. The debtor here has been represented by counsel throughout the case.
Finally, even if the trustee fails to file a claim objection based on the statute of limitations, even if filing a claim objection would have a significant benefit for the debtor, and even if the debtor did not have legal assistance, it would be easier — and less embarrassing — for the individual debtor to file a claim objection pro se than to deal with an untimely collection lawsuit. Under Bankruptcy Rule 3001(c)(3), a claim for credit card debt — such as the one at the center of this adversary proceeding — must list the creditor who held the debt at the time of the account holder’s last transaction, the date of the last transaction, the date of the last payment, and the date the account was charged to profit or loss .... So unlike the consumer who has only the information required in a state court complaint, a debtor in bankruptcy should always have the information needed to determine whether the statute of limitations for a claim has expired.
In re LaGrone,525 B.R. 419 , 426-27 (Bkrtcy.N.D.Ill.2015) (internal citations omitted).
The LaGrone court also noted that the Advisory Committee Notes to the 2012 Amendments to Bankruptcy Rule 3001(c)(3) expressly anticipated untimely proofs of claim by requiring disclosures that would “provide a basis for assessing the timeliness of the claim.” Id. at 427. See also Robinson v. eCast Settlement Corp., No. 14 C 8277,
However, a number of other courts in this circuit have found otherwise. See Patrick v. Worldwide Asset Purchasing II, LLC, No. 1:14-cv-00544-TWP-TAB,
Given the Seventh Circuit’s decision in Phillips and the split of authority on the issue, at this stage of the litigation making all inferences in Plaintiffs favor, the Court cannot conclude that Plaintiff has failed to state a claim as a matter of law. Therefore, Defendants’ motions to dismiss are denied.
Conclusion
For the reasons stated above, Midland’s motion to dismiss, stay or transfer [21] and AIS’s motion to transfer [25] and, as construed, motion to dismiss [35] are denied.
Notes
. While AIS did not file a document entitled motion to dismiss, it "responded” to Midland's motion to dismiss, essentially joining in Midland’s motion. (Dkt. # 35.) The Court therefore construes AIS’s "response” as a motion to dismiss. Plaintiff’s motion to strike AIS’s improperly-named response is denied.
. Midland emphasizes that it seeks transfer only as to it and not AIS; therefore, the Court addresses Midland’s motion to transfer without reference to AIS.
. The Court has assumed for purposes of this motion that venue would be proper in all of the districts mentioned.