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Felty v. Driver Solutions, LLC

United States District Court, Seventh Circuit

October 30, 2013

GEORGE FELTY, JR., et al., Plaintiffs,
v.
DRIVER SOLUTIONS, LLC, et al., Defendants.

MEMORANDUM OPINION

CHARLES P. KOCORAS, District Judge.

This matter comes before the Court on the motion of Defendants Pyramid Financial Solutions, LLC ("Pyramid"), Driver Solutions, LLC ("Driver"), C&S Acquisition, Inc. d/b/a C1 Professional Training Center ("C1"), C1 Truck Driver Training, LLC ("C1TDT"), Brian K. Alsip ("Alsip"), and Garrett J. Lowe ("Lowe") (collectively "Defendants") to dismiss the putative class action brought by Plaintiffs George Felty, Jr., Regginald Butler, Michael Fitch ("Fitch"), James MacNees, Shaun Phillips, and Harold Dugger ("Dugger") (collectively "Plaintiffs") pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons set forth below, the motion is granted in part and denied in part.

BACKGROUND

The following well-pleaded allegations are derived from Plaintiffs' second amended complaint, and the Court accepts them as true for the purposes of the instant motion. Driver and C1, Indiana entities, provide free training to people interested in obtaining a Commercial Driver's License ("CDL"). C1TDT facilitates the CDL training program and helps advertise. Pyramid provides collection services, including the use of its corporate counsel, Lowe, to file cases for Driver and C1 in Marion County Small Claims Court. Alsip is an attorney who has previously been employed by Driver to collect debts.

Before starting the CDL training program, Plaintiffs were required to sign an Installment Business Loan Demand Note (the "Note") and an Enrollment Agreement (the "Agreement") which promised to forgive student debt if students obtained employment as a truck driver for one year. The payee named in the Notes and Agreements alternate between Pyramid and C1. Driver advertises that the employer truck company will cover the tuition costs after a year of employment. However, according to the Agreement, during the first year of a student's employment, a certain amount of money is taken out of his paycheck to secure payment of tuition and kept in a savings account. Once the student is successfully employed for one year, he receives the money back from the savings account. The Agreement states that if a student fails to complete twelve consecutive months of employment, unpaid tuition is payable on demand. If after six days of the program a student voluntarily withdraws or violates a school policy, the pro-rated amount of tuition plus costs is payable on demand.

Each Note and Agreement designates Marion County as the venue for any action or proceeding arising in connection with the training program. Plaintiffs: (i) reside outside of Marion County; (ii) signed the Note and Agreement in locations other than Marion County; and (iii) attended CDL training programs elsewhere.

Plaintiffs enrolled in the CDL training program, but failed to complete the course. Beginning in January 2012, Driver began obtaining default judgments against Plaintiffs in Marion County Small Claims Court for unpaid tuition plus costs. Alsip and Lowe represented Driver in the proceedings using the same address and telephone number as Driver, C1 and C1TDT in court documents. Driver also filed lawsuits against Plaintiffs where C1 was the payee on the Notes. (Fitch and Duggar were sued by Driver, but originally contracted with C1.)

On August 6, 2013 Plaintiffs filed their second amended complaint against Defendants. The complaint alleges that Defendants violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692i et seq. (Count I); and engaged in abuse of process under Illinois state law (Count III). Plaintiffs also allege that Driver, C1, C1TDT and Pyramid violated the Illinois Consumer Fraud Act, 815 Ill. Comp. Stat. Ann. 505/2 et seq. (Count II); the Indiana Deceptive Consumer Sales Act, Ind. Code Ann. § 24-5-0.5-3 et seq. (Count IV); and the Ohio Consumer Sales Practices Act, Ohio Rev. Code Ann. § 1345.02 et seq. (Count V). Plaintiffs seek statutory damages, compensatory damages, punitive damages, injunctive relief requiring all further legal proceedings to be in the county where a plaintiff resides or signed a contract, and attorneys' fees, plus costs and interests.

On August 13, 2013, Defendants moved to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

LEGAL STANDARD

Under Rule 12(b)(1), the plaintiff bears the burden of establishing that the court has jurisdiction over its claims. United Phosphorous Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003) (en banc). The court may consider matters outside of the complaint in ruling on a motion to dismiss for lack of subject-matter jurisdiction. Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995). A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint and not the merits of the case. McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 878 (7th Cir. 2012). The allegations in a complaint must set forth a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A plaintiff need not provide detailed factual allegations but must provide enough factual support to raise his right to relief above a speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim must be facially plausible, meaning that the pleadings must allow the court to draw the reasonable inference that the defendant is liable for the purported misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, " are insufficient to withstand a motion to dismiss under Rule 12(b)(6). Id. at 678.

DISCUSSION

I. Judicial Notice

Defendants request that this Court take judicial notice of Exhibits 1-10 attached to the memorandum in support of their motion to dismiss. The exhibits include: (i) Indiana Small Claims Court Rules; (ii) Marion County Small Claims Court ...


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