E-Alert Case Updates

United States District Court for the District of Maryland Holds That It Does Not Have Personal Jurisdiction over Corporation Incorporated in California in Suit Arising out of Debt Collection

Doug Cutcher v. Midland Funding, LLC, et al.
No. ELH-13-3733 (D. Md., May 19, 2014)
by Sarah M. Grago, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at http://www.mdd.uscourts.gov/Opinions/Opinions/Cutcher%20-%20Mem%20Op.pdf

In Doug Cutcher v. Midland Funding, LLC, et al., the United States District Court for the District of Maryland held that it did not have personal jurisdiction, general or specific, over three (3) defendant corporations domiciled in California against whom Plaintiff raised two claims under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. The court found that where the Defendants’ only contact in Maryland consisted of conducting business from a Baltimore address and employing Maryland employees, Plaintiff failed to make a prima facie showing that Defendants’ contacts with the forum state were sufficiently continuous and systematic to trigger general jurisdiction. Further, of the three Defendants, Plaintiff contends that two also maintained agency licenses within Maryland and had litigated in Maryland on more than two thousand (2000) occasions; however, the court declined to expand the interpretation of general jurisdiction to consist of such contacts. Additionally, the latter contacts bore no bearing on the third defendant. In the same manner, the court found that Plaintiff failed to meet his burden supporting specific jurisdiction as well.

In December 2013, Plaintiff Doug Cutcher, a Florida resident, filed an action against three defendants, Midland Funding, LLC; Midland Credit Management, Inc; and Encore Capital Group, Inc. , raising two claims under Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. Plaintiff, considered a “consumer” under the FDCPA, alleged that Defendants repeatedly called him — even after requesting them to stop — to collect a consumer debt relating to a HSBC credit card during December 2012 and January 2013. In his complaint, Plaintiff stated that each Defendant maintained a business address in Baltimore, Maryland, but failed to allege that the harassing phone calls originated from the Maryland offices. Instead, Plaintiff alleged that Defendants’ numbers appeared as “private,” “restricted,” or as an indecipherable 800 telephone number.

Defendants filed a Motion to Dismiss claiming lack of personal jurisdiction because their place of incorporation and primary place of business were in California. Plaintiff opposed the motion and requested that the case be transferred to the United States District Court for the Southern District of California as an alternative to dismissal.

The court denied Defendants’ Motion to Dismiss; although, it found personal jurisdiction lacking, and granted Plaintiff’s request for transfer. In its analysis, the court primarily addressed general jurisdiction, noting that Plaintiff nearly conceded that the court lacked specific jurisdiction. First, the court noted that the Maryland long-arm statute, Md. Code Ann., Cts. & Jud. Proc. § 6-103, satisfied the due process requirements set forth in the Fourteenth Amendment and moved on to conduct a “minimum contacts” analysis. It echoed the narrow interpretation of general jurisdiction set forth by the Supreme Court in Daimler AG v. Bauman, which maintained that “only a limited set of affiliations with a forum” will trigger general jurisdiction. 134 S. Ct. 746, 760 (2014). In an effort to promote a narrow interpretation of general jurisdiction, the court espoused the view of the Daimler Court whereby general jurisdiction only exists when a defendant’s contacts with the forum state are “so ‘continuous and systematic as to render [it] essentially at home in the forum State.’” Id. at 761 (alteration in original) (emphasis added) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011)). The Supreme Court has interpreted both the place of incorporation and the principal place of business to render corporate defendants essentially domiciled or at home within that state. Additionally, courts have recognized a limited exception allowing for general jurisdiction over a defendant corporation if it temporarily takes on another primary place of business. See Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952).

The District Court of Maryland found that Plaintiff failed to make a prima facie showing that Defendants’ contacts within Maryland fit within any of the above-accepted categories of general jurisdiction. Further, it used case law to underscore that employing residents and maintaining places of business within the forum, without more, failed to establish general jurisdiction. Similarly, the actions of maintaining licenses and engaging in litigation within the forum state are also insufficient to satisfy the narrow interpretation of general jurisdiction as applied to defendant corporations.

The court declined to find that it had specific jurisdiction over Defendants. Plaintiff failed to prove any nexus when he failed to allege that the harm—harassment—arose out of Defendants’ contact with Maryland, namely the Baltimore offices. The court found further support for lack of specific jurisdiction in Plaintiff’s complaint where he admitted that he did not know from which operation center the calls originated. The court found this admission a near concession that Plaintiff cannot prove specific jurisdiction. Even assuming Plaintiff did not wish to abandon this claim, the court still found that he failed to satisfy the threshold requirements of specific jurisdiction. In its discretion, the court chose to transfer, rather than dismiss, the case to the Southern District of California.