Tuesday, September 27, 2011

(1) FDCPA can protect non-debtors, e.g., husband of debtor (2) intrusion upon seclusion (3) liability of parent company for subsidiary's acts

Berk v. JP Morgan Chase - ED Pa. - September 23, 2011


Protection of non-debtors

The FDCPA protects individualswho are not debtors provided “such persons . . . claim they are harmed by proscribed debt collection practices.” Yentin v. Michaels, Louis & Assocs., Inc., Civ. A. No. 11-0088, 2011 WL 4104675 at *17 (E.D. Pa. Sept. 14, 2011) (internal quotation marks omitted); see also H.R. Rep. No. 95-131, at 8 (1977) (“P]eople who do not owe money, but who may be deliberately harassed are the family, employer and neighbors of the consumer . . . are also protected by [the FDCPA].”) Plaintiff here has alleged damages, including his emotional distress, as well as physical symptoms related to his heart condition as a result of the debt collector's conduct.

Intrusion upon seclusion

A claim for intrusion upon seclusion requires a showing of “conduct demonstrating ‘an intentional intrusion upon the seclusion of [a plaintiff’s] private concerns whichwas substantial and
highly offensive to a reasonable person, and [must] aver sufficient facts to establish that the information disclosed would have caused mental suffering, shame or humiliation to a person of
ordinary sensibilities.’” Boring v. Google Inc., 362 Fed. Appx. 273, 278-79 (3d Cir. 2010) (quoting Pro Golf Mfg., Inc. v. Tribune Review Newspaper Co., 809 A.2d 243, 247 (Pa. 2002)).

Pennsylvania has adopted the definition of intrusion upon seclusion as set out inRestatement (Second) of Torts, § 652B. Larsen v. Phila. Newspapers, Inc., 543 A.2d 1181, 1187 (Pa. Super. Ct. 1988).Under this definition, there is no liability for a person who demands payment of a debt unless “the telephone calls are repeated with such persistence and frequency as to amount to a course of hounding the plaintiff, that [it] becomes a substantial burden to his existence, that his privacy is invaded.” Restatement (Second) of Torts, § 652B cmt. d (emphasis added).

The Court finds that Plaintiff alleges sufficient facts to support a claim for intrusion upon seclusion under Pennsylvania law. Plaintiff alleges that Defendants contacted Plaintiff on approximately twenty or more occasions over two years, at three residences, and on four telephone lines. (Am. Compl. ¶ 1.) Plaintiff also alleges that these calls persisted even after Defendants were advised that Nancy Berk was Plaintiff’s former wife and he knew nothing about the alleged debt. (Id. ¶ 142.) These allegations are sufficient to support a claim for intrusion upon seclusion. Compare Desmond v. Phillips & Cohen Assoc., Ltd., 724 F. Supp. 2d 562, 568 (W.D. Pa. 2010) (allowing intrusion upon seclusion claim to go to the jury based on debt collector’s fourteen calls, four letters, and several messages left on the plaintiff’s answering machine, holding that whether the intrusion was “highly offensive to a reasonable person is a question of fact for the jury to decide.”), with Stuart v. AR Res., Inc., Civ. A. No. 10-3520, 2011 WL 904167 (E.D. Pa. March 16, 2011) (dismissing intrusion upon seclusion claimdespite defendant debt collector’s persistent phone calls and profane and abusive language because the of failure to plead the number or substance of calls).

Liability of parent company for acts of subsidiary

The Third Circuit has emphasized that “mere ownership of a subsidiary does not justify the imposition of liability on the parent.” Pearson v. Component Tech. Corp., 247 F.3d 471, 484 (3d Cir. 2001). Instead, parental liability for a subsidiary’s acts is appropriate either when a subsidiary is not a separate and independent corporation, but rather the alter ego of the parent company, or if the subsidiary is an agent for the parent in a specific transaction. Phoenix Canada Oil Co. v. Texaco, Inc., 842 F.2d 1476-77 (3d Cir. 1988). To determine if two corporations are separate, courts consider “adequacy of capitalization, overlapping directorates and officers, separate record keeping, payment of taxes and filing of consolidated returns,maintenance of separate bank accounts, level of parental financing and control over the subsidiary, and subsidiary authority over day-to-day operations.” Id. at 1476.

Chase argues that Berk sets forth no allegations of wrongdoing by Chase Co., but rather he seeks to hold Chase Co. liable for the acts of another. However, Plaintiff alleges both overlapping
officers and authorityover day-to-day operations, aswell as specific actions taken by Chase Co. Berk alleges that he forwarded theMemeger letter to Chase Co.’s general counsel and to amember of the Chase Co. Board of Directors. Plaintiff also alleges that he received a call from Russell, who stated that he was calling at the direction of the Chase Co. general counsel. Plaintiff also alleges a letter that he sent to Chase Co. general counsel, which was responded to by Palladino from Chase Auto Finance. Finally, Plaintiff alleges that the three
Chase Defendants all maintain principal offices at the same location. Plaintiff sufficiently alleges actions undertaken either by or at the direction of Chase Co. Thus, the Court
denies Chase’s motion to dismiss any remaining claims against Chase Co., and Plaintiff’s claim for intrusion upon seclusion against Defendants JPMorgan Chase Bank, N.A. (“Chase Bank”),
JPMorgan Chase & Co. (“Chase Co.”) will remain.