Plaintiff-Appellant Karen Vanover ("Vanover") sued Defendant-Appellee NCO Financial Systems, Inc. ("NCO"), on April 23, 2014, for violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, after NCO attempted to collect medical debts from her.
This appeal involves two issues. First, Vanover alleges the district court erred by denying her motion to join additional parties. Second, Vanover claims the district court erred in dismissing Vanover II for improper claim-splitting.
After thorough review, and with the benefit of oral argument, we affirm.
Whether a complaint may be dismissed for asserting claims which could and should have been presented in an earlier-filed complaint is an issue of first impression in this Circuit. Due to the nature of the claim-splitting doctrine, and because this appeal involves a Rule 12(b)(6) dismissal, we outline in detail the allegations in Vanover I and Vanover II.
In Vanover I, Vanover alleges that during the twelve months prior to filing the complaint — April 2013 through April 2014 — NCO violated the TCPA by calling her cellular telephone without express permission and in direct violation of her instructions, all in an attempt to collect medical debts allegedly owed by her to various hospitals. Vanover further contends that NCO employed an automatic telephone dialing system to place the debt collection calls. Under the TCPA, an automatic telephone dialing system ("ATDS") "means equipment which has the capacity — (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers." 47 U.S.C. § 227(a)(1). The TCPA prohibits debt collection agencies such as NCO from calling a consumer using an ATDS except in an emergency or after obtaining the express consent of the consumer.
One week later, on May 20, 2015, Vanover filed a complaint in Florida state court (Vanover II), alleging violations of the TCPA from April 2010 through November 2013, as well as violations of the FDCPA and the FCCPA. NCO removed the state court case to federal court and filed a motion to dismiss for improper claim-splitting. Vanover requested leave to amend her complaint, which was granted by the district court, and filed her Amended Complaint on July 31, 2015. Thereafter, NCO moved to dismiss the Amended Complaint in Vanover II, again citing the claim-splitting doctrine.
The Amended Complaint in Vanover II names the same plaintiff and defendant named in Vanover I. Also like Vanover I, the Amended Complaint in Vanover II alleges that NCO was attempting to collect multiple unsubstantiated consumer medical debts from Vanover. The allegations in the Amended Complaint in Vanover II do not indicate, however, that the debts at issue in the subsequent lawsuit were different from the debts at issue in Vanover I. Vanover asserts that NCO used predictive dialers (ATDS) to contact her residential landline phone and her cellular phone hundreds of times beginning on April 11, 2010 and continuing through and including April 23, 2013. NCO is also alleged to have contacted third parties via their cellular, residential, and business telephone numbers to discuss Vanover's medical debts. Vanover contends that the medical debts were not owed because she is covered by Medicaid. Count One of the Amended Complaint in Vanover II asserts violations of the FDCPA arising from NCO contacting Vanover against her direction to cease and desist. Count Two sets forth the FCCPA state analogue to Count I, which is also predicated on NCO attempting to collect the medical debts after being instructed not to do so. Count Three is the previously described TCPA claim.
After NCO filed its Motion to Dismiss the Amended Complaint in Vanover II, Vanover sought leave to add Expert Global Solutions, Inc., formerly known as NCO Group, Inc., and Transworld Systems, Inc. as defendants in a proposed Second Amended Complaint. The district court denied the motion to join additional parties. Thereafter, the district court granted NCO's motion to dismiss Vanover II, with prejudice, finding that Vanover I and Vanover II involve the same parties along with a common nucleus of operative fact and that, as a result, Vanover II violates the prohibition against claim-splitting.
"We review a district court's decision regarding the joinder of indispensable parties for abuse of discretion."
In an attempt to defeat NCO's motion to dismiss the Amended Complaint in Vanover II for impermissible claim-splitting, Vanover moved to join Expert Global Solutions, Inc. ("EGS") and Transworld Systems, Inc. ("TSI") in a proposed Second Amended Complaint. Vanover asserts that TSI and NCO acted at the direction of their parent corporation, EGS, without specifying how EGS directs either TSI or NCO. Vanover further alleged that EGS, TSI, and NCO violated federal and state law when they attempted to collect medical debts after Vanover advised them she did not owe the alleged debts. Vanover contended that EGS, NCO, and TSI operated out of the same call centers when they called her residential and cellular telephones between April 8, 2011, and November 26, 2013. Vanover verified TSI's involvement in placing debt collection calls to her from screenshots on her cellular telephone taken on August 21, 24, and 25, 2012.
The proposed Second Amended Complaint alleges the same violations of the FDCPA, the FCCPA, and the TCPA as were asserted in the Amended Complaint that was the subject of NCO's motion to dismiss for improper claim-splitting. The proposed Second Amended Complaint detailed the same attempted collection of debts incurred on over twenty-one medical accounts as was alleged in the Amended Complaint, and these same medical accounts were the subject of the alleged unlawful collection efforts in Vanover I. Accordingly, in both Vanover I and Vanover II, Vanover alleged that NCO was attempting to collect debts incurred on the same medical accounts. Vanover sought to join TSI and EGS on the basis that the Court could not accord complete relief without them.
Federal Rule of Civil Procedure 19 governs the mandatory joinder of parties. First, the court must determine whether the absent party is a required party under Rule 19(a).
In this case, joining EGS and TSI would not have defeated the district court's subject matter jurisdiction. Thus, the issue is whether Vanover established that the district court could not accord complete relief without joining them.
The district judge concluded that Vanover failed to carry her burden under Rule 19(a) because she failed to demonstrate that she could not obtain full relief from NCO for money damages without joining
The district court found that Vanover failed to demonstrate that TSI is a necessary and indispensable party because the motion to join additional parties and the proposed Second Amended Complaint failed to allege anything about the relationship between EGS, TSI, and NCO that would prevent Vanover from obtaining full relief for any allegedly unlawful communications from NCO. Moreover, as NCO argued below, TSI is alleged to be a California corporation whereas NCO is a Pennsylvania corporation, and the record is devoid of any allegation indicating that TSI acted in concert with or controlled the actions of NCO.
Vanover alternatively sought to join EGS and TSI pursuant to Rule 20(a), which governs permissive joinder of parties. Rule 20(a) requires a plaintiff to demonstrate two prerequisites in order to permissively join a party: first, the claims against the party to be joined must "aris[e] out of the same transaction or occurrence, or series of transactions or occurrences," and second, there must be some question of law or fact common to all parties to be joined.
The district court balanced the policy considerations that weigh against the desirability of joining EGS and TSI, and denied Vanover's motion for permissive joinder. The district court noted that NCO faced duplicative litigation in Vanover I and Vanover II, specifically finding that both lawsuits arose out of the same underlying conduct — the collection of medical debts allegedly owed by Vanover. The district court further observed that NCO moved to dismiss the Amended Complaint in Vanover II for improper claim-splitting. Accordingly, the district court found that allowing Vanover to join EGS and TSI in an attempt to defeat NCO's motion to dismiss would have the undesirable effect of exposing NCO to potential conflicting liability and inconsistent judgments. Since Vanover could have added EGS and TSI
The district court was also unpersuaded by Vanover's argument that she had just become aware that EGS and TSI should be joined. By Vanover's own admission, TSI's alleged involvement in attempting to collect the medical debts was confirmed from Vanover's cellular telephone in August 2012, before she filed Vanover I. Similarly, Vanover failed to allege that she had been unaware that EGS was the parent company of NCO prior to filing Vanover I. Vanover's motion to join additional parties, if granted, would have had the effect of forcing NCO to incur additional delay and related costs of litigation, which could have been avoided had Vanover amended her complaint in Vanover 1.
This Court finds that the district court did not abuse its discretion in denying the permissive joinder of EGS and TSI. To be sure, Vanover's failure to timely amend her Complaint in Vanover I to include EGS and TSI does not justify subjecting NCO to duplicative litigation. Vanover's contention that NCO could have moved to consolidate Vanover II with Vanover I as opposed to seeking dismissal is similarly unpersuasive in that NCO had no obligation to seek consolidation of the actions. Further, as the district court aptly noticed, Vanover had nine months to amend her complaint in Vanover I, but she failed to do so.
Once the district court disposed of Vanover's Motion to Join Additional Parties, it proceeded to NCO's Motion to Dismiss the Amended Complaint in Vanover II for improper claim-splitting.
For example, the Tenth Circuit in
Indeed, "[i]t is well settled that a plaintiff `may not file duplicative complaints in order to expand their legal rights.'"
Claim-splitting has been analyzed as an aspect of res judicata or claim preclusion.
The district court in this case properly applied a two-factor test whereby the court "analyzes (1) whether the case
Vanover argues that the operative or transactional nucleus of facts related to her TCPA claims in Vanover I are limited to whether NCO placed calls to her cellular telephone using an ATDS without her express consent. Vanover asserts that the claims asserted in Vanover II are distinct and relate to abusive and harassing communications in the collection of consumer debts prohibited by the FDCPA and FCCPA. However, the distinction Vanover draws between Vanover I and Vanover II is artificially narrow and runs contrary to the prohibition against bringing a successive cause of action arising from the same nucleus of operative facts.
The district court correctly found that the first prong of the claim-splitting analysis is satisfied, as the parties are identical in Vanover I and Vanover II. Turning to the second prong, the district court found the claims asserted in Vanover I and Vanover II are based on the same nucleus of operative facts, notwithstanding Vanover's attempt to distinguish between the two actions. Vanover takes the position that Vanover II involves calls that began in April 2010 — earlier than the date alleged in Vanover I — and that Vanover II involves calls NCO made to her residential telephone and to third parties — unlike the allegations made in Vanover I where NCO is alleged to have called only Vanover's cellular telephone. The district court concluded that the claims in Vanover II are still based upon the same collection efforts set forth in Vanover I, regardless of whether the calls were placed to cellular telephone calls, residential telephones, or to third parties. The trial judge also determined that merely extending the time frame in Vanover II to cover an earlier period than was alleged in Vanover I does not impact the claim-splitting analysis, since splitting the time frame into two different periods does not create a separate transaction. The district court correctly concluded that all of the alleged wrongs by NCO occurred consecutively in time and prior to filing the compliant in Vanover I; hence, the collection efforts which form the basis of Vanover I and Vanover II arise from the same transaction or series of transactions. Stated differently, the factual bases for both lawsuits are related in time, origin, and motivation, and they form a convenient trial unit, thereby precluding
Finally, the district court found that claim-splitting is not defeated by Vanover's addition of causes of action in Vanover II.
For all of these reasons, we affirm the district court's dismissal of Vanover's amended complaint.