Consequently, Defendant Zenith avers the FDCPA does not apply to its actions as a third party
“wholly removed from debt collection activity.” (Jd. at 2).

Plaintiffs contend it is “irrelevant that [Defendant] Zenith is an entity independent of
[Defendant] TW Asset.” (Opp’n at 4). Specifically, Plaintiffs maintain that Lewis and Lee
“involve payment processors that were not debt collectors,” whereas Defendant Zenith is a debt
collector. (/d.). As the Sixth Circuit held in Glazer v. Chase Home Financial, LLC, 704 F.3d
453, 461 (6th Cir. 2013), “if a purpose of an activity taken in relation to a debt is to ‘obtain
payment’ of the debt, the activity is properly considered debt collection.”! Here, Plaintiffs allege
Defendant Zenith “is itself a debt collector” because it was involved in collecting a debt by
answering Mr. Smith’s phone call and effectuating the transfer of funds from Ms. Smith’s bank
account. (Opp’n at 6). In addition, Plaintiffs point out that Lewis and Lee were decided “in the
context of 15 U.S.C. § 1692(f)(1) violations.” (Jd. at 5). In contrast, Plaintiffs state they “have
not alleged that Zenith or TW Assert violated 15 U.S.C. § 1692(f(1).” (/d.). Thus, Plaintiffs
aver that Lewis and Lee are not applicable to the case as bar. (/d.).

Plaintiffs further argue that Defendant Zenith may be liable for its actions as a payment
processor regardless of its relationship to Defendant TW Asset. Plaintiffs cite Consumer
Financial Protection Bureau v. Universal Debt & Payment Solutions, No. 1:15-CV-00859-RWS,
2015 WL 11439178, at *15 (N.D. Ga. Sept. 1, 2015), which held that payment processors “could
still be subject to liability for unfair acts or practices if they are service providers.” In Consumer

Financial, various payment processors “provided a technology platform to process payments”

' The Supreme Court abrogated Glazer on March 20, 2019 with its ruling in Obduskey v. McCarthy &
Holthus LLP. 139 8. Ct. 1029 (2019). In Obduskey, the Supreme Court ruled that an entity only engaged
in security-interest enforcement is not a “debt collector” within the meaning of the FDCPA. /d. at 1031.
The case at bar does not involve security-interest enforcement or nonjudicial foreclosure proceedings.
Accordingly, Obduskey is not applicable here.


Plaintiffs and was not involved in any of the unlawful collection activities alleged. (Mot. to
Dismiss Brief at 4). Rather, Defendant Zenith contends that Defendant TW Asset undertook all
collection actions and that “the claims against Zenith are nothing more than a last ditch attempt
to identify any viable party to revive this lawsuit.” (/d. at 2). Plaintiffs allege Defendant Zenith
violated 15 U.S.C. §§1692(d), (d)(5), (e), (€)(3), (e)(4), (€)(10), and (f) of the FDCPA. (Am.
Compl. 27). They claim Defendant Zenith did so by working in concert with Defendant TW
Asset to effectuate the transfer of Plaintiffs’ funds, thereby participating both directly and
indirectly in the collection of Plaintiffs’ alleged debt. (Am. Compl. 32-35).

As set forth above, this Court finds that Plaintiffs have adequately alleged that Defendant
Zenith is a “debt collector.” Plaintiffs further allege that Ms. Smith did not owe a consumer
debt. (/d. 716). In addition, Plaintiffs claim that Defendant Zenith withdrew money from Ms.
Smith’s account, and also spoke to Mr. Smith regarding Ms. Smith’s bank statement. (Am.
Compl. J 25-26; Mot. to Dismiss Brief at 3). Taking these facts as true, the Court finds that
Plaintiffs have asserted sufficient facts to plausibly contend that Defendant Zenith violated the
FDCPA by engaging in unfair debt collection activities and collecting a debt that was not owed.

Iv.

For the foregoing reasons, the Court DENIES Defendant Zenith’s Motion to Dismiss.

(ECF No. 13).
IT IS SO ORDERED.
5-\-Lo1a hn
DATE ED’ ~SARGUS, JR.
CHIE D STATES DISTRICT JUDGE


extraordinarily broad statute” enacted to address what Congress “considered to be a widespread
problem.” Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992).

As a matter of law, liability under § 1692 can only attach to those who meet the statutory
definition of a “debt collector.” Jerman v. Carlisle, McNellice, Rini, Kramer & Ulrich LPA, 559
US. 573, 576 (2010) (“The Fair Debt Collection Practices Act . . . imposes civil liability on
‘debt collector[s]’”). Defendant Zenith argues in its Motion to Dismiss that Plaintiffs’ Complaint
does not sufficiently allege that Defendant Zenith is a “debt collector” under the FDCPA. (Mot.
to Dismiss Brief at 6, ECF No. 14). Specifically, Defendant Zenith argues that “Plaintiff does
not allege Zenith took any steps to collect the debt—Plaintiffs only claim Zenith appeared on a
bank statement as a payment processor stemming from an agreement between Plaintiffs and TW
Asset Group.” (Id. at 4). Accordingly, Defendant Zenith contends it is not subject to the
FDCPA and the acts of Defendant TW Assert should not be imputed to Defendant Zenith. (Jd. at
5-6). Thus, the Court must determine whether Zenith falls within the FDCPA’s definition of a
“debt collector.”

Defendant Zenith cites Lewis v. ACB Business Services, Inc., 911 F. Supp. 290, 293 (S.D.
Ohio 1996), in which this Court held that payment processors are considered independent entities
from debt collectors. The Sixth Circuit made a similar finding in Lee v. Main Accounts, Inc., 125
F.3d 855, 855 (6th Cir. 1997), concluding that a third-party transaction fee was separate from the
debt collection conducted by the defendant, a debt collection agency. Analogizing Lewis to the
case sub judice, Defendant Zenith points out that its only involvement in the instant action was
processing a single payment that appeared on Plaintiffs’ bank statement. (Mot. to Dismiss Brief
at 6). Thus, Defendant Zenith asserts that any allegations against Defendant TW Asset, a debt

collector, cannot be imputed to Defendant Zenith—‘an entirely separate entity.” (Id.).


for debt collectors. Jd. at *13 (internal quotations omitted). The payment processors claimed
they were not vicariously liable for the acts of the debt collectors because they were separate
entities. Id. at *15. However, the Consumer Financial court found that despite the payment
processors’ independence from the debt collectors, they could still be subject to liability for
unfair practices. Jd. Analogizing Defendant Zenith to a “service provider,” Plaintiff asserts that
Defendant Zenith is not immune from liability for “providing substantial assistance to a debt
collector.” (Opp’n at 4).

Finally, Plaintiffs contend that, as a debt collector, Defendant Zenith is also subject to the
FDCPA for acts taken on behalf of another debt collector. (Opp’n at 5). Plaintiffs cite the Sixth
Cireuit’s Wadlington v. Credit Acceptance Corp. decision, which concluded “Section 1692k
imposes liability on a ‘debt collector who fails to comply with [a] provision of this subchapter . .
-” 76 F.3d 103, 108 (6th Cir. 1996) (emphasis in original) (citation omitted). In Wadlington,
the Sixth Circuit found that a debt collector can be held vicariously liable for its debt collection
practices on behalf of another debt collector. Jd. Analogizing Wadlington to this case, Plaintiffs
argue that Defendant Zenith, a debt collector, engaged in impermissible debt collection activities
on behalf of Defendant TW Asset, another debt collector. (Opp’n at 5). Moreover, Plaintiffs
point out that in FDCPA cases, “[w]hen several independent actors concurrently or consecutively
produce a single, indivisible injury, each actor is held jointly responsible for the entirety of
damages resulting from the concerted activity.” (Jd.) (citing Conner v. Howe, 344 F. Supp. 2d
1164, 1169 (S.D. Ind. 2004)).

Plaintiffs’ arguments are well taken. Unlike the present case, both Lewis and Lee
involved 15 U.S.C. § 1692(f)(1) violations—i.e., the collection of any debt which is not

expressly authorized by the agreement creating the debt. Here, Plaintiffs allege that Defendants


UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

SUSAN SMITH, et al,

Case No. 2:18-cv-385
Plaintiffs, CHIEF JUDGE EDMUND A. SARGUS, JR.
Magistrate Judge Elizabeth P. Deavers

ve

TW ASSET GROUP LLC, et al,

Defendants.

OPINION AND ORDER
This matter is before the Court on Defendant Zenith Financial Network, Inc. d/b/a ZFT &
Associates d/b/a ZFN Processing’s (“Defendant Zenith”) Motion to Dismiss (ECF No. 13);
Plaintiffs Susan Smith and Zach Smith’s (“Plaintiffs”) Memorandum in Opposition (ECF No.
19); and Defendant Zenith’s Reply brief (ECF No. 20). For the following reasons, the Court

DENIES Defendant Zenith’s Motion. (ECF No. 13).

LL
Plaintiffs brought this suit against Defendant Zenith and Defendant TW Asset Group,
LLC d/b/a The Law Offices of Thompson d/b/a Walters & Associates d/b/a Thompson, Walters,
& Associates b/a/a T&W Recovery, LLC (“Defendant TW Asset”), alleging violations of the
Fair Debt Collection Practices Act 15 U.S.C. § 1692, et seg. (“FDCPA”). Plaintiffs are residents
of Chillicothe, Ross County, Ohio. (Am. Compl. 5). Defendant Zenith is a collection agency
located in Boca Raton, Florida. (Jd. $11). Defendant TW Asset is a collection agency located in

Buffalo, New York. (Id. 10).


violated § 1692(f), which states that “a debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt.” 15 U.S.C. § 1692(f). As stated by the statute,
the subparts of § 1692(f) do not “limi[t] the general application of [§ 1692(f)].” Thus, Lewis and
Lee are distinguishable from the present case because they involved different alleged violations
of § 1692(f).

Moreover, as Plaintiffs point out, Lewis involved fee charging by a separate entity that
was not a debt collector. In the instant action, Plaintiffs raise sufficient facts to plausibly allege
that Defendant Zenith is a debt collector. First, Plaintiffs properly address all elements of the
statutory definition of debt collector pursuant to § 1692(a)(6): “Defendant Zenith is a collection
agency located in Boca Raton, Florida,” where it “regularly collects, or attempts to collect, debts
allegedly owed to third parties” by sending correspondence to alleged debtors through
instrumentalities of interstate commerce and/or the mail. (Am. Compl. J 11-14). Second, the
FDCPA does not distinguish between indirect and direct debt collections. In fact, the Act
defines “debt collector” as “any person . . . who regularly collects or attempts to collect, directly
or indirectly, debts owed or due...” 15 U.S.C. § 1692(a)(6) (emphasis added).

Accordingly, the Court need not assess whether Defendant Zenith’s relationship to
Defendant TW Assert triggers imputed liability under the FDCPA. At this stage, Plaintiffs’
allegations, and Defendant Zenith’s classification as a “debt collector” are sufficient to survive
Defendant Zenith’s Motion to Dismiss.

2. It is Factually Plausible that Defendant Zenith Violated the FDCPA.

The Court now turns to Defendant Zenith’s argument that Plaintiffs have otherwise failed
to allege sufficient factual allegations to state a plausible FDCPA claim against Defendant

Zenith. Specifically, Defendant Zenith alleges that it took no direct collection action against


Between August 22, 2017 and August 22, 2018, Defendant TW Asset began calling Ms.
Smith on her home telephone number demanding that she repay a consumer debt of $535. (Id.
{| 16-22). Ms. Smith claims that Defendant TW Asset threatened to send her to jail and to serve
her at work to embarrass her if she did not pay the debt. (/d. 20). Ms. Smith paid the full
amount, claiming that she did so due to the coercive language used by Defendant TW Asset. (id.
4] 22). Plaintiffs claim Defendant Zenith effectuated the transfer of Plaintiffs’ funds from Ms.
Smith’s bank account. (Jd. (33). After the money was withdrawn from Ms. Smith’s account,
Mr. Smith called the phone number on Ms. Smith’s bank statement and spoke to an employee of
Defendant Zenith. During the telephone conversation, Mr. Smith requested that the payment be
reversed, (Id. 24-26). The Defendant Zenith employee transferred the call to a representative
from Defendant TW Asset, who stated: “they would reverse the payment, but then they would be
filing paperwork against Plaintiff Susan Smith.” (/d. J 26).

Plaintiffs filed suit against Defendant TW Asset and Defendant Zenith on April 25, 2018,
claiming that Defendants violated § 1692(d) of the FDCPA. (Id. { 27). On August 22, 2018,
Plaintiffs filed an Amended Complaint. (ECF No. 10). On September 20, 2018, Defendant
Zenith moved to dismiss Plaintiffs’ Amended Complaint for failure to state a claim upon which
relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 13).
Plaintiffs filed a Response in Opposition on November 1, 2018. (ECF No. 19). Defendant
Zenith filed its Reply Brief on November 15, 2018. (ECF No. 20). Defendant Zenith’s Motion
to Dismiss is ripe for review.

I.
To determine whether a complaint states a claim upon which relief can be granted, the

Court must: (1) accept the factual allegations contained in the pleadings as true, and (2)


determine whether the factual allegations present any plausible claim. See Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009) (clarifying the
plausibility standard articulated in Twombly). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. The factual allegations of a pleading
“must be enough to raise a right to relief above the speculative level ...” Twombly, 550 U.S. at
555. Consequently, a complaint will not be dismissed pursuant to rule 12(b)(6) unless there is no
law to support the claims made, the facts alleged are insufficient to state a claim, or there is an
insurmountable bar on the face of the complaint.

Ii.
A. Applicability of the FDCPA to Defendant Zenith

Defendant Zenith argues in its Motion to Dismiss that: (1) it is not subject to the FDCPA,
and (2) even if Defendant Zenith is subject to the FDCPA, Plaintiffs have failed to state a claim
upon which relief can be granted. The Court addresses these arguments in order.

1. It is Factually Plausible that Defendant Zenith is Subject to the FDCPA.

The purpose of the FDCPA is to “eliminate abusive debt collection practices by debt
collectors, to ensure that those debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote consistent State action to protect
consumers against debt collection abuses.” 15 U.S.C. § 1692(e). A debt collector is defined as
“any person who uses any instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debt, or who regularly collects or attempts to
collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15

U.S.C. § 1692(a){6) (emphasis added), The Sixth Circuit has noted that the FDCPA “is an