Le v. Midland Credit Management, Inc.

1
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
PHAP ANH LE,
Plaintiff
v.
MIDLAND CREDIT MANAGEMENT,
INC. and ENCORE CAPITAL
GROUP, INC.,
Defendants
§
§
§
§
§
§
§
§
Case No. 1:25-cv-00870-ADA-SH
REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO: THE HONORABLE ALAN D ALBRIGHT
UNITED STATES DISTRICT JUDGE
Before the Court are Defendant’s Motion to Dismiss Plaintiff’s Second Amended Complaint,
filed July 16, 2025 (Dkt. 24), and the associated response and reply briefs.1
I. Background
Phap Anh Le, proceeding pro se, brings this unlawful debt collection suit against Defendants
Midland Credit Management, Inc. (“MCM”) and its parent company Encore Capital Group, Inc.
(“Encore”). Second Amended Complaint, Dkt. 21. Le alleges that Defendants have unlawfully
attempted to collect a debt from him that was “either not owed, was incurred as a result of identity
theft, or is otherwise unenforceable.” Id. ¶ 2. He also alleges that Defendants used false, deceptive,
or misleading representations to collect on the debt and improperly accessed his credit report. Id.
at ¶¶ 18, 25, 48.
1 The District Court referred to this Magistrate Judge all non-dispositive pretrial matters for disposition and
all case-dispositive motions for findings and recommendations, pursuant to 28 U.S.C. § 636(b)(1), Federal
Rule of Civil Procedure 72, Rule 1 of Appendix C of the Local Rules of the United States District Court
for the Western District of Texas (“Local Rules”), and Judge Alan D Albright’s Standing Order on referrals
to United States Magistrate Judges. Dkt. 5.
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 1 of 16

2
Le asserts thirteen claims: false or misleading representations under the Fair Debt Collection
Protection Act (“FDCPA”); failure to validate debts under the FDCPA; unfair or unconscionable
practices under the FDCPA; failure to conduct a reasonable investigation in violation of the Fair
Credit Reporting Act (“FCRA”); impermissible access to credit reports in violation of the FCRA;
violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), Texas Debt
Collection Act (“TDCA”), Texas Deceptive Trade Practices Act (“TDTPA”), and Texas Identity
Theft Enforcement and Protection Act; negligence; defamation per se; invasion of privacy; and
violations of the California Consumer Credit Reporting Agencies Act and the Rosenthal Fair Debt
Collection Practices Act. Le alleges that MCM is a wholly owned subsidiary of Encore and that
“[t]ogether, these Defendants have engaged in systemic misconduct in their attempts to collect an
alleged debt from Plaintiff,” Dkt. 21 ¶ 2, but names only MCM in his causes of action.
MCM now moves to dismiss all Le’s claims against it under Rule 12(b)(6). Dkt. 24. Le opposes
the motion. Encore has not appeared and does not join the Motion.
II. Legal Standard
Rule 12(b)(6) allows a party to move to dismiss an action for failure to state a claim on which
relief can be granted. In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim, the
court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.
In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). A complaint must contain
sufficient factual matter to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id. A complaint does
not need detailed factual allegations, but it requires more than labels and conclusions or a formulaic
recitation of the elements of a cause of action. Twombly, 550 U.S. at 555.
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 2 of 16

3
The court reviews “the complaint, any documents attached to the complaint, and any
documents attached to the motion to dismiss that are central to the claim and referenced by the
complaint.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387
(5th Cir. 2010). The Court liberally construes the pleadings of litigants who, like Le, proceed
pro se. Erickson v. Pardus, 551 U.S. 89, 94 (2007).
III. Analysis
A. FDCPA Claims
Le alleges that Defendants violated the FDCPA by threatening that nonpayment of his debt
would result in wage garnishment; using inadequate validation, misrepresentations, and re-aging
tactics to collect his debt; failing to provide validation notices; and continuing collection efforts
after he disputed the debt but before properly validating it. Dkt. 21 ¶¶ 14-34.
The FDCPA was enacted “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.” Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1234
(5th Cir. 1997) (quoting 15 U.S.C. § 1692(e)). Because Congress “intended the FDCPA to have a
broad remedial scope,” it should “be construed broadly and in favor of the consumer.” Daugherty
v. Convergent Outsourcing, Inc., 836 F.3d 507, 511 (5th Cir. 2016). To plead a viable FDCPA
claim, a plaintiff must allege that (1) he has been the object of collection activity arising from a
consumer debt; (2) the defendant is a debt collector defined by the FDCPA; and (3) the defendant
has engaged in an act or omission prohibited by the FDCPA. Griffin v. O’Brien, Wexler, & Assocs.,
LLC, 680 F. Supp. 3d 772, 782 (E.D. Tex. 2023).
MCM argues that all Le’s FDCPA claims fail because “the Complaint is devoid of allegations
that could establish that the account at issue is a ‘debt’ as defined by the FDCPA.” Dkt. 24 at 5.
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 3 of 16

4
Under the FDCPA, a consumer debt is a “payment obligation[] of (1) a consumer arising out
of (2) a transaction in which the money, property, insurance or services at issue are (3) primarily
for personal, family or household purposes.” Calogero v. Shows, Cali & Walsh, L.L.P., 970 F.3d
576, 581 (5th Cir. 2020) (citation omitted). The FDCPA defines “consumer” as “any natural person
obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). A transaction “refers to
business dealings best characterized as ‘a consensual exchange involving an affirmative request’
and ‘the rendition of a service or purchase of property or other item of value.’” Calogero, 970 F.3d
at 583 (citation omitted). A transaction involving the normal creditor/debtor relationship is
understood to qualify. Id. at 585-86.
Le alleges that (1) he is a consumer obligated to pay a debt to MCM; (2) the debt arises from
an exchange of services with the Bank of Missouri when a line of credit was opened in his name;
and (3) the debt was from his personal account and does not exceed $1,200. Dkt. 21 ¶ 12. The
Court finds Le’s allegations sufficient to allege a debt under the statute.
1. Claims under § 1692e
The FDCPA prohibits the use of “any false, deceptive, or misleading representation or means
in connection with the collection of any debt.” 15 U.S.C. § 1692e. Section 1692e furnishes a
nonexclusive list of prohibited practices, including (1) representing that the “nonpayment of any
debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment,
or sale of any property or wages of any person unless such action is lawful and the debt collector
or creditor intends to take such action,” § 1692e(4); (2) threatening to take any action that cannot
legally be taken, § 1692e(5); and (3) the use of any false representation or deceptive means to
collect or attempt to collect any debt or to obtain information concerning a consumer, § 1692e(10).
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 4 of 16

5
When evaluating whether a debt collector’s representation violates § 1692e, a court must view
the communication from the perspective of an “unsophisticated or least sophisticated consumer.”
Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 511 (5th Cir. 2016) (quoting
McMurray v. ProCollect, Inc., 687 F.3d 665, 669 (5th Cir. 2012)). The court must “assume that
the plaintiff-debtor is neither shrewd nor experienced in dealing with creditors.” Id. (quoting
Goswami v. Am. Collections Enter., Inc., 377 F.3d 488, 495 (5th Cir. 2004)). Whether an
unsophisticated consumer would perceive a representation as deceptive, misleading, or unfair is
generally a question of fact. Garcia v. Ocwen Loan Servicing, LLC, No. 5:15-CV-743-DAE, 2016
WL 4734740, at *2 (W.D. Tex. Sept. 8, 2016).
Le alleges that MCM violated these provisions during a phone call on April 28, 2025, by falsely
threatening him “with wage garnishment if he did not immediately pay the alleged debt.” Dkt. 21
¶ 12. Le argues that at the time of this threat, MCM had no legal right to garnish his wages because
the alleged debt was disputed and not validated. Id. In support of his claims, Le attaches the
purported transcript of the phone call to his Second Amended Complaint. Dkt. 11-3. The transcript
shows MCM telling Le that if he failed to pay, he “may have to deal with the judgment depending
on the laws of your state. There could be efforts to enforce the judgement such as wage
garnishment[, b]ank levy or a lien on non-exempt and homestead property.” Id. at 40.
Because an unsophisticated consumer could understand MCM’s statements to be a threat that
nonpayment would result in legal action, Le has stated a claim if MCM did not intend to pursue
those actions. See Flecha v. Medicredit, Inc., No. A-16-CV-792 LY, 2017 WL 1326312, at *4
(W.D. Tex. Apr. 10, 2017), R. & R. adopted, 2017 WL 9538892 (W.D. Tex. May 26, 2017)
(finding that statements implying that legal action is a real possibility support a violation of the
section and need not convey imminence).
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 5 of 16

6
2. Claims Under § 1692g
Le alleges that MCM also violated Sections 1692g(a) and (b). Section 1692g(a) requires debt
collectors to send written notice containing information about the debt to consumers within five
days of initial communication, unless the information was already sent or the debt is paid. Le
pleads that he received no written notice after his phone call with MCM, which he alleges was its
initial communication with him. Dkt. 21 ¶ 12. This is sufficient to plead a plausible violation of
§ 1692g(a). See Koesler v. Beneficial Fin. I, Inc., 267 F. Supp. 3d 873, 884 (W.D. Tex. 2016)
(finding that plaintiff stated a claim for a violation when initial written notice did not meet
requirements and no other notice was sent within five days).
Section 1692g(b) requires collectors to cease collection activity “[i]f the consumer notifies the
debt collector in writing” and disputes the debt within 30 days of receiving the communication
described in § 1692g(a). If the consumer only disputes the debt orally, “the debt collector is under
no obligation to cease all collection efforts and obtain verification of the debt.” Osborn v. Ekpsz,
LLC, 821 F. Supp. 2d 859, 869 (S.D. Tex. 2011). Because Le admits that he only disputed the debt
with MCM orally, the Court finds that he has not stated a plausible claim for relief under
§ 1692g(b). Dkt. 21 ¶ 12.
3. Claims Under § 1692f
Le alleges that MCM engaged in unfair or unconscionable means to collect the debt in violation
of § 1692f(1) by attempting to collect a disputed debt; reporting negative credit information after
the debt was disputed; failing to validate the debt; conducting unauthorized credit inquiries; and
re-aging the debt. Dkt. 21 ¶ 32. Section 1692f provides that “[a] debt collector may not use unfair
or unconscionable means to collect or attempt to collect any debt.” The section sets out a
nonexclusive list of conduct that constitutes a violation, including collecting any amount not
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 6 of 16

7
expressly authorized by the agreement creating the debt or permitted by law. 15 U.S.C. § 1692f(1).
The subsection is intended to prevent collectors from collecting an amount greater than what is
owed, not from attempting to collect the debt from the wrong person. Valdez v. Cap. Mgmt. Servs.,
LP, No. B:09-246, 2010 WL 4643272, at *13 (S.D. Tex. Nov. 16, 2010).
Le alleges that MCM attempted to collect a disputed debt resulting from identity fraud, which
was unfair and unconscionable. Dkt. 21 ¶ 32. These allegations are insufficient to state a claim
under § 1692f(1) because the statute does not protect against collectors collecting a debt that
resulted from identity theft. See Valdez, 2010 WL 4643272, at *13 (finding that the subsection
does not apply to disputes based on identity theft).
B. Fair Credit Reporting Act
Le also brings claims under 15 U.S.C. §§ 1681s-2(b), 1681b, and 1681n. First, under § 1681s-
2(b), furnishers of information are required to investigate disputed information they provided to a
consumer reporting agency and report the results to the agency. A plaintiff asserting an FCRA
claim against a furnisher under § 1682s-2(b) must allege that (1) he disputed the accuracy or
completeness of information with a consumer reporting agency; (2) the agency notified the
furnisher of the consumer’s dispute; (3) and the furnisher failed to investigate, correct any
inaccuracies, or notify the agency of the results of the investigation. Shaunfield v. Experian Info.
Sols., Inc., 991 F. Supp. 2d 786, 805 (N.D. Tex. 2014).
In support of his § 1681s-2(b) claim, Le alleges that MCM received notice of his dispute with
consumer reporting agencies. Dkt. 21 ¶ 38. He also alleges that MCM, in investigating the dispute,
failed to conduct a reasonable investigation and attempted to re-age the debt. Id. ¶¶ 38-42. As a
result, MCM allegedly supplied false, negative information regarding the delinquency of the debt
and any amount owed. Id. Because Le pleaded that MCM conducted an unreasonable investigation
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 7 of 16

8
in response to his dispute and continued to report inaccurate information, the Court finds that he
has sufficiently alleged a violation of § 1681s-2(b). See Schoch v. Wells Fargo Home Mortg.,
No. 4:16-CV-619-ALM-CAN, 2017 WL 2385626 (E.D. Tex. Apr. 11, 2017), R. & R.
adopted, 2017 WL 2312079 (E.D. Tex. May 26, 2017) (finding that pro se plaintiff stated a claim
when identifying purported errors that continued to appear in credit reports, which support a
reasonable inference that defendant did not conduct a reasonable investigation).
Section 1681b limits the circumstances in which consumer reporting agencies can furnish a
report. One allowed circumstance is the “review or collection of an account,”
15 U.S.C. § 1681b(a)(3)(A), which allows collection agencies to obtain a consumer’s credit report
for the purpose of debt collection. Botkin v. Redline Recovery Servs., LLC, No. A-12-CA-590-SS,
2013 WL 12101004, at *2 (W.D. Tex. May 14, 2013).
Le alleges that MCM did not have a permissible purpose for obtaining his credit report
“unrelated to any legitimate credit transaction, employment relationship, or other authorized
purpose,” but he also alleges that MCM was attempting to collect a debt from him. Dkt. 21 ¶¶ 12,
48. He offers no facts to support his allegation that MCM, as a collection agency, did not obtain
his report for the collection of the debt, which is permissible. Accordingly, Le has not alleged
sufficient facts to state a plausible claim under § 1681b. See Davis v. Schwab, No. 4:12-CV-740-
A, 2013 WL 704332, at *3 (N.D. Tex. Feb. 26, 2013) (finding that conclusory allegations of no
permissible purpose were insufficient to support a claim against a creditor who plaintiff alleged
was attempting to collect a debt); Crain v. Credit Prot. Ass’n, No. 3:09-CV-2353-D, 2010
WL 1223127, at *3 (N.D. Tex. Mar. 2, 2010), R. & R. adopted, 2010 WL 1233517 (N.D. Tex.
Mar. 29, 2010) (finding that the bare allegation that defendant lacked permissible purpose was
insufficient without additional facts).
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 8 of 16

9
Finally, § 1681n imposes liability for willful noncompliance with the FCRA. To establish
willful noncompliance, the plaintiff must show that the defendant knowingly or recklessly violated
an FCRA requirement. Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2007). Le pleads facts to
support a plausible claim that MCM violated § 1681s-2(b), as explained above. But as to that
claim, he offers only conclusory allegations that MCM’s noncompliance was willful. Dkt. 21 ¶ 43.
This is insufficient to plausibly claim that MCM knowingly or recklessly violated § 1681s-2(b).
See Sanders v. JP Morgan Chase Bank N.A., No. 5-24-CV-01093-OLG, 2025 WL 2792766, at *2
(W.D. Tex. Aug. 29, 2025), R. & R. adopted, 2025 WL 2785062 (W.D. Tex. Sept. 25, 2025)
(holding that alleging a failure to comply with § 1681s-2, without more, is insufficient to support
a finding of willfulness).
C. State Statutory Claims
Le’s claims under the TDCA, TDTPA, California Consumer Credit Reporting Agencies Act,
and Rosenthal Fair Debt Collection Practices Act arise from the same actions that he asserts
violated the FDCPA and FCRA.
1. Texas Claims
Under the TDCA, collectors are prohibited from threatening an unlawful action to collect a
debt. TEX. FIN. CODE ANN. § 392.301(a)(8). The statute also prohibits collectors from using “false
representation[s] or deceptive means to collect a debt or obtain information concerning a
consumer.” Id. § 392.304(a)(19). These sections of the TDCA are nearly identical to
15 U.S.C. § 1692e(5) and (10), which the Court found Le sufficiently pleaded. Compare 15 U.S.C.
§§ 1692e(5), (10) with Tex. Fin. Code Ann. §§ 392.301(a)(8), 392.304(19). The Court finds Le’s
pleadings sufficient under the TDCA for the same reasons his allegations are sufficient under the
FDCPA. See Cox v. Hilco Receivables, L.L.C., 726 F. Supp. 2d 659, 667 (N.D. Tex. 2010)
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 9 of 16

10
(denying motion to dismiss TDCA claims because analogous FDCPA claims were pled
sufficiently).
Section 392.304(a)(8) of the TDCA prohibits misrepresenting the “character, extent, or amount
of a consumer debt, or misrepresenting the consumer debt’s status in a judicial or governmental
proceeding.” A misrepresentation under the TDCA is an affirmative statement that is false or
misleading. Thompson v. Bank of Am. Nat’l Ass’n, 783 F.3d 1022, 1026 (5th Cir. 2015). This
subsection of the TDCA is analogous to the prohibited conduct in 15 U.S.C. § 1692e(2). Compare
TEX. FIN. CODE ANN. § 392.304(a)(8) with 15 U.S.C. § 1692e(2); see also Cox, 726 F. Supp. 2d
at 667 (finding that the subsections prohibit the same conduct).
Le alleges that MCM violated this section by threatening wage garnishment, continuing
collection activity after he disputed the claim, and failing to properly validate the debt but
continuing to report it. Dkt. 21 ¶¶ 12. To the extent the claim is based on MCM’s continued
collection activity and failure to properly validate the debt after receiving notice of a dispute, the
claim is preempted by the FCRA. 15 U.S.C. § 1681t(b)(1)(F) (preempting state claims relating to
subject matter regulated under § 1681s-2); see also Anderson v. Wells Fargo Bank, N.A., No. 3:16-
CV-2514-N, 2018 WL 3426269, at *13 (N.D. Tex. July 13, 2018) (holding that TDCA claims
based on allegations of inaccurate credit reporting were preempted); Ayers v. Aurora Loan Servs.,
LLC, 787 F. Supp. 2d 451, 457 (E.D. Tex. 2011) (finding that the TDCA claim was preempted
because it was based on allegations of inaccurate furnishing to a consumer reporting agency). Le’s
claim is not preempted if he can state a claim based on MCM’s threats of wage garnishment. For
the same reasons the Court found those allegations sufficient under the FDCPA § 1692e(2), it finds
his pleadings sufficient under § 392.304(a)(8). See Cox, 726 F. Supp. 2d at 667 (denying motion
to dismiss TDCA claims because analogous FDCPA claims were sufficiently pleaded).
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 10 of 16

11
Le also alleges violations of the TDTPA. Under Texas law, the elements of a TDTPA claim
are: “(1) the plaintiff is a consumer, (2) the defendant engaged in false, misleading, or deceptive
acts, and (3) these acts constituted a producing cause of the consumer’s damages.”
Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995).
MCM argues that Le is not a “consumer” as defined by the TDTPA. Dkt. 24 at 15-16. A debtor
qualifies as a consumer under the Act if his or her primary objective in obtaining the loan was to
acquire a good or service, and that good or service forms the basis of the complaint.
Miller, 726 F.3d at 725. A person who acquires a line of credit without more does not seek or
acquire goods or services under the DTPA. Hunter v. Navy Fed. Credit Union, 749 F. Supp. 3d
743, 756 (N.D. Tex. 2024) (collecting cases); Eads v. Wolpoff & Abramson, LLP, 538 F. Supp. 2d
981, 989 (W.D. Tex. 2008).
Le alleges that he qualifies as a consumer because he sought or acquired services from MCM,
including credit reporting and debt collection services. Dkt. 21 ¶ 82. He pleads no facts to support
the conclusory allegation that he sought debt collection services from MCM, which Le alleges
acquired the subject debt from The Bank of Missouri. Id. ¶ 12. To the extent Le sought or acquired
services based on his line of credit, he does not plead that the line of credit was obtained to acquire
goods or services. Cushman v. GC Servs., LP, 657 F. Supp. 2d 834, 843-44 (S.D. Tex. 2009)
(concluding that plaintiff, in acquiring a line of credit from American Express for general purposes,
did not seek goods or services under the DTPA). To the extent the debt results from identity theft,
the Court cannot determine whether the debt was obtained to acquire goods or services because
Le did not authorize the transaction. See Eads, 538 F. Supp. 2d at 989 (“The Court cannot
determine his objective concerning the debt because he claims that he did not authorize the
transaction.”). He has not pleaded a plausible claim under the TDTPA.
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 11 of 16

12
Le also brings a claim under the Texas Identity Theft Enforcement and Protection Act,
TEX. BUS. & COM. CODE § 521.0011(b). Because this statute can be enforced only by the state,
this claim fails. Id. §§ 521.151(a)-152.
2. California Claims
Le alleges that MCM violated the California Consumer Credit Reporting Agencies Act,
CAL. CIV. CODE §§ 1785.11, 1785.25(a), and the Rosenthal Fair Debt Collection Practices Act,
id. § 1788.17, by conducting unauthorized inquiries into his credit report, reporting unverified
information relating to the debt, and violating the FDCPA. Dkt. 21 ¶¶ 101-02. MCM argues that
the California laws do not apply to Texas consumers. Dkt. 24 at 17.
Generally, non-California residents cannot bring claims under California’s consumer
protection laws when “none of the alleged misconduct or injuries occurred in California.”
Fernandez v. CoreLogic Credco, LLC., 593 F. Supp. 3d 974, 991 (S.D. Cal. 2022) (quoting
Churchill Vill., L.L.C. v. Gen. Elec. Co., 169 F. Supp. 2d 1119, 1126 (N.D. Cal. 2000), aff’d,
361 F.3d 566 (9th Cir. 2004)). This presumption can be overcome when there is a sufficient nexus
between California and the alleged unlawful actions. Ehret v. Uber Techs., Inc., 68 F. Supp. 3d
1121, 1131-32 (N.D. Cal. 2014). “To determine whether application of California’s consumer
protection laws would be appropriate courts consider ‘where the defendant is located, where the
[plaintiff] is located, and where decisions about the behavior in questions were made.’” Fernandez,
593 F. Supp. 3d at 992 (citation omitted).
Le alleges that he resides in Texas and that a substantial part of the events giving rise to his
claims occurred in Texas. Dkt. 21 ¶¶ 6-11. He also alleges that MCM has its principal place of
business in California but operates nationwide. Id. ¶ 7. Le does not allege that any of the unlawful
conduct occurred in MCM’s California offices. Although it is possible that the unlawful action
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 12 of 16

13
emanated from California, the Court finds that without additional allegations, it is not plausible
that at least some of the unlawful actions occurred in California. See Cannon v. Wells Fargo Bank
N.A., 917 F. Supp. 2d 1025, 1056 (N.D. Cal. 2013) (finding that the allegation that defendant was
headquartered in California alone was insufficient to plausibly allege that unlawful conduct
originated from California).
D. Racketeer Influenced and Corrupt Organizations Act
Le alleges that Defendants violated RICO by associating with an enterprise to participate in
mail fraud and wire fraud to unlawfully collect debts. Dkt. 21 ¶¶ 65-74. Le alleges that MCM
violated 18 U.S.C. § 1962(c), which makes it “unlawful for any person employed by or associated
with any enterprise . . . to conduct or participate, directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.”
18 U.S.C. § 1962(c).
To state a claim under RICO, there must be: “(1) a person who engages in (2) a pattern of
racketeering activity (3) connected to the acquisition, establishment, conduct, or control of an
enterprise.” St. Paul Mercury Ins. v. Williamson, 224 F.3d 425, 439 (5th Cir. 2000). To state a
claim under subsection (c), a plaintiff must plead that the person is distinct from the RICO
enterprise. Abraham v. Singh, 480 F.3d 351, 357 (5th Cir. 2007). “Although a defendant may not
be both a person and an enterprise, a defendant may be both a person and a part of an enterprise.”
Williamson, 224 F.3d at 447. In that case, the individual defendant must be distinct from the
organizational entity. Id. Otherwise, an individual member of an enterprise, such as an association-
in-fact, cannot be prosecuted for violating § 1962(c). Id.
Le alleges that MCM is the RICO person and that the RICO enterprise is the association-in-
fact consisting of MCM, Encore, other subsidiaries, and other coconspirators. Dkt. 21 ¶¶ 65-66.
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 13 of 16

14
He also asserts that the enterprise “is separate and distinct from the Defendant itself and has an
ascertainable structure and continuity.” Id. ¶ 67. These allegations do not state how the members
are distinct from one another, may have taken part in facilitating the unlawful collection scheme,
or otherwise may have contributed to the predicate acts alleged. See Koenig v. Aetna Life Ins.,
No. 4:13-CV-00359, 2015 WL 12777187, at *2 (S.D. Tex. May 29, 2015) (dismissing RICO
claims because plaintiff did not plead the distinction of subsidiaries that formed the enterprise).
Le’s pleadings only recite the elements of a RICO claim, and without more, do not state a plausible
claim for relief under 18 U.S.C. § 1962(c).
E. Texas Common Law
Le also brings Texas common law negligence, defamation per se, and invasion of privacy
claims against MCM. The FCRA provides:
[N]o consumer may bring any action or proceeding in the nature of defamation,
invasion of privacy, or negligence with respect to the reporting of information
against . . . any person who furnishes information to a consumer reporting
agency, . . . except as to false information furnished with malice or willful intent to
injure such consumer.
15 U.S.C. § 1681h(e). Unless a plaintiff alleges that the defendant acted with malice or willful
intent to injure them, state tort claims are preempted by the FCRA. Shaunfield, 991 F. Supp. 2d at
800; Meisel v. USA Shade & Fabric Structures Inc., 795 F. Supp. 2d 481, 488 (N.D. Tex. 2011).
Le does not allege that MCM acted maliciously or willfully in his negligence or invasion of privacy
claims. For his defamation claim, he offers only conclusory allegations that MCM “knowingly and
maliciously” published false statements. Dkt. 21 ¶ 58. The Court finds this insufficient to plausibly
state a defamation claim that is not preempted by the FCRA.
F. Claims Asserted in Response
In his response to the motion to dismiss, Le for the first time asserts a due process claim against
MCM under 42 U.S.C. § 1983. Dkt. 27 at 7. A plaintiff cannot raise a new claim for relief in a
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 14 of 16

15
response brief. Energy Coal v. CITGO Petroleum Corp., 836 F.3d 457, 462 n.4 (5th Cir. 2016).
Le must receive permission under Rule 15 to add a new claim. Cash v. Jefferson Assocs., Inc.,
978 F.2d 217, 218 (5th Cir.1992). And any amendment under Rule 15 to add a due process claim
against Defendants would be futile because private entities generally are not liable under § 1983.
Castro Romero v. Becken, 256 F.3d 349, 355 (5th Cir. 2001). To state a claim under § 1983, a
plaintiff must plead that private entities acted in concert with a government entity. Id. Le does not
allege that MCM’s actions had any connection with a state actor, so he cannot state a claim under
§ 1983.
Finally, Le argues that MCM’s motion is procedurally deficient because MCM failed to confer
with him before filing this motion as required by the Local Rules. Dkt. 27 at 7. The conference
requirement applies only to non-dispositive motions. Local Rule CV-7(g).
IV. Recommendation
This Magistrate Judge RECOMMENDS that the District Court GRANT in part and DENY
in part Defendant Midland Credit Management, Inc.’s Opposed Motion to Dismiss (Dkt. 24). The
court recommends that the District Court GRANT the motion and DISMISS without prejudice
Counts Two in part (15 U.S.C. § 1692g(b)), Three (15 U.S.C. § 1692f), Four in part (15 U.S.C.
§ 1681n), Five (FCRA), Six (negligence), Seven (defamation), Eight (RICO), Ten (Texas
Deceptive Trade Practices Act), Eleven (Texas Identity Theft Enforcement and Protection Act),
Twelve (invasion of privacy), and Thirteen (California Consumer Credit Reporting Agencies Act
and Rosenthal Fair Debt Collection Practices Act). This Magistrate Judge recommends that the
District Court DENY the motion in all other respects.
If the District Court accepts this recommendation, claims remaining will be Counts One
(15 U.S.C. § 1692e), Two in part (15 U.S.C. § 1692g(a)), Four in part (15 U.S.C. § 1681s-2(b)),
and Nine (Texas Debt Collection Act).
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 15 of 16

16
V. Warnings
The parties may file objections to this Report and Recommendation. A party filing objections
must specifically identify those findings or recommendations to which objections are being made.
The District Court need not consider frivolous, conclusive, or general objections. See Battle v. U.S.
Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987). A party’s failure to file written objections to
the proposed findings and recommendations contained in this Report within fourteen (14) days
after the party is served with a copy of the Report shall bar that party from de novo review by the
District Court of the proposed findings and recommendations in the Report and, except on grounds
of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings
and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1); Thomas v. Arn,
474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428-29
(5th Cir. 1996) (en banc).
SIGNED on November 10, 2025.
SUSAN HIGHTOWER
UNITED STATES MAGISTRATE JUDGE
Case 1:25-cv-00870-ADA Document 34 Filed 11/10/25 Page 16 of 16