Michael Lutz v. Portfolio Recovery Associates ( 2022 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 21-1656
______
MICHAEL LUTZ, individually and on behalf of all others
similarly situated,
Appellant
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC
____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 2:20-cv-00676)
District Judge: Honorable Christy C. Wiegand
____________
Argued: May 4, 2022
Before: GREENAWAY, JR., KRAUSE, and PHIPPS,
Circuit Judges.
(Filed: September 19, 2022)
____________
Kevin J. Abramowicz [ARGUED]
Kevin W. Tucker
EAST END TRIAL GROUP
6901 Lynn Way
Suite 215
Pittsburgh, PA 15208
Counsel for Michael Lutz
Tammy L. Adkins [ARGUED]
Amy Gilbert
David L. Hartsell
MCGUIREWOODS
77 West Wacker Drive
Suite 4100
Chicago, IL 60601
Jarrod D. Shaw
MCGUIREWOODS
260 Forbes Avenue
Suite 1800
Pittsburgh, PA 15222
Counsel for Portfolio Recovery Associates, LLC
Stefanie Hamilton
Carlton M. Smith
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF BANKING AND SECURITIES
17 North Second Street
Suite 1300
Harrisburg, PA 17101
Counsel for Amicus Curiae
2
_______________________
OPINION OF THE COURT
_______________________
PHIPPS, Circuit Judge.
In this case, a consumer, who seeks to represent a putative
class, sues a debt collection firm for attempting to collect an
outstanding credit-card debt, which had accrued interest at an
annual rate of 22.90%. After the consumer had not paid the
balance for several months, the bank canceled the card, ceased
charging interest, closed the account, and sold it to the debt-
collection firm. The firm did not charge interest on the account
balance after purchasing it, but the firm did attempt to collect
the outstanding balance inclusive of the previously accrued
interest.
In his amended complaint, the consumer claimed that the
debt collection firm violated the Fair Debt Collection Practices
Act by making false statements about the amount of the debt,
see 15 U.S.C. § 1692e, and by collecting a debt not permitted
by law, see id. § 1692f. Both of those claims rest on the
premise that a Pennsylvania statute prohibits the debt
collection firm from collecting the interest that had previously
accrued at an annual rate greater than 6%. See 7 P.S. § 6203.A;
see also 41 P.S. § 201(a).
The debt collection firm moved to dismiss those claims and
the others brought by the consumer, all for failure to state a
claim upon which relief can be granted. See Fed. R. Civ. P.
12(b)(6). The District Court granted that motion and did not
3
afford the consumer another opportunity to amend the
complaint.
Through a timely appeal, the consumer argues that the
District Court erred in dismissing the FDCPA claims and that
the District Court should have permitted him an opportunity to
amend his complaint again. But the consumer does not
plausibly allege that Pennsylvania law prohibited the debt
collection firm from collecting interest that had previously
accrued at greater than 6% annually. Thus, as elaborated
below, on de novo review of the motion to dismiss1 and abuse-
of-discretion review of the denial of the motion to amend the
pleadings,2 we will affirm the judgment of the District Court.
I. FACTUAL BACKGROUND
(AS ALLEGED IN THE COMPLAINT)
In July 2014, Michael Lutz received a credit card from
Capital One Bank (USA), N.A. The card provided him with a
revolving line of credit with which he could make purchases
and obtain cash advances. For several months, Lutz made
purchases and obtained cash advances with the card for
1
See Klotz v. Celentano Stadtmauer & Walentowicz LLP,
991 F.3d 458, 462 (3d Cir. 2021) (applying de novo review to
a motion to dismiss under Rule 12(b)(6)); see also Delaware
Cnty. v. Fed. Hous. Fin. Agency, 747 F.3d 215, 220 (3d Cir.
2014) (applying de novo review to questions of statutory
interpretation).
2
See Walker v. Coffey, 905 F.3d 138, 143 (3d Cir. 2018)
(applying abuse-of-discretion review to a denial of leave to
amend); cf. U.S. ex rel. Schumann v. Astrazeneca Pharms.
L.P., 769 F.3d 837, 849 (3d Cir. 2014) (reviewing a
determination of the futility of amendment de novo).
4
personal, family, and household purposes. Lutz had an
obligation to repay Capital One for those purchases and cash
advances. By the terms of the credit card agreement, he could
do so over time through minimum installment payments. That
agreement also permitted Capital One to charge interest at an
annual rate up to 22.90% on any unpaid monthly balance.
Lutz failed to make the required monthly installment
payments, and Capital One charged interest on the outstanding
monthly balance. By July 2015, his account balance was
$2,343.76, inclusive of at least $341.67 in interest that had
accrued at an annual rate of 22.90%. At that time, Capital One
charged off the account: it canceled the card, ceased charging
interest, closed the account, and regarded the outstanding
balance as a loss.
Capital One sold the charged-off account to Portfolio
Recovery Associates, LLC (‘PRA’). PRA is not a bank and
cannot issue credit cards, but it does hold a license from the
Pennsylvania Department of Banking and Securities to make
motor vehicle loans and to charge interest at 18% to 21% on
those loans. Despite that license, PRA’s sole business involves
purchasing defaulted consumer debt at a discount and then
attempting to collect the full amount due.
As part of its collection efforts, PRA sued Lutz in a
Magisterial District Court in Allegheny County, Pennsylvania
in August 2019 for the outstanding account balance. PRA
obtained a default judgment against Lutz. But Lutz timely
appealed to the Allegheny County Court of Common Pleas,
and before a hearing in that case occurred, PRA discontinued
the lawsuit.
5
II. PROCEDURAL HISTORY
In his original complaint, Lutz sued PRA in the District
Court for the Western District of Pennsylvania for violating
two provisions of the Fair Debt Collection Practices Act,
15 U.S.C. §§ 1692e, 1692f. See 28 U.S.C. § 1331 (conferring
federal jurisdiction over “all civil actions arising under” the
laws of the United States). Lutz based his FDCPA claims on
an alleged underlying violation of Pennsylvania’s Consumer
Credit Code. See 12 Pa. Cons. Stat. § 6309. Instead of
answering the complaint, PRA moved to dismiss it for failure
to state a claim upon which relief could be granted. See Fed.
R. Civ. P. 12(b)(6). Rather than opposing PRA’s motion, Lutz
amended his complaint. See Fed R. Civ. P. 15(a)(1) (allowing
a party to amend a pleading once as a matter of course within
21 days after service of a Rule 12(b)(6) motion to dismiss).
The amended complaint did more than just attempt to cure
the purported pleading deficiencies. It added additional
FDCPA claims also under §§ 1692e and 1692f, which were
premised on PRA’s alleged violations of Pennsylvania’s
Consumer Discount Company Act, commonly abbreviated as
the ‘CDCA.’
PRA moved to dismiss Lutz’s amended complaint, again
for failure to state a claim for relief. This time, Lutz opposed
PRA’s motion to dismiss, but as part of his opposition, Lutz
requested an opportunity to amend his complaint if the District
Court dismissed any or all of his claims.
The District Court granted PRA’s motion and dismissed
with prejudice Lutz’s original claims as well as the claims
6
added in the amended complaint. As part of that order, the
District Court denied Lutz’s request for leave to amend.
Lutz sought reconsideration of that order. In briefing that
issue, Lutz identified another alleged underlying violation of
the CDCA by PRA that he had not previously raised. The
District Court rejected that attempt to present a new argument
and denied his motion.
Through a timely appeal, Lutz invokes this Court’s
appellate jurisdiction. See 28 U.S.C. § 1291; Fed. R. App. P.
4(a). To supplement the briefing provided by the parties, the
Pennsylvania Department of Banking and Securities responded
to an invitation for an amicus filing on the issues raised in the
appeal.3
III. DISCUSSION
Under the plausibility pleading standard, this Circuit uses a
three-step process to evaluate a motion to dismiss a complaint
for failure to state a claim for relief. See Connelly v. Lane
Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016); see also
Burtch v. Milberg Factors, Inc., 662 F.3d 212, 220–21 (3d Cir.
2011); Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d
Cir. 2010). The first step in that process requires an
articulation of the elements of the claim. See Connelly,
809 F.3d at 787 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675
(2009)); see also Santiago, 629 F.3d at 130 (quoting Iqbal,
3
The Court extends its gratitude to the Pennsylvania
Department of Banking and Securities and to Deputy Chief
Carlton Smith for responding to the Court’s invitation for an
amicus submission.
7
556 U.S. at 675). The second step involves reviewing the
complaint and disregarding any ‘“formulaic recitation of the
elements of a . . . claim’ or other legal conclusion,” Connelly,
809 F.3d at 789 (alteration in original) (quoting Iqbal, 556 U.S.
at 681); see also Burtch, 662 F.3d at 224; Santiago, 629 F.3d
at 131, as well as allegations that are “so threadbare or
speculative that they fail to cross the line between the
conclusory and the factual,” Connelly, 809 F.3d at 790
(citation omitted); see also Fowler v. UPMC Shadyside,
578 F.3d 203, 210–11 (3d Cir. 2009). The third step evaluates
the plausibility of the remaining allegations. That involves
assuming their veracity, construing them in the light most
favorable to the plaintiff, and drawing all reasonable inferences
in the plaintiff’s favor. See Connelly, 809 F.3d at 787, 790; see
also Iqbal, 556 U.S. at 679; Fowler, 578 F.3d at 210–11.
If, after completing this process, the complaint alleges
“enough fact[s] to raise a reasonable expectation that discovery
will reveal evidence of” the necessary elements of a claim, then
it plausibly pleads a claim. Bell Atl. Corp. v. Twombly,
550 U.S. 544, 556 (2007). But if “a complaint pleads facts that
are merely consistent with a defendant’s liability, it stops short
of the line between possibility and plausibility of entitlement
to relief.” Iqbal, 556 U.S. at 678 (citation and internal
quotation marks omitted). In the latter scenario, a district court
should generally “permit a curative amendment, unless an
amendment would be inequitable or futile.” Phillips v. County
of Allegheny, 515 F.3d 224, 236 (3d Cir. 2008).
Following those three steps here on de novo review, the
District Court’s judgment dismissing Lutz’s FDCPA claims
should be affirmed.
8
A. The Elements of an FDCPA Claim (Only One of
Which Is Disputed)
In this Circuit, a claim under the FDCPA has four elements.
See Douglass v. Convergent Outsourcing, 765 F.3d 299, 303
(3d Cir. 2014). The first three involve statutorily defined
terms: the plaintiff must be a “consumer,” 15 U.S.C.
§ 1692a(3); the defendant must be a “debt collector,” id.
§ 1692a(6); and the challenged practice must relate to the
collection of a “debt,” id. § 1692a(5). See Douglass, 765 F.3d
at 303; see also Zimmerman v HBO Affiliate Grp., 834 F.2d
1163, 1167 (3d Cir. 1987) (“A threshold requirement for
application of the FDCPA is that the prohibited practices are
used in an attempt to collect a ‘debt[.]’”). The fourth element,
the one contested here, requires the defendant to have violated
“the FDCPA in attempting to collect the debt.” Douglass,
765 F.3d at 303.
For that fourth element, Lutz asserts that PRA violated two
provisions of the FDCPA in attempting to collect his account
balance: § 1692e and § 1692f. Section 1692e imposes civil
liability for the use of false, deceptive, or misleading
representations, subject to a bona fide error exception. See
15 U.S.C. § 1692e; see also id. § 1692k(c). That extends to
false representations relating to “the character, amount, or legal
status of any debt.” 15 U.S.C. § 1692e(2)(A). Section 1692f
outlaws unfair or unconscionable means of collecting debts.
See id. § 1692f. That includes a prohibition on debt collectors
from collecting:
any amount (including any interest, fee, charge,
or expense incidental to the principal obligation)
unless such amount is expressly authorized by
9
the agreement creating the debt or permitted by
law.
Id. § 1692f(1).
Both of Lutz’s FDCPA claims hinge on the premise that
PRA violated Pennsylvania law by attempting to collect
interest that had previously accrued at greater than 6%
annually. For context, the Commonwealth has a long history,
dating back to colonial times, of outlawing annual interest rates
above 6%.4 Even now, Pennsylvania generally prohibits
annual interest above 6% on loans or the use of money of
$50,000 or less. See 41 P.S. § 201(a). But, during the Great
Depression, the Pennsylvania Department of Banking and
Securities, despite acknowledging the problem of usury,
recommended that credit be extended more readily to
consumers.5 In response, the Pennsylvania legislature enacted
4
See, e.g., Act of 2d March, 1723 (2d vol. chap. 262, § 1)
(“[N]o person shall, directly nor indirectly . . . take for the loan
or use of money, or any other commodities, above the value of
six pounds for the forbearance of one hundred pounds, or the
value thereof, for one year[.]”); Act of 28 May 1858 § 1, P.L.
No. 557 (“[T]he lawful rate of interest for the loan or use of
money, in all cases where no express contract shall have been
made for a less rate, shall be six per cent. per annum.”). But
see, e.g., Small Loans Act of June 17, 1915 § 1, P.L. No. 432
(capping the interest rate between 2–3% for loans of $300 or
less made by licensed small loan companies).
5
See Commonwealth of Pa. Dep’t of Banking, Report on Small
Loan Companies, at 5, 26 (Feb. 9, 1937),
https://hdl.handle.net/2027/mdp.39015076020364 (last visited
August 22, 2022) (recognizing that “[v]olumes have been
written in condemnation and in defense of the taking of
interest” and that “[t]he problem is as old as history of
10
the Consumer Discount Company Act, which permits entities
licensed by the Pennsylvania Department of Banking and
Securities to charge interest at a higher annual rate, up to 24%,
for loans under a certain amount, currently $25,000. See 7 P.S.
§§ 6203.A, 6213.E, 6217.1.A; see also Cash Am. Net of Nev.,
LLC v. Dep’t of Banking, 8 A.3d 282, 285–86 (Pa. 2010). But
the CDCA imposed restrictions on unlicensed entities “in the
business of negotiating or making loans or advances of money
on credit, in the amount or value of twenty-five-thousand
dollars ($25,000) or less.” 7 P.S. § 6203.A.6 Those unlicensed
entities may not “charge, collect, contract for[,] or receive
interest” at an annual interest rate above 6%. Id. (emphasis
added); see also 41 P.S. § 201(a).
Lutz’s theory of PRA’s liability under the FDCPA depends
on PRA being subject to those restrictions in the CDCA. On
the premise that PRA is an unlicensed entity subject to the
CDCA, Lutz contends that it was illegal for PRA to attempt to
mankind,” but nonetheless, “wisdom and common sense
demand that every effort be made to support and enlarge the
general purchasing power of the consumer to prevent
underconsumption from retarding recovery”).
6
In an invited amicus filing, the Pennsylvania Department of
Banking and Securities submits that this provision contains a
scrivener’s error added during the 1963 amendments which
inadvertently changed “advances of money or credit” to
“advances of money on credit.” Compare Act of April 8, 1937,
P.L. 262, No. 66, § 3 (emphasis added), with 7 P.S. § 6203.A
(emphasis added). See Dep’t of Banking & Securities Amicus
Ltr. at 2 n.1 (Feb. 15, 2022) (ECF No. 47); see also Dep’t of
Banking Interpretive Ltr. at 4 (Nov. 19, 2001) (JA45). That
issue of Pennsylvania law does not require resolution in this
case.
11
collect interest that previously accrued on Lutz’s account at
greater than 6% – even though Capital One, as a bank not
subject to the CDCA, see 7 P.S. § 6217, could legally charge
that rate. With that alleged violation of the CDCA as a
foundation, Lutz claims that PRA violated the FDCPA by
making false statements about the amount of the debt, see
15 U.S.C. § 1692e, and by collecting a debt not permitted by
law, see id. § 1692f.
In moving to dismiss Lutz’s FDCPA claims, PRA denied
that it was subject to the CDCA’s restrictions on unlicensed
entities on two grounds. First, PRA disputed the applicability
of the CDCA’s restrictions because it is not “in the business of
negotiating or making loans or advances.” 7 P.S. § 6203.A.
Second, PRA argued that even if it were in the business of
negotiating or making loans or advances, it could still collect
interest at an annual rate above 6% because it held a license
from the Department of Banking and Securities, albeit one for
motor vehicle loans under the Consumer Credit Code,
12 Pa. Cons. Stat. § 6201, et seq., not one issued under the
CDCA. See 7 P.S. § 6217 (exempting from the CDCA’s
licensing requirements any company “licensed by the
Secretary of Banking of the Commonwealth of Pennsylvania
under the provisions of any other statute”). The District Court
granted PRA’s motion, rejecting the first argument, but relying
on the second. On appeal, Lutz argues that both rationales are
deficient, and PRA urges affirmation of the District Court’s
order on both grounds.
As briefed, the first argument – whether PRA is ‘in the
business of negotiating or making loans or advances’ – narrows
a bit. No one contends that PRA is in the business of making
loans or advances. With that focus, the keystone of Lutz’s case
12
becomes his assertion that PRA is in the business of
negotiating loans or advances and thus subject to the CDCA.
If PRA is not in that business, then the CDCA does not apply
here, and PRA would prevail regardless of the scope of its
license under the Consumer Credit Code.
B. Certain Allegations in the Amended Complaint
Must Be Disregarded.
The second step of the plausibility analysis involves
disregarding allegations in the complaint that are legal
conclusions, speculative, or threadbare. See Connelly,
809 F.3d at 789; see also Santiago, 629 F.3d at 131; Fowler,
578 F.3d at 210–11. In evaluating whether PRA is in the
business of negotiating loans or advances, only allegations
bearing on that topic need to be scrutinized.
Even still, several allegations must be disregarded. For
example, the statement that “PRA’s collection of the interest
and fees on [Lutz’s account] was subject to the CDCA” is a
legal conclusion. Am. Compl. ¶ 61 (JA31). See Connelly,
809 F.3d at 789–90. Seven other paragraphs include similar
legal conclusions about the CDCA’s applicability to PRA.7
7
See Am. Compl. ¶ 69 (JA32) (“Since PRA does not have a
CDCA license or any other license that specifically provides
for charging or collecting interest and fees on direct loans or
revolving lines of credit, PRA is limited to charging or
collecting no more than six percent simple interest per year on
direct loans or revolving lines of credit.”), ¶ 71 (JA32) (“PRA
did not have legal authority to collect or receive such interest
and fees because PRA was not licensed under the CDCA and
was not otherwise licensed to collect or receive such interest
and fees in Pennsylvania.”), ¶ 72 (JA32) (“By seeking to
collect and receive interest and fees charged in excess of six
13
See Connelly, 809 F.3d at 789–90. Also, three statements
merely paraphrase the CDCA’s requirements.8 See id. at 790
percent simple interest per year on the Account’s cash
advances, PRA falsely represented its ability to collect the full
amount of the Account.”), ¶ 73 (JA32) (“Additionally, by
seeking to collect and receive such interest and fees, PRA
sought to collect and receive interest and fees it had no legal
authority to collect or receive.”), ¶ 92 (JA34) (“PRA’s attempt
to collect and receive such interest and fees was unlawful, as
PRA could not lawfully collect or receive such interest and
fees.”), ¶ 93 (JA34) (“PRA’s attempt to collect and receive
such interest and fees misrepresented PRA’s ability to collect
or receive such interest and fees.”), ¶ 94 (JA35) (“By seeking
to collect interest and fees charged on cash advance balances
of credit card accounts at rates in excess of six percent simple
interest per year, PRA sought to collect amounts it could not
lawfully collect from Lutz or the class members.”).
8
See id. ¶ 20 (JA25) (“The CDCA applies to debt buyers that
purchase and attempt to collect loans or advances of money or
credit in amounts of $25,000 or less.”), ¶ 21 (JA25) (“Debt
buyers must obtain a CDCA license to charge, collect, contract
for, or receive interest and fees that ‘aggregate in excess of the
interest . . . the [debt buyer] would otherwise be permitted by
law to charge if not licensed under th[e CDCA].’” (alterations
in original)), ¶ 24 (JA26) (“Debt buyers seeking to collect cash
advances on credit card accounts must obtain a CDCA license
if they seek to collect interest and fees in excess of six percent
simple interest per year because this type of credit constitutes
a loan or advance of money or credit under the CDCA.”), ¶ 60
(JA31) (“The CDCA applies to entities in the business of
issuing or purchasing loans or advances of money or credit in
amounts of $25,000 or less when such entities attempt to
charge, collect, contract for, or receive interest and fees ‘in
excess of the interest . . . the [entity] would otherwise be
permitted by law to charge if not licensed under th[e CDCA].’”
(alterations in original)).
14
(disregarding allegations that “paraphrase[d] in one way or
another the pertinent statutory language or elements of the
claims in question”). None of those allegations may be
considered in assessing whether PRA is in the business of
negotiating loans or advances.
C. The Amended Complaint Lacks Plausible
Allegations that PRA Is in the Business of
Negotiating Loans or Advances.
The third stage of the plausibility analysis evaluates
whether the non-disregarded allegations in the complaint
plausibly state a claim for relief. When, as here, a motion to
dismiss challenges less than all elements of a claim, only the
sufficiency of the allegations pertaining to the disputed
elements require evaluation. The critical dispute here concerns
whether PRA is in the business of negotiating loans or
advances, and that depends on the meaning of the term
‘negotiate.’
1. As used in the CDCA, the term ‘negotiate’ is best
understood to mean ‘to bargain.’
In enacting the CDCA in 1937, the Pennsylvania legislature
did not define or incorporate a preexisting definition for the
term ‘negotiate.’ See 7 P.S. § 6202 (defining terms used in the
CDCA). Under Pennsylvania law, an undefined statutory term
takes on its “common and approved usage.” 1 Pa. Cons. Stat.
§ 1903; Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358,
1374 (3d Cir. 1996) (stating that, under Pennsylvania law, any
undefined word “must be construed according to the rules of
grammar and according to the common and approved usage”);
see also Perrin v. United States, 444 U.S. 37, 42 (1979) (“A
15
fundamental canon of statutory construction is that, unless
otherwise defined, words will be interpreted as taking their
ordinary, contemporary, common meaning.”). And following
the principle that a statutory term has a fixed meaning over
time,9 dictionaries from the time of a statute’s enactment
illuminate an undefined term’s common and approved
meaning. See Phila. Eagles Football Club, Inc. v. City of
Philadelphia, 823 A.2d 108, 127 n.31 (Pa. 2003); see also Wis.
Cent. Ltd. v. United States, 138 S. Ct. 2067, 2070–71 (2018);
Delaware Cnty. v. Fed. Hous. Fin. Agency, 747 F.3d 215, 221
(3d Cir. 2014).
Dictionaries contemporaneous with the CDCA’s enactment
identify two common and approved meanings of ‘negotiate.’
It could mean “to bargain,”10 and it also could mean “to
9
See United States v. Jabateh, 974 F.3d 281, 296 (3d Cir.
2020) (second alteration in original) (“[U]nder the fixed-
meaning canon ‘[w]ords must be given the meaning they had
when the text was adopted.” (quoting Antonin Scalia & Bryan
Garner, Reading Law: The Interpretation of Legal Texts 78
(2012))).
10
Negotiate, Black’s Law Dictionary (3d ed. 1933) (defining
‘negotiate’ as “To transact business, to treat with another
respecting a purchase and sale, to hold intercourse, to bargain
or trade, to conduct communication or conferences. It is that
which passes between parties or their agents in the course of or
incident to the making of a contract; it is also conversation in
arranging terms of contract” and “To discuss or arrange a sale
or bargain; to arrange the preliminaries of a business
transaction”); see also Webster’s New International Dictionary
1638 (2d ed.1934) (defining ‘negotiation’ as “a treating with
another with a view to coming to terms, as for a sale or
purchase”).
16
transfer,” especially with respect to a negotiable instrument.11
When, as here, a term has multiple common and approved
meanings, context may inform the term’s meaning. See United
States v. TRW Rifle 7.62X51mm Caliber, One Model 14 Serial
593006, 447 F.3d 686, 690 (9th Cir. 2006) (“As with most
words, the dictionary gives multiple definitions. But we do not
ascertain ordinary meaning in the abstract. Rather, we must
decide which of these definitions, if any, is consistent with the
context of the statute.”); see also Scalia & Garner, at 70 (noting
that “[m]any words have more than one ordinary meaning” and
that “[o]ne should assume the contextually appropriate
ordinary meaning unless there is reason to think otherwise”).
One tool for evaluating context, the noscitur a sociis canon,
instructs that neighboring words inform the meaning of a
term.12 Looking at nearby words in § 6203.A, the transitive
11
Negotiate, Black’s Law Dictionary (3d ed. 1933) (“An
instrument is ‘negotiated,’ when it is transferred from one
person to another in such manner as to constitute the transferee
the holder thereof.”); Bouvier’s Law Dictionary 843
(Baldwin’s Century Ed. 1934) (defining ‘negotiate’ as “to
conclude a contract or to transfer or arrange” and “The power
to negotiate a bill or note is the power to indorse and deliver it
to another, so that the right of action thereon shall pass to the
indorser or holder. A note transferred by delivery is negotiated.
A national bank, under the power to negotiate evidences of
debt, may exchange government bonds for registered bonds”);
Webster’s 1638 (defining ‘negotiate’ as “To transfer for a
valuable consideration under rules of commercial law”).
12
Freeman v. Quicken Loans, Inc., 566 U.S. 624, 634–35
(2012) (“[T]he ‘commonsense canon of noscitur a sociis . . .
counsels that a word is given more precise content by the
neighboring words with which it is associated.’” (quoting
United States v. Williams, 553 U.S. 285, 294 (2008))); see also
17
verb ‘negotiate,’ used as a gerund in a gerund phrase, is linked
with another transitive verb ‘make,’ also a gerund in the same
gerund phrase, and each has two direct objects: loans and
advances.13 See 7 P.S. § 6203.A. The direct objects show little
preference for either meaning of ‘negotiate’ because loans and
advances can be bargained for and transferred. But the other
verb, ‘make,’ applies to the initiation and formation of loans
and advances. See Make, Black’s Law Dictionary (3d ed.
1933) (defining ‘make’ as “[t]o cause to exist”). And the
pairing of ‘negotiating’ with ‘making’ in § 6203.A suggests
that ‘negotiate’ should also relate to the initiation of loans or
advances. Since bargaining occurs at the loan initiation phase
and transferring does not, ‘negotiate’ is better understood to
mean ‘bargain.’ That conclusion is not automatic, however,
because the terms ‘negotiating’ and ‘making’ are separated by
an ‘or,’ and that may mean that they are alternatives rather than
complements of each other.14 But the term ‘or’ may also be
used to identify two separate but related actions.15
United States v. Taylor, 142 S. Ct. 2015, 2023 (2022); United
States v. Yung, 37 F.4th 70, 80 (3d Cir. 2022); Mountain Vill.
v. Bd. of Supervisors of Longswamp Twp., 874 A.2d 1, 8–9 (Pa.
2005) (quoting Northway Vill. No. 3, Inc. v. Northway,
244 A.2d 47, 50 (Pa. 1968)).
13
See generally Sister Miriam Joseph, The Trivium: The
Liberal Arts of Logic, Grammar, and Rhetoric 55–57
(Marguerite McGlinn ed., First Paul Dry Books 2002) (1937)
(explaining that a “transitive verb expresses action that begins
in the subject . . . and ‘goes across’ . . . to the object” and that
a gerund “is a verbal which, like the infinitive, may perform all
the functions of a substantive” ).
14
See Or, Black’s Law Dictionary (3d ed. 1933).
15
See id.18
Additional context resolves that uncertainty. In the
subsequent subsection, the CDCA again uses the term
‘negotiate’ to define the scope of the CDCA’s coverage. See
7 P.S. § 6203.B. That subsection extends the CDCA to “[a]ny
person who shall hold himself out as willing or able to arrange
for or negotiate such loans . . . or who solicits prospective
borrowers of such loans.” Id. (emphasis added). The related
phrases in that subsection – ‘arrange for’ and ‘solicits’ –
concern loan initiation and formation, and not the
transferability of the debt. See Webster’s New International
Dictionary 152 (2d ed. 1934) (defining ‘arrange’); Solicit,
Black’s Law Dictionary (3d ed. 1933). Thus, for purposes of
that subsection, ‘negotiate’ is best understood to mean ‘to
bargain,’ not ‘to transfer.’ Although not absolute,16 the
consistent-usage canon holds that a term should have the same
meaning each time it is used throughout a statute.17 And for
‘negotiate’ to have a consistent meaning in the CDCA, it must
mean ‘to bargain.’
16
See United States v. Adair, 38 F.4th 341, 353 (3d Cir. 2022).
17
See Pereira v. Sessions, 138 S. Ct. 2105, 2115 (2018) (“[I]t
is a normal rule of statutory construction that identical words
used in different parts of the same act are intended to have the
same meaning.” (quoting Taniguchi v. Kan Pac. Saipan, Ltd.,
566 U.S. 560, 571 (2012)); see also United States v.
Castleman, 572 U.S. 157, 174 (2014) (Scalia, J., concurring in
part and concurring in the judgment) (invoking “the
presumption of consistent usage – the rule of thumb that a term
generally means the same thing each time it is used”); Bayview
Loan Servicing, LLC v. Lindsay, 185 A.3d 307, 313 (Pa. 2018)
(same).
19
In sum, as applied here, noscitur a sociis and the consistent
usage canon counteract the other’s limitations, and together
they yield the conclusion that the term ‘negotiate’ as used in
§ 6203A means ‘to bargain.’
2. The remnant allegations in the complaint do not
plausibly allege that PRA is in the business of
negotiating loans or advances.
Lutz does not specifically allege that PRA is in the business
of negotiating – or bargaining for – loans or advances. The
amended complaint contains two sets of allegations related to
PRA’s business practices. One paragraph describes PRA’s
business practice without a specific reference to negotiating
loans: “PRA’s sole business is purchasing defaulted consumer
debt with the purpose of collecting debt for profit.” Am.
Compl. ¶ 9 (JA24). A later paragraph adds a layer of detail,
but still makes no specific reference to PRA negotiating loans:
“PRA is in the business of purchasing loans or advances of
money or credit, as PRA purchases debt for the purpose of
collecting debt for profit.” Id. ¶ 63 (JA31). In addition, eight
paragraphs in the amended complaint address Lutz’s specific
interactions with PRA – and none of those remotely suggest
that PRA is in the business of negotiating loans. Those
paragraphs allege that “PRA filed a lawsuit against Lutz,” id.
¶ 38 (JA28), and that PRA “purchased [Lutz’s] Account from
Capital One Bank,” id. ¶ 39 (JA28). They also state that “PRA
sought to collect and receive interest and fees charged on the
Account’s purchases and cash advance balances,” id. ¶ 40
(JA28), and that “[t]he interest and fees . . . [had been] charged
at a rate that aggregated in excess of 22.90% per year,” id. ¶ 41
(JA28). They further indicate that “PRA obtained a default
judgment against Lutz,” id. ¶ 42 (JA28), that Lutz appealed
20
that judgment, id. ¶ 43 (JA28), and that PRA discontinued the
action before a hearing could be held in the appeal, id. ¶¶ 44–
45 (JA28). In short, nowhere does Lutz allege that PRA is in
the business of negotiating loans or advances.
Despite the absence of such allegations, Lutz’s pleading
receives the benefit of reasonable inferences at the motion-to-
dismiss stage. See Connelly, 809 F.3d at 790; see also Iqbal,
556 U.S. at 678. Lutz’s allegations indicate that PRA
purchases debt, such as Lutz’s credit card account that Capital
One charged off. But even with that allegation as a starting
point, it is not reasonable to infer that an entity that purchases
charged-off debt would also be in the business of negotiating
or bargaining for the initial terms of loans or advances. If
anything, the amended complaint cuts against such an
inference: it alleges that Capital One, not PRA, set the annual
interest rate for Lutz’s use of the credit card for loans and
advances at 22.90%. Thus, with the understanding that
negotiate means ‘to bargain’ and not ‘to transfer,’ Lutz’s
allegations do not support an inference that PRA is in the
business of negotiating loans or advances.
Without such a favorable inference, Lutz cannot establish
that PRA is subject to the CDCA and its limitations on
collecting interest. And because his FDCPA claims depend on
an underlying violation of the CDCA, they collapse.18
18
For closure, PRA’s collection of Lutz’s account balance
from Capital One, inclusive of the 22.90% annual interest rate,
does not violate Pennsylvania’s general usury statute, which
prohibits annual interest at a rate over 6%. As a bank, Capital
One was authorized to charge interest at a higher rate, and the
general usury prohibition, unlike the CDCA, does not regulate
collection – only the interest on a loan or use of money.
21
D. The District Court Did Not Abuse Its Discretion in
Denying Lutz Leave to Amend His Complaint
Again.
Lutz also argues that the District Court erred by dismissing
his claims with prejudice and denying him leave to amend his
complaint for a second time. He contends that through further
amendment he could allege that PRA’s license to charge
interest on motor vehicle loans at an annual rate of up to 21%
did not permit it to collect interest that Capital One charged.
But amendments along those lines could be curative only if the
CDCA applies to PRA. And as explained above, the
allegations do not establish that PRA is in the business of
negotiating loans or advances, and therefore the amended
complaint fails to place PRA within the CDCA’s regulatory
grasp. Because the proposed amendments do not cure those
deficient allegations, the amendments would be futile, and the
District Court did not abuse its discretion in dismissing Lutz’s
claims with prejudice and denying Lutz leave to amend. See
Mullin v. Balicki, 875 F.3d 140, 150 (3d Cir. 2017).
Compare 7 P.S. § 6203.A (prohibiting unlicensed covered
entities from “charg[ing], collect[ing], contract[ing] for or
receiv[ing] interest”) (emphasis added), with 41 P.S. § 201(a)
(setting “the maximum lawful interest rate for the loan or use
of money”) (emphasis added). See also Roethlein v. Portnoff
Law Assocs., Ltd., 81 A.3d 816, 821–24 (Pa. 2013) (“[T]he
plain language of [the general usury statute] restricts its
application to claims involving the loan or use of money.”);
Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 394–97 (3d
Cir. 2000) (concluding that the general usury statute’s
application is limited to “the loan or use of money”).
22
IV. CONCLUSION
For the foregoing reasons, we will affirm the District
Court’s judgment.
23
Lutz v. Portfolio Recovery Associates, LLC
No. 21-1656
KRAUSE, Circuit Judge, concurring.
I join my colleagues’ excellent opinion in full but write
separately to address two additional issues that were raised by
the parties and that have benefited from the Secretary of
Banking’s thoughtful and illuminating analysis as amicus.
First is the type of license that permits an entity under
Pennsylvania’s Consumer Discount Company Act (“CDCA”)
to charge in excess of 6% on loans under $25,000,
notwithstanding the statute’s general prohibition. See 7 P.S.
§§ 6203, 6217. As the District Court interpreted the statute, it
authorizes the charging of excess interest not just by entities
licensed under the CDCA, but by any entity to which the
Secretary of Banking has issued a license to do business under
any statute. Because Portfolio Recovery Associates (“PRA”)
fell into that category, the District Court viewed its collection
of excess interest as permissible, ruling out a Fair Debt
Collections Practices Act (“FDCPA”) claim predicated on a
CDCA violation. According to Lutz and the Secretary of
Banking, however, the District Court misinterpreted the
statute, and for the reasons explained below, I believe they are
correct.
Second, I consider whether—if Lutz cannot base his
FDCPA claim on a CDCA violation—he can base it instead on
PRA’s alleged violation of Pennsylvania’s Loan Interest and
Protection Law (“LIPL”), 41 P.S. § 101, et seq. I join my col-
leagues in holding that he cannot because the LIPL does not
regulate the “collection” of interest, and PRA is in the
collection business. See supra n.18. But there is a second, in-
dependent reason that the LIPL is inapplicable, which I also
address below.
I. PRA’s Consumer Credit Code License Does
Not Confer the Authority to Charge Interest
as a CDCA Licensee.
We begin with PRA’s contention that we need not wade
into the intricacies of what it means to “negotiate” loans or
advances under the CDCA because, regardless, the fact that
PRA holds a Consumer Credit Code license means that it is
exempted from the CDCA’s prohibition on collecting interest
at a rate of more than 6%.1 As the theory goes, the CDCA bars
any entity “engage[d] . . . in the business of negotiating or
making loans or advances of money on credit” from charging
over 6% interest on direct loans under $25,000 “if not licensed
under this act.” 7 P.S. § 6203. But the CDCA does not apply
to certain kinds of entities, including entities that are “licensed
by the Secretary of Banking . . . under the provisions of any
1
The Majority does not contend with the § 6217 issue,
instead dispensing with Lutz’s CDCA claim on the grounds
that the CDCA does not apply to PRA because PRA does not
“negotiate” loans within the meaning of the Act. As I see it,
there would be no need to construe “negotiate” if PRA’s Con-
sumer Credit Code (CCC) license—which is issued by the Sec-
retary of Banking and permits PRA to collect on motor vehicle
loans, see 12 PA. CONS. STAT. § 6201, et seq.,—exempts it
from the CDCA in any event. So, I would consider this issue
at the outset. Regardless, however, we reach the same conclu-
sion in the end.
2
other statute.” 7 P.S. § 6217. Ergo, says PRA, it is exempted
from the CDCA’s general prohibition and can charge excess
interest.
The problem for PRA, however, is that the plain
language of the statute compels a different reading, which the
Secretary, as amicus, corroborates, i.e., that § 6217 merely
permits an entity licensed by the Secretary under another
statute to engage in the activities for which it is licensed
without, in addition, obtaining a CDCA license—even when
those activities would also fall within the CDCA’s ambit.
We start with a textual analysis. As noted, the parties
differ as to what it means that the CDCA does not “apply” to
corporations licensed under a different statute. But we must
“[a]ssum[e] that every word in a statute has meaning” and
“avoid interpreting part of a statute so as to render another part
superfluous.” Allen ex. rel. Martin v. LaSalle Bank, N.A., 629
F.3d 364, 367 (3d Cir. 2011). Here, § 6203 of the CDCA
provides that only CDCA licensees may collect over 6%
interest on direct loans under $25,000. 7 P.S. § 6203. So if we
were to conclude, as PRA would have us do, that § 6217 allows
any licensee of the Secretary under any statute to collect over
6% interest, it would render § 6203 superfluous.
The broader context of § 6217 further supports Lutz’s
and amicus’s interpretation. The first sentence announces that
the CDCA “shall not affect any existing laws . . . authorizing a
charge for the loan of money in excess of interest at the legal
rate.” 7 P.S. § 6217. As the Secretary of Banking points out,
that is exactly what the provision at issue in this case does: It
ensures that the CDCA does not interfere with the privileges
conferred by other kinds of licenses issued by the Department
even when they authorize activity that would otherwise require
3
a CDCA license. In other words, § 6217 provides that entities
authorized under other laws to charge and collect interest on
direct loans at a rate greater than that permitted by the CDCA
(such as banks operating under the Banking Code or
pawnbrokers licensed under the Pawnbrokers License Act, 63
P.S. § 281-1 et seq.) need not also obtain a CDCA license and
comply with the CDCA’s requirements. See Amicus Br. 3
(“As long as those licensees lawfully engage in the activities
for which they are licensed, the CDCA will not apply to their
conduct.”). Similarly, entities authorized by other laws to
charge fees not provided for by the CDCA, such as sales
finance companies licensed under the CCC, are not prohibited
by the CDCA from doing so. Id.
PRA’s interpretation would also produce just the sort of
absurdity that Pennsylvania’s statutory rules of construction
direct us to avoid. See 1 PA. CONS. STAT. § 1922(1)-(2). PRA,
echoing the District Court, argues that its reading of § 6217 is
consistent with the purpose of the CDCA, which it believes to
be “concerned about unregulated, unlicensed entities—not
entities licensed by the Secretary of Banking,” because the
Secretary “has oversight and other authority over [all of] its
licensees, even those which are licensed under other statutes.”
Answering Br. 28, 32 (quoting Appx. 11-12). But the
Secretary of Banking issues licenses to a wide variety of
entities, including money transmitters, check cashers, debt
management and debt settlement companies, pawnbrokers,
mortgage brokers, lenders, servicers, loan correspondents or
originators, and motor vehicle sales finance companies.2 So
2
See 7 P.S. § 6102 (money transmitters); 63 P.S. § 2311
(check cashers); 63 P.S. § 2403 (debt management and debt
settlement companies); 63 P.S. § 281-3 (pawnbrokers); 7 PA.
4
under PRA’s theory, the General Assembly would have
authorized all these licensees—some of which engage in
businesses far afield from lending—to charge, collect, contract
for, and receive interest and other charges of over 6% per year
on direct loans under $25,000. 7 P.S. § 6203. To put a fine
point on it, it would mean that money transmitters and check
cashers, among others, would be authorized to charge and
collect interest in excess of the CDCA’s 6% cap solely by
virtue of the fact that they hold licenses to engage in their
primary business. But “in ascertaining legislative intent, the
Statutory Construction Act requires a presumption that the
General Assembly did not intend a result that is absurd or
unreasonable,” Cash Am. Net of Nev., LLC v. Dep’t of Banking,
8 A.3d 282, 289 (Pa. 2010) (citing 1 PA. CONS. STAT. §
1922(1)), so the CDCA should not be construed in that
nonsensical manner.
Comparing the licensing regime for pawnbrokers to the
licensing regime set forth in the CDCA reinforces our
conclusion. See 1 PA. CONS. STAT. § 1932(b) (instructing
courts to construe statutes relating to the same things together).
On April 6, 1937, just two days before the passage of the
CDCA, Pennsylvania Governor George H. Earle signed the
CONS. STAT. § 6111 (mortgage brokers, lenders, servicers, loan
correspondents or originators); 12 PA. CONS. STAT. § 6211
(motor vehicle sales finance companies). Notably, the Depart-
ment of Banking merged with the Pennsylvania Securities
Commission in 2012, so the Department is now responsible for
licensing “a broad range of entities and industries that were
never contemplated by the General Assembly when the CDCA
was enacted.” Amicus Br. 4.
5
Pawnbrokers License Act into law. 63 P.S. § 281-1 (originally
enacted as Act of April 6, 1937, P.L. 200, No. 51). It contained
many provisions parallel to the original version of the CDCA,
but included less stringent requirements for pawnbrokers. For
example, both statutes required applicants to include a bond
with their application for licensure: $2,000 for prospective
Pawnbrokers License Act licensees and $5,000 for prospective
CDCA licensees. These bond requirements remain in the same
amounts to this day. See 63 P.S. § 281-5; 7 P.S. § 6205.
Similarly, the CDCA as enacted in 1937 required
corporations to have a minimum capitalization of $25,000 in
order to be eligible for a license; the Pawnbrokers License Act
contained no minimum capitalization requirement. See Act of
April 8, 1937, P.L. 262, No. 66, § 7; Act of April 6, 1937, P.L.
200, No. 51. Today, the minimum capitalization requirement
for CDCA licensees is $75,000, and there is still no analogous
requirement for licensed pawnbrokers. See 7 P.S. § 6207; 63
P.S. § 281-1 et seq.
The fact that the two statutes were passed
contemporaneously demonstrates that the General Assembly
made intentional choices as to which requirements would
apply to consumer discount companies and which would apply
to pawnbrokers. See 1 PA. CONS. STAT. § 1921(c)(7). If the
General Assembly intended licensed pawnbrokers—who
indisputably fall within the category of entities “licensed by the
Secretary of Banking . . . under the provisions of any other
statute,” 7 P.S. § 6217—to enjoy the same privileges conferred
by a CDCA license, there would have been no reason for it to
have constructed an entirely different licensing regime. But it
did, signaling that being a licensee under another statute does
not equate to being licensed under the CDCA. And it does not
6
exempt such licensees, if they are covered by the CDCA, from
the strictures of that statute.
Here, PRA’s CCC license does not authorize it to
charge over 6% interest on direct loans under $25,000, and for
the reasons explained, the mere fact that it holds such a license
does not exempt it from § 6203’s general prohibition. The next
question I would reach is whether PRA can avoid liability
under that section by showing that it is not “in the business of
negotiating or making loans or advances.” 7 P.S. § 6203. Our
majority opinion aptly addresses that issue with which I am in
full agreement. See supra Section III.C. In sum, under neither
of Lutz’s theories of CDCA liability can his FDCPA claim rest
on a violation of that statute.
II. PRA Also Did Not Violate the LIPL.
Nor has Lutz established a LIPL violation as a basis for
his FDCPA claim. The LIPL caps at 6% “the maximum lawful
rate of interest” for a loan of $50,000 or less, 41 P.S. § 201,
with the proviso that if this rule is “inconsistent with the pro-
vision of any other act establishing, permitting or removing a
maximum interest rate, or prohibiting the use of usury as a de-
fense, the provision of such other act shall prevail,” 41 P.S.
§ 604. The LIPL also exempts banks, which “may charge a
maximum rate of interest as authorized by [the Banking Code]
or other applicable Federal or State law,” id., so there is no
question that Capital One, the originator of Lutz’s credit card
account, was in compliance with the LIPL when it charged in-
terest at a rate of 22.9%. See 7 P.S. § 6217. The question re-
mains, however, whether Capital One can validly assign its
right to collect on that interest to a non-bank, like PRA, that
itself is subject to the LIPL’s interest cap.
7
Pennsylvania law answers in the affirmative. Section
2210 of Pennsylvania’s Commercial Code provides that con-
tract rights—including rights to collect debt and interest—are
freely assignable, meaning that “the assignee stands in the
same shoes as the assignor,” U.S. Steel Homes Credit Corp. v.
S. Shore Dev. Corp., 419 A.2d 785, 789 (Pa. Super. Ct. 1980),
and although “[a]n assignment does not confer on the assignee
any greater rights than those possessed by the assignor . . . the
assignee’s rights are not inferior to those of the assignor,” id.(citation omitted). But interpreting § 201 of the LIPL to abro-
gate an assignee’s contractual right to collect debt with over
6% interest would render § 201 “inconsistent with” Pennsylva-
nia’s assignment statute. 41 P.S. § 604. So, under the LIPL’s
proviso, the assignment statute, 13 PA. CONS. STAT § 2210,
“shall prevail.” Id.
It is also telling that the LIPL, unlike some other Penn-
sylvania statutes, does not prohibit assignments. The CDCA,
for example, explicitly provides that “a license may not be
transferred or assigned,” 7 P.S. § 6208, as does the CCC, which
states that a debt arising from an installment sale contract for a
motor vehicle is not enforceable if “the holder was not licensed
under this chapter when the holder acquired the contract,” 12
PA. CONS. STAT. § 6236(a)(2). There is no such restriction in
the LIPL, which, to the contrary, indicates in the proviso that
the LIPL will yield to “other acts”—presumably including the
law of assignments, codified at 13 PA. CONS. STAT § 2210—if
they would be inconsistent with the 6% cap. See 41 P.S. § 604.
So as applied here, this means that because PRA acquired the
charged-off account from Capital One, PRA had the same
rights as Capital One to collect the total amount of both the
debt and interest that accrued.
8
We draw support for our conclusion from our decision
in Pollice v. National Tax Funding, L.P., 225 F.3d 379 (3d Cir.
2000), abrogated on other grounds by Henson v. Santander
Consumer USA Inc., 137 S. Ct. 1718 (2017). Although that
case dealt with assignment of government entities’ claims
against homeowners who failed to pay their property and utility
taxes, rather than consumer debt originated by a bank, its rea-
soning carries over to this context. In Pollice, we cited a Penn-
sylvania Commonwealth Court decision holding that a provi-
sion of the Municipal Claims and Tax Liens Law permitted a
municipality to assign or transfer any claim, tax or municipal,
to a party that is a stranger to the original transaction. Id. at
389 (citation omitted). Because the statute provided that “such
assignee[s] shall have all the rights of the original holder
thereof,” 53 P.S. § 7147, we found that the purchaser of the
claims—a company in the business of purchasing such delin-
quent claims from municipalities in several states—had the au-
thority to collect interest and penalties to the same extent as the
government entities under relevant state and local law, includ-
ing the authority to exceed the LIPL’s six percent cap on inter-
est rates, Pollice, 225 F.3d at 389-90, 392.
Our reading of the LIPL also aligns with the Seventh
Circuit’s interpretation of Illinois’s usury statute, 815 Ill.
Comp. Stat. § 205/5. In Olvera v. Blitt & Gaines, P.C., the
court considered whether Illinois’s usury statute prohibits an
unlicensed debt buyer from charging the same interest rate as
the original lender where the lender was authorized by license
or by its status as a bank to charge a higher interest rate. 431
F.3d 285, 286 (7th Cir. 2005). By its terms, § 205/5 forbids
anyone from charging a higher interest rate “than is expressly
authorized by this Act or other laws of this State.” Id. at 287
(quoting § 205/5). The Seventh Circuit noted that “other laws
9
of this State” included the “law of assignments, whereby the
assignee steps into the shoes of the assignor,” and concluded
that the usury statute did not prevent debt buyers from collect-
ing interest at the higher rate. Id. at 288-89. Here, the same is
true for the LIPL’s proviso, which by its terms gives prece-
dence to “other acts” like § 2210 that would “permit[] or re-
mov[e] a maximum interest rate.” 41 P.S. § 604.
Finally, a regulation issued by the Office of the Comp-
troller of the Currency after the events of this suit confirms the
reasonableness of this interpretation and ensures that any con-
fusion on this score is eliminated going forward. That regula-
tion—12 C.F.R. § 7.4001(e)—provides: “[i]nterest on a loan
that is permissible under 12 U.S.C. § 85 shall not be affected
by the sale, assignment, or other transfer of the loan.” Any
contrary state law is preempted.3 See id.; Barnett Bank of Mar-
ion Cnty., N.A. v. Nelson, 517 U.S. 25, 33 (1996) (establishing
preemption for state regulation of national banks). And under
12 U.S.C. § 85, national banks like Capital One may charge
interest on a loan in accordance with the law of the state where
the bank is located, so their assignees can as well.
In sum, without either a LIPL or a CDCA violation on
which to base his FDCPA claim, Lutz cannot survive a motion
3
Opponents of the regulation have argued that the OCC
lacked authority to preempt state usury law in the manner that
it did. See Permissible Interest on Loans That Are Sold, As-
signed, or Otherwise Transferred, 85 Fed. Reg. 33,530 (June
2, 2020) (summarizing comments). We need not wade into this
debate for our purposes.
10
to dismiss. For these reasons, I join the Majority in affirming
the judgment of the District Court.
11