Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

O’Boyle claimed a debt-collection letter sent by RTR violated the Fair Debt Collection Practices Act by “overshadowing” the consumer’s rights under 15 U.S.C. 1692g(b) and failing to communicate the FDCPA rights effectively. The letter consisted of two sheets the validation notice is not on either side of the first sheet. The front of this sheet directs the reader to “the back of this page for additional important information” but that “additional important information” does not include the notice. Instead, the notice is at the second sheet’s front top. The Seventh Circuit affirmed the dismissal of O’Boyle’s claim. The FDCPA does not say a debt collector must put the validation notice on the first page of a letter. Nor does the FDCPA say the first page of a debt-collection letter must point to the validation notice if it is not on the first page. Nor does the FDCPA say a debt collector must tell a consumer the validation notice is important. Nor does the FDCPA say a debt collector may not tell a consumer that other information is important. View "O' Boyle v. Real Time Resolutions, Inc." on Justia Law

When Beaton’s laptop malfunctioned, he discovered SpeedyPC, which offered a diagnosis and a cure. Beaton took advantage of Speedy’s free trial, which warned that his device was in bad shape and encouraged him to purchase its software, The software failed to improve his laptop’s performance. Beaton filed a consumer class action, raising contract and tort theories. The district court certified a nationwide class and an Illinois subclass of software purchasers. The Seventh Circuit affirmed, rejecting Speedy’s argument that the class definitions and legal theories covered by the certification orders impermissibly differ from those outlined in the complaint by the narrowing of the class from everyone in the U.S. who had purchased SpeedyPC Pro, to individual persons (not entities) who downloaded the free trial and purchased the licensed software over a three‐year period. Speedy did not suffer “unfair surprise,” given that the “legal basis for liability is based on the same allegations” about the sale of worthless software. By not raising the argument before the district court, Speedy forfeited its assertion that Beaton is judicially estopped from seeking relief under the law of British Columbia, having initially argued for Illinois law. Class certification satisfied Rule 23(a); common questions of fact and law predominate and the amount of damages to which each plaintiff would be entitled is so small that no one would otherwise bring suit. Consumer class actions are a crucial deterrent against the proliferation of bogus products. View "Beaton v. SpeedyPC Software" on Justia Law

Duncan fell behind on her car payments, ARS repossessed the vehicle on behalf of the lender, Wells Fargo. Duncan had left some personal items in the car, and when she sought to retrieve them, ARS allegedly demanded $100. The Seventh Circuit affirmed the summary judgment rejection of her suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692f. The $100 charge was not a demand for loan repayment by Duncan, but rather an administrative property-retrieval fee that Wells Fargo had agreed to pay, Duncan was not able to back her allegation that ARS demanded the $100 fee of her with anything beyond her own testimony. ARS backed its contrary testimony with the Receipt for Redeeming Personal Property, which expressly established that Wells Fargo—not Duncan—would make the $100 payment. The same documentary evidence shows that the $100 handling fee was just an administrative expense, not a masked demand for a principal payment to Wells Fargo. View "Duncan v. Asset Recovery Specialists, Inc." on Justia Law

Plaintiff filed suit against GC Services, alleging violations of the Fair Debt Collections Practices Act (FDCPA). The Seventh Circuit affirmed the district court's denial of GC Services' motion to compel arbitration and held that the company waived any right to arbitrate. In this case, GC Services did not discover the existence of the arbitration agreement for eight months, and then the company did not notify the court or move to compel arbitration for another five months. Furthermore, none of the explanations offered for the delays were adequate, and GC Services' decision to litigate the merits of plaintiff's legal theory and request for class certification was inconsistent with a desire to arbitrate. View "Smith v. GC Services LP" on Justia Law

The definition of "consumer" under the Fair Debt Collection Practices Act includes consumers who have been alleged by debt collectors to owe debts that the consumers themselves contend they do not owe. The Seventh Circuit reversed the district court's dismissal of plaintiff's action against Main Street, alleging violations of the FDCPA and the Illinois Collection Agency Act. The court held that, based on the text of the FDCPA, plaintiff was a qualifying consumer under 15 U.S.C. 1692 where Main Street alleged that plaintiff owed debt and tried its case to the bench in small claims court, even if it failed to prove the claim. View "Loja v. Main Street Acquisition Corp." on Justia Law

Allied offered Robertson a job, but ran a background check before she reported to work. Under the Fair Credit Reporting Act (FCRA) 15 U.S.C. 1681a(d)(1), Robertson claims that Allied violated a requirement to notify her “clear[ly] and conspicuous[ly],” in writing, unadorned by additional information, of its intent to obtain the report and to secure her consent (notice claim). Non‐conviction information appeared in Robertson’s background check. Allied revoked its offer. An employer that relies on a background check for an adverse employment decision must provide the applicant with a copy of the report and a written description of her rights under FCRA before acting. Allied provided neither (adverse action claim). After mediation, the parties reached a tentative settlement. Months later, the Supreme Court held that federal jurisdiction exists only if the plaintiff has alleged an injury that is concrete and particular. Months later, Robertson moved under Federal Rule of Civil Procedure 23(e) for preliminary approval of the settlement and for certification of two settlement classes. The court rejected, as “simply wrong,” Robertson’s assertion that it could approve the settlement without jurisdiction over the underlying case and dismissed the case for lack of standing. The Seventh Circuit reversed as to the adverse action claim. Allied’s alleged violations of the Act caused Robertson concrete injury. Dismissal of the notice claim was proper because authority to adjudicate must exist before a court can resolve the case, even if that resolution is only a Rule 23(e) fairness hearing, followed by approval of a settlement. View "Robertson v. Allied Solutions, LLC" on Justia Law

Holcomb did not pay her credit-card bill. The creditor hired the Freedman law firm, which sued Holcomb on the creditor’s behalf in state court. Holcomb initially appeared pro se but later retained Attorney Finko. When Freedman moved for default judgment, Finko had not yet filed a written appearance. Freedman served the motion on both Holcomb and Finko. Holcomb alleges that Freedman violated the Fair Debt Collection Practices Act, which prohibits a debt collector from directly contacting a debtor who is represented by counsel absent “express permission” from “a court of competent jurisdiction,” 15 U.S.C. 1692c(a)(2). Freedman argued that it had “express permission” because Illinois Supreme Court Rule 11 requires service of court papers on a party’s “attorney of record,” if there is one, but “[o]therwise service shall be made upon the party.” Freedman argued that Finko was not yet Holcomb’s “attorney of record” for purposes of Rule 11, requiring service on Holcomb directly. The district judge rejected this argument as “hyper-technical.” The Seventh Circuit reversed. An attorney becomes a party’s “attorney of record” for Rule 11 purposes only by filing a written appearance or another pleading with the court. Finko had done neither, so Rule 11 required Freedman to serve the default motion on Holcomb directly. View "Holcomb v. Freedman Anselmo Lindberg, LLC" on Justia Law

Portalatin allegedly owed $1,330.75 in consumer debt. The Blatt law firm, on behalf of Midland, filed a debt‐collection suit against Portalatin in the Circuit Court of Cook County’s First Municipal District (Chicago). Seventh Circuit precedent under the Fair Debt Collection Practices Act (FDCPA) then allowed Blatt to sue Portalatin in that forum even though she lived in the Fourth Municipal District (15 U.S.C. 1692i(a)(2)). The Seventh Circuit subsequently overruled that precedent and held the FDCPA requires debt collectors to file suits in the smallest venue‐relevant geographic unit where the debtor signed the contract or resides. Blatt complied, but the ruling was retroactive. Portalatin sued Blatt and Midland for violating the FDCPA. Portalatin settled with Midland and expressly abandoned all claims against Blatt except her claim for FDCPA statutory damages. Blatt argued that Portalatin’s settlement with Midland mooted her claim for FDCPA statutory damages against Blatt. The district court denied Blatt's motions. The jury awarded Portalatin $200 in statutory damages against Blatt; the court awarded Portalatin $69,393.75 in attorney’s fees and $772.95 in costs against Blatt. The Seventh Circuit reversed. The settlement with Midland mooted Portalatin’s claim for FDCPA statutory damages against Blatt. Portalatin is not entitled to attorney’s fees or costs from Blatt. View "Portalatin v. Blatt, Hasenmiller, Leibsker & Moore, LLC" on Justia Law

The FHA-insured mortgage on the Schlafs’ property is serviced by Green Tree. The Schlafs defaulted. Green Tree was unable to contact them. Green Tree contracts with Safeguard, a “mortgage field servicing company,” to perform services on properties with defaulted mortgages, including maintenance, winterizing, lock changes, and utility management. Safeguard assists Green Tree in complying with HUD regulations: When a mortgage is in default and efforts to reach the mortgagor have proven unsuccessful, the mortgagee must make an inspection to determine if the property is vacant or abandoned. During these inspections, Safeguard representatives place hangers on an outside doorknob, with instructions for the property owner: PLEASE CALL … GREEN TREE 800‐666‐1143. The door hanger does not identify Safeguard. Safeguard representatives leave the notice even if they encounter the homeowner; they do not identify themselves as Safeguard representatives and avoid talking about why they are there. Safeguard acknowledges that the door hanger is an effort to have the mortgagor contact the client. At least once, Schlaf encountered a Safeguard representative. Schlaf, unable to identify or speak with the Safeguard representative, called the number on the door hanger, which “took [him] right to Green Tree.” He testified that he did not know if Safeguard collected debt. Schlaf sued Safeguard under the Fair Debt Collection Practices Act. The court granted Safeguard summary judgment The Seventh Circuit affirmed. Safeguard’s actions were too attenuated from Green Tree’s debt‐collection efforts; Safeguard is not a debt collector. View "Schlaf v. Safeguard Property, LLC" on Justia Law

The Kohn collection law firm sent Dunbar a letter seeking to collect a debt originally owed to a bank. The letter stated that the full balance due was $4,049.08 and offered to settle the debt for $2,631.90, but warned: “NOTICE: This settlement may have tax consequences.” Dunbar was insolvent and filed for bankruptcy six months later. The Weltman collection law firm sent Smith a collection letter seeking to collect a consumer credit-card debt. The letter stated that the balance due was $4,319.69 and invited Smith to contact the law firm to discuss satisfying her debt obligation for a reduced amount but warned: “This settlement may have tax consequences.” Smith too was insolvent and filed for bankruptcy two months later. The debtors filed actions under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692e, alleging that the letters were misleading because they were insolvent and would not have had to pay taxes on any discharged debt. A magistrate and district judge each dismissed the cases, reasoning that alerting debtors that a settlement “may” have tax consequences is neither false nor misleading. The Seventh Circuit affirmed, reasoning that “may” does not mean “will” and insolvent debtors might become solvent before settling their debt, triggering the possibility of tax consequences. View "Smith v. Weltman, Weinberg & Reis Co." on Justia Law