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

Plaintiffs filed a purported class action against Moscov, his law firm Weinstein, Pinson & Riley, and a debt collection agency NCO Financial, alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, arising out of attempts to collect on student loan debts allegedly owed by the plaintiffs. The complaint asserted that the defendants included a misleading and deceptive statement in a paragraph of the debt-collection complaint they filed against the plaintiffs in state court: Pursuant to 11 U.S.C. 1692g(a), Defendants are informed that the undersigned law firm is acting on behalf of Plaintiff to collect the debt and that the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in part within thirty (30) days from the date hereof. Plaintiffs claimed that the statement was misleading and deceptive as to the manner and timing of their response to the state lawsuit. The district court dismissed. The Seventh Circuit reversed and remanded, finding that the statements fall within the category: communications which are plainly deceptive and misleading to an unsophisticated consumer as a matter of law. View "Marquez v. Weinstein, Pinson & Riley, P.S" on Justia Law

Plaintiffs each purportedly owed a debt; each creditor filed suit in Cook County seeking to collect on that debt. After each plaintiff failed to appear, a Cook County Circuit Court entered a default judgment. B&G, a debt collector, filed an affidavit for a wage deduction in the First Municipal District in downtown Chicago and obtained a summons against Plaintiffs’ respective employers. Plaintiffs allege it was this final act that violated the Fair Debt Collection Practices Act (FDCPA) venue provision, 15 U.S.C. 1692i(a)(2), because B&G should have filed the affidavits in the Sixth Municipal District in Markham, Illinois (the municipal district closest to Plaintiffs) and not in the First Municipal District. The Cook County Circuit Court’s Municipal Department has been sub‐divided into six smaller units called municipal districts. B&G moved to dismiss on the basis that B&G’s filing of an affidavit for a wage deduction did not constitute a “legal action” against a “consumer” within the meaning of the FDCPA. The district courts agreed. The Seventh Circuit affirmed, holding that such actions are not against the consumer. View "Etro v. Blitt & Gaines, P.C." on Justia Law

Franklin and Chism parked their cars in a Chicago-area lot owned by Metra, the public commuter railroad, and operated by CPS. The lot offers parking spaces to the public for $1.50 per day. CPS says the two failed to pay and sent them violation notices demanding payment of the $1.50 fee and a $45 nonpayment penalty. When they still did not pay, CPS referred the matter for collection to Parking Revenue, which sent them collection letters for the $46.50 . Franklin and Chism filed a class action against Parking Revenue alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692. The district court entered summary judgment for Parking Revenue, holding that the FDCPA does not apply because the unpaid parking obligations are not “debts” as that term is defined in section 1692a(5). The Seventh Circuit reversed. The obligations at issue are “debts” within the meaning of the FDCPA. That statutory term comprises obligations “arising out of” consumer “transactions.” Parking in a lot that is open to all customers subject to stated charges is a “transaction.” The obligation that arises from that transaction is a “debt,” and an attempt to collect it must comply with the FDCPA. View "Franklin v. Parking Revenue Recovery Servs., Inc." on Justia Law

In each of three cases, a debtor filed for Chapter 13 bankruptcy, represented by counsel. During the bankruptcy proceedings, a debt collector submitted a proof of claim for a “stale” debt, for which the statute of limitations had expired. As required by Bankruptcy Rule 3001, the proof of claim filed by the debt collector accurately noted the origin of the debt, the date of the last payment, and the date of the last transaction. Each debtor objected to the claim; each was disallowed and eventually discharged. Each debtor brought a separate suit against the debt collector, alleging that the act of filing a proof of claim on a time‐barred debt constituted a false, deceptive, misleading, unfair, or unconscionable means of collecting a debt in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692. The Seventh Circuit affirmed dismissal of the cases. The debt collectors’ conduct was not deceptive or misleading. The information contained in the proof of claim was not misleading, but set forth accurate and complete information about the status of the debts. View "Owens v. LVNV Funding, LLC" on Justia Law

The Blatt firm filed a collection lawsuit against Oliva in the first municipal district of the Circuit Court of Cook County. Oliva resided in Cook County. Under the Seventh Circuit’s 1996 “Newsom” decision, interpreting the Fair Debt Collection Practices Act (FDCPA) venue provision, debt collectors were allowed to file suit in any of Cook County’s municipal districts if the debtor resided in Cook County or signed the underlying contract there. While the Oliva suit was pending, the Seventh Circuit overruled Newsom, with retroactive effect (Suesz, 2014). One week later, Blatt voluntarily dismissed the suit. Oliva sued Blatt for violating the FDCPA’s venue provision as newly interpreted by Suesz. The district court granted Blatt summary judgment, finding that it relied on Newsom in good faith and was immune from liability under the FDCPA’s bona fide error defense, 15 U.S.C. 1692k(c), which precludes liability for unintentional violations resulting from a good‐faith mistake. The Seventh Circuit affirmed, rejecting an argument that the defense should not apply because the firm’s violation resulted from its mistaken interpretation of the law. In relying on Newsom, the firm simply followed the circuit's controlling law; its failure to foresee the retroactive change of law was not a mistaken legal interpretation, but an unintentional bona fide error View "Oliva v. Blatt, Hasenmiller, Leibsker & Moore, LLC" on Justia Law

The Fair Debt Collection Practices Act prohibits debt collectors from threatening to take an action that they do not intend to take in the course of collecting a debt, 15 U.S.C. 1692e(5). The defendants, debt collectors, filed suit in Illinois state court to recover on the plaintiffs’ delinquent credit card accounts, but later moved to voluntarily dismiss the actions without prejudice. The actions were dismissed before trial. The plaintiffs then sued the debt collectors for allegedly engaging in various deceptive practices under the FDCPA during the state court litigation. The Seventh Circuit affirmed dismissal. Section 1692e(5) of the FDCPA does not require debt collectors to intend to proceed to trial when filing a lawsuit to recover a debt. View "Owusumensah v. Cavalry Portfolio Servs., LLC" on Justia Law

Seeing an internet advertisement for a 1997 FLTHTC Harley‐Davidson motorcycle, Hahn visited City Limits dealership, test‐drove a 2004 motorcycle, took pictures, and made a downpayment. Days later, Hahn returned, paid the balance, and drove the 2004 motorcycle home. The bill of sale listed the VIN, year, and mileage for the 1997 motorcycle. The newer model had half that mileage. The next day, Hahn tried to purchase insurance and discovered the discrepancy. Hahn thought this was a scrivener’s error and called City Limits, which demanded more money and eventually called the police. After being contacted by an officer, Hahn took the motorcycle to the police station. Hahn claims that City Limits has not returned the $7,626.66. He filed suit, alleging that the police violated the Fourteenth Amendment by depriving him of property without due process and that the business violated the Illinois Consumer Fraud and Deceptive Business Practices Act. The Seventh Circuit affirmed dismissal. There is no allegation that the officer violated any state law by making telephone calls or by facilitating the return of the motorcycle; even with such an allegation, the federal constitution is not automatically violated every time the police fail to follow state or local rules. The court correctly declined jurisdiction over the state law claims. View "Zappa v. Smith" on Justia Law

P.F. Chang’s restaurant company announced that its computer system had been breached and some consumer credit- and debit–card data had been stolen. Kosner had dined at a P.F. Chang’s and paid with his debit card. Four fraudulent transactions were made with the card he had used; he cancelled it and purchased, for $106, a credit monitoring service to protect against identity theft, including against use of the card’s data to open new accounts in his name. Lewert used a debit card at the same restaurant (thought to be not among those breached) and had no fraudulent transactions, but claims that he spent time and effort monitoring his card statements and his credit report. Lewert and Kosner sought to represent a class of all similarly situated customers, under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2). The district court dismissed for lack of standing, finding they had not suffered the requisite personal injury. The Seventh Circuit reversed. At least some of the injuries alleged qualify as immediate and concrete injuries sufficient to support Article III standing; all class members should be allowed to show that they spent time and resources tracking down possible fraud, changing automatic charges, and replacing cards as a prophylactic measure. View "Lewert v. P.F. Chang's China Bistro, Inc" on Justia Law

Acceptance, a debt collector, purportedly acquired consumer debts purportedly owed by plaintiffs. The Fulton firm sent initial collection notices to the plaintiffs or their attorneys, identifying Acceptance as the “assignee” of the original creditors, but stating that the accounts had been “transferred” to Fulton. The letters did not explicitly identify Acceptance as the current creditor. Plaintiffs sued under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, which requires a debt collector to disclose to a consumer “the name of the creditor to whom the debt is owed,” either in its initial communication or in a written notice sent within the next five days. The court granted defendants summary judgment. The court found the letters ambiguous as to the identity of the current creditor, but held that plaintiffs needed to present extrinsic evidence of confusion, and that even with such evidence, the ambiguity would be immaterial to the Act’s objective of providing “information that helps consumers to choose intelligently.” The Seventh Circuit reversed. The district court correctly found that the letters were unclear, but erred in finding that additional evidence of confusion was necessary to establish a violation. Section 1692g(a) requires debt collectors to disclose specific information. If a letter fails to disclose that information clearly, it violates the Act; there is no additional materiality requirement, express or implied. View "Janetos v. Fulton Friedman & Gullace, LLP" on Justia Law

Sgouros purchased a “credit score” package from TransUnion. Armed with the number TransUnion gave him, he went to a car dealership and tried to use it to negotiate a favorable loan. The score he had bought, however, was useless: it was 100 points higher than the score pulled by the dealership. Sgouros filed suit, asserting that TransUnion violated the Fair Credit Reporting Act, 15 U.S.C. 1681g(f)(7)(A); the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1; and the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.010, by misleading consumers by failing to inform them that the formula used to calculate their purchased credit scores was materially different from the formula used by lenders. TransUnion moved to compel arbitration, asserting that the website through which Sgouros purchased his product included an agreement to arbitrate. The district court concluded that no such contract had been formed and denied TransUnion’s motion. The Seventh Circuit affirmed after evaluating the website and concluding that TransUnion had not put consumers on notice of the terms of agreement, as required by Illinois law, but actually distracted them from noticing those terms. View "Sgouros v. TransUnion Corp." on Justia Law