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

The Spuhlers incurred medical debts that State Collection sought to collect on behalf of the medical‐care provider. The collector sent the Spuhlers dunning letters that provided the debts’ sums but lacked a statement that interest would accrue on the debts. The Spuhlers, who sought to represent a class of consumers, filed a complaint under the Fair Debt Collection Practices (FDCPA), arguing that the omission of a statement that the debt amounts would increase from the accrual of interest made the letters’ account of the debts was misleading, 15 U.S.C. 1692e(2), 1692f. A magistrate granted the Spuhlers summary judgment and certified a class.The Seventh Circuit vacated. At the summary judgment stage of litigation, to demonstrate Article III standing to sue for an alleged violation of the FDCPA, the plaintiffs must “‘set forth’ by affidavit or other evidence ‘specific facts’” demonstrating that they have suffered a concrete and particularized injury that is both fairly traceable to the challenged conduct and likely redressable by a judicial decision. The plaintiffs here did not carry that burden. View "Spuhler v. State Collection Service, Inc." on Justia Law

Finance sent Bazile a letter seeking to collect medical debts. The dunning letter stated the date (September 19, 2017) and the total balance of the debt ($92.23), without indicating whether that amount may increase with the accrual of interest. Bazile filed suit, alleging that the letter’s exclusion of information concerning the accrual of interest was a violation of the Fair Debt Collection Practices Act (FDCPA) because the letter was misleading and did not provide “the amount of the debt,” 15 U.S.C. 1692g(a)(1), 1692e. The district court concluded that Bazile had Article III standing.The Seventh Circuit remanded for findings of fact. The complaint may survive dismissal as a matter of pleading but that’s not enough for the district court to decide the merits of the action. While Bazile’s allegations support an inference that interest was accruing on the debt, the defendant asserted that interest was not accruing and questioned whether the letter’s omission of information about interest affected Bazile’s response to the correspondence or to the debt. Facts necessary for standing have been called into doubt, requiring further inquiry into whether the court has subject‐matter jurisdiction, requiring an evidentiary hearing on the defendant’s motion to dismiss. View "Bazile v. Finance System of Green Bay, Inc." on Justia Law

When the Gunn's debt for homeowners' association assessments reached $2,000, the association hired a law firm, which sent the Gunns a letter demanding payment. The letter states: If Creditor has recorded a mechanic’s lien, covenants, mortgage, or security agreement, it may seek to foreclose such mechanic’s lien, covenants, mortgage, or security agreement. The Gunns did not pay. The law firm filed suit in state court, seeking damages for breach of contract rather than foreclosure. The Gunns filed suit under the Fair Debt Collection Practices Act (FDCPA), which forbids false or misleading statements in dunning letters, 15 U.S.C. 1692e(2), (4), (5) & (10). The Gunns acknowledge that the statement is true but contend that it must be deemed false or misleading because the law firm would have found it too costly to pursue foreclosure to collect a $2,000 debt.The Seventh Circuit ordered the dismissal of the suit for lack of jurisdiction. The contested sentence did not injure the Gunns. They argued that they were annoyed or intimidated but did not contend that the letter was a forbidden invasion of privacy. The association and its law firm were entitled to communicate with them, If annoyance were enough, the very fact that a suit was filed would show the existence of standing. The asserted violation of a substantive FDCPA right does not guarantee standing. There must still be a concrete injury. View "Gunn v. Thrasher, Buschmann & Voelkel, PC" on Justia Law

Convergent sent Brunett a letter demanding repayment of a debt that slightly exceeded $1,000, offering to accept 50% of the balance in satisfaction of the debt. The letter stated that, if the creditor ended up forgiving more than $600, it would be required to report the release of indebtedness to the IRS, because federal law treats as taxable income a loan that is not repaid. Brunett sued, arguing that the statement about the IRS violates the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692e(5), (10), because it threatens action that cannot legally be taken and amounts to a false representation.The Seventh Circuit ordered the dismissal of the suit for lack of jurisdiction after noting that the statement was not false. Brunett conceded that the letter had not injured her. She did not pay anything; the statement did not affect her credit rating or discourage anyone from doing business with her. A plaintiff who lacks a concrete injury cannot sue under the FDCPA. The state of confusion is not itself an injury. “If it were, then everyone would have standing to litigate about everything.” That Brunett’s confusion led her to hire a lawyer and that she felt "intimidated" do not change the evaluation. View "Brunett v. Convergent Outsourcing Inc." on Justia Law

The plaintiffs received collection letters from Finance System, seeking payment of medical debts. Represented by the same law firm, they filed materially identical class-action claims under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, alleging the use of false, deceptive, or misleading representations, or otherwise unfair or unconscionable methods to collect a debt. They cited the letters’ statement that: “You want to be worthy of the faith put in you by your creditor …. We are interested in you preserving a good credit rating with the above creditor.” The Seventh Circuit affirmed the dismissal of the claims, reasoning that the plaintiffs have not alleged any injury, or even an appreciable risk of harm, from the alleged statutory violations and, therefore, lack standing. View "Sandri v. Finance System of Green Bay, Inc." on Justia Law

The defendants sell shaker tubes in grocery stores across the country, with labels advertising “100% Grated Parmesan Cheese.” The products are not 100 percent cheese but contain four to nine percent added cellulose powder and potassium sorbate, as indicated on the ingredient list on the back of the package. Plaintiffs claim that these ingredient lists show that the prominent “100%” labeling is deceptive under state consumer-protection laws. The Judicial Panel on Multidistrict Litigation transferred numerous similar actions to the Northern District of Illinois for consolidated pretrial proceedings. That court ultimately dismissed the plaintiffs’ deceptive labeling claims (100% claims) with prejudice.The Seventh Circuit reversed in part. Plaintiffs have plausibly alleged that the prominent “100%” labeling deceives a substantial portion of reasonable consumers, and their claims are not preempted by federal law. An accurate fine-print list of ingredients does not foreclose as a matter of law a claim that an ambiguous front label deceives reasonable consumers. Many reasonable consumers do not instinctively parse every front label or read every back label before purchasing groceries. For reasons specific to multidistrict litigation, the court concluded that it lacked appellate jurisdiction to review the dismissal of the 100% claims in two complaints because the appeals were filed too late. View "Bell v. Albertson Companies, Inc." on Justia Law

Degroot defaulted on a debt owed to Capital. AllianceOne sent Degroot a letter, stating: The amount of your debt is $425.86 ... interest and fees are no longer being added. Degroot understood that Capital had “charged-off” his account, meaning that his debt would no longer accrue interest or other fees for any reason. Capital subsequently transferred the account to CSI. CSI's 2019 letter stated: BALANCE DUE: $425.86 and “NEW INFORMATION ON YOUR ACCOUNT,” indicating that Capital had placed the account with CSI for collections, with an itemized summary of Degroot’s balance. After offering to resolve the debt, with disclosures required by certain states, concluded by stating “no interest will be added to your account balance through the course of” CSI collection effortsDegroot filed a purported class action, alleging that CSI’s letter misleadingly implied that Capital would begin to add interest and fees to previously charged-off debts if consumers failed to resolve their debts with CSI and that he was “confused.” Degroot asserted that CSI violated the Fair Debt Collection Practices Act. 15 U.S.C. 1692. The Seventh Circuit affirmed the dismissal of the suit. The 2019 letter accurately disclosed the amount of the debt and did not imply fees or interest would be added in the future. Even if CSI’s letter did imply that fees and interest could begin to accrue if the debt remained outstanding, the statement was not misleading given that Wisconsin law provided for the assessment of fees and interest on “static” debts in certain circumstances. View "Degroot v. Client Services, Inc." on Justia Law

In 2013, Zablocki had x-rays administered by Medical-Midwest. Zablocki’s insurance provider covered some of the costs, Eventually, Medical-Midwest turned to Merchants for debt collection. After about two years without success collecting the debts, Merchants reported to a consumer reporting agency, TransUnion, that Zablocki owes four debts of $50, $62, $70, and $210, corresponding to each x-ray charge. Zablocki filed suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692f, arguing that by reporting the obligations separately, rather than aggregated together, Merchants falsely represented the “character" of the debt, in violation of section 1692e(2)(A), and used an “unfair or unconscionable means” to collect or attempt to collect a debt, in violation of section 1692f. 15 U.S.C. §§ 1692e(2)(A), 1692f.The Seventh Circuit subsequently held that reporting debts separately, rather than aggregated together, does not misrepresent the “character” of a debt. Zablocki accordingly abandoned his section 1692e challenge. The Seventh Circuit affirmed the dismissal of the section 1692f claim. From the perspective of an unsophisticated but reasonable consumer, the alleged conduct is reasonable. It is not deceptive or outrageous for a collector to report individually debts that correspond to different charges, thereby communicating truthfully how much is owed on each debt. View "Zablocki v. Merchants Credit Guide Co." on Justia Law

In 2009 the Gomezes stopped paying on a Bank credit card. The Bank treated the account as a bad debt and stopped sending statements. In 2011 it sold the debt to Cavalry. In January 2013 Cavalry sent a letter seeking payment of $5,800, including $1,600 in interest for months after the Bank stopped sending bills. A March 2013 letter sought $6,200. Their lawyer asked Cavalry to verify the debt. A March 2014 reply indicated that the balance was $6,320.13 without explaining how much constituted interest.The court dismissed a suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692e, which prohibits “any false, deceptive, or misleading representation … in connection with the collection of any debt” including “the character, amount, or legal status of any debt.” The court cited the one-year limitations period after finding that the Bank had waived interest after the charge-off, despite a contractual non-waiver clause; 12 C.F.R. 1026.5(b)(2) requires banks to send periodic statements while interest is being charged. The Seventh Circuit affirmed. The third letter stood alone, within the limitations period, but was not false. A demand for payment is not “false” just because, years later, a judge disagrees with an argument supporting the calculation of the debt. The letter would not have misled a competent lawyer, who would not deem “false” a demand by a potential opponent just because counsel believes that his client may have a defense. View "Gomez v. Cavalry Portfolio Services, LLC" on Justia Law

Johnson filed a putative class action against ERC, alleging that it sent her a misleading collection letter in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692‐1692p. The district court certified a class composed of all individuals in Indiana who had received a collection letter like Johnson’s from ERC in 2016-2017. The court later entered summary judgment for ERC.The Seventh Circuit affirmed. Johnson failed to present any evidence beyond her own opinion that ERC’s letter was misleading, Johnson focused primarily on the sentence, “This letter serves as notification that your delinquent account may be reported to the national credit bureaus.” According to Johnson, “may be reported” implied future reporting, and by the time she received the letter her debt had already been reported. She also singled out a sentence stating, “Payment of the offered settlement amount will stop collection activity on this matter” as constituting a promise by ERC that if she took advantage of the first settlement offer and paid by May 26, then ERC would not report her debt to the national credit bureaus. Because Johnson chose instead to rely solely on her “speculation” to support her claim, summary judgment for ERC was appropriate. View "Johnson v. Enhanced Recovery Co., LLC" on Justia Law