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

The Fair Credit Reporting Act (FCRA) prohibits consumer reporting agencies from releasing credit information except under circumstances enumerated in 15 U.S.C. 1681b, including to provide prospective lenders with "prescreen lists" of consumers who meet their criteria if the sharing results in a “firm offer of credit or insurance” to every consumer on that list." Experian compiles consumer information. Western had contracted to receive prescreen lists from Experian through agents. Experian provided its consumer data to Tranzact, which used that information to create prescreen lists, which it sold to a marketing agency, which then extended offers backed by Western to the consumers on the list. Experian terminated its contract with Western, with November 18, 2011, as the cutoff date. A prescreen list with Experian’s data went to Western on November 30, 2011. Neither company knew there was any problem. The list, which included Crabtree, was shared when it should not have been.The Seventh Circuit affirmed the dismissal of Crabtree’s FCRA suit, noting that there was no evidence that anyone on the list did not receive a firm offer from Western. Crabtree, who claimed invasion of privacy and emotional distress, did not allege the requisite injury-in-fact to satisfy Article III’s case or controversy requirement. Experian’s alleged statutory violation, without further allegations of harm, was insufficient to establish a concrete injury. View "Crabtree v. Experian Information Solutions, Inc." on Justia Law

Preston brought a putative class action, claiming that Midland Credit sent him a collection letter that violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692–1692[. He claimed the words “TIME SENSITIVE DOCUMENT” on the envelope violated section 1692f(8)’s prohibition against “[u]sing any language or symbol,” other than the defendant’s business name or address, on the envelope of a debt collection letter. He claimed that those words, and the combination statements about discounted payment options with a statement that Midland was not obligated to renew those offers, in the body of the letter, were false and deceptive, under section 1692e(2) and (10). The district court dismissed the complaint, citing a "benign‐language exception" to the statutory language because the language “TIME SENSITIVE DOCUMENT” did not create any privacy concerns or expose Preston to embarrassment. The court also rejected Preston’s section 1692e claims. The Seventh Circuit reversed in part: the language of section 1692f(8) is clear and its application does not lead to absurd results. The prohibition of any writing on an envelope containing a debt collection letter represents a rational policy choice by Congress. The language on the envelope and in the letter does not, however, violate section 1692e(2) and (10). Midland accurately and appropriately used safe‐harbor language as described in precedent. View "Preston v. Midland Credit Management, Inc." on Justia Law

The plaintiffs received form notices from Client Services with a header stated only “RE: CHASE BANK USA, N.A.,” with an account number. The letters continued: “The above account has been placed with our organization for collections.” The letters did not say whether Chase Bank still owned the accounts or had sold the debts. The Fair Debt Collection Practices Act, 15 U.S.C. 1692, requires the collector of consumer debt to send the consumer-debtor a written notice containing, among other information, “the name of the creditor to whom the debt is owed.” The plaintiffs argued that Client Services’ letters failed to identify clearly the current holder of the debt. The district court certified a plaintiff class of Wisconsin debtors who received substantially identical notices from Client Services, found that Chase Bank was actually the current creditor, and granted Client Services summary judgment. The Seventh Circuit reversed and remanded. The actual identity of the current creditor does not control the result. The question under the statute is whether the letters identified the then-current creditor clearly enough that an unsophisticated consumer could identify it without guesswork. The notices here failed that test. View "Steffek v. Client Services, Inc." on Justia Law

Dennis fell behind on his debt to Washington Mutual Bank. LVNV bought the debt and Niagara Credit sent a form collection letter on LVNV’s behalf, stating: “Your account was placed with our collection agency” and that Niagara’s “client” had authorized it to offer a payment plan or a settlement of the debt in full. The letter identifies Washington Mutual as the “original creditor” and LVNV as the “current creditor.” It lists the principal and interest balances of the debt and the last four digits of the account number. Dennis filed a putative class action complaint, claiming violation of the Fair Debt Collection Practices Act by “fail[ing] to identify clearly and effectively the name of the creditor to whom the debt was owed,” 15 U.S.C. 1692g(a)(2). The Seventh Circuit affirmed the rejection of the suit on the pleadings, rejecting an argument that listing two entities as “creditor” then stating that Niagara was authorized to make settlement offers on behalf of an unknown client could likely confuse consumers. The defendants’ letter expressly identifies LVNV as the current creditor and meets the Act’s requirement of a written notice containing “the name of the creditor to whom the debt is owed.” An unsophisticated consumer will understand that his debt has been purchased by the current creditor; the letter is not abusive or unfair. Section 1692(g)(a)(2) does not require a detailed explanation of the transactions leading to the debt collector’s notice. View "Dennis v. Niagara Credit Solutions, Inc." on Justia Law

Nationwide Credit sent Horia a letter seeking to collect a debt owed to Gottlieb Hospital. By return mail, Horia disputed the claim. The Fair Debt Collection Practices Act requires a debt collector that notifies a credit agency about the debt to reveal whether the claim is disputed, 15 U.S.C. 1692e(8). Horia claims that Nationwide notified Experian about the debt but not about the dispute, injuring his credit rating and causing him mental distress. Horia previously complained about the same type of violation, based on a different letter that Nationwide sent, attempting to collect a different debt to a different creditor. The suit was settled. Days later Horia filed this second suit. Nationwide cited claim preclusion. The district court dismissed, ruling that Horia has split his claims impermissibly. The Seventh Circuit reversed. The doctrine of bar forecloses repeated suits on the same claim, even if a plaintiff advances a new legal theory or a different kind of injury but applies only to “the same claim.” Federal law defines a “claim” by looking for a single transaction, which usually means all losses arising from the same essential factual allegations. Horia has alleged two transactions. The two claimed debts are owed to different creditors. The wrongs differ—Nationwide could have given proper notice for one debt but not the other—and the injury differs. Each failure to notify could have caused additional harm to credit score or peace of mind. View "Horia v. Nationwide Credit & Collection, Inc." on Justia Law

Each plaintiff purchased an opaque, seven-ounce box of Fannie May chocolates for $9.99 plus tax. Although the boxes accurately disclosed the weight of the chocolate within and the number of pieces, the boxes were emptier than each had expected. A box of Mint Meltaways contained approximately 33% empty space, and a box of Pixies contained approximately 38% empty space. The plaintiffs filed a putative class action, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and asserting claims for unjust enrichment and breach of implied contract. The Seventh Circuit affirmed the dismissal of the case. The court rejected the district court’s reasoning that the claims were preempted by the Food, Drug, and Cosmetic Act, 21 U.S.C 301–399, but reasoned that the Illinois Act requires proof of actual damage. The plaintiffs never said that the chocolates they received were worth less than the $9.99 they paid for them, or that they could have obtained a better price elsewhere. That is fatal to their effort to show a pecuniary loss. The receipts embody the contract between the parties. State law does not recognize an implied contract in this situation View "Benson v. Fannie May Confections Brands, Inc." on Justia Law

Around 2009, Saccameno defaulted on her mortgage. U.S. Bank began foreclosure proceedings. She began a Chapter 13 bankruptcy plan under which she was to cure her default over 42 months while maintaining her monthly mortgage payments, 11 U.S.C. 1322(b)(5). In 2011, Ocwen acquired her previous servicer. Ocwen, inexplicably, informed her that she owed $16,000 immediately. Saccameno continued making payments based on her plan. Her statements continued to fluctuate. In 2013, the bankruptcy court issued a notice that Saccameno had completed her payments. Ocwen never responded; the court entered a discharge order. Within days an Ocwen employee mistakenly treated the discharge as a dismissal and reactivated the foreclosure. For about twp years, Saccameno and her attorney faxed her documents many times and spoke to many Ocwen employees. The foreclosure protocol remained open. Ocewen eventually began rejecting her payments. Saccameno sued, citing breach of contract; the Fair Debt Collection Practices Act; the Real Estate Settlement Procedures Act; and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFDBPA), citing consent decrees that Ocwen previously had entered with regulatory bodies, concerning inadequate recordkeeping, misapplication of payments, and poor customer service. The jury awarded $500,000 for the breach of contract, FDCPA, and RESPA claims, plus, under ICFDBPA, $12,000 in economic, $70,000 in non-economic, and $3,000,000 in punitive damages. The Seventh Circuit remanded. While the jury was within its rights to punish Ocwen, the amount of the award is excessive. View "Saccameno v. U.S. Bank National Association" on Justia Law

Heredia received four collection letters from CMS, a collections firm, and claims that the language in this correspondence violated the Fair Debt Collections Practices Act (FDCPA), 15 U.S.C. 1692(e). The Seventh Circuit reversed the dismissal of the case, finding that Heredia has plausibly alleged that the dunning letter violated the FDCPA. The letters, which proposed a payment plan, stated: “Discover may file a 1099C form” and that “[s]ettling a debt for less than the balance owed may have tax consequences.” Language in a dunning letter violates section 1692e if the creditor used false, deceptive, or misleading representation or means in connection with the collection of debt. Under section 1692f, a debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Although it is not technically illegal or impossible for Discover to file a 1099C form with the IRS if the amount is under $600, “a collection letter can be literally true” and still misleading. The defendants do not dispute that Discover would never file a 1099C form unless required to do so by law (forgiving $600 or more of principal). In the case of the Heredia letter, Discover would never file a 1099C form because in no circumstances would Discover be forgiving at least $600 in principal. View "Heredia v. Capital Management Services, L.P." on Justia Law

Plaintiffs contracted to sell their condominiums. The Illinois Condominium Property Act requires an owner to give the prospective buyer a copy of the condominium declaration and bylaws, the condominium association’s rules, and other documents. The association’s board must furnish the required documents within 30 days of the owner’s written request; it may charge a reasonable fee. Sudler, which managed plaintiffs' buildings under contracts with the condominium associations, contracted with HomeWiseDocs.com, which assembles the required disclosure documents as PDFs, giving condominium owners almost instantaneous electronic access to the material needed to close a resale transaction. HomeWise charged plaintiffs $240 and $365 for PDFs of the disclosure documents. Plaintiffs filed a proposed class action, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices and Condominium Acts; aiding and abetting a breach of fiduciary duty; civil conspiracy; and unjust enrichment. The Seventh Circuit affirmed the dismissal of the suit. The Condominium Act does not provide a private right of action, and there is no basis in Illinois law to imply one. Illinois courts have held that charging too much for goods or services is not, alone, an unfair practice under the consumer fraud statute. The complaint does not plead an actionable breach of fiduciary duty, and unjust enrichment and conspiracy are not independent causes of action under Illinois law. View "Horist v. Sudler & Co." on Justia Law

Delta, a collection agency, sent Koehn a letter stating that the “current balance” of Koehn’s debt was $2,034.03. Koehn claimed the letter was misleading under the Fair Debt Collection Practices Act, 15 U.S.C. 1692 because the phrase “current balance” implied that her balance could grow, even though her account was “static.” Additional interest and fees could no longer be added to the balance. The statute requires a debt collector to state “the amount of the debt,” and section 1692e prohibits more generally “any false, deceptive, or misleading representation or means.” The Seventh Circuit affirmed dismissal. To state a legally viable claim, Koehn needed to allege plausibly that Delta’s use of the “current balance” phrase “would materially mislead or confuse an unsophisticated consumer.” An unsophisticated consumer is “uninformed, naïve, or trusting,” but nonetheless possesses “reasonable intelligence,” basic knowledge about the financial world, and “is wise enough to read collection notices with added care.” There is nothing inherently misleading in the phrase “current balance.” Delta’s letter contained no directive to call for a “current balance,” nor does it include any language implying that “current balance” means anything other than the balance owed. “The Act is not violated by a dunning letter that is susceptible of an ingenious misreading.” View "Koehn v. Delta Outsource Group, Inc/" on Justia Law