Kimberly Aker, et al v. Collection Associates, LTD., et al
Filed opinion of the court by Judge Easterbrook. AFFIRMED. Diane P. Wood, Chief Judge; Joel M. Flaum, Circuit Judge and Frank H. Easterbrook, Circuit Judge. [6833739-1]  [16-3663]
United States Court of Appeals
For the Seventh Circuit
KIMBERLY AKER, et al.,
AMERICOLLECT, INC., and COLLECTION ASSOCIATES, LTD.,
Appeal from the United States District Court
for the Eastern District of Wisconsin.
Nos. 15-‐‑C-‐‑0002 & 15-‐‑C-‐‑0613 — C.N. Clevert, Jr., Judge.
ARGUED APRIL 11, 2017 — DECIDED APRIL 13, 2017
Before WOOD, Chief Judge, and FLAUM and EASTERBROOK,
EASTERBROOK, Circuit Judge. Plaintiffs received medical
services but did not pay their bills. Their providers referred
the debts to defendants, and dunning letters ensued. The
debt collectors demanded payment not only of the principal
sums but also of 5% per annum interest. Plaintiffs contend
that this violates 15 U.S.C. §1692g(a)(1), part of the Fair Debt
Collection Practices Act, which says that debt collectors must
specify the amount of the debt, plus other provisions of state
and federal law. According to plaintiffs, Wisconsin law pro-‐‑
vides for interest (in the absence of a contractual provision)
only if a debt has been reduced to judgment, and any pre-‐‑
judgment request for interest is forbidden.
The debt collectors might have replied that §1692g(a)(1)
is satisfied by demanding a specific amount. They calculated
interest, added it to the principal, and demanded payment of
the resulting amount, rather than leaving the debtors to
guess how much they owed. The FDCPA provides a means
to contest whether the amount claimed is due. 15 U.S.C.
§1692g(b). This implies that naming an incorrect figure is not
automatically a violation of federal law. But defendants do
not pursue this possibility, so we do not discuss it further.
Instead they offer two principal responses.
First, they contend that interest under Wis. Stat. §138.04
runs automatically—unless debts are uncertain in amount,
or a contract provides otherwise—and that a judgment just
memorializes what state law requires. If this is so, then a
demand for 5% interest does not seek more than the current
amount of the debt.
Second, they rely on Wis. Stat. §426.104(4)(b), which cre-‐‑
ates a safe harbor for people who act in ways approved by
the Administrator of Wisconsin’s Department of Financial
Institutions—and treats the absence of a response within 60
days of a request as equivalent to approval. The debt collec-‐‑
tors sent the Administrator a letter asking if they are entitled
to add 5% interest to debts created by the provision of medi-‐‑
cal services. The Administrator requested further infor-‐‑
mation, which the debt collectors provided, and at that point
the Department of Financial Institutions lapsed into silence.
The debt collectors say that this entitles them to the statutory
safe harbor. The district court agreed with both of the de-‐‑
fendants’ arguments and granted summary judgment in
their favor. Myers v. Americollect Inc., 2016 U.S. Dist. LEXIS
136941 (E.D. Wis. Sept. 30, 2016).
One of the two arguments suffices on appeal. The safe-‐‑
harbor statute provides:
Any act, practice or procedure which has been submitted to the
administrator in writing and either approved in writing by the
administrator or not disapproved by the administrator within 60
days after its submission to the administrator shall not be
deemed to be a violation of chs. 421 to 427 and 429 or any other
statute to which chs. 421 to 427 and 429 refer notwithstanding
that the approval of the administrator or nondisapproval by the
administrator may be subsequently amended or rescinded or be
determined by judicial or other authority to be invalid for any
Plaintiffs seek to enforce their understanding of the interest
statute through Wis. Stat. §427.104(1)(j), which forbids at-‐‑
tempts to collect more than the debt owed. Chapter 427 is
expressly covered by §426.104(4)(b). Nonetheless, plaintiffs
insist that because demanding interest before a debt has
been reduced to judgment is (in their view) a violation of
§138.04, we should not accord deference to the Administra-‐‑
tor’s failure to disapprove the debt collectors’ request. But
§426.104(4)(b) is not about deference. It is a safe harbor,
providing that the practices presented to the Administrator
for opinion “shall not be deemed to be a violation” of other
state laws, unless the Administrator later announces a dif-‐‑
ferent view or a court holds the Administrator’s position to
be invalid. Thus, when the defendants sent their dunning
letters, they were entitled to demand payment of both the
principal amounts and interest under §138.04. This means
that the letters also did not violate 15 U.S.C. §1692e(2)(A),
which prohibits false representations about the character,
amount, or legal status of a debt.
Plaintiffs maintain that §426.104(4)(b) is preempted by 15
U.S.C. §1692n, which says that states may add to but cannot
subtract from the protections that the FDCPA offers to con-‐‑
sumers. Yet §1692n has nothing to do with interest—or for
that matter with any other component of the debt. Section
1692n deals with debt-‐‑collection practices, not how to de-‐‑
termine the amount owed. The FDCPA itself provides that
debt collectors may add interest when permitted by law. See
15 U.S.C. §1692f(1); Miller v. McCalla, Raymer, Padrick, Cobb,
Nichols & Clark, L.L.C., 214 F.3d 872, 876 (7th Cir. 2000). The
safe harbor, if not §138.04 itself, permits defendants to add
5% interest to plaintiffs’ debts.
State law is the right source for determining interest on a
state-‐‑law debt. When federal law creates a debt, it may gov-‐‑
ern prejudgment interest too. See Williamson v. Handy Button
Machine Co., 817 F.2d 1290 (7th Cir. 1987) (Title VII of the
Civil Rights Act of 1964); cf. In re Oil Spill by the Amoco Cadiz
off the Coast of France on March 16, 1978, 954 F.2d 1279, 1331–
37 (7th Cir. 1992) (US admiralty law, when parties declined
to rely on other nations’ rules). But plaintiffs’ debts arise un-‐‑
der state contract law, so the controlling question is whether
state law allows a demand for interest before the debt has
been reduced to judgment. Until the Administrator says
something more, or a state court lifts the safe harbor under
§426.104(4)(b) (and in addition rules that §138.04 does not by
itself allow the debt collectors’ practice), neither state nor
federal law forbids dunning letters that demand 5% interest
from debtors in Wisconsin.
Veach v. Sheeks, 316 F.3d 690 (7th Cir. 2003), on which
plaintiffs principally rely, does not concern any feature of
Wisconsin law. Veach held that a letter demanding a mone-‐‑
tary amount plus treble damages that a court might award
in the future under Indiana law did not comply with federal
law because it did not specify the sum immediately payable.
That conclusion has nothing to do with the parties’ dispute
about interest in Wisconsin. Other provisions of state and
federal law mentioned in passing by the plaintiffs, and not
addressed above, do not require separate analysis.
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