Washington v. Portfolio Recovery Associates LLC et al
MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr. on 7/11/2017. Mailed notice(cdh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
ASSOCIATES, LLC and FREEDMAN
ANSELMO LINDBERG, LLC,
Case No. 14-cv-3854
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
On September 29, 2016, the Court granted summary judgment in favor of Plaintiff on her
claim that Freedman’s March 20, 2014 wage deduction notice violated 15 U.S.C. § 1692c(a)(2)
and in favor of Defendants on (1) Plaintiff’s claim that Defendant Freedman’s February 13, 2014
letter to Plaintiff’s counsel violated 15 U.S.C. §§ 1692e, 1692e(5), 1692(e)(10), 1692f and
1692f(1); and (2) Plaintiff’s claim that Defendant Freedman’s March 20, 2014 wage deduction
notice violated 15 U.S.C. §§ 1692e, 1692e(5), 1692(e)(10), 1692f and 1692f(1). See . Both
Plaintiff and Defendants move for reconsideration of parts of the Court’s summary judgment
order. See , . For the reasons explained below, both motions for reconsideration
, , are denied. This case is set for status hearing on July 25, 2017 at 9:45 a.m.
The full background of this case is set forth in the Court’s summary judgment order,
knowledge of which is assumed here. See  at 2-5. Facts relevant to resolving the parties’
motions are set forth in the analysis below.
Rule 59(e) of Federal Rules of Civil Procedure allows a party to direct the court’s
attention to a “manifest error of law or fact or to newly discovered evidence.” United States v.
Resnick, 594 F.3d 562, 568 (7th Cir. 2010). “A ‘manifest error’ occurs when the district court
commits a ‘wholesale disregard, misapplication, or failure to recognize controlling precedent.’”
Burritt v. Ditlefsen, 807 F.3d 239, 253 (7th Cir. 2015) (quoting Oto v. Metro. Life Ins. Co., 224
F.3d 601, 606 (7th Cir. 2000)).
Plaintiff’s Motion for Reconsideration
On February 13, 2014, Freedman sent a letter to Plaintiff’s attorney stating the following:
Pursuant to your request, we enclose a copy of the contract and/or payment
history and/or supporting documentation to validate this particular issue. Please
note that the original creditor is GE CAPITAL RETAIL BANK at PC BOX
960061, ORLANDO, FL 32896-0061, my client [is] now the assignee of this
particular creditor. After your review, I invite you to contact our office in hopes
of amicable resolution of this matter without further inconvenience to your client.
Further, as of the date of this letter, the balance claimed is $1,035.60. Because of
interest, late charges, and other charges that may vary from day to day, the
amount due on the day your client may pay could be greater. Hence, if your
client pays the amount shown above, an adjustment may be necessary after we
receive your client’s check, in which event we will inform you before depositing
the check for collection. It is important that you contact this office regarding this
[94-1] at 2 (emphasis added).
Plaintiff argues that the Court erred by granting summary judgment for Defendants on
her claim that the letter violated 15 U.S.C. §§ 1692e, 1692e(5), 1692(e)(10), 1692f and 1692f(1)
by falsely representing that Defendants could impose late charges on Plaintiff’s debt when, as a
matter of law and contract, they could not.
15 U.S.C. §§ 1692f and 1692f(1) prohibit “[a] debt collector [from] us[ing] unfair or
unconscionable means to collect or attempt to collect any debt,” including “[t]he collection of
any amount (including any interest, fee, charge, or expense incidental to the principal obligation)
unless such amount is expressly authorized by the agreement creating the debt or permitted by
law.” (Emphasis added.) 15 U.S.C. §§ 1692e, 1692e(5), and 1692(e)(10) prohibit the use of
“any false, deceptive, or misleading representation or means in connection with the collection of
debt,” including “[t]he threat to take any action that cannot legally be taken or that is not
intended to be taken,” and “[t]he use of any false representation or deceptive means to collect or
attempt to collect any debt or to obtain information concerning a consumer.”
Plaintiff’s first argument on reconsideration is that under Section 1692(f)(1), the burden
was on Defendants to show that its late charges were “expressly authorized by the agreement
creating the debt or permitted by law.”  at 3. In support of her argument, Plaintiff relies on
the general proposition set forth in Fed’l Trade Comm’n v. Morton Salt Co., that “the burden of
proving justification or exemption under a special exception to the prohibitions of a statute
generally rests on one who claims its benefits.”
334 U.S. 37, 44–45 (1948) (interpreting
antidiscrimination provision of Robinson-Patman Price Discrimination Act). Plaintiff also relies
on a Third Circuit case interpreting another section of the FDCPA. See Evankavitch v. Green
Tree Servicing, LLC, 793 F.3d 355, 362–63 (3d Cir. 2015) (debt collector has burden of proving
exemption from 15 U.S.C. § 1692b(3), which prohibits a debt collector from “communicating
with any person other than the consumer for the purpose of acquiring location information about
the consumer . . . more than once unless requested to do so by such person or unless the debt
collector reasonably believes that the earlier response of such person is erroneous or incomplete
and that such person now has correct or complete location information”). The Court is not
persuaded to follow Evankavitch because it is inconsistent with Seventh Circuit case law
addressing who bears the burden of proving that the “unless” clause of Section 1692f of the
FDCPA applies. In Bentrud v. Bowman, Heintz, Boscia & Vician, P.C., the Seventh Circuit held
that the debtor failed to meet the burden imposed on it under Sections 1692f of proving that the
debt a law firm was attempting to collect was not authorized by the agreement that created the
debt. 794 F.3d 871, 876-77 (7th Cir. 2015) (citing Hess v. Kanoski Bresney, 784 F.3d 1154,
1159 (7th Cir. 2015)).
Although the Court did not grant summary judgment against Plaintiff on her Section
1692f claim based on her failure to submit any evidence or rebut Defendants’ evidence
concerning whether late charges are authorized by applicable law (instead finding it unnecessary
to resolve the issue), it could have ruled against Plaintiff on that basis. As the Court concluded
in its summary judgment opinion, Defendants concede that the agreement creating the debt does
not expressly authorize late charges. But, the only evidence or argument submitted concerning
whether late charges are permitted by applicable law was the deposition testimony of a former
Freedman employee, Ms. Nilsen, to the effect that a court may sua sponte impose penalties on
debtors, which should be considered equivalent to late charges. See  at 13 (Nilsen testimony
that “[w]e have had sanction orders entered [by courts] where if [debts] were not paid within a
time, the sanction order would increase”). Plaintiff has never provided any substantive response
to Ms. Nilson’s testimony; nor has Plaintiff addressed more generally what the term “late
charges” encompasses, or cited applicable rules or case law concerning the availability (or
unavailability) of late fees.
Plaintiff asserts that the Court can take judicial notice of the
underlying judgment order, which “does not allow or even reference ‘late charges’ or any extra
amount that may be added to the debt.”  at 4 (citing [75-2], ¶ 17). But the judgment order
[94-6] does not answer the question of whether late charges are authorized by law. It is a simple
one-page form default judgment for $803.60, plus unspecified costs. The judgment order does
not mention late fees, but it also does not mention post-judgment interest, and Plaintiff does not
dispute that Defendants had a right to add interest to the judgment.
Plaintiff’s second argument is that the Court erred by declining to apply the
“unsophisticated consumer” standard to Freedman’s dunning letter to Plaintiff’s lawyer.  at
4-5. Plaintiff argues that “when a statement is false on its face, the unsophisticated consumer
standard applies even to communications with lawyers,” because “[a] false statement of fact in a
dunning letter may be as difficult for a lawyer to see through as a consumer.” Id. (citing Evory v.
RJM Acquisitions Funding L.L.C., 505 F.3d 769, 775 (7th Cir. 2007)). According to Plaintiff,
“to expect a competent attorney . . . to discover” that late charges may not “be imposed under
law or agreement” is “too much of a burden.”  at 5.
Plaintiff misstates Evory and its application to this case. Evory recognizes that “the
‘unsophisticated consumer’ standard is inappropriate for judging communications with lawyers,”
just as “it is inappropriate to fix a physician’s standard of care at the level of that of a medical
orderly.” 505 F.3d at 774. Evory explains that because “most lawyers who represent consumers
in debt-collection cases are knowledgeable about the law and practices of debt collection” and
“those who are not should be able to inform themselves sufficiently to be able to represent their
consumer clients competently,” “a representation by a debt collector that would be unlikely to
deceive” (or mislead) “a competent lawyer, even if he is not a specialist in consumer debt law,
should not be actionable.” Id. at 774-75. Evory recognizes that “[a] false claim of fact in a
dunning letter”—such as the amount of debt—”may be as difficult for a lawyer to see through as
a consumer.” Id. at 775 (emphasis added). But this does not mean that false statements of fact to
attorneys are measured under the “unsophisticated consumer” standard. The Seventh Circuit has
made clear, after Evory, that “the ‘competent attorney’ standard applies” to communications
made to attorneys “regardless of whether a statement is false, misleading or deceptive.” Bravo v.
Midland Credit Management, Inc., 812 F.3d 599, 603 (7th Cir. 2016) (citing Evory, 505 F.3d at
Further, Freedman’s statement that “because of interest, late charges, and other charges
that may vary from day to day, the amount due on the day your client may pay could be greater”
is not a “statement of fact” in the same manner that a misrepresentation of “the unpaid balance of
the consumer’s debt” would be. Evory, 505 F.3d at 775. While a debtor’s attorney may not have
access to the debt collector’s tabulation of the debtor’s current unpaid balance, he or she should
be capable of reviewing the governing agreement1 and applicable law and making a legal
assessment of whether either authorizes late charges. See id. at 774 (competent lawyers “should
be able to inform themselves” about “the law and practices of debt collection”).
Plaintiff compares this case to Captain v. ARS Nat’l Services, Inc., 636 F. Supp. 2d 791
(S.D. Ind. 2009), which according to Plaintiff held that a “false threat made to a consumer’s
attorney . . . to add a $15 per day late charge [was] deceptive notwithstanding the attorney’s
knowledge that the charge was illegal.”  at 10 (citing Captain, 636 F. Supp. 2d at 796-97).
But Captain focused on the debt collector’s representation that it would impose late charges, not
the legality of the debt collector’s threat. Captain found the debt collector’s statement to be
misleading “regardless of [the] legality” of the threatened late charges because the debt
collector’s agent expressly told the attorney that “it would start imposing a $15 per day charge on
[the debtor’s] account if it were not paid in full within two weeks,” which would “mislead a
competent lawyer about whether the company actually planned to add the charge.” Id. at 797;
Freedman’s letter notes that it is enclosing the agreement that created the debt.
see also id. at 793 (explaining that the debtor’s attorney called the debt collector and the parties
dispute whether the debt collector’s agent told the attorney that it would impose late fees).
Freedman’s letter, by contrast, does not say that Freedman intended to add late charges, identify
the amount of any late charges, or provide a deadline by which late charges would be imposed.
Nor is there any allegation that Plaintiff’s attorney called Freedman (as the letter encouraged him
to do) to discuss potential late charges. Cf. Paz v. Portfolio Recovery Assocs., LLC, 2016 WL
3551662, at *2 (N.D. Ill. June 30, 2016) (explaining that “[t]he court in Captain held the
statement made by the debt collection agency’s employee that a $15 daily charge would be
added to the account, not the initial letter, ‘would, at the very least, mislead a competent lawyer,”
whereas in Paz “plaintiff’s counsel made no such follow-up phone call and was not told
affirmatively by the debt collection agency that the debt would be reported to the credit reporting
agencies as unpaid”).
This case is similar to Bravo v. Midland Credit Mgmt., Inc., 2014 WL 6980438 (N.D. Ill.
Dec. 9, 2014), aff’d, 812 F.3d 599 (7th Cir. 2016), in which a debt collector represented to a
debtor’s attorney not ‘the amount of the [debtor’s debt], but that she had debts at all.” Id. at *5
(emphasis in original). The debts at issue had been settled in full under an earlier settlement
The district court concluded that “[i]t would not have taken an expensive or
extensive investigation—or even any investigation at all—for a competent lawyer to know Bravo
owed no debts and that the letters were false,” and therefore granted a motion to dismiss the
debtor’s Section 1692e claim. Id. (distinguishing Captain on the basis that “there was no reason
for [the debtor’s attorney] to ‘take seriously’ the falsehood in [the debt collectors’] letters[,]
which, [in contrast to Captain,] contained no threats at all”). The Seventh Circuit affirmed,
concluding that a competent attorney would have been able to determine whether his client
continued to owe a debt after it was settled in full and would therefore not have been deceived by
letters seeking to collect the debt. Bravo, 812 F.3d at 603.
Plaintiff also relies on Ruth v. Triumph Partnerships, 577 F.3d 790 (7th Cir. 2009), and
Lox v. CDA, Ltd., 689 F.3d 818 (7th Cir. 2012), for the proposition that Freedman’s letter’s
reference to late fees, although conditional, was still plainly deceptive or misleading, and thus
Plaintiff was not required to offer any extrinsic evidence that a competent attorney who received
the letter would believe that Plaintiff owed late fees. But Ruth and Lox (neither of which
concerned late fees) involved letters written directly to debtors, not their lawyers, and applied the
unsophisticated consumer standard.
See Ruth, 577 F.3d at 801; Lox, 689 F.3d at 825.
Obviously, the Court will not presume that an unsophisticated consumer has “knowledge of
relevant legal precedent,” Lox, 689 F.3d at 825, but competent attorneys should be able to
familiarize themselves with governing law and review and understand a contract. Further, Lox
recognizes that even “a statement made by a debt collector that is technically false but in no way
misleading does not run afoul of § 1692e.” Id. at 822. In this case, Freedman’s “letter itself does
not plainly reveal that it would be confusing to a significant fraction of” competent attorneys,
and therefore Plaintiff was required to “come forward with evidence beyond the letter and
beyond his own self-serving assertions that the letter is confusing in order to create a genuine
issue of material fact for trial,” which she failed to do. Durkin v. Equifax Check Servs., Inc., 406
F.3d 410, 415 (7th Cir. 2005).
The Court therefore concludes that it did not commit manifest error by holding that
Defendants were entitled to summary judgment on Plaintiff’s Section 1692e and 1692f claims
based on Freedman’s February 13, 2014 letter to Plaintiff’s counsel. Plaintiff’s motion for
reconsideration is denied.
Defendants’ Motion for Reconsideration
The following facts are relevant to Defendants’ motion for reconsideration: Plaintiff’s
attorney began representing Plaintiff after the Cook County Circuit Court entered a default
judgment against Plaintiff in the amount of $803.60 plus costs.  at 9. On December 27,
2013, Plaintiff’s attorney sent Freedman a letter stating that he was representing Plaintiff in the
Cook County action and that Plaintiff “disputes this debt and intends to fully participate in the
case.”  at 9. He also entered appearances and filed a motion to vacate the default judgment
that had been entered against Plaintiff. Id. However, he did not serve Defendants with his
appearance, the notice of motion to vacate, or the motion to vacate. [94-1] at 1. Plaintiff’s
attorney was successful in having the default judgment vacated. On March 20, 2014, Freedman
sent to Plaintiff (rather than to her attorney) a wage deduction notice.  at 12-13. Defendants
concede that, as of the date Freedman sent the wage deduction notice, Freedman knew that
Plaintiff was being represented by counsel.  at 14.
The Court granted summary judgment for Plaintiff on her claim that Freedman’s March
20, 2014 wage deduction notice violated 15 U.S.C. § 1692c(a)(2) because the notice was sent to
Plaintiff directly, rather than to Plaintiff’s attorney, at a time when Defendants knew that
Plaintiff was represented by counsel. 15 U.S.C. § 1692c(a)(2) provides that, “[w]ithout the prior
consent of the consumer given directly to the debt collector or the express permission of a court
of competent jurisdiction, a debt collector may not communicate with a consumer in connection
with the collection of any debt . . . if the debt collector knows the consumer is represented by an
attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s
name and address, unless the attorney fails to respond within a reasonable period of time to a
communication from the debt collector or unless the attorney consents to direct communication
with the consumer.”
Defendants’ first argument on reconsideration is that the Court did not adequately
consider Section 1692c’s exception for communications sent with “the express permission of a
court of competent jurisdiction.” 15 U.S.C. § 1692c(a)(2). According to Defendants, their wage
deduction notice was “sent consistent with the express permission of a court of competent
jurisdiction,” because “[t]he Illinois Code of Civil Procedure, Illinois Supreme Court Rules and
Cook County Local Rules undoubtedly provide express permission to directly communicate with
a debtor who is allegedly represented by counsel.”  at 5, 7. Defendants also compare this
case to Spearman v. Tom Wood Pontiac-GMC, Inc., 2002 WL 31854892 (S.D. Ind. 2002), which
they claim holds that “rules that allow service on an individual [are] express permission from a
court under § 1692(c).”  at 8.
The Court is not persuaded by Defendants’ argument that they were expressly authorized
by a court of competent jurisdiction to send the wage garnishment notice directly to Plaintiff. As
an initial matter, Defendants misread Spearman. Spearman did not involve a claim under
Section 1692(c)(a)(2), and merely stated in dicta that “[p]erhaps the court rules that allow
service of process on an individual might be considered express permission (as distinguished
from particularized or case-specific permission) for . . . a communication with the consumer”
serving the consumer with process. Spearman, 2002 WL 31854892, at *3 (emphasis added).
Further, the rules cited by Defendants do not, under the facts of this case, constitute permission
to communicate with Plaintiff directly. Illinois Supreme Court Rule 11(a) provides that “[i]f a
party is represented by an attorney of record, service shall be made upon the attorney. Otherwise
service shall be made upon the party.” Ill. Sup. Ct. Rule 11(a). Likewise, Cook County Local
Rule 2.1 requires litigants to serve parties directly in the absence of an attorney of record. But
according to Defendants, the debtor is not a party to the garnishment action, and service of the
wage garnishment notice is governed by the Illinois Code of Civil Procedure and the “last known
address” language. See  at 8-9 (asserting that the wage garnishment action “proceeds
against the employer, not the judgment debtor” and that “there is no need for the judgment
debtor to appear in the proceeding”). Thus, according to Defendants’ own argument, the Illinois
court rules do not apply and cannot constitute “express permission of a court of competent
jurisdiction” to communicate directly with a debtor whom the creditor knows to be represented
by counsel. 15 U.S.C. § 1692c(a)(2).
The Court also is not convinced that the Illinois Code of Civil Procedure authorized
Defendants to send the wage garnishment notice directly to Plaintiff, rather than to her attorney.
Defendants provide no legal authority for their argument that 735 ILCS 5/12-805’s reference to
the “debtor’s last known address” must, in all cases, refer to the debtor’s home address. In cases
like this one, where the debt collector admittedly knows that the debtor is being represented by
counsel in relation to the debt that it seeks to collect, there is no reason for the debt collector to
circumvent the debtor’s attorney and communicate with the debtor directly. Defendants argue
that “[i]t would be illogical to have the Code mandate mailing to the judgment debtor’s last
known address, but allow the creditor to ignore that and mail it to an attorney not of record.”
 at 6. In fact, Plaintiff’s attorney was the attorney of record; he filed an appearance,
although he did not serve it on Defendants. But ultimately this is irrelevant, because Defendants
had actual notice that Plaintiff’s attorney was representing Plaintiff and that counsel’s address
should be used for communications concerning the debt. Indeed, Freedman had communicated
directly with Plaintiff’s attorney less than a month before it sent Plaintiff the wage garnishment
notice, and had the attorney’s contact information in its file.
Further, Defendants offer no support for their position that an official attorney
appearance is necessary in order for Section 1692c(a)(2) to require communications to be made
to the debtor’s attorney. Defendants fail to address the precedent that the Court cited in its
summary judgment decision, in which violations of § 1692c(a)(2) were found based on
attorneys’ informal communications to debt collectors, rather than official appearances in court
proceedings. See, e.g., Buckley v. Afni, Inc., 133 F. Supp. 3d 1140, 1149-50 (S.D. Ind. 2016)
(concluding on summary judgment that debt collector violated § 1692c(a)(2) when it directly
communicated with consumer after being notified that she was represented by counsel, where it
was undisputed that debt collector received letter from consumer’s attorney stating that he was
representing her for all debts and that after receiving letter debt collector directly sent consumer
a collection letter); Yarney v. Ocwen Loan Servicing, LLC, 929 F. Supp. 2d 569, 579 (W.D. Va.
2013) (debt collector violated § 1692c(a)(2) by communicating directly with a consumer debtor,
through collection letters and phone calls, after debtor’s counsel left voicemail for debt collector
requesting that it not contact consumer debtor directly and provided contact information to debt
collector); Tong v. Capital Mgmt. Servs. Grp., Inc., 520 F. Supp. 2d 1145, 1148 (N.D. Cal. 2007)
(letter and attachment sent to debt collector by attorney representing cardholder contained
enough information to provide collector notice that plaintiff was represented by counsel, even
though cardholder’s first name was not on the face of the attorney’s representation letter, where
the letter included the cardholder’s address and account number, and attorney had attached debt
collector’s second notice to the letter).
Defendants’ second argument on reconsideration is that, “[i]n considering whether the
FDCPA preempts the Illinois garnishment law,” the Court incorrectly “concluded that the
FDCPA offered greater protection than state law.”  at 8.2 However, the Court did not
decide the preemption question, instead concluding that there was not an irreconcilable conflict
between the FDCPA and the Illinois Code of Civil Procedure provision authorizing mailing of a
wage garnishment notice to the debtor’s “last known address.” Even if the Court had based its
decision on the FDCPA’s preemption clause, Defendants’ argument that the garnishment law
provides greater protection to debtors than the FDCPA is not persuasive. Defendants assert that
service directly on the debtor is necessary because an attorney’s representation ends upon the
entry of judgment and the wage garnishment proceedings may not occur until long after the entry
of judgment against the debtor; thus, Defendants would not know in such cases whether the
debtor could actually be reached through the attorney who previously appeared on his or her
behalf. But that is not the case here; instead, Defendants concede that at the time they sent the
wage garnishment notice they knew that Plaintiff was represented by counsel. Under different
facts, Defendants’ argument might have more persuasive force; but in those cases, Defendants
either would not know that the debtor’s “last known address” is with the debtor’s attorney (and
therefore would not run afoul of Section 1692(c) in the first place) or could fall back on the bona
fide error defense. See 15 U.S.C. § 1692k(c).
Defendants also argue that Illinois’ wage garnishment law provides greater protections to
debtors than the FDCPA does because it is more important for the debtor, rather than his or her
attorney, to receive notice of the wage garnishment notice. According to Defendants, “there is
nothing for the attorney to do” and “no adverse action that can be taken against the judgment
The FDCPA’s preemption clause provides that “a State law is not inconsistent with [the FDCPA] if the
protection such law affords any consumer is greater than the protection provided by this subchapter.” 15
U.S.C. § 1692n.
debtor.”  at 9. Defendants ignore the reality that the wage garnishment action will result in
money being taken directly out of the debtor’s paycheck, which a debtor would obviously view
as adverse to his or her interests. And an attorney could certainly be useful in a garnishment
proceeding—for instance, by informing the creditor of any reasons why the debtor’s wages
should not be garnished, and explaining the garnishment proceedings and their implications to
Therefore, Defendants fail to convince the Court that it committed manifest error by
granting summary judgment for Plaintiff on her Section 1692c(a)(2) claim. Defendants’ motion
for reconsideration is denied.
For the reasons stated above, Plaintiff’s motion for reconsideration  and Defendants’
motion for reconsideration  are both denied. Count II of Plaintiff’s complaint, a claim
against Defendant Freedman for abuse of process, remains pending. This case is set for status
hearing on July 25, 2017 at 9:45 a.m.
Dated: July 11, 2017
Robert M. Dow, Jr.
United States District Judge
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