Gonzalez v. FMS, Inc.

Filing 37

MEMORANDUM Opinion and Order. Signed by the Honorable Ruben Castillo on 7/6/2015. Mailed notice (kp, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SERGIO GONZALEZ, individually
and on behalf of all others similarly
situated,
Plaintiff,
v.
FMS, INC.,
Defendant.

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No. 14 C 9424
Chief Judge Rubén Castillo

MEMORANDUM OPINION AND ORDER
Plaintiff Sergio Gonzalez brings this putative class action against Defendant FMS, Inc.
pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA” or the
“Act”). (R. 10-1, Second Am. Compl.) Presently before the Court is Defendant’s motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (R. 16, Def.’s Mot. to Dismiss.)
For the reasons stated below, the Court grants Defendant’s motion.
BACKGROUND
Plaintiff is a resident of Illinois. (R. 10-1, Second Am. Compl. ¶ 3.) Defendant is an
Oklahoma corporation engaged in the business of debt collection. (Id. ¶ 4.) Defendant is
licensed as a collection agency in Illinois and attempts to collect consumer debts via mail and
telephone. (Id. at ¶¶ 5-6.) On November 27, 2013, Defendant mailed Plaintiff a dunning letter,
attempting to collect a defaulted consumer debt tied to a Citibank, N.A./Sears Charge Plus credit
card. (R. 10-1, Second Am. Compl. ¶ 12; R. 5-1, Ex. C at 6.) The letter was mailed in a
windowed envelope that revealed Plaintiff’s name and address, as well as a fifteen-digit number.

(Id. ¶¶ 18-21.) Embedded within the fifteen-digit number was an eight-digit account number
representing Plaintiff’s debt assigned by Defendant. (Id. ¶ 20; see also R. 34, Pl.’s Resp. at 8.)
On November 24, 2014, Plaintiff filed a one-count putative class action complaint
alleging that Defendant violated Section 1692f(8) of the FDCPA by sending Plaintiff a letter
with the numbers on the envelope. (R. 1, Compl. ¶ 28.) On December 15, 2014, Plaintiff filed
an amended complaint. 1 (R. 5, First Am. Compl.) On December 31, 2014, Plaintiff moved for
leave to file a second amended complaint instanter to correct a pleading error. (R. 10, Pl.’s Mot.
to Amend/Correct.) The Court granted this request. (R. 12, Min. Entry.) In the second amended
complaint, Plaintiff again alleges that displaying the fifteen-digit number on the envelope
violated the express provisions of Section 1692f(8). (R. 10-1, Second Am. Compl. ¶ 28.) He
seeks statutory damages, as well as attorneys’ fees and costs under 15 U.S.C. § 1692k(a). (Id. at
7.)
On January 28, 2015, Defendant filed a motion to dismiss under Rule 12(b)(6) arguing
that the second amended complaint fails to state a claim for relief. (R. 16, Def.’s Mot. to
Dismiss.) In Defendant’s view, the numbers on the envelope did not violate the Act because
they did not disclose that the mailing was from a debt collector or otherwise invade Plaintiff’s
privacy. (R. 17, Def.’s Mem. at 2.) On April 16, 2015, Plaintiff filed a response to Defendant’s
motion arguing that displaying the numbers constituted a per se violation of the FDCPA. (R. 34,
Pl.’s Resp.) On April 27, 2015, Defendant filed a reply in support of its motion. (R. 35, Def.’s
Reply).
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Plaintiff filed a motion for class certification along with the first amended complaint, (R. 6,
Pl.’s Mot. for Class Cert.), but later sought to withdraw the motion with leave to renew it at a
later stage of the litigation, (R 32, Pl.’s Stip. to Withdraw Mot. for Class Cert.). The Court
granted Plaintiff’s request. (R. 33, Min. Entry.) The Court notes additionally that Defendant has
filed a separate motion to dismiss and to compel arbitration (R. 26), which has been stayed
pending the Court’s ruling on the present motion, (R. 29).
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LEGAL STANDARD
Under federal pleading standards, a complaint must contain a “short and plain statement
of the claim showing that the pleader is entitled to relief[.]” Fed. R. Civ. P. 8(a)(2). A Rule
12(b)(6) motion “challenges the viability of a complaint by arguing that it fails to state a claim
upon which relief may be granted.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736
(7th Cir. 2014). In deciding a motion under Rule 12(b)(6), the Court construes the complaint in
the light most favorable to the non-movant, accepts all well-pleaded factual allegations as true,
and draws all reasonable inferences in the non-movant’s favor. 2 Vesely v. Armslist LLC, 762
F.3d 661, 664 (7th Cir. 2014). A complaint will survive dismissal when it “contain[s] sufficient
factual matter . . . to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. This
“plausibility standard” requires more than a “sheer possibility that the defendant acted
unlawfully.” Id. While factual allegations are assumed to be true, dismissal is proper when
allegations “stop short of the line between possibility and plausibility of ‘entitlement to relief.’”
Id. at 678-79 (citing Twombly, 550 U.S. at 557). In other words, “a plaintiff must do better than

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In deciding a motion to dismiss, the Court can consider “allegations set forth in the complaint
itself, documents that are attached to the complaint, documents that are central to the complaint
and are referred to in it, and information that is properly subject to judicial notice.” Williamson
v. Curran, 714 F.3d 432, 436 (7th Cir. 2013). Plaintiff submitted three attachments with his first
amended complaint, including the letter and envelope sent to him by Defendant. (R. 5, Exs. AC.) The second amended complaint references these documents but fails to attach them. (See R.
10-1, Second Am. Compl.) For the sake of expedience, the Court has considered the documents
submitted with the earlier pleading rather than requiring Plaintiff to correct the error and refile
his complaint for a fourth time. Because these documents are referenced in the second amended
complaint and are central to Plaintiff’s claim, they can properly be considered in any event. See
Williamson, 714 F.3d at 436.
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putting a few words on paper that, in the hands of an imaginative reader, might suggest that
something has happened to her that might be redressed by the law.” Swanson v. Citibank, N.A.,
614 F.3d 400, 403 (7th Cir. 2010).
ANALYSIS
The purpose of the FDCPA is to “eliminate abusive debt collection practices by debt
collectors, [and] to insure that those debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged[.]” 15 U.S.C. § 1692(e). To this end,
the FDCPA “generally prohibits debt collectors from engaging in abusive, deceptive, or unfair
debt-collection practices.” Gburek v. Litton Loan Serv. LP, 614 F.3d 380, 384 (7th Cir. 2010)
(internal quotation marks and citation omitted). The Act applies if a defendant qualifies as a
“debt collector” and the communication at issue was made “in connection with the collection of
any debt.” 3 Id. (quoting 15 U.S.C. §§ 1692c(a)-(b), 1692e, and 1692g.) Under Section 1692f of
the FDCPA, debt collectors are prohibited from using “unfair or unconscionable means to collect
or attempt to collect any debt.” 15 U.S.C. § 1692f. That Section includes a non-exhaustive list
of practices that are considered to be “unfair or unconscionable.” See 15 U.S.C. § 1692f(1)-(8).
At issue here is Section 1692f(8), which prohibits the following conduct:
Using any language or symbol, other than the debt collector’s address, on any
envelope when communicating with a consumer by use of the mails or by
telegram, except that a debt collector may use his business name if such a name
does not indicate that he is in the debt collection business.
15 U.S.C. §1692f(8).
The FDCPA “is a strict liability statute,” meaning that “debt collectors whose conduct
falls short of its requirements are liable irrespective of their intentions.” Osborn v. J.R.S.-I., Inc.,
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For purposes of this motion, the parties do not dispute that Defendant is a debt collector or that
Defendant’s letter was sent in connection with the collection of a debt as defined by the Act.
(See R. 10-1, Second Am. Compl. ¶ 3-4; R. 17, Def.’s Mem.)
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949 F. Supp. 2d 807, 810 (N.D. Ill. 2013) (citing Ruth v. Triumph P’ships, 577 F.3d 790, 805
(7th Cir. 2009)). Whether a debt collector’s conduct violates the FDCPA must be viewed from
the lens of an “unsophisticated consumer.” Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643,
645 (7th Cir. 2009); see also Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057,
1060 (7th Cir. 2000) (“Practices purporting to violate the [FDCPA] must be viewed from the
objective standard of an ‘unsophisticated debtor.’” (citation omitted)). The unsophisticated
consumer is “uninformed, naïve, or trusting,” but possesses “rudimentary knowledge about the
financial world, is wise enough to read collection notices with added care . . . and is capable of
making basic logical deductions and inferences.” Gruber v. Creditors’ Prot. Servs., 742 F.3d
271, 273 (7th Cir. 2014) (internal quote marks and citation omitted); see also Wahl, 556 F.3d at
645 (“The ‘unsophisticated consumer’ isn’t a dimwit.”). The unsophisticated consumer does not
interpret communications from a debtor “in a bizarre or idiosyncratic fashion.” Gruber, 742
F.3d at 274 (citation omitted).
Whether a particular practice is unfair or unconscionable in the eyes of an
unsophisticated consumer is often a question of fact, and thus “district courts must act with great
restraint when asked to rule in this context on a motion to dismiss[.]” 4 McMillan v. Collection
Prof’ls Inc., 455 F.3d 754, 759-60 (7th Cir. 2006). However, “[that] does not mean that the
unsophisticated consumer test can never be resolved at the pleading stage.” Thompson v. CACH,
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The Court notes that McMillan was decided under the more lenient, pre-Iqbal Rule 12(b)(6)
standard under which “[t]he plaintiff’s claims should survive dismissal if relief could be granted
under any set of facts that could be proved consistent with the allegations.” McMillan, 455 F.3d
at 758. This standard, first adopted by the U.S. Supreme Court in Conley v. Gibson, 355 U.S. 41,
45-46 (1957), has since been “retired” and replaced by the plausibility standard. See Twombly,
550 U.S. at 563 (“after puzzling the profession for 50 years” the Conley formulation “has earned
its retirement”); see also Bank of America, N.A. v. Knight, 725 F.3d 815, 818 (7th Cir. 2013)
(“Iqbal and Twombly hold that a complaint must be dismissed unless it contains a plausible
claim.”). Plaintiff incorrectly cites to the outdated Conley standard in response to the motion to
dismiss. (See R. 34, Pl.’s Resp. at 3 (citing Conley, 355 U.S. at 45-46).)
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L.L.C., No. 14 C 0313, 2014 WL 5420137, at *5 (N.D. Ill. Oct. 24, 2014) (citation omitted). The
U.S. Court of Appeals for the Seventh Circuit has recognized that “there will be occasions when
a district court will be required to hold that no reasonable person, however unsophisticated, could
construe the wording of the communication in a manner that will violate the statutory provision.”
McMillan, 455 F.3d at 760; see also Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769,
776 (7th Cir. 2007) (holding that whether a communication is false or misleading under 15
U.S.C. § 1692e, although often an issue of fact, can be decided at the pleading stage where the
plaintiff “rest[s] on the text of the communication” and the communication is not false or
misleading on its face).
In this case, Plaintiff claims that the presence of the numbers on the envelope constituted
a per se violation of Section 1692f(8). (R. 10-1, Second Am. Compl. ¶ 28.) Plaintiff argues that,
as a policy matter, adherence to the statute’s plain language barring the use of “any language or
symbol” on an envelope’s face will prevent debt collectors from creating “new exemptions
through the courts for conduct that the plain and unambiguous language of the Act prohibits.”
(R. 34, Pl.’s Resp. at 5.) On the other hand, Defendant argues that a strict reading of the statute
would lead to bizarre and impracticable results. (R. 17, Def.’s Mem. at 7.) For example,
Defendant points out that a literal reading would prohibit stamps or postal marks from appearing
on the envelope’s face. (Id. at 6-7.) Defendant argues that the presence of the numbers on the
envelope could not possibly constitute an unfair or unconscionable debt collection practice. (Id.
at 9-12.)
Although the Seventh Circuit has not decided this precise issue, two other Circuits
interpreting Section 1692f(8) have distinguished between “benign” language or symbols and
those that are harmful or potentially harmful to the consumer. See Goswami v. Am. Collections

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Enter., Inc., 377 F.3d 488, 494 (5th Cir. 2004); Strand v. Diversified Collection Serv., 380 F.3d
316, 318-19 (8th Cir. 2004). The U.S. Court of Appeals for the Fifth Circuit held that a half-inch
blue bar and the words “Priority Letter” on a debt collection envelope did not violate Section
1692f(8) despite the plain language of the statute, because the markings did not in any way
suggest that “the contents of the envelope relate[d] to the collection of delinquent debts.”
Goswami, 377 F.3d at 494. Similarly, the U.S. Court of Appeals for the Eighth Circuit held that
Section 1692f was only intended to prohibit unfair and unconscionable debt collection practices;
therefore, it held that a debt collector did not violate the Act by including a corporate logo and
the words “PERSONAL AND CONFIDENTIAL” and “IMMEDIATE REPLY REQUESTED”
on a debt collection envelope, because these markings did not “reveal the source or purpose of
the enclosed letters.” Strand, 380 F.3d at 317-19. The Eighth Circuit concluded that “an
interpretation of § 1692f(8) exempting benign words and symbols better effectuates
Congressional purpose,” and avoids “bizarre and impracticable consequences.” Id. at 319.
Numerous district courts, both in this District and elsewhere, have recognized that
Section 1692f(8) should not be construed mechanically. See Davis v. Baron’s Creditors Serv.
Corp., No. 00 C 4104, 2001 WL 1491503, at *5 (N.D. Ill. Nov. 20, 2001) (rejecting plaintiff’s
argument that the “statute’s plain language establishes a presumption that anything other than the
debt collector’s address violates the statute” and noting that several other courts had adopted a
benign language exception to Section 1692f(8)); see also Waldron v. Prof’l Med. Mgmt., No. 121863, 2013 WL 978933, at *5 (E.D. Penn. March 13, 2013) (adopting a benign language
exception and finding no violation of Section 1692f(8) where debt collection envelope displayed
a “seemingly random series of letters and numbers that only Defendant [could] decipher”);
Lindbergh v. Transworld Sys., Inc., 846 F. Supp. 175, 180 (D. Conn. 1994) (rejecting plaintiff’s

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“mechanical interpretation” of Section 1692f(8) and finding no violation even though envelope
bore a stripe across it and contained the word “Transmittal”); Masuda v. Thomas Richards &
Co., 759 F. Supp. 1456, 1466 (C.D. Cal. 1991) (concluding that envelope bearing the words
“PERSONAL & CONFIDENTIAL” and containing a notice that “theft of mail or obstruction of
delivery is a federal crime” did not violate Section 1692f(8), because purposes of the FDCPA
would not be advanced by construing it to prohibit “benign language”).
On the other hand, where words or symbols on an envelope indicate that the letter
pertains to a debt or otherwise invades a consumer’s privacy, courts have not hesitated to find a
violation of 1692f(8), or at least to allow the claim to proceed further. See Douglass v.
Convergent Outsourcing, 765 F.3d 299, 301-03 (3rd Cir. 2014) (vacating summary judgment for
defendant where quick-response code was visible through a windowed envelope, and “when
scanned by a device such as a smart phone,” the code could “expose [plaintiff’s] financial
predicament,” thus triggering privacy concerns under the FDCPA); Davis, 2001 WL 1491503, at
*5 (denying parties’ cross-motions for summary judgment where envelope listed a return address
of “Baron’s Creditor’s Services Corporation,” because it was an issue of fact whether an
unsophisticated consumer would view the mailing as being from a debt collector); Rutyna v.
Collection Accounts Terminal, Inc., 478 F. Supp. 980, 982 (N.D. Ill. 1979) (entering judgment
for plaintiff where envelope listed a return address of “COLLECTION ACCOUNTS
TERMINAL, INC.,” which indicated that the mailing was from a debt collector in violation of
1692f(8)).
Plaintiff urges this Court against adopting a benign language exception. (R. 34, Pl.’s
Resp. at 6-7.) But Plaintiff’s argument that Section 1692f(8) prohibits any markings, no matter
how innocuous, fails to account for the opening paragraph of Section 1692f, which provides that

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the Section applies to “unfair or unconscionable” conduct by debt collectors. See 15 U.S.C.
§1692f. In construing a statute, the Court must always “read the words in their context and with
a view to their place in the overall statutory scheme.” King v. Burwell, ---S. Ct.----, 2015 WL
2473448, at *8 (June 25, 2015) (internal quotation marks and citation omitted). The Court’s
“duty, after all, is to construe statutes, not isolated provisions.” Id. (internal quotation marks and
citation omitted); see also Dahlstrom v. Sun-Times Media, L.L.C., 777 F.3d 937, 943 (7th Cir.
2015) (“Interpretation of a word or phrase depends upon reading the whole statutory text,
considering the purpose and context of the statute.”).
Considering Section 1692f(8) in context and in light of the purposes of the FDCPA, it is
clear to this Court that the provision was only intended to prohibit markings that could be
considered unfair or unconscionable, not those that are innocuous or benign. This reading is
consistent with the commentary issued by the Federal Trade Commission (“FTC”), an agency
that “holds some interpretative and enforcement authority with respect to the FDCPA[.]” Gulley
v. Markoff & Krasny, 664 F.3d 1073, 1074 (7th Cir. 2011) (citation omitted). The FTC’s
commentary states:
[A] rigid, literal approach to [Section 1692f(8)] would lead to absurd results (i.e.,
taken literally, it would prohibit showing any part of the consumer’s address on
the envelope). The legislative purpose was to prohibit a debt collector from using
symbols or language on envelopes that would reveal that the contents pertain to
debt collection—not to totally bar the use of harmless words or symbols on an
envelope.
FTC Staff Commentary On the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097-02,
50099 (Dec. 13, 1988). Although the FTC’s commentary is “not binding on the courts because it
is not a formal regulation and did not undergo full agency consideration,” McMillan, 455 F.3d at
764, it is entitled to the Court’s “respectful consideration,” Gulley, 664 F.3d at 1075 (citation
omitted). The FTC’s interpretation is also supported by the legislative history of the FDCPA.

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The bill’s Senate report states that Section 1692f(8) was intended to prevent debt collectors from
embarrassing debtors by announcing their delinquency on the face of a dunning letter envelope:
A debt collector is prohibited from using any unfair or unconscionable means to
collect debts. The following enumerated practices are violations: . . .
communicating information about a debt by postcard; and using symbols on
envelopes indicating that the contents pertain to debt collection.
S. Rep. No. 95-382, at 8 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1702.
Plaintiff nevertheless argues that under the Third Circuit’s reasoning in Douglass, the
complaint states a valid claim. (See R. 34, Pl.’s Resp. at 8-10.) Douglass is not binding on this
Court, but in any event the Court finds the case distinguishable. There, the envelope at issue
contained an account number and a visible code, which, when scanned by a smart phone or
similar device, revealed various personal information about the plaintiff, including the “monetary
amount corresponding to [the plaintiff’s] alleged debt.” Douglass, 765 F.3d at 300. The Third
Circuit found it necessary to employ a strict reading of Section 1692f(8) in this context, because
the information on the envelope implicated “a core concern animating the FDCPA—the invasion
of privacy.” Id. at 303.
In this case, by contrast, a strict interpretation of the FDCPA is not needed to protect
Plaintiff from an invasion of privacy or from unscrupulous, embarrassing, or harassing conduct
by a debt collector. Plaintiff does not allege that someone viewing the envelope could use the
string of numbers to obtain information about the amount of his debt or other private
information; instead, the gist of his claim is that the mere presence of the numbers violated
Section 1692f(8). (R. 10-1, Second Am. Compl. ¶¶ 19-28.) But an unsophisticated consumer
viewing the envelope could not plausibly divine that the letter inside was associated with a
delinquent debt. Plaintiff has not alleged, nor is there any basis to infer, that the account number
embedded in the string of numbers would have meaning to anyone other than Defendant. The

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number is not identified in any way as an account number, and this same number is printed on
the envelope just below Defendant’s return address. (See R. 5-1, Ex. C.) Someone viewing the
envelope could just as easily conclude that the numbers were part of a postal code and that the
letter consisted of unwanted junk mail. See Strand, 380 F.3d at 319 (“Even from the perspective
of an unsophisticated consumer, the envelopes must have appeared indistinguishable from the
countless items of so-called junk mail found daily in mailboxes across the land.”). It might be a
closer question if Defendant’s name bore some indication that it was involved in the debt
collection business, but “FMS, Inc.” is entirely innocuous.
In a recent case, our respected colleague U.S. District Judge Milton I. Shadur struck a
complaint alleging a similar claim based on a string of numbers and symbols appearing on a debt
collection envelope. See Sampson v. MRS BPO, No. 15 C 2258 (N.D. Ill. Mem. Op. & Order
dated Mar. 17, 2015). As Judge Shadur aptly observed:
In order for any hypothetical member of the public who views the envelope . . . to
be able to perceive that debt collection is involved and is at issue, so that
[defendant] assertedly used unfair and unconscionable means to collect a debt . . .
that member of the public would have to be blessed (or cursed?) with x-ray vision
that enabled him or her to read the letter contained in the sealed and assertedly
offending envelope. Absent that, any deciphering of the impenetrable string of
numbers and symbols on the outside of the . . . envelope would have to depend on
some sort of divination. That is simply not the stuff of which any legitimate
invocation of the Act or its constructive purposes can be fashioned.
Id. (internal quotation marks and citations omitted). This Court agrees. Because the string of
numbers appearing on the envelope is benign, the Court finds that the numbers did not violate

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Section 1692f(8). Plaintiff has failed to state a plausible claim for relief under the FDCPA and,
therefore, this action is dismissed. 5
CONCLUSION
For the reasons set forth above, FMS, Inc.’s motion to dismiss for failure to state a claim
(R. 16) is GRANTED. This action is DISMISSED WITH PREJUDICE.

ENTERED:

_____
Chief Judge Rubén Castillo
United States District Court

Dated: July 6, 2015

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The Court is cognizant of the Seventh Circuit’s holding that “[g]enerally, if a district court
dismisses for failure to state a claim, the court should give the party one opportunity to try to
cure the problem, even if the court is skeptical about the prospects for success.” Bausch v.
Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010). In that case, however, the plaintiff specifically
requested an opportunity to amend the complaint in response to the defendant’s motion to
dismiss. Id. at 561-62. Plaintiff has made no such request in this case, nor has he otherwise
suggested how he might amend his complaint to state a viable claim under Section 1692f(8).
Instead, Plaintiff argues that his complaint as pled adequately states a claim for relief under the
FDCPA, relying on the Conley standard, (see R. 34, Pl.’s Resp. at 3, 10), which as noted above is
no longer the proper standard for deciding a motion to dismiss.
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