Wheeler v. Midland Funding LLC et al
MEMORANDUM Opinion and Order signed by the Honorable Virginia M. Kendall on 7/31/2017. Defendants' Motion to Dismiss 44 is denied. Mailed notice(lk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
MIDLAND FUNDING, LLC,
MIDLAND CREDIT MANAGEMENT,
INC., AND ECORE CAPITAL GROUP
No. 15 C 11152
Judge Virginia M. Kendall
MEMORANDUM ORDER AND OPINION
Plaintiff Kevin Wheeler brought this putative class action against Midland Funding,
LLC., Midland Credit Management, Inc. (“MCM”), and Encore Capital Group, Inc. alleging that
Defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et. seq.
(“FDCPA”), when MCM’s website failed to inform him that his debt was not collectible under
the applicable statute of limitations. Defendants now move to dismiss Wheeler’s claim for lack
of subject matter jurisdiction, arguing that Wheeler lacks Article III standing because he has
failed to articulate a concrete injury. For the reasons set forth below, Defendants’ Motion to
Dismiss is denied.
Sometime in 2015, Wheeler noticed that Midland Credit Management (“MCM”) was
pulling his credit report. (Dkt. 1 ¶ 33.) MCM is a collection agency that collects charged offdebts for owners of debt, specifically for Midland Funding LLC. (Id. 17.) As such, MCM is a
debt collector as defined in the FDCPA. See Henson v. Santander Consumer USA Inc., 137 S.
Ct. 1718, 1720 (2017). Wheeler contacted MCM and was told that it was attempting to collect
an alleged credit card balance and offered Wheeler a 40% discount to settle the debt. (Id. ¶¶ 3335, 38.)
Thereafter, on October 4, 2015, Wheeler noticed that MCM had pulled his credit again.
(Id. at ¶ 40.) When Wheeler called MCM, a representative provided him with an account number
to obtain information about his debt from MCM’s website. (Id.) MCM’s website indicated: (1)
that Wheeler last made payment on the debt on September 18, 2009; (2) that the original creditor
had given up on being repaid as of April 30, 2010; (3) a settlement offer whereby plaintiff would
save 40%; and (4) notice that MCM was not obligated to renew its settlement offer. (Id. at ¶¶ 4445; Dkt.1, Ex. B.) The website did not indicate that the statute of limitations on Wheeler’s debt
Because the statute of limitations for his credit card debt had expired, Wheeler asserts
that his debt could not be forcibly collected and that Defendants violated the FDCPA and related
rules because they failed to inform him of that fact. (Id. ¶ 46.) He also alleges that Defendants
regularly attempt to collect debts from other debtors where the statute of limitations on the debt
has expired. (Id. at ¶ 48.)
In addition to the facts alleged by Wheeler in his Complaint, both sides submit facts
elicited during discovery. Specifically, prior to accessing MCM’s website in September 2015,
Wheeler’s credit card debt was bought by non-party Asset Acceptance, LLC, a subsidiary of
Defendant Encore. (Dkt. 44-1 at 99:10-20; Dkt. 44 at 3.) In early April 2015, approximately six
months before he accessed MCM’s website, Asset sent Wheeler a letter notifying him that the
statute of limitations applicable to his credit card debt had expired. (Dkt. 44-1 at 133:1-135:15.)
At his deposition, Wheeler conceded that he received the notice from Asset regarding the statute
of limitations, understood what it meant, and admitted that he did not intend to make any further
payments on the debt. (Id.) In a response to a Request for Admission, Plaintiff admitted that he
has not “sustained any actual damages relating to this lawsuit,” (Dkt. 44-2 at 5), and testified that
he did not believe he had “any actual damages” or “other kind of injuries . . . as a result of
Midland failing to put on its website the Statute of Limitations disclosure.” (Dkt. 44-1 at 152:20153:5.) Wheeler, however, also testified that he felt misled by Midland’s offer to settle the debt
without informing him that the statute of limitations had run, because he did not “know the
consequences of making a payment.” (Dkt. 49-1 at 127:22-128:15.) Wheeler also testified that
in light of the statute of limitations information he received from Asset, the lack of notice about
the statute of limitations from MCM confused him because he believed the account had been
closed. (Dkt. 44-1 at 131:6-24.) At the time he accessed the website, Wheeler did not know how
MCM calculated the applicable statute of limitations, including whether they applied a different
statute of limitations to the debt. (Id. at 174:14 -176:1.) He also did not know whether MCM had
any reason to consider his account to be restarted by the statute of limitations. (Id. at 177:4-20.)
A motion to dismiss under Rule 12(b)(1) challenges the Court's subject matter
jurisdiction. Fed. R. Civ. P. 12(b)(1). When a defendant brings a facial challenge to subject
matter jurisdiction, “the district court must accept as true all material allegations of the
complaint, drawing all reasonable inferences therefrom in the plaintiff's favor, unless standing is
challenged as a factual matter.” Remijas v. Neiman Marcus Group, LLC, 794 F.3d 688, 691 (7th
Cir. 2015). If, however, as here, a defendant factually challenges the basis for federal
jurisdiction, “the district court may properly look beyond the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on the issue to determine whether in
fact subject matter jurisdiction exists.” Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440,
444 (7th Cir. 2009) (citation and internal quotation marks and annotation omitted).
Defendants argue that Wheeler lacks Article III standing because he did not suffer any
concrete harm or even the risk of harm resulting from Midland’s alleged violations of the
FDCPA. (Id. at 9.) Defendants focus on Plaintiff’s admissions during discovery that he was
aware that the statute of limitations had expired on his debt before he accessed MCM’s website,
he had no intention of making any payment to MCM, and that he testified he did not suffer an
injury from the alleged FDCPA violation. (Dkt. 44 at 1-2.) Wheeler responds even though he did
not suffer a pecuniary injury, he suffered an informational injury—the deprivation of critical
account information regarding his debt—which the Seventh Circuit recognizes as a “concrete
injury” for the purposes of Article III standing. (Dkt. 49 at 2.)
I. Article III Standing
There is “[n]o principle . . . more fundamental to the judiciary’s role in our system of
government than the constitutional limitation of federal court jurisdiction to actual cases or
controversies.” Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724, 726 (7th Cir.
2016), cert. denied, No. 16-1113, 2017 WL 1001378 (U.S. June 19, 2017) (quoting Spokeo, Inc.
v. Robbins, 136 S. Ct. 1540, 1547 (2016)). Whether a claimant has standing to sue is an
important component of the case and controversy limitation because it ensures “that courts do
not decide abstract principles of law. . . .” Meyers, 843 F.3d at 726 (quoting Sierra Club v.
Marita, 46 F.3d 606, 613 (7th Cir. 1995.) “The law of Article III standing, which is built on
separation-of-powers principles, serves to prevent the judicial process from being used to usurp
the powers of the political branches.” Clapper v. Amnesty Int’l USA, 133 S.Ct. 1138, 1146
Article III standing consists of three elements, requiring the plaintiff to “have: (1)
suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant,
and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, 136 S. Ct. at 1548
(citing Lujan v. Defenders of Wildlife, 504 U.S. at 560-61 (1992)). The plaintiff bears the burden
of establishing these elements. Diedrich v. Ocwen Loan Servicing, LLC., 839 F.3d 583, 588
(2016) (citing Lujan at 561).
The current dispute centers on the injury in fact requirement, specifically whether
Wheeler’s alleged injury was sufficiently concrete to confer standing. An injury in fact is
established when a plaintiff shows that he suffered “an invasion of a legally protected interest
which is (a) concrete and particularized and (b) actual or imminent, not conjectural or
hypothetical.” Lujan, 504 U.S. at 560 (internal quotations omitted). To be concrete, an injury
must be de facto, meaning that it must actually exist.
Spokeo, 136 S.Ct. at 1549. That being
said, to be concrete, an injury does not necessarily have to be tangible. Id.
When determining whether intangible injuries can confer standing, courts look to both
history and congressional judgment. Spokeo, 136 S.Ct. at 1549. Because standing is “grounded
in historical practice” it “is instructive to consider whether an alleged intangible harm has a close
relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in
English or American courts.” Id. “In addition, because Congress is well positioned to identify
intangible harms that meet minimum Article III requirements, its judgment is also instructive and
important.” Id. As a result, Congress may elevate “to the status of legally cognizable injuries
concrete, de facto injuries that were previously inadequate in law.” Lujan, 504 U.S. at 578. In
fact, “the risk of real harm” can satisfy the concreteness requirement and “the violation of a
procedural right granted by statute can be sufficient in some circumstances to constitute injury in
fact.” Spokeo, 136 S.Ct. at 1549. “In other words, a plaintiff in such a case need not allege any
additional harm beyond the one Congress has identified.” Id. That being said, bare statutory
violations that cannot result in the risk of real harm, like the dissemination of a wrong zip code,
may not confer Article III standing. Id.; see also Gubala v. Time Warner Cable, Inc., 846 F.3d
909, 911 (7th Cir. 2017) (holding that former cable subscriber did not suffer concrete injury after
cable company failed to destroy his personal information as required by the Cable
Communications Policy Act, where there was no risk to him of harm); Meyers, 843 F.3d at 727
(finding that restaurant’s failure to truncate expiration date of customer’s credit card on receipt in
violation of the Fair and Accurate Credit Transactions Act did not confer Article III standing).
When looking to historical practice and Congressional intent, Wheeler has sufficiently
established a concrete injury. Due to lackluster and inconsistent consumer protections against
unscrupulous debt collectors and to ensure that all consumers would be treated reasonably and
civilly, Congress enacted the FDCPA “to protect consumers from abusive, deceptive, and unfair
debt collection practices.” Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322,
1324 (7th Cir. 1997); see also Henson, 137 S. Ct. at 1720 (noting the FDCPA “authorizes private
lawsuits and weighty fines designed to deter wayward collection practices”). In particular, §
1692e(2)(A) provides that debt collectors may not falsely represent “the character, amount, or
legal status of any debt.” See also Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA,
559 U.S. 573, 577 (2010). The FDCPA also prohibits debt collectors from using “unfair or
unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. These
sections were “designed to provide information that helps consumers to choose intelligently.”
Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 324 (7th Cir. 2016) (quoting Hahn v.
Triumph Partnerships LLC, 557 F.3d 755, 757-58 (7th Cir. 2009)). Wheeler’s allegations – that
MCM failed to inform him that the statute of limitations had run on his debt while trying to
collect his debt and that he was confused about the status of his debt due to their failure to inform
him of his debt’ – fit squarely within the ambit of activity that Congress intended to curtail when
promulgating sections 1692e and 1692f.
The Supreme Court has also recognized that receiving misleading or incomplete
information in violation of a statutory mandate, satisfies Article III’s concreteness requirement.
In Havens Realty Corp. v. Coleman, the Court found that individual plaintiffs who acted as
“testers,” individuals who pose as renters for the purpose of collecting evidence of unlawful
housing discrimination, had standing to sue under the Fair Housing Act. 455 U.S. 363, 373
(1982). The Court reasoned that the FHA conferred an “enforceable right to truthful information
concerning the availability of housing” and that “[a] tester who has been the object of a
misrepresentation made unlawful under [the FHA] has suffered injury in precisely the form the
statute was intended to guard against, and therefore has standing to maintain a claim for damages
under the Act's provisions. That the tester may have approached the real estate agent fully
expecting that he would receive false information, and without any intention of buying or renting
a home, does not negate the simple fact of injury within the meaning of” the statute. Id. at 374.
Similar to the FHA, the FDCPA, confers a right to truthful information and is aimed at
preventing unlawful misrepresentations. And similar to the testers in Havens Realty, Wheeler
personally suffered a cognizable injury – the deprivation of truthful information – even without
suffering a pecuniary loss.1
The Supreme Court has also recognized that the right to information can confer standing in other circumstances.
See Federal Elec. Com’n v. Akins, 524 U.S. 11 (1998) (finding that a group of voters’ inability to obtain information
Several district courts within this Circuit have recently recognized that similar
informational injuries in the specific context of the FDCPA, also confer standing. In a strikingly
similar case, Haddad v. Midland Funding, a consumer sued MCM–the same defendant here–for
purported violations of the FDCPA after MCM sent the plaintiff a collection letter stating that
“flexible options may no longer be available to [the plaintiff]” even though “it never intended to
make [these] options unavailable to [the plaintiff].” Haddad, 2017 WL 1550187, at *1. Relying
on Havens Realty, the court ultimately concluded that a violation of the plaintiff’s right to
receive truthful information is sufficient to cause a concrete injury in part because “[t]ruthful
information about the state of [his] financial affairs had intrinsic value to him.” Id. at 4. See,
e.g., Pierre v. Midland Credit Mmgt. Inc., No 16 C 2895, 2017 WL 1427070, at *3 (N.D. Ill.
Apr. 21, 2017) (concluding that plaintiff had suffered injury in fact after Midland sent her “a
misleading dunning letter that sought payment on a time-barred debt and lacked disclosures to
which she was legally entitled” because “[s]uch an injury falls squarely within the ambit of what
Congress gave consumers in the FDCPA: ‘a legally protected interest in certain information
about debts,’ with ‘deprivation of information about one's debt (in a communication directed to
the plaintiff consumer) a cognizable injury’”) (quoting Saenz v. Buckeye Check Cashing of
Illinois, No. 16 C 6052, 2016 WL 5080747, at *1-2 (N.D. Ill. Sept. 20, 2016)); Quinn v.
Specialized Loan Servicing, LLC., 2016 WL 4264967 (N.D. Ill. 2016) (failure to provide the
plaintiffs with information required under the FDCPA constituted a sufficiently concrete harm
for purposes of Article III standing); Bernal v. NRA Grp., LLC, 318 F.R.D. 64, 72 (N.D. Ill.
required by the FECA to be made public was a sufficient injury in fact to satisfy Article III standing); Public Citizen
v. U.S. Dept. of Justice, 491 U.S. 440 (1989) (holding that plaintiff had standing to challenge the Justice
Department’s failure to provide access to information, the disclosure of which was required by the Federal Advisory
Committee Act). Similarly, the Seventh Circuit has recently emphasized that “[a] plaintiff suffers an injury-in-fact
when she is unable to obtain information that is statutorily subject to public disclosure.” Carlson v. United States,
837 F.3d 753, 758 (7th Cir. 2016).
2016) (holding that receiving a debt collection letter that wrongly assesses percentage-based
collection costs is a concrete injury). The logic of these cases is persuasive here and consistent
with established Seventh Circuit case law regarding the FDCPA, which “does not require proof
of actual damages as a precursor to the recovery of statutory damages” and when looking at
standing focuses on “the debt collector’s misconduct, not whether the debt is valid or, as here,
whether the consumer has paid an invalid debt.” Keele v. Wexler, 149 F.3d 589, 593 (7th Cir.
Defendants reliance on two recent Seventh Circuit decisions in which certain intangible
injuries were found to be insufficient to confer standing—Meyers v. Nicolet Restaurant of De
Pere, LLC. and Gubala v. Time Warner Cable, Inc—is misplaced. In Meyers, the plaintiff
brought a putative class action against Defendant Nicolet Restaurant, seeking damages after the
restaurant failed to truncate the expiration date of his credit card on his receipt—a purported
violation of the Fair and Accurate Credit Transactions Act (FACTA). Meyers, 843 F.3d at 725.
Relying on Spokeo, the Seventh Circuit held that “Meyers’ allegations [were] insufficient to
satisfy the injury-in-fact requirement for Article III standing” because Meyers had not suffered
any harm due or the expiration of harm to the expiration date not being printed on his receipt. Id.
at 727. Meyers is distinguishable from the facts here. Importantly, the plaintiff’s alleged injury
in Meyers—that his restaurant receipt did not comply with the FACTA because it did not
truncate the expiration date on his credit card—did not align with the protections of the statute,
which were aimed at curbing identity theft. In fact, in regards to the statute at issue in Meyers,
Congress has expressly declared that the failure to truncate a credit card’s expiration date,
without more, does not heighten the risk of identity theft. Id. As such, the Seventh Circuit,
echoing Spokeo, noted that a “violation of a statute, completely divorced from any potential real-
world harm, is [not] sufficient to satisfy Article III’s injury-in-fact requirement.” Id. at 729.
Here, the alleged injury—dissemination of misleading information about the status of a
consumer debt—is exactly the type of injury that Congress intended to prevent when it
promulgated the FDCPA.
Gubala, the other recent Seventh Circuit decision relied upon by Defendants is also
distinguishable. In Gubala, the plaintiff brought a putative class action against Time Warner, his
former cable provider, after Time Warner failed to destroy his personal information, a purported
violation of the Cable Communications Policy Act. Gubala v. Time Warner Cable, Inc., 846
F.3d 909 (7th Cir. 2017). While recognizing that “there [was] unquestionably a risk of harm in
such a case,” the Seventh Circuit affirmed the district court’s decision that Gubala lacked
standing because he had failed to present any allegations or evidence showing that he was
harmed and had “not alleged any plausible (even if attenuated) risk of harm to himself from
[Time Warner’s] violation—any risk substantial enough to be deemed concrete.” Id. The Court
went on to note that Time Warner’s conduct in retaining Gubala’s personal information was a
self-regarding act, in that it had the potential to harm Time Warner by cluttering its files and
opening it up to lawsuits under the Cable Communications Policy Act, but that the violation did
not harm the plaintiff. Id. at 912. Furthermore, the statutory requirement to destroy a former
customer’s personal information was qualified by related provisions that permitted and even
required the cable operator to retain personal information for certain reasons. Id. at 913.
Like the violation in Meyers, and unlike Wheeler’s injury, the alleged statutory violation
in Gubala, did not affect the plaintiff in any tangible way. Unlike that scenario, Wheeler was
directly impacted by the Defendants’ actions; he personally received misleading information
regarding the status of his debt which essentially encouraged him to make a payment on a now-
expired debt. Just because Wheeler did not suffer a pecuniary injury, does not mean he did not
suffer an injury in fact. In addition to receiving the misleading information, Wheeler testified
that he was confused by the Defendants’ lack of disclosure regarding his debt as he was
previously under the impression that the statute of limitations had run and that the debt was not
legally enforceable. Confused by the status of his debt, MCM’s lack of disclosure opened the
possibility that MCM calculated the applicable statute of limitations differently than Asset and
would try to enforce the debt. This is exactly the type of injury the FDCPA was enacted to
prevent and the type of injury that courts within this circuit have consistently recognized as
For the reasons set forth above, the Defendant’s Motion to Dismiss is denied.
Hon. Virginia M. Kendall
United States District Judge
Date: July 31, 2017
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