Bednarski v. Potestivo & Associates, P.C. et al
Opinion and Order Signed by the Honorable Joan H. Lefkow on 3/7/2017: Defendants' motion to dismiss 12 is granted in part and denied in part as follows: The motion to dismiss (1) for lack of subject-matter jurisdiction is denied; (2) for fa ilure to state a claim for violations of 15 U.S.C. §§ 1692c(b), 1692e(2), 1692e(5), and 1692e(10) is denied; (3) for failure to state a claim for violations of 15 U.S.C. §§ 1692b, 1692d, 1692e(1), 1692e(9), and 1692f is granted without prejudice to repleading on or before March 21; and (4) for failure to state a claim against Caleb J. Halberg is granted with prejudice.Mailed notice(mad, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
JOHN BEDNARSKI, JR.,
POTESTIVO & ASSOCIATES, P.C. and
CALEB J. HALBERG,
Case No. 16 CV 02519
Judge Joan H. Lefkow
OPINION AND ORDER
John Bednarski, Jr., filed suit against Potestivo & Associates, P.C., and Caleb J. Halberg,
alleging they violated multiple sections of the Fair Debt Collection Practices Act (FDCPA), 15
U.S.C. §§ 1692 et seq. (Dkt. 4 ¶¶ 13–14.) Potestivo and Halberg move to dismiss for lack of
subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state
claim under Federal Rule of Civil Procedure 12(b)(6). (Dkt. 12.) For the reasons stated below,
the motion to dismiss is granted in part and denied in part.
Between 1993 and 1995, Bednarski received four student loans from the Illinois Student
The facts described herein are taken from the Amended Complaint and its supporting exhibits
and are accepted as true for the purposes of this motion. See Thompson v. Ill. Dep’t of Prof’l Reg., 300
F.3d 750, 753 (7th Cir. 2002) (citation omitted); Fed. R. Civ. P. 10(c). The court will also consider the
additional factual allegations in Bednarski’s response to this motion. The defendants argue that the court
should not consider these facts because they were not included in the complaint, but this is incorrect. See
United States ex rel. Hanna v. City of Chicago, 834 F.3d 775, 779 (7th Cir. 2016) (quoting Early v.
Bankers Life & Cas. Co., 959 F.2d 75, 79 (7th Cir. 1992) (“The party defending the adequacy of a
complaint may point to facts in a brief or affidavit ‘in order to show that there is a state of facts within the
scope of the complaint that if proved (a matter for trial) would entitle him to judgment.’”)).
Assistance Commission. (Dkt. 15 at 1–2.) As of early 2015, the outstanding debt totaled
$22,824.43. (Dkt. 4 ¶ 7.) On March 10, 2015, Halberg, an attorney employed by Potestivo,
drafted a collection letter regarding this debt, representing that he was writing on behalf of the
United States Department of Justice. (Id. ¶ 9, Ex. A.) Halberg signed the letter under the typed
name of the United States Attorney for the Northern District of Illinois, as “Attorney for the
United States.” This letter was mailed to Bednarski’s father’s home address rather than to the
address listed on Bednarski’s student loan applications. (Id. ¶ 10; Dkt. 15 at 1.) Because
Bednarski’s father was deceased, the letter was received and opened by Bednarski’s sister, who
contacted Bednarski to inform him he “was being sued by the government.” (Dkt. 15 at 2.)
Bednarski alleges the letter itself “is extremely confusing” and falsely represents both that
Halberg is an attorney for the United States and that a lawsuit had been filed against Bednarski
regarding the debt. (Dkt. 4 ¶¶ 11-12.)
On March 2, 2016, Bednarski filed an Amended Complaint, which is the subject of this
motion to dismiss. The Amended Complaint names both Potestivo and Halberg as defendants
and claims they violated the FDCPA, sections 1692b(2); 1692c(b); 1692d; 1692e(1), (2), (5), (9),
and (10); and 1692f. (Id. ¶¶ 13-14.)
Potestivo and Halberg now move to dismiss Bednarski’s Amended Complaint pursuant to
Rules 12(b)(1) and 12(b)(6) arguing (a) they are entitled to qualified immunity under Yearsley v.
W.A. Ross Constr. Co., 309 U.S. 18, 20, 60 S. Ct. 413, 84 L. Ed. 554 (1940), and therefore the
court lacks subject-matter jurisdiction; (b) the Amended Complaint fails to state a claim against
Halberg in his individual capacity; and (c) the Amended Complaint fails to state a claim against
Potestivo. (Dkt. 12.)
“In considering a motion to dismiss for lack of subject matter jurisdiction, the district
court must accept the complaint’s well-pleaded factual allegations as true and draw reasonable
inferences from those allegations in the plaintiff’s favor.” Transit Exp., Inc. v. Ettinger, 246 F.3d
1018, 1023 (7th Cir. 2001).
The FDCPA, at 15 U.S.C. § 1692k(d), grants to the district courts subject matter
jurisdiction to enforce any liability created by violations of the Act. Yet, Potestivo and Halberg
argue the court lacks the power to hear this case because, as a government contractor, they are
entitled to qualified immunity under Yearsley. (Dkt. 12 at 3.) Yearsley held that a construction
contractor working for the United States government could not be held “liable for his conduct
causing injury to another,” unless either “he exceeded his authority or that [authority] was not
validly conferred.” 309 U.S. at 21. Yearsley teaches that, where the sovereign has agreed to
accept responsibility for the actions of a contractor that has acted within the scope of its
authority, the proper defendant is the United States and the proper court is the Court of Claims.
Compare Tillett v. J.I. Case Co., 756 F.2d 591 (7th Cir. 1985) (where government contractor
established, inter alia, that it supplied equipment in conformity with government specifications,
government contractor defense applied, but because the government had not waived sovereign
immunity, the plaintiff could not recover for her loss). Thus, only if the government has
immunized its contractors from liability for violations of the FDCPA would Yearsley have any
In any event, the district court does not lack subject matter jurisdiction to determine
whether the government contractor defense applies. See Ackerson v. Bean Dredging, LLC, 589
F.3d 196, 207 (5th Cir. 2009) (“Yearsley does not … address the court’s power to hear a case.”);
Adkisson v. Jacobs Eng’g Grp., Inc., 790 F.3d 641, 649 (6th Cir. 2015) (remanding for trial court
to determine under Rule 12(b)(6) whether, based on the pleadings, the defendant was eligible for
qualified immunity under the Yearsley doctrine).
Moreover, it is highly unusual to dismiss a complaint based on an affirmative defense
“since a complaint need not anticipate and overcome affirmative defenses.” Cancer Found., Inc.
v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 674 (7th Cir. 2009). “[O]nly where the allegations
of the complaint itself set forth everything necessary to satisfy the affirmative defense” is
dismissal appropriate. Chi. Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d 610, 613–14
(7th Cir. 2014) (quotation marks omitted). Because this complaint does not plead facts that
establish the government contractor defense, dismissal based on Yearsley is inappropriate.
Furthermore, defendants identify no case in which a debt collector working for the
government has been found immune from liability under Yearsley. This is likely because, as the
Secretary of Education has stated, “third party collectors of defaulted student loans . . . [are]
subject to the Fair Debt Collection Practices Act.” 55 Fed. Reg. 40120 (1990). Additionally,
defendants ignore the fact that the FDCPA explicitly defines those excluded from the definition
of “debt collector” and not subject to the Act and that list does not include debt collectors
working on a government contract. See 15 U.S.C. § 1692a(6)(C) (“The term [debt collector] does
not include . . . any officer or employee of the United States or any State to the extent that
collecting or attempting to collect any debt is in the performance of his official duties.”) “A
statute should be construed so that effect is given to all its provisions, so that no part will be
inoperative or superfluous, void or insignificant.” Hibbs v. Winn, 542 U.S. 88, 101, 124 S. Ct.
2276, 159 L. Ed. 2d 172 (2004). Had it wished to do so, Congress could have extended this
exemption to include agents or contractors as well as officers and employees of the United
States. Instead, Congress limited immunity to only officers or employees. 2
Accordingly, defendants’ motion to dismiss based on qualified immunity under Yearsley
must be denied.
Failure to State a Claim
The alleged violations of FDCPA are treated separately according to the well-
established principles to be applied to assessing a motion to dismiss under Rule 12(b)(6). See
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); Bell Atl. v.
Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).
Halberg moves to dismiss the claims against him on the ground that he is not a debt
collector in his individual capacity. Bednarski’s Amended Complaint explicitly states that
Halberg “is a ‘debt collector’ as that term is defined by 15 U.S.C. § 1692a(6)” (dkt. 4 ¶ 6), but
this conclusional statement is not supported by the rest of the factual allegations in the Amended
Complaint. See Iqbal, 566 U.S. at 678 (holding that mere “‘labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action’” are not sufficient to create facial
plausibility). Instead, Bednarski repeatedly alleges that Halberg is an employee of Potestivo
acting on the business’s behalf. (See id. ¶¶ 9, 16-19.) Under the FDCPA “individuals do not
become ‘debt collectors’ simply by working for . . . debt collection companies.” Pettit v.
Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir. 2000). Where an
The defendants have not argued that they should be considered officers or employees of the
United States under § 1692a(6)(C). Had they done so, however, the court would agree with the logic
espoused by a number of circuits, which have held such contractors are neither officers nor employees of
the United States or any State. See, e.g., Gillie v. Law Office of Eric A. Jones, LLC, 785 F.3d 1091 (6th
Cir. 2015); Brannan v. United Student Aid Funds, Inc., 94 F.3d 1260 (9th Cir. 1996); Rosario v. Am.
Corrective Counseling Servs., 506 F.3d 1039 (11th Cir. 2007).
employee is acting on behalf of his employer, the FDCPA “does not contemplate personal
liability . . . except perhaps in limited instances where the corporate veil is pierced.” Id. Rather,
“the FDCPA has utilized the principle of vicarious liablity . . . [wherein] the debt collection
company answers for its employees’ violations of the statute.” Id. Therefore, because Bednarski
alleges in his Amended Complaint that Halberg is an employee of Potestivo, he has pleaded
himself out of court, and his claims against Halberg must be dismissed.
1. §§ 1692b, 1692d, and 1692f
Bednarski fails to provide any factual allegations in support of his claims that Potestivo
violated §§ 1692b, 1692d, and 1692f. Therefore, they must be dismissed.
2. § 1692c
Section 1692c(b) prohibits certain communications by a debt collector with third parties.
Bednarski alleges that Potestivo sent a letter regarding the debt to his father (whose name was
also John Bednarski) at the father’s home address rather than to Bednarski’s home address,
which letter was received and read by his sister, who understood the letter to be describing a debt
owed by Bednarski. These allegations are sufficient to put Potestivo on notice of the basis of
Bednarski’s claim, and “give enough details about the subject-matter [sic] of the case to present a
story that holds together.” Swanson, 614 F.3d at 404. Potestivo’s arguments to the contrary point
to denials or defenses it might raise, such as lack of intent, but factual disputes are for another
day. As such, Bednarski has alleged sufficient facts to state a claim under § 1692c(b).
3. Violation of § 1692e
Section 1692e generally prohibits debt collectors from using “any false, deceptive, or
misleading representation or means in connection with the collection of any debt.” 15 U.S.C.
§ 1692e. Whether a debt collection letter is false, deceptive, or misleading under § 1692e is a
question of fact. Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769, 776 (7th Cir. 2007).
Where a plaintiff’s complaint includes well-pleaded allegations that a collection letter is
deceptive or confusing, that will usually be sufficient to avoid dismissal under Rule 12(b)(6). See
McMillan v. Collection Professionals, Inc., 455 F.3d 754, 759 (7th Cir. 2006) (“Because
confusion is a fact-based question, dismissal is typically not available under 12(b)(6).”). Where,
however, a plaintiff’s allegation that a letter is deceptive or misleading rests on the text of the
letter, with no additional factual allegations to offer, then, if “no reasonable person, however
unsophisticated, could construe the wording of the communication in a manner that will violate
the statutory provision,” the court may dismiss the complaint. McMillan v. Collection
Professionals, Inc., 455 F.3d 754, 760 (7th Cir. 2006). But the court “must act with great
restraint when asked to rule in this context on a motion to dismiss.” Id.
Bednarski first alleges that the collection letter is “extremely confusing,” apparently
because the signature block indicates that Halberg is an “Attorney for the United States.” This
appears to be a claim that the letter violates one of three subsections: § 1692e(1), which prohibits
false representations regarding affiliation with the United States; § 1692e(9), which prohibits the
use of a written communication that falsely represents that it is authorized, issued, or approved
by the United States; or § 1692e(10), which prohibits “[t]he use of any false representation or
deceptive means to collect or attempt to collect any debt.” 3 Bednarski does not base these claims
on any evidence beyond the text of the letter; therefore, the court must determine whether no
reasonable person could find the letter deceptive or misleading with regard to Potestivo’s
All of Bednarski’s allegations under § 1692e could fairly be considered claims under
§ 1692e(10). Thus, where the court finds Bednarski adequately alleges Potestivo falsely misrepresented
information or used deceptive means under another subsection of § 1692e, it likewise finds that he also
sufficiently states a claim for relief under § 1692e(10).
relationship to or affiliation with the United States government.
Potestivo points to Sheriff v. Gillie, 578 U.S. __, 136 S. Ct. 1594, 194 L. Ed. 2d 625
(2016), to argue that the letter is not deceptive or misleading because the signature block
accurately conveys the relationship between Potestivo and the United States. In Sheriff, a debt
collector under contract with the Ohio attorney general’s office sent collection letters to debtors
on the attorney general’s letterhead. The Court held that this practice was not deceptive or
misleading because the letter “[a]s a whole, . . . alerts the debtor to both the basis for the payment
obligation and the official responsible for enforcement of debts owed to the State, while the
signature block conveys who [sic] the Attorney General has engaged to collect the debt.” Id. at
1601. The letter here is analogous.
The letter is on Potestivo’s firm letterhead and states in the first sentence that the firm
represents the United States Department of Justice. The signature block merely indicates “on
whose authority [Potestivo] writes to the debtor,” showing it was sent on behalf of the United
States Attorney by an attorney designated to handle the matter. Bednarski does not allege facts
suggesting that Potestivo did not have authority to collect this debt on behalf of the government.
Thus, when the letter is taken as a whole, no reasonable person could find it deceptive or
misleading as to Potestivo’s relationship to, affiliation with, or authorization by the United States
government. Based on the facts alleged, Bednarski does not state a claim for relief under §§
1692e(1) or 1692e(9).
Bednarski next alleges that the letter falsely represents that a law suit had been filed
against him, which appears to be a claim that the letter violates § 1692e(2)(A)’s prohibition
against a debt collector’s misrepresenting the legal status of a debt. Bednarski relies both on the
text, which includes a subject line suggestive of a case caption (United States v. Bednarski), and
the additional fact that a third party, his sister, was confused enough by the letter to call him to
allege the average “unsophisticated consumer” would be similarly misled by the letter. Taken
together, these allegations and inferences “show that there is a state of facts within the scope of
the complaint that if proved (a matter for trial) would entitle him to judgment.” United States ex
rel. Hanna v. City of Chicago, 834 F.3d 775, 779 (7th Cir. 2016) (quoting Early v. Bankers Life
& Cas. Co., 959 F.2d 75, 79 (7th Cir. 1992). Thus, Bednarski has stated a claim under
§ 1692e(2)(A) sufficient to defeat a motion to dismiss.
Finally, Bednarski alleges that the letter threatens to take actions that Potestivo did not
intend to take or was not legally authorized to take, which is prohibited by § 1692e(5). If
Potestivo was not authorized to take further action to collect on the debt, then statements
indicating an intention to do so would be false. Whether such authorization existed and,
therefore, whether any statements in the collection letter are false, is a question of fact that the
court cannot decide at the motion to dismiss stage. Bednarski has stated a claim under
For the reasons stated above, the court orders the following:
Defendants’ motion to dismiss (dkt. 12) is granted in part and denied in part as follows:
The motion to dismiss (1) for lack of subject-matter jurisdiction is denied; (2) for failure to state
a claim for violations of 15 U.S.C. §§ 1692c(b), 1692e(2), 1692e(5), and 1692e(10) is denied; (3)
for failure to state a claim for violations of 15 U.S.C. §§ 1692b, 1692d, 1692e(1), 1692e(9), and
1692f is granted without prejudice to repleading on or before March 21; and (4) for failure to
state a claim against Caleb J. Halberg is granted with prejudice.
Date: March 7, 2017
U.S. District Judge Joan H. Lefkow
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