Pierre v. Midland Credit Management, Inc.
Filing
197
MEMORANDUM Opinion and Order. For the reasons stated herein, Defendant's Motion to Dismiss (Dkt. No. 152) is denied. Defendant's Motion to Decertify Class (Dkt. No. 177) is denied in part and continued in part. The Court will address the remaining Rule 23 arguments and the parties' motions in limine at the August 29, 2019 status hearing. Signed by the Honorable Harry D. Leinenweber on 8/28/2019: Mailed notice (maf)
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 1 of 15 PageID #:2022
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RENETRICE R. PIERRE,
Individually and on Behalf
of others Similarly
Situated,
Plaintiff,
Case No. 16 C 2895
v.
Judge Harry D. Leinenweber
MIDLAND CREDIT MANAGEMENT,
INC., a Kansas Corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
Plaintiff Renetrice Pierre, individually and on behalf of a
class, alleges that Defendant sent debt collection letters that
violated the Fair Debt Collection Practices Act (FDCPA). Pierre
raised two FDCPA claims:
(1) a class claim that Defendant falsely
represented the status of the debt, used deceptive means to attempt
to collect the debt, and used unfair or unconscionable means to
attempt to collect the debt; and (2) an individual claim that
Defendant falsely represented the amount of Pierre’s debt. On
February
5,
2018,
the
Court
granted
summary
judgment
as
to
liability on Count I in favor of Pierre and the class. On July 29,
2019, approximately one month before a jury trial was set to begin
in this case, Defendant moved to dismiss Count I on the basis that
Pierre lacks standing. Defendant moved in the alternative to
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 2 of 15 PageID #:2022
decertify the class. For the reasons stated herein, Defendant’s
Motion to Dismiss (Dkt. No. 152) and Motion to Decertify Class
(Dkt. No. 177) are denied.
I.
BACKGROUND
The Court laid out the factual background of this case in
greater detail in its summary judgment opinion, Pierre v. Midland
Credit Mgmt., Inc., No. 16 C 2895, 2018 WL 723278 (N.D. Ill. Feb.
5, 2018), and will provide only a brief overview of the facts here.
Pierre accumulated debt on a credit card account with Target
National Bank. She failed to pay off the debt and went into
default.
Target
Funding,
LLC
National
(“Midland
Bank
sold
Funding”)
Pierre’s
for
which
debt
to
Midland
Defendant
Midland
Credit Management, Inc. (“Midland Credit”) is a debt collector.
Midland Credit mailed Pierre a debt collection letter in
September of 2015. The letter stated that Pierre had a “current
balance” of $7,578.57. (Demand Let., Ex. A to Pl.’s Sec. Am.
Compl., Dkt. No. 40-1.) The letter encouraged Pierre to “[a]ct now
to maximize your savings and put this debt behind you.” (Id.) The
letter then presented three “options”: (1) 40% off the advertised
balance if Pierre paid $4,647.14 by a “due date” of October 2,
2015; (2) 20% off if Pierre made 12 monthly payments of $505.23,
with the first payment “due” on October 2, 2015; and (3) payments
- 2 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 3 of 15 PageID #:2022
“as low as $50 per month.” (Id.) Finally, the letter included the
following disclosure:
The law limits how long you can be sued on a debt.
Because of the age of your debt, we will not sue you for
it, we will not report it to any credit reporting agency,
and payment or non-payment of this debt will not affect
your credit score.
(Demand Let.) However, at the time Midland Credit sent the letter,
the statute of limitations on a collection action for Pierre’s
debt had run. See 735 ILCS 5/13-205. Thus, it would have been
impossible for Midland Funding or Midland Credit to sue Plaintiff
to recover the debt in question.
Pierre filed suit in March of 2016. She brought two counts:
(1) a putative class claim that Defendant falsely represented the
status of the debt, used deceptive means to attempt to collect the
debt, and used unfair or unconscionable means to attempt to collect
the debt; and (2) an individual claim that Defendant falsely
represented the amount of Pierre’s debt.
On April 21, 2017, the Court certified a class defined as
follows:
All persons with Illinois addresses to whom Midland
Credit Management, Inc. sent, from March 7, 2015 through
March 7, 2016, a letter containing the following
statement: “The law limits how long you can be sued on
a debt. Because of the age of your debt, we will not sue
you for it, we will not report it to any credit reporting
agency, and payment or non-payment will not affect your
credit score.
- 3 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 4 of 15 PageID #:2022
Pierre v. Midland Credit Mgmt., Inc., No. 16 C 2895, 2017 WL
1427070, at *11 (N.D. Ill. Apr. 21, 2017).
On February 5, 2018, the Court granted summary judgment as to
liability on Count I in favor of Pierre and the class. Defendant
now moves to dismiss Count I under Federal Rule of Civil Procedure
12(b)(1) for lack of standing or, in the alternative, to decertify
the class. The Court will address each in turn.
II.
DISCUSSION
A. Rule 12(b)(1) Standard
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(1) challenges a court’s subject matter jurisdiction. If a
plaintiff cannot establish standing to sue, dismissal under Rule
12(b)(1) is the appropriate disposition. American Federation of
Government Employees, Local 2119 v. Cohen, 171 F.3d 460, 465 (7th
Cir.
1999). In
evaluating
a
challenge
to
subject
matter
jurisdiction, the court must first determine whether a factual or
facial challenge has been raised. Silha v. ACT, Inc., 807 F.3d
169, 173 (7th Cir. 2015) (citing Apex Dig., Inc. v. Sears, Roebuck
& Co., 572 F.3d 440, 443 (7th Cir. 2009)). Here, Defendant raises
a factual challenge, and contends that “there is in fact no subject
matter
jurisdiction,”
even
if
the
pleadings
are
formally
sufficient. Id. In reviewing a factual challenge, the court “may
look beyond the pleadings and view any evidence submitted to
- 4 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 5 of 15 PageID #:2022
determine if subject matter jurisdiction exists.” Id. As the party
invoking federal jurisdiction, the plaintiff bears the burden of
establishing the elements of Article III standing.
Silha, 807
F.3d at 173 (citations omitted).
B. Standing
Defendant argues that Count I of this case should be dismissed
under Rule 12(b)(1) because Pierre and the class lack standing to
pursue their claims. To establish Article III standing, a plaintiff
must show: “(1) [she] has suffered an ‘injury in fact’ that is (a)
concrete
and
particularized
and
(b)
actual
or
imminent,
not
conjectural or hypothetical; (2) the injury is fairly traceable to
the challenged action of the defendant; and (3) it is likely, as
opposed to merely speculative, that the injury will be redressed
by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw
Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–181 (2000) (citation
omitted). In Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), the
Supreme Court held that “Article III standing requires a concrete
injury even in the context of a statutory violation.” Id. at 1549.
Defendant contends that Pierre failed to establish that she
suffered an injury in fact. Defendant cites to two primary sources
in
support
of
that
argument:
a
recent
Seventh
Circuit
case,
Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329 (7th Cir.
2019), and Pierre’s deposition testimony.
- 5 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 6 of 15 PageID #:2022
1.
Casillas and Recent Caselaw
In Casillas, a debt collector’s letter allegedly violated the
FDCPA by omitting the required notice that a consumer’s dispute of
a debt must be in writing. Casillas, 926 F.3d at 331. The Seventh
Circuit found that the plaintiff lacked standing because she
alleged only a “bare procedural violation.” Id. (citing Spokeo,
136 S.Ct. at 1549). Important to the Court’s reasoning in Casillas
was the fact that the plaintiff:
[D]id not allege that [defendant’s] actions harmed or
posed any real risk of harm to her interest under the
Act. . . . [S]he did not allege that she ever even
considered contacting [defendant] . . . She complained
only that her notice was missing some information that
she did not suggest that she would ever have used.
Casillas, 926 F.3d at 334.
Speaking more broadly to standing in FDCPA and other statutory
right cases, Casillas emphasized that “the fact that Congress has
authorized a plaintiff to sue a debt collector who ‘fails to comply
with
any
requirement
[of
the
FDCPA]’
does
not
mean
that
[a
plaintiff] has standing.” Id. at 333 (citing Spokeo, 136 S.Ct. at
1549). Article III requires a “concrete injury even in the context
of a statutory violation.” Id. Thus, an FDCPA plaintiff cannot
demonstrate
standing
violation.”
Id.
She
simply
must
by
show
pointing
that
the
to
a
violation
“procedural
harmed
or
presented an appreciable risk of harm to the underlying interest
- 6 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 7 of 15 PageID #:2022
that Congress sought to protect. Id. at 333 (citing Groshek v.
Time Warner Cable, Inc., 865 F.3d 884, 887 (7th Cir. 2017)).
However, the case at hand is distinguishable from Casillas.
First and foremost, this case concerns not an incomplete letter,
but a deceptive letter. In its summary judgment opinion, this Court
found that Midland Credit’s letter was misleading as a matter of
law, in violation of 15 U.S.C. § 1692e. See Pierre v. Midland
Credit Mgmt., Inc., No. 16 C 2895, 2018 WL 723278, at *4 (N.D.
Ill. Feb. 5, 2018). More specifically, the Court held that the
letter violated 15 U.S.C. § 1692e(10), which prohibits the use of
“any false representation or deceptive means to collect or attempt
to
collect
any
debt
or
to
obtain
information
concerning
a
consumer.” Id. at *7. This takes Count I out of the realm of a
“bare procedural violation.”
The Eastern District of Wisconsin recently made a similar
distinction when considering whether a plaintiff who received a
deceptive debt collection letter had suffered an injury in fact:
The court finds . . . Casillas distinguishable . . . in
that [it] involved claims of omission; the defendants
allegedly did not do something they were required to do.
That is not the nature of plaintiffs’ claims here. They
allege not that they were uninformed but that they were
misinformed. . . . If a consumer is misinformed, rather
than merely uninformed, the risk of harm is greater.
Untershine v. Encore Receivable Mgmt., Inc., No. 18-CV-1484, 2019
WL 3766564, at *3 (E.D. Wis. Aug. 9, 2019). That court found that
- 7 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 8 of 15 PageID #:2022
“misinformation
created
an
appreciable
risk
of
harm
to
the
plaintiffs.” Id. at *4. Courts in this District have come to
similar
conclusions.
See
Marlene
Sparrow
Oloko
v.
Receivable
Recovery Services, LLC, No. 17-CV-7626, 2019 WL 3889587, at *3
(N.D. Ill. Aug. 19, 2019) (finding injury in fact post-Casillas
because the letter in question created confusion, presenting an
appreciable risk of imminent harm to the interest Congress sought
to protect: receiving accurate information about one’s debt);
Richardson v. Diversified Consultants, Inc., No. 17-CV-4047, 2019
WL 3216030, at *4 (N.D. Ill. July 17, 2019) (finding injury in
fact
post-Casillas
because
the
plaintiff
received
a
debt
collection letter that allegedly misrepresented the amount of debt
owed—“an injury of the kind Congress sought to protect against
through the FDCPA”).
Second,
requirement.
Casillas
Accordingly,
concerned
the
a
Seventh
statutory
Circuit
disclosure
emphasized
the
distinction between an “informational injury” that relates to
“substantive information” versus “notice of statutory rights.” See
Casillas, 926 F.3d at 335; Robertson v. Allied Sols., LLC, 902
F.3d 690, 694 (7th Cir. 2018) (“An informational injury is concrete
if the plaintiff establishes that concealing information impaired
her ability to use it for a substantive purpose that the statute
envisioned.”) The FDCPA violation at issue here was not a mere
- 8 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 9 of 15 PageID #:2022
failure
to
statutory
inform
the
disclosures.
recipients
Rather,
of
it
the
was
letter
of
substantive,
required
as
it
deceptively sought to entice action by the recipients.
Third, as the Untershine opinion observed, Casillas “did not
overrule any prior Seventh Circuit decision, and the court took
pains
to
distinguish
cases
that
appeared
inconsistent.”
Untershine, 2019 WL 3766564, at *9. And Pantoja v. Portfolio
Recovery Assocs., LLC, 852 F.3d 679, 684 (7th Cir. 2017), cert.
denied, 138 S. Ct. 736 (2018), is still binding precedent in the
Seventh
Circuit.
In
Pantoja,
the
Seventh
Circuit
considered
whether a similar letter, which attempted to collect a debt barred
by the statute of limitations without warning debtors that a
payment could revive the debt, was deceptive as a matter of law.
The court found that such a letter was deceptive for two reasons:
(1) it “does not even hint, let along make clear to the recipient,
that if he makes a partial payment or even just a promise to make
a
partial
payment,
he
risks
loss
of
the
otherwise
ironclad
protection of the statute of limitations,” and (2) it “did not
make clear to the recipient that the law prohibits the collector
from suing to collect this old debt.” Pantoja, 852 F.3d at 684.
Pantoja emphasized “the danger” that such a letter presents to its
recipients—a danger that “[o]nly the rarest consumer-debtor will
recognize.” Id. at 864. As the court noted, waiving an absolute
- 9 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 10 of 15 PageID #:2022
defense under the statute of limitations would put the consumer in
a “much worse legal position” than she would have been in before
making a payment or promising to pay. Id. at 865. “Silence about
that significant risk of losing the protection of the statute of
limitations renders [defendant’s] dunning letter misleading and
deceptive as a matter of law.” Id. Though this analysis was in the
context of whether the letter was misleading as a matter of law,
it is relevant to the injury in fact analysis. The Seventh Circuit
has held that misleading a consumer about the possibility of
reviving a statute of limitations is a “significant risk” and a
“danger.” Id. at 864-65. This supports the notion that the FDCPA
violation in this case harmed or presented an appreciable risk of
harm to the underlying interest that Congress sought to protect,
as Casillas requires. See Casillas, 926 F.3d at 333.
2.
Pierre’s Deposition
Defendant contends that Pierre disclaimed any injury in fact
under
Spokeo
and
Casillas
because
she
testified
that
she
“understood she was not going to be sued by defendant”; “knew her
debt ‘was an old debt’ and that she never had any intention of
paying it”; “‘understood everything’ in the letter”; “knew she
‘didn’t owe the money’”; and that the letter “did not cause her to
do anything different than she otherwise would have done.” (Def.’s
Mot. to Dismiss at 7, Dkt. No. 152.) These characterizations are
- 10 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 11 of 15 PageID #:2022
misleading. In her deposition, Pierre stated repeatedly that the
letter
caused
her
significant
fear
and
confusion
about
the
possibility that Midland Credit would sue her or otherwise try to
collect her old debt. (See, e.g., Pierre Dep. at 31:7-13, Ex. A to
Pl.’s Resp., Dkt. No. 179-1 (“I have a legal—basically some type
of demand saying that I owe them even more money . . . and that
it’s due as of this day, which I was dismayed about and also afraid
that they would try to, you know, sue me again.”).) She experienced
emotional distress, as she believed Midland Credit could sue her
and
damage
her
credit
report.
(Id.
at
108:21-109:6
(“Q:
How
specifically have you been damaged by the allegations asserted in
your amended complaint? A: [E]motional distress. Q: How? A: Because
of the fear of again having a case reopened in the 19th Circuit or
in a different court . . . the agitation and anxiety of this
possibly finding a way on my credit report.”).)
Pierre contacted
Midland Credit after receiving the letter to contest its collection
efforts.
(Id.
at
48:18-23;
119:11-12;
123:20-22.)
Defendant’s
assertion that Pierre “understood everything in the letter” is
particularly misleading. In fact, Pierre testified as follows:
Q: When you got this letter, did you read the entire
thing?
A: Yeah. Yep, I did.
Q: Was there anything in this letter that you did not
understand?
A: I didn’t understand why they were—why I had this in
the first place.
Q: Okay. Anything else?
- 11 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 12 of 15 PageID #:2022
A: As far as what it says, did I not understand anything?
Q: Right.
A: No, I understood everything. I understood that they
were trying to say that they . . . were trying to work
something out . . . I saw a due date. I understood that
they wanted payment before too long. . . . I was
befuddled as to how to – like how can they come back and
ask me for this – for any money, 50 cents, in regard to
Target National Bank, that account, when it’s been –
when the case has been dismissed.
(Pierre Dep. at 112:14-114:1.) Read in context, Pierre’s comment
that she “understood everything” clearly relates back to counsel’s
question
about
whether
she
read
the
letter
and
followed
the
language therein. It is not a concession by Pierre that she was
not misled or confused by the letter—quite the opposite. Pierre
states that she “understood” the letter to contain a due date for
payment, a time by which Midland Credit was demanding payment.
Pierre is quite unlike the plaintiff in Casillas who had no
intention of using the information she was not given. See Casillas,
926 F.3d at 334. Thus, Defendant’s argument regarding Pierre’s
deposition is unavailing.
Plaintiffs have demonstrated an injury in fact beyond a mere
procedural violation. Protecting consumers from misinformation and
misleading representations is one of the concrete interests that
Congress sought to protect via the FDCPA. See Pantoja, 852 F.3d at
681 (discussing 15 U.S.C. § 1692e). And the violation at issue in
Count I certainly presented an appreciable risk of harm to the
underlying interest that Congress sought to protect. Casillas, 926
- 12 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 13 of 15 PageID #:2022
F.3d at 333 (citing Groshek, 865 F.3d at 887). Because Plaintiffs
were misinformed and misled about the status of their debt as a
matter of law, as opposed to merely uninformed of procedural rights
they had no intention of exercising, as was the case in Casillas,
the Court finds that Plaintiffs have suffered an injury in fact.
Accordingly, the Court finds that Plaintiffs have standing, and
Defendant’s motion to dismiss is denied.
C. Motion to Decertify
As a final note on the subject of standing, the Court notes
that Defendant’s Motion to Dismiss alternatively claimed that
Pierre, “Plaintiff,” and “Plaintiffs” had not suffered an injury
in fact. Thus, the Motion to Dismiss is ambiguous as to whether
Defendant was arguing that just Pierre, or Pierre and the entire
class, lacked standing. (Compare Def.’s Mot. to Dismiss at 2, 12
(seeking “dismissal of the individual and class claims [under Count
I]”), with at Def.’s Mot. to Dismiss at 11 (“[P]laintiff does not
claim that she made or tried to make a partial payment on her debt,
or that she ever had any intention of doing so.”).) Perhaps
Defendant reasoned that if Pierre did not have standing, the entire
class action should be dismissed. However, a district court may
substitute an alternative representative from the class to serve
as
the
named
plaintiff
if
the
named
plaintiff’s
standing
is
eliminated after certification. See Randall v. Rolls-Royce Corp.,
- 13 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 14 of 15 PageID #:2022
637 F.3d 818, 826 (7th Cir. 2011); Chapman v. Wagener Equities,
Inc., No. 09 C 07299, 2012 WL 6214597, at *7 (N.D. Ill. Dec. 13,
2012); Johnson v. Midland Career Inst., No. 93 C 1363, 1996 WL
54187, at *3 (N.D. Ill. Feb. 8, 1996).
Regardless of the ambiguity about the scope of Defendant’s
standing arguments in its Motion to Dismiss, Defendant later made
clear in its Motion to Decertify the Class that it believes the
entire
class
purports
to
lacks
standing.
challenge
the
Though
the
Motion
ascertainability,
to
Decertify
typicality,
and
superiority of the current certified class, the primary argument
in this Motion is that “no class may remain certified that contains
members lacking Article III standing.” (Def.’s Mot. to Decertify
at 2, Dkt. No. 177.) Defendant thus delves back into its argument
that many members of the class have not suffered an injury in fact
under Casillas. Defendant urges that the Court would need to
conduct individualized inquiries to confirm whether each member of
the class in fact suffered harm as Pierre did. This argument
against class standing fails for the same reasons the argument
against Pierre’s standing did. The letter at issue was misleading
and deceptive as a matter of law: a violation of a statutory right
that presented an appreciable risk of harm to the recipients. All
68,754 class members who received one of three materially identical
versions of the letter at issue thus suffered the injury of being
- 14 -
Case: 1:16-cv-02895 Document #: 197 Filed: 08/28/19 Page 15 of 15 PageID #:2022
misled
and
deceived.
The
Court
will
not
require
individual
depositions of every member confirming that they were in fact
misled by what the Court already determined at summary judgment to
be misleading as a matter of law.
See Pierre, 2018 WL 723278, at
*4 (finding the letter misleading on its face).
To the extent that the Motion to Certify contains valid
arguments
regarding
the
ascertainability,
typicality,
and
superiority of the class, the Court declines to rule on them at
this time—though it will address them prior to trial. To the extent
that the Motion to Certify merely applies Defendant’s injury in
fact argument to the class as a whole, it is denied.
III.
CONCLUSION
For the reasons stated herein, Defendant’s Motion to Dismiss
(Dkt. No. 152) is denied. Defendant’s Motion to Decertify Class
(Dkt. No. 177) is denied in part and continued in part. The Court
will address the remaining Rule 23 arguments and the parties’
motions in limine at the August 29, 2019 status hearing.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: 8/28/19
- 15 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?