Wood v. Allied Interstate, LLC
Filing
84
MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 12/28/2018.Mailed notice.(jlj, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CLARENCE WOOD,
Plaintiff,
vs.
ALLIED INTERSTATE, LLC,
Defendant.
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17 C 4921
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
Clarence Wood alleges that a collection letter he received from Allied Interstate, LLC
violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq., and the
Illinois Collection Agency Act (“ICAA”), 225 ILCS 425/9. Doc. 1. The court denied Allied’s
motion to dismiss under Civil Rule 12(b)(6). Docs. 49-50 (reported at 2018 WL 2967061 (N.D.
Ill. June 13, 2018)). With discovery closed, Allied moves for summary judgment. Doc. 60. The
motion is granted.
Background
The following facts are set forth as favorably to Wood, the nonmovant, as the record and
Local Rule 56.1 permit. See Johnson v. Advocate Health & Hosps. Corp., 892 F.3d 887, 893
(7th Cir. 2018). On summary judgment, the court must assume the truth of those facts, but does
not vouch for them. See Donley v. Stryker Sales Corp., 906 F.3d 635, 636 (7th Cir. 2018).
Because Wood’s Local Rule 56.1(b)(3)(B) response, Doc. 76, admits every material factual
assertion in Allied’s Local Rule 56.1(a)(3) statement but incorrectly numbers the paragraphs in
Allied’s statement, the court will cite Allied’s statement, Doc. 62, for the undisputed facts.
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Wood defaulted on a credit card debt. Doc. 62 at ¶¶ 5-6. Allied, a debt collector, sent
Wood a letter stating that the “Amount Owed” was $2,827.24. Id. at ¶¶ 6-7; Doc. 1-1 at 6.
Wood does not dispute the amount of the debt. Doc. 62 at ¶ 8. Allied’s letter included a table
titled “Account Listing,” which provided this breakdown of the amount owed:
Id. at ¶ 9; Doc. 1-1 at 8 (blank space in original).
According to Wood, the table’s statement that he owed “$0.00” in fees and collection
costs implied that such amounts would begin to accrue if he did not pay the debt. Doc. 75 at 6-8.
In fact, however, Allied never intended to assess any fees or collection costs on Wood’s account,
and no such amounts were accruing. Doc. 62 at ¶ 11. The summary judgment record does not
contain any consumer surveys or other evidence as to how an unsophisticated consumer would
interpret Allied’s statement that Wood owed “$0.00” in fees and collection costs.
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Discussion
I.
FDCPA Claim
Wood alleges that Allied’s letter violated §§ 1692e and 1692f of the FDCPA because the
table showing zero balances for fees and collection costs falsely implied that Allied would “add
fees and collection costs to [his] account,” when in fact it “had no intention of” doing so.
Doc. 75 at 5-8; Doc. 1 at ¶¶ 39-40. Wood further alleges that because the table was confusing,
the letter violated § 1692g(a)(1) by failing to clearly state the amount of the debt. Doc. 75 at 4-5;
Doc. 1 at ¶ 42. (Wood continues to maintain that Allied falsely implied that interest would
accrue, Doc. 75 at 5-6, but the court already dismissed that claim, holding that “the complaint
does not state a claim to the extent it alleges that the letter implies that interest might accrue on
Wood’s debt” because “[n]o reasonable consumer would believe that an interest rate of 0% could
result in interest accruing on the debt.” 2018 WL 2967061, at *3.)
A.
Sections 1692e and 1692f
Section 1692e prohibits a debt collector from using “any false, deceptive, or misleading
representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e; see
Ruth v. Triumph P’ships, 577 F.3d 790, 799-800 (7th Cir. 2009). This provision, essentially a
“rule against trickery,” Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470, 473
(7th Cir. 2007), sets forth “a nonexclusive list of prohibited practices” in sixteen subsections,
McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1019 (7th Cir. 2014). Although “a plaintiff
need not allege a violation of a specific subsection in order to succeed in a § 1692e case,” Lox v.
CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012), Wood invokes subsections (5), (8), and (10),
which proscribe, respectively, “[t]he threat to take any action that cannot legally be taken or that
is not intended to be taken,” 15 U.S.C. § 1692e(5); “[c]ommunicating or threatening to
communicate to any person credit information which is known or which should be known to be
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false, including the failure to communicate that a disputed debt is disputed,” id. § 1692e(8); 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,” id. § 1692e(10). Section 1692f, meanwhile,
proscribes the use of “unfair or unconscionable means to collect or attempt to collect any debt.”
15 U.S.C. § 1692f. Because Wood’s § 1692f claim rests on the same premise—that Allied’s
letter was deceptive—as his § 1692e claim, the two claims rise or fall together.
The Seventh Circuit “has consistently held that with regard to ‘false, deceptive, or
misleading representations’ in violation of § 1692e of the FDCPA, the standard is … whether the
debt collector’s communication would deceive or mislead an unsophisticated, but reasonable,
consumer if the consumer is not represented by counsel.” Bravo v. Midland Credit Mgmt., Inc.,
812 F.3d 599, 603 (7th Cir. 2016); see also Gruber v. Creditors’ Prot. Serv., Inc., 742 F.3d 271,
273 (7th Cir. 2014) (noting that FDCPA claims “are evaluated under the objective
‘unsophisticated consumer’ standard”). This standard protects a consumer who “may be
uninformed, naïve, or trusting,” but who nonetheless “possess[es] rudimentary knowledge about
the financial world.” Gruber, 742 F.3d at 273 (internal quotation marks omitted). The
reasonable consumer, though unsophisticated, “is not a dimwit” and “is capable of making basic
logical deductions and inferences.” Lox, 689 F.3d at 822 (internal quotation marks omitted).
As the Seventh Circuit explained in Ruth, statements alleged to be false or misleading
under § 1692e fall into three categories. See 577 F.3d at 800. The first category consists of
statements that are “plainly, on their face, … not misleading or deceptive. In these cases, [the
court] do[es] not look to extrinsic evidence to determine whether consumers were confused.
Instead, [the court] grant[s] dismissal or summary judgment in favor of the defendant based on
[its] own determination that the statement complied with the law.” Ibid. The second category
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consists of statements that “are not plainly misleading or deceptive but might possibly mislead or
deceive the unsophisticated consumer. In these cases, … plaintiffs may prevail only by
producing extrinsic evidence, such as consumer surveys, to prove that unsophisticated consumers
do in fact find the challenged statements misleading or deceptive.” Ibid. The third category
consists of statements that are “so clearly confusing on [their] face[s] that a court may award
summary judgment to the plaintiff on that basis.” Id. at 801.
In denying Allied’s motion to dismiss, the court held that the letter does not fall within
the first Ruth category because, “by stating that fees and collection costs stood at ‘$0.00,’ instead
of stating something like ‘N/A’ or declining to mention fees and collection costs at all, the letter
reasonably could be read to imply that such charges would begin to accrue if Wood did not pay
the debt.” 2018 WL 2967061, at *2. That left open the question whether the letter falls in the
second category or the third. As the parties acknowledge, this case turns on that question. If the
letter is in the second Ruth category, Allied is entitled to summary judgment because Wood does
not adduce any extrinsic evidence that it is misleading. See Lox, 689 F.3d at 822 (“[S]ince Lox
did not present any extrinsic evidence at the summary judgment stage, he must show that the
statement is plainly and clearly misleading on its face, thus eliminating any need for evidence of
its deceptive nature.”). But if the letter is in the third category, Allied is not entitled to summary
judgment and, in fact, Wood wins the case. See Ruth, 577 F.3d at 801 (noting that “a court may
award summary judgment to the plaintiff” where the statement is in the third category).
Because the statement in Allied’s letter that Wood owed “$0.00” in fees and collection
costs is “susceptible to more than one interpretation,” Janetos v. Fulton Friedman & Gullace,
LLP, 825 F.3d 317, 323 (7th Cir. 2016), one misleading and one not, the letter is “possibly”
misleading but not misleading “on [its] face” and therefore falls in the second category, Ruth,
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577 F.3d at 800. As noted, one reasonable reading of a table that includes columns for fees and
collection costs with a value of “$0.00” rather than “N/A” is that there are not yet any fees and
collection costs, but that there might be in the future. 2018 WL 2967061, at *2. That is, “$0.00”
in such a table can reasonably be read to mean “$0.00 for now.” On that reading, the table is
misleading because it implies that Allied might charge fees and collection costs when in fact it
never intended to do so. See Boucher v. Fin. Sys. of Green Bay, Inc., 880 F.3d 362, 367 (7th Cir.
2018) (holding that a letter falsely implying that late and other charges could accrue violated
§ 1692e); Lox, 689 F.3d at 825 (holding that a letter falsely implying that nonpayment could
result in the debtor being charged attorney fees violated § 1692e).
But the table could also be reasonably read to say nothing more than that Wood owed
$2,827.24 and that the balance consisted only of principal. After all, a consumer could
reasonably believe that Allied included columns showing $0.00 only because the table is part of
a form letter used in all situations, regardless of which columns might apply to a particular
debtor. Such a belief would find support in the fact that the table included a “Totals” row even
though there was only one row to “total.” Doc. 1-1 at 8. Moreover, a consumer could infer from
the “Interest” columns—which clearly state that the amount owed includes “$0.00” in interest
and that the interest rate is “0.000%,” ibid.—that Allied was merely trying to clarify that it was
not seeking to collect any interest, fees, or collection costs. Consumers making those reasonable
assumptions would conclude that the letter did not suggest that fees and collection costs would
accrue if the debt were not paid. On that reading, the table does not imply that Allied would
charge fees or collection costs and therefore is not misleading. See Dunbar v. Kohn Law Firm,
S.C., 896 F.3d 762, 765-67 (7th Cir. 2018) (holding that a collection letter’s statement that the
settlement it offered “may have tax consequences” was not misleading because the statement
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was true “as a general matter” and did not signal whether “tax consequences [were] possible or
likely … in [any] particular debtor’s circumstances”) (emphasis omitted); Barnes v. Advanced
Call Ctr. Techs., LLC, 493 F.3d 838, 840-41 (7th Cir. 2007) (holding that a collection letter
clearly stated the amount of the debt where the “‘tearoff’ section of the letter that Plaintiffs
[were] directed to return with their payments list[ed] the ‘Current Amount Due’ and nothing
more”).
To the extent any doubt remains that the innocent reading of Allied’s letter is reasonable,
several decisions addressing materially identical letters have held that the innocent reading is the
only reasonable interpretation of a table listing “$0.00” in “fees,” “collection costs,” or “other
charges”—in other words, that such letters are plainly not misleading and therefore fall within
the first Ruth category. See Coletta v. Allied Interstate, LLC, No. 18 C 4014, slip op. at 4-6
(N.D. Ill. Dec. 10, 2018) (reproduced at Doc. 80-1); Delgado v. Client Servs., Inc., 2018 WL
1193741, at *3-4 (N.D. Ill. Mar. 7, 2018); Jones v. Prof’l Fin. Co., 2017 WL 6033547, at *2
(S.D. Fla. Dec. 4, 2017); Dick v. Enhanced Recovery Co., 2016 WL 5678556, at *3-5 (E.D.N.Y.
Sept. 28, 2016). Although the court respectfully disagrees with those decisions insofar as they
hold that the innocent reading is the only available reading, they nonetheless provide further
support for the court’s conclusion that the innocent reading is one reasonable reading. And
because Allied’s letter is susceptible to two reasonable interpretations, one innocent and the other
misleading, it falls within the second Ruth category. See Janetos, 825 F.3d at 323 (noting that
letters “susceptible to more than one interpretation” fall within the second Ruth category);
Tylke v. Diversified Adjustment Serv., Inc., 2014 WL 5465173, at *1, *3 (E.D. Wis. Oct. 28,
2014) (“[T]he statement [that ‘the above balance due includes a Verizon Wireless Collection Fee
of $0.00’] falls into the second category. There are several possible ways the statement could be
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interpreted. For example, it is possible that … an ‘unsophisticated consumer’ might understand
the statement to be explaining that no part of the debt is a ‘collection fee’ even though the
Verizon agreement allows for one. On the other hand, it is also possible that an ‘unsophisticated
consumer’ would interpret the statement to mean that there is no ‘collection fee’ now but that
one could be assessed later on.”).
The cases Wood cites to support his view that the letter falls in the third Ruth category—
Boucher v. Finance System of Green Bay, Inc., supra; Chuway v. National Action Financial
Services, Inc., 362 F.3d 944 (7th Cir. 2004); and United States v. National Financial Services,
Inc., 98 F.3d 131 (4th Cir. 1996)—are distinguishable. Boucher and National Financial Services
involved letters that, on their faces, expressly or implicitly threatened to take action that the debt
collector could not or did not intend to take. See Boucher, 880 F.3d at 367 (holding that a
collection letter stating that “[b]ecause of interest, late charges and other charges that may vary
from day to day, the amount due on the day you pay may be greater” was misleading on its face
because it “falsely implie[d] a possible outcome—the imposition of ‘late charges and other
charges’—that [could not] legally come to pass”); Nat’l Fin. Servs., 98 F.3d at 137-39 (holding,
under the Fourth Circuit’s “least sophisticated consumer” standard, that the defendants’ dunning
letters were facially misleading because, by warning that “only your immediate payment will
stop further legal action,” they “falsely threatened legal action”). Here, by contrast, it is unclear
from the face of Allied’s letter whether the unsophisticated consumer would interpret it as
implicitly threatening to begin charging collection costs and fees if the debt were not paid.
Chuway is inapposite for similar reasons. There, the court held that a collection letter
was confusing on its face because it “instruct[ed] the recipient on how to obtain ‘your most
current balance information,’” clearly implying that the balance listed in the letter was not
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necessarily the amount the debt collector was seeking to collect. 362 F.3d at 947-48 (emphasis
added). That confusion precluded summary judgment on the plaintiff’s claim that the letter
violated § 1692g(a)(1) by failing to clearly disclose the amount of the debt. Ibid. Thus, like
Boucher and National Financial Services, Chuway is a case where the letter on its face gave rise
to a confusing or misleading implication, not a case where, as here, it is unclear what meaning
the unsophisticated consumer would draw from the language in question. See id. at 948
(explaining that “if it [had been] unclear whether the letter would confuse intended recipients,”
then the plaintiff would have needed to present extrinsic evidence of confusion).
Accordingly, Allied’s letter falls into the second Ruth category, and Wood therefore was
required to adduce “extrinsic evidence, such as consumer surveys, to prove that unsophisticated
consumers do in fact find the challenged statements misleading or deceptive.” Ruth, 577 F.3d at
800. Because he does not do so, Allied is entitled to summary judgment on his §§ 1692e and
1692f claims.
B.
Section 1692g(a)(1)
Wood also alleges that Allied’s letter violated § 1692g(a)(1) because Allied “did not
clearly state” whether fees and collection costs were accruing. Doc. 75 at 4-5.
Section 1692g(a)(1) requires that debt collectors state “the amount of the debt” they seek to
collect, 15 U.S.C. § 1692g(a)(1), and that their collection letters do so “clearly enough that the
recipient is likely to understand it.” Williams v. OSI Educ. Servs., Inc., 505 F.3d 675, 677 (7th
Cir. 2007) (internal quotation marks omitted). As the Seventh Circuit has explained, the court
“must evaluate the letter” from the perspective of the unsophisticated consumer “to determine
whether it causes any confusion or misunderstanding as to the amount due.” Id. at 677-78
(alterations and internal quotation marks omitted).
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Although Ruth’s three-category framework may not formally apply to § 1692g claims,
see Janetos, 825 F.3d at 322-23 (suggesting that the Ruth framework is “for claims under
§ 1692e”), the analysis is functionally the same. “If it is apparent just from reading the letter that
it is unclear,” then the plaintiff’s own testimony that he “was indeed confused” by the letter is
enough to survive summary judgment. Chuway, 362 F.3d at 948; see also Janetos, 825 F.3d at
321-23 (holding that extrinsic evidence of consumer confusion was not required where, “[o]n its
face, … the letter failed to disclose the information that § 1692g(a)(2) required”). “But if it is
unclear whether the letter would confuse intended recipients,” then the plaintiff must adduce
extrinsic evidence of consumer confusion, such as “a carefully designed and conducted
consumer survey.” Chuway, 362 F.3d at 948.
Because Allied’s letter accurately states the amount of the debt and it is unclear whether
the table’s listing $0 in fees and collection costs would confuse recipients, Wood’s failure to
adduce extrinsic evidence of consumer confusion as to the amount of the debt means that his
§ 1692g(a)(1) claim cannot survive summary judgment. See ibid. It is undisputed that the letter
correctly stated the amount owed and that the table’s breakdown of the amount into principal
($2,827.24), interest ($0.00), fees ($0.00), and collection costs ($0.00) was accurate. Doc. 62 at
¶¶ 7-9, 11. The only respect in which Wood claims that the disclosure of the debt amount was
confusing is that the letter is susceptible to the interpretation discussed above: that “$0.00” could
imply that Allied would later add fees and collection costs unless Wood paid the debt. Doc. 75
at 4-5.
For essentially the same reasons that the letter falls into Ruth’s second category as to the
§§ 1692e and 1692f claims, “it is unclear whether the letter would confuse intended recipients”
as to the amount of the debt. Chuway, 362 F.3d at 948. If consumers notice that the letter is
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susceptible to the reading on which “$0.00” implies that fees and collection costs could accrue if
the debt were not paid, they could be confused as to whether the amount of the debt is fixed and
may be misled into thinking that it is variable. See Boucher, 880 F.3d at 367, 371 (noting that
the question whether a statement implying that “late charges and other charges” may be imposed
“was misleading under § 1692e goes hand-in-hand with whether the amount of the debt has been
accurately disclosed under § 1692g(a)(1)”) (internal quotation marks omitted). But if consumers
understand “$0.00” to mean that Allied is not attempting to collect any fees or collection costs,
the letter provides accurate information (the amount of the debt is fixed at $2,827.24) and is not
confusing. See Chuway, 362 F.3d at 949 (“If the debt collector is trying to collect only the
amount due on the date the letter is sent, then he complies with [§ 1692g(a)(1)] by stating the
‘balance’ due … and stopping there, without talk of the ‘current’ balance.”).
Accordingly, to proceed with his § 1692g(a)(1) claim, Wood must adduce extrinsic
evidence of consumer confusion. Id. at 948. Because he does not, Allied is entitled to summary
judgment on the claim.
II.
ICAA Claim
Finally, Wood claims that Allied’s letter violated § 9 of the ICAA, which prohibits
collection agencies “while collecting or attempting to collect a debt” from “engag[ing] in”
certain threats and other acts. 225 ILCS 425/9. As Allied recognizes, Doc. 61 at 8 & n.4, the
court’s earlier opinion held that § 9 may be enforced through an implied private right of action.
2018 WL 2967061, at *4-5. Allied contends that Wood’s claim nonetheless fails for the same
reasons that his FDCPA claim fails: because Wood has not adduced evidence that consumers
“would read the letter as a threat.” Doc. 61 at 9.
Wood responds that no such evidence is required because “the letter falls into the third
Ruth category.” Doc. 75 at 9-10. By embracing the proposition that his ICAA claim is subject
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to the same Ruth framework that governs his §§ 1692e and 1692f claims, Wood forfeits any
argument to the contrary. See Nichols v. Mich. City Plant Planning Dep’t, 755 F.3d 594, 600
(7th Cir. 2014) (“The non-moving party waives any arguments that were not raised in its
response to the moving party’s motion for summary judgment.”); Keck Garrett & Assocs. v.
Nextel Commc’ns, Inc., 517 F.3d 476, 487 (7th Cir. 2008) (“Nextel specifically requested
summary judgment on the quantum meruit claim. Keck Garrett, however, did not defend that
claim in its reply to Nextel’s motion for summary judgment. By failing to present its argument
to the district court, Keck Garrett abandoned its claim.”); Witte v. Wis. Dep’t of Corr., 434 F.3d
1031, 1038 (7th Cir. 2006) (“By failing to raise [an argument] in his brief opposing summary
judgment, [the plaintiff] lost the opportunity to urge it in both the district court and this court.”),
overruled in other part by Hill v. Tangherlini, 724 F.3d 965, 967 n.1 (7th Cir. 2013).
Accordingly, Wood’s ICAA claim fails because the letter is not misleading on its face and he
does not adduce extrinsic evidence “to prove that unsophisticated consumers do in fact find the
challenged statements misleading or deceptive.” Ruth, 577 F.3d at 800.
Conclusion
Allied’s summary judgment motion is granted. Judgment will be entered in favor of
Allied and against Wood.
December 28, 2018
United States District Judge
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