Zuniga v. Asset Recovery Solutions, LLC et al

Filing 52

MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang. For the reasons stated in the Opinion, the motion 19 to dismiss is granted. The case is dismissed for lack of standing (and thus for lack of jurisdiction). A separate AO-450 judgment shall be entered. The status hearing of 04/03/2018 is vacated. Civil case terminated. Emailed notice(slb, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ASARAEL ZUNIGA
Plaintiff,
v.
ASSET RECOVERY SOLUTIONS and
BUREAUS INVESTMENT GROUP
PORTFOLIO NO. 15, LLC,
Defendants.

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No. 17-cv-05119
Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER
Asarael1 Zuniga brings this case against Assert Recovery Solutions, LLC and
Bureaus Investment Group Portfolio No. 15, LLC (which the parties call “BIG15”).
R. 1, Compl.2 Zuniga alleges that Asset Recovery Solutions and BIG15 violated the
Federal Debt Collection Practices Act (FDCPA) when they sent him a letter
attempting to collect a debt. Zuniga alleges that the letter failed to identify “the
creditor to whom the debt is owed,” which is a disclosure required by the FDCPA.
Id. ¶ 16; 15 U.S.C. § 1692g(a)(2). Zuniga alleges that an “unsophisticated consumer”
would have misunderstood who was the current debt owner, see Compl. ¶¶ 14, 16—
but Zuniga does not allege that he was confused or misled by the letter. See
generally Compl. Defendants jointly move to dismiss the complaint, arguing that

1The

Plaintiff’s first name is spelled inconsistently throughout the filings. Compare
Compl. p. 7 (“Asarael”) with Compl. ¶ 3 (“Asareal”) and R. 19-1, Defs.’ Br. at 1 (“Aasarael”).
The Court adopts the spelling used in the caption, “Asarael,” which also matches the
spelling of the Plaintiff’s name on the debt-collection letter. Compl. Exh. C.
2Citations to the record are noted as “R.” followed by the docket number and, where
necessary, the page or paragraph number.

Zuniga does not sufficiently allege an injury-in-fact that meets Article III standing
requirements. R. 19, Mot. to Dismiss at 1. In the alternative, Defendants argue that
the complaint fails to state a claim upon which relief could be granted, and that
Zuniga does not adequately allege that BIG15 is a debt collector for FDCPA
purposes. Id. As discussed below, the motion to dismiss is granted. Zuniga lacks
standing, and even if he had it, the complaint fails to state a claim.
I. Legal Standards: Rule 12(b)(1) and 12(b)(6)
Asset Recovery Solutions and BIG15 move to dismiss under Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6). A Rule 12(b)(1) motion tests whether the
Court has subject-matter jurisdiction, Hallinan v. Fraternal Order of Police of Chi.
Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009); Long v. ShoreBank Dev. Corp., 182
F.3d 548, 554 (7th Cir. 1999), whereas a Rule 12(b)(6) motion tests the sufficiency of
the complaint, Hallinan, 570 F.3d at 820; Gibson v. City of Chi., 910 F.2d 1510,
1520 (7th Cir. 1990). In order to survive a Rule 12(b)(1) motion, the plaintiff must
establish

that

the

district

court

has

subject-matter

jurisdiction.

United

Phosphorous, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2011), overruled
on other grounds, Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845 (7th Cir. 2012). “If
subject matter jurisdiction is not evident on the face of the complaint, [then] the ...
Rule 12(b)(1) [motion is] analyzed [like] any other motion to dismiss, by assuming
for the purposes of the motion that the allegations in the complaint are true.” Id. In
contrast, “[a] motion under Rule 12(b)(6) challenges the sufficiency of the complaint
to state a claim upon which relief may be granted.” Hallinan, 570 F.3d at 820. “[A]

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complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). These
allegations “must be enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of
truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S.
at 678-79.
II. Analysis
As noted earlier, Asset Recovery Solutions and BIG15 argue that Zuniga
lacks standing because the complaint fails to allege that he himself suffered a
concrete and particularized injury and (alternatively) because, as a matter of law,
the letter was sufficiently clear under the FDCPA. R. 19-1, Defs.’ Br. at 3, 8-10.
Zuniga loses on standing, but the Court will address both arguments for the sake of
completeness.
A. Standing
To satisfy Article III standing requirements, Zuniga must show that he
suffered an injury-in-fact that is fairly traceable to the conduct of the defendant and
can be redressed by a favorable decision. Spokeo, Inc. v. Robins, 136 S. Ct. 1540,
1547-48 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992)).
An injury-in-fact must be both concrete and particularized. Spokeo, 136 S. Ct. at
1548. A concrete injury must be “de facto; that is, it must actually exist.” Id (cleaned

3

up).

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An injury can be intangible, but not every statutory violation by itself is

enough. Id. at 1549. To determine if an intangible injury’s concreteness rises to the
level required to satisfy standing, “both history and the judgment of Congress play
important roles.” Id. A “violation of a procedural right granted by statute can be
sufficient in some circumstances … [so that] a plaintiff in such a case need not
allege any additional harm beyond the one Congress has identified.” Id. And the
risk of harm might be concrete enough to meet standing requirements. Id. With
regard to the “particularized”-injury requirement, the injury must “affect the
plaintiff in a personal and individual way.” Id at 1548. So, at minimum, Zuniga
must allege facts from which a concrete and particularized injury or risk of injury
can be inferred. Groshek v. Time Warner Cable, Inc., 865 F.3d 884, 889 (7th Cir.
2017).
Zuniga first argues that the injury-in-fact requirement is satisfied just by the
mere alleged violation of the FDCPA, because Congress “conferred” Article III
standing by enacting the FDCPA. R. 29, Pl. Resp. at 8-9; R. 39, Pl. Supp. Resp. at 56. That is wrong. As noted earlier, a bare statutory violation is not necessarily
enough—especially after Spokeo—to establish standing. Not all statutory violations
are enough to “confer” Article III standing by themselves. See Spokeo, 136 S. Ct. at
1549.
Next, Zuniga argues that the failure to provide statutorily required
information—here, the identity of the creditor to whom the debt is owed—is an
3This

opinion uses (cleaned up) to indicate that internal quotation marks,
alterations, and citations have been omitted from quotations. See, e.g., United States v.
Reyes, 866 F.3d 316, 321 (5th Cir. 2017).

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injury that is concrete and particularized enough to establish standing. Pl. Resp. at
9. It is true that, in some cases (and maybe many of them) the failure to identify the
current creditor would constitute a concrete and particularized injury sufficient to
establish standing. The FDCPA aims to protect consumers from risks of fraud,
deception, and abusive collecting practices. Janetos v. Fulton, Friedman, & Gullace,
825 F.3d 317, 320-22 (7th Cir. 2016). A debt collector’s failure to identify the current
creditor could create a concrete risk of Article III harm, because a debtor who is
confused about the identity of the creditor might be misled into making payments to
the wrong entity. See id. at 324-25.
The problem in this case, however, is that Zuniga failed to plead that the
alleged injury-in-fact was concrete and particular to him. Yes, Zuniga alleged that
the letter failed to explain the difference between the current creditor versus the
original creditor, as well as what Asset Recovery Solutions’ relationship was to the
creditors. Compl. ¶ 10. But Zuniga did not allege—even after the Court flagged this
issue explicitly, R. 35, 11/07/17 Minute Entry—that he himself was confused about
what the letter was saying about the current creditor. In the analogous context of
the Fair Credit Reporting Act, the Seventh Circuit recently held that a mere
statutory violation without concrete harm was not by itself enough to establish
standing. Groshek v. Time Warner Cable, Inc., 865 F.3d 884, 889 (7th Cir. 2017). In
Groshek, the plaintiff alleged that a prospective employer gave him extraneous
information while obtaining his consent to a background check, supposedly violating
the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. Id. at 885-86. The Seventh

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Circuit held that the plaintiff had not established standing, reasoning that
“[Groshek’s] complaint contained no allegation that any of the additional
information caused him to not understand the consent he was giving; no allegation
that he would not have provided consent but for the extraneous information on the
form; [and] no allegation that additional information caused him to be confused.”
Groshek, 865 F.3d at 887. On these facts, the Seventh Circuit held that the plaintiff
had alleged only “a statutory violation completely removed from any concrete harm
or appreciable risk of harm,” which is not enough for standing. Id.
Like the plaintiff in Groshek, Zuniga did not plead “factual allegations from
which [the court] could infer harm.” Groshek, 865 F.3d at 889. Zuniga does not
“plausibly suggest[] that he was confused” by the letter or that he would have acted
differently if the letter had used different words. See id. Instead, he alleges only (in
a conclusory fashion) that an unsophisticated consumer would be confused. Compl.
¶¶ 10, 12-16. Zuniga argues that is all that is needed, but that argument mixes up
the

substantive

standard

for

liability

under

the

FDCPA—whether

an

unsophisticated consumer would be confused by a debt-collection letter—with the
requirements of Article III standing. Whether the hypothetical unsophisticated
consumer would be confused does not matter for the standing inquiry, which
instead asks whether the plaintiff in this case has shown concrete and
particularized harm. Zuniga has not, and so he lacks standing to bring this lawsuit.
The case must be dismissed for lack of subject matter jurisdiction.

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B. Current Creditor
Even if Zuniga has standing to pursue the case, the complaint fails to state a
claim on which relief can be granted. The FDCPA requires that a debt collector
disclose to the debtor “the name of the creditor to whom the debt is owed.” 15 U.S.C.
§1692g(a)(2). When examining a debt-collection letter, the question is whether the
letter would be confusing to the unsophisticated consumer. Pantoja v. Portfolio
Recovery Assocs., LLC, 852 F.3d 679, 686 (7th Cir. 2017). The unsophisticated
consumer is “uninformed, naïve, and trusting, but possesses rudimentary
knowledge about the financial world, is wise enough to read collection notices with
added care, possesses reasonable intelligence, and is capable of making basic logical
deductions and inferences.” Pantoja, 852 F.3d at 686 (quoting Williams v. OSI
Educ. Servs., Inc., 505 F.3d 675, 678 (7th Cir. 2007)) (cleaned up). This is an
objective standard. Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057,
1060 (7th Cir. 2000). There need not be “evidence that the recipient was confused—
or even … [that] he read the letter.” Bartlett v. Heibl, 128 F.3d 497, 500-01 (7th Cir.
1997). “[A] district court must tread carefully before holding that a letter is not
confusing as a matter of law … because district judges are not good proxies for the
unsophisticated consumer whose interest the statute protects.” McMillan v.
Collection Prof’ls Inc., 455 F.3d 754, 759 (7th Cir. 2006) (quoting Walker v. Nat’l
Recovery Inc., 200 F.3d 500, 501 (7th Cir. 1999) (cleaned up). Section 1692g is
violated when “a significant fraction of the population” might be confused. Zemeckis
v. Glob. Credit & Collection Corp., 679 F.3d 632, 635 (7th Cir. 2012). On the other

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hand, dismissal is appropriate when less than a significant fraction of the
population would find the letter confusing. Id. (quoting Taylor v. Cavalry Inv., LLC,
365 F.3d 572, 574-75 (7th Cir. 2004)). The unsophisticated consumer analysis does
not allow for “bizarre, peculiar, or idiosyncratic interpretation[s].” McMillan, 455
F.3d at 758.
Debt collectors have puzzled debtors with a variety of confusing terms in
purporting to identify the current creditor. For example, some letters make
confusing references to multiple non-creditor entities, rather than simply
identifying the original creditor and the current creditor. Deschaine v. Nat’l Enter.
Sys. Inc., 2013 WL 12121197, at *1 (N.D. Ill. Oct. 20, 2011) (referencing a debt
collector’s “client” in addition to other creditor parties). Other letters use words that
are ambiguous in reporting who is the current creditor. E.g., Walls v. United
Collection Bureau Inc., 2012 WL 1755751, at *2 (N.D. Ill. May 16, 2012) (using the
phrase “current owner” instead of current creditor). And still others state the name
of the current creditor somewhere in the letter—but without saying that the
creditor owns the debt. Janetos, 825 F.3d at 321-22.
The letter sent to Zuniga is nothing like those other letters. Here, the letter
plainly identified the entity to whom the debt was owed by using the words
“Current Creditor” right next to Bureaus Investment Group Portfolio No. 15 LLC.
Compl., Exh. C. The letter also identified the original creditor with (not
surprisingly) the phrase “Original Creditor.” Id. Zuniga asserts that somehow the
words “original” and “current” are confusing. Compl. ¶ 10. They simply are not. It is

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unlikely that a significant fraction of even the most unsophisticated consumers,
possessing “reasonable intelligence,” Pantoja 852 F.3d at 686, would fail to
understand the difference between “original” and “current,” or fail to understand
that the “current” creditor is the creditor to whom the debt is currently owed. These
are plain-English words, not specialized terms that could confuse the ordinary
debtor. Indeed, as the defense points out, the FDCPA itself uses the phrase “current
creditor” as a synonym for the “creditor to whom the debt is owed” in another part of
the very same statutory provision. 15 U.S.C. § 1692g(a)(5) (“[U]pon the consumer’s
written request … the debt collector will provide the consumer with the name and
address of the original creditor, if different from the current creditor.”) (emphasis
added). And, in this case, there are no confusingly named non-creditors sprinkled
about the letter to muddy the waters, and no opaque technical terms: the letter to
Zuniga identified the “original creditor” and the “current creditor,” which is enough
to make clear to whom the debt is currently owed. So, even taking the facts in the
light most favorable to Zuniga, Zuniga has failed to state a claim for violation of the
FDCPA.4 Even if he had standing, the complaint would be dismissed anyway.

4In

light of this holding, there is no need to address whether BIG15 is a “debt
collector” as defined by the FDCPA.

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III. Conclusion
For the reasons discussed, the Defendants’ motion to dismiss is granted.
Zuniga lacks Article III standing. In the alternative, the complaint fails to allege a
violation of the FDCPA.
ENTERED:

s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: March 28, 2018

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