Akins v. LVNV Funding, LLC et al
Filing
36
OPINION and Order Signed by the Honorable Sara L. Ellis on December 10, 2020. Mailed notice (ph, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MARCELINO CENTENO,
Plaintiff,
v.
LVNV FUNDING, LLC and RESURGENT
CAPITAL SERVICES, L.P.,
Defendants.
JEANETTE AKINS,
Plaintiff,
v.
LVNV FUNDING, LLC and RESURGENT
CAPITAL SERVICES, L.P.,
Defendants.
LAURA LEMKE,
Plaintiff,
v.
LVNV FUNDING, LLC and RESURGENT
CAPITAL SERVICES, L.P.,
Defendants.
CORDELL JOHNSON,
Plaintiff,
v.
LVNV FUNDING, LLC,
Defendant.
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No. 17 C 5233
Judge Sara L. Ellis
No. 17 C 5693
Judge Sara L. Ellis
No. 17 C 5897
Judge Sara L. Ellis
No. 17 C 6098
Judge Sara L. Ellis
OPINION AND ORDER
Counsel for Plaintiffs Marcelino Centeno, Jeannette Akins, Laura Lemke, and Cordell
Johnson sent letters to Defendant LVNV Funding, LLC (“LVNV”), which owns Plaintiffs’ debt,
indicating, among other things, that “the debt reported on the credit report is not accurate.” After
LVNV did not report their debt as disputed despite this notice, Plaintiffs filed individual lawsuits
against LVNV and, in all cases except Johnson’s, Defendant Resurgent Capital Services, L.P.
(“Resurgent”), which are all now pending before this Court as related actions. Plaintiffs claim
that Defendants violated § 1692e(8) of the Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692e(8), which prohibits the failure to communicate that a disputed debt is disputed. 1
The Court denied Defendants’ motion for summary judgment, concluding that Defendants
violated § 1692e(8) because Plaintiffs’ letters conveyed a dispute about their debt and
Defendants failed to communicate that their debt was disputed. Doc. 113. But because
Defendants only moved for summary judgment on one element of Plaintiffs’ FDCPA claims, the
Court did not address the remaining elements or any potential defenses. Id. at 8. Plaintiffs have
now moved for summary judgment as to the remaining elements and Defendants’ affirmative
defenses. Defendants concede that Plaintiffs have established all the elements of their FDCPA
claims but argue that Plaintiffs do not have standing and any violation was not material. Because
Seventh Circuit precedent forecloses Defendants’ arguments, the Court grants Plaintiffs’ motion,
with the only issue remaining in this case the amount of statutory damages to which Plaintiffs are
entitled.
1
Plaintiffs have withdrawn their assertion of actual damages and only seek statutory damages for the
alleged FDCPA violations. See Doc. 93 ¶ 74.
2
BACKGROUND 2
Centeno, Akins, and Lemke had Credit One credit card accounts. Johnson had an HSBC
credit card account. Plaintiffs incurred debt for goods and services used for personal purposes on
these accounts. They all defaulted on their accounts. Thereafter, LVNV, a collection agency
licensed by the State of Illinois, acquired Plaintiffs’ debt. It assigned Centeno’s, Akins’, and
Lemke’s debt to Resurgent, also an Illinois-licensed collection agency, for collection.
LVNV derives its revenue from the collection of the debts it owns. Resurgent acts as a
master servicing agent for LVNV and has a limited power of attorney on LVNV’s behalf for this
purpose. Resurgent uses the mails and telephone to collect consumer debts originally owed to
others. LVNV reports credit information for accounts it owns to credit reporting agencies,
including Experian, Equifax, and TransUnion.
In 2017, counsel for Plaintiffs drafted and faxed letters on behalf of each Plaintiff to
LVNV. Those letters stated, in relevant part:
The above referenced client is represented by our firm regarding
all matters in connection with the above referenced debt. Please
direct any future communication regarding the account to our
office. This client regrets not being able to pay, however, at this
time they are insolvent, as their monthly expenses exceed the
amount of income they receive, and the debt reported on their
credit report is not accurate. If their circumstances change, we will
be in touch.
Doc. 180-2 ¶ 22.
After receiving the letters, LVNV communicated credit information regarding Plaintiffs’
alleged debt to consumer reporting agencies. Resurgent and LVNV did not update credit reports
to indicate a dispute for any of the Plaintiffs. Each Plaintiff acknowledges that he or she owes
2
The Court derives the facts in this section from the Joint Statement of Undisputed Material Facts filed in
connection with Plaintiffs’ motion for summary judgment. Doc. 180-2. The Court also considers the
facts Defendants present in their response to Plaintiffs’ motion. The Court takes all facts in the light most
favorable to Defendants, the non-movants.
3
the debt at issue and would pay the debt if circumstances allowed. None of them filed a dispute
regarding the debt with the credit card issuers. Plaintiffs cannot identify whether the failure to
report their debt as disputed impacted their credit scores or affected their ability to obtain credit.
LEGAL STANDARD
Summary judgment obviates the need for a trial where there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56.
To determine whether a genuine issue of fact exists, the Court must pierce the pleadings and
assess the proof as presented in depositions, answers to interrogatories, admissions, and
affidavits that are part of the record. Fed. R. Civ. P. 56 & advisory committee’s notes. The party
seeking summary judgment bears the initial burden of proving that no genuine issue of material
fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In response, the non-moving
party cannot rest on mere pleadings alone but must use the evidentiary tools listed above to
identify specific material facts that demonstrate a genuine issue for trial. Id. at 324; Insolia v.
Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). Although a bare contention that an issue
of fact exists is insufficient to create a factual dispute, Bellaver v. Quanex Corp., 200 F.3d 485,
492 (7th Cir. 2000), the Court must construe all facts in a light most favorable to the non-moving
party and draw all reasonable inferences in that party’s favor. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986).
ANALYSIS
To establish a claim under the FDCPA, Plaintiffs must prove that (1) Defendants qualify
as “debt collectors” as defined in § 1692a(6), (2) Defendants took the actions of which Plaintiffs
complain “in connection with the collection of any debt,” and (3) the actions violated one of the
FDCPA’s substantive provisions. Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 384 (7th
4
Cir. 2010) (citation omitted) (internal quotation marks omitted). The Court has already
concluded that Plaintiffs have established a violation of § 1692e(8), which prohibits
“[c]ommunicating or threatening to communicate to any person credit information which is
known or which should be known to be false, including the failure to communicate that a
disputed debt is disputed.” 3 15 U.S.C. § 1692e(8); see Doc. 113 at 5–8; Doc. 138 at 2–3.
Defendants did not respond to Plaintiffs’ arguments regarding the remaining elements of an
FDCPA claim, conceding that they qualify as “debt collectors” as defined in § 1692a(6) and took
the complained-of actions against Plaintiffs in connection with the collection of a consumer debt.
See Bonte v. U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010) (“Failure to respond to an
argument . . . results in waiver.”). Defendants also do not contest that LVNV is liable for
Resurgent’s violations of § 1692e(8), acknowledging that Resurgent acts as LVNV’s agent.
Although Defendants concede that, in light of the Court’s prior ruling, Plaintiffs have
established an FDCPA claim, Defendants argue that the Court should deny Plaintiffs’ motion for
summary judgment because Plaintiffs lack Article III standing or, alternatively, because
Plaintiffs cannot establish the materiality of the violation. 4 The Court first addresses whether
Plaintiffs have standing, an issue that implicates the Court’s subject matter jurisdiction.
3
Defendants have not raised any arguments that would warrant the Court revisiting its finding that
Plaintiffs have established a § 1692e(8) violation. Instead, in their response, Defendants state that they
“respect the Court’[s] prior summary judgment ruling” but seek to incorporate their prior arguments on
the issue so as not “to prejudice their right to appeal that ruling.” Doc. 181 at 2. The Court again rejects
Defendants’ prior arguments for the reasons expressed in its May 20, 2019 Opinion on Defendants’
summary judgment motion, Doc. 113 at 5–8, and its October 24, 2019 Order on Defendants’ motion for
reconsideration, Doc. 138 at 2–3.
4
Defendants also ask the Court to dismiss the case for Plaintiffs’ alleged failure to diligently prosecute
the case pursuant to Federal Rule of Civil Procedure 41(b). This is not the first time Defendants have
made this request. See Docs. 144, 157. The Court denied those requests. Docs. 146, 168. The Court
similarly sees no basis for granting Defendants’ renewed request to dismiss pursuant to Rule 41(b) instead
of addressing the merits of Plaintiffs’ claims. See Holmes v. W. Side Veterans Admin. V.A. Hosp., No. 04
C 2287, 2007 WL 9813407, at *4 (N.D. Ill. Feb. 2, 2007) (“As a general rule, it is preferable to decide
cases on the merits rather than on what are arguably technicalities.”).
5
I.
Article III Standing
“Standing is a threshold question in every federal case because if the litigants do not have
standing to raise their claims the court is without authority to consider the merits of the action.”
Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724, 726 (7th Cir. 2016) (quoting Freedom
From Religion Found., Inc. v. Zielke, 845 F.2d 1463, 1467 (7th Cir. 1988)). Standing consists of
three elements: “[t]he plaintiff must 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, Inc. v. Robins, --- U.S. ----, 136 S. Ct. 1540, 1547 (2016).
In Spokeo, the Supreme Court held that “Article III standing requires a concrete injury
even in the context of a statutory violation.” Id. at 1549; see also Groshek v. Time Warner
Cable, Inc., 865 F.3d 884, 887 (7th Cir. 2017) (no standing for “a statutory violation completely
removed from any concrete harm or appreciable risk of harm”). Defendants argue that Plaintiffs
do not have standing because, apart from the technical statutory violation, they did not suffer any
actual damages or harm as a result of Defendants’ conduct. Initially, Plaintiffs’ lack of actual
damages is irrelevant; the standing inquiry considers whether a plaintiff suffered an injury in
fact, not actual damages. See Wheeler v. Midland Funding LLC, No. 15 C 11152, 2020 WL
1469449, at *4 (N.D. Ill. Mar. 26, 2020) (“Defendants confuse a lack of actual damages with a
lack of injury.”).
But Defendants also argue that Plaintiffs have not identified the concrete harm required
for standing purposes after Spokeo, relying on several appellate court cases from this and other
circuits that emphasize that a statutory violation alone does not suffice for standing purposes.
See Doc. 181 at 7–10 (citing Trichell v. Midland Credit Mgmt., Inc., 964 F.3d 990 (11th Cir.
2020); Frank v. Autovest, LLC, 961 F.3d 1185 (D.C. Cir. 2020); Casillas v. Madison Ave.
6
Assocs., Inc., 926 F.3d 329 (7th Cir. 2019); Hagy v. Demers & Adams, 882 F.3d 616 (6th Cir.
2018)). In Casillas, the Seventh Circuit case cited by Defendants, the plaintiff alleged that a debt
collector’s letter violated § 1692g(a) by omitting the statutorily required notice that a consumer
must dispute a debt in writing. 926 F.3d at 332. Because the plaintiff never considered
responding to the debt collector’s letter in any manner, the Seventh Circuit concluded that she
had not suffered an injury in fact because “[a]ny risk of harm was entirely counterfactual: she
was not at any risk of losing her statutory rights because there was no prospect that she would
have tried to exercise them.” Id. at 334. Defendants argue that Casillas demonstrates that
Plaintiffs also have raised only a hypothetical risk of harm that does not confer them with
standing. But Defendants fail to acknowledge that, in Evans v. Portfolio Recovery Associates,
LLC, the Seventh Circuit concluded that an alleged violation of § 1692e(8) creates a concrete
risk of financial harm sufficient to confer Article III standing. 889 F.3d 337, 345–46 (7th Cir.
2018). Specifically, the Evans court reasoned that “[a]n inaccurate credit report produces a
variety of negative effects” and can serve as “a red flag to the debtor’s other creditors and
anyone who runs a background or credit check, including landlords and employers.” Id. at 345
(citations omitted). Evans controls the standing inquiry in this case, and the Court does not read
Casillas, although decided after Evans, to require a different result, particularly where the
alleged FDCPA violations in the two cases differ. 5
5
In Gomez v. Cavalry Portfolio Services, LLC, the Seventh Circuit recently questioned but did not decide
whether a plaintiff asserting a violation of § 1692e has standing in light of Spokeo and Casillas. 962 F.3d
963, 966 (7th Cir. 2020). But until the Seventh Circuit reconsiders its conclusion in Evans, the Court
must follow it. See Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 484 (1989) (“If a
precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some
other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to
this Court the prerogative of overruling its own decisions.”); Reiser v. Residential Funding Corp., 380
F.3d 1027, 1029 (7th Cir. 2004) (“Just as the court of appeals must follow decisions of the Supreme Court
whether or not we agree with them, so district judges must follow the decisions of [the Seventh Circuit]
7
Nonetheless, Defendants do argue that, at the summary judgment stage, no evidence
exists to support a finding of concrete financial harm, pointing to Plaintiffs’ deposition testimony
that they could not identify any impact Defendants’ failure to report their debt as disputed had on
their credit scores or ability to obtain credit. Defendants also argue that Plaintiffs have not
retained an expert to testify to any such financial harm. But Plaintiffs need not prove that their
credit scores were lowered or that the violation actually impacted their ability to obtain credit;
following Evans, the risk of harm suffices, meaning that “the statutory violation alone is enough
to establish standing, even at the summary judgment phase.” Francisco v. Midland Funding,
LLC, No. 17 C 6872, 2019 WL 498936, at *3 (N.D. Ill. Feb. 8, 2019); see also Webster v.
Receivables Performance Mgmt., LLC, --- F. Supp. 3d ----, 2020 WL 4192896, at *3–4 (S.D.
Ind. July 21, 2020) (relying on Evans to reject the defendant’s arguments at summary judgment
that the plaintiff did not have standing because she did not provide evidence that the failure to
report her debt as disputed resulted in a lower credit score and she did not designate an expert
witness on the topic). Therefore, the Court finds that Defendants’ failure to report Plaintiffs’
debt as disputed caused Plaintiffs the concrete harm required for Article III standing.
II.
Materiality
Alternatively, Defendants argue that Plaintiffs cannot recover on their claims because
Defendants’ failure to report their debt as disputed was not material. See Evans, 889 F.3d at 349
(“Generally, § 1692e only protects against false statements that are material.”). As Defendants
must acknowledge, however, the Evans court directly addressed the application of the materiality
requirement to § 1692e(8), holding that “the failure to inform a credit reporting agency that the
debtor disputed his or her debt will always have influence on the debtor, as this information will
whether or not they agree.” (citations omitted)). And, given the binding Seventh Circuit precedent, the
Court need not address the out-of-circuit cases that Defendants cite.
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be used to determine the debtor’s credit score.” Id. at 349. While Defendants argue that the
specific facts of this case do not support a finding of materiality, Evans makes clear that a
violation of § 1692e(8) is always material, regardless of the factual scenario. Id. To the extent
Defendants take issue with Evans’ holding, they can raise the issue on appeal. See Reiser, 380
F.3d at 1029.
Therefore, the Court finds it appropriate to grant summary judgment for Plaintiffs on
their FDCPA claims and Defendants’ affirmative defenses. 6 Although the Court finds that
Plaintiffs have established an FDCPA violation and that Defendants cannot rely on any
affirmative defenses to avoid liability, this does not end the case. “[Section] 1692k(a)(2) of the
FDCPA provides for trial by jury in determining statutory additional damages[.]” Kobs v. Arrow
Serv. Bureau, 134 F.3d 893, 898 (7th Cir. 1998). The parties do not address statutory damages
in their briefing, and Plaintiffs have made a jury demand. Therefore, absent an agreement by the
parties, the damages question must be submitted to a jury.
CONCLUSION
For the foregoing reasons, the Court grants Plaintiffs’ motion for summary judgment
[180]. The Court enters judgment for Plaintiffs on their FDCPA claims and Defendants’
affirmative defenses. The appropriate measure of statutory damages for each Plaintiff remains
pending.
Dated: December 10, 2020
______________________
SARA L. ELLIS
United States District Judge
6
Defendants asserted additional affirmative defenses in their answer, but only focus on standing and
materiality in response to Plaintiffs’ motion, which seeks summary judgment as to all of Defendants’
affirmative defenses. The Court treats Defendants’ failure to address the remaining affirmative defenses
as a concession that they fail. See Bonte, 624 F.3d at 466.
9
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