Smith v. Convergent Outsourcing, Inc.
MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 4/27/2021.Mailed notice.(jlj, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
CONVERGENT OUTSOURCING, INC.,
20 C 4553
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
Calvin Smith alleges in this putative class action that a collection letter he received from
Convergent Outsourcing, Inc. violated the Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692 et seq. Doc. 1. Convergent moves under Civil Rule 12(b)(6) to dismiss the
complaint. Doc. 12. The motion is granted in part and denied in part.
In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative
complaint’s well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N.
Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider
“documents attached to the complaint, documents that are critical to the complaint and referred
to in it, and information that is subject to proper judicial notice,” along with additional facts set
forth in Smith’s brief opposing dismissal, so long as those additional facts “are consistent with
the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013)
(internal quotation marks omitted). The facts are set forth as favorably to Smith as those
materials allow. See Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th Cir. 2016). In setting forth the
facts at the pleading stage, the court does not vouch for their accuracy. See Goldberg v. United
States, 881 F.3d 529, 531 (7th Cir. 2018).
Smith fell behind on his cable bill, and the account went into default. Doc. 1 at ¶¶ 10-11.
The cable company hired Convergent to collect the debt. Id. at ¶ 12. Convergent mailed Smith a
letter dated August 2, 2019 attempting to collect the $355.58 balance on his account. Id. at
¶¶ 13, 17-18; Doc. 1-1 at 2-3.
This lawsuit targets two aspects of the letter. First, the letter stated that Smith could
“dispute the validity of th[e] debt” “in writing at PO Box 9004, Renton, WA 98057 within 30
days from receiving this notice.” Doc. 1-1 at 3. But the letter did not mention that Convergent
also allowed debtors to submit disputes by mail to its physical address, by fax, by email, or by
completing a form on its website. Doc. 1 at ¶¶ 21-23. Second, the letter stated that, if Smith
disputed the debt, Convergent would “obtain verification of the debt or obtain a copy of a
judgment and mail you a copy of such judgment or verification.” Doc. 1-1 at 3. The letter’s
references to a “judgment” made Smith think that there might have been a judgment entered
against him, but in fact, as Convergent knew, there was no such judgment. Doc. 1 at ¶¶ 32-36.
Section 1692g Claim
Smith first claims that Convergent’s listing only its P.O. Box as a method for submitting
disputes, when in fact it allowed debtors to submit disputes by several other methods,
overshadowed its disclosure of his right to dispute the debt, in violation of 15 U.S.C. § 1692g.
Doc. 1 at ¶¶ 19-30; Doc. 21 at 3-9. Section 1692g(a) requires a debt collector’s written notice to
set forth five enumerated disclosures. The third disclosure gives the consumer 30 days in which
to dispute the validity of the debt, or else “the debt will be assumed to be valid by the debt
collector.” 15 U.S.C. § 1692g(a)(3). Smith’s claim centers on the fourth disclosure, which
requires the notice to include:
a statement that if the consumer notifies the debt collector in writing within
the thirty-day period that the debt, or any portion thereof, is disputed, the debt
collector will obtain verification of the debt or a copy of a judgment against
the consumer and a copy of such verification or judgment will be mailed to
the consumer by the debt collector.
Id. § 1692g(a)(4).
The FDCPA requires debt collectors to make each disclosure “clearly enough that the
recipient is likely to understand it.” Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317,
321 (7th Cir. 2016) (quoting Chuway v. Nat’l Action Fin. Servs., Inc., 362 F.3d 944, 948 (7th
Cir. 2004)). Clarity is measured under the “‘unsophisticated consumer’ standard.” Zemeckis v.
Glob. Credit & Collection Corp., 679 F.3d 632, 635 (7th Cir. 2012); see also Steffek v. Client
Servs., Inc., 948 F.3d 761, 764 (7th Cir. 2020) (“We and other circuits have long interpreted
§ 1692g to require that the mandatory disclosures be made so that they would be clearly
understood by unsophisticated debtors.”). Under that standard, the court “evaluate[s] a
communication ‘through the objective lens of an unsophisticated consumer who, while
uninformed, naïve, or trusting, possesses at least reasonable intelligence, and is capable of
making basic logical deductions and inferences.’” Steffek, 948 F.3d at 764 (quoting Smith v.
Simm Assocs., Inc., 926 F.3d 377, 380 (7th Cir. 2019)).
Smith claims that Convergent’s letter, by identifying only its P.O. Box as a method for
submitting disputes and failing to mention the other available methods, “overshadowed” the
letter’s disclosure of his ability to dispute the debt. Doc. 21 at 6. Overshadowing is a specific
type of § 1692g claim, in which the required disclosure is made but “additional language in the
letter contradicts and ‘overshadows’ the [disclosure].” Marshall-Mosby v. Corp. Receivables,
Inc., 205 F.3d 323, 326 (7th Cir. 2000). In 2006, Congress amended § 1692g to add an explicit
overshadowing provision, which states: “Any collection activities and communication during the
30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right
to dispute the debt.” Financial Services Regulatory Relief Act of 2006, Pub. L. No. 109-351,
§ 802(c), 120 Stat. 1966, 2006-07 (codified at 15 U.S.C. § 1692g(b)). As the Seventh Circuit
explained, the amendment “merely codified a rule that the courts had already instituted.”
Zemeckis, 679 F.3d at 635 n.1 (citing Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997)); see
Bartlett, 128 F.3d at 500 (“[T]he implied duty to avoid confusing the unsophisticated consumer
can be violated by contradicting or ‘overshadowing’ the required notice.”). So overshadowing
claims are just a subspecies of § 1692g claims more generally.
Dismissal of a § 1692g claim on the pleadings is appropriate only “[i]f it is apparent from
a reading of the letter that not even a significant fraction of the population would be misled by
it.” Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572, 574 (7th Cir. 2004) (quotation marks omitted);
see also Chuway, 362 F.3d at 948 (“It is impossible to draft a letter that is certain to be
understood by every person who receives it; only if it would confuse a significant fraction of the
persons to whom it is directed will the defendant be liable.”). Convergent contends that to be the
case here, reasoning that because § 1692g(a)(4) does not require debt collectors to provide
multiple means to submit a debt dispute, its “gratuitously” making available additional methods
besides the P.O. Box cannot expose it to liability merely because its letter failed to list those
additional methods. Doc. 13 at 6.
Convergent is correct that § 1692g does not specify the methods a debt collector must
make available for a consumer to dispute a debt. But neither does it permit a debt collector to
impose hurdles not found in the statute to submitting a dispute. The Seventh Circuit has held, for
instance, that a debt collector may not ask a consumer to give a reason for opening a dispute
under § 1692g(a)(4). See DeKoven v. Plaza Assocs., 599 F.3d 578, 582 (7th Cir. 2010) (“[T]he
consumer can, without giving a reason, require that the debt collector verify the existence of the
debt before making further efforts to collect it.”). District courts have applied this principle to
allow FDCPA challenges to various extra-statutory requirements imposed by debt collectors.
See Mikolajczyk v. Universal Fid., LP, 2017 WL 706301, at *3-4 (E.D. Wis. Feb. 22, 2017)
(denying a motion to dismiss a § 1692g(a) claim where the debt collector’s notice required the
debtor to give a reason for the dispute); Whitten v. ARS Nat’l Servs., Inc., 2002 WL 1050320, at
*4 (N.D. Ill. May 23, 2002) (granting summary judgment to the debtor on an overshadowing
claim where the debt collector’s letter required the debtor to provide “[s]uitable dispute
documentation”); Frey v. Satter, Beyer & Spires, 1999 WL 301650, at *5 (N.D. Ill. Apr. 30,
1999) (denying a motion to dismiss where the debt collector’s letter required the debtor to
“indicat[e] the nature of the dispute”).
It thus would have been unlawful for Convergent to tell Smith that he could submit his
dispute only by mail to the P.O. Box, because the statute imposes no such limit and Convergent
in fact made available other delivery methods. Granted, the letter does not use the word “only”;
rather, it reads: “If you notify this office in writing at [the P.O. Box] … this office will obtain
verification of the debt … .” Doc. 1-1 at 3. Technically, the letter does not state that the P.O.
Box is the sole method available to submit a dispute. A logician’s or grammarian’s reading is
not the standard, however—the question is whether “a significant fraction of the population”
could potentially read the letter to (incorrectly) limit the method of submitting a dispute. Taylor,
365 F.3d at 574.
The court cannot reject that possibility as a matter of law on the pleadings. In everyday
speech, people often use a statement in the form “if X, then Y” to mean “Y only if X.” “If the
weather is warm, we’ll go to the park.” “If you study hard, you’ll pass the test.” Those
statements might reasonably be read to imply that the first clause is a necessary condition of the
second. Here, it is likewise plausible that an unsophisticated consumer might conclude from
Convergent’s letter that mail to the P.O. Box is a necessary condition for submitting a dispute, a
message that, if received, would be incorrect—as there were several other available methods—
and thereby overshadow the letter’s disclosure in violation of § 1692g(a)(4) and (b). The
overshadowing claim cannot be dismissed at this stage.
Section 1692e and 1692f Claims
Smith’s second and third claims focus on this sentence from Convergent’s letter: “this
office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of
such judgment or verification.” Doc. 1-1 at 3; see Doc. 1 at ¶¶ 31-46. As Smith concedes,
Doc. 1 at ¶¶ 41-43, this language mirrors the disclosure required by § 1692g(a)(4). See 15
U.S.C. § 1692g(a)(4) (requiring that a collection letter include a statement that “the debt
collector will obtain verification of the debt or a copy of a judgment against the consumer and a
copy of such verification or judgment will be mailed to the consumer by the debt collector”).
Smith nevertheless contends that where, as here, no judgment exists, it is misleading under
§ 1692e and unfair under § 1692f to include the “judgment” portion of that disclosure in a
collection letter. Doc. 21 at 9-15.
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), Smith invokes subsections (2)(A) and (5), which
proscribe, respectively, “[t]he false representation of … the character, amount, or legal status of
any debt,” 15 U.S.C. § 1692e(2)(A), and “[t]he threat to take any action that cannot legally be
taken or that is not intended to be taken,” id. § 1692e(5). Section 1692f, meanwhile, proscribes
the use of “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C.
§ 1692f. As with § 1692g claims, the unsophisticated consumer standard governs claims under
§§ 1692e and 1692f. See Steffek, 948 F.3d at 765 (“Across all the [FDCPA’s] protections, we
evaluate a communication through the objective lens of an unsophisticated consumer … .”)
(quotation marks omitted); Bravo v. Midland Credit Mgmt., Inc., 812 F.3d 599, 603 (7th Cir.
2016) (“[W]ith 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 … .”). Because Smith’s § 1692e and
§ 1692f claims rest on the same premise—that Convergent’s letter falsely implied there was a
judgment against him—they rise or fall together.
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
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.
Smith’s claims based on use of the phrase “this office will obtain verification of the debt
or obtain a copy of a judgment” fall into the first category, making dismissal appropriate based
on the letter’s text alone. Even an unsophisticated consumer “is capable of making basic logical
deductions and inferences.” Steffek, 948 F.3d at 765. Here, the basic inference from the text is
that Convergent would obtain either verification of the debt or a copy of a judgment, depending
on which circumstance obtained. That is how ordinary English speakers, sophisticated or not,
use the word “or.” Also significant is the use of the phrase “a judgment,” as opposed to “the
judgment.” No formal education is needed to understand that the indefinite article “a” leaves
unaddressed whether or not a judgment exists.
The relevant subsections of § 1692e prohibit “false representation” or a false “threat to
take any action.” 15 U.S.C. § 1692e(2), (5). The language Convergent used plainly does
neither. Only an “an ingenious misreading” of the letter conjures any deception here. White v.
Goodman, 200 F.3d 1016, 1020 (7th Cir. 2000). As a result, the letter is neither misleading nor
unfair as a matter of law.
It is also significant that this part of Convergent’s letter made a disclosure required by
§ 1692g(a)(4) using language practically identical to the language of the statute itself. Smith’s
position would therefore impose liability on Convergent under § 1692e for using precisely the
language that Congress instructed it to use in § 1692g. Such an interpretation is to be avoided if
possible. See Beeler v. Saul, 977 F.3d 577, 585 (7th Cir. 2020) (“We interpret statutes as a
symmetrical and coherent regulatory scheme, and fit, if possible, all parts in an harmonious
whole.”); Roberts v. Fed. Hous. Fin. Agency, 889 F.3d 397, 403 (7th Cir. 2018) (“[W]ith any
statute, we avoid a reading that would render its provisions inconsistent or redundant.”).
Conflict can easily be avoided here under the eminently justifiable assumption that an
unsophisticated consumer would understand the words “or” and “a” in their normal senses.
Resisting this conclusion, Smith points to Boucher v. Finance System of Green Bay, Inc.,
880 F.3d 362 (7th Cir. 2018), which concerned a debt collector’s duty under §§ 1692g(a)(1) and
1692e(2) to accurately disclose the amount of the debt. In an earlier decision, Miller v. McCalla,
Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000), the Seventh
Circuit drafted “safe harbor” language for debt collectors to use when making that disclosure.
214 F.3d at 876. Boucher held, however, that debt collectors retain an independent duty to
ensure that the Miller safe harbor language is accurate and non-misleading: “[A]lthough the
Miller language is not misleading or deceptive on its face, it may nevertheless be inaccurate
under certain circumstances.” 880 F.3d at 370.
Smith contends that, under Boucher, Convergent’s use of statutory language in its letter
does not, by itself, insulate it from liability. Doc. 21 at 10. But there is a fundamental difference
between a judicial interpretation of a statute—like the Miller safe harbor language—and the
statutory text. As Boucher explained, “our judicial interpretations cannot override the statute
itself, which clearly prohibits debt collectors from making false and misleading
misrepresentations.” 880 F.3d at 370. Thus, as Boucher held, the judicial gloss articulated in
Miller had to give way to the statute itself in circumstances where the two came into conflict.
Here, Smith asks the court impose liability on Convergent under §§ 1692e and 1692f for using
language that Congress required in § 1692g. As noted, such a conflict between different
statutory provisions is to be avoided if possible, and it can be avoided here by applying the
ordinary, non-technical meaning of the phrase “obtain verification of the debt or obtain a copy of
a judgment” in Convergent’s letter.
Convergent’s motion to dismiss is granted as to the §§ 1692e and 1692f claims. The
dismissal of those claims is with prejudice, as the court can discern no amendment that would
cure the flaw those claims. See Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 335
(7th Cir. 2018) (“Nothing in Rule 15, nor in any of our cases, suggests that a district court must
give leave to amend a complaint where a party does not request it or suggest to the court the
ways in which it might cure the defects. To the contrary, we have held that courts are within
their discretion to dismiss with prejudice where a party does not make such a request or
showing.”); Gonzalez-Koeneke v. West, 791 F.3d 801, 808 (7th Cir. 2015) (“A district court acts
within its discretion in … dismissing a complaint with prejudice … when the plaintiff fails to
demonstrate how [an] amendment would cure the deficiencies in the prior complaint.”). The
motion is denied as to the § 1692g claim. Convergent shall answer the surviving portions of the
operative complaint by May 18, 2021.
April 27, 2021
United States District Judge
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