SHIELDS v. J.C. CHRISTENSEN & ASSOCIATES, INC. et al

Filing 47

ORDER on Motions to Dismiss [Docket Nos. 21 and 24 ] - Plaintiff's complaint alleges facts sufficient to state a plausible claim for relief under the FDCPA against both Defendants. Defendants' Motions to Dismiss are therefore DENIED. Signed by Judge Sarah Evans Barker on 3/24/2017. (JD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

DEAN SHIELDS individually and on
behalf of all others similarly situated,

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Plaintiff,
vs.
J.C. CHRISTENSEN & ASSOCIATES,
INC. a Minnesota corporation,
LVNV FUNDING, LLC a Delaware
limited liability company,
Defendants.

No. 1:16-cv-01548-SEB-DML

ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS
This cause is before the Court on the Motions to Dismiss [Docket Nos. 21 and 24]
filed by Defendants LVNV Funding, LLC (“LVNV”) and J.C. Christensen & Associates
(“JCC”) on August 12, 2016 and August 15, 2016, respectively, pursuant to Federal Rule
of Civil Procedure 12(b)(6). Plaintiff, Dean Shields, filed this lawsuit on behalf of
himself and a putative class of plaintiffs,1 alleging that Defendants’ form collection letter
violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq.
For the reasons detailed below, we DENY Defendants’ Motions to Dismiss.

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Mr. Shields filed this case as a putative class action and moved for class certification on June
22, 2016. On October 5, 2016, he filed an amended motion to certify. However, on December
7, 2016, before the amended motion for class certification was fully briefed, the court stayed all
deadlines in the case management plan pending a ruling on the motions to dismiss. See Dkt. 40.
Accordingly, this ruling applies only to Mr. Shield individually.

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Factual Background
More than seven years ago, Mr. Shields incurred an outstanding financial
obligation for an HSBC Bank credit card. Defendant LVNV subsequently acquired Mr.
Shields’s debt and the debt was then placed with Defendant JCC for collection. In an
effort to collect on the delinquent account, JCC sent Mr. Shields a letter dated April 8,
2016, explaining that his debt had been purchased by LVNV and placed with JCC for
collection. The letter states that JCC was “authorized to negotiate GENEROUS
SETTLEMENT TERMS” on the account and references multiple ways in which Mr.
Shields could “settle [his] account.” Exh. C to Compl. The letter also provides that:
“The law limits how long you can be sued on a debt. Because of the age of your debt,
LVNV Funding LLC will not sue you for it, and LVNV Funding LLC will not report it to
any credit reporting agency.” Id. There is no further information in the letter regarding
time-barred debts, including the consequences of making a partial payment on a timebarred debt.
Mr. Shields filed this putative class action on June 22, 2016, alleging that
Defendants’ collection letter violated §§ 1692e and 1692f of the FDCPA by repeatedly
encouraging the debtor to “settle your account” and failing to inform the debtor that,
because of the applicable statute of limitations, neither LVNV nor JCC could legally sue
to collect the debt. Mr. Shields further alleges that Defendants’ statement attempting to
collect a time-barred debt was also unfair and unconscionable in violation of § 1692f of
the FDCPA.
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Legal Analysis
I.

Standard of Review
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of claims for

“failure to state a claim upon which relief may be granted.” Fed. R. Civ. P. 12(b)(6). In
this procedural context, the Court must accept as true all well-pled factual allegations in
the complaint and draw all ensuing inferences in favor of the non-movant. Lake v. Neal,
585 F.3d 1059, 1060 (7th Cir. 2009). Nevertheless, the complaint must “give the
defendant fair notice of what the . . . claim is and the grounds upon which it rests,” and its
“[f]actual allegations must . . . raise a right to relief above the speculative level.”
Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (citations omitted).
The complaint therefore must include “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see Fed. R.
Civ. P. 8(a)(2). Stated otherwise, a facially plausible complaint is one which permits “the
court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
II.

FDCPA Standards
The FDCPA aims at remedying the use of “abusive, deceptive, and unfair debt

collection practices,” 15 U.S.C. § 1692(a), and prohibits the use of “any false, deceptive,
or misleading representation or means in connection with the collection of any debt.” 15
U.S.C. § 1692e. Section 1692e of the FDCPA sets forth a nonexhaustive list of
prohibited practices, including making a false representation of the character, amount, or
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legal status of any debt, § 1692e(2)(A). Section 1692(f) of the FDCPA prohibits debt
collectors from using “unfair or unconscionable means to collect or attempt to collect any
debt.”
In determining whether the contents of a debt collector’s communication with a
debtor are “false or misleading” under §§ 1692e and 1692f of the FDCPA, the Seventh
Circuit has directed district courts to view them from the point of view of an
“unsophisticated consumer”—one who is “uninformed, naive, or trusting,” albeit not a
“dimwit.” Wahl v. Midland Credit Mgmt. Inc., 556 F.3d 643, 645 (7th Cir. 2009) (“The
‘unsophisticated consumer’ isn't a dimwit. She may be ‘uninformed, naive, [and]
trusting,’ but she has ‘rudimentary knowledge about the financial world.’”) (further
citations omitted). A plaintiff cannot successfully plead a violation of the statute,
however, simply by pointing to some formal, but immaterial mistake in the debt
collector’s form of communication. “A statement cannot mislead unless it is material, so
a false but non-material statement is not actionable.” Hahn v. Triumph P’ships LLC, 557
F.3d 755, 758 (7th Cir. 2009) (citing Wahl, 556 F.3d at 646).
How a particular notice affects its intended audience “is a question of fact.” See
Walker v. Nat’l Recovery, Inc., 200 F.3d 500, 501 (7th Cir. 1999); Headen v. Asset
Acceptance, LLC, 383 F. Supp. 2d 1097, 1102 (S.D. Ind. 2005). Dismissal is appropriate
only when “it is ‘apparent from a reading of the letter that not even a significant fraction
of the population would be misled by it.’” Zemeckis v. Global Credit & Collection

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Corp., 679 F.3d 632, 636 (7th Cir. 2012) (quoting Taylor v. Cavalry Inv., L.L.C., 365
F.3d 572, 574 (7th Cir. 2004)).
III.

Discussion
Plaintiff argues that the letter he received from Defendants is violative of the

FDCPA because it falsely and/or misleadingly represented the legal status of the debt, in
violation of § 1692(e) and § 1692(f) of the FDCPA, by: (1) implying that LVNV is
merely choosing not to sue or credit report rather than representing that it is legally
prohibited from doing so; (2) failing to state that, in addition to LVNV, JCC as the debt
collector is also legally prohibited from suing on or credit-reporting the time-barred debt;
and (3) failing to inform Plaintiff that the consequences of making or agreeing to make a
partial payment on a time-barred debt is to revive the statute of limitations for enforcing
that debt.
Defendants rejoin that Plaintiff’s FDCPA claim must fail because the letter he
received contained no false or misleading statements, and, in fact, used language from a
consent decree that both courts and the Federal Trade Commission (“FTC”) have deemed
sufficient to advise consumers about the collection of time-barred debts. Defendants
further argue that providing the disclosure that Plaintiff requests, to wit, an explicit
statement that his debt is time-barred, would constitute giving legal advice and thus
engaging in the unauthorized practice of law. Defendants argue that, for these reasons,
Plaintiff’s complaint must be dismissed in its entirety, pursuant to Rule 12(b)(6).

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Defendants are correct that the statements that “[t]he law limits how long you can
be sued on a debt” and “[b]ecause of the age of your debt, LVNV Funding LLC will not
sue you for it, and LVNV Funding LLC will not report it to any credit reporting agency”
are not false statements. However, this does not end the inquiry. Although if read in
isolation, these statements would technically be true, we cannot say as a matter of law
that, when read in context with Defendants’ collection letter as a whole, they could not
plausibly constitute a misrepresentation.
First, while Defendants’ letter indicates that LVNV will not sue Plaintiff or report
his debt to a credit reporting agency, the letter is silent as to the debt collector, JCC.
Under Indiana law, collection agents are in certain circumstances permitted to sue in their
own names on behalf of their clients and to collect all sums owed to the principal,
including attorney fees. See Kelley v. Med-1 Solutions, 952 N.E.2d 817, 827-8 (Ind. Ct.
App. 2011) (citing Mut. Hosp. Serv. Inc. v. Burton, 695 N.E.2d 641, 644 (Ind. Ct. App.
1998) (finding that where the creditor has granted express authority to its agent, the
collection agency, to collect accounts, the collection agency may file claims to do so)).
Accordingly, we find it plausible that the fact that Defendants’ letter fails to inform the
consumer that neither LVNV nor JCC will sue could confuse and mislead the
unsophisticated consumer into believing that JCC might sue to collect a time-barred debt,
especially if the consumer had previously been sued by a third-party collector.
This material omission is exacerbated by the fact that the letter goes on to
repeatedly offer the consumer opportunities to “settle your account” and “resolve” the
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debt, which is language the unsophisticated consumer could believe to be contradictory to
the promise not to sue. Moreover, Defendants’ letter does not include a disclosure
informing the consumer that, under Indiana law, a partial payment revives the statute of
limitations. See Clark v. Univ. of Evansville, 784 N.E.2d 942, 944 n.4 (Ind. Ct. App.
2003) (“We note that a partial payment that operates to toll the statute of limitations also
sets the statute of limitations running anew.”). The Seventh Circuit has recognized that,
in these circumstances, offers to settle “make[] things worse, not better, since a gullible
consumer who made a partial payment would inadvertently have reset the limitations
period and made herself vulnerable to a suit on the full amount.” McMahon, 744 F.3d at
1021. It is at least plausible that representing to the consumer the benefits of Defendants’
“generous settlement offer” while failing to reference Indiana law that would make the
debt judicially enforceable again upon a partial payment could constitute a
misrepresentation of the character and legal status of the debt under the FDCPA.2
Defendants rejoin that their letter used the same language as that deemed by the
Federal Trade Commission (“FTC”) and the district court that entered the consent decree
in United States v. Asset Acceptance, LLC, No. 8:12-CV-00182-JDW-EAJ, slip op. (M.D.
Fla. Jan. 31, 2012), sufficient to satisfy all disclosure requirements under the FDCPA for
time-barred debt collection. However, even assuming that Defendants’ letter faithfully
incorporates the language previously found acceptable by the FTC in settling other

We see no support for Defendants’ contention that including disclosures regarding whether a
debt is time-barred or that a partial payment could revive the statute of limitations constitutes the
unlawful practice of law.
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lawsuits,3 while that might be one factor that fact-finder could consider in assessing
whether Defendants’ letter was deceptive, it does not establish as a matter of law that
Defendants’ letter would not have been misleading to the unsophisticated consumer. In
support of their position, Defendants also point out that neither the FTC nor the
Consumer Financial Protection Bureau (“CFPB”) is in favor of imposing a mandatory
requirement that debt collectors disclose that a partial payment may revive the statute of
limitations on some debts. But the mere fact that such a disclosure is not required in all
circumstances does not mean that a letter without such a disclosure necessarily complies
with the FDCPA.
For these reasons, Plaintiff’s complaint alleges facts sufficient to state a plausible
claim for relief under the FDCPA against both Defendants. Defendants’ Motions to
Dismiss are therefore DENIED.
IT IS SO ORDERED.

_______________________________

3/24/2017
Date: _______________

SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana

We note that, unlike Defendants’ letter, which states only the LVNV would not sue or credit
report Plaintiff’s debt and is silent as to JCC, the consent decree states “we will not sue.” The
consent decree makes clear that “we” includes: “Defendant, and its officers, agents, servants,
employees, and all persons or entities in active concert or participation with any of them.” Dkt.
22-1 at 11-12.
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Distribution:
David M. Schultz
HINSHAW & CULBERTSON
[e-mail]
Nabil G. Foster
HINSHAW & CULBERTSON, LLP
[e-mail]
John Thomas Steinkamp
JOHN T. STEINKAMP AND ASSOCIATES
[e-mail]
Kevin Dale Koons
KROGER GARDIS & REGAS LLP
[e-mail]
Angie K. Robertson
PHILIPPS AND PHILIPPS, LTD.
[e-mail]
David J. Philipps
PHILIPPS AND PHILIPPS, LTD.
[e-mail]
Mary E. Philipps
PHILIPPS AND PHILIPPS, LTD.
[e-mail]
Patrick W. Chinnery
ROCK FUSCO & CONNELLY LLC
[e-mail]
Brandon A. Carnes
ROCK RUSCO & CONNELLY, LLC
[e-mail]

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