Boucher et al v. Finance System of Green Bay Inc

Filing 24

DECISION AND ORDER GRANTING 20 Motion to Dismiss signed by Chief Judge William C Griesbach on 5/30/2017; 8 Motion to Certify Class terminated. The Clerk is directed to enter judgment. (cc: all counsel) (Griesbach, William)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

RYAN BOUCHER, HEATHER BOUCHER,
CHRISTOPHER DETTLOFF, and ADAM
DUCH, on behalf of themselves and all others
similarly situated,
Plaintiffs,
v.

Case No. 17-C-132

FINANCE SYSTEM OF GREEN BAY, INC.
and JOHN AND JANE DOES NUMBERS 1
THROUGH 25,
Defendants.

DECISION AND ORDER GRANTING MOTION TO DISMISS

Plaintiffs Ryan Boucher, Heather Boucher, Christopher Dettloff, and Adam Duch sued
Defendant Finance System of Green Bay, Inc., for violating the Fair Debt Collection Practices Act,
15 U.S.C. § 1692, et seq. (“FDCPA”). Plaintiffs allege that Finance System sent debt collection
letters which falsely stated that the balances owed might increase “due to interest, late charges and
other charges,” even though Finance System had no authority or intent to charge “late charges and
other charges.” On April 10, 2017, Finance System moved to dismiss Plaintiffs’ complaint pursuant
to Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the motion to dismiss will be
granted.
ALLEGATIONS OF COMPLAINT
The following allegations are taken directly from Plaintiffs’ complaint and are accepted as
true for the purpose of the motion to dismiss. Ameritech Corp. v. McCann, 297 F.3d 582, 585 (7th

Cir. 2002). Each named plaintiff is alleged to have incurred and defaulted on a financial obligation
for medical services. Compl. (ECF No. 1), ¶¶ 22, 45, 66. The creditor of those medical debts then
assigned, placed, or transferred the debt to Finance System for collection. Id. at ¶¶ 27, 50, 71.
Finance System sent a collection letter to each of the plaintiffs, which included the following
statement:
As of the date of this letter, you owe $ [stated amount]. Because 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. Hence, if you pay the amount shown above, an adjustment
may be necessary after we receive your check. For further information, write to the
address above or call [listed number].
Ex. A (ECF No. 1-1); Ex. B (ECF No. 1-2); Ex. C (ECF No. 1-3).
Plaintiffs allege upon information and belief that late charges or other charges could never
be lawfully imposed on the medical debts, that late charges or other charges were never imposed,
and that Finance Services never intended to impose late charges or other charges. Compl. ¶¶ 35–41,
56–62, 77–83. They acknowledge, however, that Finance System is entitled to collect interest on
the medical debts and that Finance System retains the collected interest as profit. Id. at ¶¶ 44, 65,
86.
Based on these allegations, Plaintiffs claim that Finance System’s collection letters are
materially false, deceptive, and misleading in violation of the FDCPA. They allege that Finance
System’s letters falsely suggest to unsophisticated consumers that their debt will increase an
undisclosed amount every day due to “late charges and other charges”; that the letters make false
threats to take action that cannot be legally taken and/or that is not intended to be taken; that
Finance System is using false representations and/or deceptive means to collect or attempt to collect
a debt; and that Finance System fails to provide the amount of the debt. Id. at ¶ 104.
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Finance System has moved for dismissal for failure to state a claim. Finance System contends
that the statement of debt in its collection letters does not violate the FDCPA because the language
used is nearly identical to the safe harbor language the Seventh Circuit held satisfied the debt
collector’s duty to state the amount of the debt in Miller v. McCalla, Raymer, Padrick, Cobb,
Nichols & Clark, LLC, 214 F.3d 872, 876 (7th Cir. 2000). Finance System also argues that because
Finance System was authorized by the creditor to add 5% interest per year on Plaintiffs’ accounts,
the letters were not materially false, deceptive, or misleading in violation of the FDCPA. Exs. A–C.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint to state
a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). Rule 8(a)(2) mandates that a
complaint need only include “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Supreme Court has held that a complaint must
contain factual allegations that “raise a right to relief above the speculative level.” Bell Alt. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). While a plaintiff is not required to plead detailed factual
allegations, he or she must plead “more than labels and conclusions.” Id. A simple, “formulaic
recitation of the elements of a cause of action will not do.” Id. In evaluating a motion to dismiss,
the court must view the plaintiff’s factual allegations and any inferences reasonably drawn from them
in a light most favorable to the plaintiff. Yasak v. Retirement Bd. of the Policemen’s Annuity &
Benefit Fund of Chi., 357 F.3d 677, 678 (7th Cir. 2004).
ANALYSIS
The Fair Debt Collection Practices Act is aimed at remedying the use of “abusive, deceptive,
and unfair debt collection practices.” 15 U.S.C. § 1692(a). “Among other things, the FDCPA
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regulates when and where a debt collector may communicate with a debtor, restricts whom a debt
collector may contact regarding a debt, prohibits the use of harassing, oppressive, or abusive
measures to collect a debt, and bans the use of false, deceptive, misleading, unfair, or unconscionable
means of collecting a debt.” Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 384 (7th Cir. 2010)
(citing §§ 1692, 1692c–1692f). Two threshold criteria must be met for a claim under the FDCPA:
the defendant must be a “debt collector” and “the communication that forms the basis of the suit
must have been made ‘in connection with the collection of any debt.’” Id. (citing §§ 1692c(a)–(b),
1692e, 1692g). Here, the parties do not dispute for the purposes of this motion that Finance System
is a debt collector and that the collection letters were mailed in connection with the collection of a
consumer debt. The sole dispute is whether the language used in Finance System’s collection letters
violates the FDCPA.
The complaint claims that the language used in Finance System’s collection
letters—“[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”—amounts to “unfair and deceptive acts and
practices” in violation of 15 U.S.C. §§ 1692e, 1692e(2), 1692e(5), 1692e(10), and 1692g(a)(1). “A
debt collector may not use any false, deceptive, or misleading representation or means in connection
with the collection of any debt.” 15 U.S.C. § 1692e. A debt collector must also notify the debtor
of the amount of the debt. 15 U.S.C. § 1692g(a)(1).
Whether a debt collector’s communications are false, deceptive, or misleading is assessed
from the perspective of an “unsophisticated consumer.” Lox v. CDA, Ltd., 689 F.3d 818, 822 (7th
Cir. 2012). The unsophisticated consumer standard “protects the consumer who is uninformed,
naive, or trusting, yet it admits an objective element of reasonableness. The reasonableness element
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in turn shields complying debt collectors from liability for unrealistic or peculiar interpretations of
collection letters.” Gammon v. GC Servs. Ltd. P’ship, 27 F.3d 1254, 1257 (7th Cir. 1994).
Furthermore, consumers “don’t need protection against false statements that are immaterial in the
sense that they would not influence a consumer’s decision—in the present context his decision to
pay a debt in response to a dunning letter.” Muha v. Encore Receivable Mgmt., Inc., 558 F.3d 623,
628 (7th Cir. 2009). “If a statement would not mislead the unsophisticated consumer, it does not
violate the FDCPA—even if it is false in some technical sense. For purposes of § 1692e, then, a
statement isn’t ‘false’ unless it would confuse the unsophisticated consumer.” Wahl v. Midland
Credit Mgmt., Inc., 556 F.3d 643, 645–46 (7th Cir. 2009).
Finance System asserts that its collection letters do not make any representations that could
be considered false, deceptive, or misleading to an unsophisticated consumer. Instead, it claims that
it uses the language the Seventh Circuit instructed debt collectors to use when outside charges, such
as interest or late fees, could cause the amount owed to vary on a daily basis. See Miller, 214 F.3d
at 876. In Miller, the Seventh Circuit offered the following guidance for complying with the
“amount of debt” provision of the FDCPA, 15 U.S.C. § 1692g(a)(1):
In a previous case, in an effort to minimize litigation under the debt collection statute,
we fashioned a “safe harbor” formula for complying with another provision of the
statute. We think it useful to do the same thing for the “amount of debt” provision.
We hold that the following statement satisfies the debt collector’s duty to state the
amount of the debt in cases like this were the amount varies from day to day: “As of
the date of this letter, you owe $___ [the exact amount due]. Because 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. Hence, if you pay the amount shown above, an
adjustment may be necessary after we receive your check, in which event we will
inform you before depositing the check for collection. For further information, write
the undersigned or call 1–800– [phone number].”

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Id. The Seventh Circuit further noted a debt collector who uses such language will not violate the
“amount of the debt” provision so long as “the information he furnishes is accurate and he does not
obscure it by adding confusing other information (or misinformation).” Id. Courts within this
Circuit have also found the use of the Miller language may be used in disputes involving § 1692e.
See Wilder v. J.C. Christensen & Assoc., Inc., No. 16-CV-1979, 2016 WL 7104283, at *4 (N.D.
Ill. Dec. 6, 2016) (“[U]se of the language from Miller or Taylor remains instructive for evaluating
a Section 1692e claim.”); Tilmon v. LVNV Funding, LLC, No. 12-CV-734-WDS, 2014 WL 335234,
at *3 (S.D. Ill. Jan. 30, 2014).
Finance System further asserts that the Seventh Circuit later clarified that its safe harbor
language from Miller should be read as “interest, late charges, or other charges.” In Chuway v.
National Action Financial Services, the court held that when the balance of a debt is static, the
collection letter should not confuse the issue by referring to the amount due as the “current” balance.
362 F.3d 944, 949 (7th Cir. 2004). However, the Seventh Circuit provided further guidance on the
situations in which the safe harbor language from Miller is appropriate and how it should be
interpreted:
Our conclusion does not place debt collectors on a razor’s edge, where if they say
too little they violate the Act by failing to disclose the amount of the debt they are
trying to collect and if they say too much they violate the Act by confusing the
consumer. . . . If, instead, the debt collector is trying to collect the listed balance plus
the interest running on it or other charges, he should use the safe-harbor language of
Miller[.]
Id. (emphasis added). Finance System thus argues that if the balance owed to a debt collector is not
static, a collection letter may use the entirety of the Miller language—even if interest, late charges,
and other charges are not all applicable to the present debt.

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Plaintiffs assert the language of the Miller safe harbor formula should be read strictly: if
interest, late charges, and other charges do not all apply to the consumer’s debt, then listing all three
options misleads unsophisticated consumers in violation of the FDCPA.

Under Plaintiffs’

interpretation of the Miller safe harbor language, debt collectors must narrowly tailor the statement
to each unique situation and eliminate the variable charges that no longer apply. See Wilder, 2016
WL 7104283, at *1 (limiting the disclaimer language to interest only). Failure to narrow the
language to the facts of the case would thus result in inaccurate and misleading information in
violation of the FDCPA. Applying that strict standard to this case, Plaintiffs argue, it is clear that
Finance System violated the FDCPA. It does not matter, Plaintiffs contend, that Finance System was
entitled to collect interest on the debts or that the amount Plaintiffs owe may ultimately differ from
the amount listed in the collection letter: the letters “falsely informed the unsophisticated consumer
that the amount of their debt would increase daily due to ‘late charges and other charges’ when, in
fact, the debt could never increase for either reason.” Pl. Resp. Br. (ECF No. 22) at 22 (emphasis
in original).
Plaintiffs’ reading of Finance System’s collection letter is unreasonable. As was the case in
Miller, no reasonable person could conclude that the letter used by Financial System “does not
inform the debtor of the amount due.” 214 F.3d at 876. The letters stated the amount due on the
date they were sent. Furthermore, Financial System’s letters clearly informed the debtors that the
amount due is not fixed and may increase by the time they ultimately pay. “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). Whether the increase occurred because
of interest, late charges, other charges, some combination thereof, or all of the above, the crucial fact
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conveyed is that the amounts owed by Plaintiffs were not fixed. Finance System was entitled
potentially collect more than the amount listed in the letter upon payment and Plaintiffs have not
alleged that Finance System intends not to exercise that right. Finance System’s failure to delete
“late charges and other charges” from its collection letter does not amount to a materially false,
deceptive, or misleading representation. Indeed, the central purpose of Miller’s safe harbor formula
is to provide debt collectors with a way to notify debtors that the amounts they owe may ultimately
vary. Finance System’s letter fulfilled that pupose.
A brief discussion regarding a recent Northern District of Illinois decision, Ruge v. Delta
Outsource Group, Inc., No. 15-CV-10865, 2017 WL 959017 (N.D. Ill. Mar. 13, 2017), is also
appropriate. In Ruge, the defendant issued a collection letter notifying the plaintiff that “[b]ecause
of interest, late charges, or other charges that may vary from day to day, the amount due on the day
you pay may be greater.” Id. at *1. However, the defendant in that case had a policy of not adding
interest, late fees, or other fees, and the defendant did not add interest or late charges to accounts
like the plaintiff’s. Id. The court held that the defendant’s letter was materially false or misleading
because “it implied that ‘because of interest’ the amount due may increase. This implied an
action—the assessment of interest—that Delta did not intend to take, in violation of § 1692e(5).”
Id. at *2. The court further held that “Miller does not provide a defense if the safe harbor language
itself is inaccurate under the circumstances.” Id. at *3. Notably, the court did not find the collection
letter was materially false for listing possible late charges or other charges despite those charges not
being available. Ruge is distinguishable from the present case because the amount owed in Ruge was
fixed—the defendant never intended to collect interest. Here, Finance System is entitled to 5%
interest per year on the accounts and Plaintiffs have not alleged that Finance System will not add the
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interest to the amount due. Because the debts owed to Finance System are variable, its collection
letters were not materially false or misleading.
Ultimately, the allegations of the complaint only allege that Finance System would be unable
to collect late charges and other charges on the debts listed in its collection letter. The complaint
concedes that Finance System is entitled to collect interest on its debts and does not allege that
Finance System will not attempt to collect interest. Given these facts, Finance System’s use of
Miller’s safe harbor language was proper and Plaintiffs have failed to state a claim under the
FDCPA. Finance System accurately notified Plaintiffs of the amount due on the date of the letter
and that the amounts due may vary due to additional charges. The letters were not false, deceptive,
or misleading. Accordingly, Plaintiffs’ FDCPA claims will be dismissed.
CONCLUSION
For the reasons given above, Finance System’s motion to dismiss (ECF No. 20) is
GRANTED and the complaint is dismissed. The Clerk is directed to enter judgment forthwith.
SO ORDERED this

30th day of May, 2017.
s/ William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court

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