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Spuhler v. State Collection Service Inc.

United States District Court, E.D. Wisconsin

August 1, 2018

KYLE SPUHLER AND NICHOLE SPUHLER, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
STATE COLLECTION SERVICES, INC., Defendant.

          DECISION AND ORDER ON DEFENDANT'S MOTION FOR RECONSIDERATION

          NANCY JOSEPH United States Magistrate Judge.

         Kyle and Nichole Spuhler filed a single count complaint against State Collection Services, Inc. alleging that a debt collection letter sent to them violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. The Spuhlers previously filed a motion for class certification, which was granted on October 26, 2017. (Docket # 74.) State Collection moved for summary judgment dismissing the claims against it. (Docket # 59.)

         I found that State Collection was entitled, pursuant to Wisconsin law, to collect prejudgment interest on the medical debts; thus, State Collection was entitled to summary judgment on the Spuhlers' 15 U.S.C. § 1692e and § 1692f claim that State Collection was attempting to collect on an amount it was not authorized to collect. However, I found that the Spuhlers created a triable issue of fact as to whether the collection letter was confusing or unclear on its face and thus denied State Collection's motion for summary judgment on the Spuhlers' 15 U.S.C. § 1692e and § 1692f claim that the collection letter was misleading because it failed to provide notice of accruing interest. (Docket # 84.)

         Presently before me is State Collection's motion for correction of, or relief from, the summary judgment order, pursuant to Fed.R.Civ.P. 54(b) or 60(b)(1). (Docket # 88.) State Collection alternatively moves for certification of the summary judgment order for immediate interlocutory appeal and to stay the proceedings. (Id.) After briefing the motion, the Spuhlers' filed a motion for leave to file a surreply. (Docket # 98.) State Collection opposes the motion, and has filed a motion to strike the proposed surreply and a motion for sanctions. (Docket # 100.) For the reasons more fully explained below, State Collection's motion for correction of the summary judgment order is granted in part and denied in part. I agree the summary judgment order should be corrected; however, in reconsidering the order, judgment is entered in favor of the plaintiffs. The Spuhlers' motion for leave to file a surreply is denied, as is State Collection's motion to strike the proposed surreply and for sanctions.

         ANALYSIS

         1. Reconsideration Standard

         State Collection moves for reconsideration of the December 22, 2017 summary judgment order pursuant to Fed.R.Civ.P. 54(b) or 60(b)(1). Fed.R.Civ.P. 54(b) allows a court to exercise its inherent authority to reconsider nonfinal orders. See Civix-DDI, LLC v. Hotels.com, LP, 904 F.Supp.2d 864, 866 (N.D. Ill. 2012) (citing Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 (1983) (“every order short of a final decree is subject to reopening at the discretions of the . . . judge”). A motion for reconsideration serves a very limited purpose in federal civil litigation; it should be used only “to correct manifest errors of law or fact or to present newly discovered evidence.” Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.1987) (quoting Keene Corp. v. Int'l Fid. Ins. Co., 561 F.Supp. 656, 665-66 (N.D.Ill.1982), aff'd, 736 F.2d 388 (7th Cir.1984)). While “[a] court has the power to revisit prior decisions of its own, ” courts “should be loathe to do so in the absence of extraordinary circumstances such as where the initial decision was ‘clearly erroneous and would work a manifest injustice.'” Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988) (quoting Arizona v. California, 460 U.S. 605, 618 n.8 (1983)). In general, “litigants must fight an uphill battle in order to prevail on a motion for reconsideration.” United Air Lines, Inc. v. ALG, Inc., 916 F.Supp. 793, 795 (N.D.Ill. 1996). A motion seeking relief under Rule 54(b), “as a general rule” should be filed within “thirty days after the entry of the adjudication to which it relates.” King v. Newbold, 845 F.3d 866, 868 (7th Cir. 2017) (internal quotation and citation omitted).

         Rule 60(b)(1) permits the court to relieve a party from an order for “mistake, inadvertence, surprise, or excusable neglect.” “Mistake” under Rule 60(b)(1) usually involves an inadvertent “misunderstanding of the surrounding facts and circumstances.” Eskridge v. Cook County, 577 F.3d 806, 809 (7th Cir. 2009). A motion under Rule 60(b)(1) must be made with a “reasonable time” and “no more than a year after the entry of the . . . order . . . .” Fed.R.Civ.P. 60(c)(1). State Collection's motion, filed January 10, 2018, is timely under either rule.

         2. Reconsideration of Summary Judgment Order

         Again, State Collection moved for summary judgment dismissing the Spuhlers' claims in their entirety. I granted in part and denied in part State Collection's motion. State Collection only moves for reconsideration of the finding that the Spuhlers created a triable issue of fact as to whether the collection letter was confusing or unclear on its face pursuant to 15 U.S.C. § 1692e and § 1692f because it failed to provide notice of accruing interest.

         The crux of State Collection's argument is that the order contains a manifest error of law because the decision failed to apply the “three category” framework articulated by the Seventh Circuit. In Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 322-23 (7th Cir. 2016) (internal citations and quotations omitted) (emphasis in original) the court stated as follows:

It is true that for claims under § 1692e, or at least those based on its general prohibitions against false, deceptive, or misleading statements and practices, we have sorted cases into three categories. The first category includes cases in which the challenged language is plainly and clearly not misleading. No extrinsic evidence is needed to show that the debt collector ought to prevail in such cases. The second Lox category includes debt collection language that is not misleading or confusing on its face, but has the potential to be misleading to the unsophisticated consumer. In such 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. The third category is cases in which the challenged language is plainly deceptive or misleading, such that no extrinsic evidence is required for the plaintiff to prevail.

         State Collection argues that the summary judgment decision did not find that the letter at issue was not confusing or deceptive on its face, nor did it find that the letter was so plainly deceptive or misleading that the Spuhlers should prevail. Thus, State Collection argues that the letter does not fall into category one or three and must fall into category two. Since category two requires the plaintiffs to produce extrinsic evidence to prevail, which the Spuhlers unquestionably failed to do, State Collection argues judgment should have been entered in its favor on this issue. State Collection argues that to the extent the summary judgment decision allowed a collection letter falling under category two to go forward without the production of extrinsic evidence by the plaintiffs, the decision contradicts established Seventh Circuit law.

         The Spuhlers do not take issue with the three category approach; rather, they argue that the decision found that the letter fell into category three because it was misleading on its face. The Spuhlers note that they did not file for summary judgment and the language of Williams v. OSI Educ. Servs., Inc., 505 F.3d 675, 678 (7th Cir. 2007) states that “[o]ur past cases indicate that summary judgment may be avoided by showing that ...


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