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Bencomo v. Forster & Garbus LLP

United States District Court, E.D. Wisconsin

July 15, 2019


          J.P. Stadtmueller U.S. District Judge

         1. INTRODUCTION

         The plaintiff, Modesta Bencomo (“Bencomo”), alleges in her amended complaint several causes of action, both on behalf of herself and on behalf of a putative class, for violations of the Fair Debt Collection Practices Act (“FDCPA”) and the Wisconsin Consumer Act (“WCA”). (Docket #14). The alleged violations arise out of a debt collection letter she received from Forster & Garbus LLP (“Forster”) regarding her delinquent Target-brand credit card account. Id. She has sued Forster, the debt collector who sent the letter; TD Bank USA, N.A. (“TD Bank”), who issued and held Bencomo's credit card account; and Target Corporation (“Target”), the servicer of the store-branded credit card account.

         On October 23, 2018, Forster filed a motion to dismiss Bencomo's amended complaint. (Docket #18). On December 3, 2018, TD Bank and Target filed a joint motion to dismiss the amended complaint. (Docket #25). Both motions are fully briefed and ripe for adjudication. For the reasons stated below, both must be granted.


         2.1 Rule 12(b)(6) Standard

          The defendants have moved to dismiss Bencomo's amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a viable claim for relief. To state a viable claim, a complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In other words, the complaint must give “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted).

         In reviewing Bencomo's amended complaint, the Court is required to “accept as true all of the well-pleaded facts in the complaint and draw all reasonable inferences in [Plaintiff's] favor[.]” Kubiak v. City of Chi., 810 F.3d 476, 480-81 (7th Cir. 2016) (citation omitted). Dismissal is appropriate only “if it appears beyond doubt that the plaintiff could prove no set of facts in support of [her] claim that would entitle [her] to the relief requested.” Enger v. Chi. Carriage Cab Corp., 812 F.3d 565, 568 (7th Cir. 2016).

         2.2 FDCPA Framework

         In the Seventh Circuit, FDCPA claims are evaluated under the objective “unsophisticated consumer standard.” Gruber v. Creditors' Prot. Serv., Inc., 742 F.3d 271, 273 (7th Cir. 2014). Such a person may, on one hand, be “uninformed, naive, or trusting, but on the other hand [she] does possess rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses reasonable intelligence and is capable of making basic logical deductions and inferences.” Id. (internal quotation marks omitted). Additionally, “while the unsophisticated consumer may tend to read collection letters literally, [she] does not interpret them in a bizarre or idiosyncratic fashion.” Id. at 274 (internal quotation marks omitted). If not even “a significant fraction of the population would be misled” by the debt collector's letter, dismissal is required. Id. (quoting Zemeckis v. Global Credit & Collection Corp., 679 F.3d 632, 636 (7th Cir. 2012)).

         Courts in the Seventh Circuit treat the question of whether an unsophisticated consumer would find certain debt collection language misleading as a question of fact. Lox v. CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012). To frame the court's analysis of that question, the Seventh Circuit has set out three categories of § 1692e cases. Id. The first category includes cases in which the allegedly offensive language is plainly not misleading. Id. In these cases, “no extrinsic evidence is needed to show that the reasonable unsophisticated consumer would not be confused by the pertinent language.” Id. The second category includes language that is not misleading or confusing on its face but has the potential to be misleading to the unsophisticated consumer. Id. If a case falls into this category, the plaintiff must produce “extrinsic evidence, such as consumer surveys, to prove that unsophisticated consumers do in fact find the challenged statements misleading or deceptive.” Id. The final category includes cases involving letters that are plainly deceptive or misleading, and therefore do not require any extrinsic evidence for the plaintiff to prevail. Id. at 801.


         On or around June 12, 2018, Forster, a New York law firm engaged in the business of debt collection, mailed a letter to Bencomo regarding a debt she owed to “TD BANK USA, N.A. - CREDITOR/TARGET CREDIT CARD” (hereinafter, the “Letter”). (Docket #14-1). TD Bank issues and holds credit card accounts, including store-brand credit card accounts from merchants like Target and other retail stores. Target is the servicer of Target store-branded credit card accounts.

         The debt Forster was attempting to collect was a store-branded credit card account, used only for Bencomo's purchase of household goods at Target stores. Bencomo believes the Letter is a form letter, generated by a computer, with the information specific to her inserted by computer.

         The Letter is printed on Forster's letterhead and identifies Forster as a “New York law firm.” Id. The subject line indicates that the “MINIMUM AMOUNT due by July 8, 2018” was $392.00 and the “FULL BALANCE” was $2, 019.38. Id. The first sentence of the Letter states that “[t]he above referenced account has been referred to this firm for collection. The Full Balance shown above is the full amount owed as of the date of this letter.” Id. The Letter goes on to explain that “[t]he Minimum Amount Due shown above is an amount that if paid by the due date above will bring your account to a current status and stop collections (unless your account goes past due in the future). The account will then be returned to our client.” Id.

         The Letter then provides statutorily-mandated information about Bencomo's right to dispute the validity of the debt and her timeframe for doing so, known as the validation period. Id. Finally, the Letter closes with information about how to pay the debt, as well as this language about Forster's role in collecting the debt:

At this time we are only acting as a debt collector. Attorneys may act as debt collectors. Our firm will not commence a suit against you. However, if we are not able to resolve this account with you, our client may consider additional remedies to recover the balance due. . . . Please note that we are required, under federal law to advise you that we are debt collectors and any information we obtain will be used in attempting to collet this debt.


         Bencomo alleges that at the time this Letter was mailed to her, no attorney at Forster had reviewed any documentation underlying the alleged debt. No. attorney at Forster had exercised his or her professional judgment to determine that Bencomo was delinquent in her debt and a candidate for legal action. Finally, Bencomo also alleges that TD Bank and Target approved the language in Forster's debt collection letters, including the language described above.

         4. ANALYSIS

         Counts One, Two, and Three of Bencomo's amended complaint, lodged only against Forster, allege violations of the FDCPA. Count One alleges that the Letter creates the false impression that an attorney at Forster had personally reviewed the circumstances of Becomo's debt, in violation of 15 U.S.C. §§ 1692e, 1692e(3), 1692e(10), and 1692f. Count Two alleges that the Letter represents to the consumer that Forster, the creditor, or some other attorney “may consider additional remedies” during the validation period without explaining how those “additional remedies” fit together with the consumer's right to dispute the debt, in violation of 15 U.S.C. §§ 1692e, 1692e(5), 1692e(10), 1692g(a)(4), and 1692g(b). Count Three alleges that the Letter equivocates as to whether Forster was attempting to resolve the entire account or was attempting to collect only the minimum payment, in violation 15 U.S.C. §§ 1692e, 1692e(2)(A), 1692e(10), and 1692g(a)(1).

         Count Four is the only claim lodged against all defendants. In it, Bencomo alleges a violation of the WCA based on the Letter giving the false impression that an attorney at Forster had personally reviewed the circumstances of Bencomo's debt. As to TD Bank and Target in particular, Bencomo alleges they authorized Forster to misrepresent its degree of attorney involvement and approved the ambiguous language that purports to disclaim meaningful attorney involvement.

         4.1 Count One: FDCPA Violation Based on Attorney-Involvement Disclaimer

          The FDCPA is intended, as its name suggests, to “eliminate abusive debt collection practices.” 15 U.S.C. § 1692(e). It contains a number of subsections which regulate certain debt collection practices. In the first Count of her amended complaint, Bencomo claims that Forster's Letter violated two of those subsections. The first is Section 1692e, which prohibits the use of false or misleading representations in the collection of a debt. Id. § 1692e. The second is Section 1692f, which disallows the use of “unfair or unconscionable means” in collecting debts. Id. § 1692f. Each of these subsections have, in turn, enumerated subparts providing specific examples of prohibited conduct. Id. §§ 1692e, f. Bencomo cites specifically to the subparts at §§ 1692e(3) (prohibiting the “false representation or implication that any individual is an attorney or that any communication is from an attorney”) and 1692e(10) ...

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