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Untershine v. Encore Receivable Management Inc.

United States District Court, E.D. Wisconsin

August 9, 2019

RONALD UNTERSHINE, et al., Plaintiffs,
v.
ENCORE RECEIVABLE MANAGEMENT, INC., Defendant.

          DECISION AND ORDER

          WILLIAM E. DUFFIN U.S. MAGISTRATE JUDGE

         1. Background

         Plaintiffs Ronald Untershine, Julie Voeks, Marlene Kanehl, and Patrick Bills allege that defendant Encore Receivable Management, Inc. sent each of them a collection letter that violated the Fair Debt Collection Practices Act (FD CPA), 15 U.S.C. § 1692 et seq. (ECF No. 15.)

         At the top of the letter is a caption listing the creditor as Synchrony Bank; “Re:”, followed by a description of the account, such as “Blain's Farm & Fleet” (ECF Nos. 15-1 at 2; 15-4 at 2) or “CARECREDIT” (ECF No. 15-2 at 2); “For Account Ending in:”, followed by the last four digits of an account number; the Encore account number; “Total Account Balance”, followed by a dollar amount; and “Amount Now Due”, followed by a lesser dollar amount. The body of each letter included the following language, with only the dollar amounts changing:

Note: As of the date of this letter, your Total Account Balance is $5, 263.83 of which $710.00 represents the Amount Now Due. Your Total Account Balance and Amount Now Due on the day you pay may be greater than the amounts listed above as a result of finance charges, late fees or other fees imposed on your account from day to day as outlined in the terms of your account and your account agreement. For further information, call or write us.

(ECF No. 15-2 at 2.)

         The letter also included the following: “Note: If payment has already been made, please notify this office at 866-247-1087 or by writing to Encore at the address listed below.” (ECF No. 15-1 at 2.) Immediately thereafter was a paragraph setting forth the notice required by 15 U.S.C. § 1692g(a)(3)-(5):

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, 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. If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.

(ECF No. 15-1 at 2.)

         At the bottom of each letter was a remittance slip that again included the “Total Account Balance” and the “Amount Now Due.” Thus, each letter contained two dollar amounts-the “Total Account Balance” and the “Amount Now Due.”

         The plaintiffs' amended complaint alleges that the letter included “false, deceptive, and misleading representations as [to] the character, amount, and legal status of Plaintiffs' alleged debts and the amount necessary to bring their accounts out of default” (ECF No. 15, ¶ 129) because, when listing the “Amount Now Due, ” it included the next installment payment that was not yet due (ECF No. 15, ¶ 130). The plaintiffs further allege that, “[b]y stating ‘Your Total Account Balance … on the day you pay may be greater than the amount listed above …' and including both the ‘Total Account Balance' and the ‘Amount Now Due' on the remittance slip, [the letters] equivocate as to the amount of the debt the letter is seeking to collect.” (ECF No. 15, ¶ 133.) Finally, they allege that, “[b]y directing consumers to contact Encore by phone ‘if payment has already been made,' [the letters] contradict and overshadow the validation notice.” (ECF No. 15, ¶ 137.)

         Encore has moved to dismiss the complaint. Briefing on the motion is complete. However, the plaintiffs filed two motions seeking leave to cite additional authority. (ECF Nos. 24; 33.) The court will grant those motions.

         2. Standing

         The judicial power of the United States extends only to “Cases” and “Controversies.” Art. III, § 2; Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016). Rooted in this limitation on the judicial power is the doctrine of standing, which “limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong.” Spokeo, 136 S.Ct. at 1547. The Supreme Court has held “that the ‘irreducible constitutional minimum' of standing consists of three elements. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). The plaintiff has the burden of establishing standing, and at the pleading stage the plaintiff “must ‘clearly allege facts demonstrating' each element.” Id. (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)) (ellipses omitted).

         “To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized and ‘actual or imminent, not conjectural or hypothetical.'” Spokeo, at 1548 (quoting Lujan, 504 U.S. at 560). A particularized injury is one that affects the plaintiff “in a personal and individual way.” Id. (quoting Lujan, 504 U.S. at 560 n.1). “A ‘concrete' injury must be ‘de facto'; that is, it must actually exist.” Id. Thus, it must be real and not abstract. Id. However, concrete does not necessarily mean merely tangible.

         The plaintiffs allege in their amended complaint that “[t]he FDCPA creates substantive rights for consumers; violations cause injury to consumers, and such injuries are concrete and particularized.” (ECF No. 15, ¶ 118.) They then cite district court decisions from within the Seventh Circuit in support of this assertion.

         Following the close of briefing on Encore's motion to dismiss, the Court of Appeals for the Seventh Circuit issued its decision Casillas v. Madison Ave. Assocs., 926 F.3d 329 (7th Cir. 2019), which called into question the continued viability of those district court decisions insofar as they supported the plaintiffs' assertion of standing. The court ordered the parties to submit additional briefs on the standing issue.

         In Casillas, a debt collector's letter allegedly violated the FDCPA by omitting notice that a consumer's dispute of a debt must be in writing. Disagreeing with the decision in Macy v. GC Services Limited Partnership, 897 F.3d 747, 751 (6th Cir. 2018), in which the defendant allegedly violated the very same provision as the defendant in Casillas, the Seventh Circuit stated that “[i]t is certainly true that the omission put those consumers who sought to dispute the debt at risk of waiving statutory rights. But it created no risk for the plaintiffs in that case, who did not try (and, for that matter, expressed no plans to try) to dispute the debt. It is not enough that the omission risked harming someone-it must have risked harm to the plaintiffs.” Casillas, 926 F.3d at 336 (emphasis in original).

         The Seventh Circuit found that Casillas lacked standing because she alleged only a “bare procedural violation.” Id. at 338. “Casillas did not allege that she even read the disclosure, much less that she relied on it to her detriment.” Id. at 335. Because she had no intention of exercising her rights under the FDCPA, she was not harmed by a lack of information as to those rights. The court stated that “receiving a complete notice would not have changed anything for Casillas.” Id. at 335. It summed up its holding tritely, “no harm, no foul.” Id. at 331.

         Untershine and his co-plaintiffs do not allege that they would have done anything differently had the letters not contained the alleged misstatement of the amount owed or the invitation to call if payment had already been made. There is no allegation that the plaintiffs attempted or intended to pay the bill but were thwarted by confusion as to the amount owed. Nor is there an allegation that they recognized the alleged discrepancy between the amount allegedly “Now Due” and the amount that was overdue. Nor do they allege that they were confused as to how to trigger their verification rights under the FDCPA. In fact, they do not allege they even read the letter. Even if a consumer could have been misled or confused, there is no allegation that these plaintiffs were so harmed. Thus, the broad language of Casillas suggests that the plaintiffs lack standing to bring their claims.

         However, Casillas did not overrule any prior Seventh Circuit decision, and the court took pains to distinguish cases that appeared inconsistent. Most significantly, the court distinguished Robertson v. Allied Sols., LLC, 902 F.3d 690 (7th Cir. 2018), which held that a job applicant had standing to pursue her claim that the defendant violated the Fair Credit Reporting Act by not providing her with a copy of a background investigation before revoking her offer of employment. The plaintiff in Robertson did not allege that anything on the report was inaccurate or that she could have persuaded the defendant to hire her if she had received it. Nonetheless, the court in Casillas characterized Robertson's injury as sufficiently concrete because she was denied the opportunity to even try to change the defendant's opinion.

         The court finds both Robertson and Casillas distinguishable from this case in that both involved claims of omission; the defendants allegedly did not do something they were required to do. That is not the nature of the plaintiffs' claims here. They allege not that they were uninformed but that they were misinformed.

         Protecting consumers from misinformation is one of the “concrete interest[s] that Congress sought to protect, ” Casillas, 926 F.3d at 333 (quoting Groshek v. Time Warner Cable, Inc., 865 F.3d 884, 887 (7th Cir. 2017), cert. denied, 138 S.Ct. 740 (2018)), under the F D C PA, see, e.g., 15 U.S.C. § 1692e, 1692e(2)(A) and (10). If a consumer is misinformed, rather than merely uninformed, the risk of harm is greater.

         The risk of harm is greatest with respect to the plaintiffs' claims that they were misinformed as to the amount of the debt. Knowing the amount of the debt is “substantive information, ” cf. Casillas, 926 F.3d at 335, central to a consumer being able to intelligently respond to an effort to collect a debt. If informed of an incorrect amount of debt, the consumer is at appreciable risk of any variety of abusive practices Congress sought to curtail with the FDCPA, including not being able to assess whether the debt is valid, paying an amount not authorized under law, or making a partial payment with the mistaken understanding that it will satisfy the debt. Therefore, the court is satisfied that the plaintiffs have standing to bring the first and second claims in their amended complaint.

         The risk of harm is arguably less appreciable with respect to the plaintiffs' “overshadowing” claim. Nonetheless, it is again a claim of misinformation: the plaintiffs allege that the letter suggested that one sort of dispute could be addressed by phone. When a consumer is misinformed about how to exercise his or her rights under the FDCPA, as opposed to merely uninformed of rights she has no intention of exercising, as was the case in Casillas, the court finds an appreciable risk of injury. Protecting consumers from misinformation is a significant goal behind the FDCPA. Although it is a close call, the court is satisfied that, in light of ...


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