December 12, 2019
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 17-cv-08355 -
Andrea R. Wood, Judge.
Bauer, Easterbrook, and St. Eve, Circuit Judges.
EASTERBROOK, CIRCUIT JUDGE.
Credit sent Henry Horia a letter seeking to collect a debt
owed to Gottlieb Memorial Hospital. By return mail, Horia
disputed the validity of this claim. The Fair Debt Collection
Practices Act requires a debt collector such as Nationwide
Credit that notifies a credit agency, such as Experian, about
the debt to reveal whether the claim is disputed. 15 U.S.C.
§1692e(8). Horia asserts in this suit that Nationwide
Credit notified Experian about the debt but not about the
dispute, injuring his credit rating and causing him mental
Credit has faced this kind of claim from Horia before. In his
first suit Horia complained about a different letter that
Nationwide Credit had sent, attempting to collect a different
debt to a different creditor. That claim was disputed, and
Horia asserted that Nationwide Credit had failed to notify
Experian about the dispute. The suit was settled and
dismissed with prejudice by agreement of the parties. Sixteen
days later Horia filed this second suit.
that Horia is gaming the system by seeking multiple
recoveries for a single kind of wrong, Nationwide Credit
asked the district court to dismiss on the ground of claim
preclusion-the contemporary phrase for what used to be called
res judicata and the doctrine of bar. See Restatement
(Second) of Judgments §19 (1982). The district
court granted that motion, ruling that Horia has split his
claims impermissibly. 2018 U.S. Dist. Lexis 127678 (N.D. Ill.
July 31, 2018). The doctrine of bar forecloses repeated suits
on the same claim, even if a plaintiff advances a new legal
theory or a different kind of injury. See, e.g., Migra v.
Warren City School District Board of Education, 465 U.S.
75 (1984); Commissioner v. Sunnen, 333 U.S. 591, 597
(1948). But, as §19 explains, bar applies only to
"the same claim." Horia insists that he has sued on
two claims, not one.
law-which applies here because the first judgment was entered
by a federal court, see Semtek International Inc. v.
Lockheed Martin Corp., 531 U.S. 497 (2001); Taylor
v. Sturgell, 553 U.S. 880 (2008)-defines a
"claim" by looking for a single transaction. See,
e.g., Herrmann v. Cencom Cable Associates, Inc., 999
F.2d 223, 226 (7th Cir. 1993); Kratville v. Runyon,
90 F.3d 195, 198 (7th Cir. 1996). Usually this means all
losses arising from the same essential factual allegations
(sometimes called a common core of facts), see Matrix IV,
Inc. v. American National Bank & Trust Co., 649 F.3d
539, 548 (7th Cir. 2011), though the American Law Institute
has resisted the idea that the inquiry can be reduced to a
formula. See Restatement §24. See also
Currier v. Virginia, 138 S.Ct. 2144, 2154 (2018)
("In civil cases, a claim generally may not be tried if
it arises out of the same transaction or common nucleus of
operative facts as another already tried."). We do not
find it necessary to seek a definition, because Horia has
alleged two transactions on any understanding.
debts are owed (if Horia owes anything) to different
creditors. Nationwide Credit sent two debt-collection
letters. Horia's lawyer sent back two letters, one
disputing each debt. With respect to each debt, Nationwide
Credit assertedly failed to tell Experian that the debt had
been disputed. The two sequences overlap in time (though it
is hard to know the date on which Nationwide Credit
didn't notify Experian; inaction spans a range of dates).
They involve the same statutory rule and the same debt
collector. But the wrongs differ-Nationwide Credit could have
given a proper notice for one debt but not the other-and the
injury differs. Each failure to notify could have caused an
additional harm to credit score or peace of mind.
this were an employment-discrimination suit. On Monday a
potential employer turns down an applicant because of the
applicant's race. Unfazed, the applicant tries again on
Friday and is rejected again, for the same forbidden reason.
Does the disappointed applicant have one claim or two? The
answer is two-for National Railroad Passenger Corp. v.
Morgan, 536 U.S. 101, 111 (2002), holds that each
discrete discriminatory act produces one claim. In
Morgan that mattered to the statute of limitations;
here it matters to claim preclusion, but the principle is the
same. Discrete and independently wrongful acts produce
different claims, even if the same wrongdoer commits both
offenses and the second wrong is similar to the first.
Likewise with discrete violations of §1692e(8). Each
time a debt collector fails to give a credit agency the
required notice for a debt is a stand-alone wrong. Disputes
that have an independent existence may be litigated
separately. Joinder in federal practice is permissive, see
Fed.R.Civ.P. 18(a), not mandatory. (The exception for
compulsory counterclaims does not matter to this case.)
Credit believes that allowing sequential litigation is
inequitable because 15 U.S.C. §1692k(a)(2)(A) sets a
maximum of $1, 000 in statutory damages per case. See
Portalatin v. Blatt, Hasenmiller, Leibsker & Moore,
LLC, 900 F.3d 377, 385 (7th Cir. 2018); Smith v.
Greystone Alliance, LLC, 772 F.3d 448, 449 (7th Cir.
2014). (By "statutory damages" we mean a sum in
addition to compensation for actual injury, which is governed
by §1692k(a)(1).) Multiplying the number of cases
multiplies the maximum award. That's true, but what of
it? A statutory cap per case, rather than per bill collector,
induces debtors to file more cases. Judges aren't
authorized to turn per-case caps into per-defendant caps;
that choice is legislative.
collectors can protect themselves, however. If Nationwide
Credit wanted to extend the effect of the settlement, it had
only to negotiate a broad release. Many a release covers all
disputes between the same parties, not just the dispute
already in court. Maybe the release in Horia's first suit
does cover the second, but release is an affirmative
defense, see Fed.R.Civ.P. 8(c)(1), which Nationwide Credit
has not asserted.
collectors also can use the language of the Act. Section
1692k(a)(2)(A) says that a court may award "such
additional damages as [it] may allow, but not exceeding $1,
000" per case. Defendants are free to argue-and district
judges have discretion to conclude-that a debtor who has
already collected $1, 000 in statutory damages should not
receive more from the same defendant for the same sort of
wrong. The critical statutory word is "may" rather
than "must". Debt collectors also are free to
contend, and judges to find, that the second suit entails the
same "actual damage" (§1692k(a)(1)) as the
first, so that an additional award on that front is
inappropriate. If a bill collector's first failure to
notify a credit bureau damages a debtor's credit score
and causes emotional distress, a second suit based on a
second failure to notify the same credit bureau allows the
debtor to collect only the marginal loss caused by
the second wrong.
defendant who persuades a court that a sequential suit was
brought to harass not only avoids an award of attorneys'
fees but also becomes eligible to collect its own
attorneys' fees from the debtor. 15 U.S.C.
§1692k(a)(3). The ...