Justia Consumer Law Opinion SummariesArticles Posted in US Court of Appeals for the Seventh Circuit
Richards v. Par, Inc.
Richards defaulted on her car loan. Her lender hired PAR to repossess the vehicle. PAR hired Lawrence Towing to carry out the repossession. Richards protested when Lawrence employees arrived at her Indianapolis home to take the car. She ordered them off her property. They summoned the police. A responding officer handcuffed Richards and threatened her with arrest, removing the handcuffs after the car was towed away. Richards sued PAR and Lawrence under the Fair Debt Collection Practices Act, which makes it unlawful for a debt collector to take “nonjudicial action” to repossess property if “there is no present right to possession of the property claimed as collateral through an enforceable security interest,” 15 U.S.C. 1692f(6)(A). Indiana law authorizes nonjudicial repossession only if the repossession “proceeds without breach of the peace.” IND. CODE 26-1-9.1-609. If a breach of the peace occurs, the repossessor must immediately stop and seek judicial remedies. The district judge granted the defendants summary judgment. The Seventh Circuit reversed. Whether a repossessor had a “present right to possession” for purposes of section 1692f(6)(A) can be determined only by reference to state law. A reasonable jury could find that the Lawrence employees did not have a present right under Indiana law to possess Richards’s vehicle. View "Richards v. Par, Inc." on Justia Law
Beardsall v. CVS Pharmacy, Inc.
Defendant manufactures aloe vera gel, sold under its own brand and as private‐label versions. Suppliers harvest, fillet, and de-pulp aloe vera leaves. The resulting aloe is pasteurized, filtered, treated with preservatives, and dehydrated for shipping. Defendant reconstitutes the dehydrated aloe and adds stabilizers, thickeners, and preservatives to make the product shelf‐stable. The products are 98% aloe gel and 2% other ingredients. Labels describe the product as aloe vera gel that can be used to treat dry, irritated, or sunburned skin. One label calls the product “100% Pure Aloe Vera Gel.” An asterisk leads to information on the back of the label: “Plus stabilizers and preservatives to insure [sic] potency and efficacy.” Each label contains an ingredient list showing aloe juice and other substances. Plaintiffs brought consumer deception claims, alleging that the products did not contain any aloe vera and lacked acemannan, a compound purportedly responsible for the plant’s therapeutic qualities. Discovery showed those allegations to be false. Plaintiffs changed their theory, claiming that the products were degraded and did not contain enough acemannan so that it was misleading to represent them as “100% Pure Aloe Vera Gel,” and to market the therapeutic effects associated with aloe vera. The Seventh Circuit affirmed summary judgment in favor of the defendants. There was no evidence that some concentration of acemannan is necessary to call a product aloe or to produce a therapeutic effect, nor evidence that consumers care about acemannan concentration. View "Beardsall v. CVS Pharmacy, Inc." on Justia Law
Spiegel v. Kim
Spiegel served as a homeowners’ association directed until the members voted him out. The association sued Spiegel in Illinois state court, alleging that he falsely held himself out as president, attempted to unilaterally terminate another board member, froze the association’s bank accounts, sent unapproved budgets to unit owners, and filed unwarranted lawsuits on behalf of the association. The association sought to enjoin Spiegel from interfering with board decisions or holding himself out as a director and to recover damages, costs, and attorneys’ fees. A declaration that Spiegel signed when he bought his unit provided that owners who violated the board’s rules or obligations would pay any damages, costs, and attorneys’ fees that the association incurred as a result. Spiegel filed complaints and motions against the association, its lawyers, and other residents. The state court dismissed his claims and enjoined him from interfering with the board’s activities, characterizing Spiegel’s filings as “a pattern of abuse, committed for an improper purpose to harass, delay and increase the cost of litigation.” The court ordered Spiegel to pay $700,000 in fees and sanctions. Spiegel filed this federal suit against the association’s counsel, citing the Fair Debt Collection Practices Act, 15 U.S.C. 1692a(5). The district court dismissed, concluding that the attorneys’ fees Kim requested were not a “debt” within the meaning of the FDCPA. The Seventh Circuit affirmed. An award of attorneys' fees does not constitute a “debt” under the FDCPA’s limited, consumer-protection-focused definition. View "Spiegel v. Kim" on Justia Law
Crabtree v. Experian Information Solutions, Inc.
The Fair Credit Reporting Act (FCRA) prohibits consumer reporting agencies from releasing credit information except under circumstances enumerated in 15 U.S.C. 1681b, including to provide prospective lenders with "prescreen lists" of consumers who meet their criteria if the sharing results in a “firm offer of credit or insurance” to every consumer on that list." Experian compiles consumer information. Western had contracted to receive prescreen lists from Experian through agents. Experian provided its consumer data to Tranzact, which used that information to create prescreen lists, which it sold to a marketing agency, which then extended offers backed by Western to the consumers on the list. Experian terminated its contract with Western, with November 18, 2011, as the cutoff date. A prescreen list with Experian’s data went to Western on November 30, 2011. Neither company knew there was any problem. The list, which included Crabtree, was shared when it should not have been. The Seventh Circuit affirmed the dismissal of Crabtree’s FCRA suit, noting that there was no evidence that anyone on the list did not receive a firm offer from Western. Crabtree, who claimed invasion of privacy and emotional distress, did not allege the requisite injury-in-fact to satisfy Article III’s case or controversy requirement. Experian’s alleged statutory violation, without further allegations of harm, was insufficient to establish a concrete injury. View "Crabtree v. Experian Information Solutions, Inc." on Justia Law
Preston v. Midland Credit Management, Inc.
Preston brought a putative class action, claiming that Midland Credit sent him a collection letter that violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692–1692[. He claimed the words “TIME SENSITIVE DOCUMENT” on the envelope violated section 1692f(8)’s prohibition against “[u]sing any language or symbol,” other than the defendant’s business name or address, on the envelope of a debt collection letter. He claimed that those words, and the combination statements about discounted payment options with a statement that Midland was not obligated to renew those offers, in the body of the letter, were false and deceptive, under section 1692e(2) and (10). The district court dismissed the complaint, citing a "benign‐language exception" to the statutory language because the language “TIME SENSITIVE DOCUMENT” did not create any privacy concerns or expose Preston to embarrassment. The court also rejected Preston’s section 1692e claims. The Seventh Circuit reversed in part: the language of section 1692f(8) is clear and its application does not lead to absurd results. The prohibition of any writing on an envelope containing a debt collection letter represents a rational policy choice by Congress. The language on the envelope and in the letter does not, however, violate section 1692e(2) and (10). Midland accurately and appropriately used safe‐harbor language as described in precedent. View "Preston v. Midland Credit Management, Inc." on Justia Law
Steffek v. Client Services, Inc.
The plaintiffs received form notices from Client Services with a header stated only “RE: CHASE BANK USA, N.A.,” with an account number. The letters continued: “The above account has been placed with our organization for collections.” The letters did not say whether Chase Bank still owned the accounts or had sold the debts. The Fair Debt Collection Practices Act, 15 U.S.C. 1692, requires the collector of consumer debt to send the consumer-debtor a written notice containing, among other information, “the name of the creditor to whom the debt is owed.” The plaintiffs argued that Client Services’ letters failed to identify clearly the current holder of the debt. The district court certified a plaintiff class of Wisconsin debtors who received substantially identical notices from Client Services, found that Chase Bank was actually the current creditor, and granted Client Services summary judgment. The Seventh Circuit reversed and remanded. The actual identity of the current creditor does not control the result. The question under the statute is whether the letters identified the then-current creditor clearly enough that an unsophisticated consumer could identify it without guesswork. The notices here failed that test. View "Steffek v. Client Services, Inc." on Justia Law
Dennis v. Niagara Credit Solutions, Inc.
Dennis fell behind on his debt to Washington Mutual Bank. LVNV bought the debt and Niagara Credit sent a form collection letter on LVNV’s behalf, stating: “Your account was placed with our collection agency” and that Niagara’s “client” had authorized it to offer a payment plan or a settlement of the debt in full. The letter identifies Washington Mutual as the “original creditor” and LVNV as the “current creditor.” It lists the principal and interest balances of the debt and the last four digits of the account number. Dennis filed a putative class action complaint, claiming violation of the Fair Debt Collection Practices Act by “fail[ing] to identify clearly and effectively the name of the creditor to whom the debt was owed,” 15 U.S.C. 1692g(a)(2). The Seventh Circuit affirmed the rejection of the suit on the pleadings, rejecting an argument that listing two entities as “creditor” then stating that Niagara was authorized to make settlement offers on behalf of an unknown client could likely confuse consumers. The defendants’ letter expressly identifies LVNV as the current creditor and meets the Act’s requirement of a written notice containing “the name of the creditor to whom the debt is owed.” An unsophisticated consumer will understand that his debt has been purchased by the current creditor; the letter is not abusive or unfair. Section 1692(g)(a)(2) does not require a detailed explanation of the transactions leading to the debt collector’s notice. View "Dennis v. Niagara Credit Solutions, Inc." on Justia Law
Horia v. Nationwide Credit & Collection, Inc.
Nationwide Credit sent Horia a letter seeking to collect a debt owed to Gottlieb Hospital. By return mail, Horia disputed the claim. The Fair Debt Collection Practices Act requires a debt collector that notifies a credit agency about the debt to reveal whether the claim is disputed, 15 U.S.C. 1692e(8). Horia claims that Nationwide notified Experian about the debt but not about the dispute, injuring his credit rating and causing him mental distress. Horia previously complained about the same type of violation, based on a different letter that Nationwide sent, attempting to collect a different debt to a different creditor. The suit was settled. Days later Horia filed this second suit. Nationwide cited claim preclusion. The district court dismissed, ruling that Horia has split his claims impermissibly. The Seventh Circuit reversed. 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 but applies only to “the same claim.” Federal law defines a “claim” by looking for a single transaction, which usually means all losses arising from the same essential factual allegations. Horia has alleged two transactions. The two claimed debts are owed to different creditors. The wrongs differ—Nationwide could have given proper notice for one debt but not the other—and the injury differs. Each failure to notify could have caused additional harm to credit score or peace of mind. View "Horia v. Nationwide Credit & Collection, Inc." on Justia Law
Benson v. Fannie May Confections Brands, Inc.
Each plaintiff purchased an opaque, seven-ounce box of Fannie May chocolates for $9.99 plus tax. Although the boxes accurately disclosed the weight of the chocolate within and the number of pieces, the boxes were emptier than each had expected. A box of Mint Meltaways contained approximately 33% empty space, and a box of Pixies contained approximately 38% empty space. The plaintiffs filed a putative class action, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and asserting claims for unjust enrichment and breach of implied contract. The Seventh Circuit affirmed the dismissal of the case. The court rejected the district court’s reasoning that the claims were preempted by the Food, Drug, and Cosmetic Act, 21 U.S.C 301–399, but reasoned that the Illinois Act requires proof of actual damage. The plaintiffs never said that the chocolates they received were worth less than the $9.99 they paid for them, or that they could have obtained a better price elsewhere. That is fatal to their effort to show a pecuniary loss. The receipts embody the contract between the parties. State law does not recognize an implied contract in this situation View "Benson v. Fannie May Confections Brands, Inc." on Justia Law
Saccameno v. U.S. Bank National Association
Around 2009, Saccameno defaulted on her mortgage. U.S. Bank began foreclosure proceedings. She began a Chapter 13 bankruptcy plan under which she was to cure her default over 42 months while maintaining her monthly mortgage payments, 11 U.S.C. 1322(b)(5). In 2011, Ocwen acquired her previous servicer. Ocwen, inexplicably, informed her that she owed $16,000 immediately. Saccameno continued making payments based on her plan. Her statements continued to fluctuate. In 2013, the bankruptcy court issued a notice that Saccameno had completed her payments. Ocwen never responded; the court entered a discharge order. Within days an Ocwen employee mistakenly treated the discharge as a dismissal and reactivated the foreclosure. For about twp years, Saccameno and her attorney faxed her documents many times and spoke to many Ocwen employees. The foreclosure protocol remained open. Ocewen eventually began rejecting her payments. Saccameno sued, citing breach of contract; the Fair Debt Collection Practices Act; the Real Estate Settlement Procedures Act; and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFDBPA), citing consent decrees that Ocwen previously had entered with regulatory bodies, concerning inadequate recordkeeping, misapplication of payments, and poor customer service. The jury awarded $500,000 for the breach of contract, FDCPA, and RESPA claims, plus, under ICFDBPA, $12,000 in economic, $70,000 in non-economic, and $3,000,000 in punitive damages. The Seventh Circuit remanded. While the jury was within its rights to punish Ocwen, the amount of the award is excessive. View "Saccameno v. U.S. Bank National Association" on Justia Law