Articles Posted in US Court of Appeals for the Seventh Circuit

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Plaintiffs defaulted on credit cards. PRA, an Illinois debt collection agency, bought the accounts for collection. Debtors Legal Clinic sent separate letters on behalf of each plaintiff to PRA, stating “the amount reported is not accurate.” PRA later reported each debt to credit reporting agencies without noting that the debt was “disputed.” Plaintiffs each filed a suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692e(8), alleging that PRA communicated their debts to credit reporting agencies without indicating they had disputed the debt. The Seventh Circuit affirmed summary judgment in favor of plaintiffs. PRA’s alleged violation of section 1692e(8) is sufficient to show an injury‐in‐fact; the plaintiffs suffered “a real risk of financial harm caused by an inaccurate credit rating.” The court rejected PRA’s argument that the phrase “the amount reported is not accurate” was ambiguous. Section 1692e(8) does not require the use of the word “dispute.” The “knows or should know” standard of section 1692e(8) “requires no notification by the consumer … and instead, depends solely on the debt collector’s knowledge that a debt is disputed, regardless of how that knowledge is acquired.” The court concluded that PRA’s error was material. View "Bowse v. Portfolio Recovery Associates, LLC" on Justia Law

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Plaintiffs visited different Massage Envy locations and had massages that lasted about 50 minutes. The company advertises, on its website, an “Introductory 1‐hour Massage Session*” at the price of $50. Clicking through two links leads to a disclaimer explaining that a “[s]ession includes massage or facial and time for consultation and dressing.” Their putative class action complaint alleged that the multiple asterisks confused the average consumer and that Massage Envy deceptively hid the disclosures where they were “nearly impossible” to find. The Seventh Circuit affirmed the dismissal of their claims under the Illinois Consumer Fraud and Deceptive Business Practices Act and the Missouri Merchandising Practices Act. Massage Envy’s representations regarding the one‐hour massage session were not the but‐for cause of any alleged injury as required by the Illinois law. There is no allegation that plaintiff’s belief about the length of the massage caused her to make the appointment; only the receipt of a gift card caused her to book a massage. With respect to Missouri law, the complaint failed to allege that a deceptive representation from Massage Envy caused plaintiff to suffer an ascertainable loss of money. View "Haywood v. Massage Envy Franchising, LLC" on Justia Law

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Linderman bought an Indianapolis house in 2004 and lived there with her ex-husband, their children, and her parents. In 2013, Linderman left and stopped paying the mortgage loan. The others left in 2014. The unoccupied structure was vandalized. U.S. Bank, which owns the note and mortgage, started foreclosure proceedings. The vandalism produced insurance money that was sent to the Bank. The city notified Linderman of code violations. Linderman hired a contractor. In 2015 the Bank disbursed $10,000 for repairs. The contractor abandoned the job. The house was vandalized twice more; a storm damaged the roof. Linderman has not hired a replacement contractor or asked the Bank for additional funds but inquired about the status of the loan and the insurance money. The Bank sent a response. Asserting that she had not received that response, Linderman sued under the Real Estate Settlement Procedures Act, 12 U.S.C. 2605(e)(1)(B). The Seventh Circuit affirmed the rejection of her claims. None of Linderman’s problems with her marriage and mental health can be traced to the Bank. Linderman does not explain how earlier access to the Bank’s record of the account could have helped her; some of her asserted injuries are outside the scope of the Act. The contract between Linderman and the Bank, not federal law, determines how insurance proceeds must be handled. Contract law also governs the arrangement between Linderman and the contractor. View "Floyd v. U.S. Bank National Association" on Justia Law

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At age 56, Newman purchased a long-term-care insurance plan MetLife, opting for one of MetLife’s non-standard options for paying her insurance premiums, “Reduced-Pay-at 65.” From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. The Seventh Circuit reversed the dismissal of Newman’s proposed class action, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The allegations raised in the complaint were enough to entitle Newman to prevail on the liability phase of her contract claim and to go forward on her remaining claims. The policy language is at least ambiguous, because it can be read reasonably to fix a person’s premium, if she had opted for the Reduced-Pay option. Illinois construes ambiguous contracts against the insurer. Newman’s complaint also alleged facts that plausibly show that MetLife’s policy was both deceptive and unfair under the Illinois Consumer Fraud Act and adequately alleged fraudulent concealment and reasonable reliance. View "Newman v. Metropolitan Life Insurance Co" on Justia Law

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At age 56, Newman purchased a long-term-care insurance plan MetLife, opting for one of MetLife’s non-standard options for paying her insurance premiums, “Reduced-Pay-at 65.” From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. The Seventh Circuit reversed the dismissal of Newman’s proposed class action, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The allegations raised in the complaint were enough to entitle Newman to prevail on the liability phase of her contract claim and to go forward on her remaining claims. The policy language is at least ambiguous, because it can be read reasonably to fix a person’s premium, if she had opted for the Reduced-Pay option. Illinois construes ambiguous contracts against the insurer. Newman’s complaint also alleged facts that plausibly show that MetLife’s policy was both deceptive and unfair under the Illinois Consumer Fraud Act and adequately alleged fraudulent concealment and reasonable reliance. View "Newman v. Metropolitan Life Insurance Co" on Justia Law

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Credit One repeatedly called A.D.’s (a minor) cell phone about payments owed on her mother’s account. A.D., by and through her mother, Serrano, brought a putative class action under the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(1)(A), seeking compensation for telephone calls placed by Credit One to her telephone number in an effort to collect a debt that she did not owe. During discovery, Credit One realized that its caller ID capture system had added A.D.’s phone number to its database when Serrano used A.D.’s phone to access her account. A.D. had apparently used the card, once, at her mother’s request, when she was 14 years old, in 2014. Credit One moved to compel arbitration and to defeat A.D.’s motion for class certification based on a cardholder agreement between Credit One and Serrano. The district court granted the motion to compel arbitration but certified for interlocutory appeal the question whether A.D. is bound by the cardholder agreement. The Seventh Circuit reversed the order compelling arbitration. A.D. is not bound by the terms of the cardholder agreement to arbitrate and has not directly benefited from the cardholder agreement such that equitable principles require the application of the arbitration clause against her. View "A.D. v. Credit One Bank, N.A." on Justia Law

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AT&T notified Walton that she owed $268.47 on her closed AT&T account number 119864170 and that failure to pay “may cause your account to be referred to an outside collection agency.” Walton did not pay the bill. She received a debt-collection letter from EOS, stating that she owed AT&T $268.47 on account 864119170. AT&T had swapped the first three digits with the second three in providing the information. Walton contacted EOS, acknowledged that her name and mailing address were correct, but falsely denied that the last four digits of her social security number matched those the representative gave to confirm her identity. After investigating, EOS sent Walton another letter stating it had verified that her name, address, and her social security number, and stating a balance of $268.47. EOS again listed an incorrect account number. EOS reported Walton’s debt to credit-reporting agencies, informing them that the account was disputed. Walton wrote to the agencies to dispute the debt; the agencies notified EOS. After learning that she disputed the account number, EOS advised the agencies to delete Walton’s debt record. Walton sued under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, for not verifying her debt with the creditor, and the Fair Credit Reporting Act, 15 U.S.C. 1681, for not reasonably investigating the disputed information. The Seventh Circuit affirmed summary judgment, finding that EOS complied with its statutory obligations. View "Walton v. EOS CCA" on Justia Law

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In this action challenging an insurance company’s doubling of Plaintiff’s insurance premium, the Seventh Circuit reversed the district court’s dismissal of Plaintiff’s complaint for failure to state a claim, holding that Plaintiff was entitled to relief on her contract claim and that the allegations Plaintiff raised were enough to permit her to go forward on her other theories. When Plaintiff was sixty-seven years old, she discovered that Metropolitan Life Insurance Company (MetLife) more than doubled her insurance premium. Plaintiff brought this lawsuit against MetLife on behalf of herself and a proposed class, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The district court granted MetLife’s motion to dismiss for failure to state a claim, concluding that the insurance policy unambiguously permitted MetLife to raise Plaintiff’s premium. The First Circuit disagreed, holding that the allegations raised in the complaint were enough to entitle Plaintiff to prevail on the liability phase of her contract claim and to go forward on her remaining claims. View "Newman v. Metropolitan Life Insurance Co." on Justia Law

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Plaintiffs, Wisconsin residents, incurred and defaulted on debts for medical services. Plaintiffs’ creditors assigned these debts to FSGB, a collection agency. FSGB sent plaintiffs letters stating: As of the date of this letter, you owe $[a stated amount]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check. Plaintiffs filed a class action, alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692–1692p, claiming that FSGB’s letter is false because, under Wisconsin law, FSGB cannot lawfully or contractually impose “late charges and other charges” and that the letter causes unsophisticated consumers to incorrectly believe that they will avoid such charges if they immediately send payment. FSGB argued that the statement tracks the Seventh Circuit's "safe harbor language" from its 2000 “Miller” decision and that it is entitled to charge interest. The district court dismissed, acknowledging that some of the safe harbor language did not “strictly” apply but finding FSGB’s letter conveyed “the crucial fact” that plaintiffs’ debts were variable. The Seventh Circuit reversed. Debt collectors cannot immunize themselves from FDCPA liability by blindly copying and pasting the Miller safe harbor language without regard for whether that language is accurate under the circumstances. View "Boucher v. Finance System of Green Bay, Inc." on Justia Law

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In 2002, Toulon applied for Continental’s long-term care insurance policy. Continental provided a Long-Term Care Insurance Personal Worksheet to help Toulon determine whether the policy would work for her, given her financial circumstances. The Worksheet discussed Continental’s right to increase premiums and how such increases had previously been applied. Toulon did not fill out the Worksheet but signed and submitted it with her application. Toulon’s Policy stated that although Continental could not cancel the Policy if each premium was paid on time, Continental could change the premium rates. There was a rider, stating that premiums would not be increased during the first 10 years after the coverage date. In September 2013, Continental raised Toulon’s premiums by 76.5%. Toulon sued, on behalf of herself and a purported class. The Seventh Circuit affirmed dismissal, agreeing that Toulon failed to state claims for fraudulent misrepresentation because she did not identify a false statement or for fraudulent omission because Continental did not owe Toulon a duty to disclose. The court also properly dismissed Toulon’s claim under the Illinois Consumer Fraud and Deceptive Practices Act (ICFA) because she did not identify a deceptive practice, a material omission, or an unfair practice. The unjust enrichment claim failed because claims of fraud and statutory violation, upon which Toulon's unjust enrichment claim was based, were legally insufficient and an express contract governed the parties’ relationship. View "Toulon v. Continental Casualty Co." on Justia Law