Justia Consumer Law Opinion SummariesArticles Posted in US Court of Appeals for the Seventh Circuit
Zablocki v. Merchants Credit Guide Co.
In 2013, Zablocki had x-rays administered by Medical-Midwest. Zablocki’s insurance provider covered some of the costs, Eventually, Medical-Midwest turned to Merchants for debt collection. After about two years without success collecting the debts, Merchants reported to a consumer reporting agency, TransUnion, that Zablocki owes four debts of $50, $62, $70, and $210, corresponding to each x-ray charge. Zablocki filed suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692f, arguing that by reporting the obligations separately, rather than aggregated together, Merchants falsely represented the “character" of the debt, in violation of section 1692e(2)(A), and used an “unfair or unconscionable means” to collect or attempt to collect a debt, in violation of section 1692f. 15 U.S.C. §§ 1692e(2)(A), 1692f.The Seventh Circuit subsequently held that reporting debts separately, rather than aggregated together, does not misrepresent the “character” of a debt. Zablocki accordingly abandoned his section 1692e challenge. The Seventh Circuit affirmed the dismissal of the section 1692f claim. From the perspective of an unsophisticated but reasonable consumer, the alleged conduct is reasonable. It is not deceptive or outrageous for a collector to report individually debts that correspond to different charges, thereby communicating truthfully how much is owed on each debt. View "Zablocki v. Merchants Credit Guide Co." on Justia Law
Gomez v. Cavalry Portfolio Services, LLC
In 2009 the Gomezes stopped paying on a Bank credit card. The Bank treated the account as a bad debt and stopped sending statements. In 2011 it sold the debt to Cavalry. In January 2013 Cavalry sent a letter seeking payment of $5,800, including $1,600 in interest for months after the Bank stopped sending bills. A March 2013 letter sought $6,200. Their lawyer asked Cavalry to verify the debt. A March 2014 reply indicated that the balance was $6,320.13 without explaining how much constituted interest.The court dismissed a suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692e, which prohibits “any false, deceptive, or misleading representation … in connection with the collection of any debt” including “the character, amount, or legal status of any debt.” The court cited the one-year limitations period after finding that the Bank had waived interest after the charge-off, despite a contractual non-waiver clause; 12 C.F.R. 1026.5(b)(2) requires banks to send periodic statements while interest is being charged. The Seventh Circuit affirmed. The third letter stood alone, within the limitations period, but was not false. A demand for payment is not “false” just because, years later, a judge disagrees with an argument supporting the calculation of the debt. The letter would not have misled a competent lawyer, who would not deem “false” a demand by a potential opponent just because counsel believes that his client may have a defense. View "Gomez v. Cavalry Portfolio Services, LLC" on Justia Law
Johnson v. Enhanced Recovery Co., LLC
Johnson filed a putative class action against ERC, alleging that it sent her a misleading collection letter in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692‐1692p. The district court certified a class composed of all individuals in Indiana who had received a collection letter like Johnson’s from ERC in 2016-2017. The court later entered summary judgment for ERC.The Seventh Circuit affirmed. Johnson failed to present any evidence beyond her own opinion that ERC’s letter was misleading, Johnson focused primarily on the sentence, “This letter serves as notification that your delinquent account may be reported to the national credit bureaus.” According to Johnson, “may be reported” implied future reporting, and by the time she received the letter her debt had already been reported. She also singled out a sentence stating, “Payment of the offered settlement amount will stop collection activity on this matter” as constituting a promise by ERC that if she took advantage of the first settlement offer and paid by May 26, then ERC would not report her debt to the national credit bureaus. Because Johnson chose instead to rely solely on her “speculation” to support her claim, summary judgment for ERC was appropriate. View "Johnson v. Enhanced Recovery Co., LLC" on Justia Law
Arwa Chiropractic, P.C. v. Med-Care Diabetic & Medical Supplies, Inc.
A medical supply company sent faxes to thousands of medical providers to solicit prescriptions to sell medical equipment to the providers’ patients. One provider received numerous faxes and filed a class action under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227. The supply company failed to appear. A default judgment entered against the company as to liability but not damages. Later the supplier’s CEO was granted summary judgment. Concerned with inconsistency, the district court vacated the default judgment against the company and entered judgment for both the executive and the company.The Seventh Circuit affirmed as to the executive. Because the good cause standard was not applied in vacating the default judgment against the company, and inconsistent judgments between the individual and corporate defendants do not present a problem, the court reversed and remanded for further proceedings on the claim against the company. Judgments against these two defendants would not necessarily be inconsistent and the district court mistakenly believed that the plaintiff sought to “essentially” hold the CEO vicariously liable as an officer of the supplier, which would require uniformity in judgments. The plaintiff alleged joint and several liability, which is critically different from vicarious liability. View "Arwa Chiropractic, P.C. v. Med-Care Diabetic & Medical Supplies, Inc." on Justia Law
Peck v. IMC Credit Services
IMC mailed Peck, regarding a debt that Peck allegedly owed. The envelope's clear pane revealed a barcode containing Peck’s personal information. Peck sued IMC for violating the Fair Debt Collection Practices Act by revealing his personal information on the envelope and by failing to verify that Peck owed the debt after he disputed it. IMC made an offer of judgment of “$1,101, plus costs under Rule 68. Peck accepted. By email, Peck indicated he believed “costs” included damages under the Act. IMC explained that its offer accounted for $1,101 in statutory damages with interest, plus the costs typically recoverable by the prevailing party. The court ultimately entered judgment consistent with the Rule 68 offer and instructed Peck to file a bill of costs, limited to those contemplated by Federal Rule 54(d). Peck demanded $24,137.50 (reimbursement for the hundreds of hours he spent litigating) and $47,425.02 in punitive damages. Citing 28 U.S.C. 1920, the court denied his bill of costs and awarded $1,101.00.The Seventh Circuit affirmed, rejecting an argument that it lacked jurisdiction because the district court had not sufficiently articulated a rationale. The “costs” recoverable under Rule 54(d) include clerk and marshal fees; printed or electronically recorded transcripts; disbursements for printing and witnesses; fees for exemplification and making copies; docket fees; and compensation of court-appointed experts, interpreters, and for special interpretation services They do not include damages, nor the compensation Peck sought for his time and mailing expenses. View "Peck v. IMC Credit Services" on Justia Law
Denan v. TransUnion LLC
Plaintiffs each obtained loans from online payday lenders affiliated with Native American tribes. Each of their lenders reported delinquencies to Trans Union. One plaintiff contacted Trans Union, which investigated and determined that the report was accurate. Plaintiffs claim that Trans Union violated Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681, provisions requiring that consumer reporting agencies “assure maximum possible accuracy of the information” contained in credit reports and re‐investigate disputed items. They did not claim the reports were factually inaccurate; they took out the reported loans and did not contest the debt amounts or the reported payment histories. They claimed the reports were “legally inaccurate” because they posted “legally invalid debts” that were void ab initio under New Jersey and Florida usury laws and that “reasonable procedures designed to ensure the maximum possible accuracy” would have shown that the loans were void. They claim that Trans Union’s screening procedures showed that the lenders lacked licenses to lend outside of tribal reservations and had histories of charging interest in excess of rates permitted in certain states and that Trans Union ignored government investigations and enforcement actions. The district court granted Trans Union judgment on the pleadings. The Seventh Circuit affirmed. FCRA does not compel consumer reporting agencies to determine the legal validity of disputed debts. View "Denan v. TransUnion LLC" on Justia Law
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