Bass v. I.C. Sys., Inc.

• Citation: 316 F.Supp.3d 1047
• Decision Date: 11 July 2018
• Docket Number: Case No. 17 C 3594
• Parties: Henry BASS, Plaintiff, v. I.C. SYSTEM, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

316 F.Supp.3d 1047

Henry BASS, Plaintiff,

v.I.C. SYSTEM, INC., Defendant.

Case No. 17 C 3594

United States District Court, N.D. Illinois, Eastern Division.

Signed July 11, 2018

Celetha Chatman, Community Lawyers Group, Ltd., Andrew Finko, Andrew Finko P.C., Michael Jacob Wood, Community Lawyers Group, Ltd., Chicago, IL, for Plaintiff.

Sean Patrick Flynn, Gordon & Rees LLP, Irvine, CA, William M. Dunn, Gordon & Rees Scully Mansukhani, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Henry Bass contends that a debt collector, I.C. System, Inc. (ICS), attempted to collect $79.35 in "collection agency fees" on top of the outstanding debt he owed, but the contract that gave rise to Bass's debt did not actually authorize the collection fee. He alleges that ICS, in doing so, violated the Fair Debt Collection Practices Act. Both parties have moved for summary judgment.

Background

Bass, an Illinois resident, was a customer of T-Mobile, a cellular phone service provider. In his contract with T-Mobile, Bass agreed to pay "collection agency fees." D.E. 1, Pl.'s Ex. D ¶ 14 (T-Mobile Terms & Conditions). Though the contract did not specify the amount of the fees, it stated that "collection agency fees are liquidated damages intended to be a reasonable advance estimate of our costs resulting from late payments and nonpayments by our customers; these costs are not readily ascertainable and are difficult to predict or calculate at the time these fees are set." Id. Bass was delinquent on his account, so T-Mobile referred a balance of $856.89 and a fee of $79.35 to ICS. ICS then notified Bass it was attempting to collect both amounts. Bass did not pay ICS.

Bass filed the present lawsuit in May 2017. ICS moved to dismiss Bass's suit, a motion the Court denied. Both parties have moved for summary judgment.

Discussion

Bass alleges that the contract that he had with T-Mobile did not authorize the $79.35 fee that T-Mobile assessed and that even if it did, the contractual term imposing the fee is unenforceable because, as he contends, it is a punitive liquidated damages clause. For these reasons, Bass contends, ICS was not authorized to attempt to collect the fee. He contends that by attempting to collect the fee, ICS violated the Fair Debt Collection Practices Act (FDCPA).

First, Bass contends ICS violated FDCPA by making a "false, deceptive, or misleading representation." 15 U.S.C. § 1692e. The statute provides numerous categories of potential misrepresentations. Bass argues that ICS's conduct falls into two of these categories: "the false representation of the character, amount, or legal status of any debt," id. § 1692e(2)(A), and "the threat to take any action that cannot legally be taken." Id. § 1692e(5). Bass also argues that ICS violated 15 U.S.C. § 1692f, which prohibits a debt collector from using "unfair or unconscionable means" to collect a debt, including "the collection of any amount...unless such amount is expressly authorized by the agreement creating the debt[.]" Id. § 1692f(1).

The resolution of Bass's claims turns on the contract imposing the fee. If the T-Mobile contract does not actually authorize the fee or is otherwise unenforceable, then ICS attempted to collect a debt that wasn't authorized (in violation of section 1692f ) and falsely represented the status of the debt (in violation of section 1692e ). If the contract does authorize the fee and is otherwise enforceable, then ICS acted consistently with the FDCPA.

On a motion for summary judgment on a claim on which the moving party bears the burden of proof, the movant "must lay out the elements of the claim, cite the facts which it believes satisfies these elements, and demonstrate why the record is so one-sided as to rule out the prospect of a finding in favor of the non-movant on the claim." Hotel 71 Mezz Lender LLC v. Nat'l Ret. Fund , 778 F.3d 593, 601 (7th Cir. 2015). When the parties have cross-moved for summary judgment, as here, the Court reviews one party's motion, taking all facts in the light most favorable to the non-moving party, then does so for the other party's motion, taking the facts in favor of the opposite party. R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Eng'rs, Local Union 150, AFL-CIO , 335 F.3d 643, 648 (7th Cir. 2003).

The Court organizes its discussion of the parties' briefing by issue: whether Bass has standing; whether the FDCPA may apply to ICS; whether either party is entitled to summary judgment on the merits of Bass's claims; and whether ICS is entitled to summary judgment on its affirmative defense.¹

I. Standing

Under Article III, a plaintiff may sue in federal court only if "(1) [the plaintiff] 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." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). ICS contends that Bass failed to establish the first element of standing: because he never made a payment in reliance on ICS's communications, he did not suffer an injury.

ICS raised this argument in its reply brief, so Bass lacked an opportunity to respond. But the Court finds that Bass has standing to bring his FDCPA claims, because the FDCPA protects consumers from harms beyond erroneous payments to debt collectors. Congress is "well positioned to identify intangible harms that meet minimum Article III requirements[.]" Id. at 1549. In the FDCPA, Congress acted to "protect consumers against debt collection abuses," 15 U.S.C. § 1692(e), by "prohibit[ing] certain abusive, deceptive, and unfair debt collection practices." Marx v. Gen. Revenue Corp. , 568 U.S. 371, 374 n.1, 133 S.Ct. 1166, 185 L.Ed.2d 242 (2013). "The statute is designed to provide information that helps consumers to choose intelligently[.]" Hahn v. Triumph P'ships LLC , 557 F.3d 755, 757 (7th Cir. 2009).

Bass can establish an injury that meets the requirements for standing under Article III. If the facts as claimed by Bass are true, ICS provided an inaccurate summary of his debt, as he did not owe the collection agency fee that ICS asserted he did. ICS's purportedly inaccurate communications injured Bass's interest in "receiving truthful information about one's financial affairs," which exist even where "the plaintiff did not act upon the misinformation." Haddad v. Midland Funding, LLC , 255 F.Supp.3d 735, 739 (N.D. Ill. 2017) (holding that a plaintiff who received an allegedly erroneous collection letter but never made payments had standing to assert FDCPA claims). Other courts in this district have found standing for similarly-situated plaintiffs, and the Court agrees with these decisions. See Aguirre v. Absolute Resolutions Corp. , No. 15 C 11111, 2017 WL 4280957, at *3 (N.D. Ill. Sept. 27, 2017) ; Keys v. Collection Prof'ls Inc. , No. 16 C 8452, 2018 WL 1469006, at *3 (N.D. Ill. Mar. 26, 2018).

The Court is unpersuaded by ICS's remaining argument on standing, which rests on cases addressing the merits of an FDCPA claim. A case in which a plaintiff's claim is rejected on the merits, such as Bernal v. NRA Group, LLC , No. 16 C 1904, 2017 WL 4948544 (N.D. Ill. Nov. 1, 2017), hardly establishes the proposition that future plaintiffs lack standing to assert similar claims—particularly in the face of the decisions finding standing exists for plaintiffs with claims indistinguishable from this one. Bass has standing to assert his claim.

II. Application of the FDCPA to ICS

In cross-moving for summary judgment, ICS presents two reasons why the FDCPA does not apply to its attempts to recover from Bass. Though Bass's briefing permits both of these arguments to drift by without direct reply, the Court finds neither to be compelling.

First, ICS contends that T-Mobile, not ICS, imposed the collection agency fee at the center of this suit. Because ICS did not impose the allegedly unlawful fee, ICS contends, it cannot be liable. The Court finds that this is at odds with basic FDCPA law. In the Seventh Circuit, the FDCPA is a "strict liability statute." Wahl v. Midland Credit Mgmt., Inc. , 556 F.3d 643, 646 (7th Cir. 2009). Accordingly, "[d]ebt collectors may not make false claims, period." Randolph v. IMBS, Inc. , 368 F.3d 726, 730 (7th Cir. 2004). In Turner v. JVDB & Associates, Inc. , 330 F.3d 991 (7th Cir. 2003), the Seventh Circuit reversed a district court's grant of summary judgment to a debt collector sued under the FDCPA who argued in defense that it lacked knowledge that the plaintiff's debt had been discharged in bankruptcy. Id. at 994-95. In rejecting this position, the Seventh Circuit reasoned there was no knowledge element to the FDCPA, so it did not matter whether the debt collector knew that it was trying to collect a debt that, after the bankruptcy discharge, was no longer owed. Id. at 999. The only thing that matters is whether ICS's claim that Bass owed the collection agency fee was false; whether the representation was intentionally false was immaterial.² See also Ross v. RJM Acquisitions Funding LLC , 480 F.3d 493, 495 (7th Cir. 2007) (the FDCPA does not require a showing the debt collector was "deliberate, reckless, or even negligent").

For these reasons, the Court does not find the cases on which ICS relies, such as Cornette v. I.C. System, Inc. , 280 F.Supp.3d 1362 (S.D. Fla. 2017), persuasive. In Cornette , the court held that a debt collector could rely on the representations of a creditor, reasoning that the FDCPA was not a strict liability statute, even while acknowledging case law from the Eleventh Circuit, in which that court sits, indicated otherwise. Id. at 1370-71 (citing LeBlanc v. Unifund CCR Partners , 601 F.3d 1185, 1190 (11th Cir. 2010). The Court declines to follow Cornette , as it would be at odds with the Seventh Circuit's reading of the FDCPA as a strict liability statute, a reading arguably shared by the Eleventh Circuit. See, e.g., ...