Boucher v. Fin. Sys. of Green Bay, Inc.

• Decision Date: 30 May 2017
• Docket Number: Case No. 17-C-132
• Parties: RYAN BOUCHER, HEATHER BOUCHER, CHRISTOPHER DETTLOFF, and ADAM DUCH, on behalf of themselves and all others similarly situated, Plaintiffs, v. FINANCE SYSTEM OF GREEN BAY, INC. and JOHN AND JANE DOES NUMBERS 1 THROUGH 25, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

RYAN BOUCHER, HEATHER BOUCHER,CHRISTOPHER DETTLOFF, and ADAM DUCH,on behalf of themselves and all others similarly situated, Plaintiffs, v. FINANCE SYSTEM OF GREEN BAY, INC.and JOHN AND JANE DOES NUMBERS

1 THROUGH 25, Defendants.

Case No. 17-C-132

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

May 30, 2017

DECISION AND ORDER GRANTING MOTION TO DISMISS

Plaintiffs Ryan Boucher, Heather Boucher, Christopher Dettloff, and Adam Duch sued Defendant Finance System of Green Bay, Inc., for violating the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA"). Plaintiffs allege that Finance System sent debt collection letters which falsely stated that the balances owed might increase "due to interest, late charges and other charges," even though Finance System had no authority or intent to charge "late charges and other charges." On April 10, 2017, Finance System moved to dismiss Plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the motion to dismiss will be granted.

ALLEGATIONS OF COMPLAINT

The following allegations are taken directly from Plaintiffs' complaint and are accepted as true for the purpose of the motion to dismiss. Ameritech Corp. v. McCann, 297 F.3d 582, 585 (7th Cir. 2002). Each named plaintiff is alleged to have incurred and defaulted on a financial obligation for medical services. Compl. (ECF No. 1), ¶¶ 22, 45, 66. The creditor of those medical debts then assigned, placed, or transferred the debt to Finance System for collection. Id. at ¶¶ 27, 50, 71. Finance System sent a collection letter to each of the plaintiffs, which included the following statement:

As of the date of this letter, you owe $ [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. For further information, write to the address above or call [listed number].

Ex. A (ECF No. 1-1); Ex. B (ECF No. 1-2); Ex. C (ECF No. 1-3).

Plaintiffs allege upon information and belief that late charges or other charges could never be lawfully imposed on the medical debts, that late charges or other charges were never imposed, and that Finance Services never intended to impose late charges or other charges. Compl. ¶¶ 35-41, 56-62, 77-83. They acknowledge, however, that Finance System is entitled to collect interest on the medical debts and that Finance System retains the collected interest as profit. Id. at ¶¶ 44, 65, 86.

Based on these allegations, Plaintiffs claim that Finance System's collection letters are materially false, deceptive, and misleading in violation of the FDCPA. They allege that Finance System's letters falsely suggest to unsophisticated consumers that their debt will increase an undisclosed amount every day due to "late charges and other charges"; that the letters make false threats to take action that cannot be legally taken and/or that is not intended to be taken; that Finance System is using false representations and/or deceptive means to collect or attempt to collect a debt; and that Finance System fails to provide the amount of the debt. Id. at ¶ 104.

Finance System has moved for dismissal for failure to state a claim. Finance System contends that the statement of debt in its collection letters does not violate the FDCPA because the language used is nearly identical to the safe harbor language the Seventh Circuit held satisfied the debt collector's duty to state the amount of the debt in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols & Clark, LLC, 214 F.3d 872, 876 (7th Cir. 2000). Finance System also argues that because Finance System was authorized by the creditor to add 5% interest per year on Plaintiffs' accounts, the letters were not materially false, deceptive, or misleading in violation of the FDCPA. Exs. A-C.

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). Rule 8(a)(2) mandates that a complaint need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The Supreme Court has held that a complaint must contain factual allegations that "raise a right to relief above the speculative level." Bell Alt. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a plaintiff is not required to plead detailed factual allegations, he or she must plead "more than labels and conclusions." Id. A simple, "formulaic recitation of the elements of a cause of action will not do." Id. In evaluating a motion to dismiss, the court must view the plaintiff's factual allegations and any inferences reasonably drawn from them in a light most favorable to the plaintiff. Yasak v. Retirement Bd. of the Policemen's Annuity & Benefit Fund of Chi., 357 F.3d 677, 678 (7th Cir. 2004).

ANALYSIS

The Fair Debt Collection Practices Act is aimed at remedying the use of "abusive, deceptive, and unfair debt collection practices." 15 U.S.C. § 1692(a). "Among other things, the FDCPAregulates when and where a debt collector may communicate with a debtor, restricts whom a debt collector may contact regarding a debt, prohibits the use of harassing, oppressive, or abusive measures to collect a debt, and bans the use of false, deceptive, misleading, unfair, or unconscionable means of collecting a debt." Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 384 (7th Cir. 2010) (citing §§ 1692, 1692c-1692f). Two threshold criteria must be met for a claim under the FDCPA: the defendant must be a "debt collector" and "the communication that forms the basis of the suit must have been made 'in connection with the collection of any debt.'" Id. (citing §§ 1692c(a)-(b), 1692e, 1692g). Here, the parties do not dispute for the purposes of this motion that Finance System is a debt collector and that the collection letters were mailed in connection with the collection of a consumer debt. The sole dispute is whether the language used in Finance System's collection letters violates the FDCPA.

The complaint claims that the language used in Finance System's collection letters—"[b]ecause 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"—amounts to "unfair and deceptive acts and practices" in violation of 15 U.S.C. §§ 1692e, 1692e(2), 1692e(5), 1692e(10), and 1692g(a)(1). "A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. A debt collector must also notify the debtor of the amount of the debt. 15 U.S.C. § 1692g(a)(1).

Whether a debt collector's communications are false, deceptive, or misleading is assessed from the perspective of an "unsophisticated consumer." Lox v. CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012). The unsophisticated consumer standard "protects the consumer who is uninformed, naive, or trusting, yet it admits an objective element of reasonableness. The reasonableness elementin turn shields complying debt collectors from liability for unrealistic or peculiar interpretations of collection letters." Gammon v. GC Servs. Ltd. P'ship, 27 F.3d 1254, 1257 (7th Cir. 1994). Furthermore, consumers "don't need protection against false statements that are immaterial in the sense that they would not influence a consumer's decision—in the present context his decision to pay a debt in response to a dunning letter." Muha v. Encore Receivable Mgmt., Inc., 558 F.3d 623, 628 (7th Cir. 2009). "If a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA—even if it is false in some technical sense. For purposes of § 1692e, then, a statement isn't 'false' unless it would confuse the unsophisticated consumer." Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645-46 (7th Cir. 2009).

Finance System asserts that its collection letters do not make any representations that could be considered false, deceptive, or misleading to an unsophisticated consumer. Instead, it claims that it uses the language the Seventh Circuit instructed debt collectors to use when outside charges, such as interest or late fees, could cause the amount owed to vary on a daily basis. See Miller, 214 F.3d at 876. In Miller, the Seventh Circuit offered the following guidance for complying with the "amount of debt" provision of the FDCPA, 15 U.S.C. § 1692g(a)(1):

In a previous case, in an effort to minimize litigation under the debt collection statute, we fashioned a "safe harbor" formula for complying with another provision of the statute. We think it useful to do the same thing for the "amount of debt" provision. We hold that the following statement satisfies the debt collector's duty to state the amount of the debt in cases like this were the amount varies from day to day: "As of the date of this letter, you owe $___ [the exact amount due]. 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, in which event we will inform you before depositing the check for collection. For further information, write the undersigned or call 1-800- [phone number]."

Id. The Seventh Circuit further noted a debt collector who uses such language will not violate the "amount of the debt" provision so long as "the information he furnishes is accurate and he does not obscure it by adding confusing other information (or misinformation)." Id. Courts within this Circuit have also found the use of the Miller language may be used in disputes involving § 1692e. See Wilder v. J.C. Christensen & Assoc., Inc., No. 16-CV-1979, 2016 WL 7104283, at *4 (N.D. Ill. Dec. 6, 2016) ("[U]se of the language from Miller or Taylor...