Gruber v. Creditors' Prot. Serv., Inc.

• Decision Date: 23 January 2014
• Docket Number: 13–2297,13–2164,13–2351.,Nos. 13–2084,s. 13–2084
• Citation: 742 F.3d 271
• Parties: John GRUBER, et al., Plaintiffs–Appellants, v. CREDITORS' PROTECTION SERVICE, INC., et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

742 F.3d 271

John GRUBER, et al., Plaintiffs–Appellants,

v.CREDITORS' PROTECTION SERVICE, INC., et al., Defendants–Appellees.

Nos. 13–2084, 13–2164, 13–2297, 13–2351.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 13, 2013.

Decided Jan. 23, 2014.

John D. Blythin, Attorney, Ademi & O'Reilly, Cudahy, WI, for Plaintiffs–Appellants.

Elizabeth A. Odian, Attorney, Hinshaw & Culbertson, Milwaukee, WI, Stephen R. Swofford, Attorney, Hinshaw & Culbertson, Chicago, IL, for Defendants–Appellees.

Before MANION, KANNE, and HAMILTON, Circuit Judges.

MANION, Circuit Judge.

Four plaintiffs filed separate lawsuits against four separate defendants, alleging that similar debt collection letters were sent in violation of 15 U.S.C. § 1692g(a)(4) of the Fair Debt Collection Practices Act (the “Act”). A district judge and three magistrate judges, all sitting in the Eastern District of Wisconsin, dismissed the respective actions for failure to state a claim. The plaintiffs appealed. We consolidated these appeals and now affirm.

I. BACKGROUND

Between 2012 and 2013, plaintiffs ¹ received letters from defendants ² that read, in pertinent part, as follows:

Unless you notify this office in writing within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid. If you notify this office within 30 days from receiving this notice, this office will obtain verification of the debt or obtain a copy of the judgment and mail you a copy of such judgment or verification.

The first sentence of this notice is an attempt to comply with § 1692g(a)(3), which requires the debt collector to include “a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector.” The second sentence is an attempt to comply with § 1692g(a)(4), which requires the debt collector to include a “statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector.” Plaintiffs claim that the letter does not adequately provide the notice required by § 1692g(a)(4).

Because the second sentence in the notice omits the phrase “that the debt, or any portion thereof, is disputed,” the plaintiffs contend that it directs the consumer to request verification instead of directing the consumer to dispute the debt. In other words, under the plaintiffs' theory, the second sentence should have read, “[i]f you notify this office within 30 days from receiving this notice that you dispute the debt or any portion of the debt, this office will obtain verification of the debt or obtain a copy of the judgment and mail you a copy of such judgment or verification.” Additionally, one of the consolidated plaintiffs' letters contained the statement: “[w]e believe you want to pay your just debt” immediately preceding the notice language above. She alleges that using the phrase “just debt” is misleading and suggests that the debt's validity has been confirmed. We address these two arguments in turn.

II. ANALYSIS

Claims brought under the Fair Debt Collection Practices Act are evaluated under the objective “unsophisticated consumer” standard. Bartlett v. Heibl, 128 F.3d, 497, 500 (7th Cir.1997); Avila v. Rubin, 84 F.3d 222, 226 (7th Cir.1996). Although the hypothetical unsophisticated consumer is not as learned in commercial matters as are federal judges, he is not completely ignorant either. Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir.2000). On the one hand, the unsophisticated consumer may be “uninformed, naive, or trusting,” but on the other hand the unsophisticated consumer does “possess[ ] rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses ‘reasonable intelligence’ and is capable of making basic logical deductions and inferences.” Id. (citations omitted). Additionally, while the unsophisticated consumer “may tend to read collection letters literally, he does not interpret them in a bizarre or idiosyncratic fashion.” Id. If not even “a significant fraction of the population would be misled” by the debt collector's letter, then dismissal is required. Zemeckis v. Global Credit & Collection Corp., 679 F.3d 632, 636 (7th Cir.2012) (citing Taylor v. Cavalry Inv. LLC, 365 F.3d 572, 574 (7th Cir.2004)). In short, the unsophisticated consumer is not the least sophisticated consumer. With this legal framework in mind, we review de novo the dismissal of an action brought under the Act, accepting all well-pleaded facts as true and construing all inferences in favor of the plaintiffs. Id. at 634.

A. Defendants' letters to plaintiffs do not violate § 1692g(a)(4) of the Act

Plaintiffs' core argument is that because the second sentence of the defendants' letters omits the phrase “that the debt, or any portion thereof, is disputed,” it creates the risk that an unsophisticated consumer who may wish to exercise his rights would fail to properly do so. Specifically, the unsophisticated consumer might be misled to request verification instead of to dispute the debt. The problem for the plaintiffs is that “the consumer can, without giving a reason, require that the debt collector verify the existence of the debt before making further efforts to collect it.” DeKoven v. Plaza Assocs., 599 F.3d 578, 582 (7th Cir.2010) (citations omitted). In other words, a request to verify the existence of a debt constitutes a “dispute” under the Act. Id. This makes sense because unsophisticated consumers cannot be expected to assert their rights in legally precise phrases. Horkey v. J.V.D.B. & Assocs., Inc., 333 F.3d 769, 773 (7th Cir.2003). So even if there is a literal distinction between requesting verification of a debt and disputing a debt, we treat a request for verification as a dispute within the meaning of the Act. DeKoven, 599 F.3d at 582.

Thus, if a consumer wrote and sought verification, he would be disputing the debt for the purposes of the Act, and would be entitled to all of the same protections afforded under the Act as if he had written to dispute the debt. Unsurprisingly, plaintiffs fail to cite a single case supporting their reading of § 1692g(a)(4)—that requesting verification of a debt is not a dispute of the debt. Moreover, all four judges below interpreted the second sentence to mean “if you object to our allegation that you owe this debt, we'll send you proof that you owe it.” This interpretation is the most natural one and one an unsophisticated consumer would take. Accordingly, we conclude that as a matter of law, defendants' notices comply with § 1692g(a)(4).

B. The statement “[w]e believe you want to pay your just debt” does not violate the Act

Additionally, one of the plaintiffs argues that because the statement “[w]e believe you want to pay your just debt” appears immediately before the obligatory § 1692g language, it overshadows and is inconsistent with the notice, rendering the letter misleading in violation of the Act. Alternatively, she argues that the phrase “just debt” implies that judgment has already been rendered against the recipient of the letter. We disagree.

The plaintiff cites cases in support other contention that the phrase “just debt” overshadows the notice and influences unsophisticated consumers into thinking a judgment was already entered in violation of the Act. These cases are distinguishable because they involved notices containingincoherent and contradictory language. For example, in Avila v. Rubin, 84 F.3d 222 (7th Cir.1996), the disputed notice informed the consumer of his right to dispute or verify the debt. Id. at 226. However, the notice was followed by the language “[i]f the above does not apply to you, we shall expect payment ... within ten (10) days from the date of this letter.” Id. There we held that “telling a debtor he has 30 days to dispute the debt and following that with a statement that ‘[i]f the above does not apply’ you have ten days to pay up or real trouble will start is entirely inconsistent” with the Act...