Lavallee v. Med-1 Solutions, LLC

• Decision Date: 08 August 2019
• Docket Number: No. 17-3244,17-3244
• Parties: Beth LAVALLEE, Plaintiff-Appellee, v. MED-1 SOLUTIONS, LLC, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

932 F.3d 1049

Beth LAVALLEE, Plaintiff-Appellee,

v.MED-1 SOLUTIONS, LLC, Defendant-Appellant.

No. 17-3244

United States Court of Appeals, Seventh Circuit.

Argued May 30, 2018

Decided August 8, 2019

Robert E. Duff, Attorney, INDIANA CONSUMER LAW GROUP, Lebanon, IN, for Plaintiff - Appellee.

Nicholas W. Levi, Attorney, KIGHTLINGER & GRAY LLP, Indianapolis, IN, for Defendant - Appellant.

Brian Melendez, Attorney, BARNES & THORNBURG LLP, Minneapolis, MN, Amicus Curiae for ACA INTERNATIONAL.

Lawrence DeMille-Wagman, Attorney, CONSUMER FINANCIAL PROTECTION BUREAU, Washington, DC, Amicus Curiae for CONSUMER FINANCIAL PROTECTION.

Before Wood, Chief Judge, and Sykes and Hamilton, Circuit Judges.

Sykes, Circuit Judge.

Debt collector Med-1 Solutions, LLC, attempted to recover two unpaid medical bills on behalf of Beth Lavallee’s healthcare provider. The Fair Debt Collection Practices Act ("FDCPA" or "the Act") required Med-1 to disclose certain information to Lavallee about her debts within a specific time frame. 15 U.S.C. § 1692g(a). Med-1 could satisfy its § 1692g(a) disclosure obligations by including the required information in its "initial communication" with Lavallee or by sending "a written notice containing" the disclosures within five days after that "initial communication." Id.

In March and April 2015, Med-1 sent Lavallee two emails, one for each debt. The emails contained hyperlinks to a Med-1 vendor’s web server. Once there, a visitor had to click through multiple screens to access and download a .pdf document containing the disclosures required by § 1692g(a). Lavallee never opened these emails. When the hospital called her in November to discuss a different medical debt, she learned about the earlier debts and was told that they had been referred to Med-1 for collection. She then called Med-1 to inquire about them, but the debt collector didn’t provide the required disclosures. Nor did it send a written notice within the next five days.

Lavallee sued Med-1 for violating § 1692g(a). She alleged that Med-1 never provided the statutory disclosures, either during the November phone call or within five days as required. Med-1 responded that its March and April emails were the "initial communication[s]" and argued that they contained the mandatory disclosures. A magistrate judge, presiding by consent, 28 U.S.C. § 636(c), granted Lavallee’s motion for summary judgment.

We affirm. Med-1 concedes its failure to send Lavallee a written notice within five days of her phone call. This appeal rests on Med-1’s contention that its emails were initial communications that contained the required disclosures. But the emails do not qualify under the Act’s definition of "communication" because they did not "convey[ ] ... information regarding a debt." 15 U.S.C. § 1692a(2). Nor did the emails "contain" the statutorily mandated disclosures. § 1692g(a). At most the emails provided a means to access the disclosures via a multistep online process. Because Med-1 violated § 1692g(a), the judge was right to enter judgment for Lavallee.

I. Background

Lavallee incurred two debts for medical services provided by a hospital. The hospital referred the debts to Med-1 for collection. Med-1 emailed Lavallee on March 20 and April 17, 2015, sending the messages from "info@med1solutions.com" to the email address Lavallee had provided to the hospital. The emails stated that "Med-1 Solutions has sent you a secure message" and featured an embedded hyperlink inviting the recipient to "View SecurePackage":

Neither email was returned to Med-1 as undelivered, but Lavallee doesn’t recall seeing them in her inbox. If Lavallee had opened either email and clicked on the hyperlink, she would have been directed via a web browser to a server operated by Privacy Data Systems, Med-1’s sister company. She would have seen a screen asking her to check a box to sign for the "SecurePackage." Checking that box would have activated the "Open SecurePackage" button at the bottom of the screen, and clicking that button would have revealed a screen with "SecurePackage Display" written across the top. Had she selected the "Attachments" tab on that screen, a .pdf file would have appeared. Had she clicked on that .pdf file, she would have seen a pop-up window asking her if she wanted to open the attachment with Adobe Acrobat or save it to her hard drive. Only then could she have viewed the document or downloaded the file and then opened it.

The file contained the disclosures required by § 1692g(a), including the amount of the debt, the consumer’s right to dispute the debt, and how to obtain more information about the alleged creditor. This type of notice is commonly called a "validation notice." Durkin v. Equifax Check Servs., Inc. , 406 F.3d 410, 412 (7th Cir. 2005).

Med-1 received reports from Privacy Data Systems indicating which email recipients had downloaded validation notices. Privacy Data Systems’ records show that Lavallee never clicked the "Open SecurePackage" hyperlink and thus never accessed the validation notice stored on the server.

On November 12, 2015, Lavallee received a phone call from the hospital about a different unpaid bill. During that conversation, Lavallee learned that she owed other debts that had been referred to Med-1. This was her first time hearing about the debt collector. Later that day Lavallee called Med-1 and discussed her medical debts with a Med-1 representative. Med-1 did not provide any § 1692g(a) disclosures during that phone call, nor did it send a written notice in the days that followed.

Lavallee filed this action in December 2015 alleging that Med-1 violated § 1692g(a) by failing to deliver the mandatory disclosures orally during the November telephone conversation or in writing thereafter. The case proceeded to cross-motions for summary judgment. Med-1 introduced its March and April emails and argued that they satisfied its § 1692g(a) obligations because they enabled Lavallee to obtain validation notices. The magistrate judge disagreed. She reasoned that the validation notices were never sent because Lavallee never downloaded them—a fact reflected in Med-1’s own records. Moreover, Med-1’s delivery method—embedding a hyperlink in an email from an unknown sender—made receipt of the notices unlikely. The judge entered summary judgment in Lavallee’s favor and awarded statutory damages, costs, and attorney’s fees.

II. Discussion

A. Standing

We begin, as we must, with the question of Lavallee’s standing. To establish constitutionally adequate standing to sue, a "plaintiff must allege an injury in fact that is traceable to the defendant’s conduct and redressable by a favorable judicial decision." Casillas v. Madison Ave. Assocs., Inc. , 926 F.3d 329, 333 (7th Cir. 2019) (citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). To satisfy the injury-in-fact requirement, Lavallee must establish that she suffered an injury that is "both concrete and particularized." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1548, 194 L.Ed.2d 635 (2016). And while "Congress has the power to define intangible harms as legal injuries for which a plaintiff can seek relief"—including violations of the FDCPA—it "must operate within the confines of Article III." Casillas , 926 F.3d at 333. So a plaintiff must do more than point to a bare procedural violation; he must show that the violation harmed or "presented an appreciable risk of harm to the underlying concrete interest that Congress sought to protect by enacting the statute." Groshek v. Time Warner Cable, Inc. , 865 F.3d 884, 887 (7th Cir. 2017) (quotation marks omitted).

Med-1 concedes that a debt collector’s failure to provide a § 1692g(a) disclosure constitutes an injury in fact and instead focuses on causation. But Med-1 made that concession before our recent decision in Casillas . There we applied the injury-in-fact requirement in the § 1692g(a) context. Paula Casillas received an incomplete § 1692g(a) validation notice: It "neglected to specify that [a] notification or request [to dispute or verify the debt] must be in writing ." 926 F.3d at 332 (citing § 1692g(a)(3)–(5) ). But Casillas never explained how this omission "harmed or posed any real risk of harm to her interests under the Act." Id. at 334. Because "there was no prospect that [Casillas] would have tried to exercise" her statutory rights, the omission of the in-writing requirement didn’t constitute a concrete harm. Id. Her suit was predicated on "a bare procedural violation," id. at 339, and her complaint never alleged how that violation affected an "underlying concrete interest," Groshek , 865 F.3d at 887.

This case differs from Casillas in two ways. First, the alleged statutory violation is meaningfully different. Unlike Casillas, who received an incomplete validation notice, Lavallee never received any of the disclosures required by § 1692g(a). The debt collector in Casillas disclosed the consumer’s statutory rights to dispute the debt and inquire into the creditor’s identity; it simply failed to mention the proper procedure for exercising those rights. In contrast, here Med-1 provided Lavallee with nothing. Her right to contest or request verification of the debt—rights that Med-1 is bound by statute to disclose to every debtor—simply never came up.

Second, and significantly, Lavallee was already a defendant in a collection suit brought by Med-1 when the statutory disclosure violation occurred. During her November 12 conversation with Med-1, Lavallee learned that it had already filed a lawsuit against her to collect the relevant debts. Without the knowledge that a consumer in her position is statutorily entitled to dispute and require verification of the debt on which the lawsuit was predicated, Lavallee stood at a distinct disadvantage. If she had known about her rights, she could have disputed and sought verification of the debts—thereby requiring Med-1 to cease the collection action and...