Nettles v. Midland Funding LLC

• Citation: 983 F.3d 896
• Decision Date: 21 December 2020
• Docket Number: No. 19-3327,19-3327
• Parties: Ashley NETTLES, Plaintiff-Appellee, v. MIDLAND FUNDING LLC, and Midland Credit Management, Inc., Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

983 F.3d 896

Ashley NETTLES, Plaintiff-Appellee,
v.
MIDLAND FUNDING LLC, and Midland Credit Management, Inc., Defendants-Appellants.

No. 19-3327

United States Court of Appeals, Seventh Circuit.

Argued June 4, 2020
Decided December 21, 2020

Curtis Warner, Attorney, Corning, NY, for Plaintiff-Appellee.

Heather L. Kramer, Attorney, Rathje & Woodward, LLC, Wheaton, IL, Theodore W. Seitz, Attorney, Dykema Gossett PLLC, Lansing, MI, for Defendants-Appellants.

Before Sykes, Chief Judge, and Easterbrook, Circuit Judge.¹

Sykes, Chief Judge.

After Ashley Nettles defaulted on her credit-card account, Midland Funding LLC acquired the debt. Midland sued Nettles in state court, and the parties entered a consent judgment requiring a monthly repayment plan with modest automatic draws from her bank account. The automatic draws ceased after three months when Midland's law firm went out of business. A Midland affiliate then sent Nettles a collection letter that overstated her remaining balance by about $100. That prompted this suit under the Fair Debt Collection Practices Act ("FDCPA" or "the Act"), 15 U.S.C. §§ 1692 et seq .

The complaint alleges that the letter is false, misleading, or otherwise unfair or unconscionable in violation of 15 U.S.C. §§ 1692e and 1692f. Nettles proposes to represent a class of consumers who received similar letters. The credit-card agreement, however, contains an arbitration provision giving either party the right to require arbitration of any dispute relating to the account, including collection matters. Midland moved to compel arbitration. The district judge denied the motion, concluding that the arbitration clause does

983 F.3d 898

not cover this claim. As permitted by the Federal Arbitration Act, Midland appealed, asking us to reverse and remand with instructions to grant the motion to compel arbitration.

A jurisdictional defect prevents us from reaching the arbitration question. Nettles sued for violation of §§ 1692e and 1692f, but she has not alleged any injury from the alleged statutory violations. Applying our recent decisions in Larkin v. Finance System of Green Bay, Inc. , Nos. 18-3582 & 19-1537, 982 F.3d 1060, (7th Cir. Dec. 14, 2020), and Casillas v. Madison Avenue Associates, Inc. , 926 F.3d 329 (7th Cir. 2019), we vacate and remand with instructions to dismiss the case for lack of standing.

I. Background

In 2015 Ashley Nettles applied for a credit card with Credit One Bank. The bank accepted her application and sent her a credit card and a copy of the cardholder agreement. The agreement explained that by using her card, she became bound by the terms of the cardholder agreement and that its terms were enforceable not only by Credit One but also its successors and assigns. The agreement contains a provision that either party may require arbitration of any dispute relating to the account, including collection matters. Nettles used the card after receiving it and thus became bound by the agreement.

Nettles continued to use her credit card but stopped making payments in January 2016. In July 2016 Credit One charged off the $601.97 balance and sold its rights in her account to MHC Receivables, LLC, which later sold the debt to Sherman Originator III LLC. Sherman Originator in turn sold the debt to Midland Funding LLC.

Midland hired the law firm Blatt, Hasenmiller, Leibsker & Moore LLC, which sued Nettles in Michigan state court to collect the debt. The parties entered a consent judgment that required Nettles to pay Midland $689.37 (the $601.97 account balance plus Midland's $87.40 in court costs) in monthly installments of $50 until paid in full. The Blatt law firm, acting on behalf of Midland, automatically withdrew the $50 payments from Nettles's bank account for three months but then stopped when the firm dissolved. At this point Nettles owed Midland $539.37.

In June 2018 Midland Credit Management, Inc., a Midland affiliate, sent Nettles a letter stating that it would be servicing the debt on behalf of Midland Funding and that her current balance was $643.59, about $104 more than her actual outstanding balance. Nettles responded with this lawsuit against Midland and its affiliate.² (The appeal doesn't require us to distinguish between the two, so we refer to them collectively as "Midland.")

The complaint alleges that the collection letter was false, misleading, or otherwise unfair or unconscionable in violation of §§ 1692e and 1692f of the FDCPA. Nettles sought actual and statutory damages and proposed to represent a class of consumers who received similar letters overstating their account balances. Midland moved to compel arbitration, invoking the arbitration provision in the Credit One...