Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-14-01329/USCOURTS-ca7-14-01329-0/pdf.json

Parties Involved:
Gregory Leeb
Appellee
Nationwide Credit Corporation
Appellant

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 14-1329

GREGORY LEEB,

Plaintiff-Appellee,

v.

NATIONWIDE CREDIT CORPORATION,

Defendant-Appellant.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:12-cv-913 — Elaine E. Bucklo, Judge.

____________________

ARGUED JANUARY 22, 2015 — DECIDED NOVEMBER 20, 2015

____________________

Before EASTERBROOK, MANION, and WILLIAMS, Circuit 

Judges.

WILLIAMS, Circuit Judge. Nationwide Credit Corporation—a debt-collection agency—telephoned Gregory Leeb 

about an unpaid medical bill. Leeb disputed the debt, saying 

that his insurance company should have paid. Because Leeb 

disputed his debt, the Fair Debt Collection Practices Act reCase: 14-1329 Document: 35 Filed: 11/20/2015 Pages: 9
2 No. 14-1329

quired Nationwide to “cease collection” until it verified the 

debt. 15 U.S.C. § 1692g(b). But, without verifying the debt, 

Nationwide sent Leeb a letter that: (1) showed a “balance” of 

$327; (2) instructed Leeb to “detach the upper portion and 

return with payment”; (3) asked Leeb to provide additional 

information; and (4) stated that the letter was “from a debt 

collector attempting to collect a debt and any information 

obtained will be used for that purpose.” Leeb sued Nationwide under the FDCPA.

On summary judgment, the district court held that Nationwide violated the FDCPA because it did not “cease collection.” We agree because Nationwide’s January 5 letter, objectively viewed, was an attempt to collect the debt. The district court also held that Nationwide was not excused by the 

FDCPA’s “bona fide error” provision. See 15 U.S.C. 

§ 1692k(c). We agree because Nationwide failed to show 

each of the three required elements: that its violation was 

unintentional; that its violation resulted from a clerical or 

factual mistake; and that it maintained procedures reasonably adapted to avoid such mistakes. So we affirm the judgment against Nationwide.

I. BACKGROUND

In May 2011, Leeb received emergency medical care. The 

medical provider submitted a claim to Leeb’s insurance 

company, Cigna. Cigna asked for additional information but 

the medical provider never responded, so Cigna closed its 

file without paying the claim. Later, Nationwide was hired 

to collect payment.

On December 28, 2011, Nationwide telephoned Leeb 

about his bill, and Leeb said that Cigna should have paid it. 

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No. 14-1329 3

Leeb then mailed and faxed a letter to Nationwide, disputing the debt. Two days later, he received a letter from Nationwide, dated December 26. Nationwide wrote that it was 

“extremely important” that the debt be paid “in full,” otherwise “collection activity [would] continue,” and Nationwide would “report the account to Equifax, Experian, and 

Trans[U]nion credit reporting agencies.” Leeb replied (by fax 

and mail), demanding that Nationwide acknowledge that 

his debt was disputed and refrain from making any negative 

credit reports.

The next day, December 31, Leeb copied Nationwide on a 

letter he sent to the medical provider, informing the provider 

that Cigna was responsible for payment. The provider called 

Leeb and said that it would seek payment from Cigna and 

would take Leeb’s account out of collections. On January 4, 

2012, Leeb informed Nationwide (by fax and mail) that the 

provider was stopping collection efforts.

On January 5, Nationwide sent the letter at the heart of 

this suit. The letter was generated from a “form letter,” and 

was divided into two portions. The top portion indicated a 

“balance” of $327. Separating the top and bottom portions 

was the instruction to “Detach Upper Portion And Return 

With Payment.” In the bottom portion, Nationwide 

acknowledged Leeb’s dispute, but asked him to provide additional information. The bottom portion also included the 

statement that “[t]his communication is from a debt collector 

attempting to collect a debt and any information obtained 

will be used for that purpose.” Leeb sued, contending that 

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by sending the January 5 letter, Nationwide violated the 

FDCPA.1

II. ANALYSIS

We review the grant of Leeb’s motion for summary 

judgment de novo, and Nationwide is entitled to a favorable 

view of the facts and reasonable inferences. In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 801 F.3d 758, 762 (7th 

Cir. 2015). Nationwide concedes that Leeb disputed his debt, 

and that Nationwide did not verify the debt. So the only 

questions are: (1) did Nationwide “cease collection” as required by § 1692g(b); and if not, (2) was Nationwide’s violation a “bona fide error,” excused by § 1692k(c)?

A. Nationwide Did Not “Cease Collection” After Leeb 

Lodged Dispute.

On the first question, Nationwide asks us to consider two 

facts: first, that it sent the January 5 letter because Leeb demanded that Nationwide acknowledge that the debt was 

disputed; and second, that Leeb believed he did not owe the 

debt. From those facts, Nationwide asks us to infer that Leeb 

did not subjectively view the January 5 letter as an attempt 

to collect a debt. And from that inference, Nationwide asks 

us to conclude that the letter was not an attempt to collect a 

debt (so Nationwide “cease[d] collection” as it was required 

to do).

But our task under § 1692g(b) is to determine whether 

Nationwide “cease[d] collection,” not whether Leeb subjec-

 1

Leeb disputed his debt before he received Nationwide’s December 26 

letter. But that letter was sent before the debt was disputed, so Leeb does 

not contend that sending the December 26 letter violated the FDCPA.

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No. 14-1329 5

tively believed that to be so. We have held that an objective 

standard is used to determine whether a letter was sent “in 

connection with an attempt to collect a debt.” Gburek v. Litton 

Loan Servicing LP, 614 F.3d 380, 385–86 (7th Cir. 2010); Ruth v. 

Triumph P’ships, 577 F.3d 790, 798 (7th Cir. 2009). An objective 

standard is likewise appropriate for the similar inquiry of 

whether, by sending a particular letter, a debt collector failed 

to “cease collection.” Our objective analysis considers the 

content of the January 5 letter and the context in which it 

was sent; that context includes the nature and scope of the 

parties’ relationship, Leeb’s demand for an acknowledgement of the dispute, and Leeb’s prior expressed belief that he 

did not owe the debt. See Ruth, 577 F.3d at 799 (considering 

the content of the letter, the other contents of the envelope, 

and the nature and scope of the parties’ relationship).

Nationwide’s letter quoted a “balance” and instructed 

Leeb to detach the top portion and return it with payment. 

The letter also asked Leeb for information and stated, “This 

communication is from a debt collector attempting to collect 

a debt and any information obtained will be used for that 

purpose.” See McLaughlin v. Phelan Hallinan & Schmieg, LLP, 

756 F.3d 240, 245–46 (3d Cir. 2014) (holding that sending a 

letter was an attempt to collect a debt where the letter stated 

the amount due and that the sender was a “debt collector 

attempting to collect a debt”). Further, Nationwide’s only 

relationship with Leeb concerned his allegedly defaulted 

debt. See Ruth, 577 F.3d at 799 (finding it relevant that “[t]he 

only relationship the defendants had with the plaintiffs 

arose out of [the] ownership of the plaintiffs’ defaulted 

debt”); cf. Bailey v. Sec. Nat’l Servicing Corp., 154 F.3d 384, 

387–89 (7th Cir. 1998) (where parties’ relationship concerned 

both a defaulted debt and payments owed in the future on a 

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non-defaulted loan, sending a letter concerning only the latter was not an attempt to collect a debt under the FDCPA).

To be sure, Leeb did not believe that he owed the debt.

But that does not strip him of § 1692g(b)’s protection. To the 

contrary, § 1692g(b) specifically protects debtors like Leeb, 

who could be pressured by persistent collection efforts to 

pay debts that are not actually owed. It is also true that Nationwide sent its letter in response to Leeb’s demand for an 

acknowledgement of his dispute. But Leeb did not demand a 

letter “from a debt collector attempting to collect a debt,” 

stating his “balance” and instructing him to send payment.

We conclude that, when the content and context are analyzed objectively, Nationwide’s January 5 letter was an attempt to collect a debt, so Nationwide failed to “cease collection,” thereby violating § 1692g(b).

B. Nationwide’s Violation Is Not Excused Under 

FDCPA’s “Bona Fide Error” Provision.

Nationwide argues that even if it violated § 1692g(b), its 

violation is excused under the FDCPA’s “bona fide error”

provision. That provision precludes liability if “the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error 

notwithstanding the maintenance of procedures reasonably 

adapted to avoid any such error.” 15 U.S.C. § 1692k(c).

Section 1692k(c) was the subject of the Supreme Court’s 

opinion in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, 

L.P.A., 559 U.S. 573 (2010). In Jerman, a debt collector informed a debtor that she could only dispute her debt if she 

did so in writing. Id. at 578–79. The district court held that 

that was a misstatement of law, in violation of the FDCPA—a 

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holding that the Supreme Court assumed was correct. The 

debt collector argued that § 1692k(c) precluded liability because the violation was unintentional and was the result of 

its honest belief, informed by thorough legal research, that 

the FDCPA required disputes to be in writing. Id. at 579. The 

Supreme Court rejected the argument, holding that FDCPA 

violations excusable under § 1692k(c) must result from “clerical or factual mistakes,” not mistakes of law. Id. at 587, 604–

05. The Court drew support for its conclusion from the statutory requirement that a debt collector maintain “procedures 

reasonably adapted to avoid” errors. The Court wrote that 

“procedures” are “processes that have mechanical or other 

such regular orderly steps” designed to “avoid errors like 

clerical or factual mistakes,” and that legal analysis did not 

lend itself to such mechanical procedures. Id. at 587 (internal 

quotation marks omitted). Finally, the Court noted that although the debt collector did not intend to violate the 

FDCPA, its violation resulted from intentional conduct, and 

liability was not limited to willful violations. Id. at 581, 584.

In view of Jerman, we reject Nationwide’s argument that 

its violation should be excused. To show that its violation 

was not intentional, Nationwide relies on an affidavit from 

the employee who sent the January 5 letter. The employee 

swears that she sent the letter intentionally but that she did 

not intend to violate the FDCPA. At this stage, that entitles 

Nationwide to the conclusion that its violation was not willful—but liability is not confined to willful violations. Jerman, 

559 U.S. at 584.2 Notably, Nationwide did not argue that its 

 2 Citing Kort v. Diversified Collection Services, Inc., 394 F.3d 530, 536–37 

(7th Cir. 2005), Nationwide argues that liability is limited to willful violations. But that was not Kort’s holding and, after Jerman, any dicta to that 

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employee was unaware of all of the contents of the January 5 

letter (which, remember, was generated from a form letter).

So Nationwide’s violation was just as intentional as the violation in Jerman.

Moreover, Nationwide has not shown that its violation 

resulted from a “bona fide error,” which the Supreme Court 

instructs are “clerical or factual mistakes.” Jerman, 559 U.S. at 

587. Nationwide argues that its “policy is to never send the 

January 5th letter in response to ... disputes... .” But whether sending the letter violated company policy is not the question. Nationwide does not explain how intentionally sending 

a letter can be considered a “clerical or factual mistake[].”

Finally, Nationwide failed to show that it maintained 

“procedures reasonably adapted to avoid” errors that could 

result in this type of violation. Nationwide first argues that it 

maintained adequate procedures because its employees were 

trained on the FDCPA. But Jerman held that mistakes of law 

are not excused and so rejected the debt collector’s legal 

training as an adequate “procedure.” See id. at 628 (Kennedy, 

J., dissenting) (noting that the debt collector had “designated 

a lead FDCPA compliance attorney, who regularly attended 

conferences and seminars; subscribed to relevant periodicals; 

distributed leading FDCPA cases to all attorneys; trained 

new attorneys on their statutory obligations; and held regular firm-wide meetings on FDCPA issues”).

 

effect misstates the law. Kort’s holding was limited: where a separate 

federal law requires debt-collection letters to include specific text, and 

that text is later held to be misleading, a debt collector that used the required text is covered by the “bona fide error” provision. Id. at 539. 

Those are not our facts, so we do not revisit Kort.

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No. 14-1329 9

Nationwide next argues that it maintained adequate procedures because sending the January 5 letter was against its 

“policy.” But Jerman instructs that “procedures” are “processes that have mechanical or other such regular orderly 

steps... .” Id. at 587 (internal quotation marks omitted). Nationwide does not argue that its “policy” told its employee 

what she should have done, much less that the policy gave her 

any “mechanical” or “regular orderly” steps to follow. Following Jerman’s instruction, we reject the argument that a 

thinly specified “policy,” allegedly barring some action but 

saying nothing about what action to take, is an adequate 

“procedure” under § 1692k(c).3 Nationwide has failed to 

show that its FDCPA violation should be excused under 

§ 1692k(c).

III. CONCLUSION

We AFFIRM the judgment of the district court.

 3 Determining whether a debt collector’s “procedures” are “reasonably adapted” to avoid errors is “is a uniquely fact-bound inquiry susceptible of few broad, generally applicable rules of law.” Owen v. I. C. Sys., 

Inc., 629 F.3d 1263, 1277 (11th Cir. 2011). So “in concluding that [Nationwide] is not entitled to § 1692k(c)’s bona fide error defense under the 

particular factual circumstances in this case, we refrain from volunteering sweeping generalizations about what procedures would be enough 

for a debt collector to effectively assert that defense. Such matters are 

better resolved on a case-by-case basis.” Id.

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