IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

SCOTT MCMAHON, )

on behalf of plaintiff and the classes defined )

herein, )

)

Plaintiff, )

) 12-cv-1410

vs. )

) Judge Alonso

LVNV FUNDING, LLC; )

RESURGENT CAPITAL SERVICES, L.P.; )

ALEGIS GROUP, LLC; and )

TATE & KIRLIN ASSOCIATES, INC., )

)

Defendants. )

PLAINTIFF’S RESPONSE TO DEFENDANTS’ 

 MOTION FOR SUMMARY JUDGMENT

Daniel A. Edelman

Cathleen M. Combs

Tiffany N. Hardy

EDELMAN, COMBS, LATTURNER 

& GOODWIN, L.L.C.

20 S. Clark Street, Suite 1500

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX) (may use for service of pleadings)

Email address for service: courtecl@edcombs.com

Case: 1:12-cv-01410 Document #: 255 Filed: 06/15/17 Page 1 of 18 PageID #:4160
I. Introduction

Defendants LVNV Funding, LLC (“LVNV”), Resurgent Capital Services, L.P.

(“Resurgent”), Alegis Group, LLC (“Alegis”) and Tate & Kirlin Associates, Inc. (“T&K”)

violated the Fair Debt Collection Practices Act (“FDCPA”) by failing to disclose, in the 148,491

letters they sent to class members, that the debts they were seeking to collect were time-barred,

that they could not sue to enforce the debts, and that payment by the debtors would restart the

statute of limitations, thus subjecting the debtors who made a payment to a subsequent collection

suit. Defendants seek to avoid liability by arguing that: (1) the Seventh Circuit opinion in this

matter, McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014)(McMahon I), did not

hold that their letters violated the FDCPA; (2) plaintiff must submit extrinsic evidence to prove his

case and did not; (3) defendants’ failure to disclose in the letter sent to plaintiff that the debt they

sought to collect was time-barred and that payment would restart the statute of limitations was not

material; (4) plaintiff lacks Article III standing; (5) plaintiff cannot show that payment made by a

debtor after the sending of a misleading collection letter, where the debtor had declined to pay for

years, resulted from the violative letter; and (6) LVNV is not liable for the collection letters sent

by the debt collector engaged by Resurgent to collect money for LVNV.

For the reasons stated below, defendants are wrong.

II. The Seventh Circuit Has Ruled In this Case that Defendants’ Failure to Disclose In

the Letters Sent to Plaintiff that the Debt They Sought to Collect From Plaintiff Was

Time-Barred and that Payment Would Restart the Statute of Limitations Violates the

FDCPA

Defendants’ statement of the legal standard cites Seventh Circuit cases decided between 

1993 and 2009. However, defendants do not cite the Seventh Circuit opinion in this matter,

McMahon I, until a parenthetical reference to a brief filed by plaintiff’s counsel in another matter,

on Def.Mem., p. 9. Defendants argue that the Seventh Circuit did not hold that the letter and the

validation of debt notice at issue in this case violated the Act, but instead remanded the case to the

district court for plaintiff to present extrinsic evidence to the district court as to how an

unsophisticated consumer would read the letter and validation of debt notice. Defendants take that

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position even though the Seventh Circuit never mentioned extrinsic evidence in its opinion. 

Defendants’ conclusion is refuted by Pantoja v. Portfolio Recovery Associates, LLC, 852

F.3d 679 (7th Cir. 2017), reh’g and reh’g en banc denied, May 15, 2017. Pantoja affirmed

summary judgment in favor of a consumer who did not submit survey evidence of how an

unsophisticated debtor would read the letter. Pantoja held that a collection letter sent to collect a

time-barred debt violated FDCPA §1692e, prohibiting “any false, deceptive, or misleading

representation or means in connection with the collection of any debt,” “because (a) it did not tell

the consumer that the defendant could not sue on this time-barred debt and (b) it did not tell the

consumer that if he made, or even just agreed to make, a partial payment on the debt, he would

restart the clock on the long-expired statute of limitations, in effect bringing a long-dead debt back

to life.” Pantoja, 852 F.3d at 682. 

Defendants argue that the holding in Pantoja, that extrinsic evidence was not required to

prove a violation, is not applicable here because “the opinion does not address a letter which is

silent as to the statute of limitations.” (Def. Mem., p. 11). Defendants are arguing that a letter that

provided some information about the debt would mislead a consumer, but a letter that provided no

statement of the time-barred nature of the debt requires survey evidence for the plaintiff to prevail.

This is absurd. 

Defendants argue (Def. Mem., p. 9) that if the Seventh Circuit did not require plaintiff to

produce extrinsic evidence it would have entered judgment in plaintiff’s favor. However, this

matter was dismissed before plaintiff could take discovery and present a motion for class

certification, much less notify the class, allow opt-outs and file a motion for summary judgment. 

Plaintiff would have waived the right to pursue the claims on behalf of a class if he had sought

summary judgment before class certification and notice. Peritz v. Liberty Loan Corp., 523 F.2d

349, 352-355 (7th Cir. 1975). The Seventh Circuit did not remand the McMahon and the

companion Delgado cases for the district courts to review survey evidence:

Given this standard and the well-reasoned position put forth by the FTC and CFPB, we

find that the district court in Delgado was correct in denying defendants' motion to dismiss.

The McMahon court will need to take a fresh look at the class allegations in that case.

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(McMahon I, 744 F.3d at 1020.) 

The Seventh Circuit did not enter a finding of liability because plaintiff did not ask for one. 

Defendants argue (Def. Mem., p. 12) that the question of liability is not resolved here

because the Seventh Circuit “focused on whether the settlement offer on a time-barred debt could

mislead the unsophisticated consumer”, arguing that the language is “not plainly misleading or

deceptive but might possibly mislead or deceive the unsophisticated consumer.” 

This analysis was rejected by the Seventh Circuit in Pantoja. In any event, it is certain that

McMahon did not hold that, under the FDCPA, consumers are expected to search Google and

Wikipedia to understand material information about a collection letter sent to them, as defendants

appear to be arguing. (Def. Mem., p. 12) 

Instead the Court used the objective “unsophisticated consumer” test. An unsophisticated

consumer is familiar with the meaning of “settled” from such sources as the Internet.

But, as we held in Phillips, supra, if the debt collector uses language in its dunning letter

that would mislead an unsophisticated consumer into believing that the debt is legally

enforceable , . . . the collector has violated the FDCPA. Because it is plausible that an

unsophisticated consumer would believe a letter that offers to “settle” a debt implies that

the debt is legally enforceable, it was correct in Delgado to decline to dismiss the action at

this stage, and incorrect to dismiss the class allegations in McMahon. . . .

Neither LVNV nor CMS gave a hint that the debts that they were trying to collect were

vulnerable to an ironclad limitations defense. An unsophisticated consumer who read the

dunning letter Delgado or McMahon received could have been led to believe that her debt

was legally enforceable. In other words, the letters misrepresented the legal status of the

debts, in violation of the FDCPA. . . . The fact that both Delgado and McMahon's letters

contained an offer of settlement makes things worse, not better, since a gullible consumer

who made a partial payment would inadvertently have reset the limitations period and

made herself vulnerable to a suit on the full amount. That is why those offers only

reinforced the misleading impression that the debt was legally enforceable. . . .

The risk here is similar: a settlement offer on a timebarred debt implies that the creditor

could successfully sue on the debt. If unsophisticated consumers believe either that the

settlement offer is their chance to avoid court proceedings where they would be

defenseless, or if they believe that the debt is legally enforceable at all, they have been

misled, and the debt collector has violated the FDCPA. (McMahon I, 744 F.3d at 1020-

1022.)

That the Court believed it was instructing collectors about how the FDCPA limits 

communications with debtors about time-barred debts is highlighted by its discussion about how

much research a debt collector must undertake to determine if a debt is time-barred: 

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Our decision today does not require debt collectors to conduct additional research. If a debt

collector does not know whether the debt submitted for collection is timebarred, it would

be easy to include general language about that possibility. That said, we find it unlikely

that debt owners lack knowledge about the age of the debts they are attempting to collect.

If the debt collector is the original creditor, it will know the relevant dates. If the collector

is a third-party collecting on behalf of the original creditor, it should easily be able to get

that information at the time the file is assigned by the original creditor on whose behalf it

is acting. If the collector has purchased the debt from the original creditor, we know from

the FTC that such buyers pay different amounts for debts depending on the age of the debt

and the number of previous attempts to collect it, in which case whether the debt is

time-barred should be known. See FTC Report 2013 at 21. 

The argument that plaintiff must submit extrinsic evidence to prevail was rejected in

Pantoja, supra, Slick v. Portfolio Recovery Associates, LLC, 111 F.Supp.3d 900 (N.D.Ill. 2015),

Rawson v. Source Receivables LLC, 215 F. Supp. 3d 684 (N.D. Ill. 2016), and Magee v. Portfolio

Recovery Associates, 12 C 1624, 2016 WL 2644763 (N.D.Ill. May 9, 2016). Each of the letters

sought to collect a time-barred debt without disclosing that the debt was time-barred and without

disclosing that payment on the debt would revive the statute of limitations. 

Defendants do not cite these cases, although defense counsel represented the defendants in

each of them. By ignoring the law of this case, and its progeny, defendants seek to reargue the

positions they asserted on appeal and lost.1 They argue that this letter falls within the second

category of letters in which plaintiff can prevail only by producing extrinsic evidence, such as

consumer surveys, to prove that unsophisticated consumers do in fact find the challenged

statements misleading or deceptive, citing Ruth v. Triumph Partnerships, 577 F.3d 790, 800 (7th

Cir. 2009). (Def. Mem., pp. 11-12) However, Judge Gettleman held, and the Seventh Circuit

1 The Summary of Argument in Appellee’s Brief in McMahon is: Summary of

Argument: There is nothing in the Fair Debt Collection Practices Act (“FDCPA”) that requires a

debt collector to notify a debtor of state law defenses. The FDCPA is not a tool for enforcement

of state law. The Third and Eight Circuits have addressed the issue presented here, and both have

rejected the claim that plaintiff is making here. The weight of district court authority is in accord.

Plaintiff’s reliance on consent orders by the Federal Trade Commission (“FTC”) and Consumer

Financial Protection Bureau (“CFPB”) is misplaced. The FTC has never had any rule-making or

interpretive authority with respect to the FDCPA. The CFPB consent orders do not interpret the

FDCPA. Thus, Chevron deference does not apply here. Moreover, consent orders apply only

to the parties involved and not third parties like defendants here. 

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affirmed, that a letter that does not disclose the time-barred status of a debt and fails to tell of the

consumer the effect of making a partial payment (restarting the statute of limitations) falls into the

third category and does not require extrinsic evidence. Pantoja v. Portfolio Recovery, LLC 78 F.

Supp.3d 743, 746 (N.D. Ill. 2015) affirmed, 852 F.3d 679 (7th Cir. 2017).

Defendants’ argument that plaintiff must submit evidence of how consumer perceived the

language in the collection letters (Def. Mem., p. 1) is absurd on its face. This is a material

omission case. It is not possible to test an omission. The best way to test the effect of an omission

on consumer’s behavior is to conduct a study to determine whether the omitted fact -- that a debt

is time-barred -- is material to the consumer’s decision to pay a debt. That was precisely the

question explored in the Goldsmith Study, which plaintiff has submitted. 

 Defendants argue that there is no mandatory time-barred debt disclosure requirement

under the FDCPA2, (Def. Mem., pp. 11-12), citing two district court opinions which held that

letters sent in connection with the collection of time-barred debt that were silent on the question of

statute of limitations are in the “clearly not misleading category”. Rice v. Midland Credit

Management, Inc., 933 F. Supp. 2d 1040, 1048 (N.D. Ill. 2013), vacated on reconsideration, 12 C

1395, 2015 WL 302155 (N.D.Ill. Jan. 22, 2015) and Crawford v. Vision Fin. Corp., 12 C 4397,

2012 WL 5383280 (N.D. Ill. 2012), predate all of the above cases and more importantly,

McMahon and Pantoja. Defendants do note that the Rice opinion was vacated on reconsideration,

but they do not point out it was vacated based upon the Seventh Circuit’s opinion in McMahon I.

2015 WL 302155 at *1. Somehow, defendants do not see fit to discuss the Seventh Circuit cases,

McMahon and Pantoja, which mandate such a disclosure. 

Defendants argue that the Validation of Debt (“VOD”) is not a communication in

2 Defendants cite, at page 13 of their memorandum, Judge Springmann’s comment

in the Memorandum Opinion and Order granting class certification in Anguiano v. LVNV

Funding, LLC, No. 2:12-00523-TLS-APR (Nov. 10, 2015, N.D. Ind.)(dkt.#88) that the court

“was not aware of any binding precedent . . . holding that a letter that is silent regarding the

statute of limitations, and the consequences of partial payment on a time-barred debt, is so

clearly misleading that extrinsic evidence is not necessary.” This comment predated the Seventh

Circuit opinion in Pantoja, binding precedent on that precise issue.

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connection with collection of a debt because it was sent in response to McMahon’s request for

verification. This argument was rejected in Carlin v. Davidson Fink, 852 F.3d 207 (2nd Cir.

2017). Moreover, each VOD sub-class member also received the initial debt collection letter. As

the Seventh Circuit notes, the VOD makes the violation worse. “Resurgent kept mum, however,

about the advanced age of the debt—a detail that would have alerted either McMahon or his

lawyer to the fact that he had an iron-clad defense under the statute of limitations.” McMahon I,

744 F.3d at 1013.

Defendants’ argument that a letter seeking to collect a time barred debt is actionable only

if it threatens litigation (Def.Mem., 15), is contrary to the Seventh Circuit’s opinion in this case:

We recognize that this interpretation conflicts with that of the Eighth and Third Circuits.

See Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 33 (3d Cir.2011); Freyermuth v. Credit

Bureau Servs., Inc., 248 F.3d 767, 771 (8th Cir.2001). With respect, however, we have

concluded that the statute cannot bear the reading that those courts have given it.1 In their

view, if a dunning letter on a time-barred debt states that the collector could sue but

promised not to, that letter would not violate the FDCPA, since no litigation was actually

threatened (and indeed was expressly rejected). On its face, that may seem reasonable, but

closer examination reveals why it is not. The plain language of the FDCPA prohibits not

only threatening to take actions that the collector cannot take, but also the use of any false,

deceptive, or misleading representation, including those about the character or legal status

of any debt. McMahon I, 744 F.3d 1010, 1020–21 (7th Cir. 2014).

Defendants then cite language in McMahon I stating that an unsophisticated consumer

“could have been led to believe,” arguing the opinion does not state that a disclosure is required.

(Def. Mem., p. 13) Defendants make the same argument with regard to language in the amicus

brief filed by the FTC and the CFPB in the appeal of this matter, (Def. Mem., p. 14), arguing that

the conditional language “the letter ‘could plausibly’ mislead a consumer” implies that no

disclosures are required.

Judge Hamilton addressed the three categories of FDCPA letters laid out in Ruth v.

Triumph Partnerships, 577 F.3d 790, 800-801 (7th Cir. 2009) in determining that the Pantoja

collection letter did not require extrinsic evidence even though the court’s reading was not the

only reasonable way to read the letter:

Where the FDCPA requires clarity, however, ambiguity itself can prove a violation. E.g.,

Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 323 (7th Cir. 2016), citing

Chuway v. National Action Fin. Servs., Inc., 362 F.3d 944, 947–48 (7th Cir. 2004).

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We are not sure that the only reasonable way to read defendant's letter is the district court's

reading, that the letter would confuse all unsophisticated consumers, but we are confident

that it is one reasonable way to read it. Closer to the heart of the issue, this letter is an

example of careful and deliberate ambiguity. (Recall how it adopts part of the language

from another debt collector's consent decree.) The very ambiguity that Portfolio Recovery

claims should save it from summary judgment convinces us that summary judgment was

appropriate. The carefully crafted language, chosen to obscure from the debtor that the law

prohibits the collector from suing to collect this debt or even from threatening to do so, is

the sort of misleading tactic the FDCPA prohibits. The only reason to use such carefully

ambiguous language is the expectation that at least some unsophisticated debtors will

misunderstand and will choose to pay on the ancient, time-barred debts because they fear

the consequences of not doing so. Pantoja ,852 F.3d at 687.

That “careful and deliberate ambiguity” is present in the letters sent by defendants to Mr.

McMahon and the class and Pantoja holds that extrinsic evidence is not required to show a

violation.

III. Plaintiff Has Submitted Extrinsic Evidence

Even though he need not submit extrinsic evidence in connection with his motion for 

summary judgment, Mr. McMahon did. 

In connection with the motion for summary judgment, plaintiff submitted an empirical

study concluding that “the fact that a debt is time-barred is material,” the Goldsmith Study. (The

Goldsmith Study, Pl. SMF ¶¶59, 60, Appendix 20) The Goldsmith Study is based upon objective

evidence. The FTC, the CFPB, the New Mexico Attorney General, and the Seventh Circuit, by

way of its reliance on the FTC and CFPB’s position, have all relied upon Dr. Goldsmith’s research

and report. Defendants cite their Daubert Motion as further grounds for disputing the Goldsmith

Study. Plaintiff’s Response to the Daubert Motion amply supports this Court considering the

Goldsmith Study. 

Plaintiff also submitted evidence that five federal agencies and a state attorney general

explicitly endorsed a duty-to-disclose by debt collectors and issued public statements stating such

disclosures must be made [N.M. Ann. Code §12.2.12.9 (2012)[New Mexico Register/Volume

XXI, Number 23/effective Dec. 15, 2010]1) Massachusetts (Mass. Regs. Code tit. 940 §7.07 (24)),

(2) the City of New York (6 Rules of the City of New York 2-191 (2010)), (3) New York State (23

NYCRR 1), (4) North Carolina (N.C.G.S. §58-70-115, effective Oct. 1, 2009) and (5) West

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Virginia (West Virginia Code, §46A-2-128(f), eff. June 6, 2014) Citing, Fed. Trade Comm'n, The

Structure and Practice of the Debt Buying Industry 47 (2013) (FTC Report 2013)]. 

It is significant that Defendants admit that they have a Compliance Department and an inhouse legal department (Defendants’ Statement of Material Facts, ¶14). Defendants’ legal and

compliance departments should have been aware of the concerns raised by the Goldsmith Study

and the FTC Reports. Defendants became were aware of and complied with the requirements

imposed on debt collectors collecting time-barred debt in New York City and New Mexico. 

Plaintiff’s Statement of Material Facts ¶¶56, 57.

This is a non-disclosure case. The claim is that the letter and validation of debt notice did

not advise McMahon that the debt was time-barred and that if he paid on the debt he would restart

the statute of limitations. The evidence plaintiff has submitted shows that informing a consumer

that a debt is time-barred is material to the consumer’s decision to pay a debt.

IV. The Seventh Circuit Has Determined That the Defendants’ Deception Here is

Material

Defendants’ argument that its deception is not material is frivolous, given the care with

which Seventh Circuit has addressed the issue in this McMahon I and II and its subsequent

decision in Pantoja.

As determined by Janetos, 825 F.3d at 324, the question of materiality under §1692e is

whether “allegedly false and misleading statements . . . could have any practical impact on a

consumer’s rights or decision-making process.” With regard to the failure of a debt collector

collecting a time-barred debt to inform the debtor that the debt is time-barred and the

consequences, the Seventh Circuit has repeatedly identified the impact on a consumer’s rights and

decision-making process. McMahon I stated: “Neither LVNV nor CMS gave a hint that the debts

that they were trying to collect were vulnerable to an ironclad limitations defense. An

unsophisticated consumer who read the dunning letter Delgado or McMahon received could have

been led to believe that her debt was legally enforceable. In other words, the letters misrepresented

the legal status of the debts, in violation of the FDCPA.” 744 F.3d at 1021. Further, “a settlement

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offer on a timebarred debt implies that the creditor could successfully sue on the debt. If

unsophisticated consumers believe either that the settlement offer is their chance to avoid court

proceedings where they would be defenseless, or if they believe that the debt is legally

enforceable at all, they have been misled, and the debt collector has violated the FDCPA”. 744

F.3d at 1022. Pantoja noted: “We begin with the danger that a debtor who accepts the offered

terms of settlement will, by doing so, waive his otherwise absolute defense under the statute of

limitations. Only the rarest consumer-debtor will recognize this danger.” 852 F.3d at 684. The

deception defendants practiced on class members here is material.

Defendants’ factual assertions in support of their materiality argument are questionable at

best, sanctionable at worst. Defendants improperly submit an affidavit to argue that their

collection results after disclosure show an increase in amounts collected. (Affidavit of Hammond,

Def Mem., Exhibit K). The affidavit conflicts with a Stipulation the parties entered in concerning

this case: Stipulation Resolving Discovery Disputes As To Purchase and Collection of Out of

Statute Debt, I, Mitchell v. LVNV Funding, Case No. 2:12-cv-00523-TLS (Dkt No. 61).

Defendants entered into the stipulation to avoid plaintiff’s written discovery and depositions on

the precise areas discussed in the stipulation. (Exhibit 1, December 15, 2014Notice of

Deposition); (Exhibit 2, February 25, 2015 email correspondence from Jennifer Weller) and

(Exhibit 3, Stipulation Resolving Discovery Disputes as to Purchase and Collection of Out-ofStatute Debt). Plaintiff is concurrently filing a motion to strike the Hammond affidavit.

Defendants stipulated that they collected less on debts that are outside the statute of

limitations and pay less for portfolios containing time-barred debt. Defendants entered into that

Stipulation in order to avoid having to produce documents and a deponent to answer questions

about the areas that the Hammond Affidavit purports to address. The submission of the Hammond

Affidavit to dispute the statements in the Stipulation in these circumstances is improper and

sanctionable.

The Hammond Affidavit is improper for other reasons. Hammond was never disclosed to

plaintiff as a witness. The affidavit does not attach copies of the records reviewed by the affiant in

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violation of Fed.R.Civ.P. 56. Furthermore it is incomplete. It does not explain how many times

class members were contacted and how. It cannot be the basis for a summary judgment that

defendants’ practices were immaterial.

V. Plaintiff Has Article III Standing

Even though this case was filed over five years ago and has been to the Seventh Circuit

twice, defendants raise the question of standing for the first time in their motion for summary

judgment. They do so without citing any case in which a court has held that a plaintiff asserting

informational injury under the FDCPA did not have Article III standing. Following the principles

articulated in Spokeo, there have been dozens of post-Spokeo decisions finding that a plaintiff

asserting an informational injury under the FDCPA did have Article III standing.3 There is no

3 See, Church v. Accretive Health, Inc., 654 Fed. Appx. 990 (11th Cir. 2016); Blaha

v. First Nat’l Collection Bureau, Inc., 2016 U.S. Dist. LEXIS 157575 (D.N.J. Nov. 10, 2016);

Daubert v. NRA Group, LLC, 2016 WL 4245560 (M.D.Pa. Aug. 11, 2016); George v. Wright,

Lerch & Litow, LLP Attorneys at Law, 2016 WL 6963990 (S.D.Ind. Nov. 29, 2016); Everett v.

Fin. Recovery Servs., Inc., 2016 WL 6948052 (S.D.Ind. Nov. 28, 2016); Zirogiannis v. Seterus,

Inc., 2:15-cv-05884-SJF-ARL, 2016 WL 7410541 (E.D.N.Y Nov. 28, 2016); Paz v. Portfolio

Recovery Associates, LLC, 2016 WL 6833932 (N.D.Ill. Nov. 21, 2016); Evans v. Portfolio

Recovery Associates, LLC, 2016 WL 6833930 (N.D.Ill. Nov. 20, 2016); Allah Mensah v. Law

Office of Patrick M. Connelly, P.C., 2016 WL 6803775 (D.Md. Nov. 17, 2016); Bowse v.

Portfolio Recovery Associates, LLC, 2016 WL 6476545 (N.D.Ill. Nov. 2, 2016); Munoz v.

California Bus. Bureau, Inc., 2016 WL 6517655 (E.D.Cal. Nov. 1, 2016); Hill v. Accounts

Receivable Servs., LLC, 2016 WL 6462119 (D.Minn. Oct. 31, 2016); Hayes v. Convergent

Healthcare Recoveries, Inc., 2016 WL 5867818 (C.D.Ill. Oct. 7, 2016); Macy v. GC Servs. Ltd.

P’ship, 2016 WL 5661525 (W.D.Ky. Sept. 29, 2016); Janetos v. Fulton Friedman & Gullace,

LLP, No. 12 C 1473, Slip Op. (N.D.Ill. Sept. 21, 2016); Saenz v. Buckeye Check Cashing of

Illinois, 2016 WL 5080747 (N.D.Ill. Sept. 20, 2016); Linehan v. Allianceone Receivables Mgmt.,

Inc., 2016 WL 4765839 (W.D.Wash. Sept. 13, 2016); Carrington Mortg. Servs., LLC v. Dye,

2016 WL 4766484 (M.D.Ga. Sept. 12, 2016); Sayles v. Advanced Recovery Sys., Inc., 2016 WL

4522822 (S.D.Miss. Aug. 26, 2016); Hall v. Glob. Credit & Collection Corp., 2016 WL 4441868

(M.D.Fla. Aug. 23, 2016); Mogg v. Jacobs, 2016 W 4395899 (S.D.Ill. Aug. 18, 2016); Prindle v.

Carrington Mortg. Servs., LLC, 2016 WL 4369424 (M.D.Fla. Aug. 16, 2016); Quinn v.

Specialized Loan Servicing, LLC, 2016 WL 4264967 (N.D.Ill. Aug. 11, 2016); Irvine v. I.C. Sys.,

Inc., 2016 WL 4196812 (D.Colo. July 29, 2016); McCamis v. Servis One, Inc., 2016 WL

4063403 (M.D.Fla. July 29, 2016); In re Robinson, 554 B.R. 800 (W.D.La.Bankr. 2016);

Dickens v. GC Servs. Ltd. P’ship, 2016 WL 3917530 (M.D.Fla. July 20, 2016); Lane v. Bayview

Loan Servicing, LLC, 2016 WL 3671467 (N.D.Ill. July 11, 2016); Tourgeman v. Collins Fin.

Servs., Inc., 2016 WL 3919633 (S.D.Cal. June 16, 2016); Nyberg v. Portfolio Recovery

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doubt under Spokeo and other long standing precedent that plaintiff has sufficiently alleged a

cognizable informational injury—the denial of his right to truthful information—for standing

purposes.

In Spokeo, the Court confirmed that informational injury—being denied access to

information to which an individual is entitled—is a concrete injury under Article III. See 136 S.

Ct. at 1549–50. And, the Court made clear, the denial of that information is on its own sufficiently

concrete; “a plaintiff in such a case need not allege any additional harm beyond the one Congress

has identified.” Id. at 1549.

In support of this principle, the Court reaffirmed its past precedents, citing Public Citizen v.

U.S. Department of Justice, 491 U.S. 440, 449 (1989), which held the plaintiff had standing to

challenge the Justice Department’s failure to provide access to information, the disclosure of

which was required by the Federal Advisory Committee Act. The inability to obtain such

information, the Court explained there, “constitutes a sufficiently distinct injury to provide

standing to sue.” Id. at 449. Similarly, the Spokeo Court invoked Federal Election Comm’n v.

Akins for a similar point, “confirming that a group of voters’ ‘inability to obtain information’ that

Congress had decided to make public is a sufficient injury in fact to satisfy Article III.” Spokeo,

136 S. Ct. at 1549–50 (citing Akins, 524 U.S. 11, 20–25 (1998)).

The Supreme Court has recognized this form of injury for more than three decades. In

Akins, the Court held that “a plaintiff suffers an ‘injury in fact’ when the plaintiff fails to obtain

information which must be publicly disclosed” 524 U.S. at 21. Akins in turn cited Havens Realty

Corp. v. Coleman, in which the Court held that a housing-discrimination “tester” had standing

based on a violation of “[his] statutorily created right to truthful housing information.” 455 U.S.

363, 374 (1982); see also, Village of Bellwood v. Dwivedi, 895 F.2d 1521, 1525-1527 (7th Cir.

1990). A “tester who has been the object of a misrepresentation made u n l a w f u l u n d e r

[ t h e s t a t u t e ] h a s suffered injury in precisely the form the statute was intended to guard

Associates, LLC, 2016 WL 3176585 (D.Or. June 2, 2016).

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against, and therefore has standing.” Havens, 455 U.S. at 373–74. So too here. Plaintiff has shown

that he was “the object of a misrepresentation made unlawful under” § 1692e and § 1692f of the

FDCPA. Id. Indeed, the case for standing is stronger here than in Havens; whereas the tester in

Havens “fully expect[ed] that he would receive false information,” id., Plaintiff had no reason to

believe defendants would omit material facts about the legal status of the debt and the

consequences of payment. Accordingly, plaintiff “has suffered injury in precisely the form the

statute was intended to guard against, and therefore has standing.” Id., Carlson, 837 F.3d 753 (7th

Cir. 2016); Janetos, supra, 825 F.3d at 319.

Contrary to defendants’ claims, class members do not each have to individually

demonstrate they have standing to assert the claim. Bernal v. NRA Group, LLC, 318 F.R.D. 64,

71-72 (N.D. Ill. 2016).

VI. Class Members Are Entitled To a Judgment For Amounts Paid 

After Receipt of the Violative Letters

Plaintiff seeks actual damages for class members who paid after receiving the violative

letter from defendants. Defendants argue that plaintiff cannot show any payment made resulted

from the violative letter. (Def. Mem., p. 21). However, it is highly unlikely that a class member

who failed to pay during the five year pendency of the statute of limitations would have paid

subsequently, but for the receipt of the dunning letter. 

As discussed above, the fact that the debt is out of statute is material. It can be inferred that

the class members who paid defendants after receipt of collection letters containing a material

omission, did so because of the collection letter. Vasquez v. Superior Court, 484 P.2d 964 (Cal.

1971). The fact of reliance upon alleged false representations may be inferred from the

circumstances attending the transactions which often times afford much stronger and more

satisfactory evidence of the inducement. 

When representations have been made in regard to a material matter and action has been

taken, in the absence of evidence showing the contrary, it will be presumed that the

representations were relied on. . . It is sufficient for our present purposes to hold that if the

trial court finds material misrepresentations were made to the class members, at least an

inference of reliance would arise as to the entire class.” (Vasquez at 973)

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Accord, Skalbania v. Simmons, 443 N.E.2d 352 (Ind. App. 1982).

Similarly under federal law, in cases involving a material omission, it is only necessary to

establish that the facts withheld are material in the sense that a reasonable person might have

considered them important in the making of his decision. Affiliated Ute Citizens of Utah v. U.S. 406

U.S. 128 (1972). “When a defendant’s fraud consists primarily of omissions, requiring plaintiff to

show a speculative set of facts, i.e., how he would have behaved if omitted material information

had been disclosed places an unrealistic evidentiary burden on the 10b plaintiff.” In Re Smith

Barney Transfer Agent Litigation, 290 F.R.D. 42, 47 (S.D.N.Y. 2013)(internal citations

omitted). Similarly, Rikos v. Procter & Gamble Co., 799 F.3d 497 (6th Cir. 2015), held:

causation as to each class member is commonly proved more likely than not by

materiality. That showing will undoubtedly be conclusive as to most of the class. Thus

plaintiffs satisfy their burden of showing causation as to each by showing materiality to all.

If the trial court finds material misrepresentations were made to the class members, at least

an inference of reliance would arise as to the entire class.” Id at 513. (internal citations

omitted). 

The notion that plaintiff has to prove reliance based on an omission of a material fact

“ignores case law which permits the presumption or inference of reliance and causation, where

omission of material facts are common to the class . . . in the context of both common law and

statutory fraud.” Strzakowiski v. General Motors Corp., 04cv4740, 2005 WL 2001912, *9 (D.N.J.

Aug. 16, 2005)(citing Varacallo v. Massachusetts Mutual Life Ins. Co., 332 N.J. Super. 31, 752

A.2d 807, 817(App. Div. 2000)); Patterson v. BP America Production Co., 240 P.3d 456 (Col.

2010)(“presuming or inferring reliance is particularly compelling when there is evidence that a

defendant intentionally withheld information to induce the very action that plaintiffs too.”).

Class members are entitled to a judgment against defendants for the amount they paid after

receipt of the Letter.

VII. LVNV Is a Debt Collector Liable for the Acts of Resurgent and its Agent in Sending

Collection Letters Which Violate the FDCPA

Defendants assert that LVNV is not liable here without even mentioning the Seventh

Circuit opinion in Janetos, supra. Janetos held that a debt collector is liable for violations of the

FDCPA committed by others on its behalf, stating: “A debt collector should not be able to avoid

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liability for unlawfully contracting with another company to do what the law does not allow it to do

for itself.” LVNV is a debt collector and is liable for the debt collection activities of its agents.

Contrary to defendants contention, LVNV does not just “hold the ownership rights of

purchased debt”. (Def. Mem., 25) LVNV admits: (i) that LVNV is engaged in the business of

purchasing or acquiring, or claiming to purchase or acquire, allegedly defaulted debts originally

owed to others and incurred for personal, family, or household purposes [Response to Plaintiff’s

Statement of Material Facts including Statements in Genuine Dispute, Mitchell v. LVNV Funding,

No. 2:12-cv-00523-TLS-APR (N.D. Ind.)(Dkt# 155)(“Mitchell SMF”)(Exhibit 4) ¶7]; (ii) LVNV

purchases portfolios of both domestic (U.S.) and international consumer debt from credit grantors

including banks, finance companies, and other debt buyers; (Mitchell SMF ¶8); (iii) LVNV

outsources the management (collection) of purchased debts to Resurgent (Mitchell SMF ¶9); (iv)

Resurgent is the master servicing agent for LVNV Funding and Resurgent holds limited power of

attorney for LVNV Funding (Mitchell SMF ¶10); (v) LVNV provides Resurgent with a limited

power of attorney to manage and work its inventory (Answer ¶23; Mitchell SMF ¶12); (vi)

Defendant Resurgent operates as a collection agency and holds one or more collection agency

licenses (Answer ¶15; Mitchell SMF ¶13); (vii) Resurgent does not own any debts, but merely acts

as a master servicer for debt collection purposes (Mitchell SMF ¶13); (viii) Resurgent collects

debts on behalf of LVNV directly, or in many cases, will outsource the recovery activities to other

specialized, licensed collection agencies (Mitchell SMF ¶14; Defendants’ Rule 56.1 Statement of

Material Facts, Dkt #237, ¶9); (ix) Defendant Resurgent uses the mails and telephones to collect

debts (Mitchell SMF ¶15); (x) LVNV is the plaintiff in thousands of collection lawsuits filed in

Cook County Illinois alone (Mitchell SMF ¶16); (xi) LVNV and Resurgent are affiliated with

Sherman Financial Group. (Mitchell SMF ¶11; Answer ¶27).

A debt collector as defined under the FDCPA includes “any person whose principal

purpose is to collect debts . . . .” 15 U.S.C. §1692a(6). LVNV buys bad debts and refers them to its

debt collector agent Resurgent who refers them for collection to third parties. LVNV receives any

money collected by its agent debt collectors and sues in its name to collect if other debt collection

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pressures are unsuccessful. LVNV is a debt collector.

Indeed, LVNV has previously admitted that it “is a ‘debt collector’ as defined by the

FDCPA because it purchases or services thousands of alleged consumer debts after those debts are

in default with the putative original creditor. LVNV attempts to collect these debts directly, or

indirectly through debt collection law firms or services [sic] who make collection phone calls,

send collection letters, or otherwise collect putative consumer debts.” Exhibit 5.

The cases that defendants cite for the proposition that LVNV is only liable if it sends the

collection letter are not good law in light of Janetos.

LVNV then cites Henson v. Santander Consumer USA, Inc., 817 F.3d 131, 135 (4th Cir.

2016), cert. granted, 137 S. Ct. 810, 196 L. Ed. 2d 595 (2017) for the proposition that it is not a

debt collector because it owns the debts. That is not the relevant question here though. Henson

expressly notes that “whether a person qualifies as a debt collector under the threshold definition

set forth in 15 U.S.C. § 1692a(6). . .is ordinarily based on whether a person collects debt on behalf

of others or for its own account, the main exception being when the “principal purpose” of the

person's business is to collect debt.” (Emphasis added) LVNV falls under the exception.

Santander is a loan company that actually originates loans and purchases active portfolios of loans

that contain a small percentage of loans in default. LVNV’s principal (indeed only) purpose is to

buy debts and collect on them. 

VI. CONCLUSION

For the foregoing reasons, plaintiff respectfully urges the Court to deny defendants’ crossmotion for summary judgment on liability.

Respectfully submitted,

s/ Tiffany N. Hardy

Tiffany N. Hardy

Daniel A. Edelman

Cathleen M. Combs

Tiffany N. Hardy

EDELMAN, COMBS, LATTURNER 

& GOODWIN, L.L.C.

20 S. Clark Street, Suite 1500

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Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX) (may use for service of pleadings)

Email address for service: courtecl@edcombs.com

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CERTIFICATE OF SERVICE

I, Tiffany N. Hardy, hereby certify that on June 16, 2017, I caused to be filed the foregoing

document via the CM/ECF System, which caused notification of such filing to be sent to the

following parties via electronic mail:

Nabil G. Foster

nfoster@hinshawlaw.com

Hinshaw & Culbertson, LLP

222 North LaSalle Street

Suite 300

Chicago, IL 60601

David M. Schultz

dschultz@hinshawlaw.com

Hinshaw & Culbertson, LLP

222 North LaSalle Street

Suite 300

Chicago, IL 60601

Jennifer W. Weller

jweller@hinshawlaw.com

Hinshaw & Culbertson, LLP

222 North LaSalle Street

Suite 300

Chicago, IL 60601

s/ Tiffany N. Hardy

Tiffany N. Hardy

Daniel A. Edelman

Cathleen M. Combs

 Tiffany N. Hardy

EDELMAN, COMBS, LATTURNER 

& GOODWIN, L.L.C.

20 S. Clark Street, Suite 1500

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX) (may use for service of pleadings)

Email address for service: courtecl@edcombs.com

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