UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

SCOTT MCMAHON, on behalf of )

plaintiff and the classes defined herein, )

)

Plaintiff, )

)

vs. ) 12 C 1410

)

LVNV FUNDING, LLC, RESURGENT )

CAPITAL SERVICES, L.P.; ALEGIS )

GROUP, LLC; and TATE & KIRLIN )

ASSOCIATES, INC., )

)

Defendants. )

MEMORANDUM OPINION

CHARLES P. KOCORAS, District Judge:

This matter comes before the Court on Plaintiff Scott McMahon’s(“McMahon”)

motion for leave to file additional authority and motion to reconsider our prior order

dismissing his class-wide claims. For the reasons set forth below, McMahon’s motion

for leave to file additional authority is granted, though his motion to reconsider is

denied. The Court grants McMahon leave to amend his complaint in a manner

consistent with this Opinion.

BACKGROUND

On February 28, 2012, McMahon filed a class-action complaint against

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

Case: 1:12-cv-01410 Document #: 49 Filed: 08/13/12 Page 1 of 8 PageID #:300
(“Resurgent”), Alegis Group, LLC, and Tate & Kirlin Associates Inc. (“Tate & Kirlin”)

(collectively, “Defendants”), alleging that they violated the Fair Debt Collection

Practices Act (“FDCPA”) by sending dunning letters to collect a time-barred debt. On

September 23, 2011, Defendants purchased McMahon’s fourteen year old debt from an

Illinois utility company. On December 19, 2011, Tate & Kirlin sent McMahon a letter

offering to “settle [his] account in full” for 40% of the balance. McMahon requested

validation of the debt, and Resurgent responded that McMahon’s account “was

previously sold by Nicor Gas on or about 09-23-2011” without disclosing that the debt

had been incurred in 1997. The four-year statute of limitations for the collection of

McMahon’s debt had long since lapsed. See 810 ILCS 5/2-725.

On July 5, 2012, the Court issued a Memorandum Opinion (the “July 5th

Opinion”) dismissing McMahon’s class-wide claims. McMahon v. LVNV Funding,

LLC, No. 12 C 1410, 2012 WL 2597933, at *4 (N.D. Ill. July 5, 2012). We held that

attempting to collect a time-barred debt without disclosing that the statute of limitations

had expired, without more, did not constitute a violation of the FDCPA as a matter of

law. Id. However, the Court allowed McMahon to proceed on his individual FDCPA

claims. Id. The Court found that Resurgent’s letter, which indicated the date that

Defendants purchased the debt while omitting that the debt had been incurred nearly

fifteen years earlier, plausibly suggested that Defendants had misrepresented the status

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or character of McMahon’s debt in violation of the FDCPA. Id. McMahon’s classwide claims did not contain similar allegations, but rather only alleged that Defendants’

attempts to collect on a time-barred debt without disclosing that the statute of

limitations had expired violated the FDCPA.

McMahon now invites the court to reconsider its holding with respect to the

dismissal of the class-wide allegations and seeksleave to introduce additional authority

to support his position.

LEGAL STANDARD

A motion to reconsider a non-final order is properly brought pursuant to Federal

Rule of Civil Procedure 54(b), which provides that such orders “may be revised at any

time before the entry of a judgment adjudicating all the claims and all the parties’ rights

and liabilities.” Fed. R. Civ. P. 54(b); see Galvan v. Norberg, No. 11-2319, slip op. at

13 n.3 (7th Cir. May 7, 2012). The decision to reconsider a previous ruling under Rule

54(b) is governed by the “law of the case” doctrine, whereby “a court generally should

not reopen issues decided in earlier stages of the same litigation” absent a “compelling

reason, such as a change in, or clarification of, law that makes clear that the earlier

ruling was erroneous.” United States v. Harris, 531 F.3d 507, 513 (7th Cir. 2008)

(citations omitted); see Minch v. City of Chi., 486 F.3d 294, 301 (7th Cir. 2007).

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Although a court maintains the discretion to revisit its prior holdings, it does so with a

presumption against reopening matters already decided. Minch, 486 F.3d at 301.

DISCUSSION

McMahon identifies two perceived deficiencies with the Court’s July 5th

Opinion. First, McMahon maintains that the Court erred by not granting deference to

a complaint and consent decree entered into by the Federal Trade Commission (the

“FTC”) and Asset Acceptance, LLC (“Asset Acceptance”), an unrelated debt collector,

in the Middle District of Florida. See United States of America v. Asset Acceptance,

LLC, No. 8:12-cv-182-T-27EAJ (M.D. Fla. 2012). The Court declined to grant

deference to the complaint or the consent decree because the FTC did not outline the

reasoning, methodology, or factual predicate of its position in the litigation. See

Arobelidze v. Holder, 653 F.3d 513 (7th Cir. 2011) (explaining that the persuasiveness

of an agency’s position is based upon “‘the thoroughness evident in its consideration,

the validity of its reasoning, its consistency with earlier and later pronouncements, and

all those factors which give it power to persuade, if lacking power to control’”) (quoting

Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). The Asset Acceptance complaint

and the consent decree merely delineated the FTC’s stance on the conduct of Asset

Acceptance, a single non-party defendant. The FTC’s position regarding the conduct

of a non-party defendant in a different jurisdiction is unpersuasive in a private suit

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against a wholly unrelated debt collector, particularly when the current state of the law

in this district is well-settled. See e.g., Murray v. CCB Credit Servs., Inc., 2004 WL

2943656, at *2 (N.D. Ill. Dec. 15, 2004) (stating that attempting to collect on a timebarred debt without disclosing that the statute of limitations has expired is not a

violation of the FDCPA absent an accompanying threat of litigation); Walker v. Cash

Flow Consultants, Inc., 200 F.R.D. 613, 616 (N.D. Ill. 2001) (same).

McMahon correctly points out that other courts have granted deference to agency

interpretations of statutes as expressed in consent decrees and requests that the Court

reconsider its interpretation of two such cases. First, in Ramson v. Layne, the court was

confronted with whether advertisement endorsers could be held liable under the Illinois

Consumer Fraud and Deceptive Practices Act. 668 F. Supp. 1162, 1165-69 (N.D. Ill.

1987). In the absence of any clear case law to guide its analysis, the Court granted

some deference to the FTC’s position regarding the liability of endorsers under the

Federal Trade Commission Act (“FTC Act”). Id. at 1168. The court observed that the

FTC had filed several complaints against endorsers under the FTC Act and entered into

consent orders in every such case. Id. Here, in contrast, McMahon asks us to stray

from well-settled case law based upon a single consent decree filed in a different

jurisdiction without a sufficient legal justification for the FTC’s position. Next,

McMahon cites to United States SEC v. Blackwell, where the court granted deference

to a consent order entered into between the SEC and an unrelated party. 291 F. Supp.

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2d 674, 694 (S.D. Ohio 2003). In doing so, the court observed that there was “a paucity

of jurisprudence that squarely addresse[d]” the issue before the court. Id. Here, courts

in this district (and two circuit courts) have spoken directly on the issue McMahon

seeks to raise in his lawsuit. Therefore, the Court remains unpersuaded by McMahon’s

legal authority.

McMahon also seeks leave to bolster his argument with more recently decided

case law, which the Court now considers. In Kline v. Mortg. Elec. Registration Sys.,

Inc., a district court in Ohio granted deference to the FTC and the Consumer Financial

Protection Bureau’s interpretation of the FDCPA. No. 3:08cv408, 2012 WL 1376995

(S.D. Ohio Apr. 19, 2012). The agencies’ position was expressed in an amicus curiae

brief in an unrelated case before the Supreme Court. Id. at *2-3. The amicus brief set

forth the statutory and precedential justification for the agencies’ position. Id. at *3.

Here, on the other hand, neither the Asset Acceptance consent decree nor the complaint

provide any insight into the legal basis for the FTC’s position on the very narrow issue

presented by McMahon. Moreover, McMahon’s additional authority from the Southern

District of Ohio does not suggest a change in the controlling law sufficient to override

the presumption against revisiting an earlier decision under the law of the case doctrine.

Accordingly, the Court is not persuaded that it erred in declining to give deference to

the Asset Acceptance complaint and consent decree.

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Second, McMahon requests that the Court alter the portion of the July 5th

Opinion dismissing his class-wide allegations. McMahon’s complaintsought to include

a class composed entirely of those individuals to whom Defendants sent dunning letters

to collect on time-barred debt. The Court held that without more, this conduct does not

violate the FDCPA as a matter of law. McMahon, 2012 WL 2597933 at *4. McMahon

now asks the Court to reconsider this decision, claiming that there may exist a class of

personsto whom Defendantssent letterssimilar to the one Resurgentsent to McMahon:

a letter citing the date that Defendants purchased the debt while omitting the date that

the debt was incurred. As discussed in the July 5th Opinion, such allegations are

sufficient to survive a motion to dismiss. See id. However, McMahon’s class-wide

claims make no such allegations, and the Court declines to disturb its prior Order

dismissing those claims asthey were pleaded. Nevertheless, the Court grants McMahon

leave to amend his complaint to include class-wide allegations that incorporate this

theory of liability.

McMahon also seeks leave to pursue his class claims on the theory that it is

misleading for a debt collector to send a dunning letter offering a “settlement” that

represents a “savings . . . off your balance” on a time-barred debt. McMahon contends

that Defendants offer of a “settlement” implied that McMahon had a legally enforceable

obligation to pay the debt. McMahon alleges that this was misleading because the

statute of limitations on the debt had expired and Defendants had no cognizable claim

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to recover on the debt. Whether a settlement offer in a dunning letter is deceptive is a

fact-intensive question that is generally not resolvable at the pleadings stage of a

lawsuit. See DeKoven v. Plaza Associates, 599 F.3d 578, 580 (7th Cir. 2010); Evory

v. RJM Acquisitions Funding, L.L.C, 505 F.3d 769, 775-76 (7th Cir. 2007). In this case,

an unsophisticated consumer may be deceived into believing that the offer of a

“settlement” implies that there is a legally enforceable obligation to pay the debt. The

lack of any case law to the contrary, coupled with the Seventh Circuit’s reticence to

resolve questions concerning the confusing nature of a dunning letter at the pleadings

stage, plausibly suggests that the offer of settlement on a time-barred debt may violate

the FDCPA.

CONCLUSION

In light of the foregoing, McMahon’s motion for leave to file supplemental

authority is granted, although his motion to reconsider our earlier dismissal of his classwide claims is denied. McMahon is granted leave to amend his complaint in a manner

consistent with this Opinion.

Charles P. Kocoras

United States District Judge

Dated: August 13, 2012

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