IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION

LINDA RICE, ) 

 ) 

 Plaintiff, ) 

 ) 

 v. ) Case No. 12-cv-1395 

 ) 

MIDLAND CREDIT MANAGEMENT, INC., ) Judge Robert M. Dow, Jr. 

MIDLAND FUNDING, LLC, and ENCORE ) 

CAPITAL GROUP, INC formerly known as ) 

MCM CAPITAL GROUP, INC., ) 

 ) 

 Defendants. ) 

MEMORANDUM OPINION AND ORDER 

 Upon consideration of the parties’ supplemental briefs [80, 81], Plaintiff’s notice of 

additional authority [82], and the recent decisions in McMahon v. LVNV Funding LLC, 744 F.3d 

1010 (7th Cir. 2014), and Buchanan v. Northland Group, Inc., --- F.3d ---, 2015 WL 149528, 

(6th Cir. Jan. 13, 2015), the Court grants Plaintiff’s motion for reconsideration [67], vacates its 

memorandum opinion and order of March 20, 2013 [61], and directs the parties to proceed with 

discovery in this case. The parties are directed to confer and to submit a proposed discovery plan 

by 2/5/2015. The Court will set the case for a further status hearing after reviewing the proposed 

discovery plan. 

I. Background 

Plaintiff Linda Rice alleges that Defendants, who are debt collectors, sent her a series of 

letters beginning in April 2011. The letters offered Plaintiff an opportunity to “settle your 

account” with monthly payment plans that discount the alleged debt. Compl., Exs. A, C, D. The 

last payment on the alleged debt was on January 19, 2006. The statute of limitations on a credit 

card bill in Illinois, where Plaintiff resides, is five years. The letters did not state when Plaintiff 
2 

incurred the debt, nor did they disclose that enforcement of the debt was time-barred. Plaintiff 

alleges that the letters violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692e, 

1692e(2), 1692e(10), and 1692f. 

The Court granted Defendants’ motion to dismiss [61], and Plaintiff moved the Court to 

reconsider [67]. The Court granted the motion to reconsider in part [76] and stayed the litigation 

in light of two pending appeals, which the Seventh Circuit consolidated and decided in 

McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1012 (7th Cir. 2014). Based on the reasoning 

and outcome in McMahon, the Court grants Plaintiff’s motion to reconsider and reinstates the 

case. 

II. Analysis 

 The FDCPA provides that “[a] debt collector may not use any false, deceptive, or 

misleading representation or means in collection of any debt.” 15 U.S.C. § 1692e. Section 

1692e prohibits the false representation of “the character, amount, or legal status of any debt,” 

among other things. 15 U.S.C. § 1692e(2)(A). Section 1692f further prohibits debt collectors 

from using “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. 

§ 1692f. In deciding whether a dunning letter violates § 1692e or § 1692f, the court asks 

“whether a person of modest education and limited commercial savvy would be likely to be 

deceived.” McMahon, 744 F.3d at 1019 (quoting Evory v. RJM Acquisitions Funding L.L.C., 

505 F.3d 769, 774 (7th Cir. 2007)). In other words, the court views the letter from the 

perspective of “unsophisticated consumer.” McMahon, 744 F.3d at 1019 (citing Lox v. CDA, 

Ltd., 689 F.3d 818, 822 (7th Cir. 2012)). 

McMahon addressed two letters from debt collectors, both of which offered to settle 

debtors’ accounts at a discount. Neither letter stated when the debt was incurred, nor did they 
3 

disclose that enforcement of the debt was time-barred under Illinois’s statute of limitations. The 

Seventh Circuit found that “[w]hether a debt is legally enforceable is a central fact about the 

character and legal status of that debt,” and concluded that “it is plausible that an unsophisticated 

consumer would believe a letter that offers to ‘settle’ a debt implies that the debt is legally 

enforceable.” McMahon, 744 F.3d at 1020. More specifically, it explained that “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.” Id. at 

1022. 

 In finding dismissal inappropriate, the Seventh Circuit explained that “[w]hether a 

dunning letter is confusing is a question of fact,” adding that dismissal was appropriate “only 

when it is apparent from a reading of the letter that not even a significant fraction of the 

population would be misled by it.” McMahon, 744 F.3d at 1020 (citations and internal quotation 

marks omitted). The Court explained its hesitation to permit dismissal at the pleadings stage by 

pointing to the FTC’s empirically based conclusion that “most consumers do not understand their 

legal rights with respect to time-barred debts.” McMahon, 744 F.3d at 1021 (citing Fed. Trade 

Comm’n, Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and 

Arbitration, 26–27 (2010)). 

 The Seventh Circuit noted that its decision conflicted with decisions of the Third and 

Eighth Circuits, which this Court discussed in its previous Opinion and Order. McMahon, 744 

F.3d at 1020 (citing Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 33 (3d Cir. 2011) and 

Freyermuth v. Credit Bureau Servs., Inc., 248 F.3d 767, 771 (8th Cir. 2001)). In Huertas, the 
4 

Third Circuit held that a plaintiff’s FDCPA claim regarding an attempt to collect a time-barred 

debt “hinges on whether [the dunning] letter threatened litigation.” Huertas, 641 F.3d at 33. In 

Freyermuth, the Eighth Circuit held that a dunning letter attempting to collect a time-barred debt 

does not violate the FDCPA “in the absence of a threat of litigation or actual litigation.” 

Freyermuth, 248 F.3d at 771. The Seventh Circuit departed from both of those decisions, 

finding that “[m]atters may be even worse if the debt collector adds a threat of litigation, see 15 

U.S.C. § 1692e(5), but such a threat is not a necessary element of a claim.” McMahon, 744 F.3d 

at 1020; see also id. at 1022 (“we conclude that an unsophisticated consumer could be misled by 

a dunning letter for a time-barred debt, especially a letter that uses the term ‘settle’ or 

‘settlement’”) (emphasis added). It added that, if anything, an offer to settle reinforced the 

misleading impression that the debt was legally enforceable “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.” McMahon, 744 F.3d at 1021; see St. Francis Med. Ctr. 

v. Vernon, 217 Ill. App. 3d 287, 289 (5th Dist. 1991) (“It is clear that part payment of a debt tolls 

the statute of limitations such that it commences to run from the date of last payment.”) 

 After the Seventh Circuit decided McMahon, the Sixth Circuit found dismissal 

inappropriate on similar facts in Buchanan v. Northland Grp., Inc., No. 13-2523, 2015 WL 

149528 (6th Cir. Jan. 13, 2015). Like the Seventh Circuit, the Sixth Circuit emphasized that 

whether a letter is misleading raises a question of fact that discovery might elucidate and that the 

letter at issue gave rise to a plausible FDCPA claim, permitting plaintiff to proceed to discovery. 

Id. at *3-*4. It also found dismissal at the pleadings stage premature because the FTC is 

sometimes in a better position to determine when a practice is deceptive within the meaning of 

the Federal Trade Commission Act, particularly “when it comes to factual plausibility in a 
5 

setting that may turn as much on empirical data as on anything else.” Buchanan, 2015 WL 

149528, at *4. 

McMahon instructs against dismissal of this case. Although the dunning letters sent by 

Defendant here are not identical to those sent in McMahon, they have in common the following 

characteristics: both offered to settle a debt at a discount, neither stated when the debt was 

incurred, and neither disclosed that enforcement of the debt was time-barred. In light of 

McMahon, the letters at issue here plausibly could have caused an unsophisticated consumer to 

believe that the debt was legally enforceable, giving rise to an FDCPA claim that survives 

Defendants’ motion to dismiss. Discovery and developments in the agencies’ empirical work 

may shed further light on whether the letters were misleading within the meaning of the FDCPA. 

But for now, in FDCPA cases like this one “it suffices to say that parties who wish to present 

evidence in support of their claim usually will be given an opportunity to do so, making 

summary judgment, not a motion to dismiss, the relevant time for ascertaining whether the claim 

should be resolved as a matter of law.” Buchanan, 2015 WL 149528, at *4. 

III. Conclusion 

 For the reasons stated above, the Court grants Plaintiff’s motion for reconsideration [67], 

vacates its memorandum opinion and order of March 20, 2013 [61], and directs the parties to 

proceed with discovery in this case. The parties are directed to confer and to submit a proposed 

discovery plan by February 5, 2015. The Court will set the case for a further status hearing after 

reviewing the proposed discovery plan. 

Dated: January 22, 2015 ___________________________________ 

 Robert M. Dow, Jr. 

 United States District Judge