UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

ERIN JOHNSON, on behalf of plaintiff )

and a class, )

)

Plaintiff, )

)

 vs. ) 2:16CV330-PPS

)

ENHANCED RECOVERY COMPANY, LLC, )

)

Defendant. )

OPINION AND ORDER

In this certified class action, the plaintiff class alleges that a dunning letter sent by

defendant Enhanced Recovery Company, LLC was false, misleading or confusing in

violation of the Fair Debt Collection Practices Act. The parties have filed cross-motions

for summary judgment, putting before me the question whether the claim can be

decided as a matter of law based on undisputed facts, without a trial. Neither party has

requested a jury trial, so the matter would ultimately be decided by me even if I found

that material disputes of fact preclude summary judgment. 

Summary judgment must be granted when “there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P.

56(a). A genuine issue of material fact exists when “the evidence is such that a

reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). Not every dispute between the parties makes

summary judgment inappropriate: “[o]nly disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude the entry of

summary judgment.” Id.

Undisputed Facts

ERC is an accounts receivable management company that provides debt

collection services for its clients, one of which is Sprint, the wireless telephone and

internet service provider. [DE 63-1 at 5,6.] ERC received the collection account of

plaintiff Erin Johnson with Sprint on March 6 or 7, 2016. [DE 63-1 at 17.] Johnson has

never used a cell phone for other than personal use, and therefore the debt on her

account with Sprint was not incurred for business purposes. [DE 63-2 at 27.] 

ERC sent Johnson three collection letters concerning her Sprint account. The

initial collection letter was sent by ERC on March 8, 2016. Here’s what it said in relevant

part:

Upon receipt and clearance of $1,094.72 [full balance of debt], your

account will be closed and collection efforts will cease.

This letter serves as notification that your delinquent account may

be reported to the national credit bureaus. 

[DE 65-1 at 4.] 

A second letter dated April 21, 2016 is the focus of this lawsuit. Johnson did not

receive the April 21 letter until May 5, 2016. [DE 63-2 at 23.] The pertinent portion of

the letter reads:

Our records indicate that your balance with Sprint remains unpaid;

therefore your account has been placed with ERC for collection efforts. 

We are willing to reduce your outstanding balance by offering discounted

options.

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Option 1: Pay the settlement of $875.78, please remit by May 26, 2016.

Option 2: Pay the settlement of $930.51, payable in 2 monthly payments of

$465.26.

Option 3: Pay the settlement of $985.25, payable in 3 monthly payments of

$328.42.

We are not obligated to renew this offer.

This letter serves as notification that your delinquent account may be

reported to the national credit bureaus.

Payment of the offered settlement amount will stop collection activity on this

matter....

Unless you dispute the validity of the debt, or any portion thereof, within

thirty (30) days after your receipt of this notice, the debt will be assumed

to be valid by us.

[DE 65-1 at 5] (emphasis added). The language I have emphasized in bold is what is at

issue in this case. 

ERC’s Senior Vice President of Compliance, Jason Davis, testified in his

deposition that “collection activity” as used in the letter meant that phone calls and

letters from ERC about the account would stop upon receipt of the full amount of the

debt, and if the debt had already been reported, full payment would result in updated

credit reporting to reflect that the debt had been paid in full or settled. [DE 63-1 at 3,

20.]

Depending on the client, ERC waits between 33 and 45 days after it sends the

first collection letter before reporting a debt to credit bureaus. [DE 63-1 at 12.] 

According to ERC’s policies, Johnson’s debt to Sprint became eligible for credit

reporting on April 21, 45 days after ERC received the account. [DE 63-1 at 22.] ERC

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first reported Johnson’s Sprint account debt to credit reporting agencies on April 24,

2016, more than a month before the earliest due date of the settlement options offered in

the April 21 letter. [DE 63-1 at 19.] 

Johnson testified that the April 21 letter was not clear whether her debt would be

reported or had already been reported. [DE 63 at ¶36.] Johnson interpreted the April 21

letter to mean that she could prevent the Sprint account from appearing on her credit

reports if she made a payment as requested in the letter, or disputed the debt within 30

days as referenced in the letter. [DE 63 at ¶38.] Recall that Johnson received the April

21 letter in early May. And the day after reading the April 21 letter, Johnson checked

her credit reports and found that the debt had already been reported. [DE 63-2 at 23.] 

She then disputed the debt to TransUnion and contacted an attorney. [Id. at 23-24.]

A third letter was sent to Johnson dated June 6, 2018. [DE 63-6 at 2.] The June 6

letter is largely identical to the April 21 letter, offering three settlement options (but for

lower amounts more favorable to the debtor than previously offered). [Id.]

Johnson did not submit any payment on her Sprint account, but on July 24, 2016,

ERC sent a “deletion” to the credit bureaus concerning Johnson’s account because ERC

had received notice of Johnson’s “lawsuit or pre-suit” disputing the debt. [DE 63-1 at

19.] Johnson never made any payments to ERC on the Sprint account, but does not

dispute the accuracy of the balance due on the account. [DE 63-2 at 25.] 

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Discussion

The claim arises under 15 U.S.C. §1692(e), which prohibits false or misleading

representations in connection with debt collection, and offers a non-exhaustive list of

more than a dozen examples of impermissible conduct. Lox v. CDA, Ltd., 689 F.3d 818,

822, 827 (7th

 Cir. 2012). A plaintiff bringing a §1692(e) claim is not required to prove that

she was misled to her detriment or that she suffered actual damages. Lox, 689 F.3d at

826; Muha v. Encore Receivable Mgmt., Inc., 558 F.3d 623, 629 (7th Cir. 2009). 

The determination whether a representation is false or misleading is made from

the perspective of what the Seventh Circuit calls an “unsophisticated consumer.” 

“[O]ur test for determining whether a debt collector violated §1692e is objective,

turning not on the question of what the debt collector knew but on whether the debt

collector’s communication would deceive or mislead an unsophisticated, but

reasonable, consumer.” Turner v. J.V.D.B. & Assoc., 330 F.3d 991, 995 (7th Cir. 2003). This

hypothetical person can be “uninformed, naive [and] trusting” but has basic knowledge

about the financial world and the ability to draw logical inferences and conclusions. 

Lox, 689 F.3d at 822 (quoting Veach v. Sheeks, 316 F.3d 690, 693 (7th Cir. 2003), and Wahl v.

Midland Credit Mgmt., 556 F.3d 643, 645 (7th Cir. 2009)). Because the “unsophisticated

consumer” standard is not so low as a “least sophisticated consumer” standard, a

collection letter is not misleading under §1692e — at least in the Seventh Circuit —

unless it is confusing to “a significant fraction of the population.” Lox, 689 F.3d at 822,

quoting Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572, 574 (7th Cir. 2004).

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The Seventh Circuit has grouped FDCPA cases alleging deceptive or misleading

statements into three categories. The first category of cases involve statements that on

their face are plainly not misleading or deceptive. Ruth v. Triumph Partnerships, 577 F.3d

790, 800 (7th Cir. 2009). In that sort of case, dismissal or summary judgment is granted

to the defendant without the need for extrinsic evidence of consumer confusion,

because even without such evidence the court can determine that “the statement

complied with the law.” Id. 

The second category of cases “involves statements that are not plainly

misleading or deceptive but might possibly mislead or deceive the unsophisticated

consumer.” Id. This is the category of claim where evidence is needed to prove that the

collection letter would likely deceive or mislead an unsophisticated, but reasonable,

consumer. In a case of this kind, the Court of Appeals has held “that plaintiffs may

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.” Id. See also Lox, 689 F.3d at 822. 

The third type of case described in Ruth is a lay down win for the plaintiff. These

are the cases where the collection letter includes plainly deceptive language. When

confronted with such a letter, a court can grant summary judgment to the plaintiff

“without requiring them to prove what is already clear.” Id.

Recall that Johnson’s claim is based on letter that she received from ERC dated

April 21 and which she received in early May. This was the second of three letters that

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she received from ERC. Johnson argues that this letter falls into the third category of

claims as discussed in Ruth — that the letter is plainly misleading on its face because it

falsely suggested that credit reporting could be prevented by timely payment of an

offered settlement amount. [DE 62 at 15.] The argument depends on Johnson’s

interpretation of the phrase “may be” in the notification “that your delinquent account

may be reported to the national credit bureaus,” and her interpretation of the

subsequent sentence advising that “[p]ayment of the offered settlement amount will

stop collection activity on this matter.” [DE 71-1 at 2.] ERC contends that the notice is

not plainly deceptive or misleading. Instead, ERC argues this is a category 2 case as

described in Ruth in which Johnson can only prevent summary judgment in ERC’s favor

by offering extrinsic evidence of consumer confusion or deception, which Johnson

admittedly does not have. 

Even with the understanding that credit bureau reporting is “collection activity”

within the meaning of the letter, the letter does not plainly indicate either that credit

bureau reporting has not yet taken place or that timely payment will prevent a report of

the debt to the national credit bureaus. A consumer might possibly construe the letter

to mean those things, but would not necessarily do so. It is also reasonable to construe

the letter as intended, namely as a notice that the delinquent account is subject to credit

reporting (which could occur or has already occurred), but that payment of an offered

settlement will impact any credit reporting (such as by an updated notice that the debt

has been resolved) as well as other collection efforts (such as additional dunning

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letters). The “delinquent account” language may reasonably be read as a statement

about eligibility for credit reporting but not a statement as to whether or not the

account has yet been reported. That the same notice about reporting to the national

credit bureaus appears in all three letters, both before and after the debt was reported,

supports this generic interpretation, because the language is then accurate in all three

letters both before and after actual reporting took place. 

In the second sentence of the challenged language, the phrase “stop collection

activity” cannot reasonably be read to mean “prevent collection activity” when the

language appears in a letter that is itself “collection activity.” Like the sentence about

credit reporting, this statement about stopping collection activity is accurate in all three

letters if understood to mean that resolution of the debt will stop further collection

activity, which for a debt already reported means an updated report reflecting that the

debt has been resolved. With respect to a debt already reported, because the word

“stop” connotes “bring to a halt” rather than “delete” or “reverse,” reasonable

interpretation includes action taken to reflect the satisfaction of the previously reported

debt. 

Johnson wrongly asserts that ERC ignores the three categories of Ruth to contend

that extrinsic evidence is always necessary to support a §1692(e) claim. [DE 75 at 2-3.] 

To the contrary, ERC expressly acknowledges that extrinsic evidence of consumer

confusion is required only in the one category of cases involving language that is not

confusing or misleading on its face but might be so to a significant fraction of the

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population. [DE 71 at 5, 7.] Johnson’s efforts to avoid an adverse summary judgment

depend on her misinterpretation of the standard for the second category of cases. The

first and third categories involve statements that are, on the one hand, plainly not

deceptive, or, on the other, plainly are deceptive, leaving the middle category as the

broader one encompassing statements that are only possibly deceptive. But Johnson

argues that the 7th Circuit has held that extrinsic evidence is not required of a consumerdebtor where a collection representation is “susceptible to two different constructions,

one of which is inaccurate.” [DE 75 at 5.] 

Veach v. Sheeks, one of the cases Johnson relies on for this proposition, is

distinguishable because it involves an actual misrepresentation as to the amount of the

debt, not a statement that is merely potentially confusing or misleading. Veach, 316 F.3d

at 693. Chuway v. National Action Financial Services, Inc., 362 F.3d 944, 948 (7th Cir. 2004),

also cited by Johnson, affirms the requirement of extrinsic evidence where “it is unclear

whether the letter would confuse intended recipients of it.” There, the Seventh Circuit

found that no extrinsic evidence was required to “create a triable issue” because to

understand the dunning letter’s confusing statement about the amount of the debt “one

has to be exceptionally ingenious.” Id. Chuway doesn’t support summary judgment in

Johnson’s favor here, where it is only “unclear whether the letter would confuse”

debtor-recipients. Id. In addition, both Veach and Chuway involve representations on a

matter – the amount of the debt – as to which the FDCPA contains a specific disclosure

requirement. Claims of noncompliance with such requirements under §1692g(a)(2) --

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rather than §1692(e) as here -- do not require extrinsic evidence of confusion. Janetos v.

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

Given the parties’ rival analyses, the case turns on whether the second category

of cases requiring extrinsic evidence encompasses those in which a collection

representation is ambiguous and one interpretation is accurate and the other false. 

Ruling on the previous motion to dismiss, I noted that the word “may” has two

different possible meanings in its context here – either “can” or “might in future.” [DE

27 at 9.] The former interpretation is espoused by ERC and, as a statement of the debt’s

eligibility for credit reporting, was true each time it was used in the three collection

letters. Johnson points out that if the word “may” is read as “might in future” then the

statement, when interpreted in conjunction with the next sentence about payment

stopping collection activity, might suggest that timely payment could prevent credit

reporting. 

Johnson cites Gonzalez v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1062 (9th Cir. 2011),

in support of the assertion that language with two reasonable interpretations, only one

of which is accurate, constitutes deception in violation of the FDCPA. First, Gonzalez

involves not merely misleading information, but a violation of the FDCPA by the

implied threat of collection action that is actually prohibited by law. Gonzalez, 660 F.3d

at 1062. There is no such circumstance here. More importantly, Gonzalez is a decision of

the Ninth Circuit, applying the “least sophisticated debtor” standard in determining

whether collections language is deceptive or misleading. Id. at 1061-62. This standard

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is different from the Seventh Circuit’s “unsophisticated consumer,” and inconsistent

with this circuit’s rubric of three categories of challenged language. This inconsistency

was noted by the Seventh Circuit in Lox. Lox, 689 F.3d at 822. Gonzalez cites decisions of

the Third, Sixth and Second Circuits to support its position. Id. at 1062. And like

Gonzalez, these decisions also identify the principle Johnson relies on as flowing from

the lower “least sophisticated debtor” standard that is inapplicable in the Seventh

Circuit. Brown v. Card Service Center, 464 F.3d 450, 454 (3rd Cir. 2006); Kistner v. Law

Offices of Michael P. Margelefsky, LLC, 518 F.3d 433, 441 (6th Cir. 2008); Russell v. Equifax

A.R.S., 74 F.3d 30, 34 (2nd Cir. 1996). 

In short, it appears that the Seventh Circuit is out of step with four other circuits

in the standard it uses in § 1692(e) cases. But that is neither here nor there for present

purposes. In a hierarchical system of courts, my job is to follow what my superiors tell

me, and the Seventh Circuit has made it abundantly clear that “the unsophisticateddebtor standard is an objective one and is not the same as the rejected leastsophisticated-debtor standard.” Durkin v. Equifax Check Services, Inc., 406 F.3d 410, 414

(7th

 Cir. 2005). 

In sum, I am persuaded that under the Seventh Circuit’s approach, ERC is correct

when it argues that the two possible interpretations require extrinsic evidence to

establish that a significant fraction of the population would be misled by the letter’s

language. [DE 71 at 5.] Because the language is not plainly deceptive, “the plaintiff

must come forward with evidence beyond the letter and beyond [her] own self-serving

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assertions that the letter is confusing in order to create a genuine issue of material

fact[.]” Durkin, 406 F.3d at 415. This extrinsic evidence can take the form of an

appropriately designed and conducted consumer survey or an appropriate expert

witness. Sims v. GC Services L.P., 445 F.3d 959, 963 (7th Cir. 2006) (citing Chuway, 362

F.3d at 948). Plaintiff lacks any such objective evidence, banking instead on her

assertion that the letter “is deceptive on its face.” [DE 62 at 15.] Now with all the

parties’ evidence and argument before me, I reject that position. Because I conclude

that the challenged statements in ERC’s letter are not plainly misleading or deceptive,

Johnson’s failure to offer extrinsic evidence that the language would confuse or mislead

a significant fraction of the population is fatal to her FDCPA claim. Sims, 445 F.3d at

963.

Conclusion

The delinquency notice provided by ERC presents the “normal case” in which a

plaintiff alleging a violation of the FDCPA for confusing or misleading statements

“must come forward with more than her own confusion as evidence.” McKinney v.

Cadleway Properties, Inc., 548 F.3d 496, 503 (7th Cir. 2008). Without a showing by extrinsic

evidence that the language Johnson cites “unacceptably increases the level of

confusion” such that “a significant fraction of the population would be similarly

misled,” ERC is entitled to judgment as a matter of law. Sims v. GC Servs. L.P., 445 F.3d

959, 963 (7th Cir. 2006) (internal quotation marks omitted). See also Gruber v. Creditors’

Protection Service, Inc., 742 F.3d 271, 274 (7th Cir. 2014) (“If not even a significant fraction

12
of the population would be misled by the debt collector’s letter, then dismissal is

required.” (internal quotation marks omitted)).

ACCORDINGLY:

Plaintiff Erin Johnson’s motion for summary judgment [DE 61] is DENIED.

Defendant Enhanced Recovery Company, LLC’s motion for summary judgment

[DE 64] is GRANTED.

The Clerk shall enter judgment in favor of defendant Enhanced Recovery

Company, LLC reflecting this ruling. 

SO ORDERED.

ENTERED: January 24, 2019.

 /s/ Philip P. Simon 

PHILIP P. SIMON, JUDGE

UNITED STATES DISTRICT COURT

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