Opinion ID: 3189403
Heading Depth: 2
Heading Rank: 3

Heading: FDCPA Venue Restriction

Text: Hageman argues Barton violated 15 U.S.C. § 1692i by registering the judgment and pursuing the garnishment order in Madison County, Illinois, a county where Hageman neither worked nor resided and which bore no relationship to the underlying debt. We conclude that § 1692i’s venue restriction does not apply to the simple act of registering a foreign judgment in Illinois or to proceedings pursuant to Illinois law to obtain a garnishment order against a debtor’s employer. 15 U.S.C. § 1692i(a) provides: Any debt collector who brings any legal action on a debt against any consumer shall . . . (2) in the case of an action not [to enforce an interest in real property securing the consumer’s obligation], bring such action only in the judicial district or similar legal entity (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action. -10- (Emphasis added). In addition, as already noted, the definitions section of the FDCPA defines “debt” to include obligations reduced to judgment. Id. § 1692a(5); supra n.5. The FDCPA, therefore, generally applies to efforts to collect upon judgment debts. The venue restriction of § 1692i, however, applies only to legal actions “on a debt against any consumer.” Id. As such, the applicability of § 1692i depends upon whether the registration of a foreign judgment and the garnishment proceedings pursuant to Illinois law are legal actions “against any consumer.” Id. Smith v. Solomon & Solomon, 714 F.3d 73 (1st Cir. 2013), cited by Barton, is the only circuit level case to fully address the question of whether the FDCPA’s venue provision restricts where a judgment creditor may register a judgment and effect garnishment. There, the First Circuit found the garnishment proceeding under examination was not an action “against any consumer.” Smith, 714 F.3d at 75 (quoting 15 U.S.C. § 1692i(a)). In Smith, a judgment creditor sought to effect garnishment in Massachusetts using a state garnishment regime in which suit is directed towards the employer, as a trustee, rather than against the debtor. Id. at 74. The First Circuit noted the details of the Massachusetts regime which, like the Illinois regime in the present case, provided for action against the employer/trustee with summons directed towards the employer/trustee and with an opportunity for the judgment debtor to raise defenses. Id. at 74–75. The court concluded, “Fundamentally . . . a Massachusetts trustee process action is geared toward compelling the trustee to act, not the debtor.” Id. at 76. The court also noted that express federal preemption language in the FDCPA preempted state laws only to the extent state laws were inconsistent with the FDCPA. The court found nothing inconsistent between the Massachusetts garnishment regime and the FDCPA because “[t]he original suit to collect on the debt occurred in a forum that was convenient for [the consumer debtor], and she had an opportunity to defend against it. She was not, in the words of Congress, ‘denied [her] day in court.’” Id. at -11- 76 (quoting S. Rep. No. 95-382 at 5 (1977), reprinted in 1997 U.S.C.C.A.N. 1695, 1699). And in reaching this conclusion, the court cited as additional support commentary from the Federal Trade Commission, which the court found persuasive but which the court acknowledged was not entitled to Chevron-level deference. See id. (“If a judgment is obtained in a forum that satisfies the requirements of [§ 1692i], it may be enforced in another jurisdiction, because the consumer previously has had the opportunity to defend the original action in a convenient forum.” (quoting Statements of General Policy or Interpretation Staff Commentary On the Fair Debt Collection Practices Act, 53 Fed. Reg. 50,097, 50,109 (Dec. 13, 1988))). Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507 (9th Cir. 1994), cited by Hageman, touched upon a similar question but is not directly on point. In Fox, the Ninth Circuit concluded merely that an action to enforce or collect upon a previously obtained judgment was, in fact, a legal action to collect a debt. Id. at 1515. The court cited the definitions section of the FDCPA to emphasize that the definition of “debt” included obligations reduced to judgment. Id. The Ninth Circuit did not, however, address the issue of whether a collection action would be deemed to be an action “against any consumer” where funds were sought from an employer or other type of trustee or entity owing funds to the debtor. Because Illinois law is akin to Massachusetts law in that a garnishment suit compels action by the employer rather than the judgment debtor, we conclude the sound reasoning of the First Circuit should apply. A garnishment summons in Illinois is made against the judgment-debtor’s employer. See 735 Ill. Comp. Stat. § 5/12-805. The process imposes duties upon the employer, including potential liability for the judgment debtor’s debt if the employer fails to comply with the garnishment regime. See id. § 5/12-808(e) & (f). The debtor is given notice of the employer’s answers to interrogatories and wage deduction calculations prior to garnishment. See id. § 5/12808(c). And the debtor may appear to contest the employer’s answers to interrogatories. See id. § 5/12-811(a). Because Barton’s use of the Illinois courts did -12- not amount to an action “against the consumer,” those actions were not subject to the FDCPA’s venue restriction.6 D. Allegations of Other Violations in Illinois Proceedings-Issue Preclusion Our conclusion that no § 1692i violation occurred does not fully dispose of Hageman’s claims as they relate to Barton’s actions in Illinois. Hageman alleged not only that Barton sought unauthorized interest in the initial Missouri action, but that he sought separate and additional unauthorized interest as well as unauthorized costs in the Illinois action, all allegedly in violation of the FDCPA. See 15 U.S.C. § 1692f(1) (listing as an FDCPA violation “[t]he collection of any amount (including any interest . . .) unless such amount is expressly authorized by the agreement creating the debt or permitted by law”). Hageman also alleged that, in the Illinois proceedings, Barton improperly identified St. Anthony’s as the creditor and as Barton’s client, in violation of the FDCPA. See id. § 1692e (“A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.”); id. § 1692e(14) (listing as an FDCPA violation “[t]he use of any business, company, or organization name other than the true name of the debt collector’s 6 Barton cites 740 Ill. Comp. Stat. § 170/2, 2.2, and 4.2, provisions that appear to govern wage assignments pledged as security on written contracts and the requirements for enforcement of such assignments. The provisions cited above and cited by Hageman, appear to govern garnishments based upon judgments. The limited state court materials in the record generally do not discuss the applicable law or reference what provisions of Illinois law support the wage deduction order. One provision of the interrogatories to the employer, however, cite “§ 5/12-814,” an Illinois code provision seemingly more fitting to the events in this case than the code provisions Barton cites. In any event, the employer-focused nature of the garnishment proceedings pursuant to either Chapter 735 or 740 of the Illinois Statutes appears constant. -13- business, company, or organization”).7 These claims are separate from the claim alleging a violation of the § 1692i venue restriction, they are not barred by the statute of limitations, and our jurisdiction is not precluded under Rooker-Feldman. To survive a motion to dismiss under Rule 12(b)(6) a plaintiff must allege sufficient facts, as contrasted with bare legal conclusions, to articulate a claim “that is plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. To succeed on the claims of independent FDCPA violations based upon the interest and costs Barton sought in the Illinois proceedings, Hageman must establish that the amounts sought were not authorized by law or by contract. See 15 U.S.C. § 1692f(1). Hageman has alleged facts demonstrating an interest amount asserted in the Illinois proceedings that, on its face, substantially exceeds any sum consistent with the rate of interest authorized by the Missouri judgment. We therefore conclude Hageman has stated a claim that is plausible. To succeed on his claims based upon Barton’s alleged misrepresentation as to the identity of his client and the creditor, Hageman must show a representation that was false and likely to have misled an “unsophisticated consumer.” See Peters v. Gen. Serv. Bureau, Inc., 277 F.3d 1051, 1055 (8th Cir. 2002) (describing the test for actionably misleading statements pursuant to § 1692e). Hageman has alleged sufficient facts to plausibly demonstrate that Barton was at all times counsel for Weiss or CACi and not counsel for St. Anthony’s. Further, the assignment document (which 7 Hageman also argues Barton’s initial Illinois filing captioned “SUNSHINE ENTERPRISES OF MISSOURI D/B/A SUNSHINE TITLE & CHECK LOAN” amounted to an actionably misleading statement under the FDCPA. Hageman, however, did not advance this argument below and cannot raise it now. See Glickert v. Loop Trolley Transp. Dev. Dist., 792 F.3d 876, 883–84 (8th Cir. 2015). -14- was provided to the court by Barton and is encompassed by the pleadings)8 supports a plausible claim that Barton and CACi were not permitted by the terms of the assignment to bring suit in St. Anthony’s name. Hageman’s misrepresentation claim, therefore, also survives Twombly. To the extent Barton argues Hageman should be barred by traditional state-law preclusion doctrines from asserting these claims, we decline to address such arguments at this time. As noted above, the inapplicability of the Rooker-Feldman doctrine leaves open the possible applicability of traditional, non-jurisdictional preclusion doctrines. Exxon Mobil Corp., 544 U.S. at 293. In this regard, Hageman does not allege that he failed to receive notice of the garnishment proceedings or the foreign registration. Preclusion, therefore, may ultimately prevent Hageman’s success on either or both claims. Still, the parties have not briefed arguments concerning the contours of traditional preclusion under Illinois law, and they do not even agree as to what Illinois law governed the garnishment action. See supra n.7. Because this case arises from a motion to dismiss, the record is scant and the only state-court materials before us fail to clarify the applicable law. Without pinning down the appropriate Illinois statute employed for garnishment, it remains unclear what if any preclusive effect the wage garnishment order should carry, whether it serves as a final judgment, and what arguments Hageman may have waived by failing to assert them in state court. Further, it is unclear when Hageman could have discovered the facts of Barton’s alleged 8 In addressing a motion to dismiss, we may look to the pleadings, documents attached to the pleadings, “materials embraced by the pleadings . . . and matters of public record.” Illig v. Union Elec. Co., 652 F.3d 971, 976 (8th Cir. 2011). Here, Hageman referenced the “assignment document” in his complaint, and Barton supplied the “assignment of claim” document with his motion to dismiss. Hageman does not challenge our ability to consider the assignment of claim document in general. Rather, he presents argument contesting the meaning of that document. -15- misrepresentations regarding the identity of his client, and the matter is only complicated by Barton’s initial filings in Illinois court in the name of the wholly separate and unexplained “SUNSHINE” entity. We generally do not address arguments not raised in the briefs, and we believe it prudent to follow this general rule when the briefing that has taken place fails to fully articulate the nature of the underlying proceedings. See In re MidAmerican Energy Co., 286 F.3d 483, 487 (8th Cir. 2002). We also believe it prudent to avoid these issues at this early stage of the proceedings given the clear opportunity for parties to present these issues on remand.