Court Opinion

ID: 2708976
Source: CourtListenerOpinion
Date Created: 2014-08-05 15:09:11.703317+00
Date Added: 2024-06-11T10:01:23.107800
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
Nos. 13-2084, 13-2164, 13-2297 & 13-2351

JOHN GRUBER, et al.,
                                               Plaintiffs-Appellants,

                                 v.

CREDITORS’ PROTECTION SERVICE,
INC., et al.,
                                              Defendants-Appellees.

        Appeals from the United States District Court for the
                    Eastern District of Wisconsin.
              No. 12-CV-1243 — Lynn Adelman, Judge.
     No. 13-CV-378 — William E. Callahan, Jr., Magistrate Judge.
          No. 13-CV-386 — Nancy Joseph, Magistrate Judge.
       No. 13-CV-70 — Patricia J. Gorence, Magistrate Judge.

  ARGUED NOVEMBER 13, 2013 — DECIDED JANUARY 23, 2014

   Before MANION, KANNE, and HAMILTON, Circuit Judges.

   MANION, Circuit Judge. Four plaintiffs filed separate
lawsuits against four separate defendants, alleging that similar
debt collection letters were sent in violation of 15 U.S.C.
§ 1692g(a)(4) of the Fair Debt Collection Practices Act (the
2                         Nos. 13-2084, 13-2164, 13-2297 & 13-2351

“Act”). A district judge and three magistrate judges, all sitting
in the Eastern District of Wisconsin, dismissed the respective
actions for failure to state a claim. The plaintiffs appealed. We
consolidated these appeals and now affirm.
                          I. BACKGROUND
   Between 2012 and 2013, plaintiffs1 received letters from
defendants2 that read, in pertinent part, as follows:
      Unless you notify this office within 30 days after
      receiving this notice that you dispute the validity of
      this debt or any portion thereof, this office will
      assume this debt is valid. If you notify this office
      within 30 days from receiving this notice, this office
      will obtain verification of the debt or obtain a copy
      of the judgment and mail you a copy of such judg-
      ment or verification.
    The first sentence of this notice is an attempt to comply
with § 1692g(a)(3), which requires the debt collector to include
“a statement that unless the consumer, within thirty days after
receipt of the notice, disputes the validity of the debt, or any
portion thereof, the debt will be assumed to be valid by the
debt collector.” The second sentence is an attempt to comply
with § 1692g(a)(4), which requires the debt collector to include

1
 The four plaintiffs named in these consolidated appeals are John Gruber,
Lee Schaefer, Thomas Borucki, and Karen A. Kryscio.

2
  The four defendants named in these consolidated appeals are Creditors’
Protection Service, Inc., Tri-State Adjustments, Inc., Vision Financial Corp.,
and National Account Systems of Madison, Inc.
Nos. 13-2084, 13-2164, 13-2297 & 13-2351                           3

a “statement that if the consumer notifies the debt collector in
writing within the thirty-day period that the debt, or any
portion thereof, is disputed, the debt collector will obtain
verification of the debt or a copy of a judgment against the
consumer and a copy of such verification or judgment will be
mailed to the consumer by the debt collector.” Plaintiffs claim
that the letter does not adequately provide the notice required
by § 1692g(a)(4).
    Because the second sentence in the notice omits the phrase
“that the debt, or any portion thereof, is disputed,” the
plaintiffs contend that it directs the consumer to request
verification instead of directing the consumer to dispute the
debt. In other words, under the plaintiffs’ theory, the second
sentence should have read, “[i]f you notify this office within 30
days from receiving this notice that you dispute the debt or any
portion of the debt, this office will obtain verification of the debt
or obtain a copy of the judgment and mail you a copy of such
judgment or verification.” Additionally, one of the consoli-
dated plaintiffs’ letters contained the statement: “[w]e believe
you want to pay your just debt” immediately preceding the
notice language above. She alleges that using the phrase “just
debt” is misleading and suggests that the debt’s validity has
been confirmed. We address these two arguments in turn.
                         II. ANALYSIS
    Claims brought under the Fair Debt Collection Practices Act
are evaluated under the objective “unsophisticated consumer”
standard. Bartlett v. Heibl, 128 F.3d, 497, 500 (7th Cir. 1997);
Avila v. Rubin, 84 F.3d 222, 226 (7th Cir. 1996). Although the
hypothetical unsophisticated consumer is not as learned in
4                     Nos. 13-2084, 13-2164, 13-2297 & 13-2351

commercial matters as are federal judges, he is not completely
ignorant either. Pettit v. Retrieval Masters Creditor Bureau, Inc.,
211 F.3d 1057, 1060 (7th Cir. 2000). On the one hand, the
unsophisticated consumer may be “uninformed, naive, or
trusting,” but on the other hand the unsophisticated consumer
does “possess[] rudimentary knowledge about the financial
world, is wise enough to read collection notices with added
care, possesses ‘reasonable intelligence,’ and is capable of
making basic logical deductions and inferences.” Id. (citations
omitted). Additionally, while the unsophisticated consumer
“may tend to read collection letters literally, he does not
interpret them in a bizarre or idiosyncratic fashion.” Id. If not
even “a significant fraction of the population would be misled”
by the debt collector’s letter, then dismissal is required.
Zemeckis v. Global Credit & Collection Corp., 679 F.3d 632, 636
(7th Cir. 2012) (citing Taylor v. Cavalry Inv. LLC, 365 F.3d 572,
574 (7th Cir. 2004)). In short, the unsophisticated consumer is
not the least sophisticated consumer. With this legal framework
in mind, we review de novo the dismissal of an action brought
under the Act, accepting all well-pleaded facts as true and
construing all inferences in favor of the plaintiffs. Id. at 634.
    A. Defendants’ letters to plaintiffs do not violate
       § 1692g(a)(4) of the Act
    Plaintiffs’ core argument is that because the second sen-
tence of the defendants’ letters omits the phrase “that the debt,
or any portion thereof, is disputed,” it creates the risk that an
unsophisticated consumer who may wish to exercise his rights
would fail to properly do so. Specifically, the unsophisticated
consumer might be misled to request verification instead of to
dispute the debt. The problem for the plaintiffs is that “the
Nos. 13-2084, 13-2164, 13-2297 & 13-2351                         5

consumer can, without giving a reason, require that the debt
collector verify the existence of the debt before making further
efforts to collect it.” DeKoven v. Plaza Assocs., 599 F.3d 578, 582
(7th Cir. 2010) (citations omitted). In other words, a request to
verify the existence of a debt constitutes a “dispute” under the
Act. Id. This makes sense because unsophisticated consumers
cannot be expected to assert their rights in legally precise
phrases. Horkey v. J.V.D.B. & Assocs., Inc., 333 F.3d 769, 773 (7th
Cir. 2003). So even if there is a literal distinction between
requesting verification of a debt and disputing a debt, we treat
a request for verification as a dispute within the meaning of the
Act. DeKoven, 599 F.3d at 582.
    Thus, if a consumer wrote and sought verification, he
would be disputing the debt for the purposes of the Act, and
would be entitled to all of the same protections afforded under
the Act as if he had written to dispute the debt. Unsurprisingly,
plaintiffs fail to cite a single case supporting their reading of
§ 1692g(a)(4)—that requesting verification of a debt is not a
dispute of the debt. Moreover, all four judges below inter-
preted the second sentence to mean “if you object to our
allegation that you owe this debt, we’ll send you proof that
you owe it.” This interpretation is the most natural one and
one an unsophisticated consumer would take. Accordingly, we
conclude that as a matter of law, defendants’ notices comply
with § 1692g(a)(4).
   B. The statement “[w]e believe you want to pay your just
      debt” does not violate the Act
    Additionally, one of the plaintiffs argues that because the
statement “[w]e believe you want to pay your just debt”
6                      Nos. 13-2084, 13-2164, 13-2297 & 13-2351

appears immediately before the obligatory § 1692g language,
it overshadows and is inconsistent with the notice, rendering
the letter misleading in violation of the Act. Alternatively, she
argues that the phrase “just debt” implies that judgment has
already been rendered against the recipient of the letter. We
disagree.
    The plaintiff cites cases in support of her contention that the
phrase “just debt” overshadows the notice and influences
unsophisticated consumers into thinking a judgment was
already entered in violation of the Act. These cases are distin-
guishable because they involved notices containing incoherent
and contradictory language. For example, in Avila v. Rubin, 84
F.3d 222 (7th Cir. 1996), the disputed notice informed the
consumer of his right to dispute or verify the debt. Id. at 226.
However, the notice was followed by the language “[i]f the
above does not apply to you, we shall expect payment …
within ten (10) days from the date of this letter.” Id. There we
held that “telling a debtor he has 30 days to dispute the debt
and following that with a statement that ‘[i]f the above does
not apply’ you have ten days to pay up or real trouble will start
is entirely inconsistent” with the Act. Id. Similarly, in Bartlett v.
Heibl, 128 F.3d 497 (7th Cir. 1997), the disputed letter notified
the consumer of his right to dispute or verify the debt within
30 days, but also stated that the debtor must pay or make
arrangements for payment within one week of receiving the
letter to avoid legal action. Id. at 499. We held that the letter
was confusing because it failed to explain how the demand for
payment within one week and the consumer’s right to demand
verification within 30 days fit together. Id. at 500. See also
Chauncey v. JDR Recovery Corp., 118 F.3d 516, 518–19 (7th Cir.
Nos. 13-2084, 13-2164, 13-2297 & 13-2351                         7

1997) (30-day period to make payment inconsistent with 30-
day window to dispute debt). Finally, in Chuway v. Nat. Action
Fin. Servs, Inc., 362 F.3d 944 (7th Cir. 2004), the issue was
whether the letter clearly stated the amount of the debt the
debt collector was attempting to collect. Id. at 946–47. The letter
stated the balance was $367.42. However, the letter also
directed the consumer to call a 1-800 number to obtain current
balance information. Id. at 947. We deemed the letter confusing
to the unsophisticated consumer because its reference to the
“current balance” could be interpreted to mean that the debt
collector was trying to collect a debt higher than $367.42 that
could only be discovered by calling the 1-800 number. Id. at
947–48. Here, plaintiffs do not allege that the amount of the
debt is unclearly stated.
    Unlike the notices in Avila, Bartlett, Chauncey, and Chuway,
a letter containing the statement “[w]e believe you want to pay
your just debt” does not direct the consumer to take any action
within the 30-day validation period. It does not direct the
consumer to take any action at all. It merely characterizes the
debt as “just.” Considered in the context of the notices in this
record, the phrase “just debt” is a congenial introduction to the
verification notice and is best characterized as “puffing, in the
sense of rhetoric designed to created a mood … .” Taylor v.
Cavalry Inv., LLC, 365 F.3d 572, 575 (7th Cir. 2004). Puffery does
not violate § 1692g(a)(4). Id. Consequently, the statement “[w]e
believe you want to pay your just debt” does not violate the
Act.
8                    Nos. 13-2084, 13-2164, 13-2297 & 13-2351

                     III. CONCLUSION
    The defendants’ notices to the plaintiffs did not violate
§ 1692g(a)(4) of the Act because any written request for
verification of the debt constitutes a dispute for the purposes
of the Act. Furthermore, the statement “[w]e believe you want
to pay your just debt” does not violate the Act because it is
mere puffery. For the foregoing reasons, we AFFIRM the
judgments entered for the defendants.