United States District Court, Northern District of Illinois, Eastern Division
September 14, 2000
GEORGE PATTERSON, PLAINTIFF,
NORTH SHORE AGENCY, INC.; AND COLUMBIA HOUSE MUSIC CLUB, A PARTNERSHIP, DEFENDANTS. BRUNITA (MIKKI) BANKS, PLAINTIFF, V. NORTH SHORE AGENCY, INC.; AND JOHN DOES 1-10, DEFENDANTS.
The opinion of the court was delivered by: Moran, Senior District Judge.
MEMORANDUM OPINION AND ORDER
The Patterson case began with two different issues. Those
were determined adversely to plaintiff in a different case, and
that ruling was affirmed in January of this year. Plaintiff
thereafter filed an amended complaint, and defendants moved to
dismiss. In the meantime, the Banks case had been filed. Since
it raised the same issue, the case was transferred to this court
as related on April 6, 2000.*fn1 We now grant the motions to
dismiss in both cases.
In Patterson, Columbia House Video Club operates a video
club. A consumer signing up for the club receives seven video
movies for seven cents, plus shipping and handling. He also
agrees to purchase five more video movies over a three-year
period at $19.95 to $29.95 per movie, plus shipping and
handling. The material furnished to the consumer further
provides as follows:
What If I Don't Fulfill My Part of the Agreement?
That is, if you:
• Cancel your membership before buying the number
of selections agreed upon, or
• Fail to make your purchase within the specified
length of time, or
• Are late paying a bill.
First, we'll send you a reminder, and hopefully the
matter will be cleared up quickly.
If you still don't meet the terms of your agreement,
we'll bill you for an amount called "Due on
Contract." This represents the total cost of the
selections you haven't yet bought. We calculate this
charge by multiplying the number of unpurchased
selections by our commitment Club price of $19.95. We
also add shipping and handling and any applicable
tax. Once you've paid this charge, you may order and
receive the number of selections you've paid for.
In Banks, the product is books but the system is the same.
The consumer receives several books at a very low cost and
obligates herself to purchase several additional books at stated
prices. That agreement provides as follows:
Your Membership Agreement
• When you joined the club, you agreed to purchase a
given number of books at regular club prices to
satisfy your membership agreement. Please note that
clearance and non-book (merchandise and audio)
purchases do not count toward your membership
• If you[sic] book purchase obligation is not
fulfilled within your agreed-to time period, you may
receive a reminder.
• After completing your commitment, you may cancel
your account at any time. If you do not fulfill your
agreement or your account becomes overdue, you may be
billed for the number of books you've failed to buy,
• The commitment charges are calculated by taking the
number of outstanding book purchases required to
fulfill your commitment and multiplying it times the
Club's average book price. These commitment charges
include shipping and handling fees and any applicable
• Upon payment of your commitment charge, you will be
given a catalogue from which to make your selections
of the books you will receive to fulfill your
In Patterson, North Shore Agency, Inc., a debt collector,
sent plaintiff a collection letter which included a demand for
payment of $93.24 as "DUE ON CONTRACT." In Banks, the same
agency sent the plaintiff a collection letter that included a
"bill for commitment" charge. Plaintiff in each case claims that
the collection letter violates Section 1692e of the Fair Debt
Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.,
because each letter falsely claims an amount not due. The amount
is inflated, plaintiffs claim, because the creditor seeks
payment of the amount that would have been due if the videos and
books had been ordered and shipped, but they were not.
Accordingly, the creditor was obligated to reduce the amount
sought by its cost for the merchandise it has not sent because
it has saved that amount.*fn2
Plaintiffs claim that the creditors have "padded" the debts
with charges not authorized by law or contract. We assume that a
demand for payment of a padded debt is a violation of FDCPA.
See Micro Data Base Systems, Inc. v. Dharma Systems, Inc.,
148 F.3d 649, 656 (7th Cir. 1998). But that is not what happened
here. The consumers and the creditors agreed upon what were
their mutual obligations upon default. Thus the creditors are
not remitted to the remedies for breach of contract in the
absence of agreement. They were entitled to pursue those
contractual remedies unless those remedies were unreasonable.
And they were not. Upon the consumer's payment of the amount
claimed the creditor becomes obligated to ship, at the request
of the consumer, all the videos or books covered by the payment.
The net effect, then, is to place the consumer and the creditor
in the same position they would have been in if the consumer had
performed his contractual obligations in the first place. That
is hardly an unconscionable outcome.
The motions to dismiss are granted. All other motions are