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Gruber v. Creditors' Protection Service Inc.

United States Court of Appeals, Seventh Circuit

January 23, 2014

John Gruber, et al., Plaintiffs-Appellants,
v.
Creditors' Protection Service, Inc., et al., Defendants-Appellees.

Argued November 13, 2013

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.

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 "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, plaintiffs[1] received letters from defendants[2] 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 judgment 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 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 consolidated 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 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 sentence 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 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). ...


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