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Franklin v. Parking Revenue Recovery Services, Inc.

United States Court of Appeals, Seventh Circuit

August 10, 2016

Carmen Franklin and Jenifer Chism, on behalf of themselves and all others similarly situated, Plaintiffs-Appellan ts,
v.
Parking Revenue Recovery Services, Inc., and Bryon Bellerud II, P.C., Defendants-Appellees.

          Argued September 10, 2015

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 02578 - Edmond E. Chang, Judge

          Before Flaum, Ripple, and Sykes, Circuit Judges.

          Sykes, Circuit Judge.

         Carmen Franklin and Jenifer Chism parked their cars in a Chicago-area lot owned by Metra, the public commuter railroad, and operated by CPS Chicago Parking, LLC. ("CPS"). The lot offers parking spaces to the public at the rate of $1.50 per day. CPS says the two failed to pay and sent them violation notices demanding payment of the $1.50 fee and a $45 nonpayment penalty. When they still did not pay, CPS referred the matter for collection to Parking Revenue Recovery Services, Inc. ("Parking Revenue"), which sent them collection letters for the $46.50 total due.

         Franklin and Chism responded with this class action against Parking Revenue alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq. The district court entered summary judgment for Parking Revenue, holding that the FDCPA does not apply because the unpaid parking obligations are not "debts" as that term is defined in § 1692a(5).

         We reverse. The obligations at issue here-unpaid parking fees and nonpayment penalties-are "debts" within the meaning of the FDCPA. That statutory term comprises obligations "arising out of" consumer "transactions." Parking in a lot that is open to all customers subject to stated charges is a "transaction." The obligation that arises from that transaction is a "debt, " and an attempt to collect it must comply with the FDCPA.[1]

         I. Background

         In June 2012 Franklin and Chism parked their cars in a Chicago-area lot owned by Metra (the Commuter Rail Division of the Regional Transportation Authority) and operated by CPS, a wholly owned subsidiary of Central Parking System, Inc. CPS is a private company that contracts with Metra to manage parking lots adjacent to commuter rail stations throughout the Chicago area. Under its contract with Metra, CPS keeps a percentage of the gross revenues collected from the lots that it operates. The signage and the pay machine at the lot plainly state that it costs $1.50 for daily parking. And CPS tells us that the signage also states that a fee of up to $60 will be assessed to parkers who fail to pay.

         Franklin and Chism both insist that they paid the $1.50 upon parking, but CPS claims they parked without paying and now owe the $1.50 parking fee and a $45 nonpayment penalty. CPS referred the matter to Parking Revenue, which in turn sent the women collection letters. The letters noted that Franklin and Chism had previously received one or more parking-violation notices and demanded payment of "this debt" within 30 days or alternatively, notification in writing that they dispute the debt's validity.

         Franklin and Chism responded with this class action against Parking Revenue alleging that the collection letters violated the FDCPA in numerous ways. The suit alleges that parking in the lot was a "transaction" -Central Parking offers parking to all comers, which the plaintiffs accepted by parking in the lot-and the payment obligation therefore was a debt, the collection of which is governed by FDCPA.

         The district judge disagreed. He characterized the collection letters as attempts to collect fines imposed for violating the parking lot's rules. The judge said that the payment obligation was "materially indistinguishable from a ticket issued for failure to feed a parking meter." As such, it did not reflect a consensual transaction; Franklin and Chism essentially stole the parking spaces from CPS. On this reasoning, the judge concluded that the obligations were not debts within the meaning of the FDCPA and granted Parking Revenue's motion for summary judgment.[2]

         II. Discussion

         We review the court's order granting summary judgment de novo, evaluating the record in the light most favorable to Franklin and Chism and drawing all reasonable inferences from the evidence in their favor. Townsend v. Cooper, 759 F.3d 678, 685 (7th Cir. 2014).

         The FDCPA prohibits various "abusive debt collection practices, " 15 U.S.C. § 1692(e), including the use of false or misleading representations, id. § 1692e, and other unfair practices, id. § 1692f, to collect any debt. Franklin and Chism contend that Parking Revenue's collection letters violate the FDCPA in several ways.[3] Our present concern, however, is limited to the threshold question whether the FDCPA even applies. That question turns on whether the underlying payment ...


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