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Ruge v. Delta Outsource Group, Inc.

United States District Court, N.D. Illinois, Eastern Division

March 13, 2017

Angela Ruge, Plaintiff,
v.
Delta Outsource Group, Inc., Defendant.

          MEMORANDUM OPINION AND ORDER

          Manish S. Shah United States District Judge.

         Angela Ruge alleges that Delta Outsource Group, Inc., violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA), while trying to collect on Ruge's debt. Delta and Ruge both move for summary judgment. For the following reasons, Delta's motion is denied and Ruge's motion is granted.

         I. Legal Standards

         On cross-motions for summary judgment, a court must “look to the burden of proof that each party would bear on an issue of trial; we then require that party to go beyond the pleadings and affirmatively to establish a genuine issue of material fact.” Santaella v. Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). For each motion, factual inferences are viewed in the nonmovant's favor. See Hotel 71 Mezz Lender LLC v. National Ret. Fund, 778 F.3d 593, 603 (7th Cir. 2015). However, “[c]ross-motions must be evaluated together, and the court may not grant summary judgment for either side unless the admissible evidence as a whole-from both motions- establishes that no material facts are in dispute.” Bloodworth v. Village of Greendale, 475 Fed. App'x 92, 95 (7th Cir. 2012) (citing Dynegy Mktg. & Trade v. Multiut Corp., 648 F.3d 506, 517 (7th Cir. 2011)).

         II. Background[1]

         Plaintiff Angela Ruge had a consumer, retail credit card account with Comenity Bank. [40] ¶ 6. Her debt was in default, and by June 2015, the bank stopped charging her interest and late fees. [40] ¶ 8. In late August 2015, the bank assigned Ruge's debt to defendant Delta Outsource Group, Inc., a licensed collection agency. [40] ¶¶ 4, 12-13. Within a few days, Delta sent Ruge a letter with information about the debt, including the identity of the current creditor, identity of the original creditor, account number, and a current balance on the debt. [32] ¶¶ 1- 2. Delta's letter also stated: “Because of interest, late charges, or other charges that may vary from day to day, the amount due on the day you pay may be greater.” [32] ¶ 3.[2] Delta did not actually add interest, late fees, or other fees to Ruge's account, [32] ¶ 9, and Delta does not add interest or late charges to Comenity Bank accounts assigned to it for collection. [40] ¶ 18.[3]

         III. Analysis

         Ruge seeks summary judgment, arguing that Delta lacked authority and never intended to charge interest, thereby violating 15 U.S.C. § 1692e, which prohibits a debt collector from using false, deceptive, or misleading means to collect a debt, and violating § 1692f, which prohibits a debt collector from using unfair or unconscionable means to collect a debt. Under the umbrella of § 1692e, she specifically invokes: § 1692e(2)(A), which prohibits the false representation of the character, amount or legal status of a debt; § 1692e(5), which prohibits threatening to take “any action that cannot legally be taken or that is not intended to be taken;” and § 1692e(10), which prohibits the use of any false representation or deceptive means to collect a consumer debt. Delta also seeks summary judgment, maintaining that it did not use deceptive or unfair means to collect Ruge's debt because its letter conformed to safe harbor language outlined by the Seventh Circuit in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000), and because it had authority to collect interest.

         Ruge's arguments are largely unpersuasive, but she prevails on the parties' cross-motions for summary judgment because the undisputed evidence is that Delta did not charge interest on Comenity Bank accounts. As a result, Delta's dunning letter was materially false or misleading, because it implied that “because of interest” the amount due may increase. This implied an action-the assessment of interest-that Delta did not intend to take, in violation of § 1692e(5).

         A § 1692e claim requires demonstrating that the debt collection language constituted a materially false statement that was misleading-a technically false statement that is not misleading does not run afoul of § 1692e. Lox v. CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012). A false or misleading statement is material if it has the ability to influence a consumer's decision. Id. at 826. In deciding whether a dunning letter is misleading, the letter is viewed through the perspective of an “unsophisticated consumer.” Id. at 822.

         Delta's letter to Ruge stated: “As of the date of this letter, our records indicate that you currently owe $814.94. Because of interest, late charges, or other charges that may vary from day to day, the amount due on the day you pay may be greater.” [1-1] at 4. The letter implied that adding interest was a possible outcome of Delta's debt collection. The conditional nature of the language at issue does not save it from the misleading impression that additional interest debt was possible, when the truth is that Delta was never going to assess interest against Ruge. See Lox, 689 F.3d at 825 (“[C]onditional language, particularly in the absence of any language clarifying or explaining the conditions, does not insulate a debt collector from liability.”) (quoting Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1059 (9th Cir. 2011)); Ruth v. Triumph P'ships, 577 F.3d 790, 801 (7th Cir. 2009) (the only reasonable interpretation of a letter stating that debt collector “may collect and/or share all information we obtain in servicing your account” to “the extent permitted by law” was that the letter threatened to share information without permission). “When language in a debt collection letter can reasonably be interpreted to imply that the debt collector will take action it has no intention or ability to undertake, the debt collector that fails to clarify that ambiguity does so at its peril.” Lox, 689 F.3d at 825.

         Delta argues that it is entitled to summary judgment because its letter describes the amount of Ruge's debt using “safe harbor” language provided in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000). In Miller, the Seventh Circuit outlined safe harbor language for a debt collector to state the amount of a debt, if the amount varies day-to-day:

As of the date of this letter, you owe $ [the exact amount due]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For further information, write the undersigned or call 1-800- [phone number].

Id. at 876. While Delta's letter is nearly identical to the safe harbor language in Miller, [4]Miller does not provide a defense if the safe harbor language itself is inaccurate under the circumstances.[5]Id. (a debt collector using the “safe harbor” language does not misstate the amount of a varying debt “provided, of course, that the information he furnishes is accurate”). It is undisputed that Delta did not charge interest on Comenity Bank accounts assigned to it for collection, including Ruge's account. [40] ΒΆ 18. The ...


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