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Gordon v. Syndicated Office Systems, LLC

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

March 27, 2017




         Plaintiff, Crissandra Gordon, brings this case under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq, against defendant Syndicated Office Systems, LLC, a debt collector. Defendant moves to dismiss. For the following reasons, the motion is granted.


         In her complaint, plaintiff alleges that defendant, a “debt collector” as the phrase is defined by the FDCPA, see 15 U.S.C. § 1692(a)(6), “began collection activities on an alleged consumer debt” attributed to plaintiff. (Compl. ¶¶ 4, 8.) Defendant reported the debt to credit reporting agencies, and it appeared on plaintiff's credit report. (Id. ¶ 11.) On July 27, 2015, plaintiff sent a letter “directly” to defendant to dispute the debt. (Id. ¶ 12.) On October 2, 2015, plaintiff examined her credit report again and found that “Defendant had not removed the credit account nor marked it as ‘disputed by consumer.'” (Id. ¶ 13.)


         “A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis omitted).

         Under federal notice-pleading standards, a complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Stated differently, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “In reviewing the sufficiency of a complaint under the plausibility standard, [courts must] accept the well-pleaded facts in the complaint as true, but [they] ‘need[ ] not accept as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.'” Alam v. Miller Brewing Co., 709 F.3d 662, 665-66 (7th Cir. 2013) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)).

         The FDCPA was enacted “to eliminate abusive debt collection practices, to ensure that debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577 (2010) (citing 15 U.S.C. § 1692(e)). Under the FDCPA, “[a] debt collector may not use any false, deceptive, or misleading representation or means.” 15 U.S.C. § 1692e. In particular, 15 U.S.C. § 1692e(8) prohibits “[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.”[1]

         Defendant argues that plaintiff fails to state a claim for violation of section 1692e(8) because “there is no affirmative obligation under the FDCPA for a debt collector, after becoming aware of a dispute, to update the information” that it may have already reported to a credit reporting agency. (Mem. Supp. Def's Mot. to Dismiss, at 5, ECF No. 14.) The vast weight of authority is on defendant's side. See Wilhelm v. Credico, Inc., 519 F.3d 416, 418 (8th Cir.2008); Rogers v. Overton, Russell, Doerr & Donovan, LLP, No. 1:16-CV-00784, 2017 WL 570811, at *2-3 (N.D.N.Y. Feb. 13, 2017) (“overwhelming weight of authority” rejects “affirmative post-reporting duty to communicate a dispute that arises after the debt has been reported”); Rogers v. Virtuoso Sourcing Grp., LLC, No. 1:12-CV-01511-JMS, 2013 WL 772865, at *2-3 (S.D. Ind. Feb. 28, 2013) (citing cases for same proposition); Wells v. Deca Fin. Servs., LLC, No. 1:12-CV-01514-JMS, 2013 WL 772870, at *3 (S.D. Ind. Feb. 28, 2013) (same). In Wilhelm, the leading federal appellate court case on this issue, the Eighth Circuit reasoned as follows:

[Plaintiff] assert[s] that § 1692e(8) imposed an affirmative duty on [debt collectors] to disclose that he had disputed the debt. He cites no case supporting this contention, and we reject it. Section 1692e generally prohibits “false, deceptive, or misleading representation.” Subsection 1692e(8) applies to the “communicating” of “credit information.” “Communication” is defined as “the conveying of information regarding a debt directly or indirectly to any person through any medium.” § 1692a(2). Reading these provisions together, as we must, the relevance of the portion of § 1692e(8) on which Wilhelm relies- “including the failure to communicate that a disputed debt is disputed”-is rooted in the basic fraud law principle that, if a debt collector elects to communicate “credit information” about a consumer, it must not omit a piece of information that is always material, namely, that the consumer has disputed a particular debt. This interpretation is confirmed by the relevant part of the Federal Trade Commission's December 1988 Staff Commentary on the Fair Debt Collection Practices Act:
1. Disputed debt. If a debt collector knows that a debt is disputed by the consumer . . . and reports it to a credit bureau, he must report it as disputed.
2. Post-report dispute. When a debt collector learns of a dispute after reporting the debt to a credit bureau, the dispute need not also be reported.

         519 F.3d at 418 (citing FTC Staff Commentary, 53 Fed.Reg. 50097-02, 50106 (Dec. 13, 1988)).This reasoning is persuasive, and plaintiff has provided no compelling reason to deviate from it.

         In support of her position that 1692e(8) “does not permit inaction on the part of the debt collector when it knows that a debt is in fact disputed” (Pl.'s Mem. Opp. Mot. to Dismiss, at 5, ECF No. 17), plaintiff has cited three cases: Ryan v. Wexler & Wexler, 113 F.3d 91, 92 (7th Cir.1997); Acosta v. Campbell, No. 6:04cv761, 2006 WL 3804729, at *7 (M.D. Fla. Dec. 22, 2006), aff'd, 309 F. App'x 315 (11th Cir. 2009); Semper v. JBC Legal Grp., No. C04-2240L, 2005 WL ...

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