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Haddad v. Midland Funding, LLC

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

May 1, 2017



          Gary Feinerman Judge.

         Kaldoon Haddad sued Midland Funding, LLC and Midland Credit Management, Inc. (together, “Midland”) for violating the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. Doc. 15. Midland answered the complaint, Doc. 22, and now moves to dismiss the suit for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) or, alternatively, for judgment on the pleadings under Rule 12(c). Doc. 23. The motion is denied.


         As on a Rule 12(b)(6) motion, the court on a Rule 12(b)(1) motion submitted on the pleadings or on a Rule 12(c) motion assumes the truth of the operative complaint's well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016); Adams v. City of Indianapolis, 742 F.3d 720, 727-28 (7th Cir. 2014); G&S Holdings LLC v. Cont'l Cas. Co., 697 F.3d 534, 539 (7th Cir. 2012). The court must also consider “documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice, ” along with additional facts set forth in Haddad's brief opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013). The facts are set forth as favorably to Haddad as those materials allow. See Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th Cir. 2016). In setting forth those facts at the pleading stage, the court does not vouch for their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A., 610 F.3d 382, 384 (7th Cir. 2010).

         Haddad incurred debt on a Citibank credit card account and then failed to pay it off. Doc. 15 at ¶¶ 11-12. Citibank (not a party here) eventually closed the account, ceased charging interest and late fees, and sold the debt to Midland Funding. Id. at ¶¶ 13-17. Midland Funding in turn assigned the debt to its subsidiary, Midland Credit Management (“MCM”), for collection. Id. at ¶ 18.

         In May 2015, MCM sent Haddad a collection letter. Id. at ¶ 19. The letter identified Midland Funding as the debt's owner, Citibank as the original creditor, and an outstanding balance of $1, 823.84. Id. at ¶ 20; Doc. 15-1 at 10. The letter advised Haddad that MCM was “considering forwarding this account to an attorney … for possible litigation, ” and asked that he call to discuss possible “discounts and affordable payment plans” and/or mail it $250 in order “to stop this process from continuing.” Doc. 15-1 at 10. The letter then asserted: “If this account goes to an attorney, our flexible options may no longer be available to you.” Doc. 15 at ¶ 22; Doc. 15-1 at 10. MCM, however, routinely continues to offer flexible payment options for accounts that have been forwarded to attorneys, even after lawsuits have been filed, and it never intended to make flexible payment options unavailable to Haddad. Doc. 15 at ¶¶ 24-26.

         About two months later, in July 2015, MCM sent Haddad another letter. Id. at ¶ 29. That letter, too, identified Midland Funding as the debt's owner and Citibank as the original creditor. Id. at ¶ 30; Doc. 15-1 at 13. The letter began, “The purpose of this letter is to inform you that your account has been transferred to the internal legal collections department at [MCM] for possible initiation of legal proceedings against you.” Doc. 15-1 at 13. It continued:

As of the date of this letter, you owe $1, 823.84 on the above-referenced account. This may include other charges that apply to this account. In addition, charges may continue to accrue on some or all of the balance due until the account is satisfied. Thus, the amount due on the day you pay may be greater than the amount above. Please contact us to obtain an exact payoff amount or for further information.

Doc. 15 at ¶ 33; Doc. 15-1 at 13 (emphasis added). Midland, however, lacked authority to add any additional charges to Haddad's account, and it has not done so since Citibank closed the account. Doc. 15 at ¶¶ 34-35.


         I. Rule 12(b)(1) Motion

         Midland's motion to dismiss for lack of subject matter jurisdiction turns not on whether Haddad has alleged a violation of the FDCPA-as explained below, he has-but on whether Article III of the Constitution permits this court to do anything about it. The issue is whether Haddad has standing to bring this suit. Doc. 23 at 3-7. The “irreducible constitutional minimum of standing consists of three elements. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (citation and internal quotation marks omitted). “To establish injury in fact, a plaintiff must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical.” Id. at 1548 (internal quotation marks omitted).

         Here, whatever injury Haddad suffered was caused by MCM's sending the collection letters, and a favorable judicial decision could redress Haddad's injury through an award of statutory damages under the FDCPA. See 15 U.S.C. § 1692k(a)(2)(A). And because the letters were sent specifically to Haddad, his injury was “particularized”-the letters “affect[ed] [him] in a personal and individual way.” Spokeo, 136 S.Ct. at 1548. So the decisive question here is whether Haddad has alleged an injury that is also concrete. See id. at 1550 (holding that failure to separately analyze concreteness and particularity was error)

         To be concrete, a plaintiff's injury “must be de facto; that is, it must actually exist.” Id. at 1548 (internal quotation marks omitted). In other words, the injury must be “real, ” as opposed to “abstract.” Ibid. Both “tangible” and “intangible” injuries, even those that are “difficult to prove or to measure, ” can suffice. Id. at 1549. But concreteness requires at least some “appreciable risk of harm” to the plaintiff. Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724, 727 (7th Cir. 2016); see also Spokeo, 136 S.Ct. at 1550 (holding that there is no standing where the complained-of conduct does not “cause harm or present any material risk of harm”); Gubala v. Time Warner Cable, Inc., 846 F.3d 909, 911 (7th Cir. 2017) (holding that the plaintiff lacked standing where he identified no “plausible (even if attenuated) risk of harm to himself”). Injuries that are too ethereal to meet this standard include: “the dissemination of an incorrect zip code” to the general public, Spokeo, 136 S.Ct. at 1550; printing a customer's untruncated credit card expiration date on a receipt that only the customer saw, see Meyers, 843 F.3d at 727; and a company's retention of a former customer's personal information, absent any allegation that the data was disseminated or exposed to theft, see Gubala, 846 F.3d at 910.

         When attempting to identify valid injuries in fact, Congress's judgment is an “instructive and important” source of guidance. Spokeo, 136 S.Ct. at 1549. Congress is “well positioned to identify intangible harms that meet minimum Article III requirements” and, through legislation, may “define” and thus render “legally cognizable” injuries that were once obscure. Ibid.; seealso Massachusetts v. EPA, 549 v. 497, 516 (2007) (“Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.”); Lujan v. Defenders of Wildlife, 504 U.S. 555, 580 (1992) (Kennedy, J., concurring in part and concurring in the judgment) (same). Nevertheless, Spokeo cautions that “Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” 136 S.Ct. at 1549 (internal quotation marks omitted). So although courts must give due ...

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