United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
J. ROSENSTENGEL United States District Judge.
Tammy Smith brings this action for an alleged violation of
the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.
§ 1692, et seq. (Doc. 1). Defendant Weltman,
Weinberg & Reis Co., L.P.A. (“WWR”) now moves
to dismiss the Complaint for failure to state a claim (Doc.
13). For the following reasons, the motion to dismiss is
January 15, 2016, Smith received a letter from WWR, a debt
collection law firm, attempting to collect Smith's
personal credit card debt in the amount of $4, 319.69 (Doc.
1). The letter invited Smith to call WWR “during this
tax season” to discuss using her income tax refund as a
source of funds to satisfy her outstanding obligation for a
reduced amount. (Id.). The letter did not offer any
specific settlement amount but included the statement:
“This settlement may have tax consequences.”
(Id.). The letter did not mention the Internal
Revenue Service. According to the Complaint, Smith was
insolvent at the time she received WWR's letter. She then
filed for Chapter 7 bankruptcy on March 16, 2016, and
obtained a discharge of her debts (Id.).
December 12, 2016, Smith initiated this action, claiming the
statement “[t]his settlement may have tax
consequences” violates the FDCPA, 15 U.S.C.
§§ 1692e and 1692e(10). Specifically, Smith alleges
that referring to “tax consequences” in a
collection letter is intimidating and misleading, suggesting
to the unsophisticated consumer that failure to pay the debt
will give rise to problems with the IRS (Id.). Smith
asserts the language misleads the unsophisticated consumer to
believe that unless the consumer pays the entire amount
allegedly owed on the debt, he or she is going to be reported
to the IRS and/or will have to pay taxes on the unpaid
balance. Smith further claims WWR voluntarily chose to give
the “tax advice” found in the letter despite no
law or regulation requiring such language in collection
letters. Smith argues there is no legitimate reason for
referring to “tax consequences” in a collection
letter directed to a consumer.
January 31, 2017, WWR moved to dismiss Smith's Complaint
for failure to state a claim pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure (Doc. 13). WWR argues the
statement at issue is neither false nor misleading, as is
required to state a claim under the FDCPA. Furthermore, the
letter did not mention even the possibility of WWR reporting
any discharge of debt to the IRS, such that an
unsophisticated consumer would feel pressured to pay off the
entire debt. Smith filed a response on March 3, 2017 (Doc.
15), and WWR filed a reply on March 17, 2017 (Doc. 16). The
motion is now ripe for review.
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) is meant to “test the sufficiency of the
complaint, not to decide the merits” of the case.
Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th
Cir. 1990) (citation omitted). In evaluating a motion to
dismiss, the Court must accept all well-pleaded allegations
in the complaint as true and draw all reasonable inferences
in the plaintiff's favor. Cole v. Milwaukee Area
Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011);
Thompson v. Ill. Dep't. of Prof'l
Regulation, 300 F.3d 750, 753 (7th Cir. 2002). Pursuant
to Federal Rule of Civil Procedure 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).
Accordingly, the Court may grant a motion to dismiss under
Rule 12(b)(6) only if a complaint lacks “enough facts
to state a claim [for] relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 697,
129 S.Ct. 1937, 1960 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974
(2007)); Swanson v. Citibank, N.A., 614 F.3d 400,
404 (7th Cir. 2010).
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.” Iqbal, 556 U.S. at 678, 129 S.Ct. at
1949 (citing Twombly, 550 U.S. at 556, 127 S.Ct. at
1955). While a complaint need not include detailed factual
allegations, there “must be enough to raise a right to
relief above the speculative level.” Twombly,
550 U.S. at 555. “Threadbare recitals of the elements
of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 556 U.S.
at 678, 129 S.Ct. at 1949 (citing Twombly, 550 U.S.
at 556, 127 S.Ct. at 1955). These requirements ensure that
“the defendant [receives] fair notice of what the . . .
claim is and the grounds upon which it rests . . . .”
Twombly, 550 U.S. at 556, 127 S.Ct. at 1964 (quoting
Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103
The Fair Debt Collection Practices Act (FDCPA)
purposes of the FDCPA are ‘to eliminate abusive debt
collection practices by debt collectors, to insure that those
debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged, and
to promote consistent State action to protect consumers
against debt collection abuses.'” Pantoja v.
Portfolio Recovery Assocs., LLC, 852 F.3d 679, 683 (7th
Cir. 2017) (quoting 15 U.S.C. § 1692e). To that end, the
FDCPA prohibits collectors of consumer debts from, among
other things, using “any false, deceptive, or
misleading representation or means in connection with the
collection of any debt.” Id.
a debt collection letter is deceptive or misleading is a
question of fact.” Everett v. Fin. Recovery Svcs.,
Inc., No. 116-CV-01806-JMS-MPB, 2016 WL 6948052, at *6
(S.D. Ind. Nov. 28, 2016) (citing Evory v. RJM
Acquisitions Funding L.L.C., 505 F.3d 769, 776 (7th Cir.
2007)). Dismissal is appropriate where it is
“‘apparent from a reading of the [debt
collection] letter that not even a significant fraction of
the population would be misled by it.'”
Id. (quoting Zemeckis v. Global Credit &
Collection Corp., 679 F.3d 632, 636 (7th Cir. 2012)).
Deceptive or misleading debt collection tools include
“[t]he false representation of . . . the character,
amount, or legal status of any debt, ” “[t]he
threat to take any action that cannot legally be taken or
that is not intended to be taken, ” and “[t]he
use of any false representation or deceptive means to collect
or attempt to collect any debt or to obtain information
concerning a consumer.” 15 U.S.C. § 1692e(2)(A),
a debt collection letter is false, deceptive, or misleading
under the FDCPA must be evaluated from the perspective of the
least sophisticated consumer. Evory, 505 F.3d at
774. Thus, to determine whether a representation made in a
collection letter is misleading, the Court must ask whether a
person of modest education and limited commercial savvy would
likely be deceived. Id. “The standpoint is not
that of the least intelligent consumer in this nation of 300
million people, but that of the average consumer in the
lowest quartile (or some other substantial bottom fraction)
of consumer competence.” Id. (citations
omitted). As described by the Seventh Circuit, the least
sophisticated consumer “isn't a dimwit. She may be
uninformed, naive, and trusting, . . . but she has
rudimentary knowledge about the financial world, and is
capable of making basic logical deductions and
inferences.” Wahl v. Midland Credit Mgmt.,
Inc., 556 F.3d 643, 645 (7th Cir. 2009).
“Furthermore, while our unwary debtor may tend to read
collection letters literally, he does not interpret them in a
bizarre or ...