United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Z. LEE United States District Judge.
Victoria Infante (“Plaintiff”) brought this
action against Defendant Portfolio Recovery Associates, LLC
(“Defendant”), alleging a violation of the Fair
Debt Collection Practices Act, 15 U.S.C. § 1692 et
seq. After Defendant moved for summary judgment,
Plaintiff voluntarily dismissed her claim, and Defendant
thereafter moved for sanctions under Rule 11. The Court
referred Defendant's motion to Magistrate Judge M. David
Weisman, who recommended that the motion be denied. For the
reasons that follow, the Court adopts Magistrate Judge
Weisman's report and recommendation , overrules
Defendant's objections , and denies Defendant's
and Procedural Background
defaulted on a Synchrony Bank consumer credit card account.
Am. Compl. ¶¶ 9-10, ECF No. 7. Defendant allegedly
purchased Plaintiff's debt and thereafter tried to
collect it from Plaintiff. Id. ¶¶ 11-12.
In response, Plaintiff informed Defendant in June 2015 that
she disputed the debt. Id. ¶ 12. Plaintiff
claims that, despite informing Defendant of the disputed
nature of the debt, Defendant failed to communicate this
information to Experian in July 2015 in violation of 15
U.S.C. § 1692e(8). Id. ¶ 17. Her basis for
this allegation is an Experian report dated July 14, 2015,
which does not indicate that her debt was disputed.
Id., Ex. D.
filed her First Amended Complaint in this action on November
15, 2015. On January 21, 2016, prior to filing an answer to
the complaint, Defendant shared internal documentation with
Plaintiff that, in Defendant's view, established that it
had in fact informed Experian (along with TransUnion and
Equifax) on July 8, 2015, that Plaintiff's debt was
disputed. Def.'s Objs. 1, ECF No. 100; see
Def.'s Mot. Sanctions, Ex. A, ECF No. 74. Then, in
February 2016, Plaintiff produced a TransUnion report from
July 16, 2015, that indicated her debt was disputed.
Def.'s Objs. at 2; see Def.'s Mot.
Sanctions, Ex. B, ECF No. 75. Finally, in March 2016,
Defendant served an initial Rule 11 motion on Plaintiff,
attaching a declaration from one of Defendant's
executives authenticating its internal records that Defendant
had in fact reported to Experian (along with TransUnion and
Equifax) on July 8, 2015, that Plaintiff's debt was
disputed. Def.'s Objs. at 2; see Def.'s Mot.
Sanctions, Ex. C, ECF No. 76.
thereafter filed its initial Rule 11 motion in April 2016, at
which time the Court dismissed the motion without prejudice
and granted Defendant leave to refile after moving for
summary judgment. Defendant moved for summary judgment in
September 2016. In October 2016, Plaintiff filed a suggestion
of bankruptcy, following which she moved to voluntarily
dismiss the case. The Court granted the motion but later
reopened the case in order to permit Defendant to file its
present motion for sanctions. In its motion, Defendant states
that Plaintiff's claim lacked a factual basis. Def.'s
Mot. Sanctions ¶ 30. It further asserts that
Plaintiff's counsel failed to adequately investigate the
factual basis of the claim and pursued the claim despite its
lack of a factual basis. Id. ¶¶ 30-32.
Court referred the motion to Magistrate Judge Weisman, who
recommended that the motion be denied. See Report
& Rec., ECF No. 97. He explained that the evidence that
Defendant produced against Plaintiff's claim did not
establish that it was meritless such that Plaintiff should
have dismissed the claim earlier. Id. at 3.
“Given this contradictory evidence, ” he
reasoned, “plaintiff and her counsel were not required
blindly to accept defendant's version of the
facts.” Id. He noted that the Experian report
“squarely disputed” Defendant's
representations, and that “[b]ased on the divergence of
information that the parties possessed, plaintiff was
entitled to investigate the veracity of the relevant facts
through the discovery process without running afoul of Rule
imposition of sanctions is a dispositive matter for which
magistrate judges make a recommendation that district courts
review de novo. See Cleversafe, Inc. v.
Amplidata, Inc., 287 F.R.D. 424, 431 (N.D. Ill. 2012).
The Seventh Circuit has further articulated the de
De novo review requires the district judge to decide
the case based on an independent review of the evidence and
arguments without giving any presumptive weight to the
magistrate judge's conclusion. The district judge is
free, and encouraged, to consider all of the available
information about the case when making this independent
decision. A district judge may be persuaded by the reasoning
of a magistrate judge or a special master while still
engaging in an independent decision-making process.
Mendez v. Republic Bank, 725 F.3d 651, 661 (7th Cir.
seeks sanctions under Rule 11 and 28 U.S.C. §
1927. Rule 11 states, in pertinent part, that
“[b]y presenting to the court a pleading, written
motion, or other paper- whether by signing, filing,
submitting, or later advocating it-an attorney or
unrepresented party certifies to the best of the person's
knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances . . . [that] the factual
contentions have evidentiary support.” Fed.R.Civ.P.
11(b)(3). In determining if sanctions for violating Rule 11
are warranted, “[t]he court must ‘undertake an
objective inquiry into whether the party or his counsel
should have known that his position is
groundless.'” Cuna Mut. Ins. Soc. v. Office
& Prof'l Emps. Int'l Union, Local
39, 443 F.3d 556, 560 (7th Cir. 2006) (quoting
Nat'l Wrecking Co. v. Int'l Bhd. of
Teamsters, Local 731, 990 F.2d 957, 963
(7th Cir. 1993)). A number of factors bear on the
reasonableness of an inquiry into factual allegations,
[w]hether the signer of the documents had sufficient time for
investigation; the extent to which the attorney had to rely
on his or her client for the factual foundation underlying
the pleading, motion or other paper; whether the case was
accepted from another attorney; the complexity of the facts
and the attorney's ability to do a sufficient pre-filing