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Wheeler v. Midland Funding, LLC

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

July 31, 2017



          Virginia M. Kendall Judge

         Plaintiff Kevin Wheeler brought this putative class action against Midland Funding, LLC., Midland Credit Management, Inc. (“MCM”), and Encore Capital Group, Inc. alleging that Defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et. seq. (“FDCPA”), when MCM's website failed to inform him that his debt was not collectible under the applicable statute of limitations. Defendants now move to dismiss Wheeler's claim for lack of subject matter jurisdiction, arguing that Wheeler lacks Article III standing because he has failed to articulate a concrete injury. For the reasons set forth below, Defendants' Motion to Dismiss is denied.


         Sometime in 2015, Wheeler noticed that Midland Credit Management (“MCM”) was pulling his credit report. (Dkt. 1 ¶ 33.) MCM is a collection agency that collects charged off-debts for owners of debt, specifically for Midland Funding LLC. (Id. 17.) As such, MCM is a debt collector as defined in the FDCPA. See Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718, 1720 (2017). Wheeler contacted MCM and was told that it was attempting to collect an alleged credit card balance and offered Wheeler a 40% discount to settle the debt. (Id. ¶¶ 33-35, 38.)

         Thereafter, on October 4, 2015, Wheeler noticed that MCM had pulled his credit again. (Id. at ¶ 40.) When Wheeler called MCM, a representative provided him with an account number to obtain information about his debt from MCM's website. (Id.) MCM's website indicated: (1) that Wheeler last made payment on the debt on September 18, 2009; (2) that the original creditor had given up on being repaid as of April 30, 2010; (3) a settlement offer whereby plaintiff would save 40%; and (4) notice that MCM was not obligated to renew its settlement offer. (Id. at ¶¶ 44-45; Dkt.1, Ex. B.) The website did not indicate that the statute of limitations on Wheeler's debt had expired.

         Because the statute of limitations for his credit card debt had expired, Wheeler asserts that his debt could not be forcibly collected and that Defendants violated the FDCPA and related rules because they failed to inform him of that fact. (Id. ¶ 46.) He also alleges that Defendants regularly attempt to collect debts from other debtors where the statute of limitations on the debt has expired. (Id. at ¶ 48.)

         In addition to the facts alleged by Wheeler in his Complaint, both sides submit facts elicited during discovery. Specifically, prior to accessing MCM's website in September 2015, Wheeler's credit card debt was bought by non-party Asset Acceptance, LLC, a subsidiary of Defendant Encore. (Dkt. 44-1 at 99:10-20; Dkt. 44 at 3.) In early April 2015, approximately six months before he accessed MCM's website, Asset sent Wheeler a letter notifying him that the statute of limitations applicable to his credit card debt had expired. (Dkt. 44-1 at 133:1-135:15.) At his deposition, Wheeler conceded that he received the notice from Asset regarding the statute of limitations, understood what it meant, and admitted that he did not intend to make any further payments on the debt. (Id.) In a response to a Request for Admission, Plaintiff admitted that he has not “sustained any actual damages relating to this lawsuit, ” (Dkt. 44-2 at 5), and testified that he did not believe he had “any actual damages” or “other kind of injuries . . . as a result of Midland failing to put on its website the Statute of Limitations disclosure.” (Dkt. 44-1 at 152:20-153:5.) Wheeler, however, also testified that he felt misled by Midland's offer to settle the debt without informing him that the statute of limitations had run, because he did not “know the consequences of making a payment.” (Dkt. 49-1 at 127:22-128:15.) Wheeler also testified that in light of the statute of limitations information he received from Asset, the lack of notice about the statute of limitations from MCM confused him because he believed the account had been closed. (Dkt. 44-1 at 131:6-24.) At the time he accessed the website, Wheeler did not know how MCM calculated the applicable statute of limitations, including whether they applied a different statute of limitations to the debt. (Id. at 174:14 -176:1.) He also did not know whether MCM had any reason to consider his account to be restarted by the statute of limitations. (Id. at 177:4-20.)


         A motion to dismiss under Rule 12(b)(1) challenges the Court's subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). When a defendant brings a facial challenge to subject matter jurisdiction, “the district court must accept as true all material allegations of the complaint, drawing all reasonable inferences therefrom in the plaintiff's favor, unless standing is challenged as a factual matter.” Remijas v. Neiman Marcus Group, LLC, 794 F.3d 688, 691 (7th Cir. 2015). If, however, as here, a defendant factually challenges the basis for federal jurisdiction, “the district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.” Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009) (citation and internal quotation marks and annotation omitted).


         Defendants argue that Wheeler lacks Article III standing because he did not suffer any concrete harm or even the risk of harm resulting from Midland's alleged violations of the FDCPA. (Id. at 9.) Defendants focus on Plaintiff's admissions during discovery that he was aware that the statute of limitations had expired on his debt before he accessed MCM's website, he had no intention of making any payment to MCM, and that he testified he did not suffer an injury from the alleged FDCPA violation. (Dkt. 44 at 1-2.) Wheeler responds even though he did not suffer a pecuniary injury, he suffered an informational injury-the deprivation of critical account information regarding his debt-which the Seventh Circuit recognizes as a “concrete injury” for the purposes of Article III standing. (Dkt. 49 at 2.)

         I. Article III Standing

         There is “[n]o principle . . . more fundamental to the judiciary's role in our system of government than the constitutional limitation of federal court jurisdiction to actual cases or controversies.” Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724, 726 (7th Cir. 2016), cert. denied, No. 16-1113, 2017 WL 1001378 (U.S. June 19, 2017) (quoting Spokeo, Inc. v. Robbins, 136 S.Ct. 1540, 1547 (2016)). Whether a claimant has standing to sue is an important component of the case and controversy limitation because it ensures “that courts do not decide abstract principles of law. . . .” Meyers, 843 F.3d at 726 (quoting Sierra Club v. Marita, 46 F.3d 606, 613 (7th Cir. 1995.) “The law of Article III standing, which is built on separation-of-powers principles, serves to prevent the judicial process from being used to usurp the powers of the political branches.” Clapper v. Amnesty Int'l USA, 133 S.Ct. 1138, 1146 (2013).

         Article III standing consists of three elements, requiring the plaintiff to “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, 136 S.Ct. at 1548 (citing Lujan v. Defenders of Wildlife, 504 U.S. at 560-61 (1992)). The plaintiff bears the burden of ...

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