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Nicholas v. Alltran Education, Inc.

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

September 30, 2019



          Honorable Edmond E. Chang, United States District Judge.

         Michael Nicholas defaulted on his student loan payments. So Alltran Education, a collection agency, sent Nicholas a letter attempting to collect the amount owed. Nicholas later sued Alltran, alleging that the debt-collection letter violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq (FDCPA). R. 1, Compl.[1]Alltran now moves to dismiss the complaint. R. 10, Mot. Dismiss. For the reasons discussed below, Alltran's motion is granted.

         I. Background

         For purposes of this motion, the Court accepts as true the allegations in the Complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007). In addition to the allegations in the pleading itself, documents attached to a complaint are considered part of the complaint. Fed.R.Civ.P. 10(c). Nicholas owes money on student loans. Compl. ¶¶ 6, 11; see also R. 1-2, Exh. A, Collection Letter. At some point, the original creditor of his student loans transferred the debt to Alltran for debt collection. Compl. ¶¶ 10, 13. Eventually, Nicholas defaulted on his loan payments, see Collection Letter at 1, so Alltran sent Nicholas a letter, attempting to collect the debt, see id.; Compl. ¶¶ 14-16. The letter referred to the possibility of a “review[]” for wage garnishment:

If we don't hear from you, your debt(s) will be reviewed for Administrative Wage Garnishment (AWG). Under that program, ED [the U.S. Department of Education] can issue an order to your employer directing them to withhold up to 15% of your disposable pay to be paid to ED to apply to your defaulted debt(s).

         Collection Letter at 1; Compl. ¶ 17.

         Nicholas claims that this language is misleading, and thus violates § 1692e of the FDCPA. Compl. ¶ 23. Specifically, he claims that the letter “threatens garnishment if [he] does not pay, ” and “misleads [him] as to his rights in such matter.” Id. ¶ 21. Alltran now moves to dismiss the complaint, arguing that Nicholas fails to adequately state a claim. Mot. Dismiss.

         II. Legal Standard

         Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This short and plain statement 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, 545 (2007) (alteration in original) (cleaned up).[2] The Seventh Circuit has explained that this rule “reflects a liberal notice pleading regime, which is intended to focus litigation on the merits of a claim rather than on technicalities that might keep plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)) (cleaned up).

         “A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[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). These allegations “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.

         III. Analysis

         Section 1692e prohibits debt collectors from using false or misleading tactics to collect a debt: “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. This provision, essentially a “rule against trickery, ” Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470, 473 (7th Cir. 2007), sets forth “a nonexclusive list of prohibited practices” in 16 subsections, McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1019 (7th Cir. 2014). Although “a plaintiff need not allege a violation of a specific subsection in order to succeed in a Section 1692e case, ” Lox v. CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012), Nicholas invokes § 1692e generally as well as three subsections: (4), (5), and (10).[3]

         In evaluating whether a debt collector's statement is deceptive under § 1692e, the statement is viewed from the perspective of an “unsophisticated consumer.” That is, the Court must ask “whether a person of modest education and limited commercial savvy would be likely to be deceived by the debt collector's representation.” Dunbar v. Kohn Law Firm, S.C., 896 F.3d 762, 764 (7th Cir. 2018). This standard protects a consumer who is “uninformed, naïve, and trusting, ” but who nonetheless “possesses rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses reasonable intelligence, and is capable of making basic logical deductions and inferences.” Boucher v. Fin. Sys. of Green Bay, Inc., 880 F.3d 362, 366 (7th Cir. 2018) (cleaned up). The reasonable consumer, though unsophisticated, “is not a dimwit.” Lox, 689 F.3d at 822 (cleaned up). Because this is a fact-laden inquiry, dismissal for failure to state a claim is only appropriate “in cases involving statements that plainly, on their face, are not misleading or deceptive.” See Boucher, 880 F.3d at 366-67.

         According to Nicholas, the letter implies that “Alltran has the power to garnish wages if it does not hear from Plaintiff, ” Compl. ¶ 19, and, therefore, the letter “threatens” garnishment, Compl. ¶ 21; R. 19, Pl.'s Resp. Br. at 1. Even viewed through the lens of an unsophisticated consumer, Nicholas' reading of the letter is untenable. The actual words in the letter say that if Alltran does not hear from Nicholas, then Nicholas' “debt(s) will be reviewed for Administrative Wage Garnishment (AWG).” Collection Letter at 1 (emphasis added). An unsophisticated consumer would not read this language to mean that Alltran will go on to deduct Nicholas' wages if it does not hear from Nicholas. Instead, the statement that the debt will be “reviewed” necessarily means that something more has to ...

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