Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

GULLEY v. MARKOFF & KRASNY (December 22, 2011)

In 2008, the City of Chicago imposed fines on Victor Gulley for Municipal Code violations. Gulley did not pay the fines because he no longer owned the real property associated with the violations. The City retained the law firm of Markoff & Krasny to collect the fines. Gulley brought suit against Markoff & Krasny pursuant to the Fair Debt Collection Practices Act alleging a number of specific statutory violations. The law firm moved to dismiss the complaint on the ground that the fines were not "debts" under the Act. Judge Gettleman (N.D. Ill.) agreed. Gully appeals.

In their opinion, Seventh Circuit Judges Flaum, Kanne, and Sykes affirmed. In affirming, the Court relied on: a) the language of the Act, which states that a "debt" must arise out of a transaction in which the subject of the transaction is "primarily for personal, family, or household purposes" b) the FTC (which is entitled not to Chevron deference but to respectful consideration in this context), which specifically excludes fines from the definition of "debts," and c) the consistent findings of district courts (no Court of Appeals has addressed the issue in a written opinion) excluding fines from FDCPA coverage.

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MARR v. BANK OF AMERICA (December 6, 2011)

In 2007, Richard Marr refinanced his home mortgage with Countrywide Bank. Summit Title closed the loan in February. Marr signed an acknowledgment at that time that he had been given two copies of the right to rescind notice, as required by the Truth in Lending Act. The closing agent gave Marr the closing documents, which he alleges he put in a folder and kept in a filing cabinet in his home. Two years later, his attorney inspected the folder in connection with an unrelated matter and discovered only one copy of the notice to rescind. Marr brought suit to rescind, relying on the statutory three-year rescission period when a lender fails to provide two copies of the notice. He testified that he removed nothing from the closing folder between the time he received it and the time he turned it over to his lawyer. The closing agent testified regarding the standard procedures for closing, which included providing the borrower with two copies of the notice. Marr testified that the February closing did not follow the standard procedures outlined in the agent’s affidavit. Judge Stadtmueller (E.D. Wis.) granted summary judgment to the defendants based on the rebuttable presumption created by Marr’s signed acknowledgment. The court ruled that his testimony was not enough to overcome the presumption. Marr appeals.

In their opinion, Seventh Circuit Judges Wood, Tinder, and Hamilton reversed and remanded. The Court first noted that the Act does create a rebuttable presumption but that it does so by saying that it "does no more than" create the presumption. The Court interpreted this language as a warning to courts to not overvalue the presumption. The Third Circuit has recently ruled that the borrowers testimony by itself is sufficient to overcome the presumption. The Court declined to adopt that extreme a position because Marr presented more than that: the folder contained only one copy of the notice, he testified that he removed nothing from the folder, and he testified that the closing agent did not follow standard operating procedures during closing. A reasonable jury could believe that he received only one copy of the notice.

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FTC v. TRUDEAU (November 29, 2011)

Kevin Trudeau advertises his books on infomercials. The FTC, after entering into a court approved settlement, alleged that Trudeau violated the settlement and sought a contempt finding. Judge Gettleman (N.D. Ill.) agreed and found Trudeau in contempt. He imposed a $37.6 million fine and banned Trudeau from making infomercials for three years. On appeal, the Seventh Circuit affirmed (opinion and intheiropinion) the finding of contempt but remanded on the sanctions. It concluded that the district court failed to adequately explain its rationale for the monetary sanctions and also concluded that a complete ban was inappropriate, in that he did not give Trudeau an opportunity to comply with the agreement. On remand, Judge Gettleman reinstated the monetary penalty, explaining that he arrived at it by multiplying the number of books ordered through the 800 number by the price of the books plus shipping. The court also imposed a $2 million performance bond if Trudeau wanted to do any more infomercials, to be effective for five years. Trudeau appeals.

In their opinion, Seventh Circuit Judges Ripple, Manion, and Tinder affirmed. The Court rejected Trudeau's argument that the fine was improper because it was based on consumer loss. That is an appropriate approach to a contempt finding even if, as he alleges, Trudeau did not benefit to the same degree as the consumers lost. The Court actually noted that the district court's figures were conservative. It only included those books that were sold through the infomercial’s 800 number, even though other books were sold through the Internet and retail outlets. With respect to the performance bond, the Court rejected Trudeau's argument that the FTC had to show significantly changed circumstances. That rule applies only in institutional reform cases. Here the proper test is whether the order was achieving its purpose -- and it clearly was not. Finally, the Court rejected Trudeau's First Amendment argument and found the requirement narrowly enough drawn to meet the constitutional standard: a) the bond is only triggered if Trudeau decides to engage in infomercials, b) the district court gave him an opportunity to seek a reduction in the amount of the bond with proof of his financial position, and c) the amount of the bond is proportional to the threatened harm.

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ANDERSON v. GULF STREAM COACH (November 3, 2011)

Jeff and Liz Anderson had a 2008 Crescendo RV manufactured by Gulf Stream. They liked the vehicle but wanted to upgrade to a more powerful version for their tour of the Western United States. They contacted Mike Apple at Royal Gorge, a Gulf Stream dealer. He suggested a 2009 Tourmaster. The Anderson's, with Apple, examined the vehicle and consulted Gulf Stream's website. The website indicated that the vehicle came with a standard 425-hp engine. In fact, the vehicle at issue had only a 360-hp engine. Assuming the RV had the larger engine, the Anderson's purchased it "as is" and accepted delivery in September 2008. After only a few uses, they discovered numerous significant problems. They returned the RV to Royal Gorge. During the repair process, Apple discovered the presence of the smaller engine, although the original paperwork had correctly identified the engine’s horsepower. The Anderson's went back and forth with Apple and Gulf Stream. Finally, in April 2009, the Anderson's brought suit for breach of express warranty, breach of the implied warranty of merchantability, Magnuson-Moss Warranty Act violations, Indiana’s Deceptive Consumer Sales Act violations, and fraud. Magistrate Judge Nuechterlein (N.D. Ind.) granted summary judgment to the defendants on all counts. The Anderson's appeal.

In their opinion, Circuit Judges Bauer, Flaum, and Williams affirmed in part and reversed in part. The Court first addressed the Magnuson-Moss Warranty Act claim, which was based on the state law warranty claims. The statute provides a federal cause of action for failure to comply with a warranty. The statute requires, however, notice and a reasonable opportunity to cure. Although the district court concluded that the Anderson's did not give a reasonable opportunity to cure, the Court disagreed, when the record was viewed in the light most favorable to the Anderson's. Thus, summary judgment on the state law expressed warranty claim and related MMWA claim was improper. The Court reached the same conclusion with respect to the Anderson's state law implied warranty claim and its related MMWA claim. Again, the district court relied on its conclusion that the Anderson's failed to provide an opportunity to cure, with which the Court disagreed. The Court turned to the Indiana Deceptive Consumer Sales Act claim. That claim was based on the fact that the Tourmaster was designated a 2009 model but was manufactured to fulfill an order for 2008 model. The FTC is responsible for enforcing model year designation requirements. Under those requirements, although an RV manufacturer may use an older chassis on a newer model, or even the same chassis on different model years, it cannot do as it did here – use a 2007 chassis on a vehicle that is completed during the 2008 model year and call it a 2009. The district court erred in concluding that it could. But the Court also concluded that there were issues of material fact with respect to this claim because the Anderson's allegedly received documents with the RV that accurately identified the 360-hp engine. Summary judgment is therefore not appropriate for either party. Finally, the Court concluded that there was no evidence in the record of intent to deceive and affirmed summary judgment on the fraud claim.

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KASALO v. HARRIS & HARRIS, LTD. (August 26, 2011)

Mariana Kasalo brought suit under the Fair Debt Collection Practices Act against Harris & Harris. Her attorney included two class accounts in her complaint. Harris & Harris admitted that it violated the Act with respect to Kasalo, but denied that its normal practices violated the Act. The parties informed the district court judge that they intended to settle the individual claim. Although the court expressed skepticism with respect to the class claims, he allowed some discovery. Over the following months, status hearings were held, Kasalo's attorney abandoned two class theories but developed a third, and the attorney missed due dates and failed to inform the court of his intentions. When Kasalo's attorney showed up late for a May 2010 status hearing, Judge Guzmán (N.D. Ill.) dismissed the case for want of prosecution. When he showed up minutes later, the court instructed him to file a motion for reconsideration explaining why he had not been more diligent in prosecuting the case. The court later denied that motion. Kasalo appeals.

In their opinion, Seventh Circuit Judges Rovner, Wood, and Evans (who, as a result of his death, took no part in the decision) reversed and remanded. A dismissal for want of prosecution is an extremely harsh remedy and should only be used when, considering all the circumstances, less serious sanctions are unsatisfactory. The factors include the frequency of plaintiff's shortcomings, whether the shortcomings are attributal to the plaintiff or her lawyer, any prejudice, the impact on the court, and the merits of the suit. The Court noted that most of the factors weigh against an outright dismissal. Courts should consider less serious sanctions and normally should provide a warning to a party before dismissal. Here, the district court did neither. In fact, the Court specifically noted the presence of a much more appropriate remedy. The district court could have denied class certification and allowed the parties to settle the individual claim. The plaintiff then could have sought review of the class certification denial.

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COLLINS v. AMERICA'S SERVICING CO. (July 13, 2011)

In 2004, Phillip Collins bought a house in Lowell, Indiana. His lender assigned the mortgage servicing obligations to America's Servicing Company shortly after closing. Under the terms of the mortgage, Collins’s payment was due on the first of the month with a 15-day grace period, a late fee was assessed after the grace period, and any payment was always applied first to the oldest obligation. Collins missed his payments in September and October of 2006. He sought assistance from ASC. Collins and ASC entered into a forbearance agreement. Under the agreement: a) Collins did not have to make his November payment, b) the amount of his November payment was prorated over the following eight months’ payments, c) his due date was extended to the 15th of each month, d) the grace period was eliminated, and e) ASC would continue credit reporting. Collins apparently did not understand the agreement. He thought that he could avoid late fees and protect his credit under the agreement if he simply made his regular, though now slightly increased, monthly payments. Collins and ASC entered into a second agreement in April. ASC agreed not to accelerate the loan if Collins made his regular monthly payments for the following four months. Like the earlier agreement, there was no grace period and credit reporting continued. In fact, ASC charged late fees every month and reported him delinquent every month after September. Collins discovered this when he tried to refinance in August 2007. Collins sent a letter to ASC pursuant to the Real Estate Settlement Procedures Act (RESPA) and requested that ASC remove the late fees and retract any negative credit reports. ASE responded to the letter but refused his requests. He now faces foreclosure. Collins filed suit alleging violations of RESPA, the Indiana Home Loan Practices Act, and breach of contract. Judge Miller (N.D. Ind.) granted summary judgment to ASC on all counts. He concluded that ASC responded to Collins' RESPA request according to the statute. He concluded that Collins failed to prevent evidence of either a breach of contract or a material misrepresentation in violation of the Indiana statute. Collins appeals the latter two rulings.

In their opinion, Judges Bauer, Kanne, and Evans affirmed. The Court first addressed the breach of contract claim. The Court concluded that ASC fully complied with the terms of the mortgage, the first forbearance agreement, and the second forbearance agreement. After Collins missed his September and October payments, he was always in arrears. Even if he made every monthly payment, the monthly payments went to past due obligations. The fact that Collins understood otherwise, and may have even been told otherwise, does not help him. The language of the contracts is unambiguous and Collins cannot rely on oral modifications for a breach of contract under Indiana law. Likewise, Collins cannot succeed on his Indiana Home Loan Practices Act claim. The written agreements are very clear. Collins cannot prove that ASC made a knowing or intentional material misrepresentation.

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CARTER v. AMC (May 13, 2011)

Jackson Square Properties owns the Riverstone Apartments in Bolingbrook Illinois. AMC, LLC managed the building on its behalf. AMC brought suit in state court to evict tenant Geaneice Carter. Although AMC prevailed at the trial court level, the appellate court reversed on the ground that AMC failed to give proper notice. One judge on the panel also concluded that AMC violated the Fair Debt Collection Practices Act. Carter brought suit in federal court seeking damages for AMC's violation of the Act. Judge Gettleman (N.D. Ill.) dismissed the complaint on the ground that AMC was not a "debt collector" under the Act because it collected money owed to itself. Carter appeals.

In their opinion, Chief Judge Easterbrook and Judges Kanne and Sykes affirmed. The Court rejected Carter's position that AMC's violation of the Act was established in state court. Not only is the opinion of one judge on a three-judge panel not enough to resolve an issue, but even the one judge who expressed an opinion acknowledged that the resolution of that issue was not necessary for the court's decision. Collateral estoppel applies only when an issue is necessarily decided. The Court then pointed out an incorrect factual assumption made by both the state court and the district court. Both assumed that AMC was the lessor. In fact, it is clear that Jackson Square Properties is the lessor and AMC is its agent. AMC can therefore not escape liability under the Act as the lessor. But AMC can also escape liability if it is attempting to collect a debt it "obtained" from another and the debt was not in default when AMC obtained it. The Court noted that several courts of appeals have concluded that a mortgage loan servicer "obtains" the bank's debt. Although no court of appeals has considered the lessor situation, many district courts have and have concluded that a lease servicer "obtains" the debt when the lease is signed. The FTC staff has also concluded, albeit not in a regulation or advisory opinion, that a lease servicer "obtains" the debt when it becomes the agent. The agent is not a debt collector under the Act unless the rent was in arrears at that time. The Court therefore concluded that AMC obtained the debt when it acquired the authority to collect the rent. Since Carter was not in arrears at that time, AMC is not a debt collector under the Act.

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O’ROURKE v. PALISADES ACQUISITION XVI (March 17, 2011)

Michael O'Rourke accumulated several thousand dollars of debt on his credit card but never paid it. In fact, he assumed the statute of limitations barred any payment obligations. So, when lawyers for Palisades Acquisition XVI, the debt's owner, sent him a collection notice, he ignored it. Palisades filed suit in state court and attached an exhibit that appeared to be, but was not, a credit card bill issued by Palisades to O'Rourke. Palisades eventually dismissed the state court case. O'Rourke brought suit against Palisades in federal court, alleging that the exhibit violated the Fair Debt Collection Practices Act. His theory was that Palisades included the exhibit in order to mislead the state court judge into thinking that it was an accurate statement of the actual debt. Judge Norgle (N.D. Ill.) granted summary judgment to Palisades. O’Rourke appeals.

In their opinion, Judges Flaum, Manion, and Tinder (concurring in the result) affirmed. The Court stated that the Act prohibits both the false representation of a debt's "character, amount, or legal status" and the use of deceptive means to collect a debt. On its face, the Act does not say whether it includes statements made to a state court judge. The Court concluded that it did not. The Act is intended to protect consumers. Courts have extended its protection to third parties only when there is a special relationship (e.g., attorney, executrix) with a consumer. The Court held that the Act only applies to statements directed to consumers, and those with a special relationship to a consumer. Since a state court judge is an impartial decision-maker, the exhibit is not a covered communication.

Judge Tinder concurred in the result but disagreed with the Court’s rationale. He noted that the language of the Act is quite expansive, that its goal is to reduce abusive debt collection practices, and that state judges are powerful participants in the debt collection process. Why, then, should a false and misleading court submission not be a violation of the Act? Judge Tinder did not answer that question because he did not believe it necessary or prudent. Even assuming that the Act applies to communications to judges, O'Rourke loses. Because the exhibit was not misleading on its face, O'Rourke was required to submit extrinsic evidence. Although he submitted an expert report, the trial court excluded it. Without any extrinsic evidence, O'Rourke is unable to establish a genuine issue of material fact and summary judgment for Palisades was proper.

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TINSLEY v. INTEGRITY FINANCIAL PARTNERS (February 11, 2011)

Integrity Financial Partners (IFP) is a debt collector and was trying to collect a debt from Christopher Tinsley. Tinsley retained a lawyer and had the lawyer send a letter to IFP advising them that Tinsley refused to pay the debt and had no assets. The lawyer further requested that all collection efforts cease and advised IFP to "direct all future communications to our office." When IFP called the lawyer and requested payment, Kinsley filed suit under the Fair Debt Collection Practices Act. Chief Judge Holderman (N.D. Ill.) granted summary judgment to the defendants. Tinsley appeals.

In their opinion, Chief Judge Easterbrook and Judges Manion and Hamilton affirmed. The Court began with § 1692(c)(c) of the Act. That section prohibits any communication by a debt collector with the “consumer" when it is advised that the consumer refuses to pay the debt or asks for no further communication on the debt. Tinsley argues that the prohibition on communicating with the consumer applies equally to communicating with the consumers attorney, his agent. Tinsley relies on the section of the Act that defines "communication" as conveying information directly or indirectly. Surely, he argues, communication with one’s lawyer is an indirect communication to the client. The Court noted that Tinsley's argument had been accepted by at least one district court and had apparently not been considered at the appellate court level. Although expressing some attraction to the argument at a superficial level, the Court reconsidered after it put the section in context. For example, subsections (a) and (b) of the Act are written in such a way that they would make no sense if a consumer and his lawyer were interchangeable. Furthermore, the Court noted that it is unlikely that Congress intended to prohibit all communication with a consumer’s lawyer. Finally, the Act’s definition of consumer does not include lawyer. Taking the Act as a whole, together with its purposes, the Court concluded that IFP's communication with Tinsley's lawyer was not prohibited by the Act.

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THOROGOOD v. SEARS, ROEBUCK AND CO. (November 2, 2010)

For the third time in two years, the Seventh Circuit has an occasion to decide an appeal in this failed attempt at a class action. Steve Thorogood filed a class action on behalf of residents of 28 states and the District of Columbia. He alleged that Sears' advertising and representations regarding the stainless steel content of a dryer drum constituted a violation of consumer protection laws. The Court reversed the district court's class certification order (the opinion and intheiropinion). It concluded that there were no common issues of fact and that the case was a particularly poor case for class certification. On remand, Sears made a $20,000 offer of judgment on Thorogood's individual claim. Because that amount exceeded Thorogood's maximum recovery, the district court dismissed the case as moot. The Court affirmed, rejecting Thorogood's argument that he was entitled to substantial attorneys' fees (the opinion and intheiropinion). Undaunted, Thorogood's counsel continued his "quixotic . . . quest" and filed an almost identical class-action suit in California. The California district court ruled that the case was barred by collateral estoppel. After plaintiffs alleged additional facts in an amended complaint, however, the court reversed its ruling and allowed the case to proceed with discovery. Sears returned to the Illinois district court and sought to enjoin the continued prosecution of the California case. Judge Leinenweber (N.D. Ill.) denied the motion, concluding that the availability of a collateral estoppel defense was adequate relief. Sears appeals.

In their opinion, Judges Posner, Kanne, and Evans reversed and remanded. The Court first noted that the district court had jurisdiction notwithstanding the fact that the original case was no longer pending. Sears' motion was brought pursuant to the All Writs Act, which authorizes a federal court to issue commands that are necessary to effectuate prior decisions of the court. The Court turned its attention to the merits, which required it to determine whether the district court abused its discretion. Ordinarily, a collateral estoppel defense would amount to an adequate remedy at law and preclude injunctive relief under the All Writs Act. The Court concluded, however, that several factors in the case militated otherwise: the near frivolous nature of the complaint itself, its poor fit as a class action, the difficulty in structuring proper relief, counsel's stated intention to circumvent the district court's order, counsel's position that California consumer protection law is different when his earlier position in the Illinois case was that all class members were governed by the same law, the potential for abuse in class proceedings, the cost of pretrial discovery, and California counsel's "threat to turn the screws" if the case did not settle. The district court apparently did not take these considerations into account and may have believed that the mere availability of the collateral estoppel defense precluded relief. Although conceding that the California court's order deserved respect, the Court mentioned that the California court misunderstood the case and was not going to revisit certification until after discovery. In addition, its orders were not appealable. Sears is therefore without an adequate remedy at law and the district court abused its discretion in denying the injunction. The Court left the details of the injunction to the district court but made several comments nonetheless: the lawyers and all of the original class members should be subject to the injunction, the injunction should not prohibit individual claims, the additional named defendant in the California suit is entitled to no relief, no unnamed class member should be punished with contempt until served with a copy of the injunction, and the injunction should not prohibit class actions with materially different allegations. Finally, the Court noted that the Supreme Court recently granted certiorari in a case regarding a federal court's power to enjoin a state court proceeding. In consideration of that fact, the Court directed that the injunction should encompass state court proceedings but should specifically allow for a modification in consideration of the ultimate decision in the case. 

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BONTE v. U.S. BANK (October 19, 2010)

Travis and Jolene Bonte own a home in the small village of Woodville in west-central Wisconsin. In late 2005, they took out a third mortgage on the home. A few years later, the Bontes brought an action for rescission. They alleged that there were ten discrepancies between the HUD-1 settlement statement and the Truth in Lending Act (TILA) statement and disclosures. U.S. Bank, the mortgage holder, moved to dismiss for failure to state a claim. It argued that none of the errors alleged related to a “material” disclosure as required for TILA rescission. In response, the Bontes simply restated their allegations and the applicable legal standard. Judge Crocker (W.D. Wis.) dismissed the complaint, holding that the Bontes waived their opposition to the motion by failing to respond but also concluding that U.S. Bank was correct. The Bontes appeal.

In their opinion, Judges Posner, Rovner, and Sykes affirmed. The Court agreed with U.S. Bank’s statement of the applicable law – that rescission (at least after three days) requires proof of a “material” non-disclosure. Regulation Z identifies eighteen required disclosures and names five of them as material: the APR, the finance charge, the amount financed, the total of payments, and the payment schedule. The Court noted that the Bontes alleged that the ten errors related to the APR, the finance charge, and the amount financed. But U.S. Bank went through each of the errors and showed how they did not related to any material disclosure. The Bank provided citations and reasons why each did not qualify as a material disclosure. The Court noted that the Bontes failed to respond to any of the Bank’s arguments. Just as they did in the district court, they merely restated their conclusory allegation that the errors related to material disclosures. Iqbal requires a two-step approach. The Bontes meet the first step – a “short and plain statement” of their claim. But they failed, said the Court, to satisfy the second prong – demonstrating a plausible entitlement to relief. Just because they couched their allegation of materiality as a factual allegation, a court is not required to accept it as true. It is, in fact, a legal conclusion – not a factual allegation. By failing to respond to the Bank’s arguments, they have waived any argument that the errors related to material disclosures.

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SHLAHTICHMAN v. 1-800 CONTACTS (AUGUST 10, 2010)

In June of 2009, Eduard Shlahtichman purchased contact lenses from defendant 1-800 Contacts using the Internet. Shlahtichman used his credit card for the purchase. The company sent him an e-mail confirming his purchase. The e-mail contained the expiration date of his credit card. Shlahtichman brought suit pursuant to the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"). FACTA prohibits a merchant from "print[ing]" a credit card expiration date on a receipt "provided to the cardholder at the point of the sale." That restriction applies only to electronically printed receipts. Judge Darrah (N.D. Ill.) dismissed the suit on two grounds: that an e-mail order confirmation does not constitute printing and that an e-mail order confirmation is not provided "at the point of the sale." Shlahtichman appeals.

In their opinion, Judges Bauer, Rovner, and Hamilton affirmed. Much of the appeal centers on the meaning of the word "print." Since it is not defined in the statute, the Court looked to its ordinary meaning. Although recognizing that a minority of courts have extended its meaning to computer displayed receipts, the Court concluded that the Act applies only to paper receipts. It relied on dictionary definitions, the overall context and content of the Act, the ready application of such an approach to face-to-face transactions versus a host of questions in the computer context, Congress' determination of the effective date of the Act using the year the printing device was first put into use, and the lack of any reference to Internet or e-mail in the Act in light of Congress' many such references in other statutes. Alternatively, the Court noted that dismissal was proper because Shlahtichman alleged no actual injury, statutory damages are available only for willful violations, and 1-800 Contacts' interpretation of the statute was reasonable, even if wrong, and could not support a finding of willfulness.

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 SIEGEL v. SHELL OIL CO. (July 30, 2010)

Michael Siegel is a retail gasoline consumer. He brought a class action against several major oil companies. The complaint alleged that the oil companies violated the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA") and were unjustly enriched as a result of their concerted effort to reduce the supply of gasoline, thereby increasing its price. Judge St. Eve (N.D. Ill.) denied class certification and entered summary judgment for the defendants. Siegel appeals.

In their opinion, Circuit Judges Bauer and Sykes and District Judge Griesbach affirmed. The Court noted that an Illinois claim for unfair conduct under the ICFA requires both a substantial injury that could not reasonably have been avoided and that the injury be the proximate result of defendants' conduct. Addressing first the class certification issue, the Court concluded that the district court did not abuse its discretion in finding that common issues of fact did not predominate over individual issues. For example, each class member's gasoline purchasing habits would have to be determined in order to establish causation. On the merits, the Court concluded that Siegel's own testimony precluded a finding of proximate causation. He testified that he could and did purchase gasoline from other oil companies, that he continued to purchase gasoline from the defendant oil companies, and that many factors were relevant to his buying decisions. Finally, an unjust enrichment claim is not a stand-alone claim. Here, Siegel’s claim rests on his allegation of unfair conduct. Having rejected the ICFA claim, the Court rejected the unjust enrichment claim as well.

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PELLA CORP. v. SALTZMAN (May 20, 2010)

Pella Corp. is in the business of manufacturing and selling home windows. It has sold in excess of 6 million "ProLine" casement windows. When a wood rotting problem arose, Pella set up a customer service program to compensate affected purchasers. A group of those purchasers brought a class action. The suit alleges that Pella committed consumer fraud when it failed to disclose the alleged design defect and the problems it was causing. Judge Zagel (N.D. Ill.) certified seven classes: a) a nationwide Rule 23(b)(2) class of persons who own structures containing the casement windows that have not been replaced, and b) six statewide Rule 23(b)(3) classes of persons whose windows have already been replaced because of the defect. The court refused to certify causation, damages, and statute of limitations issues. Pella petitioned for leave to appeal.

In their opinion, Judges Posner, Williams, and Tinder granted the petition and affirmed. The Court agreed that consumer fraud actions frequently present problems when treated as class actions. That does not, however, equal a general rule that they can never be so treated. Here, the principal issue is whether there is a single design defect in the window that leads to wood rot. The Court concluded that the district court was well within its discretion in deciding that the issue is best resolved in a class context. The problems inherent in treating consumer fraud cases in a class context are not present in this case. The issues are not complex, the central questions are all the same, and the class members must prove causation and damages on an individual basis.

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KIM v. CARTER'S INC. (March 15, 2010)

Su Yeun Kim and Gina Polubinski purchased children's clothing at several different Carter's stores in Illinois over a period of time. Articles of clothing in the stores had individual price tags. Frequently, however, Carter's displayed signs announcing discounts off individual prices. Kim and Polubinski each filed separate class actions, alleging that any savings were fictitious because the prices listed were artificially inflated . The complaints alleged breach of contract and a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The district court granted Carter’s motion to dismiss the complaints. Kim and Polubinski appeal.

In their opinion, Judges Bauer, Kanne, and Tinder affirmed. With respect to the breach of contract count, the Court concluded that Carter's fulfilled its contractual obligations. It provided articles of clothing to the plaintiffs at an agreed upon price. The Court rejected plaintiffs' interpretation that the sales contract required Carter's to apply the discount to an undisclosed, fair price instead of the tag price. With respect to the statutory claim, however, the Court found that the allegations of the complaints did sufficiently allege a violation. However, the Act requires a private party to show "actual damage." Here, the plaintiffs agreed to pay a certain price for the clothing. They have not alleged that the clothing is actually worth less than what they paid or that they could have purchased it elsewhere for less. Having concluded that the plaintiffs suffered no actual pecuniary harm, the Court held that they could not state a claim under the Act.

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HUKIC v. AURORA LOAN SERVICES (November 20, 2009)

Avdo Hukic took out a mortgage in 1997. The monthly obligation was $1335. The agreement allowed him to pay taxes and insurance directly -- as long as he provided proof of payment to the lender. Through no fault of his own, his April 1998 payment was processed for $200 less than the required amount. Although the lender notified Hukic of the error, he took no steps to rectify it. Instead. Hukic continued to pay the correct amount each month, but the lender always considered him one month in arrears because of the continuing shortage. At about the same time, the lender advised Hukic that it would start to pay the taxes and insurance unless Hukic provided proof of payment. Hukic did not respond. The lender set up an escrow for the payments and advised Hukic of a new monthly payment amount. Hukic continued to pay the original $1335 each month. The lender, now Aurora Loan Services, reported the mortgage to credit agencies as delinquent in November of 1999. In early 2000, Aurora assigned the loan to Ocwen. Ocwen notified Hukic of his default but continued to pay the taxes and insurance. In January of 2001, Hukic's lawyer advised Aurora that he was paying his taxes directly and complained about negative information on credit reports. Hukic filed a multiple-count suit against Aurora and Ocwen. The court dismissed seven counts and granted summary judgment to the defendants on the Fair Credit Reporting Act, breach of contract and tortious interference with prospective economic advantage counts. Hukic appeals.

In their opinion, Judges Bauer, Evans and Williams affirmed. The Court first considered its jurisdiction-and first considered diversity jurisdiction, the basis of the original removal to federal court. The Court pointed out several problems: Aurora was a limited liability company, the citizenship of an L.L.C. is the citizenship of its members, its only member was a federally chartered savings association, the citizenship of a federally chartered savings association was in doubt under the law, a federal statute that clarified an association's citizenship was not enacted until after the date of removal, and the statute clarifying the citizenship question only applied if the association was a party in a lawsuit (instead of, as here, the member of a party). Luckily, the Court was able to bypass those issues because it concluded that the presence of the FCRA claim provided federal question jurisdiction. Since the state law claims arose out of the same nucleus of fact, they were covered by supplemental federal jurisdiction. After rejecting several procedural arguments, the Court addressed the merits. The Court affirmed the summary judgment on the breach of contract, tortious interference and FCRA claims. It concluded that Hukic was in default and that Aurora and Ocwen thus never provided false information to credit agencies. The Court then addressed the dismissal of the defamation claim on statute of limitations grounds. Like the jurisdictional analysis, the Court's analytic path was tortured. It included discussion of the defamation limitations period, the discovery rule, the continuing violation rule and the single publication rule. Concluding that the Illinois Supreme Court would apply neither the single publication rule nor the continuing violation rule to the facts and therefore that Hukic could maintain a claim for defamation for statements made by Aurora within a year of the filing of the suit, the Court nevertheless affirmed the dismissal. Illinois requires that special damages be pled in a defamation per quod case, which this is. Hukic alleged no harm from the reports that are actionable. Finally, the Court affirmed the dismissal of the intentional infliction of emotional distress claim because it did not allege conduct so extreme or outrageous to state a claim under Illinois law.

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MURO v. TARGET CORP. (August 31, 2009)

Christine Muro held a Target "Guest Card" for a few years. In late 1999, she paid off the balance and requested that her account be closed. In 2004, Target sent her an unsolicited Visa Card. Muro never used, or even activated, the card. She brought an action under §§ 1637 and 1642 of the Truth in Lending Act (“TILA”). With respect to § 1642, which prohibits the unsolicited issuance of a credit card, the court denied class certification. It concluded that Muro's claims were not typical of the claims of most of the proposed class (because most of the class members had an open “Guest Card” account) and that she had failed to establish numerosity with respect to the claims for which her claims were typical. Muro settled her individual § 1642 claim, reserving the right to appeal the denial of class certification. The court granted summary judgment to Target and denied class certification on the § 1637 claims. Muro appeals.

In their opinion, Judges Ripple, Rovner and Evans affirmed. With respect to § 1642, the Court noted that the narrow issue was whether a named plaintiff in a putative class action could settle her individual claim and still appeal an adverse decision on class certification. Referring to the Supreme Court's decisions in Geraghty and Roper, the Court stated that a plaintiff has to have a personal stake in the adjudication of the certification issue to maintain an appeal. The Court recognized a difference of opinion among courts as to whether a mere reservation of a right to appeal is sufficient interest to maintain an appeal. Upon reflection, the Court concluded that a voluntary settlement by a putative class plaintiff strips the plaintiffs of any personal interest in the litigation sufficient to support an appeal. Here, although Muro accepted the settlement with a reservation of her right to appeal, she retains no stake in the litigation and no right to appeal. As an aside, the Court indicated its agreement with the district court on the merits of its denial of class certification. With respect to § 1637, which requires certain disclosures before "opening" an account, the Court also agreed with the lower court. The issue on the § 1637 claim was when an account is "opened." The TILA is silent but the Federal Reserve Board regulations require the disclosures before the first transaction. Concurring with the regulation's approach, the Court noted that Muro had never activated or used her card. She had no § 1637 claim.

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RUTH v. TRIUMPH PARTNERSHIPS (August 17, 2009)

Triumph Partnerships purchases defaulted debt. Its sister company, Triumph Asset Services ("TAS"), is a debt collection agency. In early 2006, TAS sent letters out to a number of individuals who owed debts purchased by Triumph. The letter notified the recipient that Triumph had purchased the debt and that TAS was attempting to collect it. Sent with the notice was a separate document from Triumph stating that it collected and could share certain information about the debtor. It also provided an opportunity for the debtor to “opt out,” or instruct Triumph not to share certain information. Alice Ruth was one of the recipients of the letter. Ruth brought a class action against Triumph and TAS, alleging that the mailing violated the Fair Debt Collection Practices Act ("FDCPA") in that it made a false statement in connection with the collection of a debt and threatened to take illegal action. The district court granted summary judgment to the defendants, concluding that Ruth was required to present extrinsic evidence to prove that an unsophisticated debtor would consider the notice a communication in connection with the collection of a debt and would view it as a threat to take illegal action. Ruth appeals.

In their opinion, Judges Ripple, Sykes and Lawrence reversed and remanded. The Court first addressed Triumph's argument that it was not a "debt collector" and therefore not subject to the FDCPA. Citing its recent McKinney decision, the Court rejected that argument. Under McKinney (see my earlier post), the FDCPA status of a party that attempts to collect a debt that it acquired from another party depends on whether the debt was in default at the time it was acquired. Since the debts here were in default at the time they were acquired by Triumph, Triumph is a debt collector. The Court moved to the heart of the matter -- whether the mailing violated the FDCPA as a matter of law. The FDCPA violation has two elements -- the notice had to be sent "in connection with the collection of any debt" and the notice had to be false, misleading or had to threaten to take an illegal action. With respect to the "in connection with" element, the Court concluded, in a matter of first impression, that the standard is an objective one and need not be proven by extrinsic evidence. On the facts of the case, the Court stated that any reasonable fact finder would conclude that the notice was sent in connection with the attempt to collect a debt. With respect to the false/deceptive/illegal action element, the Court stated that Ruth must do more than prove a false statement -- she must prove that the statement would mislead or deceive an unsophisticated consumer. She need not, however, offer extrinsic evidence on that point in every case. Extrinsic evidence is required in those situations where the statement is possibly misleading or deceptive. Here, the Court concluded that a consumer could reach only one reasonable conclusion -- that the defendants claimed a right to disclose certain information. Since the defendants conceded that such a sharing, without consent, would have violated the FDCPA, the notice was an illegal threat as a matter of law. Finally, the Court had to address defendants' bona fide error defense. That defense protects a debt collector from liability when a violation is unintentional, is the result of a bona fide error and occurs notwithstanding the defendant's maintenance of reasonable procedures to avoid the error. That Court concluded that the defense is available for errors of law, if at all, when the debt collector relies on the opinion of an attorney or other expert in the field. Although Triumph claimed it relied on a pamphlet prepared by an attorney, the Court concluded that that was well short of the "reasonable procedures" required by the FDCPA.

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SWANSON v. BANK OF AMERICA (April 24, 2009)

The Court denied rehearing in a case originally decided on March 19 and reported here. The Ninth Circuit released an opinion at odds with the Court's on March 16 (and therefore not considered or discussed in the March 19 opinion), Nevertheless, the Court stuck with its analysis and remarked that the Ninth Circuit panel was at odds with an earlier, nonprecedential opinion of the same court.

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SWANSON v. BANK OF AMERICA (March 19, 2009)

Bank of America issued a credit card to Laura Swanson. Pursuant to the credit agreement, Bank of America could increase the interest rate if her balance exceeded her credit limit twice in any 12-month period. The higher interest rate was to take effect at the beginning of the billing cycle to which it applied. Swanson exceeded her credit limit at the close of the August 2007 and November 2007 cycles. Bank of America applied the higher interest rate effective at the beginning of the November cycle. Swanson brought suit, alleging that a Truth in Lending Act regulation precludes the imposition of a higher interest rate in that circumstance. The district court granted judgment to the bank. Swanson appeals.

In their opinion, Chief Judge Easterbrook and Judges Kanne and Evans affirmed. The Court first analyzed the regulation at issue. Although both the bank and Swanson argued that the regulations supported its position, the Court concluded that the regulation did not squarely address the issue at hand. It therefore consulted the commentary. The bank relies on the comment that states that no notice of the change is required if the specific change is set forth in the initial agreement. The comment gives as examples an increased rate after a lower introductory rate and an increased rate when a customer fails to keep a promised minimum account balance. Swanson, on the other hand, relies on the comment that notice must be given if the contract allows the creditor to increase the rate at its discretion. The Court noted that one appellate court and at least six trial courts had considered the issue and had all agreed with the bank's position. Finding these decisions "sensible," the Court also agreed with the bank. It pointed out that the contract between the bank and Swanson allowed the practice. An ambiguous regulation with an ambiguous commentary was not enough to override the specific contract term. Finally, the Court observed that the Federal Reserve had promulgated a new regulation that would prohibit the vary practice at issue. The new regulation is not effective until July of 2010 -- Swanson must live with the law as it stands today.

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MUHA v. ENCORE RECEIVABLE MANAGEMENT, INC. (March 10, 2009)

Charlotte Muha, representing a class of credit card debtors, brought an action under the Fair Debt Collection Practices Act ("FDCPA") against Encore Receivable Management, Inc. The complaint alleged that Encore violated the FDCPA by stating, in a debt collection letter, that "your original agreement with the above mentioned creditor has been revoked." Plaintiffs allege that that statement is false. The plaintiffs also claim that the statement is misleading and confusing and sought to introduce a survey to support that allegation. The lower court excluded the survey and granted summary judgment to Encore. Plaintiffs appeal.

In their opinion, Judges Posner, Kanne and Tinder affirmed in part, reversed in part and remanded. The Court first upheld the lower court's exclusion of the survey. It concluded that the survey was improper both because the questions and answers were leading and because there was no control group that was shown the letter without the language in question. Notwithstanding the exclusion of the survey (and notwithstanding the admission at oral argument that plaintiffs could not prove damages without the survey), the Court held that plaintiffs could be entitled to statutory damages. The plaintiffs have the burden of proving that the statement was misleading. Although a survey may be the best evidence of that, is not the only potential evidence. The recipients of the letter itself may testify, allowing the judge to infer that the letter is misleading within the meaning of the FDCPA. The Court then addressed the merits of the falsity argument. The issue, it stated, was not the falsity of the statement. The Court concluded that the statement obviously meant that the credit card privileges of the recipient have been revoked. Nevertheless, the plaintiffs are entitled to attempt to prove that the statement is misleading. The Court found that the statement was confusing and noted that confusing language can have an intimidating effect on an unsophisticated consumer. It did not think the evidence was so clear on that point so as to entitle the plaintiff to summary judgment, however. It reversed and remanded for further proceedings. 

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HAHN v. TRIUMPH PARTNERSHIPS LLC (March 4, 2009)

Triumph Partnerships acquired some overdue credit card debt from a bank, including a debt owed by Marylou Hahn. Triumph sent a letter to Hahn, stating that she had an "amount due" of $1051.91 and that she had "interest due" of $82.64. Hahn filed suit under the Fair Debt Collection Practices Act. Hahn alleged, and Triumph conceded, that the $82.64 represented the interest that had accrued only since Triumph acquired the debt. The $1051.91 included interest that had accrued prior to Triumph's acquisition of the debt. Hahn alleged, therefore, that the statement was a false representation of the debt and prohibited by the Fair Debt Collection Practices Act. The District Court granted summary judgment to Triumph. Hahn appeals.

In their opinion, Chief Judge Easterbrook and Judges Flaum and Manion affirmed. The Court concluded that the letter contained no false representation. It held that an “amount” that is due can include principle, interest and other components. The Court specifically pointed out that the letter did not assert that the $82.64 was the totality of the interest that had accrued on the debt since its inception. Since the statement was not false, the Court held that it does not violate the Fair Debt Collection Practices Act. Alternatively, the court affirmed on the ground that the statement was immaterial. The Court held that materiality is an element in a §1692e action. Since the letter accurately reported the debt and accurately computed the debt, whether it segregated the post-acquisition interest was immaterial. 

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WAHL v. MIDLAND CREDIT MANAGEMENT, INC. (February 23, 2009)

Barbara Wahl accumulated a small balance on her credit card. When she stopped using it, the balance was less than $100. Unfortunately, Wahl incurred some huge medical bills and never paid off the credit card. By the time the card issuer turned it over to Midland Credit Management, Inc. (“Midland”) in 2005 for collection, the balance (with interest and late fees) had risen to $1149.09. In February 2005, Midland sent a letter to Wahl and offered to settle for a 25% discount. When Wahl did not accept the offer, Midland sent letters again in April and August. In each of those letters, Midland included an itemization of the amount owed. In each, it referred to the $1149.09 as the “principal balance” and the rest as “accrued interest.” Wahl filed a class action under the Fair Debt Collection Practices Act (“FDCPA”). She alleged that Midland’s inclusion of interest charged by the card issuer before the debt was purchased by Midland as part of the stated “principal balance” was false and a violation of the FDCPA. The district court certified the class and granted summary judgment to Midland. Wahl appeals.

In their opinion, Judges Bauer, Evans and Williams affirmed. The Court first took issue with Wahl’s assertion of law that a collection letter which is false, even if not deceptive, is a FDCPA violation. The Court stated that a collection letter does not violate the FDCPA unless it would confuse the unsophisticated consumer – even if is false. The Court went further, though. It determined that the letters were not false. Since Midland had acquired the debt from the issuer, the Court decided that the $1140.09 was all “principal” from Midland’s perspective. Finally, the Court applied the unsophisticated consumer test and found that there was “no way” that the language of the letter could be confusing.

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SEEGER v. AFNI, INC. (December 8, 2008)

AFNI is a debt collector. Cingular is (or was) a cellular telephone service provider. Cingular contracts with individuals to provide telephone service. It typically includes in its contracts a provision that its customer is obligated to pay the fees of a collection agency and other costs Cingular incurs in enforcing its rights under the contracts. In 2004-05, Cingular sold some delinquent customer accounts to AFNI. AFNI sent collection letters to plaintiff Seeger and others. The letters stated that the recipient was responsible for collection fees. In 2005, Seeger and other plaintiffs filed suit. They alleged that AFNI’s actions violated the Fair Debt Collection Practices Act (“FDCPA”) and the Wisconsin Consumer Act (“WCA”). The district court certified a class and granted summary judgment to the class. It held that AFNI’s action violated both the FDCPA and WCA because the owner of a debt is not allowed to impose a collection fee for its own benefit (as opposed to that it pays a third-party collector). AFNI appeals.

In their opinion, Judges Bauer, Cudahy and Wood affirmed. The Court agreed that AFNI could prevail if the fee was allowed either by the contract or by Wisconsin law. It turned first to the law. Wisconsin does permit recovery of losses that are the natural and probable result of a breach of contract. The Court noted, however, that the record was silent on the issue of AFNI’s cost of debt collection and could not support a characterization of the fee as a form of allowable damages. Turning to the contracts, the Court agreed with the court below that the contracts allowed Cingular only to collect fees it “incurred” in collecting a debt. The way the parties structured their arrangement, neither Cingular nor AFNI “incurred” any collection fees. Finally, the Court addressed AFNI’s argument that it was entitled to the bona fide defense in the FDCPA. The Court identified a growing split in the circuits on the issue of whether the bona fide defense applies to mistakes of law. It did not express an opinion on that issue, however. Rather. it decided that AFNI did not maintain reasonable procedures to prevent the error, which is an element of the defense.

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KELLEY v. MED-1 SOLUTIONS  (November 25, 2008)

Brian Kelley received medical treatment at St. Vincent Carmel Hospital (“St. Vincent”). When Kelley failed to pay for the services, St. Vincent hired Med-1 Solutions, LLC (“Med-1”) to collect the amounts due. Although St. Vincent always owned the debt, it gave Med-1 the right to collect it. Med-1 sued Kelley in an Indiana small claims court. It attached documents to the small claims court form which indicated that the debt was owed to St. Vincent. Med-1 also attached Kelley’s financial responsibility form he had signed prior to receiving medical treatment. That form provided for payment of “reasonable attorney fees” if the debt was assigned to a collection agency. St. Vincent paid Med-1’s fees and costs and a percentage of the amount collected. Med-1’s in-house attorneys received a percentage of the attorney fees collected by Med-1. Med-1 obtained a judgment against Kelley for $892.09. Kelley and several others in a similar situation brought suit against Med-1, its owner, and its in-house attorneys. Plaintiffs alleged violations of the Fair Debt Collection Practices Act (“FDCPA”), claiming that Med-1 was not entitled to attorney fees and that its claims that it was were false and deceptive. The district court dismissed the complaint. Plaintiffs appeal.

In their opinion, Judges Bauer, Flaum and Williams affirmed. The issue before the Court was whether the case was controlled by the Rooker-Feldman doctrine. That doctrine, taken from two Supreme Court decisions, Rooker v. Fidelity Trust Co. and District of Columbia Court of Appeals v. Feldman, prohibits a lower federal court review of a decision of a state court. Plaintiffs attempted to avoid the application of Rooker-Feldman by characterizing their complaint as one attacking defendants’ representations and requests for attorneys fees, not the actual state court judgment awarding the fees. The Court did not accept the distinction. It concluded that if it found that defendants were not entitled to fees and therefore violated the FDCPA, it was also determining that the state court judgments were in error. The Court next addressed the “reasonable opportunity” exception to the Rooker-Feldman doctrine. Plaintiffs contended that they were unable to raise their FDCPA claims in the Indiana small claims venue. The Court disagreed. The plaintiffs could have transferred their case out of the small claims venue and litigated their FDCPA claims. The Court concluded that plaintiffs had a “reasonable opportunity” to litigate their claims and their complaint was properly dismissed. In addition, the Court questioned the continued viability of the “reasonable opportunity” exception since the Supreme Court’s decision in Exxon Mobil Corp. v. Saudi Basic Industries.

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MCKINNEY v. CADLEWAY PROPERTIES, INC. (November 13, 2008)

Versia McKinney’s sewer backed up in her Chicago home in 1996 and caused substantial damage. McKinney took out a disaster assistance loan of $5200 from the Small Business Administration (“SBA”). At some point, McKinney stopped making payments on the loan. The SBA sold the loan. It eventually was sold to Cadleway Properties, Inc. (“Cadleway”). Cadleway sent McKinney a letter in September 2004. The letter informed McKinney that Cadleway had purchased the debt and that McKinney should make payments to Cadleway. The back of the letter contained a “Validation of Debt Notice” intended to comply with the Fair Debt Collection Practices Act (the “Act”). The notice stated that: a) McKinney owed $4,370.02, b) McKinney had 30 days to tell Cadleway that she disputed the debt, and c) Cadleway would assume the debt was valid if McKinney did not so dispute. At the bottom of the form, McKinney was asked to confirm the amount of the balance as stated by Cadleway or to state what she believed to be the correct balance. McKinney filed an action against Cadleway alleging that the notice letter violated the Act. She only sought statutory damages and attorney’s fees. The court below held that: a) the obligation was a “debt” under the Act, b) Cadleway was a “debt collector” under the Act, and c) the notice letter was confusing on its face to an unsophisticated consumer and therefore in violation of the Act. The court granted summary judgment to McKinney. Cadleway appeals.

In their opinion, Judges Manion (concurring in part and concurring in the judgment), Rovner (concurring in part, dissenting in part), and Sykes reversed and remanded. The Court stated that the purpose of the Act was to protect consumers from deceptive and unfair debt collection practices. It applies only to “debt collectors,” as that term is defined in the Act. The substantive section relevant to McKinney’s complaint is the requirement that a debt collector notify a consumer of her right to dispute the validity of, and receive a verification of, the debt. The Court first addressed Cadleway’s status as a “debt collector.” The majority on that issue (Sykes and Rovner) relied on the language of the Act and the Court’s prior decision in Schlosser to hold that Cadleway was a debt collector. The Court stated that the terms “debt collector” and “creditor” in the Act are mutually exclusive. The determinative factor in deciding which term applies to Cadleway is whether the debt was in default at the time Cadleway acquired it. Since McKinney’s debt was in default, Cadleway was a debt collector. With respect to the notice, the majority on that issue (Sykes and Manion) stated that the Act requires the debt collector to provide an initial communication with certain disclosures to the consumer. The Act requires no particular form but the disclosures must not be confusing to the “unsophisticated consumer.” Normally, the majority noted, the plaintiff would bring forth evidence of confusion. Here, McKinney introduced no extrinsic evidence of confusion. In fact, McKinney testified that she herself was not confused by the notice. The majority conceded that a notice letter could be so clearly confusing on its face that summary judgment could be granted. However, it did not believe that McKinney’s notice was such a case. The Court specifically addressed the balance confirmation request that the district court had found to be confusing. The majority found the notice to be clear. It simply asked McKinney to confirm the amount of the debt or dispute it. The notice complied with the Act. The Court remanded with instructions to enter judgment for Cadleway.

Judge Manion concurred in part and concurred in the judgment. Judge Manion agreed with the Court’s opinion on the validity of the notice letter. He noted that, given the outcome on that issue, the Court need not have resolved the “debt collector” issue. Having done so, however, Judge Manion wrote to express his disagreement with the resolution of that issue. The exclusionary language in the definition of “creditor” and the definition of “debt collector” in the Act refer to a person who collects a debt “for another” or “due another,” respectively. Cadleway was not collecting the debt for another. Cadleway purchased the debt and was collecting it for its own account. Judge Manion conceded that Schlosser held that the person holding the debt was a “debt collector” in similar circumstances. He pointed out, however, that the issue of collecting for another never came up. Judge Manion would not have been found Cadleway to be a “debt collector.”

Judge Rovner also wrote separately, concurring in part and dissenting in part. Judge Rovner concurred with the majority’s resolution of the “debt collector” issue without additional comment. She disagreed with the resolution of the validity of the notice letter, however. Judge Rovner found the letter “clearly confusing” on its face. She focused solely on the balance confirmation request section. Judge Rovner found the paragraph confusing, particularly to a consumer who may believe she owes something but has no records or other way of computing a different amount. The letter implies that the confirmation is obligatory, and also implies that failure to do so will damage one’s credit rating. Under the terms of the Act, the creditor can simply respond that she disputes the debt collector’s proffered total. Judge Rovner found the letter different from, and at least to some degree contrary to, the terms of the Act and therefore a violation of the Act.

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