94 F. Supp. 3d 941
N.D. Ill.2015Background
- Plaintiff (Illinois resident) alleges Midland and AIS filed a proof of claim in his Chapter 13 bankruptcy on a credit-card debt whose Illinois statute of limitations expired May 30, 2009, and that the July 8, 2014 filing violated FDCPA § 1692e(5).
- Midland is a debt buyer that files proofs of claim in consumer bankruptcies; AIS prepares and files proofs of claim nationwide from Oklahoma City.
- Midland moved to dismiss, stay or transfer based on a substantially similar, earlier-filed putative class action in the Southern District of Alabama (Johnson); that case has a pending motion to dismiss and no class-certification motion.
- AIS moved to transfer to the Western District of Oklahoma (where its operations and relevant documents/employees are located) and the court construed AIS’s response as a motion to dismiss as well.
- Defendants moved to dismiss under Rule 12(b)(6), arguing § 1692e(5) forbids only threats to take unlawful action (not the filing of an actual proof of claim) and that proofs of claim in bankruptcy differ materially from collection lawsuits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether case should be dismissed/stayed under first-to-file/comity because of Johnson (S.D. Ala.) | Proceed here; plaintiff filed in his home district and seeks relief for similar class | Midland: Johnson filed first; comity and docket conservation favor dismissal/stay | Denied — court declines to dismiss or stay; Johnson may be dismissed or not certified and is not sufficiently ahead to warrant comity-based dismissal |
| Whether Midland’s motion to transfer under 28 U.S.C. § 1404(a) to S.D. Ala. is appropriate | Plaintiff’s chosen forum (his home) and situs of filing weigh for Illinois | Midland: Alabama is more convenient and duplicative case exists there | Denied — plaintiff’s forum given substantial weight; private and public factors do not show transferee clearly more convenient |
| Whether AIS’s motion to transfer to W.D. Okla. is appropriate | Plaintiff prefers Illinois; discovery can be conducted remotely; forum convenient for plaintiff | AIS: its operations, documents, and witnesses are in Oklahoma City; docket faster in Oklahoma | Denied — AIS did not show Oklahoma is clearly more convenient for parties/non-party witnesses |
| Whether filing an untimely proof of claim violates FDCPA § 1692e(5) (failure to state a claim) | Filing a time-barred proof of claim can mislead debtors into believing debt is legally enforceable and thus violates § 1692e(5) | Defendants: § 1692e(5) prohibits threats to take unlawful action, not the taking of unlawful action; bankruptcy proofs of claim differ from lawsuits and may be neutral/harmless | Denied — on Rule 12(b)(6) pleadings, given Seventh Circuit precedent and split authority, the court cannot rule as a matter of law that the claim is not viable |
Key Cases Cited
- Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc., 626 F.3d 973 (7th Cir. 2010) (first-to-file/comity principle guides district-court docket management)
- McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873 (7th Cir. 2012) (duplicative-suit analysis requires substantial overlap of claims)
- Phillips v. Asset Acceptance, LLC, 736 F.3d 1076 (7th Cir. 2013) (filing a time-barred lawsuit to collect a debt can violate the FDCPA)
- Coffey v. Van Dorn Iron Works, 796 F.2d 217 (7th Cir. 1986) (party seeking transfer bears burden to show transferee forum is clearly more convenient)