Yvonne Owusumensah v. Cavalry Portfolio Services
2016 U.S. App. LEXIS 9117
| 7th Cir. | 2016Background
- Debt collectors filed state-court collection suits against consumers for unpaid credit-card debts; suits were later voluntarily dismissed before trial.
- Consumers sued in federal court alleging violations of the Fair Debt Collection Practices Act (FDCPA), primarily § 1692e(5), claiming filing suit implied a threat to go to trial when the collectors had no such intent.
- District court dismissed the complaints under Rules 12(b)(6)/12(c) for failure to state a plausible claim; plaintiffs appealed.
- Plaintiffs’ theory: filing a collection complaint carries an implicit representation (a “threat”) that the plaintiff intends to proceed to trial; filing without that intent violates § 1692e(5).
- Defendants argued (and the court found) that filing a suit does not implicitly promise trial, litigation often resolves by settlement or default, and voluntary dismissal before trial does not show lack of intent at filing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1692e(5) prohibits filing a collection suit without intending to go to trial | Filing a complaint implies a representation that the plaintiff intends to try the case; filing without that intent is a prohibited "threat" | Mere filing is not a promise to go to trial; plaintiffs often seek settlement or default; dismissal before trial doesn’t prove lack of initial intent | No — § 1692e(5) does not make it unlawful to file suit without intending to proceed to trial |
| Whether plaintiffs adequately pleaded lack of intent to go to trial at time of filing | Plaintiffs alleged defendants intended only settlement or default and thus had no intent to try when filing | Plaintiffs’ allegations are speculative; voluntary dismissal is consistent with legitimate litigation choices | Dismissal affirmed for failure to plead plausible facts showing no intent at filing |
| Whether an unsophisticated consumer would be misled by filing alone | Filing implies a threat to try the case, which could deceive consumers | An unsophisticated consumer would not reasonably infer an implicit promise to try; litigation is a process with many possible outcomes | Court: an unsophisticated consumer would not be misled; no violation under § 1692e(5) |
| Whether district court erred procedurally (12(b)(6)/12(c) standard; leave to amend) | District court failed to accept well-pleaded facts and should have allowed amendment | Appellate court reviews de novo and finds plaintiffs’ claims meritless; plaintiffs waived amendment argument | No reversible error; de novo review affirms dismissal and denial of leave to amend (argument waived) |
Key Cases Cited
- Ball v. City of Indianapolis, 760 F.3d 636 (7th Cir. 2014) (standard of review for Rule 12 motions)
- Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609 (7th Cir. 2012) (pleading standards)
- Vinson v. Vermilion County, Illinois, 776 F.3d 924 (7th Cir. 2015) (Rule 12(b)(6)/12(c) standard equivalence)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (facial plausibility standard for complaints)
- Ruth v. Triumph Partnerships, 577 F.3d 790 (7th Cir. 2009) (unsophisticated-consumer standard under FDCPA)
- Lox v. CDA, Ltd., 689 F.3d 818 (7th Cir. 2012) (FDCPA consumer-perspective test)
- Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470 (7th Cir. 2007) (distinguishing legitimate litigation strategy from trickery)
- Heintz v. Jenkins, 514 U.S. 291 (U.S. 1995) (FDCPA preserves creditors’ judicial remedies)
- Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Ind., 786 F.3d 510 (7th Cir. 2015) (plausibility requirement)
- El v. AmeriCredit Financial Services, Inc., 710 F.3d 748 (7th Cir. 2013) (dismissal for failure to state a claim is on the merits)
- Mahaffey v. Ramos, 588 F.3d 1142 (7th Cir. 2009) (undeveloped arguments waived on appeal)