April 11, 2017
from the United States District Court for the Eastern
District of Wisconsin. Nos. 15-C-0002 & 15-C-0613 - C.N.
Clevert, Jr., Judge.
WOOD, Chief Judge, and Flaum and Easterbrook, Circuit Judges.
Easterbrook, Circuit Judge.
received medical services but did not pay their bills. Their
providers referred the debts to defendants, and dunning
letters ensued. The debt collectors demanded payment not only
of the principal sums but also of 5% per annum interest.
Plaintiffs contend that this violates 15 U.S.C.
§1692g(a)(1), part of the Fair Debt Collection Practices
Act, which says that debt collectors must specify the amount
of the debt, plus other provisions of state and federal law.
According to plaintiffs, Wisconsin law provides for interest
(in the absence of a contractual provision) only if a debt
has been reduced to judgment, and any prejudgment request for
interest is forbidden.
debt collectors might have replied that §1692g(a)(1) is
satisfied by demanding a specific amount. They calculated
interest, added it to the principal, and demanded payment of
the resulting amount, rather than leaving the debtors to
guess how much they owed. The FDCPA provides a means to
contest whether the amount claimed is due. 15 U.S.C.
§1692g(b). This implies that naming an incorrect figure
is not automatically a violation of federal law. But
defendants do not pursue this possibility, so we do not
discuss it further. Instead they offer two principal
they contend that interest under Wis.Stat. §138.04 runs
automatically-unless debts are uncertain in amount, or a
contract provides otherwise-and that a judgment just
memorializes what state law requires. If this is so, then a
demand for 5% interest does not seek more than the current
amount of the debt.
they rely on Wis.Stat. §426.104(4)(b), which creates a
safe harbor for people who act in ways approved by the
Administrator of Wisconsin's Department of Financial
Institutions-and treats the absence of a response within 60
days of a request as equivalent to approval. The debt
collectors sent the Administrator a letter asking if they are
entitled to add 5% interest to debts created by the provision
of medical services. The Administrator requested further
information, which the debt collectors provided, and at that
point the Department of Financial Institutions lapsed into
silence. The debt collectors say that this entitles them to
the statutory safe harbor. The district court agreed with
both of the defendants' arguments and granted summary
judgment in their favor. Myers v. Americollect Inc.,
2016 U.S. Dist. Lexis 136941 (E.D. Wis. Sept. 30, 2016).
the two arguments suffices on appeal. The safe-harbor statute
Any act, practice or procedure which has been submitted to
the administrator in writing and either approved in writing
by the administrator or not disapproved by the administrator
within 60 days after its submission to the administrator
shall not be deemed to be a violation of chs. 421 to 427 and
429 or any other statute to which chs. 421 to 427 and 429
refer notwithstanding that the approval of the administrator
or nondisapproval by the administrator may be subsequently
amended or rescinded or be determined by judicial or other
authority to be invalid for any reason.
seek to enforce their understanding of the interest statute
through Wis.Stat. §427.104(1)0), which forbids attempts
to collect more than the debt owed. Chapter 427 is expressly
covered by §426.104(4)(b). Nonetheless, plaintiffs
insist that because demanding interest before a debt has been
reduced to judgment is (in their view) a violation of
§138.04, we should not accord deference to the
Administrator's failure to disapprove the debt
collectors' request. But §426.104(4)(b) is not about
deference. It is a safe harbor, providing that the practices
presented to the Administrator for opinion "shall not be
deemed to be a violation" of other state laws, unless
the Administrator later announces a different view or a court
holds the Administrator's position to be invalid. Thus,
when the defendants sent their dunning letters, they were
entitled to demand payment of both the principal amounts and
interest under §138.04. This means that the letters also
did not violate 15 U.S.C. §1692e(2)(A), which prohibits
false representations about the character, amount, or legal
status of a debt.
maintain that §426.104(4)(b) is preempted by 15 U.S.C.
§1692n, which says that states may add to but cannot
subtract from the protections that the FDCPA offers to
consumers. Yet §1692n has nothing to do with interest-or
for that matter with any other component of the debt. Section
1692n deals with debt-collection practices, not how to
determine the amount owed. The FDCPA itself provides that
debt collectors may add interest when permitted by law. See
15 U.S.C. §1692f(1); Miller v. McCalla, Raymer,
Padrick, Cobb, Nichols & Clark L.L.C., 214 F.3d 872,
876 (7th Cir. 2000). The safe harbor, if not §138.04
itself, permits defendants to add 5% interest to
law is the right source for determining interest on a
state-law debt. When federal law creates a debt, it may
govern prejudgment interest too. See Williamson v. Handy
Button Machine Co., 817 F.2d 1290 (7th Cir. 1987) (Title
VII of the Civil Rights Act of 1964); cf. In re Oil Spill
by the Amoco Cadiz off the Coast of France on March 16,
1978, 954 F.2d 1279, 1331-37 (7th Cir. 1992) (US
admiralty law, when parties declined to rely on other
nations' rules). But plaintiffs' debts arise under
state contract law, so the controlling question is whether
state law allows a demand for interest before the debt has
been reduced to judgment. Until the Administrator says
something more, or a state court lifts the safe harbor under
§426.104(4)(b) (and in addition rules that §138.04
does not by itself allow the debt collectors' practice),
neither state nor federal law forbids dunning letters that
demand 5% interest from debtors in Wisconsin.
v. Sheeks,316 F.3d 690 (7th Cir. 2003), on which
plaintiffs principally rely, does not concern any feature of
Wisconsin law. Veach held that a letter demanding a
monetary amount plus treble damages that a court might award
in the future under Indiana law did not comply with federal
law because it did not specify the sum immediately payable.
That conclusion has nothing to do with the parties'
dispute about interest in Wisconsin. Other provisions ...