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Boucher v. Finance System of Green Bay, Inc.

United States Court of Appeals, Seventh Circuit

January 17, 2018

Ryan Boucher, et al., Plaintiffs-Appellants,
Finance System of Green Bay, Inc., et al., Defendants-Appellees.

          Argued December 1, 2017

         Appeal from the United States District Court for the Eastern District of Wisconsin. No. l:17-cv-132 - William C. Griesbach, Judge.

          Before Bauer, Flaum, and Rovner, Circuit Judges.


         Plaintiffs sued defendant, a debt collection agency, for violations of the Fair Debt Collection Practices Act ("FDCPA"). Specifically, plaintiffs allege that defendant's dunning letters were false and misleading because they threatened to impose "late charges and other charges" that could not lawfully be imposed. The district court dismissed plaintiffs' claims because the challenged statement mirrors the safe harbor language that this Court instructed debt collectors to use in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, LLC, 214 F.3d 872 (7th Cir. 2000). The district court further held that defendant's failure to remove the reference to "late charges and other charges" was not materially misleading. For the reasons below, we reverse.

         I. Background

         Plaintiffs are Wisconsin residents who incurred and defaulted on debts for medical services. Plaintiffs' creditors assigned these debts to defendant, Finance System of Green Bay, Inc. ("FSGB"), a collection agency. In turn, FSGB sent plaintiffs a letter informing them of their principal balance, their interest balance, and their total account balance. The letter also included the following statement:

As of the date of this letter, you owe $[a stated amount]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check. For further information, write to the above address or call [phone number].

         On January 30, 2017, plaintiffs filed a class action complaint against FSGB in the Eastern District of Wisconsin for violations of the FDCPA, 15 U.S.C. §§ 1692-1692p. Plaintiffs allege that FSGB's letter is false because under Wisconsin law, FSGB cannot lawfully or contractually impose "late charges and other charges." Plaintiffs further allege that the letter causes unsophisticated consumers to incorrectly believe that they will avoid such charges, and thus benefit financially, if they immediately send payment. For these reasons, plaintiffs claim that the letter is false, misleading, and deceptive in violation of § 1692e. Plaintiffs also claim that the letter fails to properly state the amount of debt, as required by § 1692g(a)(1).

         In its motion to dismiss, FSGB argued that it complied with the FDCPA as a matter of law because the allegedly false statement tracks the safe harbor language provided by this Court in Miller. FSGB further asserted that, although it may not lawfully impose "late charges and other charges, " the reference to such charges was not materially misleading because it is entitled to charge interest.

         The district court granted defendants' motion to dismiss. In doing so, it acknowledged that some of the Miller safe harbor language-namely, the phrase "late charges and other charges"-does not "strictly" apply in this case. Boucher v. Fin. Sys. of Green Bay, Inc., No. 17-cv-132, 2017 WL 2345678, at *4 (E.D. Wis. May 30, 2017). However, it reasoned that "the central purpose of Miller's safe harbor formula is to provide debt collectors with a way to notify debtors that the amounts they owe may ultimately vary." Id. Accordingly, it concluded that debt collectors like FSGB may rely on the Miller safe harbor language as long as the debt is variable in some way-regardless of "whether the increase occurred because of interest, late charges, other charges, some combination thereof, or all of the above." Id. Because FSGB's letter conveyed "the crucial fact" that plaintiffs' debts were variable, the court concluded that FSGB was entitled to safe harbor protection under Miller. This appeal followed.

         II. Discussion

         We review de novo a district court's decision to grant a motion to dismiss under Rule 12(b)(6). Bible v. United Student Aid Funds, Inc., 799 F.3d 633, 639 (7th Cir. 2015). In doing so, we accept as true all factual allegations in the complaint and draw all permissible inferences in plaintiffs' favor. Id. To survive a motion to dismiss, a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "The plausibility standard is not akin to a 'probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556).

         A. FSGB's Dunning Letter is Materially False, Misleading, and ...

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