September 26, 2018
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 16 C 5215 -
Virginia M. Kendall, Judge.
WOOD, Chief Judge, and EASTERBROOK and ROVNER, Circuit
EASTERBROOK, CIRCUIT JUDGE.
case is about character- the character of a debt. A debt
collector must not make any "false representation"
about "the character, amount, or legal status of any
debt". 15 U.S.C. §1692e(2)(A). A district court
concluded that a debt collector misrepresented a debt's
"character" by reporting to a credit bureau that
the debtor had nine unpaid bills of $60 rather than one of
$540. We hold, to the contrary, that arithmetic does not
affect a debt's "character." The statutory word
"amount" rather than the word "character"
is what governs reporting the debt's size.
Rhone received physical therapy from Illinois Bone and Joint
Institute, which billed her $134 for each session. Insurance
covered all but a $60 copay per session. Rhone did not remit
her part of the bills, however, and the Institute turned to
the Medical Business Bureau for debt collection. After three
years of dunning letters did not work, the Bureau reported to
Equifax that Rhone owes nine debts of $60 each. That led to
this suit, in which Rhone contends that the Bureau had to
report the aggregate debt of $540 rather than nine $60 debts.
Judge Der-Yeghiayan agreed with that submission. 2017 U.S.
Dist. LEXIS 177800 (N.D. 111. Oct. 25, 2017). After he
retired the case was assigned to Judge Kendall, who imposed a
$1, 000 penalty. 2018 U.S. Dist. LEXIS 188433 (N.D. 111. Apr.
credit report was factually correct. Rhone incurred nine
debts of $60 each. Judge Der-Yeghiayan did not explain why
the difference between 1 x $540 and 9 x
$60 misrepresents the "character" of a debt.
Neither the district judge nor Rhone offered a definition of
the word "character." Asked at oral argument
whether a debt collector should report one debt, or two, if a
person buys two cars from a single dealer and does not pay
for either car, Rhone's lawyer replied: "It would
depend." Counsel told us that a judge should consider
"all the facts and circumstances" once litigation
is underway. Yet what a court (or for that matter a debt
collector) needs is a rule of law to apply to those
facts and circumstances. This is a statutory suit, not a
commonlaw action. The word "character" either
requires aggregation of debts arising from multiple
transactions with a single entity, or it does not.
statute refers separately to the "character" and
the "amount" of a debt. Rhone does not contend that
the Bureau misrepresented the "amount" of the debt
by telling Equifax that Rhone owes $60 for each of nine
medical treatments. We can imagine a regulation specifying
whether debts to a single creditor should be aggregated (or
perhaps reported both singly and in the
aggregate)-consistency contributes to clarity-but Rhone does
not point to such a regulation, nor could we find one. One
benefit of identifying each amount separately is that a
debtor then can identify exactly which transactions are at
issue. If the Bureau had reported one $540 debt, Rhone might
well have asserted that the report was misleading-after all,
she does not owe $540 for any transaction. Pertransaction
reporting also shows whether some of the debts are stale
(that is, whether the statute of limitations bars
collection). Consumers and credit bureaus alike may find that
search through decisions from this court and the other courts
of appeals did not turn up any discussing whether aggregation
(or not) of all amounts owed to a single creditor concerns
the "character" of a debt. Indeed, few decisions
discuss the meaning of that word in any debt-related context.
In this circuit, Fields v. Wilbur Law Firm, P.C.,
383 F.3d 562 (7th Cir. 2004), holds that presenting a debt
plus attorneys' fees as a single undifferentiated sum
misstates the debt's character, while Hahn v. Triumph
Partnerships LLC, 557 F.3d 755 (7th Cir. 2009), holds
that combining principal and interest does not do so.
Attorneys' fees differ in character from the main debt,
while interest does not. Elsewhere, Donohue v. Quick
Collect, Inc., 592 F.3d 1027, 1033 (9th Cir. 2010),
agrees with Hahn, while Miller v. Javitch, Block
& Rathbone, 561 F.3d 588, 592-94 (6th Cir. 2009),
holds that describing a debt as a loan rather than an account
receivable does not misstate its character. None of these
decisions holds or implies that it matters to a debt's
"character" whether amounts due for individual
purchases from a single merchant are stated separately or as
absence of authoritative or even persuasive guidance leaves
us on our own. To our ears, "character" sounds like
a reference to the kind of obligation. (That is essentially
how Fields heard it, too.) A secured auto loan would
be of one character, an unsecured credit-card debt another, a
judgment debt a third, and a subordinated debenture (an
instrument junior by contract) a fourth. Keeping these kinds
of obligation distinct reduces the potential for confusion
about their nature and relative priority. But the number of
transactions between a debtor and a single merchant does not
affect the genesis, nature, or priority of the debt and so
does not concern its character. The statute names
"character, amount, or legal status" as distinct
attributes, and it would undercut this disjunction to treat
arithmetic as concerning the debt's "character"
rather than its "amount."
district court's opinion, and the parties' briefs,
devote considerable attention to whether the Bureau made a
proper report of "tradelines." This is a word that
Equifax uses in the conduct of its own business. It does not
appear in the statute or any relevant regulation. (The word
"tradeline" or the phrase "trade line"
appears four times in the Code of Federal Regulations. None
of the regulations defines it, and none concerns debt
collectors' reports to credit bureaus.) Whether Equifax
has a grievance against Medical Business Bureau-and whether
Equifax offers debtors some remedy if creditors or debt
collectors err in implementing Equifax's policies-are
neither here nor there for our purposes. Equifax might have a
duty to correct its report if an error with respect to the
number of tradelines affects a consumer's credit rating.
See 15 U.S.C. §1681i(a). But this suit rests on
§1692e(2)(A), not on Equifax's vocabulary.
Business Bureau did not misstate the "character" of
Rhone's debt to the Illinois Bone and Joint Institute, so