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Bernal v. NRA Group, LLC

United States Court of Appeals, Seventh Circuit

July 19, 2019

Joseph Bernal, individually and on behalf of others similarly situated, Plaintiff-Appellant,
v.
NRA Group, LLC, Defendant-Appellee.

          Argued March 28, 2019

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 16 C1904 - Gary Feinerman, Judge.

          Before Ripple, Manion, and Sykes, Circuit Judges.

          Sykes, Circuit Judge.

         Joseph Bernal bought a monthly pass to Six Flags amusement parks. The contract said that if he fell behind on his payments, he would "be billed for any amounts that are due and owing plus any costs (including reasonable attorney's fees) incurred by [Six Flags] in attempting to collect amounts due." This case asks whether a debt collector's fee counts as a collection cost under that Ianguage. We hold that it does. The contract unambiguously permits Six Flags to recover any cost it incurs in collecting past-due payments, and that includes a standard collection fee.

         I. Background

         After Bernal missed several monthly payments, Six Flags hired AR Assist, a debt collector, to help recover the balance. Under their contract, AR Assist could charge Six Flags a 5% management fee plus an additional amount based on the number of days the debt was delinquent (in this case, an additional 20%). No one disputes that this was a reasonable fee, nor that arrangements like this are common in the market. In turn, AR Assist hired the NRA Group as a subcontractor.

         NRA then sent Bernal a collection letter asking for the $267.31 he owed, plus $43.28 in costs—which is technically even less than the 25% fee NRA was authorized by contract to charge. The letter gave Bernal two options: He could pay the sum directly to NRA, which would then remit the collection fee to AR Assist, minus its own fee. Or he could pay the sum to Six Flags, in which case Six Flags would have to pay AR Assist separately.

         Bernal did neither. He reasoned that it couldn't possibly have cost NRA $43.28 to mail a single collection letter. So rather than pay, he filed this class-action lawsuit under the Fair Debt Collection Practices Act ("FDCPA"), alleging that NRA charged a fee not "expressly authorized by the agreement creating the debt." 15 U.S.C. § l692f(1). Each class member had entered into a contract with essentially the same language.

         After rejecting the parties' motions for summary judgment, the district judge held a bench trial. As part of his legal conclusions, he held that the percentage-based collection fee was expressly authorized by the following language in the initial agreement:

If your account is in arrears for more than 30 days (after you miss two payments) and ... the Minimum Term has expired, then your account will be permanently cancelled and you will be billed for any amounts that are due and owing plus any costs (including reasonable attorney's fees) incurred by us in attempting to collect amounts due or otherwise enforcing this agreement.

         The judge reached this conclusion even though two other circuits have said otherwise when interpreting almost identical language. Because no class member was charged more than what was authorized by the contracts, the judge entered judgment for NRA.

         II. Discussion

         The parties agree that NRA is allowed to collect this fee if it was "expressly authorized by the agreement creating the debt." § l692f(1). That, in turn, depends on whether the collection fee was a "cost[] ... incurred by [Six Flags] in attempting to collect amounts due." The judge said it was, and we review that legal conclusion de ...


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