7th Circuit affirms judgment for collection agency in class-action suit

A district court properly ruled for a debt collector in a class-action suit that sought damages for allegedly misleading letters sent to consumers, the 7th Circuit Court of Appeals ruled Wednesday.

Erin Johnson sued Enhanced Recovery Company LLC in the Northern Indiana District Court in Hammond after the company sent her three letters in 2016 seeking to collect a debt of $1,094.72 owed to Sprint.

After the second letter warned that the debt may be reported to national credit bureaus, ERC did report the debt. Afterward, the third letter contained the same warning, that the debt may be reported. Johnson alleged the language was in violation of 15 U.S.C. §1692(e), which prohibits false, deceptive or misleading representations by debt collectors.

Northern District Judge Philip Simon rejected ERC’s motion to dismiss the case and certified a class of anyone who received a letter like Johnson’s between July 2016 and August 2017, but he granted ERC’s motion for summary judgment. The 7th Circuit affirmed Wednesday.

“Because Johnson failed to present any evidence beyond her own opinion that ERC’s letter was misleading, we affirm the judgment of the district court,” Judge Ilana Rovner wrote.

“Our case law makes clear that ‘mere speculation’ by the plaintiff that a collection letter is misleading is insufficient to survive a debt collector’s motion for summary judgment,” Rovner wrote, citing Durkin v. Equifax, 406 F.3d 410, 415 (7th Cir. 2005). “In denying ERC’s motion to dismiss Johnson’s complaint, the district court observed that ‘as the case proceeds, the parties may (both might, and are permitted to) present evidence about how unsophisticated consumers would interpret’ the allegedly misleading statements in ERC’s April letter. Because Johnson chose instead to rely solely on her ‘speculation”’ to support her claim, summary judgment for ERC was appropriate.”

Meanwhile, the 7th Circuit also rejected ERC’s cross-appeal that argued the district court erred by rejecting its motion to dismiss. Because the district court determined Johnson had presented a plausible claim that consumers could be confused or misled by the language of the letters, denial of ERC’s motion to dismiss was proper, the appellate panel ruled..

The opinion is Erin Johnson v. Enhanced Recovery Company, LLC, 19-1210 & 19-1334.

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