Brown v. CACH, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

GABRIEL BROWN and IVAN BROWN, )

)

Plaintiffs, )

) Case No. 20-cv-4579

v. )

) Judge Robert M. Dow, Jr.

CACH, LLC and UNIFIN, INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

For the reasons stated below, Defendant Unifin, Inc.’s motion for judgment on the

pleadings [39] is granted with prejudice. Judgment will be entered in favor of Unifin and against

Plaintiff Ivan Brown. Given the earlier settlement between Gabriel Brown and Unifin, Defendant

Unifin will be dismissed from this case in its entirety. The case between Plaintiffs and Defendant

CACH will proceed, with fact discovery to close in 28 days and a joint status report to be filed

within 30 days thereafter [see 43, 50, 51].

I. Factual Background

In August 2020, Plaintiffs Gabriel and Ivan Brown,1 who are sister and brother, filed this

action alleging that Defendants Unifin, Inc. and CACH, LLC violated Section 1692e of the Fair

Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692e. Gabriel reached a settlement with

Unifin and dismissed her claims against that defendant with prejudice. [See 19.] Ivan then filed

an amended complaint against both Defendants. Although both Defendants have answered [see

27, 29], Unifin has filed a motion for judgment on the pleadings [39] as well.

Ivan’s claim against Unifin arises out of a single telephone call that Ivan placed to Unifin

on June 15, 2020.2 On that day, Ivan returned a call that Unifin had placed to his phone number

seeking to reach Gabriel to collect a debt alleged owed by Gabriel to CACH.3 According to Ivan’s

amended complaint [23, ¶¶ 8, 19], that debt was uncollectable because of its age. The transcript

of the June 15, 2020 call makes clear that the Unifin representative thought he was speaking with

Gabriel, but he actually was speaking with Ivan. To be sure, the representative asked if he was

1 In the interest of clarity, the Court will refer to Plaintiffs by their first names as they have the same

surname.

2 The call was recorded, transcribed, and submitted by the parties in connection with the briefing on this

motion.

3 According to the complaint [see 23, ¶ 8], the original debt holder was Bank of America, but its interest in

the debt had been transferred to CACH.

speaking with “Mr. Brown,” to which Ivan (accurately) answered in the affirmative. But the

representative then asked for confirmation of the last four digits of the caller’s social security

number, and Ivan confirmed his sister’s digits as his own. The representative then provided

information and answered Ivan’s questions about a debt balance owed to Defendant CACH that

Unifin was hoping to collect. Ivan contends that some of the statements made during the call were

false and actionable under the FDCPA. Unifin counters that Ivan lacks standing to assert a claim

relating to Unifin’s attempt to collect his sister’s debt.

II. Legal Standard

Pursuant to Federal Rule of Civil Procedure 12(c), a party may move for judgment on the

pleadings after the pleadings are closed, but early enough not to delay trial. A Rule 12(c) motion

tests the legal sufficiency of a complaint under the same standards applicable to a motion under

Rule 12(b)(6). Adams v. City of Indianapolis, 742 F.3d 720, 727-28 (7th Cir. 2014). In judging

the sufficiency of a complaint, the Court is guided by familiar standards. To survive a motion to

dismiss for failure to state a claim, the plaintiff must allege “enough facts to state a claim to relief

that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955,

1974 (2007). In general, the inquiry is limited to the material facts alleged in the complaint, which

are accepted as true and construed in the light most favorable to the plaintiff. Buchanan-Moore v.

Cty. of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). “As the title of the rule implies, Rule 12(c)

permits a judgment based on the pleadings alone…. The pleadings include the complaint, the

answer, and any written instruments attached as exhibits.” R.J.R. Serv., Inc. v. Aetna Cas. & Sur.

Co., 895 F.2d 279, 281 (7th Cir. 1989) (internal citations omitted). The District Court may not

look beyond the pleadings, and all uncontested allegations to which the parties had an opportunity

to respond are taken as true. Flora v. Home Fed. Savings and Loan Assoc., 685 F.2d 209, 211 (7th

Cir. 1982). The Court is not required to accept as true allegations that are merely conclusory,

unwarranted deductions of fact, or unreasonable inferences. Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009); Fed. R. Civ. P. 8(a).

III. Discussion

In their briefs, the parties focus on many aspects of the call and the inferences to be drawn

from the interaction between Ivan and the Unifin representative. But only a few facts matter to

the disposition of this claim and they are entirely undisputed. According to the amended

complaint, the “debt account with a balance of $5,246.21” that was the subject of the call was

“owed by Gabriel Brown.” [23, ¶ 15]. Ivan initiated the call during which the allegedly actionable

statements were made and the Unifin representative took steps to verify that the person with whom

he was speaking was the alleged debtor, Gabriel. Only after Ivan confirmed the last four digits of

his sister’s Social Security number did the representative make the statements in question.

The first – and it turns out dispositive – question before the Court is whether Ivan has

standing to assert a claim in these circumstances. The parties rightly focus the Court’s attention

on two Seventh Circuit decisions, Todd v. Collecto, Inc., 731 F.3d 734 (7th Cir. 2013), and

O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938 (7th Cir. 2011), which appear to be the

leading cases in this circuit on standing under the FDCPA. Although Todd in no way suggested

that it was overruling O’Rourke – and, in fact, the two cases involved different sections of the

statute – the panel in Todd explicitly stated its intent to “clarify” how broadly O’Rourke should be

read. Todd, 731 F.3d at 736-37. In the discussion below, this Court endeavors to synthesize the

guidance from these court of appeals decisions.

To begin, the Court notes that the claims in Todd arose under Sections 1692b(2) and 1692f

of the FDCPA, while the claim in O’Rourke (as here) involved Section 1692e. In Todd, the court

rejected any notion that proper plaintiffs in FDCPA cases can be determined on a uniform basis

across the statute. Instead, “each provision of the FDCPA must be analyzed individually to

determine who falls within the scope of its protection and thus to decide ‘with respect to’ whom

the provision can be violated.” 731 F.3d at 738. Turning to the two specific provisions at issue,

the court of appeals determined that Section 1692b(2) protects only “consumers,” but that “anyone

aggrieved by a debt collector’s unfair or unconscionable collection practices can fall within the

provision’s zone of interest.” Id. And, although no Section 1692e claim was asserted in the case,

the Todd court also “clarif[ied] that O’Rourke should not be read to foreclose all FDCPA claims

by persons other than customers and their proxies,” id. at 737, though it did not delineate any more

precisely who can and who cannot invoke Section 1692e. See also Jordan v. BP Peterman Law

Group, LLC, 2019 WL 698459, at *3 (E.D. Wis. Feb. 20, 2019) (noting that the Todd court, in

dicta, left open the possibility that non-consumers could have standing to sue under § 1692e).

Returning to O’Rourke, it is important to note at the outset, as the Todd panel did, that the

“broad language” in the O’Rourke opinion must be understood in the context of the specific claim

asserted—namely, that statements made in a pleading filed with a state court judge were actionable

under Section 1692e. Whatever the “limiting principle” used to define the “zone of interest” to be

protected by that section, it could not be read to extend to a judge, who neither “stand[s] in the

shoes of the consumer,” has a “special relationship” to the consumer, nor is either a consumer’s

advocate or adversary. O’Rourke, 635 F.3d at 944. In other words, the ruling that statements made

to a state court judge were not actionable under the FDCPA did not necessarily foreclose actions

based on statements made to third parties who were not “consumers” as to the specific debt in

question. Todd, 731 F.3d at 738.

In the Section 1692e cases since Todd, district judges in this circuit have applied the “zone

of interest” test as applied to that particular section of the statute. O’Rourke makes clear that a

consumer – defined as “any natural person obligated or allegedly obligated to pay any debt” 15

U.S.C. s 1692a(3) – can sue under Section 1692e. Gabriel clearly is a consumer as to the debt in

question here. But, by his own admission, Ivan just as clearly is not. Yet Todd makes clear that

the zone of interest under Section 1692e is broader that consumers alone, notwithstanding

O’Rourke’s statement that “[a]s a general matter, the Act and its protections do not extent to third

parties.” 635 F.3d at 943. To be sure, O’Rourke recognized that the Act protected “consumers

and those who have a special relationship with the consumer” or put slightly differently,

“consumers and those who stand in the consumer’s shoes and no others.” Id. at 943-44.

So, what relationships are so “special” as to place a third party in the “shoes” of the

consumer and thus confer standing under Section 1692e? The case law reveals several examples.

In Koval v. Harris & Harris, Ltd., 2017 WL 1321152, at *1 (N.D. Ill. Apr. 5, 2017), the plaintiff

was the legal guardian of her disabled father, had authority to open his mail and make decisions

on his behalf, and provided daily care for him. The court concluded that “a daughter who provides

daily care for a disabled parent fits comfortably” within the zone of interest. Id. at *2. In Hill v.

Bayside Woods, HOA Inc., 2017 WL 529601, at *5-*6 (S.D. Ind. Feb. 9, 2017), by contrast, the

court found that an adult daughter of a debtor did not have standing where another individual—

the plaintiff’s brother—had their father’s power of attorney and thus actual authority to step into

his shoes. In Schmitz v. Valentine & Kebartas, LLC, 2019 WL 6619074, at *4-*5 (E.D. Wis. Dec.

5, 2019), the court rejected any suggestion that a formal designation (such as guardian or power of

attorney) should be required, but still looked to allegations that the plaintiffs had “authority to open

and read the debtor’s letters” in allowing them to “pursue a § 1692e claim.” In drawing that line,

the Schmitz court found persuasive the Sixth Circuit’s analysis in Wright v. Fin. Serv. of Norwalk,

Inc., 22 F.3d 647, 649-50 (6th Cir. 1994), in which the § 1692e plaintiff was acting as executrix

of her mother’s estate and thus had “the same authority as the debtor to open and read the letters

of the debtor.”

What these cases have in common is the principle that standing must be predicated on some

indication—formal or informal—of the plaintiff’s authority to act on behalf of the

consumer/debtor in regard to the communications at issue. See, e.g., Wright, 22 F.3d at 650

(explaining that the phrase “with respect to any person” includes, at a minimum, “those persons,

such as Wright, who ‘stand in the shoes’ of the debtor or have the same authority as the debtor to

open and read the letters of the debtor.”) Yet Hill suggests that a familial relationship alone will

not suffice.

Here, as Ivan’s complaint concedes, he is not obligated on the debt, nor did Unifin ever

suggest that the debt was his. To the contrary, the complaint repeatedly acknowledges that the

debt was Gabriel’s; Ivan’s brief says the same thing; and the context of the call makes abundantly

clear that the Unifin representative thought he was speaking with Gabriel. By confirming Gabriel’s

Social Security number, Ivan led the representative to believe that he was dealing with the actual

alleged debtor, and thus someone plainly within the “zone of interests” protected by the FDCPA.

But, in reality, Ivan was an imposter (albeit, a well-meaning one, he claims) and had no right to

intrude into his sister’s business. Indeed, any suggestion that Ivan had Gabriel’s permission or

authorization to stand in her shoes is belied by the allegations of the complaint itself and Ivan’s

response brief – in particular, Ivan’s contention that his actions embarrassed his sister and resulted

in a souring of their relationship [see 23, ¶ 21; see also 48, at 1, 4].4

4 For purposes of this opinion, the Court accepts the proposition that “there is no unclean hands defense

available to debt collectors under the FDCPA.” Valenta v. Midland Funding, Case No. 17-cv-6609, Docket

No. 95, Memorandum Opinion and Order at 8 (N.D. Ill. Mar. 29, 2019). But this ruling is not an application

of an “unclean hands” affirmative defense; rather, it rests on Ivan’s failure to establish standing to pursue

this statutory cause of action in the first place.

IV. Conclusion

For the reasons explained above, Defendant Unifin, Inc.’s motion for judgment on the

pleadings [39] is granted with prejudice. Judgment will be entered in favor of Unifin and against

Plaintiff Ivan Brown. Given the earlier settlement between Gabriel Brown and Unifin, Defendant

Unifin will be dismissed from this case in its entirety. The case between Plaintiffs and Defendant

CACH will proceed, with fact discovery to close in 28 days and a joint status report to be filed

within 30 days thereafter [see 43, 50, 51].

Dated: September 10, 2021

Robert M. Dow, Jr.

United States Distrief Judge