Beth Lavallee v. Med-1 Solutions, LLC

In the

United States Court of Appeals

For the Seventh Circuit

____________________

No. 17-3244

BETH LAVALLEE,

Plaintiff-Appellee,

v.

MED-1 SOLUTIONS, LLC,

Defendant-Appellant.

____________________

Appeal from the United States District Court for

the Southern District of Indiana, Indianapolis Division.

No. 1:15-cv-01922-DML-WTL

Debra McVicker Lynch, Magistrate Judge.

____________________

ARGUED MAY 30, 2018 — DECIDED AUGUST 8, 2019

____________________

Before WOOD, Chief Judge, and SYKES and HAMILTON,

Circuit Judges.

SYKES, Circuit Judge. Debt collector Med-1 Solutions, LLC,

attempted to recover two unpaid medical bills on behalf of

Beth Lavallee’s healthcare provider. The Fair Debt Collection

Practices Act (“FDCPA” or “the Act”) required Med-1 to

disclose certain information to Lavallee about her debts

within a specific time frame. 15 U.S.C. § 1692g(a). Med-1

2 No. 17-3244

could satisfy its § 1692g(a) disclosure obligations by includ-

ing the required information in its “initial communication”

with Lavallee or by sending “a written notice containing”

the disclosures within five days after that “initial communi-

cation.” Id.

In March and April 2015, Med-1 sent Lavallee two

emails, one for each debt. The emails contained hyperlinks

to a Med-1 vendor’s web server. Once there, a visitor had to

click through multiple screens to access and download a .pdf

document containing the disclosures required by § 1692g(a).

Lavallee never opened these emails. When the hospital

called her in November to discuss a different medical debt,

she learned about the earlier debts and was told that they

had been referred to Med-1 for collection. She then called

Med-1 to inquire about them, but the debt collector didn’t

provide the required disclosures. Nor did it send a written

notice within the next five days.

Lavallee sued Med-1 for violating § 1692g(a). She alleged

that Med-1 never provided the statutory disclosures, either

during the November phone call or within five days as

required. Med-1 responded that its March and April emails

were the “initial communication[s]” and argued that they

contained the mandatory disclosures. A magistrate judge,

presiding by consent, 28 U.S.C. § 636(c), granted Lavallee’s

motion for summary judgment.

We affirm. Med-1 concedes its failure to send Lavallee a

written notice within five days of her phone call. This appeal

rests on Med-1’s contention that its emails were initial

communications that contained the required disclosures. But

the emails do not qualify under the Act’s definition of

“communication” because they did not “convey[] … infor-

No. 17-3244 3

mation regarding a debt.” 15 U.S.C. § 1692a(2). Nor did the

emails “contain” the statutorily mandated disclosures.

§ 1692g(a). At most the emails provided a means to access

the disclosures via a multistep online process. Because

Med-1 violated § 1692g(a), the judge was right to enter

judgment for Lavallee.

I. Background

Lavallee incurred two debts for medical services provid-

ed by a hospital. The hospital referred the debts to Med-1 for

collection. Med-1 emailed Lavallee on March 20 and

April 17, 2015, sending the messages from

“info@med1solutions.com” to the email address Lavallee

had provided to the hospital. The emails stated that “Med-1

Solutions has sent you a secure message” and featured an

embedded hyperlink inviting the recipient to “View Secure-

Package”:

4 No. 17-3244

Neither email was returned to Med-1 as undelivered, but

Lavallee doesn’t recall seeing them in her inbox. If Lavallee

had opened either email and clicked on the hyperlink, she

would have been directed via a web browser to a server

operated by Privacy Data Systems, Med-1’s sister company.

She would have seen a screen asking her to check a box to

sign for the “SecurePackage.” Checking that box would have

activated the “Open SecurePackage” button at the bottom of

the screen, and clicking that button would have revealed a

screen with “SecurePackage Display” written across the top.

Had she selected the “Attachments” tab on that screen, a

.pdf file would have appeared. Had she clicked on that .pdf

file, she would have seen a pop-up window asking her if she

wanted to open the attachment with Adobe Acrobat or save

it to her hard drive. Only then could she have viewed the

document or downloaded the file and then opened it.

The file contained the disclosures required by § 1692g(a),

including the amount of the debt, the consumer’s right to

dispute the debt, and how to obtain more information about

the alleged creditor. This type of notice is commonly called a

“validation notice.” Durkin v. Equifax Check Servs., Inc.,

406 F.3d 410, 412 (7th Cir. 2005).

Med-1 received reports from Privacy Data Systems indi-

cating which email recipients had downloaded validation

notices. Privacy Data Systems’ records show that Lavallee

never clicked the “Open SecurePackage” hyperlink and thus

never accessed the validation notice stored on the server.

On November 12, 2015, Lavallee received a phone call

from the hospital about a different unpaid bill. During that

conversation, Lavallee learned that she owed other debts

that had been referred to Med-1. This was her first time

No. 17-3244 5

hearing about the debt collector. Later that day Lavallee

called Med-1 and discussed her medical debts with a Med-1

representative. Med-1 did not provide any § 1692g(a) disclo-

sures during that phone call, nor did it send a written notice

in the days that followed.

Lavallee filed this action in December 2015 alleging that

Med-1 violated § 1692g(a) by failing to deliver the mandato-

ry disclosures orally during the November telephone con-

versation or in writing thereafter. The case proceeded to

cross-motions for summary judgment. Med-1 introduced its

March and April emails and argued that they satisfied its

§ 1692g(a) obligations because they enabled Lavallee to

obtain validation notices. The magistrate judge disagreed.

She reasoned that the validation notices were never sent

because Lavallee never downloaded them—a fact reflected

in Med-1’s own records. Moreover, Med-1’s delivery meth-

od—embedding a hyperlink in an email from an unknown

sender—made receipt of the notices unlikely. The judge

entered summary judgment in Lavallee’s favor and awarded

statutory damages, costs, and attorney’s fees.

II. Discussion

A. Standing

We begin, as we must, with the question of Lavallee’s

standing. To establish constitutionally adequate standing to

sue, a “plaintiff must allege an injury in fact that is traceable

to the defendant’s conduct and redressable by a favorable

judicial decision.” Casillas v. Madison Ave. Assocs., Inc.,

926 F.3d 329, 333 (7th Cir. 2019) (citing Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560–61 (1992)). To satisfy the injury-in-

fact requirement, Lavallee must establish that she suffered

6 No. 17-3244

an injury that is “both concrete and particularized.” Spokeo,

Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016). And while “Con-

gress has the power to define intangible harms as legal

injuries for which a plaintiff can seek relief”—including

violations of the FDCPA—it “must operate within the

confines of Article III.” Casillas, 926 F.3d at 333. So a plaintiff

must do more than point to a bare procedural violation; he

must show that the violation harmed or “presented an

appreciable risk of harm to the underlying concrete interest

that Congress sought to protect by enacting the statute.”

Groshek v. Time Warner Cable, Inc., 865 F.3d 884, 887 (7th Cir.

2017) (quotation marks omitted).

Med-1 concedes that a debt collector’s failure to provide

a § 1692g(a) disclosure constitutes an injury in fact and

instead focuses on causation. But Med-1 made that conces-

sion before our recent decision in Casillas. There we applied

the injury-in-fact requirement in the § 1692g(a) context.

Paula Casillas received an incomplete § 1692g(a) validation

notice: It “neglected to specify that [a] notification or request

[to dispute or verify the debt] must be in writing.” 926 F.3d at

332 (citing § 1692g(a)(3)–(5)). But Casillas never explained

how this omission “harmed or posed any real risk of harm to

her interests under the Act.” Id. at 334. Because “there was

no prospect that [Casillas] would have tried to exercise” her

statutory rights, the omission of the in-writing requirement

didn’t constitute a concrete harm. Id. Her suit was predicat-

ed on “a bare procedural violation,” id. at 339, and her

complaint never alleged how that violation affected an

“underlying concrete interest,” Groshek, 865 F.3d at 887.

This case differs from Casillas in two ways. First, the al-

leged statutory violation is meaningfully different. Unlike

No. 17-3244 7

Casillas, who received an incomplete validation notice,

Lavallee never received any of the disclosures required by

§ 1692g(a). The debt collector in Casillas disclosed the con-

sumer’s statutory rights to dispute the debt and inquire into

the creditor’s identity; it simply failed to mention the proper

procedure for exercising those rights. In contrast, here Med-1

provided Lavallee with nothing. Her right to contest or

request verification of the debt—rights that Med-1 is bound

by statute to disclose to every debtor—simply never came

up.

Second, and significantly, Lavallee was already a defend-

ant in a collection suit brought by Med-1 when the statutory

disclosure violation occurred. During her November 12

conversation with Med-1, Lavallee learned that it had al-

ready filed a lawsuit against her to collect the relevant debts.

Without the knowledge that a consumer in her position is

statutorily entitled to dispute and require verification of the

debt on which the lawsuit was predicated, Lavallee stood at

a distinct disadvantage. If she had known about her rights,

she could have disputed and sought verification of the

debts—thereby requiring Med-1 to cease the collection

action and obtain verification. See § 1692g(b). Because she

was already a collection-suit defendant, it’s reasonable to

infer that she would have exercised her statutory rights,

thereby halting the collection litigation, if Med-1 had pro-

vided the required disclosures.

In light of Casillas, an FDCPA plaintiff should include an

allegation of concrete harm in his complaint. A bare allega-

tion that the defendant violated one of the Act’s procedural

requirements typically won’t satisfy the injury-in-fact re-

quirement. But in Lavallee’s circumstances, the complete

8 No. 17-3244

deprivation of § 1692g(a) disclosures and the fact that she

was sued without the benefit of mandatory § 1692g(a)

disclosures lends concreteness to her injury.

So this case is distinguishable from Casillas. Med-1 raises

a different standing challenge, but we can make short work

of it. Med-1 maintains that because Lavallee never opened

the disputed emails, she lacks standing to argue that they

were inadequate. But recall that Med-1 brought the emails

into this case in an effort to prove that it had satisfied its

statutory obligations. Indeed, Lavallee didn’t learn about the

emails until this litigation was underway. Lavallee alleged in

her complaint that Med-1 violated § 1692g(a) when it failed

to send her a written validation notice within five days of

the November 12 phone call. That failure inflicted the cog-

nizable harm described above. Med-1 introduced the emails

as evidence of its compliance with § 1692g(a). Med-1 was

free to do so, but once it did, Lavallee was free to argue that

the emails were deficient. Med-1’s standing challenge is

meritless.

B. Section 1692g(a) Violation

We review a summary judgment de novo, construing the

record and drawing all reasonable inferences in Med-1’s

favor as the nonmoving party. Severson v. Heartland Wood-

craft, Inc., 872 F.3d 476, 480 (7th Cir. 2017). The facts here are

undisputed, so our task is to determine whether Lavallee “is

entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a).

The judgment against Med-1 rests on its violation of

§ 1692g(a). Thus far we’ve only summarized the statute. In

full, § 1692g(a) provides:

No. 17-3244 9

Within five days after the initial communica-

tion with a consumer in connection with the

collection of any debt, a debt collector shall,

unless the following information is contained

in the initial communication or the consumer

has paid the debt, send the consumer a written

notice containing—

(1) the amount of the debt;

(2) the name of the creditor to whom the debt

is owed;

(3) a statement that unless the consumer, with-

in thirty days after receipt of the notice, dis-

putes the validity of the debt, or any portion

thereof, the debt will be assumed to be valid by

the debt collector;

(4) a statement that if the consumer notifies the

debt collector in writing within the thirty-day

period that the debt, or any portion thereof, is

disputed, the debt collector will obtain verifica-

tion of the debt or a copy of a judgment against

the consumer and a copy of such verification or

judgment will be mailed to the consumer by

the debt collector; and

(5) a statement that, upon the consumer’s writ-

ten request within the thirty-day period, the

debt collector will provide the consumer with

the name and address of the original creditor,

if different from the current creditor.

The statutory disclosure obligation is triggered by an “in-

itial communication with a consumer in connection with the

10 No. 17-3244

collection of any debt.” The FDCPA defines “communica-

tion” as “the conveying of information regarding a debt

directly or indirectly to any person through any medium.”

§ 1692a(2).

Everyone agrees that the November 12 phone conversa-

tion between Lavallee and a Med-1 employee was a “com-

munication.” And if it was the initial communication, Med-1

was required to send Lavallee a validation notice within five

days. Med-1 concedes that it did not. So to prevail on appeal,

Med-1 must persuade us that its March and April emails

were “communications” under the FDCPA.

As we’ve just explained, to qualify as a “communication”

under the Act, a message must “convey[] … information

regarding a debt.” Id. Med-1’s emails conveyed three pieces

of information: the sender’s name (Med-1 Solutions), its

email address, and the fact that it “has sent … a secure

message.” The emails say nothing at all about a debt.

Med-1 insists that the emails should count as communi-

cations because they contain the name and email address of

the debt collector. We disagree. Though we haven’t yet

addressed the FDCPA’s definition of “communication,” the

Sixth and Tenth Circuits have held that to constitute a

communication under the Act, a message must at least imply

the existence of a debt. In Brown v. Van Ru Credit Corp., the

Sixth Circuit held that a message that didn’t “imply the

existence of a debt” wasn’t a communication because “what-

ever information [was] conveyed [could not] be understood

as ‘regarding a debt.’” 804 F.3d 740, 742 (6th Cir. 2015). In

Marx v. General Revenue Corp., the Tenth Circuit considered a

fax that didn’t “indicate to the recipient that [it] relate[d] to

the collection of a debt” or “expressly reference debt,” and

No. 17-3244 11

that could not “reasonably be construed to imply a debt.”

668 F.3d 1174, 1177 (10th Cir. 2011). The fax was therefore

not a “communication” under the Act. Id.

This understanding of “communication” is firmly rooted

in the statutory text. “To convey is to impart, to make

known.” Id. at 1182; accord Convey, THE AMERICAN HERITAGE

DICTIONARY (2d college ed. 1982) (“[t]o communicate or

make known; impart”). If a message doesn’t inform its

reader that it even pertains to a debt, it simply cannot “con-

vey[] … information regarding a debt.” § 1692a(2). We

therefore hold that a debt collector’s message must at least

imply the existence of a debt to meet the Act’s definition of

“communication.” Med-1’s emails were insufficient.

Med-1 argues that the Eleventh Circuit’s decision in Hart

v. Credit Control, LLC, 871 F.3d 1255 (11th Cir. 2017), sup-

ports its position that a message can qualify as a communi-

cation without mentioning a debt. In Hart the court

considered the following voicemail: “This is Credit Control

calling with a message. This call is from a debt collector.

Please call us at 866–784–1160. Thank you.” Id. at 1256. The

court ruled that the voicemail was a communication under

the Act.

Hart does little to bolster Med-1’s case. The Eleventh Cir-

cuit reasoned that the debt collector’s “voicemail, although

short, conveyed information directly to Hart—by letting her

know that a debt collector sought to speak with her and by

providing her with instructions and contact information to

return the call.” Id. at 1257–58. Moreover, it “indicated that a

debt collector was seeking to speak to her as a part of its

efforts to collect a debt.” Id. at 1258. In sum, Credit Control

implied the existence of a debt when it identified itself as a

12 No. 17-3244

debt collector. Med-1’s emails did nothing of the sort. Unlike

the voicemail in Hart, the emails did not include the words

“debt” or “collector.”

Med-1 argues in the alternative that its emails were

communications because they were intended to aid its

collection efforts. This argument relies on Horkey v. J.V.D.B.

& Associates, Inc., 333 F.3d 769 (7th Cir. 2003), but that case is

inapposite: It contains no analysis of the Act’s definition of

“communication.” We looked to the debt collector’s purpose

solely to determine whether it engaged in harassing “con-

duct … in connection with the collection of a debt” under

§ 1692d. Id. at 773 (emphasis added). Horkey has no bearing

on the question presented here.

There is a second and independent reason why the

emails don’t measure up under § 1692g(a): They did not

themselves contain the enumerated disclosures. To access

the validation notice, Lavallee would have had to (1) click on

the “View SecurePackage” hyperlink in the email; (2) check a

box to sign for the “SecurePackage”; (3) click a link to open

the “SecurePackage”; (4) click on the “Attachments” tab;

(5) click on the attached .pdf file; and (6) view the .pdf with

Adobe Acrobat or save it to her hard drive and then open it.

At best, the emails provided a digital pathway to access

the required information. And we’ve already rejected the

argument that a communication “contains” the mandated

disclosures when it merely provides a means to access them.

See Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark,

L.L.C., 214 F.3d 872, 875 (7th Cir. 2000) (holding that a debt

collector did not satisfy § 1692g(a) by providing a phone

number that the debtor could call to obtain the required

information).

No. 17-3244 13

Med-1 analogizes the information available through a

hyperlink in an email to the information printed on a letter

inside an envelope. The analogy is inapt. An envelope is

merely a means of transmitting a letter bearing a substantive

message. The letter in Med-1’s analogy clearly “contains” the

information it imparts. Conversely, Med-1’s emails contained

nothing more than hyperlinks—gateways to an extended

process that ends in the relevant message. The proper ana-

logue is a letter that provides nothing more than the address

of a location where the message can be obtained. That

hypothetical letter, like the emails here, doesn’t “contain” the

relevant information.

C. The E-Sign Act

The Bureau of Consumer Financial Protection submitted

an amicus brief urging us to affirm on a different ground—

one that Lavallee did not raise in the district court or on

appeal. The Bureau draws our attention to the E-Sign Act,

15 U.S.C. §§ 7001 et seq. When a statute or regulation “re-

quires that information … be provided or made available to

a consumer in writing,” the E-Sign Act imposes conditions

on the use of an electronic record to satisfy that disclosure

requirement. See id. § 7001(c)(1). The Bureau maintains that

Med-1’s emails weren’t “written notice” under § 1692g(a)

because Med-1 failed to satisfy the conditions of the E-Sign

Act before sending them.

Because we’ve resolved this appeal in Lavallee’s favor on

other grounds, we have no need to address the impact of the

E-Sign Act. Moreover, we don’t usually consider arguments

introduced on appeal by an amicus. See, e.g., Lopez v. Davis,

531 U.S. 230, 244 n.6 (2001); Sanders v. John Nuveen & Co., 554

F.2d 790, 794 (7th Cir. 1977). Appellate courts have the

14 No. 17-3244

discretion to do so where the parties raised the issue but

didn’t develop it, see Toussaint v. McCarthy, 801 F.2d 1080,

1106 n.27 (9th Cir. 1986), or where the issue was of the type

that the court has the power to raise sua sponte, see Teague v.

Lane, 489 U.S. 288, 300 (1989). Neither circumstance is pre-

sent here.

AFFIRMED