Milisavljevic v. Midland Credit Mgmt., LLC

581 F.Supp.3d 1020

Milun MILISAVLJEVIC, on behalf of himself and all others similarly situated, Plaintiff,

v.MIDLAND CREDIT MANAGEMENT, LLC, Midland Funding, LLC, and Encore Capital Group, Inc., Defendants.

No. 19-cv-08449

United States District Court, N.D. Illinois, Eastern Division.

Signed January 24, 2022

Celetha Chatman, Michael Jacob Wood, Community Lawyers Group, Ltd., Chicago, IL, Mario Kris Kasalo, The Law Office of M. Kris Kasalo, Ltd., Skokie, IL, for Plaintiff.

David M. Schultz, Jennifer W. Weller, Hinshaw & Culbertson LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

JOHN F. KNESS, United States District Judge Seeking to collect unpaid credit card debt, Defendants Midland Credit Management, Inc., Midland Funding, LLC, and Encore Capital Group, Inc. sued Plaintiff Milun Milisavljevic in a state court. When Defendants filed a motion for default judgment in the state-court litigation, they sent copies of the motion and an unsigned order to Plaintiff. Thinking that the unsigned and undated order meant he had already lost in the state court, Plaintiff declined to respond; accordingly, the state court entered a judgment against him. Only then did Plaintiff retain counsel to assist with his legal woes.

Plaintiff brought this purported class action alleging that Defendants violated the Fair Debt Collection Practices Act (FDCPA). But the injuries Plaintiff alleges—that he "experienced severe emotional distress" and "lost sleep"; was duped into not responding to Defendants’ motion, thus leading to a default state-court judgment; and "spent time, money, and energy in seeking to vacate the judgment once he realized it was entered"—are not sufficient under binding precedent of the Court of Appeals to confer on him standing under Article III of the Constitution. Accordingly, because the Court lacks subject matter jurisdiction, Defendants’ motion to dismiss (Dkt. 53) is granted, and Plaintiff's complaint is dismissed without prejudice.

I. BACKGROUND

Plaintiff held a credit card account with Citibank, N.A.; Plaintiff used this account "for household purchases such as clothing and groceries." (Dkt. 50 ¶¶ 6-7.) Defendants Midland Credit Management, Inc. ("MCM") and Midland Funding, LLC ("Midland") are collection agencies that collect defaulted consumer debts owed to others. (Id. ¶¶ 9-10, 15-16.) Defendant Encore Capital Group, Inc. ("Encore") is an "international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets." (Id. ¶ 20.)

When Plaintiff could not pay the debt on his credit card and defaulted, Defendant Midland purchased the debt and, in March 2019, filed a lawsuit against Plaintiff in the Circuit Court of Cook County, Illinois. (Id. ¶¶ 28-30.) (Defendant MCM was also involved in the state-court lawsuit (see, e.g., id. at ¶ 39), but it is not clear from the allegations of the complaint when MCM became involved.)

During the state-court litigation, Defendants MCM and Midland filed a motion for default judgment and sent the motion along with a judgment "order" to Plaintiff. (Id. ¶ 39-40, 50.) Plaintiff characterizes the "order" as a "False Order," alleging that he believed it "had been originated, drafted and entered by the State Court as opposed to being a communication from one or more of the Defendants, as the False Order did not state it was from a debt collector, and instead read that it was from ‘Judge of the Circuit Court.’ " (Id. ¶ 53.)¹ According to Plaintiff, "MCM and Midland regularly present draft orders of judgment to the Illinois Courts that are different than those they send to consumers in connection with the motions of default judgments that they file in collection cases." (Id. ¶ 66.)

Thinking he had lost the case, Plaintiff "experienced severe emotional distress" and "lost sleep." (Id. ¶¶ 57-58.) Plaintiff—believing he had already lost the state-court case—"did not respond to the Motion"; accordingly, the state court entered judgment against Plaintiff. (Id. ¶¶ 61-62.) Only after that judgment was entered did "Plaintiff hire[ ] an attorney to seek to vacate the judgment, and spen[d] time, money, and energy in seeking to vacate the judgment." (Id. ¶ 73.)

In December 2019, Plaintiff brought this suit against the three Defendants,² purportedly on behalf of all individuals similarly situated (id. ¶¶ 79-88), alleging the Defendants’ conduct in the state-court litigation amounted to violations of the Fair Debt Collection Practices Act (FDCPA) (id. ¶¶ 89-93). Defendants moved to compel arbitration in June 2020 (Dkt. 23), and Plaintiff filed an amended complaint in August 2021 (Dkt. 50). Defendants then filed the present motion to dismiss, arguing, among other things, that Plaintiff lacks standing. (Dkt. 53.)

II. STANDARD OF REVIEW

A motion under Rule 12(b)(6) "challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7 , 570 F.3d 811, 820 (7th Cir. 2009). Each complaint "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). These allegations "must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. Put another way, the complaint must present a "short, plain, and plausible factual narrative that conveys a story that holds together." Kaminski v. Elite Staffing, Inc. , 23 F.4th 774, 777 (7th Cir. 2022) (cleaned up). In evaluating a motion to dismiss, the Court must accept as true the complaint's factual allegations and draw reasonable inferences in the plaintiff's favor. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. But even though factual allegations are entitled to the assumption of truth, mere legal conclusions are not. Id. at 678-79, 129 S.Ct. 1937.

III. DISCUSSION

As has been long recognized, the United States Constitution "confers limited authority on each branch of the Federal Government." Spokeo, Inc. v. Robins , 578 U.S. 330, 337, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). One of the limitations placed on federal courts is that "[t]he judicial Power" extends only to "Cases" and "Controversies." U.S. Const. art III, § 2; see Raines v. Byrd , 521 U.S. 811, 818, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997) ("No principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies") (citation omitted).

To satisfy the case-or-controversy requirement, a party seeking to invoke a federal court's jurisdiction must establish that it has standing. Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). To establish standing, the plaintiff must allege: "(1) the plaintiff suffered a concrete and particularized injury in fact; (2) the injury is fairly traceable to the challenged conduct; and (3) the injury is likely to be redressed by a favorable judicial decision." Spuhler v. State Collection Serv., Inc. , 983 F.3d 282, 285 (7th Cir. 2020) (citing Lujan , 504 U.S. at 560-61, 112 S.Ct. 2130 ).

At an accelerated pace, the Seventh Circuit has addressed standing under the FDCPA on numerous recent occasions. See, e.g., Wadsworth v. Kross, Lieberman & Stone, Inc. , 12 F.4th 665 (7th Cir. 2021) ; Nettles v. Midland Funding LLC , 983 F.3d 896 (7th Cir. 2020) ; Brunett v. Convergent Outsourcing, Inc. , 982 F.3d 1067 (7th Cir. 2020) ; Markakos v. Medicredit, Inc. , 997 F.3d 778 (7th Cir. 2021) ; Smith v. GC Servs. Ltd. P'ship , 986 F.3d 708 (7th Cir. 2021) ; Bazile v. Fin. Sys. of Green Bay, Inc. , 983 F.3d 274 (7th Cir. 2020) ; Larkin v. Fin. Sys. of Green Bay, Inc. , 982 F.3d 1060 (7th Cir. 2020) ; Spuhler v. State Collection Serv., Inc. , 983 F.3d 282 (7th Cir. 2020). In shorthand, the net effect of these rulings has been to narrow the range of alleged harms that can, at the pleading stage, demonstrate that a plaintiff has standing to proceed under the FDCPA.

Under the FDCPA, as with every other remedial statutory scheme, Congress "must remain within the bounds of Article III in creating causes of action for intangible injuries, and even when it does, not every statutory violation implicates an interest that Congress sought to protect." Wadsworth , 12 F.4th at 667. An alleged procedural violation of the FDCPA "may amount to a concrete injury, but only if it impairs the plaintiff's ability to use that information for a substantive purpose that the statute envisioned." Bazile , 983 F.3d at 280 (cleaned up).

At the pleading stage, "the standing inquiry asks whether the complaint clearly alleges facts demonstrating each element in the doctrinal test." Larkin , 982 F.3d at 1064 (cleaned up).³ To establish injury in fact—one of the elements of standing—a plaintiff must show that he or she suffered " ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " Spokeo , 578 U.S. at 339, 136 S.Ct. 1540 (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ).

A. Plaintiff's General Standing Allegations

Plaintiff's alleged injuries are insufficient to confer standing in this case. As an initial matter, Plaintiff's recitation of the standing requirements in the "Standing" section of his complaint is inadequate. Plaintiff alleges that "Plaintiff has suffered an injury in fact that is traceable to Defendants’ conduct and that is likely to be redressed by a favorable decision." (Dkt. 50 ¶ 3.) Then, he alleges "[s]pecifically" that he has "suffered a harm from receiving false, misleading, unfair, oppressive, and deceptive communications from Defendants while they were attempting to collect a debt from him," and thus "suffered an injury...