Friday, September 29, 2017

More Cash Biz Antics: Full briefing, incl. Amici, Oral Argument before the Supremes, and now: Strategic Bankruptcy Stay

Henry v Cash Biz LP et al 
[See subsequent --> Comment on SCOTX opinion in Henry v Cash Biz issued Feb 23, 2018]
Payday loan companies filed for bankruptcy on September 18, 2017 - 3 days after oral argument before the Texas Supreme Court in consumers' action against them. Used a different attorney for the BK filing and didn't tell the High Court until  Sep. 27, 2017. Also see prior post on 

(unless some are found later) 

Link to Tex docket for --> Cause No. 16-0854



CASH BIZ, LP, Redwood Financial, LLC, Cash Zone, LLC dba Cash Biz, Appellants,
Hiawatha HENRY, Addie Harris, Montray Norris, and Roosevelt Coleman Jr., et al., Appellees.

No. 04-15-00469-CV.
Court of Appeals of Texas, Fourth District, San Antonio.
Delivered and Filed: July 27, 2016.



While I agree that the Borrowing Parties' claims against Cash Biz in the underlying suit are factually intertwined with the Loan Contracts, and thus fall within the broad scope of the Loan Contracts' arbitration agreement, I disagree with the majority's conclusion that Cash Biz did not "substantially invoke the judicial process" and thus did not waive its right to enforce the arbitration agreement. In my view, the Borrowing Parties met their burden to prove that Cash Biz waived its right to enforce arbitration by showing that Cash Biz filed criminal "bad check" complaints against the Borrowing Parties in an effort to collect restitution on the debts created by the Loan Contracts, thereby substantially invoking the judicial process to obtain a satisfactory result and causing the Borrowing Parties actual prejudice.[1] See Perry Homes v. Cull, 258 S.W.3d 580, 584 (Tex. 2008)(stating the two-prong test for waiver).

I therefore dissent to the portion of the majority opinion holding that the Borrowing Parties failed to prove that Cash Biz waived its right to enforce the arbitration agreement by substantially invoking the judicial process.

As the majority notes, the relevant issue presented on appeal is whether Cash Biz's action in filing criminal bad check complaints against the Borrowing Parties was sufficient to constitute substantial invocation of the judicial process, waiving its contractual right to arbitrate the Borrowing Parties' malicious prosecution and other claims against it. The majority concedes that the evidence is undisputed that Cash Biz "provided information and filed criminal complaints against the Borrowing Parties," and that "absent Cash Biz's complaint, no criminal prosecution would have occurred."[2]

The majority holds that such evidence is insufficient, however, because it does not show that Cash Biz engaged in "deliberate conduct inconsistent with the right to arbitrate, that is, an active attempt to achieve a satisfactory result through means other than arbitration." See Maj. Op. at p. 12. The majority reasons that Cash Biz's filing of a criminal complaint does not rise to the level of "active engagement in litigation" through "specific and deliberate actions" that are inconsistent with the right to arbitrate, or that reveal an intent to resolve the dispute through litigation rather than arbitration, because: (1) the criminal complaints were filed before the Borrowing Parties filed suit; (2) Cash Biz was not a party to, and did not participate as a witness in, the separate criminal prosecution; and (3) Cash Biz's actions do not show its desire to obtain repayment of the loans through the criminal process. See Maj. Op. at p. 14-15. The majority stresses that, even assuming Cash Biz's action in filing the complaints "initiated" the criminal prosecution, the mere filing of suit or initiation of litigation does not, by itself, constitute substantial invocation of the judicial process.

I disagree with the majority's analysis for several reasons. First, the traditional waiver requirement that the judicial process have been substantially invoked after the filing of the underlying lawsuit is based on the usual situation where there is only one legal proceeding. See, e.g., Perry Homes, 258 S.W.3d at 585, 591. Here, we are presented with the unique situation of a civil lawsuit and a criminal proceeding, both of which arise out of the same civil debt. Second, while the formal parties in a criminal proceeding are the defendant and the State of Texas, In re Amos, 397 S.W.3d 309, 314 (Tex. App.-Dallas 2013, orig. proceeding), the victim or complainant has a personal interest in the prosecution and thus plays a unique role in criminal proceedings. See In re Ligon, 408 S.W.3d 888, 896 (Tex. App.-Beaumont 2013, orig. proceeding).

Third, I disagree with the majority that Cash Biz's actions in "merely" filing the criminal complaints do not show its desire to obtain repayment of the loans, or otherwise obtain a satisfactory result, through the criminal process. As Flanagan's supplemental affidavit indicates, Cash Biz has staunchly maintained that it acted with no self-interest, but "simply left the information [of potential criminal conduct] to the discretion of the district attorney, and any action taken by the district attorney thereafter was made completely on his/her own." To the contrary, the evidence in this case shows a pattern of specific, deliberate, and affirmative conduct by Cash Biz in filing sworn complaints (accompanied by documentation) with the district attorneys' offices as an immediate and direct reaction to its borrowers' defaults on their payday loans. The 13-page list of criminal cases in the Justice of the Peace Courts for Harris County, Texas, where the bad check cases against the Borrowing Parties were filed, shows that Cash Biz was the complainant in more than 400 bad check cases filed during the relevant time period from May 2011 through July 2012. The appellees represent that Cash Biz repeated this conduct in other Texas counties as well. Given the sheer number and geographic scope of the complaints, it is disingenuous to assert, as Cash Biz does, that it was simply acting as a concerned citizen who was aware of potentially criminal conduct, without any desire for restitution from any of its borrowers. Moreover, at the hearing, counsel for Cash Biz ultimately conceded that Cash Biz would provide the "bad check" information to the prosecutors, and the prosecutors' office would send out letters "to collect."

In addition, in its appellate brief and at oral argument, Cash Biz conceded that it was "mistaken" in believing that it was a crime for its borrowers to give it a post-dated check as security for the loan (as it required). See TEX. PENAL CODE ANN. § 32.41 (West Supp. 2015) (defining the offense of issuance of a bad check). Indeed, the criminal charges against the four named Borrowing Parties were ultimately dismissed. This does not change the fact that they suffered prejudice as a result of the charges, arrests, and defense costs, as well as the mental, emotional, and reputational damages. Other defaulting borrowers against whom Cash Biz filed complaints suffered convictions and punishment, including restitution. Ultimately, Cash Biz invoked the collection authority of the district attorney's office with the expectation to obtain restitution, i.e., repayment of the loans.

While it may be technically correct that the district attorney made the ultimate decision whether to file bad check charges based on the information contained in Cash Biz's sworn complaints, it is also true that no criminal prosecution would ever have been initiated without Cash Biz alerting the district attorney's office and supplying the information stated in, and attached to, its complaints. See Browning-Ferris Indus., Inc. v. Leick, 881 S.W.2d 288, 293 (Tex. 1994). By submitting the sworn complaints, Cash Biz not only procured the prosecution, it became a "witness" in the criminal prosecution, i.e., a person who presented personal knowledge of the borrowers' purported criminal conduct. See Crawford v. Washington, 541 U.S. 36, 50-53 (2004) (defining "`witnesses' against the accused" within the context of the Sixth Amendment to include not only those who actually testify at trial, but also those whose out-of-court statements are used against the defendant). Once the complaint was submitted, the right of confrontation attached to each defendant. Id. at 50. Whether Cash Biz was attempting to obtain repayment of the loans through restitution as its conduct suggests, or to obtain some other form of punishment against its defaulting borrowers, it deliberately and repeatedly invoked the criminal justice system in an attempt to achieve some form of satisfactory result based on the civil debt. In doing so, Cash Biz ignored its own right and obligation under the arbitration agreement contained in the Loan Contracts to seek collection of the debts through arbitration rather than judicially.

While the instant facts involving Cash Biz's actions in a separate criminal proceeding do not fit within the traditional waiver analysis applied to a single civil lawsuit, the parties have presented us with some cases that are instructive on the application of waiver law to similar fact scenarios. Only one Texas case discusses the interplay between civil and criminal litigation in a waiver-of-arbitration context. In In re Christus Spohn Health Sys. Corp., 231 S.W.3d 475 (Tex. App.-Corpus Christi-Edinburg 2007, orig. proceeding), a nurse was murdered in her employer hospital's parking lot and her family sued the hospital for wrongful death. Id. at 478. Christus Spohn "substantially litigated" the case during the fourteen-month period before it filed a motion to compel arbitration. Id. at 480-81 (describing how the hospital engaged in "voluminous discovery," filed a motion to designate the criminal defendant as a third party defendant, and filed an original third party petition, while three trial dates were rescheduled). During the fourteen-month period before the hospital sought to compel arbitration, the hospital filed a motion for contempt in the criminal proceeding based on alleged discovery abuse in the civil case by counsel for the deceased's family. Id. at 481. The court of appeals explained that, "[w]hile we ordinarily would not consider actions in a separate cause as indicative of waiver," the motion for contempt expressly stated that Christus Spohn planned to use the criminal court's contempt finding to prevent the use of the criminal defendant's statement in the civil matter. Id. at 481. The court "construe[d] Spohn's actions in this separate lawsuit as part of its strategic plan of defense in the underlying matter that would be inconsistent with a right to arbitrate." Id. (emphasis added). The court of appeals concluded that "Spohn's third-party petition, motion for contempt, and attempt to impose sanctions constitute specific and deliberate actions that are inconsistent with the right to arbitrate and suggest that Spohn was attempting to achieve a satisfactory result through the judicial process." Id. at 481-82. Based on this combination of facts and circumstances, the court held that Christus Spohn had substantially invoked the judicial process and waived its right to enforce arbitration. Id. at 482.

A Nevada court has addressed waiver of arbitration in a factual scenario that is substantially similar, if not identical, to the scenario presented here. The Nevada Supreme Court has held that a payday loan company that obtained default judgments against its borrowers waived its right to arbitration under the loan contracts in a separate lawsuit. Principal Invs., Inc. v. Harrison, 366 P.3d 688, 697-98 (Nev. 2016). In that case, during a seven-year period, Rapid Cash filed more than 16,000 individual collection actions in justice of the peace court in Clark County, Nevada against its borrowers seeking repayment of the loans. Id. at 690. Relying on affidavits of service by its process server, Rapid Cash obtained thousands of default judgments. Id. at 690-91. The borrowers filed a class-action lawsuit against Rapid Cash alleging fraud upon the court through false affidavits of service, abuse of process, negligence, civil conspiracy and violation of fair debt collection laws. Id. at 691. Rapid Cash moved to compel arbitration under the provision contained in the loan agreements, but the trial court denied the motion based on waiver due to the collection actions in justice court. Id. at 691-92. Acknowledging that FAA waiver law requires "prior litigation of the same legal and factual issues as those the party now wants to arbitrate," the Nevada Supreme Court affirmed the finding of waiver, reasoning the class-action claims "arise out of, and are integrally related to, the litigation Rapid Cash conducted in justice court." Id. at 697. The court stated that if the default judgments that Rapid Cash obtained were unenforceable as the product of fraud or criminal misconduct, it would be "unfairly prejudicial to the judgment debtor to require arbitration of claims seeking to set that judgment aside . . . and otherwise to remediate its improper entry." Id. at 697-98.
Harrison is not directly on point, but is instructive because there "the named plaintiffs' claims all concern[ed], at their core, the validity of the default judgments," and in our situation the Borrowing Parties' malicious prosecution claims similarly "arise out of, and are integrally related to" the criminal bad check charges instigated by Cash Biz. See 698. Waiver of the right to arbitration under the FAA does not require that the party litigate the identical claims in order to invoke the judicial process, but rather a "specificclaim it subsequently wants to arbitrate." Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 328 (5th Cir. 1999) (emphasis added). 

Here, Cash Biz initiated a process that invited the Harris County district attorney to address issues that are at stake in the underlying lawsuit. The Borrowing Parties' malicious prosecution claim contains elements of a plaintiff's innocence.[3] The Borrowing Parties' innocence and the absence of probable cause were litigated in the prior criminal proceedings. Their other claims for fraud and violations of the DTPA and Finance Code similarly involve litigation in the criminal proceedings of defensive issues based on Cash Biz misrepresenting the conditions for the loans the process of collection, and threatening them to achieve repayment. Cash Biz invoked the criminal judicial process to litigate a "specific claim [it] subsequently wants to arbitrate," to wit: the specific issue of non-payment from which all of the Borrowing Parties' causes of action derive.

I believe the record here shows that Cash Biz substantially invoked the judicial process by deliberately engaging in a series of overt acts in court that evidence a desire to resolve the same arbitrable dispute through litigation rather than arbitration. See Tuscan Builders, LP v. 1437 SH6 L.L.C., 438 S.W.3d 717, 721 (Tex. App.-Houston [1st Dist.] 2014, pet. denied) (op. on reh'g) (quoting Haddock v. Quinn, 287 S.W.3d 158, 177 (Tex. App.-Fort Worth 2009, pet. denied)). Therefore, I would hold that, by filing the criminal "bad check" complaints against the Borrowing Parties, seeking repayment or some other form of satisfaction, Cash Biz waived its contractual right to arbitrate the malicious prosecution claims arising out of the criminal proceedings.

As to the class-action prohibition, it is not an independent agreement, but is included within the arbitration agreement in the Loan Contracts. Therefore its applicability depends on the applicability of the arbitration agreement. I would therefore hold that the class-action prohibition was similarly waived by Cash Biz's invocation of the judicial process.

[1] The proposed Class is defined as "[a]ll residents of the State of Texas who received a `deferred presentment transaction' or payday loan as defined by TEX. FIN. CODE § 393.221 from Cash Biz in the State of Texas and Cash Biz's pursuit of [sic] criminal charges to collect or recover the payday loan."
[2] See TEX. CONST. Art. 1, sec. 18 ("No person shall ever be imprisoned for debt."); see also TEX. FIN. CODE ANN. § 392.301(a) (West 2006) ("In debt collection, a debt collector may not use threats, coercion or attempts to coerce that employ any of the following practices . . . (2) accusing falsely or threatening to accuse falsely a person of fraud or any other crime"); TEX. FIN. CODE ANN. § 393.201(c)(3) (West Supp. 2015) (credit services contract must state "a person may not threaten or pursue criminal charges against a consumer related to a check or other debit authorization provided by the consumer as security for a transaction in the absence of forgery, fraud, theft, or other criminal conduct.").
[3] In the civil context, courts consider factors such as: (i) when the movant knew of the arbitration clause; (ii) the reason for any delay in moving to enforce arbitration; (iii) how much discovery was conducted; (iv) who initiated the discovery; (v) whether the discovery related to the merits; (vi) how much the discovery would be useful for arbitration; and (vii) whether the movant sought judgment on the merits. Perry Homes, 258 S.W.3d at 591-92
[1] Because the majority opinion does not reach the second-prong issue of prejudice, I also omit that analysis; however, I believe the Borrowing Parties proved that they suffered actual prejudice.
[2] The majority agrees that the list of criminal cases in the Harris County Justice of the Peace Court showing Cash Biz as "complainant" in all the cases against the Borrowing Parties, as well as multiple other borrowers, "impliedly reveals" that no criminal prosecution would have been initiated without Cash Biz's complaints.
[3] The elements of a malicious prosecution claim are: (1) the commencement of a criminal prosecution against the plaintiff; (2) causation (initiation or procurement) of the action by the defendant; (3) termination of the prosecution in the plaintiff's favor; (4) the plaintiff's innocence; (5) the absence of probable cause for the proceedings; (6) malice in filing the charge; and (7) damage to the plaintiff. Richey v. Brookshire Grocery Co.,952 S.W.2d 515, 517 (Tex. 1997)Davis v. Prosperity Bank, 383 S.W.3d 795, 802 (Tex. App.-Houston [14th Dist.] 2012, no pet.).

(The Court issued an abatement order two days later) 

Wednesday, September 27, 2017

Dismissals of National Collegiate Student Loan Collection Lawsuits under way in Texas (data for Harris County)


The external audit of NCSLT collection case files for defaulted student loans, which is part of the package of remedies ordered by the CFPB, has yet to commence, but in the interim dismissals of pending collection cases are already in progress, even freshly filed ones.  

NCSLT collection suit dismissal order signed by Judge Storey
Harris County CCCL3 Sep. 25, 2017 

In July 2017, the various trusts filed 21 collection suits on defaulted student loans in Harris County Civil County Courts at Law (CCCLs) and two more in August. Of these, seven have now been nonsuited as of yesterday (Sep 26, 2017). Two are still awaiting orders of dismissal, and more may follow. 

All non-suit dismissals were filed after 9/18/2017, when the CFPB issued its CONSENT ORDER against TSI and proposed CONSENT JUDGMENT in its enforcement action against the Trusts, filed the same day in federal district court in Delaware. 

In Texas state courts, Plaintiffs may unilaterally dismiss cases by filing a NOTICE OF NONSUIT, i.e. without the opposing party's consent or the court's approval. The notice of nonsuit (sometimes called a motion for nonsuit or a motion to dismiss) is effective upon filing, and terminates the pending action immediately. The court's signing of an order of dismissal (which is supposed to be attached as a proposed order to the notice), is merely a ministerial act, meaning that the court does not get to decide whether to grant it or not. Some judges sign them more quickly than others. 

One exception to automatic case termination is a scenario where the Defendant has a counter-claim on file, which is rare. If a counterclaim is on file, the nonsuit will still be effective, but the case will remain pending until the counter-claim is resolved.

Because nonsuits are (generally) without prejudice, they do not prevent the plaintiff from re-filing them later. A nonsuit therefore does not "erase" the debt, and it may remain enforceable, depending on whether or not the statute of limitations has run, and other factors. A dismissal with prejudice, by contrast, would generally have preclusive effect, barring another lawsuit based on the same debt.
Shown below is the tally of the Harris County cases filed since July, their status, and some key characteristics, including program lender and documentation on the file. Only one lawsuit had the entire loan contract attached (i.e. not just the signature page or the first two pages in cases where the signature is on page 2), and none had complete chain-of-title evidence. Several lawsuits contained Pool Supplements. For purposes of default judgment or trial, of course, additional documentation would be submitted, with an affidavit from TransWorld Systems, Inc. aka TSI.

Also see page with

Status of Nat'l Collegiate Trust collection cases as of Sep. 26, 2017 
OP Filed = Original Petition (Complaint) filed on __
Order Date = Date nonsuit order was signed by the judge
Appl Date = Date on Student Loan Application (date of signature or fax stamp)
CCL = Court to which case assigned by number (there are four)
Items = Items on e-docket for the case (measure of activity)
Ds = Number of Defendants (1 or 2) (does not necessary match with number of signers on note)
OP Attachments = Documents attached to the Original Petition
SP = Signature Page (without Terms and Conditions pages)
2PGs = Same as SP, but 2 pages with signature(s) on the second page
NDS = Note Disclosure Statement
PS = Pool Supplement (for specific lender/loan program)
RFA = Requests for Admission (asking Defendant(s) to admit all relevant facts, incl. Trust’s ownership of note and amount of debt). Admissions are deemed admitted if not expressly denied in timely fashion.


This notice was filed 9/22/2017, but it is dated August 22, 2017
Perhaps an internal review was already under way to 
screen cases for dismissal under the CONSENT ORDER criteria before it made the news.
But plain clerical error is also a possibility. 

This nonsuit is dated September 21, 2017 and was also efiled that day
Judge Barnstone of CCCL1 signed the dismissal order a day later. 

Nonsuit / Dismissal Order signed one day after filing of Nonsuit Notice by the Trust  

Monday, September 25, 2017

FDCPA class action certified by U.S. District Court in Illinois against student loan collector NCO Financial Systems (now operating under a different name), and collection law firm

Marquez v Weinstein, Pinson & Riley, P.S. et al., U.S.D.C. N.D. Illinois (Sep. 20, 2017) (Collection law firm filed form complaints on student loan notes for NCSLT that violated the FDCPA by providing misleading information to the defendants about how to dispute the debt. Class certified) 
Consumer-Plaintiffs' motion for class certification granted after their case against law firm and NCO had made a trip to the Seventh Circuit Court of Appeals, which found deceptive language in the law firm's lawsuit paperwork when they sued consumers on delinquent student loans. The alleged FDCPA violation consisted of the filing of collection complaints that were misleading "as to the proper timing to respond to the complaint and as to the manner of response."  

on behalf of plaintiffs and a class,

No. 14 C 739.
United States District Court, N.D. Illinois, Eastern Division.

September 20, 2017


JOHN J. THARP, Jr., District Judge.

The plaintiffs, Erick Marquez, Iraida Garriga (formerly Ortiz), and Doris Russell, seek to certify a class under the Fair Debt Collection Practices Act ("FDCPA"). The defendants, Evan Moscov; his law firm, Weinstein, Pinson & Riley, P.S. ("WPR"); and their client, EGS Financial Care, Inc. (formerly NCO Financial Systems, Inc.) (hereinafter "NCO") contend that certification is improper because the plaintiffs lack standing to assert their FDCPA claims and have failed to meet the requirements of Federal Rule of Civil Procedure 23 ("Rule 23").

Because all three plaintiffs have standing to sue and satisfy the strictures of Rule 23, the Court grants the plaintiffs' motion for class certification with a modified class definition.


This litigation arises out of efforts to collect student loan debts. In late 2013, WPR, on behalf of its client NCO, filed suits in Illinois state court seeking repayment of student debt owed by Marquez, Garriga, and Russell. In November 2013, WPR filed three debt collection complaints against Garriga and Marquez (who are mother and son) for the recovery of over $75,000 in unpaid debt. (Pls.' Renewed Mot. for Class Cert., App. A-C.) The following month, WPR filed a debt collection complaint against Russell seeking to recover over $4,000 under her student loan agreement. (Id., App. D.)

The four complaints are virtually identical and contain language common for collection cases; they recite the loan agreement and outstanding principal, and allege the breach of that agreement and the corresponding damages. Following those allegations, the complaints include a paragraph ("Paragraph 12") with the following language:
Pursuant to 11 U.S.C. §1692g(a) [sic], [Marquez, Garriga, and Russell are] informed that the undersigned law firm is acting on behalf of [NCO[1]] to collect the debt and that the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in part within thirty (30) days from the date hereof.
A prayer for relief and signature block containing Moscov's signature and a WPR address follow Paragraph 12 in each complaint. (Id., App. A-D.)

The plaintiffs filed this action in early 2014, claiming that Paragraph 12 violated Section 1692e of the FDCPA, which bars a debt collector from using any false, deceptive, or misleading representations in connection with the collection of any debt. The plaintiffs also sought to certify a class of Illinois consumers against whom the defendants filed debt collection complaints that included Paragraph 12. In relief, the plaintiffs sought only statutory damages (as well as attorney's fees and costs) on behalf of themselves and the class as a result of the statutory violation. None of the plaintiffs asserted a claim for actual damages.

In October 2015, the Court dismissed the plaintiffs' class complaint with prejudice for failure to state a claim under Rule 12(b)(6) after determining that Paragraph 12 was not misleading under the FDCPA. On appeal, the Seventh Circuit found Paragraph 12 to have substantially greater potential for confusing unsophisticated consumers than did this Court. It held that Paragraph 12 was "plainly deceptive and misleading to an unsophisticated consumer as a matter of law" and remanded the case for further proceedings. Marquez v. Weinstein, Pinson & Riley, P.S., 836 F.3d 808, 815 (7th Cir. 2016).
7th Circuit reversed the District Court
See full opinion further below
The plaintiffs now seek to certify their class of Illinois consumers who were subjected to the same deceptive and misleading language.


Specifically, the plaintiffs wish to certify the following class:
(a) all individuals in Illinois, (b) against whom WPR filed a complaint, (c) containing the language in paragraph 12 of Appendices A-D [in the Second Amended Complaint], (d) which complaint was filed on or after February 3, 2013 and prior to February 23, 2014.
The defendants argue that the class should not be certified for several reasons. At the outset, they contend that the plaintiffs lack standing to sue under the FDCPA—let alone on behalf of a class—because Marquez, Garriga, and Russell did not suffer any concrete harm as a result of Paragraph 12.

Moreover, the defendants claim that even if all three have standing, they cannot establish commonality, typicality, or adequacy under Rule 23(a). Finally, the defendants argue that because individual issues predominate and a class action is not the superior method for revolving this lawsuit, the plaintiffs' motion fails under Rule 23(b)(3). The Court rejects each of these arguments and finds that the plaintiffs have met their burden to proceed as a class.


Before turning to the merits of the motion, the Court must first be assured that the plaintiffs have standing to maintain an action under the FDCPA.

Standing is a threshold jurisdictional issue that requires the plaintiffs to show that they have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendants, and (3) that is likely to be redressed by a favorable judicial decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000). These requirements extend not only to individual plaintiffs, but to class representatives as well. See, e.g., Lewis v. Casey, 518 U.S. 343, 357 (1996) ("That a suit may be a class action . . . adds nothing to the question of standing, for even named plaintiffs who represent a class must allege and show that they personally have been injured. . . .") (internal quotation marks and citation omitted); O'Shea v. Littleton, 414 U.S. 488, 494 (1974) ("[I]f none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself of any other member of the class."). Yet, only one named plaintiff need establish a sufficient injury for the Court to turn to the certification issue. See Kohen v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 676 (7th Cir. 2009) ("[A]s long as one member of a certified class has a plausible claim to have suffered damages, the requirement of standing is satisfied.") (citations omitted).

The defendants contend that the plaintiffs lack standing to sue because they have not suffered an injury in fact. (NCO's Mem. in Opp'n to Renewed Mot. for Class Cert. 5-7, ECF No. 136; Moscov & WPR's Resp. in Opp'n to Renewed Mot. for Class Cert. 3-4, ECF No. 143 (hereinafter "Atty Defs.' Opp'n").)

An injury in fact arises whenever a plaintiff has suffered "an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal quotation marks and citations omitted). The defendants argue that although the plaintiffs can establish a violation of Section 1692e, that violation amounts to a "bare procedural harm" following the Supreme Court's decision in Spokeo, Inc. v. Robins, ___ U.S. ___, 136 S. Ct. 1540, 1549 (2016). More precisely, the defendants believe that because the plaintiffs either did not read, were not actually misled by, or at the very least, were not in danger of defaulting on their debts as a result of Paragraph 12 (either because they were not served with the complaint or because they retained counsel and moved to dismiss it), the statutory violation did not give rise to a concrete harm. (NCO's Opp'n 7-8, ECF No. 136; Atty Defs.' Opp'n 3-4, ECF No. 143.)

The Court disagrees.

As an initial matter, the defendants make unduly short shrift of Spokeo. It is true that Spokeo held that even lawsuits based on statutory violations require proof of a concrete injury and that concreteness is not automatically met by citing a statute that grants a right and authorizes a suit to vindicate that right. 136 S. Ct. at 1549-50 (recognizing that some "procedural violation[s]" are "divorced from any concrete harm"). Yet, Spokeo also confirmed that in some cases, a violation of a statutory right does amount to a concrete harm, even where that harm is intangible. Id. at 1549 ("[T]he violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact."). The Seventh Circuit has since interpreted Spokeo to mean that a statutory violation alone gives rise to a concrete harm where the "violation present[s] an appreciable risk of harm to the underlying concrete interest that Congress sought to protect by enacting the statute" at issue. Groshek v. Time Warner Cable, Inc., 865 F.3d 884, 887 (7th Cir. 2017) (internal quotation marks omitted) (citing Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724, 727 (7th Cir. 2016); Spokeo, 136 S. Ct. at 1549-50). It is in those cases that plaintiffs "need not allege any additional harm beyond the one Congress has identified." Spokeo, 136 S. Ct. at 1549.

This is a case in which the plaintiffs need not establish harm beyond what Congress has identified.

The FDCPA undoubtedly provides consumers with a concrete interest in receiving accurate information about their debts. In enacting the FDCPA, Congress concluded that "many" debt collectors use "abusive, deceptive, and unfair debt collection practices" and that "[e]xisting laws and procedures . . . are inadequate to protect consumers" from those abuses. 15 U.S.C. § 1692(a)-(b); see also Lane v. Bayview Loan Servicing, LLC, No. 15 C 10446, 2016 WL 3671467, at *4 (N.D. Ill. July 11, 2016). Congress sought to curb "the unscrupulous antics of debt collectors," Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998) (citation omitted), by arming debtors with accurate information about their debts, see Bernal v. NRA Group, LLC, 318 F.R.D. 64, 72 (N.D. Ill. 2016). Moreover, Section 1692e is a critical component for protecting that interest. It affords consumers the ability to fully avail themselves of their legal rights by prohibiting debt collectors from using any false, deceptive, or misleading means in the course of collecting a debt. Papetti v. Does 1-25, No. 16-2582-CV, 2017 WL 2304227, at *2 (2d Cir. May 26, 2017); 15 U.S.C. § 1692e.

Thus, the defendants' violation of Section 1692e—in that they filed debt collection complaints that were misleading "as to the proper timing to respond to the complaint and as to the manner of response," Marquez, 836 F.3d at 815—gives rise to a concrete harm sufficient to establish an injury in fact.

Several other courts have addressed Spokeo arguments in the context of Section 1692e and reached the same result.

The Second Circuit soundly rejected an almost identical "bare procedural" challenge against a consumer who claimed a debt collector violated the statute by sending him a communication that contained misleading representations. Papetti, 2017 WL 2304227, at *2. The Court found that because "there can be no dispute that Section[ ] 1692e . . . protect[s] an individual's concrete interest[]" in being free from "abusive debt collection practices," the debt collector's alleged violation alone "entail[ed] the concrete injury necessary for standing." Id. (internal quotation marks and citations omitted). A number of other in-circuit courts have adhered to this approach as well. See, e.g., Pierre v. Midland Credit Mgmt., Inc., No. 16 C 2895, 2017 WL 1427070, at *1, *4 (N.D. Ill. Apr. 21, 2017) (finding allegation that debt collector sent misleading dunning letter in violation of Section 1692e was sufficient to establish concrete harm because "injury falls squarely within the ambit of what Congress gave consumers in the FDCPA") (citation omitted); Bernal, 318 F.R.D. at 72 (same); Saenz v. Buckeye Check Cashing of Illinois, No. 16 C 6052, 2016 WL 5080747, at *2 (N.D. Ill. Sept. 20, 2016) ("Congress gave consumers a legally protected interest in certain information about debts, and made the deprivation of information about one's debt (in a communication directed to the plaintiff consumer) a cognizable injury.").

The Seventh Circuit has not yet addressed a Spokeo challenge under the FDCPA; nonetheless, two of its recent standing decisions merit consideration.

In Meyers, the court found that a customer lacked standing to bring a class action suit against a restaurant that violated the Fair Credit Reporting Act ("FCRA") by failing to truncate credit card expiration dates on its receipts. 843 F.3d at 729. It held that because no one else ever saw the customer's receipt, the expiration date could not "have increased the risk that [his] identity would be compromised," and thus, did not give rise to a concrete harm. Id. at 727.

Similarly, in Groshek, the court determined that a job applicant had no standing to pursue a class action against employers who allegedly violated the standalone disclosure requirements of the FCRA. 865 F.3d at 889. The Court found that the violation, if true, did not give rise to an injury in fact because the statute at issue did not protect the applicant from "the kind of harm he claims to have suffered, i.e., receipt of non-compliant disclosures." Id. at 888. Instead, the statute's principal aim is to protect applicants from unwittingly agreeing to have their credit reports run, a fact that was not at issue based on the allegations of the complaint. Id. at 888-89.

Although Meyers and Groshek share factual similarities to this case in that they involve named plaintiffs alleging harm based solely on statutory violations, both are distinguishable. In contrast to Meyers, there is no concern here that the defendants' FDCPA violation failed to present a risk of harm to the Act's goal of ensuring consumers have accurate debt-related information. Indeed, the violation directly deprived the plaintiffs of that interest by providing misleading information about the timing and manner with which to respond to their debt collection complaints. Although that violation may not have resulted in "tangible economic or physical harm that courts often expect, the Supreme Court has made clear an injury need not be tangible to be concrete." Church v. Accretive Health, Inc., 654 F. App'x 990, 994-95 (11th Cir. 2016) (citing Spokeo, 136 S. Ct. at 1549). And, unlike the allegations in Groshek, the plaintiffs have established exactly the type of harm that Section 1692e protects against: a deprivation of accurate, non-misleading information about how to dispute their debts.

This case instead is reminiscent of Havens Realty Corp. v. Coleman, where a tester-plaintiff alleged that the defendant falsely told her that it had no apartments available for rent on several occasions. 455 U.S. 363, 368 (1982). Even though the tester did not intend to rent an apartment, and was merely posing as a renter to collect evidence of a violation of the Fair Housing Act ("FHA"), the Court determined she had standing to sue. Id. at 374. The Court reasoned that because the FHA "establishes an enforceable right to truthful information concerning the availability of housing, . . . [a] tester who has been the object of a misrepresentation made unlawful under [the FHA] has suffered injury in precisely the form the statute was intended to guard against, and therefore has standing to maintain a claim for damages under the Act's provisions." Id. at 373-74.

Just as it did not matter to the standing inquiry in Havens that the tester was not actually deceived by the information provided, it does not matter here that the plaintiffs were not actually confused by Paragraph 12. Like the FHA, which establishes an enforceable right to truthful information concerning the availability of housing, the FDCPA establishes an enforceable right to accurate information about consumer debts. And because the Seventh Circuit has determined that Paragraph 12 was not accurate, but rather misleading as a matter of law, it follows that the plaintiffs have demonstrated that they "have been the object of a misrepresentation made unlawful" under the FDCPA. Therefore, the plaintiffs suffered concrete harm in precisely the form the statue guards against and, as a result, have standing to assert their FDCPA claims.[2]

II. Class Certification

Turning to the merits of the motion, the plaintiffs must meet four criteria under Rule 23(a) to certify a class action: numerosity, commonality, typicality, and adequacy. Fed. R. Civ. P. 23(a); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348-49 (2011). Moreover, because the plaintiffs move for certification under Rule 23(b)(3), they also must demonstrate that "the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Fed. R. Civ. P. 23(b)(3). Finally, the plaintiffs have an inherent obligation to show that membership in the class is readily ascertainable. Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006) (citations omitted).

The Court must conduct a rigorous analysis to determine whether the plaintiffs have satisfied these requirements by a preponderance of the evidence. Messner v. Northshort Univ. HealthSys., 669 F.3d 802, 811 (7th Cir. 2012); Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th Cir. 2001) (stating that the Court "should make whatever factual and legal inquiries are necessary under Rule 23"). The defendants argue that the plaintiffs have failed to meet the commonality, typicality, and adequacy prongs under Rule 23(a), as well as the predominance and superiority criteria under Rule 23(b)(3).

The Court disagrees and finds that the plaintiffs have carried their burden to certify the proposed class.

A. Rule 23(a)

1. Numerosity

Rule 23(a)'s initial requirement is numerosity: the class must be "so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). Although there is no "magic number" of class members for numerosity purposes, when a class reaches forty, joinder is typically considered impracticable. See, e.g., Swanson v. Am. Consumer Indus., Inc., 415 F.2d 1326, 1333 n.9 (7th Cir. 1969) (finding that proposed class of forty was "a sufficiently large group to satisfy Rule 23(a)"); Oplchenski v. Parfums Givenchy, Inc., 254 F.R.D. 489, 495 (N.D. Ill. 2008). The plaintiffs contend that the proposed class is over 100 individuals, as Moscov and WPR filed "several hundred" form complaints containing Paragraph 12 in Cook County" and "hundreds more in other Illinois counties." (Pls.' Mot. 2-3, ECF No. 93.) In support, they submitted eleven form complaints containing Paragraph 12 filed against other Illinois consumers, along with a list of hundreds of other Illinois cases that Moscov and WPR filed on behalf of NCO during the class period. (Id., App. G-S.) The defendants offer no objection to these figures. In fact, Moscov and WPR believe that the class size is likely closer to 900 members. (Atty Defs.' Opp'n 10, ECF No. 143.) Because there is no dispute the proposed class includes hundreds of members, and the plaintiffs are not required to specify an exact number, see Marcial v. Coronet Ins. Co., 880 F.2d 954, 957 (7th Cir. 1989) (citation omitted), Rule 23(a)(1) is satisfied.

2. Commonality

The second requirement for certification is that "there are questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). Commonality does not "demand that every member of the class have an identical claim." Spano v. The Boeing Co., 633 F.3d 574, 585 (7th Cir. 2011). Instead, it looks at whether the plaintiffs have raised at least one common question such "that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Dukes, 564 U.S. at 350; see also Spano, 633 F.3d at 585 ("It is enough that there be one or more common questions of law or fact."). Commonality usually exists where the defendants have engaged "in standardized conduct towards members of the proposed class." Keele, 149 F.3d at 594 (citations omitted).

The defendants' challenge to commonality—as well as to predominance, typicality, and adequacy—is that not all class members received and responded to the debt collection complaints in the same fashion. They contend that some class members (like Marquez, but not Garriga or Russell) may not have been served with the complaint, while others may not have retained counsel and may have failed to respond to the complaint in a timely manner (in contrast to the named plaintiffs). (NCO's Opp'n 10-12, ECF No. 136.) The result of these discrepancies, the defendants argue, is that the class' claims are so "unique" that "commonality is lacking." (Id. at 11.)

The Court is unpersuaded by this argument.

First, the defendants are merely repackaging their standing argument with a commonality label. Doing so does not make the argument more viable. As discussed above, the FDCPA vests consumers with a concrete interest in receiving accurate information about their debts, the deprivation of which is a concrete harm. Because the named plaintiffs and the putative class members need not establish any additional harm beyond the defendants' statutory violation, their claims do not turn on whether they retained counsel or were served or answered the debt collection complaints. Those matters may implicate issues involving actual damages (which, again, are not at issue here in any event), but they do not diminish the commonality between the claims of the putative class members.

Second, this case involves exactly the type of standardized conduct contemplated under Rule 23(a)(1). See Quiroz v. Revenue Prod. Mgmt., Inc., 252 F.R.D. 438, 442 (N.D. Ill. 2008) ("The requisite common nucleus of operative fact exists in FDCPA claims when the controversy arises from a standard form debt collection letter.") (citations omitted). Here, the defendants filed a standard debt collection complaint against hundreds of Illinois consumers. (See Pls.' Mot., App. R-S.) The question common to all class members is whether Paragraph 12 of those complaints violated the FDCPA. Resolving that question resolves in "one stroke" an issue that "is central to the validity" of each class members' claim. Dukes, 564 U.S. at 350. Therefore, the plaintiffs have established commonality under Rule 23(a)(2).

3. Typicality

Rule 23(a)'s third requirement is that the named plaintiffs' claims and defenses must be typical of those of the class. Fed. R. Civ. P. 23(a)(3). This inquiry centers on "whether the named representatives' claims have the same essential characteristics as the claims of the class at large." Oshana, 472 F.3d at 514 (citations omitted).

The Seventh Circuit has established a two-prong test for typicality: the named plaintiffs' claims must (1) arise "from the same event, practice or course of conduct" as the class members' claims, and (2) "be based on the same legal theory." Id.

Both prongs are met here. The plaintiffs' claims are typical because they arise out of the same course of conduct as the class members' claims in that the defendants filed a standardized complaint against all of them. (See Pls.' Mot., App. A-D, G-S, ECF No. 93.) And the basis of all of their claims is that Paragraph 12 is misleading as a matter of law under Section 1692e. (Pls.' Mem. in Supp. of Renewed Mot. for Class Cert. 10, ECF No. 94.)

The defendants try to refute typicality by raising the same argument underlying their attack against commonality: that there may be differences in how the class members received and responded to their complaints. (NCO's Opp'n 12-13, ECF No. 136.) But such differences do not change the fundamental nature of the claims here: that the defendants provided misleading information about how to dispute a debt. In any event, typicality "does not required identical claims," especially where, as here, the factual distinctions are immaterial. Pierre, 2017 WL 1427070, at *7 (citing Keele, 149 F.3d at 594). Moreover, typicality focuses on the actions of the defendants, not the plaintiffs, Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992) (finding that courts must "look to the defendant's conduct and the plaintiff's legal theory to satisfy Rule 23(a)(3)"); thus, whether the putative class members were actually confused by Paragraph 12, retained counsel, or failed to file an answer to their debt collection complaints has little bearing under Rule 23(a)(3). Therefore, the Court finds that the plaintiffs have satisfied the typicality requirement.

4. Adequacy

The final requirement under Rule 23(a) is that the plaintiffs must "fairly and adequately protect the interest of the class." Fed. R. Civ. P. 23(a)(4). There is no question that here they do. At the outset, the named plaintiffs do not have any interests that conflict with those of the rest of the class, Rosario, 963 F.2d at 1018 ("A class is not fairly and adequately represented if class members have antagonistic or conflicting claims."), as both the plaintiffs and the class seek monetary damages under the FDCPA, see Hale v. AFNI, Inc., 264 F.R.D. 402, 406 (2009) (finding interests aligned where plaintiffs and class all sought monetary damages under FDCPA).

The defendants argue that the plaintiffs' interests are not aligned because some class members may have suffered greater harm and may have claims for actual damages, in contrast to the named plaintiffs, who seek only statutory damages. (NCO's Opp'n 14-15, ECF No. 136; Atty Defs.' Opp'n 6-7, ECF No. 143.) But this argument misapprehends the plaintiff's class claim. The plaintiffs seek only statutory damages on behalf of themselves and the class; there are no claims for actual damages. (See Second Am. Compl. 12, ECF No. 67 ("Wherefore, the Court should enter judgment in favor of plaintiffs and the class and against defendants for: (1) Statutory damages . . .; (2) Attorney's fees, litigation expenses and costs of suit; [and] (3) Such other and further relief as the Court deems proper."); Pls.' Reply in Supp. of Renewed Mot. for Class Cert. 18, ECF No. 147 (discussing predominance requirement and acknowledging that "Plaintiffs seek only statutory damages here, so individual questions of damages do not arise.").) Consequently, because there is no class-wide claim for actual damages, there cannot be a conflict among class members over who suffered actual damages. There is, moreover, no evidence in the record that a significant portion of the class would have claims for actual damages. And to the extent that any putative class members have claims for actual damages, "such cases can be adequately dealt with by providing a clear notice of the right to opt out, as required by Federal Rule of Civil Procedure 23(c)[(2)](B)." Cavin v. Home Loan Ctr., Inc., 236 F.R.D. 387, 393 (N.D. Ill. 2006); see also Pierre, 2017 WL 1427070, at *8 (rejecting similar adequacy argument and granting class action certification under FDCPA).

Further, the Court finds that the class representatives are sufficiently interested in the outcome of this case. See Chapman v. Worldwide Asset Mgmt., LLC, No. 04 C 7625, 2005 WL 2171168, at *4 (N.D. Ill. Aug. 30, 2005) (finding that "as long as a class representative[s'] interests do not conflict with those of the proposed class, [they] need only have a marginal familiarity with the facts of the case"). All three plaintiffs demonstrated a general knowledge of the case during their depositions, (see Pls.' Reply, App. 1-3, ECF No. 147), and the defendants offer no objection on that basis.
Finally, the Court finds that class counsel is qualified, experienced, and generally able to conduct the case. See Susman v. Lincoln Am. Corp., 561 F.2d 86, 90 (7th Cir. 1977). Counsel for the plaintiffs is experienced in consumer class action cases, including FDCPA cases, and have been appointed class counsel in several other cases in this district. (Pls.' Mot., App. F, ECF No. 93.) Therefore, the plaintiffs have established adequacy and, as a result, satisfy all of the strictures of Rule 23(a).

B. Rule 23(b)(3)

1. Predominance

Turning now to Rule 23(b)(3), the plaintiffs must demonstrate that "questions of law and fact common to class members predominate over any questions affecting only individual members" of the class. Fed. R. Civ. P. 23(b)(3). Predominance is a more stringent requirement than commonality under Rule 23(a)(2). Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 623-24 (1997). It "requires a qualitative assessment," Butler v. Sears, Roebuck and Co., 727 F.3d 796, 801 (7th Cir. 2013), regarding whether "common questions represent a significant aspect of [a] case and can be resolved for all members of [a] class in a single adjudication," Messner, 669 F.3d at 815. Even so, there is no question here that common questions predominate. The basis for this litigation is that the defendants filed form debt collection complaints against the class. Whether a class member is entitled to any relief revolves almost entirely around whether Paragraph 12 in each of those complaints violated the FDCPA. Addressing this issue is not just significant to the litigation; it appears to be dispositive of the defendants' liability.[3]

The defendants contest that the common question of whether Paragraph 12 is misleading predominates for much of the same reason they challenge the plaintiffs' standing and ability to meet the requirements of Rule 23(a). More precisely, they assert that the Court will need to conduct "mini-trials" to determine which class members suffered concrete harm and/or actual damages based on the inclusion of Paragraph 12. (NCO's Opp'n 10-12, ECF No. 136; Atty Defs.' Opp'n 7-9, ECF No. 143.) Again, that argument fails for the simple reason that the plaintiffs have not asserted a claim for actual damages on behalf of the putative class.[4]The plaintiffs therefore can present class wide proof to establish harm; they need only submit as evidence the form debt collection complaint containing Paragraph 12 and a verified list of the consumers who had the complaint filed against them. Significantly, several in-circuit courts have found Rule 23(b)(3) satisfied in analogous cases where the common issue was whether debt collection letters sent by the defendants violated the FDCPA. See, e.g., Pierre, 2017 WL 1427070, at *9-10; Magee v. Portfolio Recovery Asscs., LLC, No. 12 C 1624, 2015 WL 535859, at *3-4 (N.D. Ill. Feb. 5, 2015); Quiroz, 252 F.R.D. at 444; Day v. Check Brokerage Corp., 240 F.R.D. 414, 419 (N.D. Ill. 2007). Accordingly, because this lawsuit centers around the defendants filing form complaints that violated the FDCPA, the plaintiffs have satisfied the predominance prong under Rule 23(b)(3).

2. Superiority

Finally, the Court finds that a class action is the superior method "for fairly and efficiently adjudicating [this] controversy." Fed. R. Civ. P. 23(b)(3). A class action is superior where, as here, "the potential damages may be too insignificant to provide class members with incentive to pursue a claim individually." Randolph v. Crown Asset Mgmt., LLC, 254 F.R.D. 513, 520 (N.D. Ill. 2008) (citation omitted); accord Crawford v. Equifax Payment Servs., Inc., 201 F.3d 877, 880 (7th Cir. 2000) ("Because these are small-stakes cases, a class suit is the best, and perhaps only, way to proceed."); Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997) ("A class action solves [the small stakes] problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor.").

Moscov and WPR argue that a class action is not the best way forward because putative class members have a greater incentive to pursue their claims individually than as a class. (Atty Defs.' Opp'n 9-11, ECF No. 143.) Setting aside claims for actual damage, on an individual basis, FDCPA plaintiffs are entitled to up to $1,000 in statutory damages and may recover attorney's fees and costs for meritorious suits. 15 U.S.C. § 1692k(a)(2). Conversely, the maximum recovery in a class action is "the lesser of $500,000 or 1 per centum of net worth of the debt collector." Id. In this case, Moscov and WPR estimate that class members would be able to recover only around $3.33 in damages against them if the class were successful.[5]Because that amount is de minimis, they argue, class treatment is inappropriate. (Atty Defs.' Opp'n 9-11, ECF No. 143.)

For starters, Moscov and WPR omit any potential recovery from NCO, whose net worth exceeds $50 million, and so would cause the $500,000 cap to apply regardless of their worth. (Pls.' Reply, App. 7.) That omission is glaring. Even if the Court were to accept Moscov and WPR's view that individual liability is capped by individual net worth, their argument that recovery would be de minimis must take into account all of class' potential sources of recovery. At $500,000, the potential recovery for 900 class members would be almost $560, an amount that is hardly de minimis, especially when considering that $1000 is the most that each class member could recover on their own (apart from actual damages).

There are a myriad other reasons to doubt Moscov and WPR's premise that class members will be better off pursuing their claims individually (beyond the skepticism appropriately applied to arguments made by defendants about how best to protect the interests of plaintiffs). First, their contention that class members would be better off on their own assumes that other members "will be aware of [their] rights, willing to subject [themselves] to all the burdens of suing and able to find an attorney willing to take [their] case." Mace, 109 F.3d at 344 (noting in dicta that such considerations "cannot be dismissed lightly in assessing whether a class action or a series of individual lawsuits would be more appropriate for pursing the FDCPA's objectives"). That assumption is made more problematic by the fact that many potential class members may have little time left before their claims would expire were the class not certified.[6]

It also assumes, without justification, that plaintiffs who prevail on individual claims are entitled to $1000 in statutory damages. Yet, the statute makes clear that $1000 is the maximum amount of statutory damages that plaintiffs may be awarded in individual suits, 15 U.S.C. § 1692k(a)(2); thus, the delta between statutory damages awarded in an individual action versus a class action is not necessarily the difference between the estimated payout to class members and $1000.

The availability of attorney's fees also does not lead to the conclusion that individual suits are more attractive. Attorney's fees are available for both successful individual and class actions, id., but large fee awards are likely to be easier to justify in class actions, making them more attractive to the plaintiff's bar than individual claims, see Mace, 109 F. 3d at 344-45.

And finally, with respect to the preferences of putative class members, it must be noted that any class members who wish to preserve their individual claims (whether because they deem the likely recovery of statutory damages for the class to be too meager, or want to preserve claims of actual damages, or both) would have the right to do so by opting out of the class. See Fed. R. Civ. P. 23(c)(2)(B). Thus, no class member who found the potential recovery afforded to the class in this case to be inadequate would be required to give up their claim.

Beyond the perspectives of the litigants, proceeding as a class also furthers the FDCPA's purpose of curbing debt collection abuses and judicial efficiency. Even if class members end up with little recovery, there is value to certifying a class to curtail the use of the misleading debt collection complaint at issue in this case. See Spiegel v. Ashwood Fin., Inc., No. 16 C 1998, 2017 WL 443168, at *3 (S.D. Ind. Feb. 2, 2017) ("Even where recovery is de minimus, there is value in certifying a class to address potentially unlawful behavior that would not otherwise be addressed because the barriers to bringing suit are too high.") (internal quotation marks and citation omitted); see also Pierre, 2017 WL 1427070, at *10 (collecting in-circuit cases rejecting argument that de minimis recovery precludes finding of superiority). Moreover, rather than litigating the legality of the defendants' form complaint over 100 (or 900) times; see Pastor v. State Farm Mut. Auto. Ins. Co., 487 F.3d 1042, 1047 ("The picture of a federal district judge presiding over thousands of evidentiary hearings each involving a trivial amount of money is not a pretty one."), the Court can resolve these claims in a signal blow. Thus, a class action is the superior method for resolving this lawsuit and, as such, the plaintiffs have met Rule 23(b)(3).

C. Objectively Identifiable Class

Finally, in addition to Rule 23, the Court must determine that the proposed class is sufficiently identifiable. Oshana, 472 F.3d at 513. That is, the class must be based on objective criteria that identify a particular group, harmed during a particular time frame, in a particular location, and in a particular way. Mullins v. Direct Digital, LLC, 795 F.3d 654, 660 (7th Cir. 2015). The plaintiffs' class definition meets this standard: it defines the class as the group of persons in Illinois against whom the defendants filed a form complaint that contained specifically misleading language during a year-long period. The parties readily can ascertain membership in the class through a review of state court dockets or the defendants' case files.

Nonetheless, the Court modifies the class definition to remove the reference to "Appendices A-D." In its place, the Court inserts the actual language of Paragraph 12 so that the definition need not reference the Second Amended Complaint. The class will be defined as:
(a) all individuals in Illinois; (b) against whom WPR filed a complaint; (c) containing the following language: "Pursuant to 11 [or 15] U.S.C § 1692g(a),[7] Defendants are informed that the undersigned law firm is acting on behalf of Plaintiff to collect the debt and that the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in part within thirty (30) days from the date hereof"; (d) which complaint was filed on or after February 3, 2013 and prior to February 23, 2014.[8]
Therefore, for the above reasons, the plaintiffs' motion for class certification is granted.

[1] Although "National Collegiate Student Loan Trusts" is the plaintiff in each of the complaints, (Pls.' Mot., App. A-D.), the collection actions were filed on behalf of NCO, who was the account servicer for the trusts, (see id., App. T at 9, App. U. at 5, App. V at 7-8).
[2] Having determined that the plaintiffs suffered a concrete harm, the remaining standing elements are easily satisfied. The defendants filed debt collection complaints against Marquez, Garriga, and Russell, (Pls.' Mot., App. A-D); thus, their injury was actual, because it already occurred, and particularized, because it "affect[ed] them in a personal and individual way." Spokeo, 136 S. Ct. at 1548. Moreover, the informational harm resulted directly from the defendants filing the misleading debt collection complaints and can be redressed by awarding the plaintiffs statutory damages. 15 U.S.C. § 1692k(a)(2). Thus, all three plaintiffs have standing to sue under the FDCPA.
[3] Although the Seventh Circuit has already determined that Paragraph 12 is misleading as a matter of law, it remains for the plaintiffs to prove (as opposed to merely allege) the other elements of liability as to each of the defendants (i.e., that the defendants are debt collectors who used the misleading complaints in connection with the collection of debts).
[4] Even if some class members have claims for actual damages, that fact alone does not preclude a finding of predominance under Rule 23(b)(3). Messner, 669 F.3d at 815 ("It is well established that the presence of individualized questions regarding damages does not prevent certification under Rule 23(b)(3).") (citations omitted).
[5] Moscov and WPR reach this conclusion by assuming that the class will be around 900 members and by revealing that their net worth during the class period was around $300,000. (Atty Defs.' Opp'n 10, ECF No. 143.) They also contend, without support, that "net worth" under the FDCPA is determined on an individual-defendant level during the class period (in other words, they contend that their individual liability is capped based on their individual, not aggregate, net worth). Because the Court finds Moscov and WPR's de minimis argument fails even assuming their calculation is correct, it need not decide here whether "net worth" under 15 U.S.C. § 1692k(a)(2) must be considered on an individual or aggregate basis or whether it must be calculated as of the class period.
[6] The FDCPA's statute of limitations is one year. 15 U.S.C. § 1692k(d). The filing of this suit tolled the running of the statute for all putative class members. Am. Pipe & Const. Co. v. Utah, 414 U.S. 538, 554-60 (1974). But if the Court were to deny certification, the statute would begin to run again. Lewis v. City of Chicago, Illinois, 702 F.3d 958, 961 (7th Cir. 2012) ("A decision against certification, or a limited certification, ends the tolling and the time resumes running."). So, for example, a class member who learned on February 4, 2013-364 days before this suit was filed—that the defendants filed a complaint against him that included Paragraph 12, would have only one day left on the clock to file an individual claim. Class members like that, who would almost certainly lose their individual claims if the class were not certified, are unlikely to find proceeding individually more attractive.
[7] Paragraph 12 contains a typo that misidentifies the relevant statute. The paragraph presumably was intended to read: "Pursuant to 15 U.S.C. § 1692g(a). . . ." All of the form debt collection complaints filed as exhibits contained this typo. Because it is possible that other class members received complaints with the correct citation, however, the Court has added the bracketed reference to Title 15 as an alternative formulation that would also give rise to membership in the class.
[8] It is not apparent to the Court why the class period extends beyond one year, given the one-year limitations period for FDCPA claims. This question can be addressed further in connection with notice issues and is not material to the question of certification

836 F.3d 808 (2016)

Erick MARQUEZ, et al., Plaintiffs-Appellants,
WEINSTEIN, PINSON & RILEY, P.S., et al., Defendants-Appellees.

No. 15-3273.
United States Court of Appeals, Seventh Circuit.
Argued May 19, 2016.
Decided September 7, 2016.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 1:14-cv-00739, John J. Tharp, Jr., Judge.

Before WOOD, Chief Judge, and POSNER and ROVNER, Circuit Judges.


Plaintiffs-appellants Erick Marquez, Iraida Garriga, and Doris Russel brought an action, individually and on behalf of a class, against defendants-appellees Evan L. Moscov, his law firm Weinstein, Pinson & Riley, P.S. ("Weinstein"), and debt collection agency NCO Financial Systems, Inc. (NCO), alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., arising out of the defendants' attempt to collect on student loan debts allegedly owed by the plaintiffs. The gravamen of the complaint was that the defendants included a misleading and deceptive statement in a paragraph of the debt-collection complaint they filed against the plaintiffs in state court. The district court granted the initial motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), and after the plaintiffs filed their second amended complaint, granted a subsequent motion to dismiss as well, this time with prejudice. The plaintiffs now appeal that dismissal.

This case arose from complaints filed in state court by the defendant Weinstein, on behalf of NCO and signed by Moscov as their attorney, (the "debt collectors") seeking repayment of student loans from the plaintiffs (the "consumers").[1] Those complaints contained typical language for such cases, reciting the loan agreement and the outstanding principal amount, and alleging the breach of that loan agreement and the corresponding damages. However, following those allegations, and immediately preceding the prayer for relief, the debt collectors included Paragraph 12 in the complaints, which stated:
810*810 12. Pursuant to 11 U.S.C. § 1692g(a), Defendants are informed that the undersigned law firm is acting on behalf of Plaintiff to collect the debt and that the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in part within thirty (30) days from the date hereof.
The plaintiffs in the FDCPA action before us assert that Paragraph 12 violated the FDCPA in that it was misleading and deceptive as to both the manner and timing of their response to the state lawsuit. The central issue in this appeal is whether the district court erred in determining that paragraph 12 of the state law complaint was not misleading or deceptive as a matter of law, and therefore granting the motion to dismiss the FDCPA claim. We review de novo a district court's decision to grant a motion to dismiss under Rule 12(b)(6), accepting as true all well-pleaded factual allegations and drawing all reasonable inferences in favor of the plaintiff. McMillan v. Collection Professionals, Inc.,455 F.3d 754, 758 (7th Cir. 2006).

Before considering whether the district court properly held that Paragraph 12 was not misleading or deceptive as a matter of law, we must address a preliminary matter. NCO argues that we need not address the FDCPA challenge at all because 15 U.S.C. § 1692e does not regulate the content of state court pleadings. That issue was properly preserved because it was presented, and rejected, in the district court.[2]

In Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470, 473 (7th Cir. 2007)and O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 941 n.1 (7th Cir. 2011),we postponed for a future case the question of whether § 1692e of the FDCPA covers the process of litigation. This is that future case, as the issue is squarely presented to us and the answer is necessary to resolution of this appeal. Numerous circuits already have addressed this issue, and often in nearly identical reasoning, have concluded that pleadings or filings in court can fall within the FDCPA. See, e.g., Kaymark v. Bank of Am., N.A., 783 F.3d 168, 176-77 (3d Cir. 2015)Goldman v. Cohen, 445 F.3d 152, 155-56 (2nd Cir. 2006)Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 231 (4th Cir. 2007)Stratton v. Portfolio Recovery Associates, LLC, 770 F.3d 443, 449-50 (6th Cir. 2014), as amended (Dec. 11, 2014); Powers v. Credit Mgmt. Servs., Inc., 776 F.3d 567, 573-74 (8th Cir. 2015)Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1031-32 (9th Cir. 2010)James v. Wadas, 724 F.3d 1312, 1316 (10th Cir. 2013)Miljkovic v. Shafritz & Dinkin, P.A., 791 F.3d 1291, 1297-1300 (11th Cir. 2015). Those circuits almost uniformly base their conclusion on the Supreme Court's analysis in Heintz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995), as well as on the amendment to the FDCPA following that decision. We agree with the reasoning of those circuits and for those same reasons conclude that § 1692e of the FDCPA applies to the statement in Paragraph 12 of the state court complaint at issue here.

In Heintz, Darlene Jenkins had borrowed money from Geiner Bank to purchase an automobile. Id. at 293, 115 S.Ct. 1489. She defaulted on that loan, and the bank's law firm sued her in state court to recover the balance owed. In an effort to settle the case, an attorney for the bank's law firm, George Heintz, sent a letter to Jenkins' lawyer listing the amount that she owed. Jenkins filed suit alleging that the 811*811 letter violated the FDCPA in that it contained a false statement of the amount that she owed the bank. The district court dismissed the lawsuit holding that the FDCPA was inapplicable to lawyers, but we reversed and the Supreme Court agreed with us, holding that the FDCPA applies to "the litigating activities of lawyers." Id. at 294, 115 S.Ct. 1489. Heintz had argued that the Court should construe the statute as containing "an implied exemption for those debt-collecting activities of lawyers that consist of litigating," but the Court rejected that interpretation. Id. at 295, 115 S.Ct. 1489. The Court held that the FDCPA applies to attorneys who "`regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." Id. at 299, 115 S.Ct. 1489.

Although the communication at issue in Heintz was a letter rather than a legal pleading, the Court recognized the applicability of the FDCPA even to attorneys whose debt-collection activity consisted of litigation, and nothing in that analysis commands a differentiation between the two. Nothing in the broad language in Heintz would support an interpretation that would apply the FDCPA to attorneys whose debt collection activity consisted of litigation, but limit it to only those representations made by those attorneys outside of that litigation. The conclusion that the FDCPA applies to legal pleadings is supported by a post-Heintz amendment enacted by Congress. In the post-Heintzamendment, Congress exempted legal pleadings from a specific provision in the FDCPA, but did not exempt it from the FDCPA as a whole. 

Specifically, 15 U.S.C. § 1692e prohibits a debt collector from using any false, deceptive or misleading representation in connection with the collection of any debt. The statute itemizes sixteen communications that constitute violations of that provision, including at § 1692e(11), the failure to disclose in the initial written communication to the consumer that the debt collector is attempting to collect a debt and that any information will be used for that purpose. After Heintz was decided in 1995, however, Congress amended § 1692e(11) to exclude formal legal pleadings from that requirement, with the amended version now stating that "this paragraph shall not apply to a formal pleading made in connection with a legal action." By providing that sub-section 1692e(11) did not apply to a formal pleading made in connection with a legal action, the implication is that § 1692e as a whole other than § 1692e(11) applies to formal legal pleadings. Otherwise, the amendment would be merely superfluous, exempting formal legal pleadings from one specific requirement in the act even though legal pleadings were not subject to any provisions of the act already. It is "a cardinal principle of statutory construction" that "a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant." TRW Inc. v. Andrews, 534 U.S. 19, 31, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001)United States v. Michalek, 54 F.3d 325, 335-36 (7th Cir. 1995)

A natural interpretation of that provision which gives meaning to all words is that Congress, post-Heintz, envisioned § 1692e of the FDCPA as applying to communications in the form of legal pleadings as well as communications in other forms such as letters, and that it sought to exempt legal pleadings from only § 1692e(11).

That interpretation is consistent with the purpose of the FDCPA, "to eliminate abusive debt collection practices, to ensure that those debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers." 812*812 Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577, 130 S.Ct. 1605, 176 L.Ed.2d 519 (2010); 15 U.S.C. § 1692(e). That purpose would be undermined if the FDCPA was inapplicable to communications that occurred in the context of litigation, particularly in the debt collection area in which judgments are overwhelmingly reached through forfeiture, and thus misleading or deceptive statements are more likely to influence the response of the defendant without ever coming to the attention of the court in any meaningful way. In fact, although we have not previously addressed the question of whether pleadings fall within § 1692e of the FDCPA, we have already decided a number of FDCPA cases alleging FDCPA violations in state court filings (in which this issue was presumably not raised), thus illustrating that the dangers addressed in the FDCPA arise in the context of pleadings just as in other forms of communication. See O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 948 (7th Cir. 2011)(Tinder, J., concurring) and cases cited therein. Accordingly, we hold that representations may violate § 1692e of the FDCPA even if made in court filings in litigation. Accord Kaymark, 783 F.3d at 176-77Powers, 776 F.3d at 574Miljkovic, 791 F.3d at 1297Stratton, 770 F.3d at 450James, 724 F.3d at 1316Donohue, 592 F.3d at 1031-32Sayyed, 485 F.3d at 231Goldman, 445 F.3d at 155-56.

We turn then to the question of whether the district court erred in holding that Paragraph 12 was "plainly and clearly not misleading" as a matter of law and dismissing the case on that basis. Dist. Ct. Op. at 8. The FDCPA provides that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt," including, but not limited to the false representation of "the character, amount, or legal status of any debt." 15 U.S.C. § 1692e generally and § 1692e(2)(A). In McMillan v. Collection Professionals Inc., 455 F.3d 754, 759 (7th Cir. 2006), we noted that a determination of whether a statement is false, deceptive or misleading, like a determination as to whether a statement is confusing under the FDCPA, is a fact-bound determination of how an unsophisticated consumer would perceive the statement. We cautioned in McMillan that in determining whether a statement is confusing or misleading, a district court must "tread carefully" because "district judges are not good proxies for the `unsophisticated consumer' whose interest the statute protects." Id. Accordingly, Rule 12(b)(6) dismissal on that issue is appropriate only if there is no set of facts consistent with the pleadings under which the plaintiffs could obtain relief. Id.

In its effort to collect the student loan debt, the debt collectors initially sent each of the consumers a demand letter, which informed them that they were in default on their loan payments and demanded payment of the outstanding balance. Pursuant to § 1692g of the FDCPA, that letter contained a statement informing the consumers that they had 30 days after receipt of the notice to dispute the validity of the debt, and provided that "[u]nless you dispute this debt, or any portion of it, within 30 days from receipt of this notice, we will assume the debt to be valid." The demand letter instructs the consumer to dispute the debt by either calling a toll free number or submitting a dispute in writing to their law offices.
The debt collectors subsequently filed suit against the consumers and served the consumers with a summons and complaint in that state court action. The summons informed the consumers that they had to file an appearance by a specified date approximately 30 days after issuance, and an answer to the complaint before the time period set forth in the applicable subsections 813*813 of paragraph 3 or 4 on the reverse side of the summons. Unfortunately, that standard summons form contained an error, in that paragraphs 3 or 4 contain no subsections, and the relevant subsections for the consumers were contained in paragraph 2 on that reverse side of the summons. Paragraph two provided that for amounts less than $10,000, the consumer only needs to file an appearance but not an answer unless otherwise ordered by the court, but that for amounts over $10,000, an answer must be filed no more than 10 days from the appearance date (return date) set forth on the summons. In all capitalized letters for emphasis, the summons also declared that if the consumer failed to do so "A JUDGMENT BY DEFAULT MAY BE TAKEN AGAINST YOU FOR THE RELIEF ASKED IN THE COMPLAINT, A COPY OF WHICH IS HERETO ATTACHED." Thus, the summons directs the consumers to the complaint, both in determining the answer and in the relief that could be imposed. The complaint, however, in paragraph 12 declares: "Pursuant to 11 U.S.C. § 1692g(a), Defendants [consumers] are informed that the undersigned law firm is acting on behalf of Plaintiff [debt collector] to collect the debt and that the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in part within thirty (30) days from the date hereof." The court erred in holding that the paragraph 12 declaration would not be misleading or deceptive as a matter of law.

Paragraph 12 is misleading to the unsophisticated consumer both as to the proper timing to respond to the complaint and as to the manner of response. A plain reading of the summons and the complaint would cause a consumer to believe that he had until the date in the summons to file an answer and contest the claim, but that beyond the 30-day period in paragraph 12 he could no longer contest the validity or correctness of the debt. Because the 30-day period would expire before the date that the answer had to be filed for each of the litigants, those provisions in conjunction would lead an unsophisticated consumer to believe that he had that 30-day period to dispute the debt and beyond that period he could not dispute that debt in his answer. For each plaintiff in this FDCPA action, the time period for "disputing the debt" was shorter than the time period provided by law for the answer. For instance, for one plaintiff in this FDCPA action, the complaint provided that the debt must be disputed by December 14 while the answer was not due, according to the summons, until December 23. Paragraph 12 thus effectively shortened the time period provided in the summons for the consumer to answer, because the consumer had been told in paragraph 12 that he only had the 30-day period to dispute the validity or correctness of the debt. That would cause an unsophisticated consumer to believe that beyond that time period in Paragraph 12 for disputing the debt, even if filing an answer, the validity of the debt could no longer be disputed in that answer.

The language used in Paragraph 12 is particularly pernicious in that regard. The language regarding the 30-day dispute period was not merely lifted from the demand letter, which provided that unless the debt was disputed within that 30-day period, "we[the debt collector] will assume the debt to be valid." [emphasis added] Nor does that language track § 1692g(a)(3), which provides that if consumers do not dispute the debt within 30 days of the written notice, "the debt will be assumed to be valid by the debt collector." The language in Paragraph 12 differs in a material way from those provisions, in that it does not contain the limiting language that the debt will be considered valid by the debt collector, instead stating 814*814 that after the 30-day period "the debt will be considered valid." The presence of such language in a court complaint, cross-refer-enced in the summons, would lead an unsophisticated consumer to believe that the debt will be considered valid by the court if not disputed within that 30 days, because the relevant language that would have limited the assumption to only the debt collector is absent from Paragraph 12, whether intentionally or otherwise. Whether the consumer is a sophisticated or unsophisticated consumer, one cannot say—as the district court did—that reading the summons and paragraph 12 in relation to each other is to interpret it in a "bizarre or idiosyncratic fashion." It is in fact a rational reconciliation of the two provisions.

Magnifying the problem, that sentence regarding the 30-day period to dispute the debt mirrored the earlier demand letter to the consumers informing them of their rights to dispute the debt. The inclusion of that sentence in the complaint would lead an unsophisticated consumer to believe that she must dispute the debt through the procedures outlined in the earlier letter, rather than in an answer in court, or she would forfeit her right to contest the debt. That would place the consumers at risk of losing their rights in court if they disputed the debt through contact with the debt collectors rather than in the form of an answer.

The district court's reading of the provisions illustrates the problem with its analysis. The district court characterizes Paragraph 12 as providing that a consumer could dispute the "debt" and that the "debt" will be valid if not disputed, not as providing that the legal claim to collect it will somehow be resolved. Therefore, according to the district court, the consumer might attempt to dispute the debt directly with the debt-collection firm but could not view that as a sufficient response to the lawsuit. The problem with the court's interpretation is twofold. First, it asks us to assume that an unsophisticated consumer will distinguish the "disputing of a debt" from "disputing a claim to collect that debt." But an unsophisticated consumer is unlikely to distinguish those concepts. In fact, even at oral argument counsel for defendants alternated between stating that the plaintiffs could dispute the debt by answering the complaint and that they could dispute it by contacting the law firm. Given the shortened time frame for disputing the debt set forth in Paragraph 12, the notion that the dispute should be in the form of the answer illustrates the problem—its 30-day provision would thereby shorten the time for the answer. Moreover, the court acknowledges that the consumer may be led to dispute the debt directly with the debt collector. Yet if a consumer was led to believe that she had to pursue a dispute directly with the debt collector, as the district court acknowledges, then that same consumer is also likely to believe that if she fails to do so within the 30-day period, the debt is assumed to be valid and correct, and cannot be contested in the court action. This is particularly true because, as previously discussed, the wording in paragraph 12 has moved the phrase "by the debt collector" so that it no longer clarifies who will assume the debt to be valid. Finally, paragraph 12 is simply improper in its entirety at this stage of the proceedings, as the failure to dispute the debt will have no impact on the court case. Its presence in the complaint serves no purpose, as conceded by counsel for defendant. Its function in the complaint is only to mislead. In Ruth v. Triumph Partnerships, 577 F.3d 790, 800 (7th Cir. 2009), we recognized that suits alleging deceptive or misleading statements fall within three distinct categories: (1) "cases involving statements that plainly, on their face, are not misleading or deceptive;" (2) "cases involving 815*815 statements that are not plainly misleading or deceptive but might possibly mislead or deceive the unsophisticated consumer," for which plaintiffs must produce extrinsic evidence to prove that unsophisticated consumers find the statements to be so; and (3) communications which are plainly deceptive and misleading to an unsophisticated consumer as a matter of law. See also Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 322-23 (7th Cir. 2016). The district court held that the statements in this case rest within the first category, but they fall within the third. For the reasons stated above, we hold that Paragraph 12 is misleading and deceptive as a matter of law, and that the district court erred in reaching the opposite conclusion. Accordingly, the district court erred in granting the motion to dismiss.

The decision of the district court is REVERSED and the case REMANDED for further proceedings consistent with this opinion.

[1] The terms "plaintiff" and "defendant" can cause confusion in this case, because the defendants in the state court collection action are the plaintiffs here, and vice versa. To avoid such confusion, we will refer to the plaintiffs and defendants in the state court action as debt collectors and consumers, and use the terms plaintiff and defendant to refer to the parties in this FDCPA action.

[2] NCO attempts to raise a number of other issues on appeal that were not properly presented to the district court, but those arguments are waived and we do not address them. Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir. 2012).