Deborah Walton v. EOS CCA ( 2018 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17-3040
DEBORAH WALTON,
Plaintiff-Appellant,
v.
EOS CCA,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:15-cv-00822-TWP-DML — Tanya Walton Pratt, Judge.
____________________
ARGUED FEBRUARY 27, 2018 — DECIDED MARCH 21, 2018
____________________
Before WOOD, Chief Judge, and BAUER and BARRETT, Circuit
Judges.
BARRETT, Circuit Judge. Deborah Walton sued EOS CCA, a
debt collector, under the Fair Debt Collection Practices Act
and the Fair Credit Reporting Act. Walton argues that EOS
violated the former by failing to contact the creditor directly
to “obtain[] verification” of her debt and the latter by failing
to investigate disputed information. The district court con-
cluded that EOS had discharged its obligation under both
2 No. 17-3040
statutes and entered summary judgment for EOS. We affirm
the district court’s judgment.
I.
In a letter dated October 11, 2014, AT&T notified Deborah
Walton that she owed $268.47 on her closed AT&T account. It
identified her account number as 119864170 and informed her
that failure to pay the bill “may cause your account to be re-
ferred to an outside collection agency.” Walton did not pay
the bill, and on January 27, 2015, she received a debt-collection
letter from EOS CCA (“EOS”). The notice stated that she owed
AT&T $268.47 and that payment was expected “unless [she]
dispute[d] the debt.” Because of an error in the records AT&T
sent EOS, the letter incorrectly identified Walton’s AT&T ac-
count number as “864119170” when her actual account num-
ber is 119864170. AT&T had swapped the first three digits of
Walton’s account with the second three in the information it
provided to EOS.
Walton contacted EOS to dispute that the debt belonged
to her. During a phone call with an EOS representative, Wal-
ton acknowledged that her name and mailing address in the
debt notice were correct, but she falsely denied that the last
four digits of her social security number matched those the
representative gave her in an attempt to confirm her identity.
Walton also wrote EOS a letter disputing the debt, in which
she asserted: “I do not own [sic] AT&T any money under the
account number listed above.” After investigating, EOS sent
Walton a notice it characterized as “verification of your out-
standing debt.” It told Walton that based on “a review of our
records,” it had verified that her name, address, and the last
four digits of her social security number matched the debt re-
port it had received from AT&T. The verification letter also
No. 17-3040 3
provided additional information about the amount of the
debt: it stated a balance of $268.47 and specified that AT&T
had not added interest or collection costs to the account. As it
had in its initial notice to Walton, EOS listed her AT&T ac-
count number with the three swapped digits reflected in the
records AT&T had sent it.
EOS reported Walton’s debt to two credit-reporting agen-
cies, Experian and TransUnion. When it did so, it informed
the agencies that the account was disputed. Walton wrote to
Experian and TransUnion to dispute the debt, once in April
and again in May. Each time, the agencies sent EOS a notice
reflecting the complaint that Walton had registered. The first
notice stated that Walton had insisted that the debt did not
belong to her. This notice prompted EOS to double-check its
own records, and it again concluded that Walton’s name, ad-
dress, and social security number matched the information it
had received from AT&T. The second notice stated that Wal-
ton had asserted that EOS’s debt-collection letter referred to
account 864119170, when her correct account number was
119864170. After receiving this second notice, EOS asked Ex-
perian and TransUnion to delete Walton’s debt record.
Walton sued EOS, claiming that it violated (1) the Fair
Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.
(2006), by not verifying her debt with the creditor, AT&T, and
(2) the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et
seq. (2010), by not reasonably investigating the disputed infor-
mation. She alleges that she lost income, suffered emotional
distress, and incurred substantial attorney’s fees as a result of
these violations. A magistrate judge recommended that the
district court enter summary judgment in favor of EOS, and
4 No. 17-3040
the district court, overruling Walton’s objections to the mag-
istrate’s report and recommendation, did so.
II.
We begin with the FDCPA. Under that Act, if a consumer
“notifies the debt collector in writing within the thirty-day pe-
riod” that the consumer is disputing a debt notice, "the debt
collector shall cease collection of the debt … until the debt col-
lector obtains verification of the debt … and a copy of such
verification or judgment … is mailed to the consumer by the
debt collector." 15 U.S.C. § 1692g(b). The statute does not de-
scribe what it means to “obtain[] verification of the debt,” and
the definition of “verification” does not cast much light on the
problem before us. “Verification” is “the authentication of
truth or accuracy by such means as facts, statements, citations,
measurements, or attendant circumstances.” WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY 2543 (1961). The
question here, however, is what the debt collector is supposed
to be verifying. Walton argues that § 1692(g) is about the ac-
curacy of the underlying debt; she insists that the provision
obligated EOS to contact AT&T to confirm whether the ac-
count number was hers and thus whether she really owed
AT&T the money. EOS maintains that § 1692(g) is about the
accuracy of its collection notice; it argues that the provision
required EOS to confirm only that its notice to Walton
matched AT&T’s description of the debt and debtor.
EOS is right. The Act’s stated purpose is “to eliminate abu-
sive debt collection practices by debt collectors, to insure that
those debt collectors who refrain from abusive debt collection
practices are not competitively disadvantaged, and to pro-
mote consistent State action to protect consumers against debt
collection abuses.” 15 U.S.C. § 1692(e). It is both sensible and
No. 17-3040 5
consistent with that purpose to construe § 1692g(b) as requir-
ing a debt collector to verify that its letters to the consumer
accurately convey the information received from the creditor.
The verification assures the consumer that the creditor actu-
ally made the demand the debt collector said it did and equips
the consumer to evaluate the validity of the creditor’s claim.
It would be both burdensome and significantly beyond the
Act’s purpose to interpret § 1692g(b) as requiring a debt col-
lector to undertake an investigation into whether the creditor
is actually entitled to the money it seeks. Section 1692g(b)
serves as a check on the debt-collection agency, not the credi-
tor. We thus join other circuits in holding that the statute re-
quires “nothing more than the debt collector confirming in
writing that the amount being demanded is what the creditor
is claiming is owed.” Chaudhry v. Gallerizzo, 174 F.3d 394, 406
(4th Cir. 1999); Clark v. Capital Credit & Collection Servs., Inc.,
460 F.3d 1162, 1173–74 (9th Cir. 2006).
With this in mind, EOS plainly satisfied § 1692g(b). It
checked its records and confirmed that the Deborah Walton
to whom it had sent a debt-collection letter was the same Deb-
orah Walton identified by AT&T. It then mailed Walton a no-
tice confirming that it had sent the demand for payment to the
person AT&T identified and for the amount AT&T sought.
The notice included AT&T’s address, which served both to
identify and provide contact information for the creditor. This
verification armed Walton with the information she needed
to “sufficiently dispute the payment obligation.” Dunham v.
Portfolio Recovery Assocs., LLC, 663 F.3d 997, 1004 (8th Cir.
2011); see also Haddad v. Alexander, Zelmanski, Danner & Fio-
ritto, PLLC, 758 F.3d 777, 784 (6th Cir. 2014). Indeed, that is
precisely what Walton did. She used the data she received
from EOS—in particular, the erroneous account number—to
6 No. 17-3040
dispute her debt with Experian, TransUnion, and AT&T. And
once she highlighted the precise source of her complaint—the
account number—she succeeded in having the debt record
deleted.
III.
We turn next to the FCRA. Under that Act, when a
credit-reporting agency notifies a debt collector of a disputed
debt, the debt collector (called a “furnisher” under the statute)
must “conduct an investigation with respect to the disputed
information.” 15 U.S.C. § 1681s-2(b)(1)(A). Whether the fur-
nisher’s investigation is reasonable is a factual inquiry, but
“summary judgment is proper if the reasonableness of the de-
fendant’s procedures is beyond question.” Westra v. Credit
Control of Pinellas, 409 F.3d 825, 827 (7th Cir. 2005). EOS’s in-
vestigation was unquestionably reasonable. When EOS first
heard from the credit-reporting agency, the report stated
solely that Walton claimed the account did not belong to her.
Based on this scant report, EOS conducted a reasonable inves-
tigation by verifying Walton’s personal information with her
EOS file on record. See id. After receiving the second credit-
reporting agency notice, EOS learned that Walton challenged
the accuracy of the account number associated with the debt.
EOS responded to this information by asking the credit agen-
cies to delete the adverse credit report. And they did. Nothing
more was required of EOS.
IV.
Walton’s remaining arguments are also unpersuasive. She
contends that EOS made false or misleading representations
that violated both the FDCPA and the FCRA. The former re-
quires debt collectors who communicate to a credit-reporting
No. 17-3040 7
agency to report if a debt is disputed, 15 U.S.C. § 1692e(8), and
the latter prohibits debt collectors from furnishing infor-
mation to consumer reporting agencies if they know or have
“reasonable cause to believe that the information is inaccu-
rate.” 15 U.S.C. § 1681s-2(a)(1)(A). EOS argues that we should
not reach either issue because Walton did not raise either is-
sue in her objection to the magistrate judge’s report, see Willis
v. Caterpillar Inc., 199 F.3d 902, 904–05 (7th Cir. 1999). Even if
these arguments were not waived, they fail for two reasons.
First, EOS presented undisputed evidence that it did report
the debt as disputed, thereby complying with both Acts’ pro-
visions in §§ 1692e(8) and 1681s-2(a)(1)(A). Second, the FCRA
does not provide a private right of action for violations of
§ 1681s-2(a)(1)(A). See 15 U.S.C. § 1681s-2(c); Purcell v. Bank of
America, 659 F.3d 622, 623 (7th Cir. 2011).
Finally, Walton brings two procedural challenges. She first
objects to the consolidated briefing for cross-motions for sum-
mary judgment and argues the magistrate judge erred in
denying her motion to strike EOS’s combined motion and re-
sponse. Permitting consolidated briefing on cross-motions for
summary judgment is well within the judge’s discretion. As
for Walton’s second procedural challenge, she complains that
the district court, in considering her objections to the magis-
trate’s report and recommendation, stated that “[Ms. Walton]
does not cite any specific content in the ten pages of that ex-
hibit and develops no arguments therefrom. She does not
specify any error in the Report that these excerpts identify.”
Walton maintains that the district court’s statement runs afoul
of Johnson v. Zema Sys. Corp., 170 F.3d 734, 741 (7th Cir. 1999),
where we interpreted “Rule 72(b)’s requirement of specific,
written objection [to a magistrate’s report] to require a litigant
to specify each issue for which review is sought and not the
8 No. 17-3040
factual or legal basis of the objection.” Walton has taken the
district court’s statement out of context. The district court
made a descriptive observation about Walton’s objection to
the exhibit in question, but it did not penalize Walton for her
failure to develop a factual or legal argument. On the con-
trary, the district court clearly reviewed each of Walton’s ob-
jections to the report under the proper de novo standard, 28
U.S.C. § 636(b)(1). Walton’s objection is meritless.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.