Illinois Federal Court Holds That Debt Collector May Be Liable For Filing Lawsuit Based on Retroactive Seventh Circuit Decision

The United States District Court for the Northern District of Illinois recently held that the filing of a debt collector’s lawsuit in a then-proper venue may have constituted a violation of the Fair Debt Collection Practices Act (“FDCPA”) after a retroactive Seventh Circuit Decision.  See Glazewski v. CKB Firm, P.C., 2015 WL 661278 (N.D. Ill. 2015).  Pursuant to the FDCPA, a debt collector must bring an action in the “judicial district or similar legal entity” where either the consumer signed the contract at issue or where the consumer resides.  See 15 USC 1692i.  In 1996, the Seventh Circuit interpreted this provision to mean that a debt collector could sue a Cook County, Illinois resident anywhere within the county, even though the county was broken up into numerous judicial districts.  See Newsom v. Friedman, 76 F.3d 813 (7th Cir. 1996).

In Glazewski, the defendant debt collector filed a collection lawsuit against the plaintiff in 2012, then had it dismissed pursuant to a settlement agreement.  When the plaintiff defaulted in 2014, the defendant reinstituted the lawsuit in a downtown Cook County court, even though the consumer lived in a different judicial district within the county.  Two months after defendant reinstituted the suit, however, the Seventh Circuit overturned its previous decision and interpreted “judicial district or similar legal entity” as “the smallest geographic area relevant to venue in the court system in which the case is filed.”  Suesz v. Med-1 Solutions, LLC, 757 F.3d 636 (7th Cir. 2014).  Plaintiff then filed a lawsuit alleging a FDCPA violation, and the defendant moved to dismiss, arguing: (i) the lawsuit originally was filed in 2012 and was thus outside the one-year FDCPA statute of limitations; (ii) Suesz did not apply retroactively; and (iii) the filing was a “bona fide error,” an exception under the FDCPA.  The Court denied the motion to dismiss, however, holding that the reinstitution of the action in 2014 qualified as bringing a legal action under the FDCPA and that Suesz decision explicitly applied retroactively.  Additionally, any bona fide error defense required discovery and could not be applied to dismiss a complaint.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.