MaryLou Hahn v. Triumph Partnerships ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-1521
M ARYLOU H AHN,
Plaintiff-Appellant,
v.
T RIUMPH P ARTNERSHIPS LLC and
A LLIED INTERNATIONAL C REDIT C ORP.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Western Division.
No. 06 C 50132—Frederick J. Kapala, Judge.
A RGUED F EBRUARY 12, 2009—D ECIDED M ARCH 4, 2009
Before E ASTERBROOK, Chief Judge, and F LAUM and
M ANION, Circuit Judges.
E ASTERBROOK , Chief Judge. Triumph Partnerships
bought some overdue credit card debts from HSBC
Bank USA. One of Triumph’s affiliates sent Marylou
Hahn a letter saying that she owed $1,134.55. According
to the letter, $1,051.91 of this was an “AMOUNT DUE”
and the remaining $82.64 was “INTEREST DUE”. The
2 No. 08-1521
letter told Hahn that she should pay Triumph rather
than HSBC Bank and that the total of $1,134.55 was
“inclusive of interest accrued in accordance with the
terms of your original agreement.” The letter also offered
to accept $567.27 in satisfaction of the debt. (We refer to
Triumph Partnerships and its affiliate collectively as
“Triumph.”)
Hahn does not deny owing $1,134.55. Instead of
paying, however, she filed this suit under the Fair Debt
Collection Practices Act. Hahn relies on 15 U.S.C. §1692e,
which says that “[a] debt collector may not use any
false, deceptive, or misleading representation or means
in connection with the collection of any debt.” In par-
ticular, §1692e(2)(A) provides, a debt collector may not
falsely represent “the character, amount, or legal status
of any debt”. According to Hahn’s complaint, Triumph
misrepresented the “character” of her debt when it said
that the interest due was $82.64. Hahn maintains, and
Triumph concedes, that the $82.64 represents interest
accrued after it purchased the debt from HSBC. The
$1,051.91 includes interest that accrued while HSBC was
Hahn’s creditor. Thus the representation that “interest
due” equals $82.64 was false, Hahn submits. The
district court, however, granted summary judgment in
Triumph’s favor, ruling that the letter’s statement is true.
Hahn owes more than $82.64 in interest. But the pro-
position that $82.64 of the total is “interest due” is true.
Hahn reads the statement “interest due” as if it were “this
is all the interest due”. Equivalently, Hahn could argue
that “amount due” should be read as if it were “principal
No. 08-1521 3
due”. The letter’s actual language, however, does not
commit either of these errors. An “amount” that is due
can include principal, interest, penalties, attorneys’ fees,
and other components. Interest then can be added to that
total. (Hahn does not say that her agreement with HSBC
Bank forbade compound interest.) And we know from
Wahl v. Midland Credit Management, Inc., No. 08-1517 (7th
Cir. Feb. 23, 2009), that there would be no falsity even if
the “amount due” had been described as “principal
due”—for Wahl observes that when interest is com-
pounded, today’s interest becomes tomorrow’s principal,
so all past-due amounts accurately may be described as
“principal due”.
Barnes v. Advanced Call Center Technologies, LLC, 493
F.3d 838 (7th Cir. 2007), holds that a debt collector need
not break out principal and interest; it is enough to tell
the debtor the bottom line. So Triumph could have
sent Hahn a letter demanding payment of $1,134.55
without saying where this figure came from. By pro-
viding some extra detail Triumph may have helped
customers understand the situation. The “amount due”
reflected the last balance they would have seen in
mailings from HSBC. Lumping together the interest
charged while HSBC owned the account, plus interest
after the sale to Triumph, would have produced “amount”
and “interest” items that did not correspond to any
figures that Hahn or other customers would have recog-
nized. Reporting the post-transfer interest separately
also could have helped debtors to check whether Triumph
had applied the correct interest rate to the balances ac-
quired from HSBC. Classifying obligations in a way that
4 No. 08-1521
helps customers to understand what has happened
cannot be condemned as a false statement about a
debt’s character. (It is not evident what §1692e(2)(A)
means by the “character” of a debt. We need not pin
down the definition, because the letter is true.)
Hahn does not contend that the “interest due” line item
is misleading. To get anywhere with such an argument
she would need to introduce survey evidence, or some
equivalent, demonstrating how the language actually
affects borrowers. See Williams v. OSI Educational Services,
Inc., 505 F.3d 675, 678 (7th Cir. 2007); Johnson v. Revenue
Management Corp., 169 F.3d 1057 (7th Cir. 1999). Her only
argument is that the letter is false—and, as we have
concluded that the statement is true, the case is over.
The statement’s immateriality is another way to reach
the same conclusion. Suppose Triumph had written:
“Remember the tan-colored letter you received from
HSBC giving your balance as $1,051.91? From now on
you will receive light blue letters from us, and interest
will be added to the balance due.” Hahn seems to think
that she could collect statutory damages if HSBC’s letters
had been gray rather than tan in color. As we recognized
in Barnes, the difference between principal and interest is
no more important to the Fair Debt Collection Practices
Act than the color of the paper that HSBC used. A dollar
due is a dollar due. Applying an incorrect rate of interest
would lead to a real injury; reporting interest in one
line item rather than another (or in two line items)
harms no one and, for the reasons we have given, may
well assist some people. Materiality is an ordinary ele-
No. 08-1521 5
ment of any federal claim based on a false or misleading
statement. See Carter v. United States, 530 U.S. 255 (2000);
Neder v. United States, 527 U.S. 1 (1999).
We do not see any reason why materiality should not
equally be required in an action based on §1692e. The
statute is designed to provide information that helps
consumers to choose intelligently, and by definition
immaterial information neither contributes to that objective
(if the statement is correct) nor undermines it (if the
statement is incorrect). See Peters v. General Service
Bureau, Inc., 277 F.3d 1051, 1056 (8th Cir. 2002); cf. Evory
v. RIM Acquisitions Funding L.L.C., 505 F.3d 769, 776–77
(7th Cir. 2007). This is the upshot of our conclusion in
Wahl (slip op. 6) that, “[i]f a statement would not mislead
the unsophisticated consumer, it does not violate the
[Act]—even if it is false in some technical sense.” A
statement cannot mislead unless it is material, so a
false but non-material statement is not actionable.
Our conclusion that the letter does not violate §1692e
makes it unnecessary to decide whether Triumph Partner-
ships—as opposed to its affiliate, which sent the letter—
is a “debt collector.”
A FFIRMED
3-4-09