Diane Rhone v. Medical Business Bureau, LLC , 915 F.3d 438 ( 2019 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17-3408
DIANE RHONE,
Plaintiff-Appellee,
v.
MEDICAL BUSINESS BUREAU, LLC,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 16 C 5215 — Virginia M. Kendall, Judge.
____________________
ARGUED SEPTEMBER 26, 2018 — DECIDED FEBRUARY 7, 2019
____________________
Before WOOD, Chief Judge, and EASTERBROOK and ROVNER,
Circuit Judges.
EASTERBROOK, Circuit Judge. This case is about character—
the character of a debt. A debt collector must not make any
“false representation” about “the character, amount, or legal
status of any debt”. 15 U.S.C. §1692e(2)(A). A district court
concluded that a debt collector misrepresented a debt’s
“character” by reporting to a credit bureau that the debtor
had nine unpaid bills of $60 rather than one of $540. We
2 No. 17-3408
hold, to the contrary, that arithmetic does not affect a debt’s
“character.” The statutory word “amount” rather than the
word “character” is what governs reporting the debt’s size.
Diane Rhone received physical therapy from Illinois
Bone and Joint Institute, which billed her $134 for each ses-
sion. Insurance covered all but a $60 co-pay per session.
Rhone did not remit her part of the bills, however, and the
Institute turned to the Medical Business Bureau for debt col-
lection. After three years of dunning legers did not work, the
Bureau reported to Equifax that Rhone owes nine debts of
$60 each. That led to this suit, in which Rhone contends that
the Bureau had to report the aggregate debt of $540 rather
than nine $60 debts. Judge Der-Yeghiayan agreed with that
submission. 2017 U.S. Dist. LEXIS 177800 (N.D. Ill. Oct. 25,
2017). After he retired the case was assigned to Judge Ken-
dall, who imposed a $1,000 penalty. 2018 U.S. Dist. LEXIS
188433 (N.D. Ill. Apr. 27, 2018).
The credit report was factually correct. Rhone incurred
nine debts of $60 each. Judge Der-Yeghiayan did not explain
why the difference between 1 × $540 and 9 × $60 misrepre-
sents the “character” of a debt. Neither the district judge nor
Rhone offered a definition of the word “character.” Asked at
oral argument whether a debt collector should report one
debt, or two, if a person buys two cars from a single dealer
and does not pay for either car, Rhone’s lawyer replied: “It
would depend.” Counsel told us that a judge should consid-
er “all the facts and circumstances” once litigation is under-
way. Yet what a court (or for that mager a debt collector)
needs is a rule of law to apply to those facts and circum-
stances. This is a statutory suit, not a common-law action.
The word “character” either requires aggregation of debts
No. 17-3408 3
arising from multiple transactions with a single entity, or it
does not.
The statute refers separately to the “character” and the
“amount” of a debt. Rhone does not contend that the Bureau
misrepresented the “amount” of the debt by telling Equifax
that Rhone owes $60 for each of nine medical treatments. We
can imagine a regulation specifying whether debts to a sin-
gle creditor should be aggregated (or perhaps reported both
singly and in the aggregate)—consistency contributes to clar-
ity—but Rhone does not point to such a regulation, nor
could we find one. One benefit of identifying each amount
separately is that a debtor then can identify exactly which
transactions are at issue. If the Bureau had reported one $540
debt, Rhone might well have asserted that the report was
misleading—after all, she does not owe $540 for any transac-
tion. Per-transaction reporting also shows whether some of
the debts are stale (that is, whether the statute of limitations
bars collection). Consumers and credit bureaus alike may
find that information valuable.
A search through decisions from this court and the other
courts of appeals did not turn up any discussing whether
aggregation (or not) of all amounts owed to a single creditor
concerns the “character” of a debt. Indeed, few decisions
discuss the meaning of that word in any debt-related con-
text. In this circuit, Fields v. Wilbur Law Firm, P.C., 383 F.3d
562 (7th Cir. 2004), holds that presenting a debt plus agor-
neys’ fees as a single undifferentiated sum misstates the
debt’s character, while Hahn v. Triumph Partnerships LLC, 557
F.3d 755 (7th Cir. 2009), holds that combining principal and
interest does not do so. Agorneys’ fees differ in character
from the main debt, while interest does not. Elsewhere,
4 No. 17-3408
Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033 (9th Cir.
2010), agrees with Hahn, while Miller v. Javitch, Block &
Rathbone, 561 F.3d 588, 592–94 (6th Cir. 2009), holds that de-
scribing a debt as a loan rather than an account receivable
does not misstate its character. None of these decisions holds
or implies that it magers to a debt’s “character” whether
amounts due for individual purchases from a single mer-
chant are stated separately or as a total.
The absence of authoritative or even persuasive guidance
leaves us on our own. To our ears, “character” sounds like a
reference to the kind of obligation. (That is essentially how
Fields heard it, too.) A secured auto loan would be of one
character, an unsecured credit-card debt another, a judgment
debt a third, and a subordinated debenture (an instrument
junior by contract) a fourth. Keeping these kinds of obliga-
tion distinct reduces the potential for confusion about their
nature and relative priority. But the number of transactions
between a debtor and a single merchant does not affect the
genesis, nature, or priority of the debt and so does not con-
cern its character. The statute names “character, amount, or
legal status” as distinct agributes, and it would undercut this
disjunction to treat arithmetic as concerning the debt’s
“character” rather than its “amount.”
The district court’s opinion, and the parties’ briefs, de-
vote considerable agention to whether the Bureau made a
proper report of “tradelines.” This is a word that Equifax us-
es in the conduct of its own business. It does not appear in
the statute or any relevant regulation. (The word “tradeline”
or the phrase “trade line” appears four times in the Code of
Federal Regulations. None of the regulations defines it, and
none concerns debt collectors’ reports to credit bureaus.)
No. 17-3408 5
Whether Equifax has a grievance against Medical Business
Bureau—and whether Equifax offers debtors some remedy if
creditors or debt collectors err in implementing Equifax’s
policies—are neither here nor there for our purposes.
Equifax might have a duty to correct its report if an error
with respect to the number of tradelines affects a consumer’s
credit rating. See 15 U.S.C. §1681i(a). But this suit rests on
§1692e(2)(A), not on Equifax’s vocabulary.
Medical Business Bureau did not misstate the “character”
of Rhone’s debt to the Illinois Bone and Joint Institute, so the
judgment of the district court is
REVERSED.