Seventh Circuit Reverses And Remands FDCPA Claim For Lack Of Standing

• Published date: 24 September 2021
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation, Personal Injury
• Law Firm: Riker Danzig Scherer Hyland & Perretti
• Author: Mr Michael O'Donnell, Desiree McDonald and Kevin Hakansson

The United States Court of Appeals for the Seventh Circuit recently reversed and remanded a plaintiff's successful summary judgment motion for violations of the Fair Debt Collection Practices Act (the "FDCPA"). See Wadsworth v. Kross, Lieberman & Stone, Inc., 2021 WL 3877930 (7th Cir. Aug. 31, 2021). In the case, plaintiff Audrey Wadsworth had been hired by Pharmaceutical Research Associates, Inc. ("PRA"). The job offer included a signing bonus - $3,750 payable after 30 days of employment, followed by another $3,750 payable after 180 days of employment. But, if Wadsworth voluntarily ended her employment or PRA fired her for cause within 18 months of the second payment, she was obligated to repay the full bonus. In her employment agreement, Wadsworth agreed to promptly reimburse PRA for any amounts owed as of the final date of her employment. Wadsworth collected both signing payments, but in September 2017, after completing one year of employment, PRA fired her. PRA quickly hired Kross, Lieberman, & Stone ("Kross"), a debt-collection agency, to recoup the bonus payments. Kross mailed Wadsworth a collection letter shortly after her employment ended, and in the coming weeks, a Kross employee called Wadsworth by telephone four times. Wadsworth then sued Kross, claiming that its letter and phone calls violated the FDCPA because Kross failed to provide complete written notice of her statutory rights within five days of the initial communication, and because the Kross employee who called her never identified herself as a debt collector or stated that she was attempting to collect a debt. Both parties moved for summary judgment. Kross did not contest Wadsworth's allegations about its conduct but argued instead that the FDCPA is inapplicable for two reasons: the signing bonus was not a "debt" within the meaning of the FDCPA and the firm was not acting as a "debt collector" under the FDCPA because Wadsworth's debt was not in default at the time of the letter and phone call. The District Court rejected both arguments and entered summary judgment for Wadsworth. Kross timely appealed.

The Court granted Kross's appeal, reversing the District Court's decision...