Circuit Decision Reinterprets "Judicial District" Under FDCPA

The full Seventh Circuit Court of Appeals last week struck down rulings from lower courts, a previous three-judge circuit panel, and even a decision it reached itself in 1996 to reinterpret venue provisions of the Fair Debt Collection Practices Act (FDCPA) as they relate to townships vs. counties in Indiana.

In an en banc ruling involving ten 7^th Circuit judges, the majority interpreted “judicial district or similar legal entity” under Section 1692i of the FDCPA as the smallest geographic area that is relevant for determining venue in the court system where the case is filed. The case involved a debt collection suit filed against the consumer in small claims court in a county in which he didn’t live and a different township from where the hospital – the original creditor – is located.

The case was Mark Suesz v. Med-1 Solutions LLC.

In March 2012, collection agency Med-1 sued Suesz in Pike Township small claims court, which is located in Marion County, Ind. and won a $1,280 judgment against him. Suesz lived in an adjacent county, and while he owed the debt to a hospital located in Marion County, the hospital was not in the same township as where the suit was filed: Pike Township (the hospital is in Lawrence Township).

Suesz responded by filing a putative class action in federal court claiming Med-1 had a practice of suing in Pike Township alleging forum-shopping, a violation of the FDCPA’s venue provision.

A district court dismissed the suit and that dismissal was upheld by a three-judge panel in the 7^th Circuit. One of the panelists dissented in that decision.

On en banc appeal to the full Circuit, a majority decided that the dissenting panelist was correct: township is actually the “judicial district” in question, not the county.

The decision is the opposite of what the 7th Circuit decided in in 1996 in Newsom v. Friedman, in which a panel adopted a test based on details of court administration rather than on the applicable venue rules. The Circuit Court last week in Suesz not only reversed the court’s previous ruling which held that small claims cases could be brought in any Marion County Township Court, but it also overruled its own precedent in Newsom.

The opinion was not without dissent. Two of the judges wrote dissents, and one wrote a concurring opinion that expressed support for some of the ideas in the dissents. One dissent noted, “I decline to join this decision because I believe the court’s rule seizes upon a general congressional purpose behind the FDCPA – protecting debtors from abusive collection practices – to craft a rule more exacting than Congress intended.”