In the
United States Court of Appeals
For the Seventh Circuit
No. 09-2016
D ORIS D EK OVEN, individually and on behalf
of all others similarly situated,
Plaintiff-Appellant,
v.
P LAZA A SSOCIATES,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 3462—David H. Coar, Judge.
No. 09-2249
K ENT B. K UBERT, individually and on behalf
of all others similarly situated,
Plaintiff-Appellant,
v.
A ID A SSOCIATES, doing business as P LAZA A SSOCIATES,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 5865—Charles P. Kocoras, Judge.
A RGUED JANUARY 12, 2010—D ECIDED M ARCH 17, 2010
2 Nos. 09-2016, 09-2249
Before P OSNER, F LAUM, and W ILLIAMS, Circuit Judges.
P OSNER, Circuit Judge. In these two closely related class
action suits under the Fair Debt Collection Practices Act,
15 U.S.C. §§ 1692-1692p, which we have consolidated
for decision, the plaintiffs complain about dunning letters
sent them by the well-known Plaza Associates debt-
collection agency. In both cases the district court entered
summary judgment in favor of Plaza after rejecting the
survey evidence prepared by the plaintiffs’ expert
witness, Howard L. Gordon.
Two identical letters sent to plaintiff DeKoven state
that “we have been authorized to offer you the oppor-
tunity to settle this account with a lump sum payment for
65% of the above balance due, which is equal to $2,459.22.
This offer will be valid for a period of thirty-five (35) days
from the date of this letter.” The letter to Kubert is similar
but includes a paragraph which states—after telling the
recipient that if he notifies the agency within 30 days that
he “dispute[s] the validity of this debt or any portion
thereof” the agency will “obtain verification of the debt or
obtain a copy of a judgment and mail you a copy of such
judgment or verification”—that “you may already have
satisfactory proof that this account is listed with us in
error. If so, please send this notice back along with a copy
of one of the following to support your claim: Bankruptcy
Notice from the court stating case number and filing date,
Satisfaction of Judgment, Proof of prior settlement, Letter
from the original Creditor clearing your account.” The
suits complain about the statement in the letters that
the offer of settlement is valid for only 35 days and the
Nos. 09-2016, 09-2249 3
additional statement in the Kubert letter concerning
“satisfactory proof” that the account is in error.
The plaintiffs say the first statement would be under-
stood by many consumers to mean that this would be
their last chance to settle the claim and that the terms in
it would be the best they’d be offered—that in short it
was a final offer—when in fact Plaza Associates had
been authorized by DeKoven’s and Kubert’s creditors to
settle for less; thus the offers were just the opening bid
in a negotiation. Kubert complains in addition that the
reference to “satisfactory proof” of error is misleading
because it implies that to “dispute” a claim a debtor
must furnish “proof” to support his position.
As an original matter one might wonder why a debtor
who does not deny the validity of his debt would be
heard to complain that he had failed to understand that
if he turned down the debt collector’s initial offer he
might be able to settle the creditor’s valid claim for even
less later. But in many cases, including the ones before us,
the debtor is not simply a wise guy who could afford to
pay his debts in full but would prefer not to. He is
someone who cannot pay them in full because he has
been hit by unforeseen medical bills or lost his job unex-
pectedly or is otherwise under water, without wanting
to cheat anyone. He might be unable to pay 65 percent
of a given debt but able to pay 25 or 33 percent, and if
he did pay that lesser percentage he might be able to
preserve his credit standing and avoid bankruptcy. If
through poor wording of the debt collector’s letter the
debtor gets the impression that the initial offer is the
4 Nos. 09-2016, 09-2249
final one, he may pay it in full and default on other
debts, or decide that his position is hopeless and
declare bankruptcy.
And so while a debt collector can, if authorized by the
creditor whom he is representing, make his initial offer
a final one, he cannot pretend that it is final if it is not, in
the hope that the debtor will think it final. See 15 U.S.C.
§ 1692e(10); Campuzano-Burgos v. Midland Credit Manage-
ment, Inc., 550 F.3d 294, 299 (3d Cir. 2008); Goswami v.
American Collections Enterprise, Inc., 377 F.3d 488, 495-96
(5th Cir. 2004).
The problem with implementing this rule, as we ex-
plained in Evory v. RJM Acquisitions Funding L.L.C., 505
F.3d 769, 775-76 (7th Cir. 2007), is that “the settlement
process would disintegrate if the debt collector had to
disclose the consequences of the consumer’s rejecting
his initial offer. If he says ‘We’ll give you 50 percent if
you pay us by May 14, but if you don’t, we’ll probably
offer you the same or even better deal later, and if you
refuse that, we’ll probably give up and you’ll never have
to pay a cent of the debt you owe,’ there will be no point
in making offers.” We added that this “concern can be
adequately addressed yet the unsophisticated con-
sumer still be protected against receiving a false impres-
sion of his options by the debt collector’s including
with the offer the following language: ‘We are not obli-
gated to renew this offer.’ The word ‘obligated’ is strong
and even the unsophisticated consumer will realize that
there is a renewal possibility but that it is not assured.”
Nos. 09-2016, 09-2249 5
Plaza has not included this safe-harbor language in its
dunning letters, but we had disclaimed in Evory any
suggestion “that in the absence of safe-harbor language
a debt collector is per se liable for violating [the Fair
Debt Collection Practices Act] if he makes the kind of
settlement offer that we quoted. We see a potential for
deception of the unsophisticated in those offers but we
have no way of determining whether a sufficiently
large segment of the unsophisticated are likely to be
deceived to enable us to conclude that the statute has
been violated. For that, evidence is required, the most
useful sort being the kind of consumer survey described
in Johnson v. Revenue Management Corp., 169 F.3d 1057, 1060-
61 (7th Cir. 1999).” 505 F.3d at 776; see also Hahn v.
Triumph Partnerships LLC, 557 F.3d 755, 757 (7th Cir. 2009);
Williams v. OSI Educational Services, Inc., 505 F.3d 675, 678
(7th Cir. 2007). (But see, for criticism of the use of survey
evidence, Judge Jolly’s dissenting opinion in Gonzalez
v. Kay, 577 F.3d 600, 609-11 (5th Cir. 2009).)
In the present cases the plaintiffs’ expert did conduct a
survey. But both judges considered it inadmissible
under the standards governing the admission of survey
evidence (a form of expert evidence) in federal court. See,
e.g., Muha v. Encore Receivable Management, Inc., 558 F.3d
623, 625-26 (7th Cir. 2009); Peaceable Planet, Inc. v. Ty, Inc.,
362 F.3d 986, 992 (7th Cir. 2004); United States v. Curtin, 588
F.3d 993, 997-98 (9th Cir. 2009); Vail Associates, Inc. v. Vend-
Tel-Co., Ltd., 516 F.3d 853, 864 n. 8 (10th Cir. 2008); see
generally Fed. R. Evid. 702.
The survey staff interviewed 160 shoppers at a mall in
a Chicago suburb. Half were shown the letter to Kubert;
6 Nos. 09-2016, 09-2249
the other half—the members of the control group—were
shown the letter minus the “valid for a period” and
“satisfactory proof” paragraphs. There was no need to
show either group the letters to DeKoven, since they
differed materially from the letter to Kubert only in
lacking the reference to “satisfactory proof.”
After the survey respondents read the letter (either the
survey letter or the control letter, depending on which
group a respondent had been placed in), they were first
asked questions about the letter orally, then given orally
two answers to choose between, and finally handed a
card with the answers printed on it and asked to pick
one of them. The cards also contained a third answer
option, which had not been presented orally: “DON’T
KNOW/NOT SURE.” The critical question, asked of the
respondents in both groups, was what the respondent
thought would happen if he or she didn’t accept the
offer in the letter—would it be renewed or extended, or
was this the last chance to get a discount off the
balance owed?
Of the respondents in the survey group, 59 percent
thought the offer was final, 26 percent thought that it
would be renewed or extended, and 15 percent didn’t
know or weren’t sure. The corresponding percentages
in the control group were 24 percent, 10 percent, and
66 percent. These statistics may seem strongly to
support the hypothesis that the letter to Kubert was
misleading. And likewise if we treat the “don’t know/not
sure” respondents as having correctly interpreted the
letter to leave uncertain whether the offer was final or
Nos. 09-2016, 09-2249 7
would be renewed; for there was nothing misleading
about the letter if interpreted so because, as we said, a debt
collector is not required to reveal his negotiating strategy.
Then 76 percent of the respondents in the control group
(the 10 percent who thought the offer nonfinal and the
66 percent who didn’t know whether it would be re-
newed) correctly interpreted the letter they were given to
read, compared to only 41 percent of the respondents
who read the real letter to Kubert.
But as the district judges found, the members of the
control group may well have been confused by the omis-
sion from the cropped letter of any reference to a dead-
line. How could an offer be extended if it had no deadline?
The survey should have included in the letter shown
the control group the safe-harbor language in Evory (“We
are not obligated to renew this offer”) or some variant
thereof. If the 66 percent of the respondents who
answered “don’t know/not sure” are excluded, on the
ground that they may well have been confused by the
cropped letter, then the results of the survey do not
support the plaintiffs’ claim. Of the 34 percent of the
respondents in the control group who either thought the
offer was final (24 percent) or thought it would be
renewed (10 percent), 71 percent (24 percent divided by
34 percent) thought the offer was final. In the survey
group, if the don’t know/not sure 15 percent is set aside,
a slightly lower percentage of respondents—69 percent
(59 percent, the total who thought it final, divided by
85 percent [59 percent plus 26 percent], the sum of those
who thought it final and those who thought it would be
8 Nos. 09-2016, 09-2249
renewed)—thought the offer final. The implication is
that the control letter was more confusing than the actual
survey letter—that by adding the “valid for a period”
paragraph that the plaintiffs claim confuses consumers,
Plaza Associates reduced consumer confusion!
We decline to draw this inference, however, because
the control letter was no good and may have confused
respondents besides those who answered “don’t know/not
sure.” Therefore the survey was no good, as the judges
found. It was no good for another reason: if the don’t
know/not sure respondents are eliminated, the control
group shrinks to 27 persons. Determining the minimum
sample size from which reliable extrapolations can be
made to the sampled population is tricky. Floyd J. Fowler,
Jr., Survey Research Methods 45 (4th ed. 2008). But 27 is too
small a sample, especially when one considers the mis-
match between the population to be sampled—people
who receive dunning letters from debt collectors—and
the sample, which consisted of mall patrons none of
whom, for all one knows, may ever have received such
a letter. The sample drawn by the plaintiffs’ expert is
what is called a “convenience” sample—convenient to
the sampler—as distinct from a “representative” sam-
ple—representative of the population sampled.
The survey was bad for still another reason: the
omission of the “don’t know/not sure” option in the
oral questioning. The omission was likely to make re-
spondents guess—though the control letter was so con-
fusing that most of the respondents in the control group
may have grasped that option as a drowning man grasps
Nos. 09-2016, 09-2249 9
at a straw. Cf. Sir Thomas More, A Dialogue of Comfort
against Tribulation, ch. 3 (1534).
A properly designed control group is vital in a survey
intended to reveal whether a debt collector is confusing
debtors. Cf. Free v. Peters, 12 F.3d 700, 705-06 (7th Cir.
1993); Penney v. Praxair, Inc., 116 F.3d 330, 333-34 (8th Cir.
1997); United States v. Aguilar, 883 F.2d 662, 706-08 (9th Cir.
1989). The debt collector can’t be blamed if consumers
don’t understand his dunning letter unless he should
have added or subtracted something to make it clearer.
The plaintiff thus has “to show that the additional lan-
guage of the letters unacceptably increases the level of
confusion; many unsophisticated consumers would be
confused even if the letters they received contained
nothing more than a statement of the debt and the statu-
tory notice.” Johnson v. Revenue Management Corp., supra,
169 F.3d at 1060 (emphasis in original).
The plaintiffs contend that Plaza Associates should
have deleted the “valid for” paragraph. To prove this they
conducted a survey. The survey, if it proves anything
(we don’t think it proves anything), proves the opposite
of their claim.
Kubert’s challenge to the “satisfactory proof” paragraph
also produced confusion in the control group. Of the
respondents in the survey group, 66 percent opined that
the recipient of the letter could not dispute the debt
without proof and 26 percent that the recipient could;
only 8 percent opted for don’t know/not sure. But in the
control group, 20 percent said the recipient of the letter
could not dispute the debt without proof, 24 percent
10 Nos. 09-2016, 09-2249
that he could, and 56 percent didn’t know or weren’t
sure. The confusion probably stemmed from the omis-
sion of any clue in the control letter to how one “disputes”
a debt.
If we ignore don’t know/not sure, the survey results
favor Kubert: 72 percent of the survey group (66 percent
divided by 92 [66 plus 26] percent) thought the debtor
could not dispute the debt without satisfactory proofs,
compared to only 45 percent of the control group
(20 percent divided by 44 percent). But the results are
vitiated by the absence from the letter read by the
control group of any reference to “proof.” The members
of the control group were just asked whether the debtor
could dispute the debt “without proof.” Since the letter
they read did not contain the word “proof,” it was
natural for them to assume that the thing the word
denotes was not required.
The question asked the respondents in the survey
group was also misleading. They were asked whether
they could dispute the debt if they didn’t have “satisfac-
tory proof.” To answer in the affirmative would imply
that one can dispute a debt with unsatisfactory proof.
What is unsatisfactory proof of not owing a debt? A
respondent would naturally and we think correctly
believe that if he does not have satisfactory proof of not
owing the debt, the debt collector will not accept his
denial of owing it.
Kubert argues that a consumer can dispute a debt for
“no reason at all,” and that is true, DeSantis v. Computer
Credit, Inc., 269 F.3d 159, 162 (2d Cir. 2001)—provided
Nos. 09-2016, 09-2249 11
one understands that “dispute” is a term of art in the
Fair Debt Collection Practices Act. It means that the
consumer can, without giving a reason, require that the
debt collector verify the existence of the debt before
making further efforts to collect it. 15 U.S.C. §§ 1692g(a)(4),
(b); see Bartlett v. Heibl, 128 F.3d 497, 498-99 (7th Cir. 1997).
This was not explained to the respondents. If after re-
ceiving verification of the debt, the consumer has no
grounds for contesting it, the fact that he “disputed” it
will not cancel his liability.
If Plaza Associates’ letter is misleading, it is misleading
in containing an incomplete list of satisfactory proofs.
But Kubert does not list additional proofs that he thinks
a debt collector would be required to accept. The “satis-
factory proof” challenge fails also because of the inade-
quacy of the control letter and, as before, the omission
of the “don’t know/not sure” option from the oral ques-
tioning of the respondents.
Suits under the Fair Debt Collection Practices Act have
repeatedly come to grief because of flaws in the surveys
conducted by the plaintiffs’ experts (often Mr. Gordon).
Muha v. Encore Receivable Management, Inc., supra, 558
F.3d at 625-26; Jackson v. Midland Credit Management, Inc.,
445 F. Supp. 2d 1015, 1020-21 (N.D. Ill. 2006), affirmed
under the name Evory v. RJM Acquisitions Funding L.L.C.,
supra; Jackson v. National Action Financial Services, Inc., 441
F. Supp. 2d 877, 882 (N.D. Ill. 2006); Hernandez v. Attention,
LLC, 429 F. Supp. 2d 912, 916-18 (N.D. Ill. 2005). District
judges may want to consider exercising the clearly autho-
rized but rarely exercised option of appointing their
own expert to conduct a survey in FDCPA cases. Fed. R.
12 Nos. 09-2016, 09-2249
Evid. 706(a); General Electric Co. v. Joiner, 522 U.S. 136, 149-
50 (1997) (Breyer, J., concurring); In re High Fructose Corn
Syrup Antitrust Litigation, 295 F.3d 651, 665 (7th Cir. 2002);
Indianapolis Colts, Inc. v. Metropolitan Baltimore Football
Club Ltd. Partnership, 34 F.3d 410, 414-15 (7th Cir. 1994);
Walker v. American Home Shield Long Term Disability Plan,
180 F.3d 1065, 1070-71 (9th Cir. 1999); United States v.
Microsoft Corp., 147 F.3d 935, 955 n. 22 (D.C. Cir. 1998).
Judges can assure themselves of the expert’s neutrality by
(as in arbitration) asking the parties’ own experts to
nominate a third expert to be the court-appointed expert.
In re High Fructose Corn Syrup Antitrust Litigation, supra, 295
F.3d at 665; Indianapolis Colts, Inc. v. Metropolitan Baltimore
Football Club Ltd. Partnership, supra, 34 F.3d at 414-15;
Manual for Complex Litigation § 11.51, pp. 112-13 (4th ed.
2004); Daniel L. Rubinfeld, “Econometrics in the Court-
room,” 85 Colum. L. Rev. 1048, 1095-97 (1985). A genuine
neutral should be easy to find in the field of survey re-
search because few survey researchers have settled views
about debt collection.
The decision to appoint an expert is within the discre-
tion of the trial judge, of course, and we merely invite
consideration of the possibility of using this procedural
device to improve judicial understanding of survey
methodology. Although the judge is authorized to
allocate the cost of the court-appointed expert between
the parties, Fed. R. Evid. 706(b), we do not suggest that
the defendant should be made to contribute to the cost
of a survey conducted by the neutral expert, for in cases
under the Fair Debt Collection Practices Act defendants
rarely conduct their own surveys but are content to point
out the deficiencies in plaintiffs’ surveys. A survey con-
Nos. 09-2016, 09-2249 13
ducted by a neutral is a possible alternative to the
often unedifying spectacle of a battle of party-appointed
experts.
The dismissal of the suits is
A FFIRMED.
3-17-10