In St. John v. Cach, LLC, 2016 WL 2909195, at *2-3 (C.A.7 (Ill.),2016), the Court of Appeals for the Seventh Circuit held that a debt collector who files lawsuits hoping for settlement or default judgment does not violate the FDCPA by dismissing contested actions.
The plaintiffs’ principal argument on appeal is both novel and straightforward. They begin by asserting that the act of filing a lawsuit includes an implied representation, or “threat,” that the case will go to trial. They therefore propose that a debt collector that files a collection lawsuit without intending to go to trial has ipso facto violated § 1692e(5), for it has “threatened” to take an action—proceeding to trial—that it does not intend to take. The plaintiffs further submit that the relevant time at which to gauge the debt collector’s intent is the time it files its complaint, since that is the time the apparent intention to proceed to trial is supposedly manifested. Based on these suppositions, the plaintiffs allege that the defendants violated § 1692e(5) because they did not intend to proceed to trial when they filed their collection complaints in state court. Instead, the plaintiffs assert, the defendants impermissibly filed suit hoping only for a settlement or default judgment, as evidenced by their decision to voluntarily dismiss the actions once the plaintiffs became involved in defending the litigation. To be clear, the plaintiffs do not allege that the defendants represented anywhere in their state court complaints that they intended to go to trial; rather, they allege that the defendants implicitly communicated an intention to go to trial simply by filing the complaints. Nor is there any indication that the defendants did not file the complaints in good faith, since the plaintiffs do not deny that they owed the debts sued upon or otherwise contend that the debts were not legally enforceable. We conclude that the plaintiffs have failed to state a viable claim under § 1692e(5). For one thing, although it is crucial to their theory of liability, the plaintiffs have not sufficiently alleged that the defendants did not intend to proceed to trial when they initially filed their collection complaints in state court. In support of this allegation, the plaintiffs emphasize that the defendants moved to voluntarily dismiss their lawsuits prior to trial—but that does not plausibly suggest that the defendants had no intention of ever going to trial in the first place. There are many reasons why a litigant may eventually want to dismiss its own case. That it ultimately seeks to do so does not provide an adequate basis to broadly discern its original intentions at the time of filing, much less to specifically infer that it did not intend to prove its case at trial. Accordingly, the plaintiffs’ assertion that the defendants filed suit without intending to go to trial is based on speculation; it is not a well-pleaded factual allegation supporting a plausible claim to relief. . . . But the plaintiffs’ claim also fails for a more fundamental reason: not only have they failed to show that the defendants did not intend keep their supposed threat of going to trial—they have failed to show that the defendants ever threatened to go to trial at all. As the plaintiffs acknowledge, a threat, in the broadest sense, involves a declaration of an intention to take some action. Contrary to the plaintiffs’ supposition, however, the mere filing of a civil action does not include an implicit declaration that the plaintiff intends to advance the action all the way through trial. Litigation is inherently a process. And recovery through that process may be achieved in many ways, and at different stages, of which trial is often not the most cost-effective or desirable. Indeed, the typical plaintiff at the outset of litigation likely hopes to recover through a less cumbersome avenue, such as a settlement or default judgment, and would rather avoid the expense, inconvenience, and uncertainty of trial.2 That is not “trickery,” Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470, 473 (7th Cir.2007); it is the legitimate exercise of the plaintiff’s discretion in determining how to efficiently manage litigation by obtaining an optimal outcome with limited resources. In this respect, debt collectors who sue to recover a debt are no different from any other plaintiff. They too must weigh the anticipated costs of trial against the potential benefits when considering how far to advance the litigation. Yet, under the plaintiffs’ theory, a debt collector who foresees that it would not be cost-effective to proceed to trial on a particular debt (and who therefore has no intention of doing so) would be liable just for filing a complaint. The debt collector would thus effectively be barred from recourse to the courts, even when its claim is unquestionably legitimate, and even when no other recourse is left. The FDCPA does not compel this incongruous result. Section 1692e(5) does not punish debt collectors for engaging in a customary cost-benefit analysis when conducting litigation, nor does it constrain them to mechanically steer the proceedings toward trial with no regard for expense or efficiency. Moreover, under Illinois law the debt collectors in this case were allowed to voluntarily dismiss their actions at any time before trial, for any reason. 735 ILCS 5/2–1009(a); see also Ciers v. O.L. Schmidt Barge Lines, Inc., 285 Ill.App.3d 1046, 221 Ill.Dec. 303, 675 N.E.2d 210, 213 (Ill.App.Ct.1996) (recognizing a plaintiff’s “absolute right to voluntarily dismiss the case without prejudice prior to trial”). Since there was no expectation that the debt collectors would proceed to trial when filing suit in Illinois, their act of filing cannot possibly support a reasonable inference that they were thereby manifesting an intention to proceed to trial. In sum, an unsophisticated consumer could not reasonably conclude that a debt collector implicitly threatens to proceed to trial simply by filing a lawsuit to recover a debt. We therefore hold that § 1692e(5) of the FDCPA does not prohibit debt collectors from filing a collection lawsuit without intending to go to trial. Accordingly, the plaintiffs have failed to state a plausible claim under § 1692e(5) even if the defendants did not intend to go to trial when they filed their collection complaints.