Consumer is Responsible for Default Judgment; Court Dismisses Class Action Lawsuit on Standing

There seems to be an enhanced focus on defending lawsuits for a lack of standing lately, particularly in the Seventh Circuit Court of Appeals (for example, see this, this, and this). While it may seem like these Standing challenges are becoming repetitive, we shouldn’t look away just yet; interesting decisions are still coming out such as the recent opinion in Milisavljevic vs. Midland Credit Management, No 19-cv-08449 (N.D. IL Jan. 24, 2022).

In Milisavljevic, the consumer alleged the debt collector violated the Fair Debt Collection Practices Act (FDPCA) when it sent him a blank notice of a motion for default judgment, which in his opinion, gave the impression that it had been originated and drafted by the state court. Believing the draft motion came from the court and a judgment had already been entered against him, the consumer chose to do nothing, and a default judgment was ultimately entered against him by the state court. The consumer did not retain counsel until after the judgment was entered.

The Court dismissed the consumer's lawsuit against the debt collector holding that various emotional distresses and the expenditure of "time, money, and energy” were insufficient to create standing. The court explicitly pointed out that the consumer did not allege anywhere in his complaint that he paid money he did not owe. 

More interestingly, in its analysis, the court noted that any injury suffered by the consumer resulted not from the debt collector's conduct but from the consumer’s own failure to respond to the motion for default. Per the court, “Plaintiff’s role in the causal chain leading to the default judgment cannot be ignored.”  The court rejected the consumer's claim that his inaction was due to the debt collector sending the (allegedly) confusing draft motion for default judgment. 

insideARM Perspective:

Sometimes it may seem like the “least sophisticated consumer” standard has become so loose that the phrase "personal responsibility" no longer exists when it comes to debt collection. This opinion is refreshing in that it suggests that consumers do hold some level of personal responsibility when it comes to conducting their affairs. Is this an earth-shattering, change-everything opinion? Probably not. However, a case like this is good to have on hand next time your entity receives a lawsuit that reads like it was written by a certain cartoon character who laments, “D’oh - this is everyone else's fault but mine!”