money background of american hundred dollar banknotesRecently the Seventh Circuit Court of Appeals changed the longstanding rule regarding choosing venue when filing a collection case. As of July 2, 2014, all collection cases must be filed in the “smallest geographic area that is relevant for determining venue in the court system in which the case is filed.” For those who live in Illinois, that can be taken to mean the Municipal District court where the debtor lives or the contract was signed. To file a collection case elsewhere has been determined to be a violation of the Fair Debt Collection Practices Act (“FDCPA”) by the Seventh Circuit. The pivotal decision was handed down in Suesz v. Med-1 Solutions, LLC, 757 F.3d 636 (7th Cir. 2014) and is applicable to any county that has multiple courthouses that hear small claims cases.

According to the FDCPA, debt collectors are required to sue consumers in the “judicial district or similar legal entity” where the consumer lives or where the consumer signed the contract being sued on. 15 U.S.C. §1692i(a)(2). The Suesz court observed that while the FDCPA does not define the term “judicial district”, the term can be interpreted to mean “the relevant judicial district or similar legal entity is the smallest geographic unit relevant for venue purposes in the court system in which the case was filed, regardless of the source of the venue rules.” Suesz, 757 F.3d at 648. The Seventh Circuit court through Suesz overruled its’ own prior ruling in Newsom v. Friedman, 76 F.3d 813 (7th Cir. 1996) at which time it held that the six municipal districts in the Circuit Court of Cook County were not considered to be judicial districts under the FDCPA.

The decision is Suesz is extremely important as it is applied retroactively, unlike most decisions which are applied prospectively, and therefore applies to any debt collection case currently pending. The fact that a lawsuit has been filed in the wrong venue triggers liability under the FDCPA. While a motion to transfer venue seems like a clean answer, the FDCPA is a strict liability statute and the courts have yet to decide if transferring venue will “cure” any violations.

It is unlikely that we have heard the last about the Suesz decision as the case has been remanded to the Southern District Court of Indiana for further proceedings. Additionally, a petition for a writ of certiorari has been filed with the U.S. Supreme Court. However until we hear otherwise, all collection cases must be filed in Municipal District court where the debtor lives or the contract was signed.

Should you have any questions about debt collection or any other laws that may affect your business, or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.

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