In the
United States Court of Appeals
For the Seventh Circuit

No. 99-2119

Margaret Walker,

Plaintiff-Appellant,

v.

National Recovery, Inc.,

Defendant-Appellee.



Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 98 C 4530--Morton Denlow, Magistrate Judge.


Argued November 1, 1999--Decided December 21, 1999


  Before Easterbrook, Ripple, and Diane P. Wood, Circuit
Judges.

  Easterbrook, Circuit Judge. Notices sent to
debtors must not confuse them about the
verification rights established by the Fair Debt
Collection Practices Act, 15 U.S.C. sec.sec.
1692-1692o. See Bartlett v. Heibl, 128 F.3d 497
(7th Cir. 1997). How a particular notice affects
its audience is a question of fact, which may be
explored by testimony and devices such as
consumer surveys. We held accordingly in Johnson
v. Revenue Management Corp., 169 F.3d 1057 (7th
Cir. 1999), that a complaint alleging that a
particular notice confuses recipients may not be
dismissed under Fed. R. Civ. P. 12(b)(6)--not
only because "this notice is confusing" states a
claim on which relief may be granted, but also
because district judges are not good proxies for
the "unsophisticated consumers" whose interests
the statute protects. "Unsophisticated readers
may require more explanation than do federal
judges; what seems pellucid to a judge, a legally
sophisticated reader, may be opaque to someone
whose formal education ended after sixth grade.
To learn how an unsophisticated reader reacts to
a letter, the judge may need to receive
evidence." Johnson, 169 F.3d at 1060.

  Congress requires debt collectors to inform
debtors at the outset that the debtor has 30 days
to dispute the validity of the debt, and that in
response to a written request "the debt collector
will obtain verification of the debt [from the
creditor] . . . and a copy of [the] verification
. . . will be mailed to the consumer." 15 U.S.C.
sec.1692g(a)(1)-(4). Debt collectors must desist
from making additional demands until verification
has been obtained and furnished. 15 U.S.C.
sec.1692g(a)(5). Bartlett holds, and Johnson
reiterates, that demands for immediate payment,
or threats of immediate suit, may confuse
recipients about their rights under the Act. A
demand for immediate payment is not necessarily
at odds with the statutory rights; consumers who
acknowledge the validity of the debt must pay
immediately, and if they do not pay they may
legitimately be sued. But to an unsophisticated
person--the Act’s benchmark, see Gammon v. GC
Services Limited Partnership, 27 F.3d 1254, 1257
(7th Cir. 1994)--the combination of a demand for
prompt action with a notice that the recipient
has 30 days to seek verification may produce
befuddlement. Bartlett gave debt collectors a
plain-language reconciliation that if used
produces a safe harbor from suits alleging
confusion. When the Bartlett language is not
employed, however, a debt collector whose dunning
letter suggests urgency must meet on the merits
a contention that the letter would confuse an
unsophisticated reader. See also Chauncey v. JDR
Recovery Corp., 118 F.3d 516 (7th Cir. 1997);
Avila v. Rubin, 84 F.3d 222 (7th Cir. 1996);
Savino v. Computer Credit, Inc., 164 F.3d 81, 85-
86 (2d Cir. 1998); Jeter v. Credit Bureau, Inc.,
760 F.3d 1168, 1177-78 (11th Cir. 1985).

  Johnson dealt with two letters. Each contained
a paraphrase of the statutory notice. The first
letter added:

   If you fail to make prompt payment we will
   have no alternative but to proceed with
   collection, which may include referring
   this account for legal action or reporting
   this delinquency to the credit bureau.
   Should you wish to discuss this matter,
   contact our office and ask for extension
   772.

The other related:
   The above account has been placed with our
   firm for payment in full.
   Call our office immediately upon receipt
   of this letter. Our toll free number is 1-
   800-521-3236.

Neither letter attempted to explain how a demand
for "prompt" or "immediate" action could be
reconciled with the statutory 30-day period. We
held that each was potentially confusing and
therefore that the complaints could not be
dismissed under Rule 12(b)(6).
  Plaintiff Margaret Walker received this letter
(boldface in original):

   Balance Due:$ 4130.82

   Your past-due account with Commercial
   Credit has been placed with our company
   for immediate collection. Failure to
   respond may result in further collection
   activity and possible legal action.

   Unless you notify this office in writing
   within thirty (30) days after receiving
   this notice that you dispute the validity
   of this debt or any portion thereof, this
   office will assume that this debt is
   valid. If you notify this office in
   writing within THIRTY (30) days from
   receiving this notice, this office will;
   [sic] obtain verification of the debt or
   obtain a copy of a judgment and mail you a
   copy of such judgment or verification. If
   you request in writing within THIRTY (30)
   days after receiving this notice, this
   office will provide you with the name and
   address of the original creditor, if
   different from the current creditor.

   Please remit PAYMENT IN FULL with this
   letter to the address above or you may pay
   in person at our office. Make payment
   payable to NATIONAL RECOVERY, INC.

   If you have any questions concerning your
   account please contact me at my office.

National Recovery did not demand "prompt payment"
or an "immediate call" but did say that the
account had been placed for "immediate
collection"--and it did not endeavor to explain
how collection could be "immediate" unless
payment were made immediately. Just as in
Bartlett and Johnson, the reader was left to
speculate about the relation between "immediate
collection" and the statutory 30 days to seek
verification.

  Issuing his opinion the day after we released
Johnson, and without awareness of that decision,
a magistrate judge, presiding by agreement under
28 U.S.C. sec.636(c), dismissed the complaint
under Rule 12(b)(6) for failure to state a claim
on which relief may be granted. 42 F. Supp. 2d
773 (N.D. Ill. 1999). The court concluded that
the letter would not confuse its recipient:
"Regarding the use of the word ’immediate’ in the
letter, instead of demanding an immediate
response, the letter only stated that the debt
had been submitted to the agency for immediate
collection. This is just a way of informing the
debtor that the agency would go about its debt
collection activities. . . . Thus, no response is
asked for that contradicts Plaintiff’s rights
under the FDCPA. The only time period the debtor
need worry about is the thirty-day time period
set forth three times in the second paragraph."
Id. at 778. In response to a motion for
reconsideration, the magistrate judge concluded
that his decision did not conflict with Johnson
because the reference to "immediate collection"
does not contradict any of the statutory
entitlements. The magistrate judge wrote "that
there was no possibility of confusion as a matter
of law. In such a situation, since there is no
possibility of confusion, there is no question of
fact for the jury to decide and dismissal is
proper because the plaintiff can prove no set of
facts consistent with her allegations that would
entitle her to relief." Id. at 783.

  By concluding "that there was no possibility of
confusion as a matter of law"--and then declining
to allow Walker to demonstrate that there is
confusion as a matter of fact--the magistrate
judge disregarded the letter’s actual effect on
unsophisticated consumers. Whether a given
message is confusing is, we held in Gammon,
Bartlett, and Johnson, a question of fact, not of
law or logic. Similarly in the law of trademarks,
whether a mark, slogan, or trade dress is likely
to confuse consumers about the source of the
goods is a question of fact, not law. August
Storck K.G. v. Nabisco, Inc., 59 F.3d 616 (7th
Cir. 1995); Sunmark, Inc. v. Ocean Spray
Cranberries, Inc., 64 F.3d 1055 (7th Cir. 1995);
Scandia Down Co. v. Euroquilt, Inc., 772 F.2d
1423 (7th Cir. 1985). See also, e.g., Johnson &
Johnson v. SmithKline Beecham Corp., 960 F.2d
294, 297-98 (2d Cir. 1992); Barber v. Kimbrell’s
Inc., 577 F.2d 216, 221 (4th Cir. 1978). See also
Inwood Laboratories, Inc. v. Ives Laboratories,
Inc., 456 U.S. 844 (1982) ("mislabeling" under
the trademark law is a question of fact). When
the evidence is one-sided, then it is possible to
end the case by summary judgment under Fed. R.
Civ. P. 56. When the plaintiff decides to stand
on her complaint and forego factual development,
then the case may come to an end by judgment on
the pleadings under Fed. R. Civ. P. 12(c). But a
complaint that presents a claim turning on
factual issues and inferences, as this one does,
may not be terminated under Rule 12(b)(6).

  Walker wants to show that, however lawyers read
this letter, unsophisticated readers would be
confused by it. It is possible to imagine facts
that would support this conclusion. Perhaps a
survey would show that four out of five high
school dropouts would take the reference to
"immediate collection" to demand "immediate
payment" notwithstanding the statutory time to
request verification. Perhaps not. But a
complaint may not be dismissed under Rule
12(b)(6) unless no relief may be granted "under
any set of facts that could be proved consistent
with the allegations". Hishon v. King & Spalding,
467 U.S. 69, 73 (1984); see also, e.g., Conley v.
Gibson, 355 U.S. 41, 45-46 (1957). A judge may
not toss out a complaint just because the judge
believes that proof is unlikely to be
forthcoming. Walker may well fail in her attempt
to demonstrate that this letter confuses
unsophisticated recipients. See Richard Craswell,
Interpreting Deceptive Advertising, 65 B.U. L.
Rev. 657 (1985); Craswell, Regulating Deceptive
Advertising: The Role of Cost-Benefit Analysis,
64 S. Cal. L. Rev. 550 (1991). Still, because it
is possible to imagine evidence consistent with
the allegations of the complaint that would
establish confusion, the complaint survives a
motion to dismiss under Rule 12(b)(6). See also,
e.g., Bennett v. Schmidt, 153 F.3d 516, 518 (7th
Cir. 1998); Cook v. Winfrey, 141 F.3d 322 (7th
Cir. 1998); American Nurses’ Association v.
Illinois, 783 F.2d 716, 727 (7th Cir. 1986).
"Rule 12(b)(6) does not countenance . . .
dismissals based on a judge’s disbelief of a
complaint’s factual allegations. District court
judges looking to dismiss claims on such grounds
must look elsewhere for legal support." Neitzke
v. Williams, 490 U.S. 319, 327 (1989).

  The conclusion that Walker’s complaint states a
claim on which relief may be granted and
therefore may not be dismissed under Rule
12(b)(6) follows directly from the proposition
that "confusion" is a matter of fact rather than
law. It may be an "ultimate" issue in the case,
and "mixed" with a legal dispute about how
confusing is too confusing, but this does not
make the subject less a matter of fact. Icicle
Seafoods, Inc. v. Worthington, 475 U.S. 709
(1986); Pullman-Standard v. Swint, 456 U.S. 273
(1982); Mucha v. King, 792 F.2d 602, 604-06 (7th
Cir. 1986). See also, e.g., Scott v. Chicago, No.
99-1317 (7th Cir. Nov. 1, 1999), slip op. 2-3;
Smith v. Cash Store Management, Inc., No. 99-2472
(7th Cir. Oct. 27, 1999), slip op. 4-5; Veazey v.
Communications & Cable of Chicago, Inc., No. 98-
2625 (7th Cir. Oct. 20, 1999), slip op. 3-5.

  To say that a complaint may not be dismissed
under Rule 12(b)(6) is not necessarily to say
that the litigation need be prolonged. When the
plaintiff attaches the debt-collection letter as
an appendix, the district court may treat a
motion to dismiss the complaint as one for
summary judgment and require the plaintiff to
come forward with proof. Moreover, we stressed in
Johnson and cases such as Kirksey v. R.J.
Reynolds Tobacco Co., 168 F.3d 1039 (7th Cir.
1999), that if a plaintiff who files a formally
sufficient complaint does nothing to back it up
after the defendant moves for dismissal, the
district court may enter judgment on the
pleadings under Rule 12(c). In Johnson we
concluded that, "[i]f all the plaintiffs have to
go on is the language of these letters, they must
lose in the end." 169 F.3d at 1060. That is
equally true of the letters in this case. But
Walker told us, as she informed the district
court, that she wants to adduce evidence of the
letter’s effect on readers, and that she does not
propose to rest on the text of the letter alone.
Walker is entitled to an opportunity to prove her
contention that National Recovery’s letter
confuses unsophisticated recipients.

  Because this opinion addresses an issue of
general importance about the proper application
of Rule 12(b)(6), we have circulated it to the
full court under Circuit Rule 40(e). A majority
did not favor a hearing en banc. Circuit Judges
Manion, Kanne, and Evans voted to hear the case
en banc; Circuit Judge Williams did not
participate in the consideration or decision of
this case.

Reversed and Remanded
