                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 17-2826
                        ___________________________

        David Coyne, on behalf of himself and all others similarly situated

                        lllllllllllllllllllllPlaintiff - Appellant

                                           v.

            Midland Funding LLC; Midland Credit Management, Inc.

                             lllllllllllllllllllllDefendants

                              Messerli & Kramer P.A.

                       lllllllllllllllllllllDefendant - Appellee
                                      ____________

                    Appeal from United States District Court
                   for the District of Minnesota - Minneapolis
                                  ____________

                             Submitted: June 13, 2018
                               Filed: July 16, 2018
                                  ____________

Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.
                         ____________

ARNOLD, Circuit Judge.

      In 2016, Minnesota resident David Coyne received three collection letters
about a credit-card debt in his name. The law firm of Messerli & Kramer P.A. sent
him the first letter, asserting he owed an "account balance of $17,230.29 consist[ing]
of the principal balance of $13,205.30 and interest of $3,871.39 at the rate of 6.00%
plus incurred costs of $153.60." Another debt collector, Midland Credit Management,
Inc., sent him the other letters on behalf of the debt's current owner, Midland Funding
LLC, but those parties and letters are not before us in this appeal.

       Coyne filed a putative class action against Midland Funding and the two debt
collectors under the Fair Debt Collection Practices Act, see 15 U.S.C. § 1692k(d),
claiming they used a "false, deceptive, or misleading representation or means," see
id. § 1692e, and an "unfair or unconscionable means," see id. § 1692f, in attempting
to collect the credit-card debt when they told him, among other things, that he owed
interest on the debt's principal balance. In his amended complaint, Coyne alleges that
the principal balance included contractual interest. He also alleges that since the
underlying credit-card agreement does not authorize the charging of compound
interest (i.e., interest on the contractual interest), the defendants falsely represented
the amount of the debt and impermissibly tried to collect interest that they could not
charge under Minnesota law. See Minn. Stat. § 334.01(1) (setting forth the rule that
"[i]n the computation of interest upon any . . . instrument or agreement, interest shall
not be compounded" unless the parties have contracted for compound interest). Coyne
attached all three collection letters to his amended complaint. See Brown v. Green
Tree Servicing LLC, 820 F.3d 371, 373 (8th Cir. 2016).

       When Midland Funding and the debt collectors moved the district court to
dismiss the amended complaint for failing to state a claim, the district court granted
the motion and dismissed the action on the ground that Coyne failed to allege that any
statement in the collection letters "was not only false but materially so." The district
court explained why some of the statements Coyne had contested did not violate the
FDCPA, but it did not discuss whether he had pleaded a claim based on the charging
and attempted collection of compound interest that state law did not allow. Coyne
moved the district court for leave to file a motion to reconsider, but the district court

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denied him leave since it had determined that the representations in the letters
"regarding interest were either not material or did not violate the FDCPA." Coyne
appeals from the judgment dismissing his complaint, and we reverse.

        We review de novo a district court's dismissal of a complaint for failing to state
a claim, "accepting the factual allegations in the complaint as true and viewing them
in the light most favorable to the plaintiff." United States ex rel. Ambrosecchia v.
Paddock Labs., LLC, 855 F.3d 949, 954 (8th Cir. 2017). The only claim that Coyne
seeks to resuscitate against Messerli is that it violated 15 U.S.C. §§ 1692e and 1692f
by attempting to collect, and representing he owed, compound interest on the debt.
The amended complaint, moreover, alleges facts against Messerli only in relation to
its letter to Coyne. So as Coyne conceded at oral argument, we now have only one
issue to review: Whether Coyne stated a FDCPA claim when he alleged that since the
debt's principal balance included contractual interest and since "compounded interest
upon interest" was "not expressly authorized by the agreement creating the debt," the
interest on the principal balance that Messerli's letter tried to collect, and said that he
owed, was compound interest "in violation of Minn. Stat. § 334.01."

       The FDCPA is a consumer-protection statute authorizing private lawsuits and
weighty fines to deter wayward collection practices. Henson v. Santander Consumer
USA Inc., 137 S. Ct. 1718, 1720 (2017). The statute prohibits a debt collector from
asserting any "false, deceptive, or misleading representation," or using any "unfair or
unconscionable means," to attempt to collect a debt. See 15 U.S.C. §§ 1692e, 1692f.
In determining whether a collection letter sent directly to a debtor uses a prohibited
representation or means, we normally view it "through the eyes of the unsophisticated
consumer." Freyermuth v. Credit Bureau Servs., Inc., 248 F.3d 767, 771 (8th Cir.
2001). That standard is designed to protect consumers of below average intelligence
or sophistication. Strand v. Diversified Collection Serv., Inc., 380 F.3d 316, 317 (8th
Cir. 2004). Coyne may well be sophisticated since he is a licensed attorney, and if he
were "interposed as an intermediary" between a debt collector and a debtor in another

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case, we would apply the "competent lawyer" standard to collection letters sent to him
in his capacity as the debtor's counsel. See Powers v. Credit Mgmt. Servs., Inc., 776
F.3d 567, 574 (8th Cir. 2015). Though the parties below disputed which standard
should apply to a collection letter sent to a debtor who is a lawyer, Messerli does not
contest the district court's holding that the unsophisticated-consumer standard applies.
So we assume for purposes of the appeal that Messerli's letter must be evaluated from
the perspective of an unsophisticated consumer.

       It is undisputed that Minnesota law governs Coyne's alleged credit-card debt.
Minn. Stat. § 334.01(1) provides that "[i]n the computation of interest upon any . . .
instrument or agreement, interest shall not be compounded" unless there is a "contract
to pay [such] interest." See Lampert Lumber Co. v. Ram Constr., 413 N.W.2d 878,
883 (Minn. Ct. App. 1987). Coyne alleges he did not agree to pay compound interest
on the debt, and at this stage we must accept that allegation as true. See Paddock
Labs., 855 F.3d at 954. He further alleges that the debt's principal balance already
contained contractual interest. The district court agreed that an unpaid credit-card
debt sold to another party would include "the interest and fees [the credit-card
company] originally charged." Neither party contests that ruling on appeal, and so we
hold that Coyne has plausibly alleged that the principal balance that Messerli's letter
mentions contained contractual interest. Cf. Haney v. Portfolio Recovery Assocs.,
L.L.C., 837 F.3d 918, 921, 924 (8th Cir. 2016) (per curiam).

       It is also plausible that the interest charged on the principal balance included
interest on the contractual interest: Messerli's letter to Coyne was dated February 26,
2016, and it asserted that he owed "interest of $3,871.39 at the rate of 6.00%" on "the
principal balance of $13,205.30." This amount of interest is approximately what
would accrue on the principal balance under an annual rate of 6.00% simple interest
from the date the credit-card company sold the debt—April 14, 2011, according to the
final debt-collection letter—to the date of Messerli's letter. So if the principal balance
has contractual interest in it, the interest sought in Messerli's letter would include

                                           -4-
interest on that contractual interest. We thus hold that Coyne has plausibly alleged
that Messerli tried to collect, and told him that he owed, an amount and a type of
interest that state law prohibited in the circumstances.

       In Haney, we held under the unsophisticated-consumer standard that a debtor
stated a claim under 15 U.S.C. §§ 1692e and 1692f(1) when he alleged that a debt-
collection letter had sought to collect, and informed him he owed, "an interest-on-
interest amount not allowed as a matter of state law." Id. at 931–32. We reasoned that,
under the unsophisticated-consumer standard, demands to pay an amount of debt
"unauthorized . . . or even 'slightly overstated'" under state law is actionable as a false
statement or unfair collection attempt. See id. at 932. But in Haney we did not address
whether attempts to collect a debt amount that the debtor does not legally owe are a
material violation of §§ 1692e and 1692f. We have since established that a materiality
standard applies to § 1692e. Hill v. Accounts Receivable Servs., LLC, 888 F.3d 343,
346 (8th Cir. 2018). We have not yet stated whether the standard also applies to §
1692f, but we need not decide that issue today since "an attempt to collect a debt not
owed is a material violation of § 1692f(1)." Demarais v. Gurstel Chargo, P.A., 869
F.3d 685, 699 (8th Cir. 2017).

       We now hold that a false representation of the amount of a debt that overstates
what is owed under state law materially violates 15 U.S.C. § 1692e(2)(A) as well. It
is material not only because the representation violates the plain language of that
subsection prohibiting the "false representation" of the "amount" of "any debt," but
also because an overstatement of the debt's amount necessarily misleads the debtor
about the amount he owes under his agreement with the creditor. See Hill, 888 F.3d
at 345–46; cf. Demarais, 869 F.3d at 699. So the district court erred in holding that
the allegation under review—that Messerli's letter to Coyne attempted to collect, and
asserted he owed, compound interest in violation of Minn. Stat. § 334.01—did not
state a plausible claim under §§ 1692e and 1692f.



                                           -5-
        Messerli argues nonetheless that it did not violate the FDCPA since the amount
of interest stated in its letter to Coyne was contractually authorized. That may prove
to be true. But at the pleading stage we must accept Coyne's allegation that he did not
agree to be charged compound interest and so may not be charged it. See Minn. Stat.
§ 334.01(1). Messerli maintains we must calculate the interest Coyne may be charged
under some credit-card terms it attached to its motion to dismiss, asserting the district
court considered them "governing" and Coyne did not object to their authenticity. But
Messerli is wrong. In his opposition to the motion, Coyne specifically contested the
terms as "unauthenticated," noting they were "boilerplate" and did not "identify [him]
as a party" to them. He also noted that Messerli provided no reason to believe the
terms were in any way related to the underlying credit card "aside from [a Messerli
attorney] just unilaterally stating that those are the terms . . . that applied." Since
Coyne questioned the applicability of the terms, we may not consider them in
reviewing the sufficiency of his complaint. Ryan v. Ryan, 889 F.3d 499, 505 (8th Cir.
2018). The district court, moreover, did not consider those terms when it granted the
motion: Instead of looking to the interest provisions in the terms Messerli proffered,
the district court simply noticed that a credit card's terms "always include interest."
We express no view on the propriety of that notice. See Fed. R. Evid. 201(b). The
notice did not help Messerli in any event since the notice taken said nothing about
terms authorizing compound interest.

        Since the amended complaint and the documents it necessarily embraces do not
indicate the interest rates that apply to the debt, we have no occasion to consider
Messerli's argument that a debt collector may try to collect compound interest (which
state law does not allow) without materially violating the FDCPA so long as the total
amount of interest sought does not exceed the maximum amount permitted under the
debtor's contract. Messerli contends the district court held that requesting less interest
than the amount owed does not materially violate the FDCPA, but that is simply not
correct. Nothing in the district court's orders granting the motion to dismiss and
denying Coyne leave to file a motion to reconsider supports Messerli's representation.

                                           -6-
At oral argument, Messerli further asserted that the district court had correctly noted
that its letter to Coyne "was not a collection letter," but Messerli errs again: The
district court did not make that observation, and it was not even in a position at the
pleading stage to do so since that observation would have conflicted not only with the
allegations in the amended complaint, but also with the declaration printed on the
letter's face that it "is from a debt collector and is an attempt to collect a debt."

      We reverse the judgment of the district court only as to Coyne's claim against
Messerli that it violated 15 U.S.C. §§ 1692e and 1692f when it attempted to collect,
and represented he owed, compound interest on the debt in violation of Minnesota
law. We remand the case for further proceedings on that claim.
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