Heather Gudex v. Franklin Collection Service, Inc.

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
December 3, 2024
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2022AP1728 Cir. Ct. No. 2021CV1965

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT I

HEATHER GUDEX,

PLAINTIFF-RESPONDENT,

V.

FRANKLIN COLLECTION SERVICE, INC.,

DEFENDANT-APPELLANT.

APPEAL from an order of the circuit court for Milwaukee County:
FREDERICK C. ROSA, Judge. Affirmed.

Before White, C.J., Donald, P.J., and Geenen, J.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2022AP1728

¶1 PER CURIAM. Franklin Collection Service, Inc. (FCS), appeals
from an order granting class certification in an action brought by Heather Gudex.
On appeal, FCS contends that the circuit court erroneously granted Gudex’s
motion for class certification, and that Gudex lacked standing. For the reasons
discussed below, we reject FCS’s arguments and affirm.

BACKGROUND

¶2 The underlying facts of this case are largely undisputed. In February
2021, FCS mailed Gudex a letter attempting to collect a debt owed to a third-party.
The letter referred to the debt by its “FCSI CASE #” and client account number.
The letter offered to settle the account and stated in part that “if you are not paying
this account, contact your attorney regarding our potential remedies, and your
defenses, or call (877) 264-2172.” The letter noted at the end that, “[w]hen this
letter was mailed no attorney has personally reviewed your account.”

¶3 Gudex filed a complaint against FCS in the Milwaukee County
Circuit Court. Gudex asserted that FCS violated the Wisconsin Consumer Act
(WCA), see WIS. STAT. chs. 421-427 (2021-22),1 and the Fair Debt Collection
Practices Act (FDCPA), see 15 U.S.C. § 1692 et seq. (2018). According to
Gudex, FCS’s letter confused her, and as a result, she “feared that she might be
sued and brought [the letter] to her attorneys.”

¶4 FCS moved to dismiss for failure to state a claim. FCS argued that
the letter was not false, misleading, overshadowing, or confusing. Additionally,

1
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.

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FCS asserted that Gudex’s claims failed because she lacked standing to bring the
claims. After briefing and oral argument, the circuit court denied FCS’s motion.
The circuit court found that Gudex stated a claim against FCS and had standing to
pursue relief under Wisconsin law.

¶5 In January 2022, Gudex sent FCS a notice and demand under WIS.
STAT. § 426.110(4) indicating that she intended to seek monetary damages on
behalf of a class of similarly situated individuals. FCS responded to Gudex’s
notice and demand with an offer of relief, which consisted of “[l]egally
compensable actual damages (exclusive of any claimed attorney’s fees),” the
statutory maximum penalty of $1,000, and a stipulated injunction that FCS “is
henceforth restrained from sending collection letters, to anyone, containing the
language … that allegedly violates the [WCA] and/or the [FDCPA] under the
circumstances alleged.” Gudex rejected FCS’s offer.

¶6 In May 2022, Gudex filed a motion for class certification. FCS
opposed the motion. Relevant to this appeal, FCS contended that Gudex’s
individual and class claims were barred under WIS. STAT. § 426.110(4)(c) because
FCS made her a complete offer of relief, which she rejected.

¶7 After hearing argument, the circuit court issued a written decision
granting Gudex’s motion. In particular, the circuit court found that FCS “did not
offer Gudex an appropriate remedy sufficient to bar Gudex’s individual and class
claims … because the remedy does not appropriately address the whole class.”
The circuit court explained that:

If FCS’s interpretation is true, then any class action for
damages would be unduly difficult to maintain. All a
defendant would need to do is pay off the lead plaintiff to
prevent class certification. This scenario is contrary to the

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purpose of allowing class action suits for violations of the
WCA.

The court further stated:

Wisconsin courts have noted that it is “in the public interest
as declared by the legislature to permit class actions when
the prerequisites are satisfied” in part because it simplifies
lawsuits and avoids “a multiplicity of litigation.” A
situation where defendants only need to pay lead plaintiffs
to prevent class certification is contrary to that purpose
because it incentives multiple plaintiffs coming forward
that would have been a part of the proposed class to file a
class action suit in hopes of either getting paid off
individually, or actually moving forward as a class action.

(Citation omitted.) FCS now appeals.

DISCUSSION

I. Class Certification

¶8 On appeal, FCS renews its argument that Gudex’s claims are barred.
FCS contends that its settlement offer was an “appropriate remedy” within the
meaning of WIS. STAT. § 426.110(4)(c) thereby mooting Gudex’s individual
claims and precluding Gudex from maintaining a class action for damages.
According to FCS, the circuit court erroneously interpreted “appropriate remedy”
to require “class-wide relief” when FCS’s offer of “complete individual relief”
was sufficient. We are not persuaded.

¶9 In Wisconsin, state court class actions under the WCA and FDCPA
are addressed in WIS. STAT. § 426.110. Paragraph (4)(c) provides that “no action
for damages may be maintained under this section if an appropriate remedy, which
shall include actual damages and may include penalties, is given, or agreed to be
given within a reasonable time, to such party within [thirty] days after receipt of
such notice.”

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¶10 When interpreting a statute, we start with the language of the statute.
State ex rel. Kalal v. Circuit Ct. for Dane Cnty., 2004 WI 58, ¶45, 271 Wis. 2d
633, 681 N.W.2d 110. If the meaning of the words of a statute is plain, we stop
our inquiry and apply the words chosen by the legislature. Id. Statutory language
is interpreted “to avoid absurd or unreasonable results.” Id., ¶46. When a statute
is ambiguous (i.e., when it “is capable of being understood by reasonably well-
informed persons in two or more senses”), we turn to the “scope, history, context,
and purpose of the statute” to resolve the ambiguity. Id., ¶¶47-48 (citation
omitted). Questions of statutory language are reviewed de novo. Myers v. DNR,
2019 WI 5, ¶18, 385 Wis. 2d 176, 922 N.W.2d 47.

¶11 WISCONSIN STAT. § 426.110(4)(c) states that an “appropriate
remedy … shall include actual damages and may include penalties[.]” The statute
is silent as to whether an “appropriate remedy” requires individual relief or relief
for the whole class. The statute’s silence on the issue renders the statute
ambiguous. Consequently we look beyond the language of the statute to ascertain
the legislative intent. Kalal, 271 Wis. 2d 633, ¶¶47-48; see also, Ocasio v.
Froedtert Mem’l Lutheran Hosp., 2002 WI 89, ¶13, 254 Wis. 2d 367, 646
N.W.2d 381 (examining the purpose of a statute and previous interpretations of
related statutory provisions when the statute was silent on an issue).

¶12 As FCS acknowledges, “Chapters 421 to 427 shall be liberally
construed and applied to promote their underlying purposes and policies,” which
includes the “protect[ion] [of] customers against unfair, deceptive, false,
misleading and unconscionable practices by merchants” as well as “encourag[ing]
the development of fair and economically sound consumer practices in consumer
transactions.” WIS. STAT. §§ 421.102(1), 421.102(2)(b) & (c). To that end, any

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person affected by a violation of the WCA or FDCPA is empowered to bring a
class action in Wisconsin. See WIS. STAT. § 426.110(1).2

¶13 Further, as we have previously observed, “the case law is clear that
public policy favors class actions especially where the amount in controversy is so
small that the wronged party is unlikely ever to obtain judicial review of the
alleged violation without a class action.” Harwood v. Wheaton Franciscan
Servs., Inc., 2019 WI App 53, ¶58, 388 Wis. 2d 546, 933 N.W.2d 654. Class
actions “simplif[y]” lawsuits and avoid “a multiplicity of litigation.” See id., ¶54
(citation omitted).

¶14 Thus, interpreting WIS. STAT. § 426.110(4)(c) to only require an
offer of individual relief, and not class-wide relief, would be contrary to the
purpose of allowing class action lawsuits in Wisconsin. As the circuit court found,
requiring an offer of only individual relief to bar a plaintiff’s claims would make a
class action “unduly difficult to maintain” as “[a]ll a defendant would need to do is
pay off the lead plaintiff to prevent class certification.” Thus, we conclude that the
circuit court properly found that FCS’s offer in this case did not moot Gudex’s

2
We note that FCS discusses California’s Consumer Legal Remedies Act and argues
that if the Wisconsin legislature had intended to require class-wide relief, it would have followed
the California code. Instead, according to FCS, the Wisconsin legislature intentionally departed
from California’s code. FCS, however, does not cite any sources for its assertion that the
Wisconsin legislature intentionally departed from California’s code. Accordingly, we do not find
this line of reasoning persuasive.

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individual claims and preclude Gudex from maintaining a class action for
damages.3

II. Standing

¶15 FCS also contends that Gudex lacked standing. In response, Gudex
asserts that FCS failed to preserve its standing argument, and that Gudex does in
fact have standing. Even if we assume that the standing issue is properly before
us, we conclude that FCS’s argument fails on the merits.

¶16 WISCONSIN STAT. § 427.105(1) provides relief for “a person injured
by violation of this chapter.” FCS argues that Gudex was not “a person injured”
because she did not have “actual damages.” However, in Associates Financial
Services Co. v. Hornik, 114 Wis. 2d 163, 167 n.2, 336 N.W.2d 395 (Ct. App.
1983), this court held that consumers can seek relief under the WCA, even if they
did not suffer any actual damages.

¶17 In its reply brief, FCS argues that Hornik is not dispositive because
Hornik “did not consider the significance of the prerequisite condition that a
person be ‘injured by’ the alleged violation.” To the extent that FCS is suggesting
that Hornik is wrongly decided, we do not consider this argument as we are bound
by a published court of appeal’s decision. Cook v. Cook, 208 Wis. 2d 166, 189-
90, 560 N.W.2d 246 (1997) (holding that only our supreme court has the power to

3
Gudex additionally argues that FCS’s offer was insufficient because: (1) it did not
include reasonable costs and attorney’s fees and any punitive damages; and (2) WIS. STAT.
§ 426.110(4)(c) is inapplicable to her claims for injunctive relief under the WCA and her claims
for monetary relief under the FDCPA. Given that we conclude that FCS’s offer failed because it
only offered individual relief, we do not address Gudex’s other arguments. See State v. Blalock,
150 Wis. 2d 688, 703, 442 N.W.2d 514 (Ct. App. 1989) (stating that “cases should be decided on
the narrowest possible ground”).

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overrule, modify, or withdraw language from a previously published decision of
the court of appeals).4 Thus, we are not persuaded that Gudex lacked standing.

¶18 In sum, we reject FCS’s arguments and affirm.

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.

4
FCS also cites several federal cases to assert that Gudex’s alleged confusion and fear of
being sued are insufficient to establish standing. Gudex asserts, and FCS does not refute, that
these cases applied the federal law of standing under the United States Constitution, which is a
jurisdictional issue inapplicable to Wisconsin courts. See ASARCO Inc. v. Kadish, 490 U.S. 605,
617 (1989) (stating that “state courts are not bound by the limitations of a case or controversy or
other federal rules of justiciability even when they address issues of federal law, as when they are
called upon to interpret the Constitution or, in this case, a federal statute”).

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