On February 3, the U.S. Court of Appeals for the 7th Circuit vacated a lower court’s dismissal of a federal consumer protection lawsuit and remanded the case for further proceedings. The plaintiff had filed FDCPA and TILA claims against a credit union and its insurer, alleging that after an Indiana state court entered a garnishment order to collect an unpaid balance exceeding $40,000, the defendants engaged in unauthorized post-judgment debt collection, false reporting, and failed to provide accurate disclosures. The district court found that the claims were “inextricably intertwined” with the state court’s garnishment determinations and thus initially dismissed the suit under the Rooker-Feldman doctrine, which “imposes a jurisdictional bar if ‘a plaintiff seeks relief from a federal court that would reverse a state court judgment’” [citations omitted].

On appeal, the court concluded that the plaintiff was not seeking review or rejection of the state court’s garnishment order but rather redress for independent misconduct occurring after the judgment. The appellate panel noted that such claims, focused on deceptive post-judgment communications and account servicing, did not require overturning the state court’s judgment and therefore were not barred by the Rooker-Feldman doctrine. The ruling distinguished prior cases in which federal claims arose from pre-judgment conduct that may have influenced state court orders, finding that alleged FDCPA and TILA violations can be pursued when they target conduct distinct from the underlying judgment.