FYI: 7th Cir Holds Hiring Attorney, Paying Appearance Fee, Emotional Distress Not Enough for Article III Standing

The U.S. Court of Appeals for the Seventh Circuit recently affirmed the dismissal of a debtor's federal Fair Debt Collection Action (FDCPA) lawsuit for lack of Article III standing.

 

In so ruling, the Seventh Circuit held that the debtor's hiring an attorney and paying an appearance fee, as well as alleged confusion, lost sleep, and emotional distress, were not sufficient to meet the requirements of standing.

 

A copy of the opinion is available at:  Link to Opinion

 

An individual debtor defaulted on a debt owed to a bank. The debt was assigned to a collections company. The collections company hired a law firm to initiate debt collection proceedings.

The law firm filed a lawsuit against the borrower in state court and sought a judgment in the amount of the debt as well as "statutory attorney fees." However, the lawsuit included an affidavit from a representative of the collections company that that stated the assignee collections company was not seeking additional amounts after the charge-off date, including attorney's fees.

 

Due to the contradicting statements of the company and the law firm, the debtor sued the debt collectors under the FDCPA in federal court, alleging he was injured by the false, misleading, and deceptive communications from the law firm and the collections company. Specifically, the debtor's complaint alleged that defendant law firm filed a collection suit against him that included a prayer for attorney fees that was baseless under state law and therefore illegal under the FDCPA. See 15 U.S.C. § 1692e (2), (5) & (10).

 

The defendants both moved to dismiss the claim for lack of subject matter jurisdiction. The trial court granted defendants' motion to dismiss concluding that debtor did not establish Article III standing because the debtor's alleged confusion, lost sleep, and hiring a lawyer were not considered concrete harms sufficient to meet the requirements of standing. This appeal followed.

 

As you may recall, to establish standing under Article III of the Constitution, a plaintiff must demonstrate (1) that he or she suffered an injury in fact that is concrete, particularized, and actual or imminent, (2) that the injury was caused by the defendant, and (3) that the injury would likely be redressed by the requested judicial relief." Thole v. U.S. Bank N.A., 140 S. Ct. 1615, 1618 (2020).

 

Debtor argued that he suffered an injury when he hired an attorney to defend him in the collection action and he lost sleep due to concern about having to pay statutory attorney's fees.

First, the Seventh Circuit noted that its precedent clearly held that hiring an attorney and paying an appearance fee is not sufficient to establish standing. See Pierre v. Midland Credit Mgmt., Inc., 29 F.4th 934, 939 (7th Cir. 2022); Nettles v. Midland Funding LLC, 983 F.3d 896, 900 (7th Cir. 2020); Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067, 1069 (7th Cir. 2020).

 

Debtor further argued that he was injured because the statement about statutory attorney's fees led him to take a detrimental step by choosing to litigate the debt and paying an appearance fee, as opposed to paying or settling the debt. However, this allegation was contradicted in the debtor's own pleadings and information obtained during the discovery process.

 

Ultimately, the Seventh Circuit held that debtor's complaint consisted of confusion about what to do in the situation and the Seventh Circuit precedent has held that confusion leading one to hire a lawyer is insufficient to establish standing. See, e.g., Pierre, 29 F.4th at 939; Brunett, 982 F.3d at 1069.

 

Lastly, the debtor argued that his alleged lost sleep should constitute an injury. However, the Seventh Circuit again cited a case directly on point that previously held that a debtor's loss of sleep is insufficient to show a concrete harm. Wadsworth v. Kross, Lieberman & Stone, Inc., 12 F.4th 665 (7th Cir. 2021).

 

Accordingly, the Court of Appeals upheld the trial court's judgment dismissing debtor's claims.

 

Notably, Judge David Hamilton wrote a dissenting opinion that argued this case should be distinguished from prior Seventh Circuit precedent including Pierre v. Midland Credit Mgmt., Inc. case. Specifically, Judge Hamilton opined that hiring a lawyer to defend yourself in state court in an action where the debt collector allegedly violated the FDCPA should be distinguishable from consulting a lawyer to clear up your own confusion or to file your own lawsuit.

 

The dissenting Judge Hamilton believed that the expense of hiring a lawyer to defend a baseless or illegal lawsuit is a concrete injury and this should support a finding of standing consistent with the recently decided Supreme Court cases in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021); Spokeo, Inc. v. Robins, 578 U.S. 330 (2016). In conclusion, Judge Hamilton believed that the Court should have vacated and remanded to allow debtor to clarify his theory on injury and standing. He also noted that future plaintiffs should show how the cost of defense counsel is a concrete injury under the standard outlined in TransUnion and Spokeo. However, the majority did not have the same view.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 6^th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: 9th Cir Holds TCPA "Prerecorded Voice" Did Not Apply to Text Messages

The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court's dismissal of a putative class action brought under the federal Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227.

 

In so ruling, the Ninth Circuit held that the text messages at issue did not use "prerecorded voices" under the TCPA because they did not include audible components.

 

A copy of the opinion is available at:  Link to Opinion

 

A consumer, as named plaintiff, sought to represent a class of consumers who received any unsolicited text message using an automatic telephone dialing system (ATDS) or an artificial or prerecorded voice from the defendant marketing company, which text message was not made for emergency purposes or with the recipient's prior express consent.

 

In the consumer's first cause of action, she alleged that the text messages were sent using an ATDS and, thus, violated the TCPA. In her second cause of action, she alleged that the text messages constituted "prerecorded voice messages" and, therefore, also violated the TCPA on that ground. To support this claim, the consumer argued that, because one definition of "voice" in Meriam Webster's dictionary is "an instrument or medium of expression," the automatic messages sent to the consumer (which were drafted before being sent), constituted "prerecorded voice[s]" as prohibited by 47 U.S.C. § 227(b)(1)(A).

 

As to the first cause of action, the trial court held that the consumer failed to plead the use of an ATDS. As to the second cause of action, the trial court determined that the text messages did not use voices and therefore did not violate the applicable section of the TCPA. The trial court then granted the consumer's motion to certify the above dismissals for immediate appeal to the Ninth Circuit.

 

Regarding the second cause of action, the Ninth Circuit held that Congress clearly intended "voice" in 47 U.S.C. § 227(b)(1)(A) to encompass only audible sounds, because, in the Court's view, the ordinary meaning of voice establishes that it refers to an audible sound. According to the Court, the ordinary meaning of "voice" when the TCPA was enacted in 1991 was a "[s]ound formed in or emitted from the human larynx in speaking," Voice (def. 1a), Oxford English Dictionary (2d ed. 1989); see also Voice (def. 1a), Webster's Ninth New Collegiate Dictionary (1991).

 

Furthermore, the Ninth Circuit reasoned that the statutory context of the TCPA bolsters its determination that Congress did not intend the meaning of voice to include a metaphorical component. See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000). The TCPA defines "caller identification information" as "information regarding the origination of[] a call made using a voice service or a text message sent using a text messaging service." 47 U.S.C. § 227(e)(8)(A)). The Court concluded that, if voice calls encompassed text messages, the inclusion of the term text message would be surplusage, and Congress would have written the statute in a manner contrary to a basic canon of statutory construction, that a statute should be interpreted "so as not to render one part inoperative." Mountain States Tel. & Tel. Co. v. Pueblo of Santa Ana, 472 U.S. 237, 249 (1985).

 

Moreover, the Ninth Circuit was not persuaded by the consumer's argument that the legislative history of the TCPA demonstrates that the artificial/prerecorded voice prohibitions hinge on whether the calls had a live agent on the other end who could respond to questions or frustration. The Court held that it did not need to consider this argument on the merits because it already determined that the statute is not ambiguous after exhausting "traditional tools of statutory construction." NLRB v. United Food & Com. Workers Union, Loc. 23, AFL-CIO, 484 U.S. 112, 122 (1987).

 

Accordingly, the Ninth Circuit affirmed the trial court's dismissal of the second cause of action and held that, because the ordinary meaning and statutory context of the TCPA show that the term "voice" in 47 U.S.C. § 227(b)(1)(A) excludes a symbolic definition, the marketing company's text messages to the consumer could not have violated the prohibition on "prerecorded voices."

 

Additionally, the Court stated that it would address the trial court's dismissal of the first cause of action in a separate, simultaneous memorandum.  In that unpublished ruling, the Ninth Circuit reiterated its holding in Borden v. eFinancial, LLC, 53 F.4th 1230 (9th Cir. 2022), that "a system constitutes an autodialer regulated by the TCPA only if it 'generate[s]and dial[s] random or sequential telephone numbers.' Id. at 1231". 

 

Because the named plaintiff conceded "that the subject dialing equipment did not generate telephone numbers using a random or sequential number generator," the Ninth Circuit held that the "text messages were not sent via use of an autodialer in violation of the TCPA."

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 6^th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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