The U.S. Court of Appeals for the Seventh Circuit recently affirmed a trial court's ruling that a debtor lacked Article III standing to sue a debt collector for failing to notify her in its debt validation letter that to trigger the federal Fair Debt Collection Practices Act's ("FDCPA") protections she had to communicate a dispute in writing because the only harm she suffered was receiving the incomplete letter.
In so ruling, the Seventh Circuit created a circuit split on this issue as in Macy v. GC Services Limited Partnership, 897 F.3d 747 (6th Cir. 2018), the Sixth Circuit held under identical facts that the complaint in that case alleged a concrete injury because depriving a consumer of this information put them at a greater risk of future harm.
A copy of the opinion is available at: Link to Opinion
A debt collector sent a letter to a debtor demanding payment that largely complied with section 1692g(a) of the FDCPA, except it did not state that the debtor had to send any dispute to the debt collector in writing.
The debtor sued on behalf of herself and a putative class alleging that the letter violated the FDCPA. As you may recall, a 1692g(a) notice must state, among other items, that a debtor has two options to verify her debt.
First, the debtor must notify the debt collector "in writing" that she disputes the debt. § 1692g(a)(4). Second, the debtor may send a "written request" to the debt collector for the name and address of the original creditor. § 1692g(a)(5).
The debtor did not allege that she sent a dispute regarding the debt or that she would do so, but claimed the letter breached her rights under the FDCPA and sought to recover $1,000 in statutory damages for herself, a statutory award for the class members, attorneys' fees, and costs.
While the case was pending the Seventh Circuit decided Groshek v. Time Warner Cable, Inc., 865 F.3d 884 (7th Cir. 2017), which followed the Supreme Court's Spokeo decision in holding that without anything more "a plaintiff cannot satisfy the injury‐in‐fact element of standing simply by alleging that the defendant violated a disclosure provision of a consumer protection statute." As such, the trial court concluded that the debtor lacked Article III standing.
This appeal followed.
Initially, the Seventh Circuit observed that to establish standing a plaintiff must allege "an injury-in-fact that is traceable to the defendant's conduct and redressable by a favorable judicial decision." This case concerns the first injury-in-fact requirement which involves "an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical."
Although Congress enabled consumers to sue debt collectors that fail to comply with the FDCPA, 15 U.S.C. § 1692k(a), the Seventh Circuit held that this does not mean that every plaintiff has standing as even in the context of a statutory violation. Instead, the Court held, Congress must adhere to Article III's requirement that a plaintiff suffer "a concrete injury." A "bare procedural violation" like the one the debtor alleged here does not satisfy this requirement.
The Seventh Circuit acknowledged that the Sixth Circuit's opinion in Macy, under a nearly identical fact pattern, concluded that a failure to notify plaintiffs that they had to dispute their debts in writing established a concrete injury sufficient to confer Article III standing because "[w]ithout the information about the in‐writing requirement, Plaintiffs were placed at a materially greater risk of falling victim to abusive debt collection practices."
The Seventh Circuit disagreed with this approach because regardless of whether the omission created a risk that consumers who sought to dispute the debt may waive their statutory rights, it created no risk for the named plaintiffs who did not dispute the debt or even plan to dispute the debt. In the Seventh Circuit's view, the risk that the omission may harm "someone" does not confer standing. Instead, the omission "must have risked harm to the plaintiffs."
Next the Seventh Circuit rejected the debtor's argument that she sufficiently alleged a concrete injury because depriving her of the knowledge that she had to submit disputes in writing constituted an "informational injury." The Seventh Circuit had little trouble rejecting this argument because "the denial of information subject to public disclosure is one of the intangible harms that Congress has the power to make legally cognizable. (Emphasis in original). A public disclosure law protects "the public's interest in evaluating matters of concern to the political community" and denying a request for information under such a law "necessarily implicates that interest." The debtor did not seek and was not denied any such information.
The debtor also argued that Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982), demonstrated that she suffered a concrete "informational injury" because the defendant violated a statutory requirement. Havens Realty involved a minority plaintiff that sued the defendant after it "falsely told her that an apartment complex had no vacancies." Although the plaintiff in Havens Realty did not intend to rent an apartment, she requested the information because she suspected that the defendant was practicing "unlawful racial steering." She had a concrete injury because the Fair Housing Act gave everyone "a legal right to truthful information." The debtor argued that the FDCPA "likewise conferred on all debtors a right to complete information about their statutory rights."
The Seventh Circuit disagreed because the Havens Realty plaintiff did not allege harm based on any received "inaccurate or incomplete information." Instead, she claimed the defendant harmed her by lying to her because of her race. This invasion is precisely the "interest that the Fair Housing Act protects: freedom from racial discrimination in the pursuit of housing." That is not the harm the debtor claimed nor the harm that the FDCPA protects against.
Thus, the Seventh Circuit affirmed the trial court's ruling.
Ralph T. Wutscher
Maurice Wutscher LLP
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