FYI: 11th Cir Holds Single Alleged TCPA Violation Not Enough for Standing, Disagrees with 9th Cir

The U.S. Court of Appeals for the Eleventh Circuit recently held that the receipt of one unwanted text message in alleged violation of the federal Telephone Consumer Protection Act was not enough to allege a concrete harm that meets the injury-in-fact requirement of Article III.

 

In so ruling, the Eleventh Circuit noted that it was not persuaded by the Ninth Circuit's opinion in Van Patten v. Vertical Fitness Group, LLC, 847 F.3d 1037 (9th Cir. 2017), which held that the receipt of two unsolicited text messages constituted an injury in fact. 

 

Accordingly, the Eleventh Circuit reversed the ruling of the trial court that the plaintiff had standing to sue, and remanded with instructions to dismiss without prejudice.   

 

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

 

The plaintiff ("Plaintiff"), a former client of an attorney ("Defendant"), received a multimedia text message from Defendant offering a ten percent discount on his services.

 

The Plaintiff filed suit in the trial court as a representative of a putative class of former clients of Defendant who received unsolicited text messages in the past four years, alleging class-wide violations of the TCPA.

 

Defendant moved to dismiss the complaint based on lack of standing, as well as for failure to state a claim against him.

 

The trial court disagreed, and denied the motion to dismiss.  However, the trial court allowed Defendant to pursue an interlocutory appeal, and stayed its proceeding pending appeal.

 

On appeal, the Eleventh Circuit first discussed the TCPA.  As you may recall, the TCPA prohibits using automatic telephone dialing systems to call residential or cellular telephone lines without the consent of the called party, and prohibits sending unsolicited advertisements via facsimile machine.  The TCPA also authorizes the Federal Communications Commission ("FCC") to enact implementing regulations. 

 

Under this rulemaking authority, the FCC has applied the statute's regulations of voice calls to text messages.

 

After explaining that the Plaintiff's complaint facially stated a cause of action under the TCPA, the Eleventh Circuit next turned to whether Plaintiff had Article III standing. 

 

As you may recall, to establish Article III standing, a plaintiff must have: (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.

 

Moreover, the injury in fact must be concrete.  When the concreteness of an injury is difficult to recognize, courts look to "history and the judgment of Congress" for guidance.

 

However, "an act of Congress that creates a statutory right and a private right of action to sue does not automatically create standing."  Instead, "Article III standing requires a concrete injury even in the context of a statutory violation."

 

Here, Plaintiff alleged that receiving one text message "caused Plaintiff to waste his time answering or otherwise addressing the message," and "[w]hile doing so, both Plaintiff and his cellular phone were unavailable for otherwise legitimate purposes."  Plaintiff alleged that the message also "resulted in an invasion of Plaintiff's privacy and right to enjoy the full utility of his cellular device."

 

Initially, the Court observed that the Ninth Circuit ruling in Van Patten involved a nearly identical issue, and that Ninth Circuit held that the receipt of two unsolicited text messages constituted an injury in fact. 

 

However, the Eleventh Circuit found that decision unpersuasive, and noted that in the absence of any controlling authority, it would turn its "analysis to the framework outlined by the Supreme Court in Spokeo," which required it to "look to history and the judgment of Congress to see whether they support treating [Plaintiff's] allegations as a concrete injury in fact." 

 

With respect to the judgment of Congress, the Eleventh Circuit noted that Congress has said nothing about the harms from telemarketing via text message, although "Congress was concerned about 'intrusive invasion[s] of privacy' into the home when it enacted the TCPA." 

 

Still, the Eleventh Circuit disagreed with the Ninth Circuit's conclusion in Van Patten that "Congress identified unsolicited contact as a concrete harm," choosing instead to "focus[] our analysis on text messaging specifically."

 

The Eleventh Circuit next turned to history for guidance.  Specifically, with respect to Plaintiff's allegations of invasion of privacy, the Court "look[ed] to the generally accepted tort of intrusion upon seclusion, which creates liability for invasions of privacy that would be 'highly offensive to a reasonable person.'"

 

In comparing Plaintiff's alleged harm to the tort of intrusion upon seclusion, the Eleventh Circuit determined that "[s]imply sending one text message to a private cell phone is not closely related to the severe kinds of actively intermeddling intrusions that the traditional tort contemplates." 

 

With respect to Plaintiff's allegations of nuisance, the Eleventh Circuit compared them to traditional torts of trespass and nuisance, but found "them also to be distinct both in kind and in degree." 

 

As to trespass, Plaintiff "alleged no invasion of any interest in real property here."  

 

As to nuisance, under Florida law "mere disturbance and annoyance as such do not in themselves necessarily give rise to an invasion of a legal right," and Plaintiff's text message is therefore "not closely related to these traditional harms because it is not alleged to have infringed upon [Plaintiff's] real property, either directly or indirectly."

 

Plaintiff also asked the Court to consider the personal property torts of conversion and trespass to chattel.  However, the Eleventh Circuit was unconvinced, explaining that "although [Plaintiff's] allegations here bear a passing resemblance to this kind of historical harm, they differ so significantly in degree as to undermine his position."

 

Thus, the Eleventh Circuit concluded that "history and the judgment of Congress do not support finding concrete injury in [Plaintiff's] allegations."  Accordingly, the Court held that Plaintiff's "allegations do not state a concrete harm that meets the injury-in-fact requirement of Article III." 

  

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th 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

 

 

 

Alabama   |   California   |   Florida   |   Georgia   |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog™

 

and

 

Webinars

 

and

 

California Finance Law Developments

 

 

 

FYI: 7th Cir Holds No FDCPA Claim Where Consumer Failed to Prove Credit Card Transactions Were for "Consumer" Purposes

The U.S. Court of Appeals for the Seventh Circuit recently affirmed judgment in favor of two debt collectors and against a debtor for his claims arising under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA") and the Wisconsin Consumer Act, Wis. Stat. §§ 421-427 ("WCA").

 

In so ruling, the Court held that the debtor did not create a triable issue of material fact to overcome summary judgment because he failed to present sufficient evidence that the transactions comprising the credit card debt on the underlying account were for "personal, family, or household purposes", and therefore that the debt was a "consumer debt" subject to the FDCPA and WCA.

 

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

 

A law firm ("Law Firm") filed suit against a debtor ("Debtor") in Wisconsin state court (the "State Court Action") to collect amounts due to its client debt collector ("Debt Collector").  Debtor denied knowledge of, or association with the issuer of the credit card at issue ("Creditor"), and filed suit against the Law Firm alleging violations of the FDCPA and WCA for filing the State Court Action without first providing Debtor notice of his right to cure the default.

 

After the State Court Action was dismissed on the basis of Debtor's denial that he incurred the underlying debt, Debtor amended his federal complaint against the Law Firm to add the Debt Collector as an additional defendant. 

 

In ruling upon the parties' cross motions for summary judgment, the trial court entered judgment in favor of the Law Firm and Debt Collector, holding that Debtor failed to failed to establish that the debt at issue was a "consumer debt," incurred was for personal, family or household purposes, and therefore, was not subject to the FDCPA or WCA.  The instant appeal followed.

 

On appeal, the Seventh Circuit first examined the plain language of the FDCPA and WCA and its purpose to protect personal borrowers from abusive debt collection practices. 

 

As you may recall, the FDCPA defines a "debt" as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes." 15 U.S.C. § 1692a(5). Similarly, the WCA protects transactions involving a "customer," Wis. Stat. § 421.301(13), and defines a "customer" as "a person … who seeks or acquires real or personal property, services, money or credit for personal, family or household purposes," id. § 421.301(17).

 

Although the Debtor maintained that the underlying debt was not his, the Seventh Circuit noted that he nonetheless may claim FDCPA protection by showing that the debt collector treated him as a "consumer" allegedly owing a consumer debt. Loja v. Main St. Acquisition Corp., 906 F.3d 680, 684 (7th Cir. 2018) (holding "that the definition of 'consumer' under the FDCPA includes consumers who have been alleged by debt collectors to owe debts that the consumers themselves contend they do not owe").

 

However, the Court held, a plaintiff proceeding under this theory still must offer evidence to establish that the debt was a "consumer debt." 

 

Thus, the issue to be decided on appeal was whether the Debtor submitted sufficient evidence to create a triable issue of fact that the underlying credit card debt was incurred for personal, family, or household purposes.

 

The debtor argued that five pieces of evidence established that the debt incurred on the credit card account was consumer debt: (1) his statements that to the extent he was liable for the debt, it was a consumer debt; (2) the defendants' treatment of the debt as a consumer debt by including FDCPA disclaimers on the collection letters, suing Debtor in his personal capacity, and sending communications to his personal address; (3) the Law Firm and Debt Collector's description of their consumer debt collection services on their websites; (4) an employee of the Creditor's email description of the underlying account as a "consumer account"; and (5) the billing statements listing purchases made on the credit card for personal, family, or household purposes.  The appellate court examined each of the Debtor's arguments in order.

 

First, as to Debtor's own contention that his own statements suffice to prove that the debt was a consumer debt, the Seventh Circuit noted that the Debtor's representations in this case directly conflicted with those in the State Court Action. 

 

Specifically, his Complaint in the federal action alleged that "[t]o the extent that [Debtor] entered into a credit agreement with [Creditor], such agreement was entered into for personal, family or household purposes," yet in the State Court Action, he maintained that he never applied for, had knowledge of, or made purchases or payments towards the account.  Without any affidavit or sworn testimony to support his claims, the Debtor's allegations alone failed to establish that the debt at issue was a "consumer debt," and the Seventh Circuit rejected Debtor's self-serving statements.

 

Next, the Court reviewed Debtor's argument that the Law Firm and Debt Collector's treatment of the debt—including use of FDCPA disclaimers in collection letters—established that the debt was a consumer debt.  The Seventh Circuit also rejected this argument, noting that courts "have held repeatedly that merely including FDCPA disclaimers on debt collection letters is insufficient evidence that the debt was a consumer debt because debt collectors may be exercising caution and including disclaimers on all communications with debtors simply to avoid any FDCPA liability." See, e.g., Gburek v. Litton Loan Serv. LP, 614 F.3d 380, 386 n.3 (7th Cir. 2010) (noting that evidence that letter included disclaimer identifying it as attempt to collect a debt "does not automatically trigger the protections of the FDCPA"). 

 

The Seventh Circuit was also unpersuaded by the Debtor's arguments that filing of the State Court Action and mailing of communications to the Debtor's home address established the debt as a consumer debt, because an individual can be sued in a personal capacity for a business debt, and can carry on business activities from his residence. 

 

Without lengthy analysis, the Seventh Circuit also rejected Debtor's argument that the debt was a consumer debt because the Law Firm and Debt Collector advertised services collecting consumer debt on their websites, concluding that such general descriptions of their services have no bearing on the debt they attempted to collect from Debtor in this case.

 

The Court next analyzed the Debtor's argument that the district court improperly excluded an email from the Creditor which identified the Debtor's account in default as "a consumer account."  The email, sent by an employee of the Creditor in response to an inquiry from the Debtor's counsel, was characterized by the trial court as "a statement made by someone other than the declarant to prove the truth of the matter asserted (that the debt was consumer debt)," and excluded as inadmissible hearsay. 

 

On appeal, the Debtor contended that the email was not inadmissible hearsay, but instead, an admissible statement of an opposing party under Fed. R. Evid. 801(d)(2)(C).  However, because the email was offered to provide the truth of the matter asserted — i.e. establish that the Creditor itself stated the account was a consumer account — the Seventh Circuit concluded that the email was correctly characterized as hearsay.  Fed. R. Evid. 801(c), 802.  Moreover, the Court found that the exception under Rule 801(d)(2)(C) did not apply, because the email came from an employee of the Creditor — who was not a party to the lawsuit — and cannot be attributed to the opposing parties here, the Law Firm and Debt Collector. 

 

Alternatively, the Debtor argued that the email was admissible under the residual exception to the hearsay rule, Rule 807.  Rule 807(a) provides that a statement not otherwise subject to a hearsay exception "is not excluded by the rule against hearsay" if: (1) the statement has equivalent circumstantial guarantees of trustworthiness; (2) it is offered as evidence of a material fact; (3) it is more probative on the point for which it is offered than any other evidence that the proponent can obtain through reasonable efforts; and (4) admitting it will best serve the purposes of these rules and the interests of justice. Fed. R. Evid. 807(a).

 

The Seventh Circuit concluded that the email did not satisfy any of these conditions because: (1) the statement was not made under oath or subject to cross-examination; (2) Debtor sought to introduce the email to show that Creditor stated the account was a consumer account, but such distinction did not provide a factual dispute of whether the debt was a consumer debt; (3) Debtor could have obtained sworn deposition or in-court testimony of the Creditor's employee or any other representative through reasonable efforts, and; (4) Debtor failed to establish that admitting the email will "serve the purposes of these rules and the interests of justice."  Accordingly, the appellate court agreed with the district court's determination that the Creditor's email was properly excluded as inadmissible hearsay.

 

Lastly, the Seventh Circuit considered the Debtor's argument that the billing statements on the account demonstrate that the debt in question was a consumer debt. 

 

While the statements showed that most charges to the account were purchases of low dollar amounts primarily at gas stations and convenience stores, they also shed no light on why these charges were incurred. 

 

Because the Debtor was unable to explain whether these transactions were for a consumer as opposed to a business purpose, the billing statements failed to provide adequate information for a trier of fact to conclude that his purchases were made for personal, family, or household purposes. Cf. Matin v. Fulton, Friedman & Gullace LLP, 826 F. Supp. 2d 808, 812 (E.D. Pa. 2011) (finding the court "lack[ed] sufficient information to determine whether the purchases were made for primarily personal, family, or household purposes" based on account statement where plaintiff was "unable to recall what purchases she made on her credit card and the purpose for those purchases").

 

For the foregoing reasons, the Seventh Circuit concluded that the trial court properly determined that the Debtor failed to submit sufficient evidence to create a triable issue of material fact that the underlying debt at issue was a "consumer debt" for the purpose of the FDCPA and WCA.  Accordingly, judgment in favor of the Law Firm and Debt Collector and against the Debtor was affirmed.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th 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

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog™

 

and

 

Webinars

 

and

 

California Finance Law Developments