FYI: 6th Cir Holds Mere Confusion Does Not Impart Article III Standing, Reverses FDCPA Ruling in Favor of Defendant

The U.S. Court of Appeals for the Sixth Circuit recently reversed a trial court order granting summary judgment in favor of the defendant on a consumer's claim that the defendant violated the federal Fair Debt Collection Practices Act ("FDCPA").

 

In so ruling, the Sixth Circuit held that, even though the defendant's failure to properly identify itself in the phone calls confused the plaintiff and led to him sending a cease and desist request to the wrong entity, confusion by itself does not establish "a concrete injury for Article III purposes." 

 

Therefore, the Court held, the consumer did not suffer "more than a bare procedural violation of the FDCPA" as required to establish the standing necessary to pursue his claims. 

 

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

 

The consumer incurred medical expenses after treatment with a medical provider. The provider hired a company to collect the debt. The collection company allegedly left several voice messages while attempting to collect the debt.

 

The consumer filed suit alleging claims against the collection company ("Defendant") under the FDCPA arising out of the alleged voice mails where the Defendant did not accurately identify itself.  The consumer claimed that the Defendant's failure to accurately provide its correct legal name confused him.  As a result of this confusion, the consumer allegedly sent a cease and desist letter to the wrong entity.

 

Specifically, the consumer claimed that the defendant violated section 1692d(6) of the FDCPA, which provides that a "debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt[,]" including the "placement of telephone calls without meaningful disclosure of the caller's identity." 

 

The consumer also claimed that the defendant violated section 1692e(14), which  provides that a "debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt[,]" including "us[ing]any  business,  company,  or organization  name  other  than  the  true  name  of  the  debt  collector's  business,  company,  or organization." 

 

The Defendant moved for summary judgment arguing that it did not meet the definition of a debt collector under the FDCPA and the trial court granted the motion. This appeal followed.

 

On appeal, the Defendant argued that the consumer lacked Article III standing. Although the Defendant did not raise this issue with the trial court, the Sixth Circuit observed that it has an independent obligation to determine its jurisdiction to hear an appeal.

 

As you may recall, standing requires that the "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." The plaintiff bears the burden of setting forth facts that demonstrate standing. 

 

The issue in this appeal was whether the plaintiff suffered an injury in fact. This requires that "the injury must be (1) particularized and (2) concrete."  The dispute here concerned whether the consumer suffered a concrete injury.  

 

The consumer claimed that he suffered a concrete injury for two reasons. First, he argued that the violation of his procedural rights under the FDCPA established a concrete injury. Second, he claimed that the confusion caused by the phone calls and expense of the counsel that he retained demonstrated that he suffered a concrete injury. 

 

The Sixth Circuit observed that in TransUnion LLC v. Ramirez, the Supreme Court of the United States recently clarified what is required to show that a violation of a procedural right established a concrete injury and, as a result, the plaintiff must "must show either that the procedural harm itself is a concrete injury of the sort traditionally recognized or that the procedural violations caused an independent concrete injury."  After conducting that inquiry here, the Sixth Circuit concluded that the consumer lacked Article III standing to pursue his alleged claims.

 

As a result of the alleged FDCPA violations the consumer argued that the FDCPA created an enforceable right to know who is calling about a debt because the Defendant's failure to correct provide its full legal name concretely harmed him. The consumer further argued that this harm is closely related to the invasion of privacy harm that most states recognize. 

 

The Sixth Circuit rejected the consumer's argument because the Defendant's alleged failure to disclose its full legal name does not resemble a traditional harm "regarded as providing a basis for a lawsuit," as required to establish a concrete injury. 

 

The Sixth Circuit acknowledged that most states recognize actions to enforce the right of privacy, including "the tort of intrusion upon one's right to seclusion." However, the Court noted that not receiving full and complete information about the name of a defendant does not closely resemble the tort of intrusion upon seclusion because this common law tort typically requires proof that the defendant "intentionally intrude[d], physically or otherwise, upon the solitude or seclusion of another or his privacy affairs or concerns."

 

The consumer's alleged harm did not impact his privacy.  Instead, it merely confused him. The Defendant did not share his private information with a third-party or publicize his private information. Thus, the Sixth Circuit found that the consumer's claimed harm did "not bear a close relationship to traditional harms" and the consumer could not establish standing based solely upon the alleged statutory violations.

 

The consumer advanced several additional reasons for why he suffered a concrete injury that stemmed from the alleged statutory violation. First, the consume claimed that the Defendant's failure to properly identify itself in the phone calls confused him and led to him sending a cease and desist request to the wrong entity. The Sixth Circuit rejected this argument, because confusion by itself does not establish "a concrete injury for Article III purposes."

 

The consumer next argued that he retained counsel to stop the calls and that this action constitutes a concrete harm flowing from the statutory violation. The Sixth Circuit disagreed that the expense of hiring counsel established a concrete harm because applying this "logic to any plaintiff who hires counsel to affirmatively pursue a claim would nullify the limits created under Article III."

 

Finally, the consumer argued that an additional call that he received after he sent his cease and desist letter to the wrong entity concretely harmed him. The Sixth Circuit declined to consider this argument because the consumer did not clearly allege in his complaint that he received another phone call after sending the cease and desist letter or that this additional call harmed him.

 

Thus, the Sixth Circuit held that consumer did not demonstrate that he suffered "more than a bare procedural violation of the FDCPA" and that he lacked Article III standing to pursue his claims. Therefore, the Sixth Circuit vacated the trial court's order granting summary judgment and remanded the case to be dismissed without prejudice for lack of subject matter jurisdiction.

 

 

 

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 Applies to "Any Call", Not Just Marketing or Advertising Calls

The U.S. Court of Court of Appeals for the Ninth Circuit recently reversed the dismissal of a plaintiff's complaint alleging supposed violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA") for placing a job-recruitment "robocall" to the plaintiff's cell phone.

 

In so ruling, the Ninth Circuit concluded that the plaintiff's allegations that the plaintiff pled adequate allegations to survive a motion to dismiss because the TCPA's prohibition on robocalls to cell phone numbers applies to "any call," not just marketing or advertising calls.

 

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

 

The plaintiff received an allegedly unauthorized call to his cell phone in which the caller left a "job recruitment" voicemail.  The plaintiff alleged the call was placed using an automated telephone dialing system (ATDS) and an artificial or pre-recorded voice.

 

The plaintiff filed suit against the company identified in the voicemail, alleging that its call violated the TCPA's prohibitions against calls using "any automatic telephone dialing system or an artificial or prerecorded voice" to "any telephone number assigned to a . . . cellular telephone service." § 227(b)(1)(A)(iii).

 

The defendant caller moved to dismiss, and the trial court granted its motion, concluding that the TCPA and its relevant implementing regulation, 47 C.F.R. § 64.1200 did not prohibit calls of this nature, but only robocalls to cell phones when the calls include an "advertisement" or constitute "telemarketing," which the plaintiff recipient conceded were not included in the voicemail.  § 64.1200(f)(1), (13).  The plaintiff timely appealed the dismissal.

 

On appeal, the Ninth Circuit first reviewed the plain language of the TCPA, noting that the Act does not apply only to calls involving advertising or telemarketing, but plainly prohibits "any call," regardless of content, that is made to a cell phone using an automatic telephone dialing system or an artificial or pre-recorded voice, unless the call is made either emergency purposes or with the prior express consent of the person being called. 47 U.S.C. § 227(b)(1)(A)(iii). 

 

Here, the Court found that the plaintiff recipient adequately alleged that the call he received was not made for emergency purposes, and that he did not expressly consent to receiving it.  Accordingly, the Ninth Circuit concluded that he stated a valid claim for violation of the TCPA pursuant to the plain language of the statute.

 

Further review of the FCC's relevant implementing regulation, 47 C.F.R. § 64.1200, led the Ninth Circuit to the same conclusion. 

 

The relevant implementing language, which closely tracks the language of the statute, includes a qualifier that prohibits "any telephone call" made to a cell phone unless the call was made either for emergency purposes or with the prior express consent of the person being called "except as provided in paragraph (a)(2) of this section" (47 C.F.R. § 64.1200).

 

In granting the motion to dismiss, the trial court relied upon the paragraph (a)(2)'s separate prior express written consent requirement to a subset of robocalls made to cell phones that involve advertising or telemarketing—which differs from calls covered by paragraph (a)(1) in which prior express consent may be given either orally or in writing—as effectively removing robocalls to cell phones from the scope of the TCPA's coverage unless the calls involve advertising or telemarketing.  See 47 C.F.R. § 64.1200(a)(2); In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961, 7971 (2015). 

 

The Ninth Circuit disagreed with this interpretation, noting that the FCC's amendment of § 64.1200 in 2012 to add paragraph (a)(2) served to impose a heightened consent requirement only for the subset of robocalls that involve advertising or telemarketing because the agency determined that, based upon findings that the existing consent requirements proved ineffective in protecting consumers' privacy interests, but expressly maintained the existing consent requirement in paragraph (a)(1) for all other robocalls made to cell phones. 77 Fed. Reg. 34,233 (June 11, 2012), 34,235, ¶ 7, 34,236, ¶ 11 (noting that the Commission was "maintain[ing] the existing consent rules for non-telemarketing, informational calls"); id. ¶ 12 (noting that "section 227(b)(1)(A) of the Act and its implementing rules continue to require some form of prior express consent for autodialed or prerecorded non-telemarketing calls to wireless numbers"). 

 

Thus, the Court held, the undisputed fact that the call did not involve advertising or marketing simply meant that the heightened written consent requirement imposed by paragraph (a)(2) did not apply, and the trial court erred by focusing exclusively on paragraph (a)(2) of the FCC's implementing regulation and overlooking paragraph (a)(1), which governed the allegedly violative call.

 

Because the recipient plaintiff adequately alleged that he did not consent to the defendant's job recruiting call orally or in writing, the Ninth Circuit ruled that his complaint pled allegations sufficient to state a claim under the TCPA.  The trial court's dismissal was reversed and the case was remanded for further proceedings.

 

 

 

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: 7th Cir Holds TCPA Plaintiff Sufficiently Alleged "Agency" Relationship for Complaint to Survive Dismissal

The U.S. Court of Court of Appeals for the Seventh Circuit recently reversed the dismissal of a plaintiff's complaint alleging supposed violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"), and the Illinois Automatic Telephone Dialing Act, 815 ILCS 305/30(a)(b) ("IATDA"), concluding that the plaintiff alleged enough of an agency relationship between the defendants and the entities that placed the subject calls for the complaint to move forward.

 

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

 

The plaintiff received unauthorized robocalls concerning health insurance that allegedly violated the TCPA and IATDA. The plaintiff sued on a vicarious liability theory, claiming that an insurer contracted with a marketer to sell its insurance. The marketer then hired lead generators to effectuate telemarketing, and the lead generators made the unauthorized robocalls that formed the basis of the plaintiff's claims. The plaintiff cited three agency theories: actual authority, apparent authority, and ratification.

 

The insurer and the marketer each moved to dismiss the plaintiff's complaint. The insurer brought a motion to dismiss for failure to state a claim under Rule 12(b)(6), arguing that the plaintiff failed to plausibly allege an agency relationship between itself and the lead generators. Making the same agency arguments, the marketer moved for dismissal for lack of personal jurisdiction under Rule 12(b)(2). It argued that without alleging a plausible agency relationship, the plaintiff failed to connect the marketer to Illinois through the lead generators' conduct.

 

The trial court agreed with the defendants, ruling that the plaintiff failed to plausibly allege that the lead generators acted pursuant to a valid agency theory. 

 

On the actual authority claim, the trial court reasoned that the plaintiff failed to plausibly allege agency because his complaint lacked allegations of the defendants' control over the timing, quantity, and geographic location of the lead generators' unauthorized robocalls. It next found the apparent authority claims insufficient because the plaintiff alleged only that the purported agents—not the principals—made manifestations to the plaintiff. Finally, the trial court reasoned that the plaintiff failed to allege agency under the ratification theory because the plaintiff did not allege that he purchased health insurance from the robocalls, so the defendants accepted no benefits from the calls.

 

In light of its determinations on the plaintiff's three agency theories, the trial court held that the plaintiff neither stated a claim against the insurer nor established a prima facie case of personal jurisdiction over the marketer.

 

Accordingly, the trial court dismissed the plaintiff's complaint and entered final judgment in the defendants' favor. The plaintiff timely appealed.

 

The Seventh Circuit began its analysis with the trial court's Rule 12(b)(6) dismissal of the insurer.

 

The Court note that actual authority requires that, at the time of an agent's conduct, "the agent reasonably believes, in accordance with the principal's manifestations to the agent, that the principal wishes the agent so to act." RESTATEMENT (THIRD) OF AGENCY § 2.01 (2006); see Moriarty v. Glueckert Funeral Home, Ltd., 155 F.3d 859, 866 (7th Cir. 1998).

 

Thus, the Seventh Circuit held that, to prove that the lead generators in this case had actual authority to act as the agents of the insurer, the plaintiff needed to show evidence that (1) a principal/agent relationship existed, (2) the principal controlled or had the right to control the alleged agent's conduct, and (3) the alleged conduct fell within the scope of the agency. See Spitz v. Proven Winners N. Am., LLC, 759 F.3d 724, 732 (7th Cir. 2014).

 

The Seventh Circuit determined that it need not decide whether the plaintiff's allegations were sufficient, if true, to prove his vicarious liability claims. Instead, the Court determined it only needed to ascertain whether the plaintiff's allegations included enough detail to render his actual authority theory of agency liability plausible.

 

The plaintiff, as his theory of liability, alleged that the lead generators acted as the insurer's agents, with actual authority, when they allegedly initiated robocalls to the plaintiff's cellphone without his consent. The Seventh Circuit held that the plaintiff's underlying factual allegations included enough supporting detail to render this theory plausible. The plaintiff alleged that the lead generators initiated robocalls that solicited the insurer's health insurance, and that the insurer authorized the lead generators to use its approved scripts, trade-name, and proprietary information in making these calls.

 

The Seventh Circuit held that these allegations, viewed in the light most favorable to the plaintiff, supported the inference that the insurer authorized the lead generators to act on its behalf and subject to its control. See RESTATEMENT (THIRD) OF AGENCY § 2.01; Warciak v. Subway Rests., Inc., 949 F.3d 354, 357 (7th Cir. 2020).

 

The Court reasoned that the plaintiff alleged more than a formulaic recitation of his cause of action, see W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670, 675 (7th Cir. 2016), and included specific facts to support his theory of relief, see McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011). The Court concluded that nothing more was required to comply with Rule 8(a)(2), nor to meet the plausibility standard articulated by Twombly.

 

The insurer argued that the plaintiff failed to state a plausible agency claim to survive a Rule 12(b)(6) dismissal because his complaint lacked allegations that the insurer controlled the timing, quantity, and geographic location of the lead generators' robocalls. However, the Seventh Circuit held that allegations of minute details of the parties' business relationship are not required to allege a plausible agency claim. See generally Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).

 

With a viable agency claim on the actual authority theory, the Seventh Circuit held that the complaint should move forward at the pleading stage. In reaching this result, the Court also decided that it need not rule on the plaintiff's apparent authority and ratification theories of agency liability.

 

The Seventh Circuit next addressed the trial court's dismissal of the marketer for lack of personal jurisdiction.

 

When a trial court decides a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) without conducting an evidentiary hearing, as here, a plaintiff need only make out a prima facie case of personal jurisdiction. See Matlin v. Spin Master Corp., 921 F.3d 701, 705 (7th Cir. 2019). "[The court] take[s] as true all well-pleaded facts alleged in the complaint and resolve[s] any factual disputes ... in favor of the plaintiffs." Id. (quotation and alterations omitted).

 

In a federal question case, "a federal court has personal jurisdiction over the defendant if either federal law or the law of the state in which the court sits authorizes service of process to that defendant." Curry v. Revolution Labs, LLC, 949 F.3d 385, 393 (7th Cir. 2020) (quotation omitted). The plaintiff's federal claim here arose under the TCPA, which does not authorize nationwide service of process in a private cause of action. See 47 U.S.C. § 227. Therefore, "a federal court sitting in Illinois may exercise jurisdiction over the defendants in this case only if authorized both by Illinois law and by the United States Constitution." Curry, 949 F.3d at 393 (quotation and alteration omitted).

 

The Seventh Circuit held that the Illinois long-arm statute authorizes jurisdiction over a non-resident through the conduct of an agent. See 735 ILCS 5/2- 209(a). In addition, § 2-209(c) provides a catch-all provision, permitting a court's exercise of jurisdiction to the full extent permitted by the Illinois and United States Constitutions. See 735 ILCS 5/2-209(c).

 

Moreover, to comport with federal due process, a defendant must maintain "minimum contacts" with the forum state such that "the maintenance of the suit 'does not offend traditional notions of fair play and substantial justice.'" Tamburo, 601 F.3d at 701 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). When considering due process for specific personal jurisdiction, the court must determine whether "(1) the defendant has purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state, and (2) the alleged injury arises out of the defendant's forum-related activities." Id. at 702 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).

 

The Seventh Circuit concluded that the attribution of an agent's conduct to a principal to establish specific personal jurisdiction comports with federal due process. In doing so, the Court joined other circuits that have recognized the same. See, e.g., Nandjou v. Marriott Int'l, Inc., 985 F.3d 135, 150 (1st Cir. 2021); Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1379 (Fed. Cir. 2015); Myers v. Bennett Law Offices, 238 F.3d 1068, 1073 (9th Cir. 2001).

 

Here, the lead generators' alleged illegal phone calls formed the basis of the plaintiff's TCPA and IATDA claims. The Seventh Circuit concluded that the plaintiff adequately alleged that the lead generators acted with the marketer's actual authority, as the Court had ruled regarding the insurer. See RESTATEMENT (THIRD) OF AGENCY § 1.01; § 2.01; see Moriarty, 155 F.3d at 866. The plaintiff alleged not only that the marketer contracted with the lead generators directly to telemarket the insurer's health insurance, but that the marketer participated in the calls in real-time by pairing the agents with the insurer's health insurance quotes, emailing quotes to call recipients, and permitting the agents to enter information into its system.

 

These well-pled factual allegations were enough, in the Seventh Circuit's view, to support an agency relationship on actual authority grounds at the pleading stage. As a result, the Court concluded that the plaintiff established a prima facie case of personal jurisdiction over the marketer.

 

Accordingly, the Seventh Circuit reversed the judgment of the trial court and remanded for further proceedings consistent with its opinion.

 

 

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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