The U.S. Court of Appeals for the Seventh Circuit recently vacated a trial court’s summary judgment in favor of a debt collector and ordered dismissal for lack of Article III standing.
In so ruling, the Seventh Circuit held that stress and confusion alone are not concrete injuries sufficient to grant a plaintiff Article III standing for a federal Fair Debt Collection Practices Act (FDCPA) claim.
A copy of the opinion in Pennell v. Global Trust Management, LLC is available at: Link to Opinion.
A consumer defaulted on a loan and, through counsel, sent the lender a letter stating that she refused to pay her debt and requesting that all future debt communications cease.
Soon after, the lender sold the debt to a debt collector. The debt collector was never informed that the consumer refused to pay her debt and that she was represented by counsel.
Eventually, the debt collector sent the consumer a dunning letter. The consumer, again through counsel, sent the debt collector a letter to notify it that she refused to pay and asking that all debt communications stop. The debt collector complied with the consumer’s request and did not take any further actions.
Nevertheless, the consumer filed a lawsuit alleging that the debt collector violated 15 U.S.C. § 1692c(a)(2) and (c) of the FDCPA, which regulates debt collectors’ communications with consumers. As you may recall, § 1692c(a)(2) prohibits a debt collector from directly communicating with a consumer who is represented by an attorney with respect to the debt and § 1692c(c) forbids a debt collector from directly communicating with a consumer who notifies a debt collector in writing that she refuses to pay the debt or that she wishes for the debt collector to stop communicating with her.
The consumer claimed “stress and confusion” as her injuries, arguing that the dunning letter made her feel like “her demand had been futile” and that she did not have rights under the FDCPA. According to the consumer, the dunning letter also made her “question whether she was still represented by counsel” and “whether she was required to pay the debt at issue.”
The trial court granted summary judgment in favor of the debt collector on the merits, concluding that the debt collector could not have violated § 1692(a)(2) and (c) without actual knowledge of the consumer’s first cease-communication request to the lender. The consumer then filed a motion to reconsider, the trial court denied the motion, and the consumer appealed.
The Seventh Circuit focused its analysis on Article III standing, even though neither party raised the issue in their briefs.
The Court noted that the “irreducible constitutional minimum of standing” requires the plaintiff or party invoking federal jurisdiction to demonstrate that she has suffered an injury in fact that is fairly traceable to the defendant’s conduct and redressable by a favorable judicial decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). Standing must be established at the time the suit is filed. Pollack v. U.S. Dep’t of Just., 577 F.3d 736, 742 n.2 (7th Cir. 2009).
To establish injury in fact, a plaintiff must allege a “concrete and particularized” injury. Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 180 (2000). An injury is particularized if it “affect[s] the plaintiff in a personal and individual way,” Lujan, 504 U.S. at 560 n.1, and it is concrete if it is “real, and not abstract.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016) (internal quotation marks omitted). To satisfy concreteness, the injury does not need to be tangible; a risk of real harm can suffice. Id. at 1549.
However, a statutory violation alone does not automatically lead to a concrete injury. Id. For an FDCPA violation, the plaintiff must allege in the complaint that “the violation harmed or presented an appreciable risk of harm to the underlying concrete interest that Congress sought to protect.” Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329, 333 (7th Cir. 2019) (internal quotation marks omitted).
In this case, the Seventh Circuit concluded that the consumer did not allege a concrete injury. The Court reasoned that “confusion is not itself an injury.” Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067, 1068 (7th Cir. 2020). Similarly, stress by itself, with no physical manifestations and no qualified medical diagnosis, does not amount to a concrete harm. Cf. United States v. All Funds on Deposit with R.J. O’Brien & Assocs., 783 F.3d 607, 616 (7th Cir. 2015) (noting that “purely psychological harm” does not suffice to establish Article III standing).
For the alleged injury to be concrete, the consumer must have acted “to her detriment, on that confusion.” Brunett, 982 F.3d at 1068. The consumer did not prove to the Court that the debt collector’s letter caused her to change her decision-making or put her in harm’s way.
The consumer attempted to save her claim by arguing that the dunning letter was also an invasion of her privacy, which she submitted as an injury. However, the Seventh Circuit was not persuaded because this allegation was made for the first time in a supplemental memorandum. What mattered to the Court was what the consumer alleged in her operative complaint. Thornley v. Clearview AI, Inc., 984 F.3d 1241, 1242 (7th Cir. 2021); see also Borelli v. City of Reading, 532 F.2d 950, 951 (3d Cir. 1976) (per curiam) (noting that “[t]he question of standing is generally determined from the face of the complaint”).
Accordingly, the Seventh Circuit concluded that the consumer failed to allege a concrete injury sufficient to grant her Article III standing in an FDCPA case and, therefore, vacated the trial court’s judgment and remanded with instructions to dismiss for lack of subject matter jurisdiction.