The U.S. Court of Appeals for the Eighth Circuit recently affirmed the judgment of a trial court and held that non-consumers cannot bring a claim under Section 1692c(b) of the federal Fair Debt Collection Practices Act (FDCPA).
The Eighth Circuit also concluded that there was no abuse of discretion in the trial court because the plaintiff, a bankruptcy attorney, failed to follow the applicable court rules. Further, the Court ruled that the attorney confused Article III standing, which implicates subject matter jurisdiction and was undisputed here, with statutory standing.
Thus, because the attorney only alleged a violation of Section 1692c(b), and the trial court determined that Section 1692c(b) does not provide the attorney with statutory standing to sue, the Court concluded that judgment as a matter of law was appropriate.
A copy of the opinion in Andrew Magdy v. I.C. System, Inc. is available at: Link to Opinion.
A bankruptcy attorney sued a debt collection agency after he received a letter from the agency identifying him as the attorney for a consumer named in the letter. In fact, the consumer was not the attorney’s client and never had been, and the attorney engaged in an extensive search of his files and records to determine this fact. This search cost the attorney time and resources that he could have spent working on matters for actual clients.
The attorney brought his claim in Missouri state court under 15 U.S.C. Section 1692c(b), which prohibits a debt collector from contacting a third party about the collection of a debt without the prior consent of the consumer. The agency properly removed the case to federal court.
Eventually, the federal trial court granted the agency’s motion for judgment on the pleadings finding that the attorney, a non-consumer, lacked standing to bring a cause of action under Section 1692c(b). The attorney asked for leave to replead his claims pursuant to Section 1692d in his response to the debt collector’s motion, but he never filed an actual motion for leave to amend his pleadings. The attorney timely appealed the trial court’s judgment.
As you may recall, Section 1692c(b) concerns third-party communications by debt collectors:
Except as provided in section 1692b[4] of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
The Eighth Circuit upheld the trial court’s ruling that the debt collector violated Section 1692c(b) by contacting the plaintiff without the consumer’s prior consent. However, the Court also recognized that the agency’s violation of Section 1692c(b) did not guarantee the attorney statutory standing.
The plaintiff attorney relied on the language in 15 U.S.C. § 1692k, the FDCPA’s general civil liability provision, to support his argument that he had standing to sue for a Section 1692c(b) violation.
Section 1692k(a) provides: “Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person. . .” Focusing on this language, “with respect to any person is liable to such person,” the plaintiff attorney argued that because the agency failed to comply with Section 1692c(b) “with respect to” him by sending him the letter, the agency is liable to him.
“[A] statutory cause of action extends only to plaintiffs whose interests ‘fall within the zone of interests protected by the law invoked.’” Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 129 (2014) (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)). The zone-of-interests test requires courts to use “traditional tools of statutory interpretation” to determine “whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim.” Lexmark, 572 U.S. at 127.
Here, the Eighth Circuit reasoned that Section 1692c(b)’s plain language — “without the prior consent of the consumer” — indicates that the attorney is outside the scope of its protection. Any violation of Section 1692c depends on the debt collector making contact without the consumer’s prior consent.
The Court thus read the plain language of Section 1692c(b) as making clear that the provision’s purpose is to protect consumers, not third parties. Cf. Kuntz v. Rodenburg LLP, 838 F.3d 923, 925 n.2 (8th Cir. 2016) (reviewing Section 1692b(3)’s plain language to determine its purpose). Because the purpose of Section 1692c(b) is to protect consumers alone, the Court concluded that the attorney falls outside Section 1692c(b)’s “zone of interests” and thus could not invoke the protection afforded by it.
The Eighth Circuit agreed with the attorney that the FDCPA protects more than just consumers in its regulation of debt collectors. Congress intended for the FDCPA to “make collectors behave responsibly towards people with whom they deal.” H.R. Rep. No. 95-131, at 8 (1977). However, as the Sixth Circuit recognized in Montgomery v. Huntington Bank, the Court here held that the availability of relief to non-consumers under other sections of the FDCPA does not guarantee non-consumers relief under Section 1692c. 346 F.3d 693, 696-97 (6th Cir. 2003).
The Eighth Circuit joined the other circuits that have considered this issue in concluding that non-consumers cannot bring a claim under Section 1692c(b). See, e.g., Todd, 731 F.3d at 737 (“[Section] 1692c restricts debt collectors’ communications with and about consumers and is understood to protect only the consumer-debtors themselves.”); Montgomery, 346 F.3d at 696 (“[O]nly a ‘consumer’ has standing to sue for violations under 15 U.S.C. § 1692c.” (citation omitted)); Johnson v. Ocwen Loan Servicing, 374 F. App’x 868, 874 (11th Cir. 2010) (per curiam) (holding that plaintiff lacked standing to sue under Section 1692c because she was not a consumer).
The plaintiff attorney also argued that the trial court abused its discretion by refusing to grant him leave to amend his pleading. The attorney cited Federal Rule of Civil Procedure 15(a)(2), which provides a party the opportunity to amend its pleadings with the court’s leave and notes that “[t]he court should freely give leave when justice so requires.” However, the Eighth Circuit noted that the attorney never filed a motion to amend or a memorandum in support of such a motion. Therefore, the Court concluded that there was no abuse of discretion because the attorney failed to follow the applicable procedural rules of the trial court.
Lastly, the attorney asserted that, even if the trial court correctly concluded that he lacks standing to sue under Section 1692c(b), the proper action was to remand the case back to Missouri state court. The attorney then cited case law in which the Eighth Circuit instructed trial courts to remand cases originally filed in state court when the plaintiff lacks Article III standing. See Wallace v. ConAgra Foods, Inc., 747 F.3d 1025, 1033 (8th Cir. 2014).
However, the Eighth Circuit determined that the attorney confused Article III standing, which implicates subject matter jurisdiction and was undisputed here, with statutory standing, which implicates whether the plaintiff has the right to sue the defendant to redress alleged injuries. Miller v. Redwood Toxicology Lab’y, Inc., 688 F.3d 928, 934 (8th Cir. 2012). Because this appeal concerned statutory standing under Section 1692c(b), the Eighth Circuit held that the trial court’s decision that the attorney lacks statutory standing was a ruling on the merits of his claim, not on the trial court’s jurisdiction.
Thus, the Eighth Circuit concluded that the attorney only alleged a violation of Section 1692c(b) and the trial court correctly determined that Section 1692c(b) does not provide the attorney with statutory standing to sue. Accordingly, the Eighth Circuit affirmed the trial court’s decision to grant judgment as a matter of law.
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