The U.S. Court of Appeals for the Eighth Circuit recently vacated a trial court’s judgment entered after trial in favor of the named plaintiff and a class of consumers for alleged violations of the federal Fair Debt Collection Practices Act and the Nebraska Consumer Protection Act due to lack of Article III standing.
In so ruling, the Eighth Circuit held that, because the named plaintiff never actually paid any part of the interest or principal sought in the collection letters at issue, she did not suffer a concrete injury as required for Article III standing.
A copy of the opinion in Kelly Bassett v. Credit Bureau Services, Inc. is available at: Link to Opinion.
Two debt collectors sent the named plaintiff (and her deceased husband) a letter demanding payment for medical bills. The letter listed amounts owed without distinguishing interest from principal. The letter stated, “interest and other charges may accrue daily.”
The named plaintiff brought a putative class action lawsuit against the collectors for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, and the Nebraska Consumer Protection Act, Neb. Rev. Stat. § 59- 1601. After a trial, the trial court granted judgment as a matter of law in favor of the named plaintiff and the plaintiff class.
The collectors appealed, alleging among various issues: (i) the named plaintiff did not have Article III standing; (ii) the trial court erred in allowing her to introduce an issue at trial without notice; (iii) the trial court erred in determining that the NCPA requires a judgment before collecting prejudgment interest; (iv) the trial court abused its discretion in finding that the named plaintiff was an adequate class representative; and (v) the trial court abused its discretion in certifying the FDCPA class.
As you may recall, standing under Article III consists of three elements: 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.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016), citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
“To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Id. at 339, quoting Lujan, 504 U.S. at 560 (1992). “Central to assessing concreteness is whether the asserted harm has a ‘close relationship’ to a harm traditionally recognized as providing a basis for a lawsuit in American courts — such as physical harm, monetary harm, or various intangible harms.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2200 (2021), citing Spokeo, 578 U.S. at 340-41.
The Eighth Circuit noted that the Supreme Court of the United States “has rejected the proposition that ‘a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2205 (2021), citing Spokeo, 578 U.S. at 341.
The named plaintiff contended that she suffered an injury in fact when the collectors sent a letter demanding interest on her debts without a judgment — despite the fact that the named plaintiff never actually paid any part of the interest or principal. The named plaintiff analogized her alleged injury to the type of harms recognized in common-law fraudulent misrepresentation and conversion. Fraudulent misrepresentation recognizes harm flowing from plaintiffs’ reasonable reliance on a misrepresentation. See Flamme v. Wolf Ins. Agency, 476 N.W.2d 802, 809 (Neb. 1991). Conversion recognizes harm resulting from a wrongful deprivation of or interference with plaintiffs’ property. See Zimmerman v. FirsTier Bank, 585 N.W.2d 445, 451 (Neb. 1998).
The Eighth Circuit concluded that the named plaintiff did not show any harm that bears a “close relationship” to the type of injury that results from reliance on a misrepresentation or wrongful interference with property rights. Spokeo, 578 U.S. at 341; cf. TransUnion, 141 S. Ct. at 2209. Although “Spokeo does not require an exact duplicate in American history and tradition,” TransUnion, 141 S. Ct. at 2204, the Court reasoned that the absence of any injury resembling these harms meant that the borrower did not suffer a concrete injury in fact. See Trichell v. Midland Credit Mgmt., 964 F.3d 990, 998 (11th Cir. 2020).
Accordingly, the Eighth Circuit held that, because the named plaintiff did not suffer a concrete injury in fact as a result of the alleged statutory violations, she lacked Article III standing. Thus, the Court vacated the trial court’s judgment and remanded the case for further proceedings consistent with its opinion.