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6th Cir. Holds Single Unwanted Call Enough for Standing in FDCPA Claim

medical debtThe U.S. Court of Appeals for the Sixth Circuit recently held that a consumer plaintiff had Article III standing to sue because his federal Fair Debt Collection Practices Act claim was similar to a common law “intrusion upon seclusion” claim, even though it involved only a single unwanted call.

However, the Sixth Circuit also held that the defendant “extended business office” company that contacted the consumer for payment of outstanding medical bills was not a debt collector under the FDCPA.

A copy of the opinion in Ward v. NPAS, Inc. is available at:  Link to Opinion.

The consumer twice received medical treatment at a facility after signing agreements that stated that the consumer was responsible for charges not covered by insurance, the facility may “utilize the services of a third party” as an extended business office (EBO) for billing and account servicing, and while the account was being serviced by the EBO, it was not considered delinquent, past due or in default. The facility would “determine the account to be delinquent, past due, and in default” after its return from the EBO and the account could be referred to a collection agency.

After the consumer did not pay bills from the medical facility, the consumer’s accounts were referred to an EBO that mailed the consumer statements and left him messages. The EBO identified itself as “a company that is managing your account.” The consumer contacted a law firm, which erroneously sent a cease-and-desist letter to the wrong EBO.

The consumer then sued the EBO under the FDCPA, alleging that the EBO had not disclosed its identity as a debt collector, used a name other than its “true name,” and called him after he attempted to send a cease-and-desist letter.

On the EBO’s motion for summary judgment, the trial court held that the EBO did not qualify as a “debt collector” under the FDCPA. The consumer timely appealed. The appellate court previously found that the consumer did not have Article III standing but remanded. On remand, the consumer amended his complaint and submitted documents to show he had suffered concrete harm. The EBO again moved for summary judgment. The trial court denied the EBO’s motion as to standing but again granted the motion as to substantive liability. The consumer timely appealed.

As you may recall, to establish standing, a plaintiff must show (i) that she suffered an injury in fact; (ii) that was likely caused by the defendant; and (iii) that would likely be redressed by judicial relief. TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021) (citing Lujan v. Defs. of Wildlife, U.S. 555, 560–561 (1992)). An Article III injury, in turn, requires the “invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal citations and quotation marks omitted).

The consumer here relied on intrusion upon seclusion to show his concrete harm. The Sixth Circuit noted that unwanted phone calls are the “type of intrusive invasion of privacy” that this tort at common law sought to prevent, but that tort liability typically lies only when “telephone calls are repeated with such persistence and frequency as to amount to a course of hounding the plaintiff.” Gadelhak v. AT&T Servs., Inc., 950 F.3d 458, 462 (7th Cir. 2020)

Because the Sixth Circuit determined that the intrusion caused by unwanted phone calls bears a “close relationship” to the kind of harm that the common law sought to protect, the Court also reasoned that it did not matter that the volume of such calls “may be too minor an annoyance to be actionable at common law.” Gadelhak, 950 F.3d at 462–63, 463 n.2

Furthermore, the Sixth Circuit concluded that whether the consumer effectively notified the EBO of his wishes went to the merits of the consumer’s claim, not to standing. To have a “legally protected interest,” the consumer only needed to show that he “has a right to relief if the Court accepts [his] interpretation of the constitutional or statutory laws on which the complaint relies.” CHKRS, LLC v. City of Dublin, 984 F.3d 483, 488 (6th Cir. 2021). Assuming the consumer’s theory to be correct, the Court held that he did suffer an Article III injury by receiving an unwanted phone call from the EBO.

The Sixth Circuit next addressed the consumer’s appeal of the trial court’s grant of summary judgment. The trial court held that the EBO was not a debt collector, so it could not be liable for any of the FDCPA violations the consumer alleged.

The Sixth Circuit noted that a “debt collector” under the FDCPA is one who “either acquired a debt in default or has treated the debt as if it were in default at the time of acquisition.” Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 362 (6th Cir. 2012). Per the terms of the agreement, the consumer’s account would not be considered “delinquent, past due or in default” while the EBO held the account. Furthermore, the Court pointed out that there was nothing in the record to suggest that the medical facility considered the consumer’s account to be in default before it referred it to the EBO. Thus, the Court agreed with the trial court that the EBO company was not a debt collector under the FDCPA.

Accordingly, the Sixth Circuit affirmed the trial court’s grant of summary judgment in favor of the EBO company.

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.

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