D.C. Circuit Has Strict Rules for Constitutional Standing in FDCPA Suits

The Court of Appeals for the District of Columbia added gloss to the Supreme Court’s Spokeo decision from 2016, and in the process erected additional obstacles to lawsuits by consumers under the federal Fair Debt Collection Practices Act, or FDCPA.

Adopted in 1970, the FDCPA was landmark consumer-protection legislation. For identifying a debt-collection activity that violates the act, the plaintiff is entitled to actual damages or statutory damages of $100 to $1,000 per violation. In addition, the plaintiff can recover costs, attorneys’ fees, and possibly punitive damages.

In the case before the D.C. Circuit, a woman was sued for defaulting on a car loan. Court papers included affidavits by individuals saying they were employees or agents of the lender. In fact, they were employees of the lender’s collection agent.

The debtor filed a putative class action suit against the lender and the agent under the FDCPA, 15 U.S.C. § 1962(e), alleging false, deceptive or misleading representations. The following month, the lender withdrew the collection suit with prejudice.

Back in the FDCPA suit, the district court denied a motion by the lender and the agent to dismiss for failure to state a claim. After discovery, the defendants filed a motion for summary judgment. The district court granted the motion, ruling on the merits that the plaintiff’s testimony failed to state a claim. The plaintiff appealed to the circuit.

Circuit Judge Thomas B. Griffith upheld dismissal, but on different grounds: jurisdiction. Without reaching the merits of an FDCPA violation in his June 9 opinion, Judge Griffith ruled there was no case or controversy under Article III of the Constitution because the plaintiff had failed to show by affidavit or evidence that she had suffered “a concrete and particularized injury-in-fact” as required by Spokeo.

In Spokeo, the high court held that alleging a violation of a statutory right by itself will not establish constitutional standing without alleging an injury-in-fact. Spokeo Inc. v. Robins, 136 S. Ct. 1540 (2016). To read ABI’s report on Spokeo, click here.

Spokeo requires a plaintiff to show an invasion of a legally protected right that is “concrete and particularized.” To be “particularized,” it “must affect the plaintiff in a personal and individual way.” Id. at 1458.

The plaintiff’s complaint passed constitutional muster by making general allegations about injury resulting from the defendant’s conduct. On summary judgment, however, the plaintiff’s testimony at deposition failed to satisfy Spokeo, according to Judge Griffith.

Judge Griffith said that the plaintiff did not identify any concrete injury traceable to the false representations or that she had been “harmed in any relevant way during the collection action by the contested affidavits.” Although the plaintiff testified that the collection action caused her stress and inconvenience, “she never connected those general harms to the affidavits,” the judge said.

Judge Griffith held that the plaintiff lacked Article III standing because she “was unaffected by the conduct that underlies her FDCPA claims.”

To counter the defendant’s contentions under Spokeo, the plaintiff said she had incurred legal fees in the collection suit. Judge Griffith dismissed the argument, saying “there’s no evidence that the contested statements rendered litigation more expensive or onerous.”

Judge Griffith also rejected the idea that the FDCPA requires no harm beyond a violation of the statute. Quoting Spokeo, he said that “‘Article III standing requires a concrete injury even in the context of a statutory violation.’” Id. at 1549. He found nothing in the FDCPA to suggest “that every violation of the provisions implicated here — no matter how immaterial the infraction — creates a cognizable injury.”

Judge Griffith went on to say that a false statement about the affiants’ employer “is certainly capable of causing a concrete and particularized injury. But [the plaintiff] has not demonstrated that these statements had that effect. Without that showing, [the plaintiff] lacks standing — even if [the defendants] violated the FDCPA.” [Emphasis in original.]

Judge Griffith acknowledged that Congress enacted the FDCPA to protect unsophisticated consumers. Still, he said, “Congress’s effort to protect plaintiffs cannot relieve them of the requirement to establish Article III standing.” He cited the Seventh Circuit for saying that the FDCPA is “is rife with procedural requirements and substantive prohibitions that do not necessarily trigger concrete injuries when violated.”

The tests on the merits and for constitutional standing are different. Judge Griffith explained that the merits involve an objective analysis of whether an unsophisticated consumer would be misled. For constitutional standing, he said that the plaintiff must show “a subjective — that is, an actual — personal injury for standing.”

Judge Griffith made a distinction at the end of the opinion giving plaintiffs an avenue for showing standing. He said that a plaintiff “need not suffer the same harm that underlies his statutory claim. For instance, a plaintiff could submit evidence of investigatory injuries — e.g., resources spent uncovering or confirming the truth — rather than outright deception.” [Emphasis in original.]

Observations

The plaintiff had flimsy claims in the first place and might have established standing by having better preparation for deposition. However, cases like this raise a nagging question: Will Spokeo be applied rigorously to bankruptcy?

For example, suppose that someone has violated the discharge injunction or the automatic stay. (Assume there’s no problem with Taggart v. Lorenzen.) What type of harm must the debtor show to establish constitutional standing? If an individual debtor demonstrates a willful violation of the automatic stay under Section 362(k), will the claim be dismissed unless the debtor also shows “concrete” injury?