A district judge in Chicago lamented how the Supreme Court and the Seventh Circuit have curtailed the ability of federal courts to enforce some consumer protection laws.
A discharged bankrupt filed a lawsuit in Chicago under the federal Fair Debt Collection Practices Act, or FDCPA, 15 U.S.C. § 1692-1692p. The plaintiff had received her discharge under chapter 7 and had listed a $165 debt owing to a pharmacy.
Ten days after discharge, the pharmacy sold the debt to a debt buyer. Two days after the purchase, the debt buyer sent a collection letter to the plaintiff-debtor. The debt buyer employed a third party to determine whether any of the debtors had filed bankruptcy, but the third party evidently did not find the plaintiff’s bankruptcy or discharge.
The plaintiff hired a lawyer who filed suit, alleging that the debt buyer made a false representation and thus violated Section 1692e(2), (10) of the FDCPA. The defendant filed a motion to dismiss, alleging a lack of jurisdiction because the plaintiff had no standing under Article III of the Constitution.
Under Spokeo Inc. v. Robins, 136 S. Ct. 1540 (2016), District Judge Matthew F. Kennelly explained in his August 23 opinion that constitutional standing under Article III requires an injury in fact that was “fairly traceable” to the defendant’s conduct and that is likely to be redressed by a favorable court ruling. In the case at bar, the defendant argued that the plaintiff had not suffered an injury in fact.
The plaintiff testified that she had suffered anxiety as a result of the dunning letter. She had been seeing a psychotherapist before receiving the letter but admitted that she had not discussed the letter with the therapist.
Applying the law to the facts, Judge Kennelly cited Seventh Circuit authority for the proposition that violation of a statutory right does not guarantee standing. More pertinent to the case at hand, he quoted the Seventh Circuit for saying that “stress by itself with no physical manifestations and no qualified medical diagnosis [does not] amount to a concrete harm” giving rise to Article III standing. Pennell v. Glob. Tr. Mgmt. LLC, 990 F.3d 1041, 1045 (7th Cir. 2021).
Judge Kennelly said that the standards laid down by the Supreme Court and the Seventh Circuit might lead a “reasonable observer” to believe that the courts had rendered the FDCPA a “dead letter.” The judge explained at greater length:
The statute has been consistently enforced through private litigation, as regulatory authorities are insufficiently staffed and financed to police the very large industry that exists around debt collection. The harm most likely to be caused by improper debt collection methods that contravene the statute is emotional harm — stress and anxiety. And most of those who are the targets of debt collectors by definition already owe money and thus are highly unlikely to have the financial wherewithal to consult a mental health professional who might be able — for a fee, presumably — to provide medical confirmation of a diagnosis. Thus if, as the Seventh Circuit now appears to require, a debtor must show an economic harm (e.g., payment or partial payment of the debt being collected) or a confirmed medical diagnosis of a claimed intangible harm, noncompliance with the FDCPA is likely to go unpoliced.
Binding on the court, Judge Kennelly said that the authorities required dismissal of the suit for lack of constitutional standing, because the plaintiff had been consulting a psychotherapist before the letter arrived but did not discuss the letter with her therapist.
If the plaintiff had testified that she consulted the therapist about the dunning letter and that the letter caused her to incur professional fees, “then the Court would be inclined to conclude that she had shown a sufficiently concrete harm,” Judge Kennelly said.
Dismissal for lack of standing meant that Judge Kennelly had no need for ruling on the defendant’s bona fide error defense.
Observations
The opinion instructs plaintiffs on how they should testify to ensure constitutional standing. But we know that lawyers are not permitted to coach clients on how to testify.
A district judge in Chicago lamented how the Supreme Court and the Seventh Circuit have curtailed the ability of federal courts to enforce some consumer protection laws.
A discharged bankrupt filed a lawsuit in Chicago under the federal Fair Debt Collection Practices Act, or FDCPA, 15 U.S.C. § 1692-1692p. The plaintiff had received her discharge under chapter 7 and had listed a $165 debt owing to a pharmacy.
Ten days after discharge, the pharmacy sold the debt to a debt buyer. Two days after the purchase, the debt buyer sent a collection letter to the plaintiff-debtor. The debt buyer employed a third party to determine whether any of the debtors had filed bankruptcy, but the third party evidently did not find the plaintiff’s bankruptcy or discharge.
The plaintiff hired a lawyer who filed suit, alleging that the debt buyer made a false representation and thus violated Section 1692e(2), (10) of the FDCPA. The defendant filed a motion to dismiss, alleging a lack of jurisdiction because the plaintiff had no standing under Article III of the Constitution.