Courts are Increasingly Dismissing No-Harm FDCPA Claims

Apr 12, 2021

Several recent decisions show courts are enforcing the need for plaintiffs to prove tangible statutory harm in order to meet standing requirement.

Ever since the U.S. Supreme Court’s 2016 decision in Spokeo Inc. v. Robins, debt collectors have held out hope that courts would begin limiting the number of meritless lawsuits advanced by plaintiffs who lack standing to sue because they allege, at best, technical violations of the law but no meaningful injury. Five years after Spokeo, the tide may finally be turning.

The legal doctrine of standing examines who is a proper plaintiff to bring a particular lawsuit. The “test” for standing was best articulated in a 1992 Supreme Court decision: To have standing, a plaintiff must demonstrate an injury-in-fact, caused by the alleged wrongdoing, and capable of redress by the court. If a plaintiff does not meet this requirement, a federal court will not have authority to hear the case and must dismiss it (although the same plaintiff may be able to bring the same claim or a similar claim in state court). Simply put, the standing requirement means no harm, no foul.  

The Spokeo decision arose in the context of a suit under the Fair Credit Reporting Act. The plaintiff in that case alleged that Spokeo—a “people search engine” where users can find information such as age, city and marital status of individuals—published inaccurate information about his life that was available for anyone to see.

When he filed his FCRA lawsuit, the lower courts wrestled with the standing issue because the plaintiff alleged little in the way of an actual injury flowing from the inaccurate information published by Spokeo. In its decision, the Supreme Court ultimately held that a plaintiff’s injury must be both “particular” and “concrete,” a two-pronged requirement that appeared to raise the bar for plaintiffs. The decision suggested that statutory-based causes of action, such as those under the Fair Debt Collection Practices Act, Telephone Consumer Protection Act and FCRA, would be harder to advance since plaintiffs would be required to allege not just a statutory violation, but some concrete and particular harm flowing from it.

It has taken some time for the promise of that FCRA decision to permeate the FDCPA litigation landscape. But as a slew of recent cases in federal appellate courts demonstrate, we are now seeing the promise of Spokeo play out in FDCPA decisions:

  • The 7th Circuit has been very active in dismissing FDCPA claims for lack of standing. Most recently, in Pennell v. Global Trust Mgmt, LLC, No. 20-1524, 2021 WL 925494, *3 (7th Cir. Mar. 11, 2021), the court concluded that the plaintiff’s claims of “stress and confusion” from an allegedly wrongful collection letter lacked sufficient concreteness to meet the injury-in-fact requirement. The Pennell decision is the latest in a line of cases in which the 7th Circuit has taken an active role in scrutinizing FDCPA standing questions under the Spokeo standard. See, e.g., Casillas v. Madison Ave. Assocs. Inc., 926 F.3d 329, 331 (7th Cir. 2019); Larkin v. Fin. Sys. of Green Bay Inc., 982 F.3d 1060, 1063 (7th Cir. 2020).

  • The D.C. Circuit held that a consumer’s confusion and other “informational” injuries, without any allegation by the plaintiff that he relied on misstatements in collection letters to his detriment, did not rise to the level of a concrete and particularized injury. See Frank v. Autovest LLC, 961 F.3d 1185, 1188 (D.C. Cir. 2020).

  • Building on the D.C. Circuit’s Autovest decision and the 7th Circuit decisions, the 11th Circuit recently dismissed a case on standing grounds where a plaintiff alleged only informational injuries that created a “risk of being defrauded” that never materialized. See Trichell v. Midland Credit Mgmt. Inc., 964 F.3d 990, 994 (11th Cir. 2020).

  • The 9th Circuit, albeit in an unpublished decision that carries less precedential value, also recently found an FDCPA plaintiff lacked standing where he made “a bare allegation of confusion” and did not rely to his detriment on any statement in an allegedly wrongful collection letter. Adams v. Skagit Bonded Collectors LLC, 836 F. App’x 544, 547 (9th Cir. 2020).

On the whole, these recent decisions demonstrate a new willingness by courts to strictly enforce the Supreme Court’s Spokeo edict that statutory harms must be tangible in order to meet the standing requirement of federal court jurisdiction. And they may prove to be a powerful defense against meritless consumer lawsuits. 

By Mark E. Rooney