The FDCPA imposes myriad restrictions and obligations on debt collectors’ communications with consumers and third parties. Since the TransUnion decision, courts have grappled with whether a violation of the FDCPA’s requirements alone confers Article III standing or whether plaintiffs must show that they suffered tangible adverse consequences. This issue often arises in cases involving purported “informational injuries,” emotional distress, or the disclosure of a consumer’s financial information to others.
Informational injuries involving misrepresentations might confer Article III standing. In TransUnion, the Court noted that an “informational injury” could arise where plaintiffs “allege that they failed to receive any required information” or “that they received it in the wrong format,” but an “informational injury that causes no adverse effects cannot satisfy Article III.” TransUnion, 141 S. Ct. at 2214 (emphasis in original) (internal quotations omitted). Since then, courts have repeatedly held that plaintiffs lack standing based solely on the omission of information required by the FDCPA in letters or verbal communications. For example, in Wadsworth v. Kross, Lieberman & Stone, Inc., the U.S. Court of Appeals for the Seventh Circuit reaffirmed that a plaintiff did not suffer any “concrete harm” simply because a letter omitted her “rights” under section 1692g(a) because she never paid the debt and did not “rely” on the “communication to her detriment in any other way.” 12 F.4th 665, 666–69 (7th Cir. 2021). The U.S. Court of Appeals for the Sixth Circuit reached a similar conclusion in Ward v. National Patient Account Services Solutions, Inc., where a debt collector allegedly violated the FDCPA by failing “to state its full name” in voice mails. 9 F.4th 357, 360 (6th Cir. 2021). The Sixth Circuit found that the statutory violation lacked any “common-law or historical analogue” and that the plaintiff’s alleged “confusion” and “economic expense of retaining counsel” were not concrete harms. Id. at 362–63.
Courts are divided, however, where collection letters contain alleged misrepresentations as opposed to omissions. On one end of the spectrum is Ozturk v. Amsher Collection Services, Inc., where the defendant allegedly disguised a collection letter as an “informational” communication about identity theft “while also misrepresenting [its] obligations concerning identity theft.” No. CV 21-18317, 2022 WL 1602192, at *4 (D.N.J. May 20, 2022). The court found that merely “alleging that a debt collector has provided (and the debtor has subsequently consumed) false information concerning the collection of a debt . . . confers Article III standing.” Id.; see also Butela v. Midland Credit Mgmt. Inc., No. 2:20-CV-1612, 2022 WL 1237047, at *2 (W.D. Pa. Apr. 27, 2022) (misleading statement was an “invasion of a debtor’s legally protected interest . . . under the FDCPA and is sufficiently actual, concrete, and particularized”). However, just one month after the Ozturk decision, the same judge found that “misleading information” in a collection letter does not confer “standing irrespective of any additional harm suffered” and that a plaintiff must show “detrimental reliance” on the misrepresentation. Vaughan v. Fein, Such, Kahn & Shepard, P.C., No. CV 21-16013, 2022 WL 2289560, at *4–6 (D.N.J. June 24, 2022). And this is consistent with several other decisions finding that a plaintiff must take some affirmative action or refrain from acting to the plaintiff’s benefit based upon supposedly misleading statements. See Rogers v. LVNV Funding, LLC, No. 21CV796, 2022 WL 2292836, at *1 (E.D.N.Y. June 24, 2022) (no standing based on collection letter because “the claimed risk of economic harm” never “materialized”); Spillman v. Mason, Schilling & Mason Co. LPA, No. 3:21-CV-269, 2022 WL 696801, at *2 (W.D. Ky. Mar. 8, 2022) (no standing based on “false” threat to sue where plaintiff did not make “a payment on the debt or would have disputed the debt if the letter had been worded differently”).
Emotional distress usually does not satisfy Article III’s injury requirement. As with purely informational injuries, courts typically find that emotional distress resulting from an FDCPA violation is not a concrete injury. In TransUnion, the Court took “no position on whether or how such an emotional or psychological harm could suffice for Article III purposes.” TransUnion, 141 S. Ct. at 2211 n.7. The Seventh and Sixth Circuits have since held that “psychological states induced by a debt collector’s letter . . . fall short” and that “worry, like confusion, is insufficient to confer standing.” Pierre v. Midland Credit Mgmt., Inc., 29 F.4th 934, 939 (7th Cir. 2022); Wadsworth, 12 F.4th at 668 (same); Ward, 9 F.4th at 363 (same). Several district courts have followed suit, but those decisions are not unanimous. Compare Madlinger v. Enhanced Recovery Co., LLC, No. CV 21-00154, 2022 WL 2209929, at *6 (D.N.J. June 21, 2022) (“confusion and misleading debt communications . . . do not amount to a concrete, injury-in-fact”); Klein v. Receivable Mgmt. Grp., Inc., No. 8:21-CV-0678, 2022 WL 998366, at *7 (M.D. Fla. Mar. 30, 2022) (“mere confusion . . . cannot establish standing”); and Wan v. Trans Union, LLC, No. 22CV115, 2022 WL 955290, at *2 (E.D.N.Y. Mar. 30, 2022) (“emotional damages falls short”), with Benjamin v. Rosenberg & Assocs., LLC, No. CV 19-3012, 2021 WL 3784320, at *6 (D.D.C. Aug. 26, 2021) (“‘mental distress’ falls squarely within the type of harm Congress sought to redress” with the FDCPA). Despite this lack of uniformity among district courts, it seems clear that a concrete injury under Article III requires, at a minimum, more than generalized and perfunctory allegations of “emotional distress” or “confusion.”
Disclosures to third parties sometimes rise to the level of concrete injury. Certain courts have held that a concrete injury exists when a debt collector violates the provisions of the FDCPA prohibiting a debt collector from publicizing a consumer’s debt. See 15 U.S.C. §§ 1692b(2), 1692c(b), 1692f(7)–(8). For example, in Palacio v. Medical Financial Solutions, the defendant allegedly violated FDCPA section 1692f(8) by printing its name on an envelope, which indicated that it was “in the debt collection business.” No. 21 CV 1288, 2022 WL 2132505, at *3 (N.D. Ill. June 14, 2022). After the plaintiff’s parents saw the envelope, she had to “explain to them that she was being contacted by . . . a debt collector”; the court found that “the reputational harm that comes from explaining to others that you’re in significant financial trouble” is “concrete.” Id. at *4; see also Panebianco v. Selip & Stylianou, LLP, No. 21-CV-5466, 2022 WL 392229, at *1–2 (E.D.N.Y. Feb. 9, 2022) (plaintiff suffered reputational harm when defendant allegedly posted the complaint in a collection lawsuit to plaintiff’s door in violation of section 1692c(b)).
Conversely, while the U.S. Court of Appeals for the Eleventh Circuit initially found that sharing a debtor’s information with a third-party mailing vendor was sufficiently analogous to “defamation” to confer standing, that decision has been vacated, and numerous courts have disagreed with its holding. Compare Hunstein v. Preferred Collection & Mgmt. Servs., Inc., 17 F.4th 1016, 1038 (11th Cir.), reh’g en banc granted, opinion vacated, 17 F.4th 1103 (11th Cir. 2021), with Rembert v. Am. Coradius Int’l, LLC, No. 22 C 1093, 2022 WL 1211510, at *2 (N.D. Ill. Apr. 25, 2022). Thus, disclosures to third parties that perform ministerial duties for debt collectors likely will not constitute a concrete injury sufficient to satisfy the standing requirement.
Case law applying TransUnion within the context of TCPA claims is still relatively scarce and underdeveloped. Notably, to date, the Eleventh Circuit is the only federal appellate court that has analyzed TCPA claims under the TransUnion rubric.
The Drazen court ruled that all members of a class must have Article III standing. The Eleventh Circuit recently applied TransUnion to vacate certification of a TCPA settlement class because the class definition included members who could never have Article III standing under Eleventh Circuit precedent. Drazen v. Pinto, — F.4th —, No. 21-10199, 2022 WL 2963470, at *4–7 (11th Cir. July 27, 2022). The court held that all members of a Rule 23(e) settlement class must have Article III standing to recover damages and explicitly rejected the proposition that plaintiffs with no standing in the Eleventh Circuit could be a part of a nationwide class, even if they may have standing in another circuit. Id. at *6.
In Drazen v. Pinto, the district court certified a nationwide settlement class defined to include “[a]ll persons” who received texts and calls from the defendant during the class period. Id. at *1–2. The district court acknowledged that the scope of the settlement class was problematic because it included individuals who received only a single text message, and, under existing Eleventh Circuit precedent, such individuals did not have Article III standing to assert TCPA claims. Id. at *2, *5 (citing Salcedo v. Hanna, 936 F.3d 1162, 1168 (11th Cir. 2019)). Nonetheless, the court held that the class definition was permissible because “only the named plaintiff must have standing.” Id. at *5 (citation omitted). The district court further noted that this was a “nationwide class action” and determined that the class members in question “might have standing in another circuit” even if they did not have standing under Eleventh Circuit law. Id. (citation omitted).
An objector appealed the certification decision on unrelated grounds, and the Eleventh Circuit raised the issue of Article III standing sua sponte. See id. at *4. The Eleventh Circuit rejected the district court’s reasoning and held that under TransUnion “when a class seeks certification for the sole purpose of a damages settlement under Rule 23(e), the class definition must be limited to those individuals who have Article III standing.” Id. at *5 (citing TransUnion, 141 S. Ct. at 2208). The court explicitly rejected the proposition that plaintiffs with no standing in the Eleventh Circuit could be a part of the nationwide class because they may have standing in another circuit. Id. at *6. The court held that “[a]ny class definition that includes members who would never have standing under [Eleventh Circuit] precedent is a class definition that cannot stand.” Id. The Eleventh Circuit vacated the settlement class certification and remanded the case to the district court with orders to redefine the class “with the benefit of TransUnion.” Id. at *7. The court also asked the parties to address whether a plaintiff’s receipt of a single cell phone call in violation of the TCPA is sufficient to confer Article III standing under TransUnion, as this issue remains unsettled within the Eleventh Circuit. Id.
The impact of Drazen outside the Eleventh Circuit remains to be seen. What is clear, however, is that class-action litigants of all stripes will need to consider how Drazen may impact a court’s assessment of Article III standing issues in the class-action context going forward.
District court opinions rely on pre-TransUnion law to find standing. Several district courts have applied TransUnion to resolve Article III standing issues raised in motions to dismiss and for class certification. These courts have consistently relied upon Article III standing decisions that predate TransUnion and have generally concluded that the plaintiffs at issue have standing. Consequently, the TransUnion decision has not yet caused a significant deviation from how district courts have previously analyzed standing in TCPA cases.
For instance, in Black v. First Impression Interactive, Inc., the U.S. District Court for the Northern District of Illinois relied upon TransUnion and the Seventh Circuit’s pre-TransUnion decision in Gadelhak v. AT&T Services, Inc. to deny the defendants’ motion to dismiss. Black, No. 21-cv-3745, 2022 WL 169652, at *2–3 (N.D. Ill. Jan. 19, 2022); Gadelhak, 950 F.3d 458 (2020). The Black plaintiff alleged that the defendants made autodialed and prerecorded telemarketing calls to her cell phone, which was purportedly on the National Do-Not-Call Registry. Black, 2022 WL 169652, at *1. The defendants’ motion to dismiss argued that the plaintiff failed to allege Article III standing because she did not “provide any factual support for her allegations that [d]efendants’ phone calls caused her lost time and nuisance,” and she failed to “explain how [such harm] related to the alleged calls.” Id. at *2. The court held that the defendants’ standing arguments “ignored plaintiff’s allegation that the phone calls were an ‘invasion of privacy,’ and the Seventh Circuit’s holding [in Gadelhak] that ‘unwanted text messages’ constitute a ‘concrete harm’ sufficient to confer standing.” Id. at *2; see also Gebka v. Allstate Ins. Co., No. 19-cv-06662, 2021 WL 4951520 (N.D. Ill. Oct. 25, 2021) (citing Gadelhak (but not TransUnion) to deny defendant’s motion to dismiss and holding that unspecified allegations in plaintiff’s complaint “alleg[ed] an actual concrete harm to his right to privacy, which Congress sought to protect by enacting the TCPA”); Fischman v. MediaStratX, LLC, No. 20-cv-83, 2021 WL 3559639, at *3–4 (E.D.N.C. Aug. 10, 2021) (plaintiff “plausibly alleged a cognizable constitutional injury sufficient to support Article III standing” because he allegedly “received unwanted calls from [defendant] on multiple occasions despite having placed his number on the Do-Not-Call registry”).
Furthermore, in Swanson v. National Credit Services, Inc., the U.S. District Court for the Western District of Washington granted class certification and held that the plaintiff’s alleged injuries from receiving unwanted debt-collection calls were “consistent with the behavior Congress sought to deter in enacting the TCPA” and “concrete enough to confer Article III standing for all putative class members.” No. 19-cv-1504, 2022 WL 1746776, at *2–3 (W.D. Wash. May 31, 2022) (emphasis added) (citing TransUnion, 141 S. Ct. at 2203; Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1043 (9th Cir. 2017)); see also Lackawana Chiropractic, P.C. v. Tivty Health Support, LLC, No. 18-cv-649, 2021 WL 3827733, at *2–6 (W.D.N.Y. Aug. 27, 2021) (relying upon TransUnion to find Article III satisfied because the “alleged injury” of receiving a fax in violation of the TCPA “is no bare procedural violation divorced from any concrete harm” under U.S. Court of Appeals for the Second Circuit precedent in Melito v. Experian Marketing Solutions, Inc., 923 F.3d 85, 93 (2d Cir. 2019)).
In light of these district court decisions, TCPA litigants should ensure that they are aware of the pre-TransUnion Article III standing jurisprudence in the jurisdiction where their case is pending.
Practical Considerations for Litigators
Due to the increased focus on Article III standing following TransUnion, litigators should be mindful of the following issues:
- What happens if a defendant prevails on a motion to dismiss because a plaintiff lacks Article III standing?
When a complaint fails to establish Article III standing, courts typically dismiss the complaint with leave to amend or without prejudice due to a lack of jurisdiction. See MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., 935 F.3d 573, 581–82 (7th Cir. 2019). In the event of a dismissal without prejudice, a plaintiff may have an opportunity to refile the case in state court. Thus, if a defendant raises an Article III standing argument, it should be prepared to litigate the claims in state court.
- What are the standing requirements in state court?
States can establish their own standing requirements. ASARCO, Inc. v. Kadish, 490 U.S. 605, 617 (1989). Consequently, state courts do not necessarily have the same “concrete harm” requirement as federal courts. Moreover, standing requirements can vary drastically from state to state. See, e.g., Rosenbach v. Six Flags Ent. Corp., 2019 IL 123186, ¶ 40 (plaintiff need not allege actual injury or adverse effect beyond a violation of the Illinois Biometric Information Privacy Act ); Ind. Fam. Inst., Inc. v. City of Carmel, 155 N.E.3d 1209 (Ind. Ct. App. 2020) (“Even when some constitutionally protected interest is involved, a party must show adequate injury or the immediate danger of sustaining some injury to establish standing.”); Tex. Propane Gas Ass’n v. City of Houston, 622 S.W.3d 791, 799 (Tex. 2021) (“The Texas standing requirements parallel the federal test for Article III standing.”).
- How should litigants address Article III standing issues if they have already removed a case from state court to federal court?
In most circumstances, a party should avoid moving to dismiss for lack of Article III standing if it removed the case to federal court. By removing a case to federal court, the party is asserting that the court has jurisdiction. A subsequent motion arguing that the plaintiff lacks Article III standing may be viewed as unreasonable. See, e.g., Keller v. Client Servs., Inc., 2021 WL 558794 (N.D. Ill. Nov. 30, 2021) (“[R]emoving an action to federal court and then arguing against standing later is not reasonable.”).
- How does the TransUnion decision impact the standing analysis for class certification?
Footnote 4 of the TransUnion decision explicitly states that the Court is not addressing “whether every class member must demonstrate standing before a court certifies a class.” TransUnion, 141 S. Ct. at 2208 n.4. Consequently, litigants should review case law in the relevant jurisdiction to identify how courts have addressed this issue. See, e.g., Drazen, 2022 WL 2963470, at *4–7 (discussed above); Kohen v. Pac. Inv. Mgmt. Co., LLC, 571 F.3d 672 (7th Cir. 2009) (“[A] class should not be certified if it is apparent that it contains a great many persons who have suffered no injury at the hands of the defendant.”).
James J. Morrissey is a partner at Pilgrim Christakis LLP in Chicago, Illinois. Matthew M. Morrissey is a partner and Sophie H. Gotlieb is an associate at Faegre Drinker Biddle & Reath LLP in Chicago, Illinois. The authors would like to thank Bob Bullington, a summer associate at Faegre Drinker Biddle & Reath LLP, for his assistance with this article.