In summer 2021, the U.S. Supreme Court issued its landmark decision in TransUnion, LLC v. Ramirez, holding that each and every member of a class must demonstrate a “concrete harm” to establish Article III standing to sue in federal court and recover individual damages. 141 S. Ct. 2190 (2021). The Court held that the central inquiry when assessing “concreteness” is “whether the asserted harm has a ‘close relationship’ to a harm traditionally recognized as providing a basis for a lawsuit in American courts—such as physical harm, monetary harm, or various intangible harms including . . . reputational harm.” Id. at 2200 (quoting Spokeo, Inc. v. Robins, 578 U.S. 330 (2016)). The decision clarified the Court’s previous jurisprudence regarding Article III standing and established a new framework for lower courts to apply.
In the wake of TransUnion, Article III standing has once again become a hotly contested issue in consumer class actions. Although TransUnion involved claims arising under the Fair Credit Reporting Act, federal courts have cited the decision in a variety of contexts.
The FDCPA
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.