The FDCPA and Spokeo, Inc. v. Robbins, 136 S. Ct. 1540, 1547 (2016)

February 25, 2021 – We recently faced a motion to dismiss a FDCPA claim on the basis of lack of standing under Spokeo, Inc. v. Robbins, 136 S. Ct. 1540, 1547 (2016). You may find our argument helpful in your own FDCPA if you face the same issue in the Sixth Circuit. Here it is:

Current State of the Law on Standing.
There are three elements to Article III standing. “The plaintiff ‘must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.’” Buchholz v. Meyer Njus Tanick, PA, 946 F.3d 855, 861 (6th Cir. 2020) (quoting Spokeo, Inc. v. Robbins, 136 S. Ct. 1540, 1547 (2016).). The Supreme Court has long held that Congress may “define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.” Id. (citing Lujan v. Defs. Of Wildlife, 504 U.S. 555, 580 (1992).). Congress acted within in its authority to do so when it enacted the FDCPA in 1978.

Injury-in-Fact.
A plaintiff must first show an injury-in-fact, which has two sub-elements, concreteness and particularization. Id. (citing Lujan v. Defs. Of Wildlife, 504 U.S. 555, 560 (1992).). Particularization requires that the injury “must affect the plaintiff in a personal and individual way.” (Internal citations omitted.) Spokeo, 136 S. Ct. at 1548. However, particularization alone is not sufficient to establish an injury in fact. Id. “An injury in fact must also be concrete.” Id.

In terms of the FDCPA, the Sixth Circuit follows Spokeo, which recognizes statutory violations fall into two broad categories:

(1) Where the violation of a procedural right granted by statute is sufficient in and of itself to constitute concrete injury in fact because Congress conferred the procedural right to protect a plaintiff’s concrete interests and the procedural violation presents material risk of real harm to that concrete interest; [or] (2) where there is a “bare” procedural violations that does not meet this standard in which case a plaintiff must allege “additional harm beyond the one Congress has identified.”

Macy v. GC Servs. Ltd. P’ship, 897 F.3d 747, 756 (6th Cir. 2018) (quoting, in part, Spokeo 136 S. Ct. at 1549.) Further, “both tangible and intangible injuries,” as well as a “risk of real harm” could “satisfy the requirement of concreteness.” Id. at 753 (quoting, in part, Spokeo at 1549.). The Sixth Circuit, and district courts within the circuit, have long recognized emotional distress damages as the type of intangible damages recoverable under the FDCPA. See Buchholz, 946 F.3d at 863-864 (discussing Smith v. Reliant Grp. Debt Mgmt. Sols., 2018 WL 3753976, at *3 (E.D. Mich. Aug. 8, 2018) and Link v. Recovery Sols. Grp., LLC, 2018 WL 1980657, at * 5 (E.D. Mich. Apr. 27, 2018)); Davis v. Creditors Interchange Receivable Mgmt., LLC, 585 F. Supp. 2d 968, 971 (N.D. Ohio 2008) (citing Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097, 50109 (Dec. 13 1988) (Section 813-Civil Liability) (“actual damages” for FDCPA violations include “damages for personal humiliation, embarrassment, mental anguish, or emotional distress” as well as “out-of-pocket expenses.”)); Becker v. Montgomery, Lynch, 2003 WL 23335929, at *2 (N.D.Ohio) (FDCPA permits recovery of actual damages for emotional distress); Minick v. First Federal Credit Control, Inc.1981 U.S. Dist. LEXIS 18622, at *3–4 (N.D.Ohio) (upholding award of actual damages for emotional distress); Harding v. Check Processing, LLC, No. 5:10CV2359, 2011 WL 1097642, at*2 (N.D. Ohio Mar. 22, 2011) (“While the FDCPA does not define ‘actual damages,’ it is commonly accepted that a prevailing plaintiff may recover for emotional distress damages.”).

Moreover, a party does not need to “satisfy the elements of the tort of intentional
infliction of emotional distress before the jury can find that the defendants caused them actual
damages.” Davis v. Creditors Interchange Receivable Mgmt., LLC, 585 F. Supp. 2d 968, 973
(N.D. Ohio 2008). The testimony of the plaintiff alone suffices to establish emotional distress
damages provided that a reasonable explanation is provided about the circumstances of the
injury, not mere conclusory statements. Bach v. First Union Nat’l Bank, 149 Fed.Appx. 354, 361
(6th Cir. 2005).

Traceability.
“The standard for establishing traceability for standing purposes is less demanding than the standard for proving tort causation.” Buchholz v. Meyer Njus Tanick, PA, 946 F.3d 855, 866. The burden of “alleging that their injury is ‘fairly traceable’ to defendant’s challenged conduct is ‘relatively modest[.]” Id. (citing Bennett v. Spears, 520 U.S. 154, 171 (1997).). Even harms that flow “indirectly from the action in question can be said to be ‘fairly traceable’ to the that action for standing purposes.” (Internal citations omitted.) Id.

Redressability.
Generally, “[a]n injury is redressable if a court order can provide “substantial and meaningful relief.” Parsons v. U.S. Dept. of Justice, 801 F.3d 701, 715 (6th Cir. 2015) (quoting Larson v. Valente, 456 U.S. 228, 243 (1982). However, “[c]laims for violations of procedural rights are treated uniquely under the standing inquiry. ‘The person who has been accorded a procedural right to protect his concrete interest can assert that right without meeting all the normal standards for redressability and immediacy.’” Id. at 712 (quoting Lujan v. Defenders of Wildlife 504 U.S. 555, 572, n. 7.). “[A] plaintiff satisfies the redressability requirement when he shows that a favorable decision will relieve a discrete injury to himself. He need not show that a favorable decision will relieve his every injury.” (Emphasis in original.) Id. at (715 quoting Larson at 244, n. 15.). The Supreme Court has acknowledged statutory damages payable to the injured party satisfy the redressability prong. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 103 (1998).

Recent cases out of the Sixth Circuit.
Two recent cases out of the Sixth Circuit have muddied the standing doctrine under the FDCPA: Buchholz v. Meyer Njus Tanick, PA, 946 F.3d 855, 861 (6th Cir. 2020) and Hagy v. Demers & Adams, 882 F.3d 616 (6th Cir. 2018). However, there is a common thread between these cases. In Buchholz, the plaintiff sued a debt collector for sending a letter that was both accurate, and required under the FDCPA. In Hagy, the plaintiff sued a debt collector after it sent a letter that could only be interpreted as beneficial. The underlying position screams clearly from the halls of the Sixth Circuit – do not sue a debt collector for communicating information that is either (1) accurate and required under the law, or (2) beneficial to a consumer. However, the minutiae of the analyses in these cases created fodder for debt collectors to challenge otherwise colorable claims. They have cast doubt on cases, including this one, where standing is not at issue. Regardless, neither of these cases drastically alter the existing case law on standing under the FDCPA. Further, even under both these cases Ms. Smith still has standing.

The impact of Buchholz.
Buchholz involved two identical letters sent from the same law firm. 946 F.3d 855. Each letter was the initial communication from a debt collector regarding two different credit card accounts. Id. Each stated the communication was from a debt collector and provided contact information to either challenge or pay the debts. Id. The debtor did not dispute the validity of underlying debts. Id. Further, the debtor did not allege the content of the letters lacked proper notice, threatened improper legal action, contained incorrect information, or otherwise ran afoul of the FDCPA. Id. Instead, the debtor claimed the letters violated the FDCPA by giving the impression that an attorney had reviewed each account and determined the validity of the debts. Id. It further alleged that, given the law firm’s high-volume practice, it was impossible that an attorney reviewed the accounts prior to sending the letters. Id. The only claim for damages was that the letters made the debtor feel anxious that he would be sued at some point in the future. Id. These were the facts alleged in the Complaint. Id. The law firm moved to dismiss. Id. The trial court granted that motion. The Sixth Circuit affirmed that ruling. Id.

In affirming the lower court’s ruling, the Sixth Circuit held that the debtor lacked standing. Id. In dicta, the court discussed whether a bare allegation of anxiety satisfies the concreteness prong of the injury-in-fact element of standing. Id. at 863-865. However, the Sixth Circuit did not rule on this issue. Id. at 865 (stating “[n]evertheless, we need not decide whether a bare anxiety allegation, in the abstract, fails to satisfy the injury-in-fact requirement. Buchholz fails to establish his Article II standing for other reasons…”). Buchholz does not overturn any prior binding precedent regarding standing under the FDCPA discussed above.

Ultimately, the Sixth Circuit held the debtor lacked standing for three reasons. First, the fear of a future harm was not an injury-in-fact unless the future harm is imminent. (Internal citations omitted.) Id. at 865. The court reasoned the fear of litigation was not impending because (1) the letter did not threaten litigation, (2) there were no other communications threatening a lawsuit, and (3) the plaintiff did not allege that he refused to pay the debt. Id. Second, the injury was self-inflicted and therefore did not satisfy the traceability requirement. Id. at 866. For this, the court reasoned that because the plaintiff did not dispute the debts his associated anxiety was not traceable to anything in the debt collection letters. Id. In other words, he only had himself to blame. Third, the plaintiff did not allege a violation of a procedural right that Congress elevated to protect a concrete interest. Id. Here, the court considered two factors to determine whether an intangible injury is cognizable. Id. at 868. The court first looked to congressional judgment because it is “well positioned to identify intangible harm that meet minimum Article III requirements.” Id. (quoting Spokeo, 135 S. Ct. at 1550.) The court then looked to the second factor considering whether the intangible harm is analogous to a harm recognized at common law. Id. The Sixth Circuit held the first factor weighted in favor of dismissal because the plaintiff did not allege he did not owe the debts nor did he claim that it was otherwise not legally collectable (e.g. barred due to statute of limitations or res judicata). Id. at 870. Further, the plaintiff did not allege that the letters miscalculated the debt or contained any misstatements or omissions that would could cause him to waive a procedural right under the FDCPA. Id. As to the second factor, the Sixth Circuit found this too weighed in favor of dismissal because the letters did not mention litigation. Id. Therefore, the common law claims of malicious prosecution and intentional infliction of emotional distress were not analogous harms. Id.

The Sixth Circuit went through a rigorous analysis to reach an easy conclusion. Plain and simple, Buchholz was a bad case. It should have never been pursued. Essentially, the plaintiff sued a debt collector for sending accurate information and doing what the FDCPA required. 15 U.S.C. § 1692g requires debt collectors to send debt validation letters prior to beginning collection efforts. The debt collector did exactly that, and got sued in return. It is easy to see why the Sixth Circuit affirmed the dismissal. The concerning aspect of this bad case, is the impact it has on solid FDCPA claims, such as this lawsuit. The concurring opinion offers some insight. It provides a thorough discussion of precedent supporting that anxiety alone can be a concrete Article III injury. Id. at 870-875. Nevertheless, despite the majority’s doubts, it did not rule that anxiety alone is insufficient. Id. at 865. Regardless, as discussed below, Ms. Smith has presented more than adequate evidence that she suffered an injury-in-fact that is fairly traceable to ICS’s conduct. These injuries are certainly redressable in this lawsuit.

Other pertinent recent case law out of the Sixth Circuit.
Hagy v. Demers & Adams, 882 F.3d 616 (6th Cir. 2018) is yet another example illustrating the Sixth Circuit’s distaste for “gotcha litigation.” In Hagy, an attorney sent a letter on behalf of his lender-client to the attorney for the plaintiffs-borrowers. 882 F.3d 616. The letter indicated the plaintiffs would not have to pay the balance of their loan and that the lender would not pursue any other remedies against the plaintiffs. Id. However, the letter failed to include a notice identifying the law firm as a debt collector pursuant to 15 U.S.C. § 1692e(11). Id. Despite the letter’s positive news, the plaintiffs sued the attorney. Id. The plaintiffs did not allege any injury, tangible or intangible. Id. The only issue was whether the omission of the statutorily required notice satisfied the injury-in-fact element of standing. Id. The Sixth Circuit held “because Congress made no effort to show how a letter like this would create a cognizable injury in fact and because we cannot see any way in which that could be the case, we must dismiss the case for lack of standing.” Id at 623.

Similar to Buchholz, Hagy was a bad case. Common sense dictated the result. However, as the Sixth Circuit aptly noted “[i]t’s difficult, we recognize, to identify the line between what Congress may, and may not do in creating an ‘injury in fact.’ Put five smart lawyers in a room, and it won’t take long to appreciate the difficulty of the task at hand.” Id.

Within months of the Hagy decision, the Sixth Circuit declined to extent Hagy in Macy v. GC Servs. Ltd. P’ship, 897 F.3d 747, 756 (6th Cir. 2018). Macy involved a class action lawsuit against a debt collection agency whose letters failed to notify debtors of their rights to contest the alleged debts in writing. 897 F.3d 747. The issue was whether this violation alone was enough to show a concrete injury without the need to allege any additional harm. Id. In what appears to be an about face from Hagy, the Sixth Circuit held the plaintiffs demonstrated a sufficient “risk of real harm” to a congressionally created interest. Id. at 757. The court found that the “letters present a risk of harm to the FDCPA’s goal of ensuring that consumers are free from deceptive debt-collection practices because the letters provide misleading information about the manner in which the consumer can exercise the consumers statutory right to obtain verification of the debt or information regarding the original creditor.” Id. The Sixth Circuit further held that this risk of harm was traceable to the violation because it created the possibility of an unintentional waiver of the FDCPA’s debt validation rights. Id. To reconcile its departure from Hagy, the court noted that Hagy did not conduct a risk-of-harm analysis because no risk of harm was alleged. Id. at 761.

At first blush, the holdings of Hagy and Macy are difficult to reconcile. The holdings seem schizophrenic. However, Hagy and Macy serve as guideposts to the well-established precedent on FDCPA standing. Hagy holds a simple lesson: if the communication is beneficial in all respects there is no concrete injury. Macy reinforces that Congress does have the authority to elevate injuries, given sound rationale. Buchholz is yet another incarnation of Hagy. It warns litigants from bringing lawsuits where a debt collector is conveying accurate information and otherwise complying with the law. The theme throughout all of these cases creates a balance. Unfortunately, the language is easily misconstrued and used to suppress claims that, prior to these cases, would have easily passed the threshold burden of standing. Nevertheless, as discussed below, Ms. Smith has shown standing for each of her claims under the FDCPA.