No. 192 ___ Perspectives on Developments in the Law from Sharp-Hundley, P.C. __ January 2021
7th Circuit Hands Down New Rules On Standing
By John T. Hundley, Sharp Thinking Editor
Dramatic changes in litigation under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (FDCPA) – and probably in federal litigation generally – are likely as a result of a rash of FDCPA decisions handed down by the Seventh U.S. Circuit Court of Appeals last month.
The cases – Larkin v. Finance System of Green Bay, Inc., 982 F.3d 1060 (7th Cir. Dec. 14, 2020); Gunn v. Thrasher, Buschmann & Voelkel, P.C., 982 F.3d 1069 (7th Cir. Dec.15, 2020); Bazile v. Finance System of Green Bay, Inc., 983 F.3d 274 (7th Cir. Dec. 15, 2020); Spuhler v. State Collection Service, Inc., 983 F.3d 282 (7th Cir. Dec. 15, 2020); and Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067 (7th Cir. Dec. 15, 2020) – all dealt with the federal requirement of standing in FDCPA suit contexts, and are likely to drastically reduce the availability of judicial remedies under that statute.
However, because standing in federal courts is a function of the constitutional requirement of justiciability, the decisions will have impacts on federal litigation generally.
Seminal Decision: The seminal opinion of the five decisions was Larkin. Larkin announced standards for standing that apply in FDCPA cases and, by implication, all federal litigation, as a result of the constitution’s limitation of the federal judiciary’s jurisdiction to “cases and controversies”.
“To establish standing, a plaintiff has the burden to establish that he has ‘(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 ruling,’” Larkin stated, quoting Spokeo, Inc. v. Robins, __ U.S. __, 136 S.Ct. 1540 (2016). “At the pleading stage, the standing inquiry asks whether the complaint ‘clearly … allege(s) facts demonstrating each element’ in the doctrinal tests.”
“To establish injury in fact, a plaintiff must show that he or she suffered ’an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical’”, Larkin continued, quoting Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). Under the particularization requirement, “the plaintiff himself must have personally suffered an actual injury or an imminent threat of injury” (court’s emphasis).
On the concreteness requirement, the court quoted Spokeo and noted that “Congress may identify and elevate historically non-cognizable intangible harms to the status of cognizable injuries, and when it does so, ‘its judgment is … instructive and important’” but “not conclusive,” because “Congress cannot override the case-or-controversy requirement” of the constitution. “[S]tanding requires a concrete injury even in the context of a statutory violation.”
“An FDCPA plaintiff must allege a concrete injury regardless of whether the alleged statutory violation is characterized as procedural or substantive,” Larkin said. “It’s not enough for an FDCPA plaintiff to simply allege a statutory violation; he must allege (and later establish) that the statutory violation harmed him or presented an appreciable risk of harm to the concrete interest that Congress sought to protect.” Because neither complaint in Larkin alleged any harm or appreciable risk of harm, the plaintiffs’ actions based on the statutory violations were dismissed.
Procedural v. Substantive Provisions: The following day, the court made clear that annoy-ance from debt collection efforts was insufficient and that merely characterizing a provision as “substantive” rather than “procedural” did not confer standing. “The Supreme Court has never thought that having … one’s dander up creates a case or controversy,” it said in Gunn. And “the asserted violation of a substantive right conferred by the [FDCPA] does not guarantee the plaintiff’s standing.” See also Brunett (“the need for injury in fact is a constitutional rule that does not depend on how one characterizes the statute involved”).
Confusion Not Enough: In Brunett, plaintiff admitted at deposition that the allegedly offending letter had not injured her, but argued that it had caused confusion. “A debtor confused by a dunning letter may be injured if she acts, to her detriment, on that confusion,” the court said. “But the state of confusion is not itself an injury.” The analysis was unchanged when plaintiff argued the letter was “intimidating”. “Attaching an epithet such as ‘intimidation’ to a letter does not show that injury occurred….[W]here’s the concrete harm?” See also Bazile (“nonreceipt of information to which a plaintiff is entitled under a statute may amount to a concrete injury, but only if it impairs the plaintiff’s ability to use that information for a substantive purpose that the statute envisioned”).
Not Just A Pleading Matter: The cases decided December 15 make clear that standing is not just a matter of pleading. Indeed, in many circumstances they usher in a trial-type hearing at the beginning of the case to determine whether standing allegations are based in fact.
“Plaintiff’s complaint may survive dismissal as a matter of pleading,” the court said in Bazile. “But that’s not enough for the district court to decide the merits of the action; the truthfulness of the facts necessary for standing have been called into doubt, requiring further inquiry into whether the court has subject-matter jurisdiction…. The appropriate mechanism to revolve factual disputes is an evidentiary hearing on the defendant’s motion to dismiss under [Federal Rule of Civil Procedure] 12(b)(1).” See also Spuhler (“the plaintiff must supply proof, by a preponderance of the evidence or to a reasonable probability, that standing exists”).
Summary Judgment: The cases also show that the elements of standing must be shown on motion for summary judgment and trial. “To demonstrate standing at the summary judgment stage of litigation, the plaintiffs must ‘set forth by affidavit or other evidence specific facts’ demonstrating that they have suffered a concrete and particularized injury that is fairly traceable to the challenged conduct and likely redressable by a judicial decision,” stated Spuhler, quoting Lujan. “If those facts are later controverted, the plaintiff must adequately support them with evidence adduced at trial.”