WDTN Judge Uses TransUnion Ruling to Grant MTD in FDCPA Case Over Debt Amount

Originally published in ARM Compliance Digest - July 19 by AccountsRecovery.net

A District Court judge in Tennessee is the latest to use the Supreme Court’s ruling in TransUnion v. Ramirez as grounds to determine that a plaintiff lacked standing to sue a collector for allegedly violating the Fair Debt Collection Practices Act because it indicated in a collection letter that additional fees could be added to the balance that was due. More details here.

WHAT THIS MEANS, FROM LAUREN VALENZUELA OF ACTUATE LAW: Things in the accounts receivable industry have been moving fast, and in case you missed it – in June of this year the Supreme Court issued a ruling of epic proportions for our industry and many others. In Ramirez v. TransUnion the Supreme Court clarified that even if a defendant violates a statute, the statutory violation by itself does not rise to the level of a "concrete injury" for purposes of Article III standing. In other words, for a plaintiff to have standing, they must have a real-world injury if they want to recover damages in a lawsuit.

In Kale v. PreCollect, we got to see Ramirez in action. To establish standing a plaintiff has the burden of establishing s/he " ‘(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’ " (Kale citingSpokeo v. Robins, 136 S. Ct. 1540, 1547 (2016)). The court in Kale did not mince words when it stated: "this case boils down to whether the alleged procedural violations of the FDCPA, taken alone, are injuries in fact."

For a plaintiff to establish an injury in fact, Supreme Court precedent has established that the injury "must be both ‘concrete’ and ‘particularized’" (id., citing Spokeo at 1548). The court in Kale explained how the plaintiff could have demonstrated injury in fact in one of two ways: (1) by showing that the defendant’s violation of the statute caused her concrete harm, or (2) by showing how the defendant’s violation "created a risk of harm that Congress intended to prevent" (Kale citing Buchholz v. Meyer, 946 F.3d 855, 863 (6th Cir. 2020)). Prior to Ramirez, the Sixth Circuit established the risk of harm inquiry was the only way a plaintiff could show a statutory violation by itself was a concrete injury (Kale citing Garland v. Orlans). The court acknowledged how the Supreme Court has since clarified, with its Ramirez ruling, that the risk of harm analysis only applies in lawsuits "seeking injunctive relief and cannot be used to establish standing in a suit for damages." Here, the plaintiff was seeking damages (and no injunctive relief) and therefore could not use risk of harm analysis to establish the statutory violation alone caused an injury in fact. Hence, the plaintiff could not meet the first element required for standing and the case was dismissed.

The FDCPA’s strict liability framework has encouraged a lot of litigation over statutory violations, and consequently, it has also encouraged a lot of vexatious litigation. Perhaps Kale shows us that the Ramirez ruling will serve as a balancing pendulum to the FDCPA’s strict liability framework going forward. Or perhaps plaintiff’s will simply get better at articulating their injuries, so they pass "concrete" and "particularized" muster. Or perhaps we will see an increase in plaintiff’s leveraging state consumer protection laws and an increase in state court filings where there are more lenient standards for standing. Only time will tell. For now, I chose to see the Ramirez ruling as a small ray of hope for defendants encountering frivolous FDCPA litigation, and as a win for those consumers who are truly harmed by illegal debt collection acts and practices since court resources will not be as easily diverted as before.