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Six December FDCPA Decisions Favorable to Collectors

  • Written by Steel Rose

In December 2020, the Seventh Circuit issued no less than six rulings examining and raising the bar for Article III standing in Fair Debt Collection Practices Act ("FDCPA") suits.

The Court has taken a hard stance, refusing to find standing where plaintiff debtors cannot plausibly allege or prove any concrete harm as a result of defendants’ conduct. The Court’s decisions illustrate the proper approach to standing issues at the pleading stage, discussing its implications in 12(b)(6) and 12(b)(1) motions, as well as at the summary judgment stage.

The issue of standing with respect to statutory violations has been a hot button topic for the past five years, stemming primarily from the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). In its six no-nonsense decisions, each summarized below, the Seventh Circuit continues to develop upon Spokeo and its progeny, charting course for more favorable treatment of debt collectors in FDCPA cases at a fundamental level.

For those in the industry, now is a good time to examine any pending matters to determine whether a push for dismissal or favorable resolution is possible. The Gordon & Rees Consumer Protection Litigation practice group has been very successful in this arena and stands by to assist.

1. Larkin v. Fin. Sys. of Green Bay, Nos. 18-3582, 19-1557, 2020 U.S. App. LEXIS 39058 (7th Cir. Dec. 14, 2020).

Plaintiff debtors appealed their dismissal of allegations under sections 1692e, 1692f, and 1692g of the FDCPA. The plaintiffs received a dunning letter that stated in part: “You want to be worthy of the faith put in you by your creditor.” The complaints failed to provide “any allegation of harm—or even an appreciable risk of harm—from the claimed statutory violation.” Larkin, 2020 U.S. App. LEXIS 39058, at *11.

In finding the plaintiffs lacked standing, the Court, in a decision authored by Chief Judge Sykes, reasoned that the plaintiffs could not identify a concrete injury that might give rise to standing at the pleading stage. Specifically, the Court set forth the following factual allegations that the plaintiffs failed to assert, but would have given rise to standing:

  • The communications caused the plaintiffs to pay debts they did not owe or created an appreciable risk that they might do so;
  • The plaintiffs were confused or misled to their detriment by the statements in the dunning letters, or otherwise relied on the letters to their detriment;
  • The plaintiffs would have pursued a different course of action were it not for the statutory violations; and
  • The collection letters deterred the plaintiffs from seeking medical care or prevented providers from wanting to treat them.

The Court relied heavily on Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) and Casillas v. Madison Avenue Associates, Inc., 926 F.3d 329 (7th Cir. 2019), both of which set the stage for the firm and favorable standing decisions described herein.

2. Gunn v. Thrasher, Buschmann & Voelkel, P.C., No. 19-3514, 2020 U.S. App. LEXIS 39267 (7th Cir. Dec. 15, 2020).

The plaintiffs alleged that a law firm seeking to collect $2,000 in overdue homeowner association dues sent a dunning letter containing false or misleading statements. The letter stated that the creditor may seek foreclosure, a remedy the plaintiffs believed to be unreasonable and costly to a law firm in pursuit of only $2,000. The plaintiffs therefore alleged that this statement was false or misleading under the FDCPA.

The Seventh Circuit’s decision, authored by the ever-succinct Judge Easterbrook, reiterated the reasoning in Larkin, holding that a violation of a substantive right conferred by the FDCPA does not necessitate standing. The plaintiffs’ mere allegation that they were “annoyed” was not enough. The plaintiffs failed to illustrate how the defendant’s conduct actually injured them, and therefore could not establish Article III standing.

3. Brunett v. Convergent Outsourcing, Inc., No. 19-3256, 2020 U.S. App. LEXIS 39270 (7th Cir. Dec. 15, 2020). To read more click here