Nevada Court Finds No Cognizable Injury-in-Fact in Avila Interest Disclosure Claim

Avila interest disclosure decisions have ebbed since the Second Circuit’s decision in Taylor v. Financial Recovery Services, but a new court decision popped up in District of Nevada that examined what actual har an interest disclosure caused to a consumer. In Martinez v. Aargon Agency, Inc., Case No. 2:17-cv-789 (D. Nev. Sep. 12, 2018), the court found that including an interest disclosure did not cause a cognizable injury-in-fact.

Factual and Procedural Background

Plaintiff incurred a debt with Univesity Medical Center of Nevada. The medical center placed the account with Aargon Agency, Inc. (Aargon) for collection. While attempting to collect the debt, Aargon sent a letter to plaintiff that included the Avila safe harbor disclosure. The letter also included an itemization of the balance, listing that "Interest Accrued: $0.00."

Plaintiff filed a Fair Debt Collection Practices Act (FDCPA) lawsuit against Aargon claiming that the agency included the interest accrual language to deceive and confuse plaintiff into paying the balance rather than excersing her rights to challenge the debt. Plaintiff also claimed that the letter is patently false because the interest disclosure is in direct contradiction with the debt itemization that suggests no interest accrued on the account.

Plaintiff and Aargon both filed motions for summary judgment. Plaintiff's motion rested on the argument that the least sophisticated consumer would be mislead by the letter and that the interest disclosure overshadows plaintiff's 1692g validation rights. Defendant's motion for summary judgment argued that the letter accruately reflected the balance as of the date the letter was sent because it included conditional langauge in the interest disclosure and that plaintiff's "entire claim fails because she has not suffered an injuiry-in-fact sufficient to confer standing."

The Decision

The court's decision focused soley on the standing issue because if plaintiff lacked standing, the remaining issues are moot. Citing Spokeo, the court noted that an injury-in-fact must be both "concrete and particularized," even if it is a pure procedural violation except for in some circumstances.

While the court found that plaintiff was, indeed, subjectively confused by the letter, the letter is not misleading under the objective "least sophisticated consumer" standard. At the crux of this issue is whether or not Aargon intended to charge interest on the account. Aargon claims that it intended to do so but had not yet begun to charge interest at the time the letter was sent. Plaintiff herself admitted that she understood that the debt would accrue interest. The court found that even the least sophisticated consumer would not be able to infer from this letter that the balance would never accrue interest. 

Based on this, the court found that plaintiff "has not shown sufficient evidence to support her allegation that the letter was, in fact, false or misleading. Without doing so, she has not carried her burden to show that she suffered an injury-in-fact sufficient to confer standing."

The court granted Aargon's motion for summary judgment and denied plaintiff's motion.

insideARM Perspective

One question that usually comes to mind when the typical hyper-technical FDCPA lawsuits come down the pipe is "where is the actual harm to the consumer?" Sometimes even jurisdictions don't agree whether there is an FDCPA violation on the same letter language issue.

Even though the court stated that the issue of standing is supposed to be "distinct from the merits of the litigant's claims," it appears that is not what the court did here. The finding on standing was based almost entirely on the merits of the false and misleading claim.

Regardless, here we have a case where a court consciously looked to see whether the consumer suffered any actual harm in the FDCPA contextrather than following the path of least resistance by stating that an alleged FDCPA injury counts as one of those sufficient procedural injuries for post-Spokeo Article III standing.