Circuit Split on Standing Gets Wider: 11th Circuit Tosses FDCPA False/Misleading Claim

The U.S. Supreme Court decision in Spokeo v. Robins was all the rage when it was first released in 2016. In reality, it caused a messy aftermath of case law related to Article III standing that ultimately led to a big circuit split in the FDCPA context. This week, the Eleventh Circuit Court of Appeals (11th Circuit) further solidified this split when it found that a plaintiff who claims consumers might be misled by a debt collection communication, but he himself was not misled, lacks Article III standing to bring an FDCPA claim.

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Factual and Procedural Background

In Trichell v. Midland Credit Mgmt, Inc., at issue were collection letters sent by defendant to several consumers. The letters contained “preapproved” discounted payment plans on time-barred accounts. The letters also included a time-barred debt disclosure that read, “The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau.”

Two plaintiffs sued defendant in two separate lawsuits, both alleging that this language was false and misleading. One suit alleged that the language could mislead a consumer into thinking that defendant could could sue or credit report the account—the ol’ “will not” versus “cannot” wording debacle of time-barred debt disclosures. The other suit alleged that the language was misleading because it did not warn about the consequences of a partial payment on a time-barred debt.

The district court dismissed each case, and both were appealed to the 11th Circuit. In its decision, the 11th Circuit combined the cases.

Decision on Standing

According to the decision, neither party argued standing in their respective initial briefs, and standing was not discussed in the district court opinions. Yet, standing became the crux of the cases after the 11th Circuit, on its own accord, requested that the parties brief the issue. The appellate court concluded that both plaintiffs lacked standing, whichever way the issue was sliced.

Poignantly, the court found:

With no plausible allegation that they were ever at substantial risk of being misled, Trichell and Cooper cannot show standing based on such a risk to others.

The court delved into several different theories of standing, and came to the same conclusion in each.

Theory 1: No detrimental reliance

First, the court looked at history to see when an intangible injury—such as the one here, since plaintiffs failed to show that they themselves were actually misled by the letters—qualifies as concrete. The closest example the court could find to a false/deceptive/misleading claim is one of misrepresentation, which requires that the plaintiff relied on the misrepresentation to their detriment and had actual damages. Plaintiffs were unable to show either element in their claims before the 11th Circuit.

Theory 2: Congressional intent

Next, the court looked at congressional intent to determine whether Congress intended intangible, purely statutory damages to meet the standing threshold. The court notes:

The FDCPA’s statutory findings contain one sentence identifying the harms against which the statute is directed: “Abusive debt collection practices contribute to [a] number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” 15 U.S.C. § 1692(a). These serious harms are a far cry from whatever injury one may suffer from receiving in the mail a misleading communication that fails to mislead.

…

The FDCPA’s private cause of action reinforces this analysis. It provides that a person may recover “any actual damage sustained by such person as a result of” an FDCPA violation and “such additional damages as the court may allow.” 15 U.S.C. § 1692k(a). This formulation suggests that Congress viewed statutory damages not as an independent font of standing for plaintiffs without traditional injuries, but as an “additional” remedy for plaintiffs suffering “actual damage” caused by a statutory violation.

Theory 3: Standing based on risk

Next, the court rejected plaintiffs’ arguments that they had standing based on risk. The court was unpersuaded with the idea that potential risk to others is sufficient. Instead, it found that plaintiffs failed to show that the letters posed any risk of harm to themselves, and that any risk that may have existed dissipated by the time the suit was filed. Regarding the latter, the court noted that the “complaints explain perfectly well why the collection letters were arguably misleading,” which indicates that plaintiffs could not allege that they would be misled in the future.

Theory 4: Standing based on informational injuries

Last, the court rejects plaintiffs' theory that their standing is based on informational injuries. The primary reason for this rejection was because, unlike other statutes where informational injuries might serve as standing, the FDCPA sections invoked by the plaintiffs are not public disclosure statutes that require the disclosure of certain information. Instead, these invoked sections only requires that if a debt collector communicates with a consumer, that communication must not be misleading.

And the gravamen of the plaintiffs’ complaints is not that they sought and were denied desired information, but that they received unwanted communications that were misleading and unfair. The informational-injury cases thus are inapposite.

insideARM Perspective

Regardless of the way the standing issue is sliced, the 11th Circuit found that plaintiffs lacked Article III standing because they themselves were not misled by the communication. This is huge, and might put the kibosh on the myriad false/deceptive/misleading claims brought by the frequent filer attorneys in the 11th Circuit.

In its decision, the court recognizes that there is a circuit split on this issue. Might this be yet another industry-related case that sees its way up to the U.S. Supreme Court’s steps? That would sure be interesting.

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