In an unpublished opinion, the U.S. Court of Appeals for the Eleventh Circuit recently held that a consumer alleging that she did not receive disclosures required by the federal Fair Debt Collections Practices Act (FDCPA) sufficiently alleged that she suffered a concrete injury, and thus satisfied the standing doctrine’s injury-in-fact requirement under Article III of the U.S. Constitution.

In so ruling, the Court confirmed that the FDCPA only applies to debts that are in default when the debt collector obtained them, rejecting the consumer’s argument that “a debt can be in default before the debtor is ever asked to pay a balance.”

A copy of the opinion is available at: Link to Opinion.

A consumer filed a putative class action against a debt collector, alleging that a dunning letter used by the debt collector violated the FDCPA because it lacked required disclosures under 15 U.S.C. § 1692g.  The consumer did not allege that she suffered any actual damages from the alleged failure to include the disclosures, but alleged that the letter made her “very angry” and that she “cried a lot.”

The district court granted summary judgment in the defendant’s favor, and the consumer appealed.

The Court began its analysis by explaining that “[t]he sole issue raised at summary judgment was whether, at the time the debt at issue was obtained by [the debt collector], the debt was in default, as contemplated by the FDCPA.”

As you may recall, the FDCPA exempts “any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity … concerns a debt which was not in default at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F).

The debt collector argued that the debt was not in default when it obtained the debt from the initial creditor, and therefore the FDCPA did not apply to the subject dunning letter.

The consumer argued on appeal that “a debt can be in default before the debtor is ever asked to pay a balance.” The Eleventh Circuit disagreed.

The Court first addressed the issue of standing, which was raised by the debt collector in a notice of supplemental authority filed before oral argument.

The supplemental authority cited was the Supreme Court of the United States’ recent decision in Spokeo v. Robins, which addressed “standing’s injury-in-fact requirement.” The debt collector argued that the consumer’s injury “was not sufficiently concrete to support Article III standing because [she] incurred no actual damages from [the debt collector’s] violation of the FDCPA.” The consumer argued in response that the debt collector waived the standing issue by not raising it earlier, and “that a violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury-in-fact.”

The Eleventh Circuit explained that the standing doctrine comes from Article III of the United States Constitution, which “limits federal court jurisdiction to actual cases and controversies. … Accordingly, ‘standing is a jurisdictional question which must be addressed prior to and independent of the merits of a party’s claims.’”

Because under the case law the issue of subject matter jurisdiction can be raised at any time while a case is pending, and moreover, the court must consider standing sue sponte even if the parties have not raised the issue, the Court concluded that although the debt collector failed to raise its standing argument below, the Court would address the issue to ensure the consumer has standing.

The Eleventh Circuit then discussed the holding in Spokeo, in which the Supreme Court explained that in order 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.” While an injury must be “concrete,” which means “real” and not “abstract,” the Supreme Court in Spokeo held that “an injury need not be tangible to be concrete and reiterated that Congress may elevate to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.” Accordingly, “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact.”

Relying on the Supreme Court’s earlier decision in Havens Realty Corp. v. Coleman, which held that a tester-plaintiff had standing to sue under the Fair Housing Act, the Eleventh Circuit concluded that “[j]ust as the tester-plaintiff had alleged injury to her statutorily-created right to truthful housing information, so too has [the consumer] alleged injury to her statutorily-created right to information pursuant to the FDCPA.”

By requiring a debt collector to include certain disclosures in the initial communication with a debtor or within five days thereafter and creating a private right of action for failure to comply with FDCPA, the Eleventh Circuit found that “Congress has created a new right—the right to receive the required disclosures in communications governed by the FDCPA—and a new injury—not receiving such disclosures.”

The Eleventh Circuit held that the consumer “sufficiently alleged that she has sustained a concrete—i.e., ‘real’—injury because she did not receive the allegedly required disclosures.”

According to the Eleventh Circuit, the violation of her right to receive the required disclosures was “not hypothetical or uncertain” because she did not receive information to which she was entitled under the FDCPA.

The Eleventh Circuit explained that, while this was not “economic or physical harm that courts often expect, the Supreme Court has made clear an injury need not be tangible to be concrete.”  The Court held that, because “this injury is one that Congress has elevated to the status of a legally cognizable injury through the FDCPA … [the consumer] has sufficiently alleged that she suffered a concrete injury, and thus, satisfies the injury-in-fact requirement.”

Turning to the merits, the Court affirmed the district court’s ruling granting summary judgment in the debt collector’s favor because the debt at issue was not in default when the debt collector obtained it and thus the FDCPA did not apply to the dunning letter.