6th Cir. Holds Mere Confusion Does Not Impart Article III Standing, Reverses FDCPA Ruling in Favor of Defendant

The U.S. Court of Appeals for the Sixth Circuit recently reversed a trial court order granting summary judgment in favor of the defendant on a consumer’s claim that the defendant violated the federal Fair Debt Collection Practices Act.

In so ruling, the Sixth Circuit held that, even though the defendant’s failure to properly identify itself in the phone calls confused the plaintiff and led to him sending a cease and desist request to the wrong entity, confusion by itself does not establish “a concrete injury for Article III purposes.” 

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Therefore, the Court held, the consumer did not suffer “more than a bare procedural violation of the FDCPA” as required to establish the standing necessary to pursue his claims. 

A copy of the opinion in Ward v. Nat’l Patient Account Servs. is available at:  Link to Opinion.

The consumer incurred medical expenses after treatment with a medical provider. The provider hired a company to collect the debt. The collection company allegedly left several voice messages while attempting to collect the debt.

The consumer filed suit alleging claims against the collection company (“defendant”) under the FDCPA arising out of the alleged voice mails where the defendant did not accurately identify itself.  The consumer claimed that the defendant’s failure to accurately provide its correct legal name confused him.  As a result of this confusion, the consumer allegedly sent a cease and desist letter to the wrong entity.

Specifically, the consumer claimed that the defendant violated section 1692d(6) of the FDCPA, which provides that a “debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt[,]” including the “placement of telephone calls without meaningful disclosure of the caller’s identity.” 

The consumer also claimed that the defendant violated section 1692e(14), which provides that a “debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt[,]” including “us[ing] any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.”

The defendant moved for summary judgment arguing that it did not meet the definition of a debt collector under the FDCPA, and the trial court granted the motion. This appeal followed.

On appeal, the defendant argued that the consumer lacked Article III standing. Although the defendant did not raise this issue with the trial court, the Sixth Circuit observed that it has an independent obligation to determine its jurisdiction to hear an appeal.

As you may recall, standing requires that the “plaintiff must have (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.” The plaintiff bears the burden of setting forth facts that demonstrate standing. 

The issue in this appeal was whether the plaintiff suffered an injury in fact. This requires that “the injury must be (1) particularized and (2) concrete.”  The dispute here concerned whether the consumer suffered a concrete injury. 

The consumer claimed that he suffered a concrete injury for two reasons. First, he argued that the violation of his procedural rights under the FDCPA established a concrete injury. Second, he claimed that the confusion caused by the phone calls and expense of the counsel that he retained demonstrated that he suffered a concrete injury. 

The Sixth Circuit observed that in TransUnion LLC v. Ramirez, the Supreme Court of the United States recently clarified what is required to show that a violation of a procedural right established a concrete injury and, as a result, the plaintiff “must show either that the procedural harm itself is a concrete injury of the sort traditionally recognized or that the procedural violations caused an independent concrete injury.”  After conducting that inquiry here, the Sixth Circuit concluded that the consumer lacked Article III standing to pursue his alleged claims.

As a result of the alleged FDCPA violations the consumer argued that the FDCPA created an enforceable right to know who is calling about a debt because the defendant’s failure to correctly provide its full legal name concretely harmed him. The consumer further argued that this harm is closely related to the invasion of privacy harm that most states recognize. 

The Sixth Circuit rejected the consumer’s argument because the defendant’s alleged failure to disclose its full legal name does not resemble a traditional harm “regarded as providing a basis for a lawsuit,” as required to establish a concrete injury. 

The Sixth Circuit acknowledged that most states recognize actions to enforce the right of privacy, including “the tort of intrusion upon one’s right to seclusion.” However, the Court noted that not receiving full and complete information about the name of a defendant does not closely resemble the tort of intrusion upon seclusion because this common law tort typically requires proof that the defendant “intentionally intrude[d], physically or otherwise, upon the solitude or seclusion of another or his privacy affairs or concerns.”

The consumer’s alleged harm did not impact his privacy.  Instead, it merely confused him. The defendant did not share his private information with a third party or publicize his private information. Thus, the Sixth Circuit found that the consumer’s claimed harm did “not bear a close relationship to traditional harms” and the consumer could not establish standing based solely upon the alleged statutory violations.

The consumer advanced several additional reasons for why he suffered a concrete injury that stemmed from the alleged statutory violation. First, the consumer claimed that the defendant’s failure to properly identify itself in the phone calls confused him and led to him sending a cease and desist request to the wrong entity. The Sixth Circuit rejected this argument, because confusion by itself does not establish “a concrete injury for Article III purposes.”

The consumer next argued that he retained counsel to stop the calls and that this action constitutes a concrete harm flowing from the statutory violation. The Sixth Circuit disagreed that the expense of hiring counsel established a concrete harm because applying this “logic to any plaintiff who hires counsel to affirmatively pursue a claim would nullify the limits created under Article III.”

Finally, the consumer argued that an additional call that he received after he sent his cease and desist letter to the wrong entity concretely harmed him. The Sixth Circuit declined to consider this argument because the consumer did not clearly allege in his complaint that he received another phone call after sending the cease and desist letter or that this additional call harmed him.

Thus, the Sixth Circuit held that consumer did not demonstrate that he suffered “more than a bare procedural violation of the FDCPA” and that he lacked Article III standing to pursue his claims. Therefore, the Sixth Circuit vacated the trial court’s order granting summary judgment and remanded the case to be dismissed without prejudice for lack of subject matter jurisdiction.