A Seventh Circuit district court recently clarified that a Fair Debt Collection Practice (“FDCPA”) plaintiff may not satisfy Article III’s injury-in-fact requirement by alleging confusion and aggravation, even where a complaint generally alleges actual damages.

In Suxstorf v. Portfolio Recovery Assocs. LLC, Plaintiff brought claims under the FDCPA, 15 U.S.C. § 1692e against Defendant, Portfolio Recovery Associates LLC, a debt collector. In connection with an outstanding debt, Defendant sent Plaintiff a “permanent hardship” letter, in which Defendant offered to pause or cease its collection efforts upon a showing of permanent hardship. Defendant attached to the letter a “Permanent Hardship Request Form,” in which it requested certain consumer information to evidence permanent hardship, including: the consumer’s date of birth, the last four digits of the consumer’s Social Security number, the consumer’s employment status, whether the consumer is receiving unemployment benefits, whether the consumer is receiving Social Security benefits or any other financial assistance from the government, any other sources of income and a description of any financial hardship and the duration of that hardship.

Plaintiff alleged that Defendant’s request for such information was under false pretenses and that the actual purpose of requesting the information was to determine whether to bring suit against the consumer based on the information obtained from the permanent hardship letter. Plaintiff alleged that this practice violated, among other statutes, the FDCPA, 15 U.S.C. § 1692e(10), which prohibits a debt collector from using “any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” 15 U.S.C. § 1692e(10). Plaintiff alleges that he was confused and misled by the letter and that he was required to spend time and money investigating the letter and the consequences of his response.  

Plaintiff filed suit in Milwaukee County Circuit Court. Defendant removed the case to the Eastern District of Wisconsin. Plaintiff filed a motion to remand, arguing that the complaint did not allege a “concrete injury” sufficient to assert Article III standing. Defendant proffered two arguments in opposition to Plaintiff’s motion to remand: (1) the Plaintiff’s claims for actual damages satisfied the concrete injury prong for Article III standing, primarily relying on the Seventh Circuit’s decision in Thornley, 984 F.3d 1241 (7th Cir. 2021)—which involved alleged violations of the Illinois Biometric Privacy Act (“BIPA”); and (2) it would be improper to remand the class claims because the defined class includes those who suffered a concrete injury.  

In rejecting the Defendant’s arguments, the Court emphasized that “[a] plaintiff cannot satisfy the injury-in-fact element of standing simply by alleging that the defendant violated a disclosure provision of a consumer-protection statute.” A procedural violation of the FDCPA, unadorned with any concrete harm or an “appreciable risk of harm” is insufficient for purposes of Article III standing. Moreover, a “mere reference to ‘actual damages’ in the complaint’s prayer for relief does not establish Article III standing.” A complaint must nevertheless allege a concrete injury-in-fact to proceed in federal court. And it is immaterial that Plaintiff may have “carefully crafted his complaint” to avoid litigating in federal court.  

The Court looked to Seventh Circuit precedent, which provided examples of concrete harms that may arise from FDCPA violations: “an FDCPA violation might cause harm if it leads a plaintiff to pay extra money, affects a plaintiff’s credit, or otherwise alters a plaintiff’s response to a debt.” The Court ultimately concluded that Plaintiff’s allegations here that he was “confused” and “misled” were not sufficiently concrete:

A debtor confused by a dunning letter may be injured if she acts, to her detriment, on that confusion—if, for example, the confusion leads her to pay something she does not owe, or to pay a debt with interest running at a low rate when the money could have been used to pay a debt with interest running at a higher rate. But the state of confusion itself is not an injury. See, e.g., Trichell v. Midland Credit Management, Inc., 964 F.3d 990 (11th Cir. 2020). If it were, then everyone would have standing to litigate about everything.

The Court likewise held that Plaintiff’s allegation he “spent time and money investigating one of the communications he received” was insufficient, relying on authority holding that retaining counsel or expending litigation costs do not constitute concrete injuries. “If hiring an attorney or spending money to litigate do not constitute injuries-in-fact sufficient to confer Article III standing, ‘spend[ing] time and money investigation [a communication] and the possible consequences of responding to [that communication] do not suffice.”  

Finally, the Court rejected Defendant’s argument opposing remand on the grounds that the class included putative class members who suffered concrete harm. It reasoned that “the natural consequence of keeping this case in federal court would be that a plaintiff who lacked a concrete injury of his own would be seeking to act as the representative of a class plaintiffs who may have suffered a concrete injury. It is unlikely that a federal court would find an uninjured plaintiff adequate under Rule 23 to represent injured class members.”

This case serves as an important reminder that a plaintiff’s allegations of actual damages arising out of violations of a federal statute may not be sufficient to support subject matter jurisdiction in federal court, and plaintiffs may artfully plead their allegations of harm to avoid litigating in federal court—at least for now in the Seventh Circuit.    

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