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Year-End Review of 2022 FDCPA Appellate Decisions

This article summarizes all 2022 FDCPA published decisions from the federal Circuit Courts of Appeal. These cases and 2022 unpublished appellate decisions––those not appearing in F.4th––and 2022 federal district court decisions can be found in future updates to NCLC’s Fair Debt Collection. The published 2022 decisions summarized here are from the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Tenth, and Eleventh Circuits. The sixteen decisions are organized below under nine topics.

Appellate Decisions on Constitutional Standing

The Supreme Court decisions in TransUnion L.L.C. v. Ramirez, 141 S. Ct. 2190 (2021) and Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) addressed whether the injury a consumer suffered due to an inaccurate credit report met the concreteness requirement for Article III federal court standing. The 2022 published appellate decisions considering federal court standing in cases raising claims under the FDCPA are summarized infra. 

For more discussion on constitutional standing in federal court FDCPA cases see “Practice Implications of June 25 Supreme Court Decision Ramirez Decision,” and for a more detailed, updated analysis, see NCLC’s Fair Debt Collection § 11.15.  If an FDCPA case is filed in state court and removed to federal court, the case will be remanded to state court if the federal court lacks Article III standing.  For a state-by-state analysis of state court standing requirements, see NCLC’s Fair Debt Collection Appx. I.

Cooper v. Retrieval-Masters Creditors Bureau, Inc. (Cooper I), 42 F.4th 675 (7th Cir. 2022). After winning on the merits in an FDCPA case, the consumer appealed the lower court’s decision to only award attorney fees until the date of a mediation, where collector’s settlement offer was rejected. The Seventh Circuit held that this was an abuse of discretion where the offer was not a formal Rule 68 offer.  The Seventh Circuit also rejected a standing challenge by the debt collector, holding that res judicata barred the court from considering a standing challenge where the defendant did not file an appeal to the final judgment on the merits.

Ewing v. MED-1 Sols., L.L.C., 24 F.4th 1146 (7th Cir. 2022). In two consolidated cases, consumers alleged violations of § 1692e(8) when the collector failed to report alleged debts as disputed. In both cases, the Seventh Circuit found that the consumers satisfied the concreteness prong of standing because a violation of § 1692e(8) is analogous to the harm caused by common law defamation. The evidence of dissemination by the collector to the consumer reporting agency, which understood the defamatory significance of the report and took the information into account when determining creditworthiness, was sufficient to prove publication to a third party.

In Ewing’s case, the Seventh Circuit affirmed dismissal of the § 1692e(8) claim because the collector maintained procedures to direct disputes received by fax to the legal department. The court concluded that the collector was entitled to a bona fide error defense despite the absence of procedures to address faxes that were forwarded to the wrong department. In Webster’s case, however, the court concluded that the collector was not entitled to the bona fide error defense where it ceased monitoring its fax machine without notice and without disconnecting the machine, which continued to issue receipt confirmations. The court held that the collector had no reasonable procedure in place to address faxed disputes or ensure that they would no longer receive faxed disputes.

Hunstein v. Preferred Collection and Mgmt. Servs., Inc., 48 F.4th 1236 (11th Cir. Sept. 8, 2022) (en banc). Consumer alleged a violation of § 1692c(b) when the collector disclosed information about his debt to a mail vendor. Sitting en banc, the majority concluded that the consumer did not have standing because he failed to allege a concrete harm. Specifically, the majority held that the disclosure was not analogous to a traditionally recognized tort of public disclosure of private facts because “[t]ransmitting information that no one reads or perceives is not publicity” and the consumer “did not even allege that a single employee ever read or understood the information about his debt.”

A concurring opinion concluded that the consumer failed to allege other elements of the tort, not just publicity. A dissenting opinion argued that the consumer did plead that the collector disclosed sensitive medical information to the mail vendor’s employees and concluded that the alleged disclosure was close enough to the publicity prong under the “close relationship” standard and thus satisfied Article III standing requirements.

Ojogwu v. Rodenburg Law Firm, 26 F.4th 457 (8th Cir. 2022). Consumer alleged a violation of § 1692c(a)(2) where collector communicated directly with a consumer it knew to be represented by counsel. The Eighth Circuit reversed judgment for the consumer and dismissed the FDCPA claim for lack of standing due to the consumer’s failure to plausibly allege concrete harm as a result of receiving a copy of the garnishment summons served on US Bank. The court noted that the summons “imposed no tangible obligations” on the consumer but was instead designed to benefit the consumer by providing notice and an opportunity to claim an exemption or otherwise satisfy the garnishment. The court held that consumer’s allegations of intangible harm—“fear of answering the telephone, nervousness, restlessness, irritability, amongst other negative emotions”—were not “cognizable injury” under general tort law and that consumer made no showing that these were caused by the defendant.

Perez v. McCreary, Veselka, Bragg & Allen, P.C., 45 F.4th 816 (5th Cir. 2022). Consumer sued debt collector, alleging a violation of § 1692e for seeking to collect on a time-barred debt without disclosing that the statute of limitations had run. Reversing class certification, the Fifth Circuit dismissed for lack of standing. Specifically, the court rejected five theories advanced by the consumer to establish that he suffered a concrete injury in fact: (1) violation of substantive statutory rights; (2) material risk of future harm; (3) letter was confusing or misleading; (4) letter caused consumer to waste time consulting an attorney; and (5) receipt of unwanted collection letter was analogous to the tort of intrusion upon seclusion. The consumer also lacked standing for his request for a declaratory judgment that the collector’s practices violated the FDCPA since the consumer is not currently subject to a material risk of future harm, only a past risk.

Pierre v. Midland Credit Mgmt., Inc., 29 F.4th 934 (7th Cir. 2022). Consumer who received a collection letter on a time-barred debt alleged that the letter violated §§ 1692e(2) and 1692e(10) as well as § 1692f because a payment or a promise to pay risked restarting the statute of limitations. The majority remanded the case for dismissal for lack of standing, concluding that: (1) the consumer had no standing where the consumer did not make a payment or a promise to pay; (2) the Supreme Court clarified that risk of harm was insufficient to establish standing; (3) consulting a lawyer for legal advice did not satisfy the concreteness requirement of standing; and (4) confusion caused by the letter was not sufficient to establish a concrete injury. The majority also concluded that its previous decision in Pantoja v. Portfolio Recovery Assocs., L.L.C., 852 F.3d 679 (7th Cir. 2017) did not control where the case was not about standing and was decided before TransUnion L.L.C. v. Ramirez, 141 S. Ct. 2190 (2021).

The dissent offered a detailed explanation of why the Seventh Circuit’s recent cases denying standing for intangible injuries are wrong and opined that these decisions resulted in “unjustified constitutional restrictions on Congress’s legislative powers.”

The Seventh Circuit denied a petition for rehearing en banc with three judges joining a written opinion dissenting from the denial of rehearing en banc. Pierre v. Midland Credit Mgmt., Inc., 36 F.4th 728 (7th Cir. 2022).

Shields v. Pro. Bureau of Collections of Maryland, Inc., ___ F.4th ___, 2022 WL 17725387 (10th Cir. Dec. 16, 2022). Consumer alleged that collector violated § 1692c(b) by using a third-party mail vendor. The Tenth Circuit concluded that she had not demonstrated a concrete injury since the alleged harm was private disclosure, which was not analogous to the harm of public disclosure at issue in the traditional tort of public disclosure of private facts.

Consumer also alleged that the debt collector violated §§ 1692e(2)(A), 1692e(10), and 1692g(a)(1) for not informing her that her balance could increase. The Tenth Circuit concluded that she had not demonstrated a concrete injury since her confusion and misunderstanding were insufficient to confer standing and that the harm was not analogous to common law fraud because she did not plead reliance on the alleged misrepresentation.

Appellate Decisions on Least Sophisticated/Unsophisticated/Reasonable Consumer

Tavernaro v. Pioneer Credit Recovery, Inc., 43 F.4th 1062 (10th Cir. 2022). Consumer alleged that collector’s letter, which used the name and logo of a federal student loan guarantee agency, was misleading and unfair in violation of §§ 1692e, 1692e(10), 1692e(14) and 1692f. In evaluating these claims, the court held that statements must be material to be actionable under § 1692e and that materiality must be measured with a “reasonable consumer” standard, noting that this is “comparable in practice” with the “least sophisticated consumer” standard that incorporates elements of reasonableness. Affirming dismissal of the complaint, the Tenth Circuit held that the letter was not materially misleading to a reasonable consumer, who would understand the identities of the creditor and debt collector. Since the letter was not materially misleading in violation of § 1692e, the court held that it also did not violate § 1692f since the consumer’s claim that the letter was unfair was based on the letter being misleading.

Woods v. LVNV Funding, L.L.C., 27 F.4th 544 (7th Cir. 2022). Consumer alleged a violation of § 1692e(10) for false statements made by the collector in its efforts to collect a credit card debt that was a result of identity theft. The Seventh Circuit first held that a reasonable jury could conclude that the account was a debt “primarily for personal, family, or household purposes” under § 1692a(5) because the credit card debt involved a single purchase for a one-way flight, and it was unlikely that a one-way flight was purchased for a business purpose. The court affirmed summary judgment for the collector on the § 1692e(10) claim because an unsophisticated consumer would have known that the collection letters were sent in error and the consumer would not have been misled by false statements knowing that they never opened such an account.

Appellate Decision on Attorney Fees

See Cooper v. Retrieval-Masters Creditors Bureau, Inc. (Cooper I), 42 F.4th 675 (7th Cir. 2022) summarized supra, at “Appellate Decisions on Constitutional Standing.”

Appellate Decision on Bona Fide Error Defense

See Ewing v. MED-1 Sols., L.L.C., 24 F.4th 1146 (7th Cir. 2022) summarized supra, at “Appellate Decisions on Constitutional Standing.”

Appellate Decisions on Intersection of FDCPA and TILA

Daniels v. Select Portfolio Servicing, Inc., 34 F.4th 1260 (11th Cir. 2022). Consumer alleged that a series of monthly mortgage statements that misstated the amount due violated §§ 1692d, 1692e(2)(A), 1692e(10), and 1692f(1). Reversing the lower court’s dismissal of the case, the majority held that mortgage statements required by the Truth in Lending Act (TILA) can plausibly constitute communications in connection with the collection of a debt “if (a) they contain ‘this is an attempt to collect a debt’ language, (b) they request or demand payment of a certain amount by a certain date, (c) they provide for a late fee if the payment is not made on time, and (d) the history between the parties suggests that the statement is an attempt to collect on a disputed debt.”

The dissent argued that the majority was placing too much weight on the sentence, “This is an attempt to collect a debt,” which is the only statement that is alleged to be beyond what is required by TILA.

Lamirand v. Fay Servicing, L.L.C., 38 F.4th 976 (11th Cir. 2022). Consumers alleged that the collector violated §§ 1692e and 1692f by sending periodic mortgage statements falsely claiming that they owed a larger amount of money due sooner than agreed. The Eleventh Circuit held that the monthly statements were “in connection with” or a “means” of debt collection because they conveyed information about a debt and were at least partly designed to induce payment. The court also held that there is no conflict between the TILA requirement to send periodic statements and FDCPA requirements that information be accurate and fair, meaning that the collector must comply with both statutes.

Appellate Decisions on FDCPA Claims Based on Questions of State Law

Lutz v. Portfolio Recovery Assocs., L.L.C., 49 F.4th 323 (3d Cir. Sept. 19, 2022). Consumer alleged that collector violated §§ 1692e and 1692f by collecting interest in excess of that permitted by Pennsylvania law. Affirming dismissal by the lower court, the Third Circuit concluded that the collector is not subject to the relevant Pennsylvania statute and dismissed the FDCPA claims that relied on a violation of that statute.

Snyder v. Finley & Co., L.P.A., 37 F.4th 384 (6th Cir. 2022). Consumer alleged a violation of § 1692e where collector sued consumer and consumer’s husband, asserting joint liability under the state necessaries statute. The Sixth Circuit reversed summary judgment for the collector and ordered the lower court to enter summary judgment for the consumer because the collector’s lawsuit against the consumer was “objectively baseless . . . asserting a claim against a party under circumstances in which a state supreme court has explicitly held that the party cannot be held liable.”

Appellate Decision on Communications with Third Parties

Magdy v. I.C. Sys., Inc., 47 F.4th 884 (8th Cir. Sept. 6, 2022). Collector sent collection letter to Magdy, an attorney that did not represent the relevant consumer whose alleged debts were at issue in the letter. Magdy alleged that the collector violated § 1692c(b). The majority concluded that the collector violated § 1692c(b) by sending the letter to an attorney that did not represent the consumer and without the consumer’s consent. However, the majority held that the attorney lacked statutory standing to bring the claim because the purpose of § 1692c(b) was to protect consumers, not third parties. A dissenting judge argued that under the broad language of § 1692k(a), Magdy had statutory standing.

Appellate Decisions on Coverage of FDCPA and State Debt Collection Statutes

Alexander v. Carrington Mortg. Servs., L.L.C., 23 F.4th 370 (4th Cir. 2022). Holding that collector that is not a covered “debt collector” under § 1692a(6) is covered under the Maryland Consumer Debt Collection Act (MCDCA), which has a broader definition of “collector.” The MCDCA incorporated the FDCPA’s substantive violations but not its definitions. The MCDCA provides greater protections to consumers and is therefore not preempted by the FDCPA pursuant to § 1692n.

Analyzing § 1692f(1), the Fourth Circuit concluded that a convenience fee qualified as an “amount” and that it was “prohibited by law” since no law affirmatively authorized it to charge convenience fees. As such, the court held that the collector violated the MCDCA.

See also Woods v. LVNV Funding, L.L.C., 27 F.4th 544 (7th Cir. 2022) summarized supra at “Appellate Decisions on Least Sophisticated/Unsophisticated/Reasonable Consumer.”

Appellate Decision on Claim Splitting and Sanctions

Cooper v. Retrieval-Masters Creditors Bureau, Inc. (Cooper II), 42 F.4th 688 (7th Cir. 2022). While one FDCPA case was pending between the parties, the consumer filed a separate action alleging different FDCPA violations arising from the same debt and against the same collector. The lower court dismissed the claim as impermissible claim splitting, granted Rule 11 sanctions, and awarded the collector attorney’s fees under § 1692k(a)(3). The Seventh Circuit reversed the award of sanctions since the grounds stated did not support monetary sanctions.