No Harm, No Foul: Consumers Must Suffer a Concrete Injury to Sue Under FDCPA

In the world of pick-up basketball, no one likes to play with the guy who cries foul every time he is lightly bumped going for a layup. It appears that the courts are starting to follow the same logic when it comes to Fair Debt Collection Practices Act claims.

In Davis v. Mandarich Law Group, the Ninth Circuit vacated the lower court’s confirmation of an arbitration award because there was a question of standing that the district court failed to address – did the plaintiff suffer an actual or imminent, concrete, particularized injury as a result of defendant’s conduct?

Plaintiff Marla Davis filed a putative class action alleging that defendant Mandarich Law Group violated the FDCPA by sending Davis a declaration that purported to comply with the California Code of Civil Procedure § 98 but, in fact, was inconsistent with that statutory provision. Davis further alleged that Mandarich’s conduct was “false, deceptive, or misleading” under 15 U.S.C. §1692e, and constituted debt collection by “unfair or unconscionable means” pursuant to 15 U.S.C. §1692f.

The arbitrator awarded judgment in favor of Mandarich, and the district court agreed with the arbitrator’s decision. Davis then sought relief from the Ninth Circuit; however, during the course of the appeal, Mandarich raised the issue of standing. Observing that there was a “serious question” of whether Davis had adequately alleged an injury in fact, or could do so even if given leave to amend her complaint, the Ninth Circuit remanded the case to the district court to determine whether Davis had Article III standing.

Although the FDCPA provides statutory relief to consumers who encounter unfair debt collection activity, alleged violations of the statute do not provide a one-way ticket to the free throw line. Under Article III of the Constitution, an individual must have suffered a concrete injury to sue in federal court.

Since Spokeo, Inc. v. Robins, courts have adhered to the injury-in-fact inquiry with respect to Fair Credit Reporting Act claims but have been slow to apply the same constitutional philosophy to FDCPA claims. Recently, however, the Seventh Circuit granted a defendant’s motion to dismiss for lack of standing, holding that a plaintiff “cannot demonstrate standing simply by pointing to [defendant’s] procedural violation” of the FDCPA. Casillas v. Madison Avenue Associates. Recent Troutman Sanders articles have explored similar FDCPA standing inquiries in the Fifth and Sixth circuits. SeeGrowing Trend of Courts Recognize “Class Member” Standing as a Significant Class Certification Hurdle: Fifth Circuit Decertifies FDCPA Letter Class With Observation That Class Presented Substantial Questions of Standing and 6th Circuit: Consumer Alleging Anxiety Lacked Standing to Pursue “Meaningful Attorney Involvement” Claim Under the FDCPA.

As for the Ninth Circuit, the Court’s order along with any subsequent decision from the district court will serve as additional precedent for future Article III inquiries in FDCPA cases. Troutman Sanders will continue to monitor and report on the progress of this case.