The United States District Court for the District of New Jersey reiterated the importance of standing and reviewed its application to the Fair Debt Collection Practices Act in the matter of George v. Rushmore Serv. Ctr., LLC, 2024 U.S. App. LEXIS 20303 (Aug. 13, 2024 3d Cir.).
In 2013, the plaintiff opened a credit card account with First Premier Bank. A few months later, she defaulted on the account by failing to make the monthly minimum payment. This failure to pay initiated First Premier’s collection machine run through a servicing entity Premier Bankcard, LLC. However, Premier Bankcard does not perform its own collection work and outsourced it to Rushmore Service Center, LLC.
In 2018, Rushmore sent its first collection letter to the plaintiff which contained the following header: “Current/Original Creditor: Premier Bankcard, LLC.” As a result, the plaintiff filed a complaint alleging a violation of the Fair Debt Collection Practices Act because the letter was (1) “confusing as to whether” Premier Bankcard was the current or original creditor, and (2) misleading in any event, because First Premier, not Premier Bankcard, was “the current creditor to whom the debt [was] owed” and the “original creditor” of the account. Specifically, George claimed the letter failed to identify “the name of the creditor to whom the debt [was] owed” as required by law, 15 U.S.C. § 1692g(a)(2); that it constituted a “false, deceptive, or misleading representation . . . in connection with the collection of [a] debt,” § 1692e; and that it used “unfair or unconscionable means to collect or attempt to collect [a] debt,” § 1692f. The complaint alleged the plaintiff “received and reviewed the letter.” However, critically, it did not allege any consequences for the Plaintiff as a result of the receipt and review of the letter. The complaint did allege the letter was “confusing” and would “leave the least sophisticated consumer in doubt about to whom the alleged debt is owed and if it is legitimate.”
Although the parties asserted that the plaintiff had standing and the District Court did not address the issue, the Third Circuit examined whether it and the District Court had standing as it is obligated to do.
In order to show standing, a plaintiff bears the burden of establishing three distinct elements:
First, the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of —the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992) (cleaned up). In addressing the first prong, the United States Supreme Court stated that “[c]entral” question when assessing concreteness is “whether the asserted harm has a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts—such as physical harm, monetary harm, or various intangible harms including . . . reputational harm.” TransUnion LLC v. Ramirez, 594 U.S. 413, 141 S. Ct. 2190, 2200 (2021). Based on this principle, the Supreme Court concluded that plaintiffs whose misleading credit reports “were disseminated to third-party businesses . . . suffered a concrete harm” qualifying as an injury in fact; these plaintiffs, the Court reasoned, had been subjected to “reputational harm associated with the [traditional] tort of defamation.” See id. at 2208-09.
In the context of an “informational injury,” an injury that occurs when a plaintiff fails to receive information to which she is legally entitled to must show: “(1) the omission of information to which [she] claim[s] entitlement, (2) adverse effects that flow from the omission, and (3) [a] nexus to the concrete interest Congress intended to protect” by requiring disclosure of the information. See Kelly v. RealPage, Inc., 47 F.4th 202, 214 (3d Cir. 2022).
The George Court found that the plaintiff satisfied the first prong by alleging that Premier Bankcard was not the creditor to whom the debt was owed as required by 15 U.S.C. § 1692g(a)(2). However, the Court found that the complaint did not allege specific adverse effects flowing from the omission. Instead, the complaint averred the letter would have left “the least sophisticated consumer in doubt about to whom the alleged debt [was] owed and if it [was] legitimate.” The complaint did not aver that the plaintiff could not pay her debt as a result of the letter, that the omission caused any financial consequences, or that she suffered any distress. In fact, although not relevant for evaluating standing, discovery revealed the plaintiff did not even read the letter, she simply sent it to her attorney.
Under the “more traditional path prescribed by the Supreme Court in TransUnion,” we must ask whether the injury alleged “has a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts.” A violation of 15 U.S.C. § 1692e is analogous to the tort of fraudulent misrepresentation, and “the harm traditionally recognized as providing a basis for [a] fraudulent misrepresentation [suit] . . . is not the mere receipt of a misleading statement, or even confusion, without any further consequence.” Huber v. Simon’s Agency, Inc., 84F.4th 132, 148 (3d Cir. 2023). The George Court found that the plaintiff was not confused or suffered any injury in fact as a result of receiving the misleading letter. Thus, the Third Circuit found the plaintiff lacked standing.
The George case is a good reminder of the importance of evaluating whether a plaintiff has standing. Often, Fair Debt Collection Practices Act cases allege information injury and traditional injuries, but averments of actual harm or injuries may be missing from the complaint.
