CHICAGO — After nine times turning away plaintiffs seeking to hit debt collectors with class actions for allegedly violating federal law, federal appeals judges in Chicago have issued a plea to the U.S. Supreme Court to resolve a question they say is blocking people from seeking justice the judges say was intended by Congress.
On May 14, a three-judge panel of the U.S. Seventh Circuit Court of Appeals cited a prior Supreme Court decision in - begrudglingly - rejecting an attempt by plaintiff Rose Markakos to lead a class action lawsuit against debt collector Medicredit.
“In the last five months, we’ve held eight times that a breach of the Fair Debt Collection Practices Act does not, by itself, cause an injury in fact,” wrote Seventh Circuit Judge Michael Kanne. “We now repeat that refrain once more.”
Daniel A. Edelman
| edcombs.com
Kanne, joined by Judges Kenneth Ripple and Ilana Rovner, upheld U.S. District Judge Ronald Guzmán’s dismissal of Markakos' lawsuit, which alleged the company sent her an inflated debt statement, while also improperly identifying the creditor.
“That decision was right,” Kanne wrote. “Markakos lacks standing to sue Medicredit under the FDCPA because she did not allege that the deficient information harmed her in any way. Instead, she admits that she properly disputed her debt and never overpaid.”
On appeal, Markakos maintained “the injury in fact is informational in nature,” Kanne continued, in that she was deprived of information the FDCPA is supposed to guarantee. And while the panel said that position fails to establish standing, the judges further explained many Seventh Circuit judges no longer agree with the way the court has addressed such issues.
Determining what is or isn’t a factual injury, then panel said, relies on interpretation of the 2016 U.S. Supreme Court opinion in Spokeo v. Robins. In that case, although a plaintiff demonstrated inaccuracies in a credit report, the court deemed there was no legal injury because the person’s credit rating was unaffected.
In a concurring opinion, Ripple said several recent cases “take too restrictive a view of Congress’ authority to identify intangible injuries and to allocate enforcement burdens.” He said Markakos’ lawsuit demonstrates “a core substantive violation” of a federal law she is nonetheless unable to remedy.
“Congress has prohibited explicitly debt collectors from sending collection notices that state an inaccurate amount owed and has given individuals who receive such letters the right to sue the sender,” he wrote. In Spokeo, Ripple added, “The court clearly effects a direct and complete frustration of Congress’ attempt to regulate commerce in the manner that it has chosen.”
Ripple further detailed how the Seventh Circuit, in recent years and without Supreme Court guidance, “expanded and then ignored completely the guideposts established by the Court and, at the same time, underemphasized and then ignored the Court’s discussion of historical practice and congressional judgment in regulating the interstate commerce of the United States.”
In enacting the FDCPA, Ripple said, Congress explicitly addressed “abusive, deceptive and unfair” collection practices and intended individual plaintiffs, like Markakos, to be primary enforcers. He said debt letters demanding inaccurate amounts are similar to common law violations like fraudulent or negligent misrepresentation. Those collectors hope recipients will pay the requested amount, and so Congress intended “the wise debtor” to sue both for self-protection as well as a broad deterrent.
“To say that there is no injury in this economy when a person receives a dunning letter demanding money that is not owed not only ignores the realities of everyday life,” Ripple wrote. “It also ignores the findings of Congress and constitutes a direct affront to a congressional prerogative at the core of the legislative function.”
Rovner also wrote a concurring opinion, joining with Ripple to note opinions from other appellate circuits establishing allegations of statutory violations as sufficient to establish standing “where the violation implicates the concrete interest of the statute.” He further explained concerns about how the Spokeo precedent forces courts to overlook when a plaintiff is at risk of harm.
“The dissonance among the circuits as to how to approach standing post-Spokeo, and even how to apply the analysis as to whether a statutory provision has a ‘close relationship’ with a harm actionable at common law, is a clarion call to the Court for guidance,” Rovner concluded. “Hopefully, the Supreme Court will weigh in on this matter in the near future and provide that clarity.”
Markakos has been represented in the action by attorney Daniel Edelman, of the firm of Edelman Combs Latturner & Goodwin, of Chicago.
Medicredit has been represented by attorneys Eric A. Berg, of Ogletree Deakins Nash Smoak & Stewart, of Chicago; and Scott J. Dickenson and Ryan C. Hardy, of Spencer Fane LLP, of St. Louis.