Chicago’s federal appeals court has refused to reconsider an earlier decision striking down a $350,000 verdict awarded to a woman who claimed a debt collector had caused her “emotional distress” by sending her an illegal debt collection notice, and throwing the woman’s case out of court.
But a group of judges on the U.S. Seventh Circuit Court of Appeals dissented, saying their colleagues in the majority got the law wrong, by determining the woman’s claims of emotional distress, alone, don’t pass muster as a “concrete injury” entitling her to sue under federal legal precedent.
The dissenting judges said the “abusive” debt collection practices the named plaintiff, Renetrice R. Pierre, allegedly endured should give her so-called legal standing to press her class action claims.
Seventh Circuit Judge David Hamilton wrote for the judges dissenting from the 7-4 decision, rendered by an 11-member en banc panel of the appellate court.
Circuit judges Ilana D. Rovner, Diane P. Wood and Candace Jackson-Akiwumi joined Hamilton in the dissent.
Jackson-Akiwumi is the Seventh Circuit’s newest member, appointed in 2022 by President Joe Biden.
“The emotional distress, confusion, and anxiety suffered by Pierre in response to this zombie debt collection effort fit well within the harms that would be expected from many of the abusive practices,” Hamilton wrote. “ That’s true regardless of whether the debtor actually made a payment or took some other tangible action in response to them.
“Standing for Pierre thus fits well within Congress’s judgments about actionable harms.”
The decision comes as the latest development in a class action lawsuit launched in 2016 by Pierre and her lawyers from the firm of Markoff Leinberger, of Chicago.
The lawsuit took aim at debt collector Midland Credit Management. The lawsuit asserted Midland had violated the federal Fair Debt Collection Practices Act by trying to collect so-called “zombie debts,” or debts the collector knew were too old to collect any more under the law.
According to court documents, Pierre refused their efforts to collect the debt, rightly discerning the statute of limitations on the old debt had expired.
However, in her lawsuit, Pierre claimed the attempt to collect the debt caused her “emotional distress and anxiety.”
The case went to trial in Chicago federal court, and a jury awarded $350,000 to Pierre and the plaintiffs’ class she was representing.
Midland appealed the verdict to the Seventh Circuit court.
On appeal, a three-judge panel of the Seventh Circuit ruled 2-1 to toss out that verdict, and also tossed Pierre’s case. Hamilton also dissented in that decision.
The majority, which included Sykes, ruled that under the holdings of prior U.S. Supreme Court decisions, Pierre’s claims for emotional distress didn’t amount to a “concrete injury,” so she lacked standing under federal law to bring any legal claims in federal court under the debt collection law at all.
The panel determined that “psychological states induced by a debt collector’s letter … fall short” of giving plaintiffs standing to sue.
Pierre’s lawyers asked the full court to reconsider the panel’s decision. However, seven of the court’s 11 judges, presiding en banc, still said the earlier three-judge panel got the decision right.
Hamilton and his fellow dissenters, however, said the decision represents a misreading of two key U.S. Supreme Court decisions.
In the 2016 decision of Spokeo Inc. v Robins, the Supreme Court ruled plaintiffs must assert a “concrete injury” to gain standing to sue.
After federal courts grappled with the definition of “concrete injury” for years, the concept was further refined in the 2021 decision in TransUnion LLC v Ramirez. That decision dealt with a class action accusing credit reporting bureau TransUnion of improperly disclosing creditor information.
In TransUnion, the Supreme Court declared more emphatically that plaintiffs must suffer actual harm to press a claim under federal law. The mere fact that a law has been violated is not enough, by itself, to allow for such lawsuits.
Hamilton, in the dissent, noted the Seventh Circuit majority relied on those decisions in tossing out Pierre’s claims against Midland.
However, the dissenting judges said their colleagues in the majority were “painting with too broad a brush.”
They said they believed Spokeo and TransUnion should still allow for plaintiffs to press claims for “intangible harms close to those traditionally recognized in the law,” such as emotional distress.
The dissenting judges said, in this case, Pierre’s lawsuit bore the hallmarks of such intangible harms under the FDCPA. So, they said, the majority’s decision goes too far in interfering with the will of Congress in enacting the federal debt collection law to “offer vulnerable consumers this protection from abusive and deceptive bullying by debt collectors.”
“The emotional distress, anxiety, fear, and stress she (Pierre) experienced were foreseeable, even intended, responses to defendant’s attempt to collect the zombie debt,” Hamilton wrote. “Congress told the federal courts to authorize damages for such harms. That choice is well within Congress’s legislative power over interstate commerce to go beyond the common law.”
Seventh Circuit Chief Judge Diane Sykes issued the decision for the majority. She was joined by judges Frank H. Easterbrook, Michael S. Kanne, Michael Y. Scudder, Michael B. Brennan, Amy J. St. Eve and Thomas L. Kirsch.
Pierre has been represented by attorneys Paul F. Markoff and Karl G. Leinberger, of Markoff Leinberger.
Midland has been represented in the case by attorneys David M. Schultz and Todd P. Stelter, of the firm of Hinshaw & Culbertson; and Michael T. Brody and Gabriel K. Gillett, of Jenner & Block, all of Chicago.