Great news - "standing" to sue stands-up as a strong defense to FDCPA letter cases brought in federal court.
On July 6, the Eleventh Circuit federal appeals court issued a favorable decision in Trichell v. Midland Credit Mgmt., Inc., concluding plaintiffs in FDCPA letter cases cannot satisfy their federal court standing requirements by merely alleging the least sophisticated consumer (rather than the individual plaintiff) would be misled by the letter. Standing is the capacity of a party to file a lawsuit, and the Supreme Court has interpreted what standing means in various consumer protection contexts, such as the significant 2016 Spokeo case.
In Trichell, plaintiffs alleged Midland violated the FDCPA by sending collection letters containing confusing time-barred debt disclosures. The plaintiff attorney theory was that the disclosure created a risk that the least sophisticated consumer might be misled into making unnecessary payments on time-barred debt. The 11th Circuit said No Way will a consumer pay per the letter and ruled: Plaintiffs did not allege the letters posed any risk of cognizable harm to themselves and any risk the letters may have posed disappeared by the time plaintiffs sued.
Although one plaintiff claimed the letter sent to him "puts an unsophisticated consumer, i.e. Plaintiff, into a difficult position" by failing to disclose that making a payment would allegedly restart the statute of limitations, the court rejected the assertion that plaintiff was put into a "difficult position" that supported a plausible inference he was at risk of making a payment.
Besides the individual harm argument, the appellate court also alternatively explained that any risk of harm to the plaintiffs dissipated by the time they filed the lawsuit. Their lawsuit proved they knew exactly why the letters were allegedly misleading and thus faced no risk of being misled by the letters in the future.
Finally, the court rejected plaintiffs' claims that the letters created an "informational injury" sufficient to allow the claim in federal court, holding the FDCPA is not a "public disclosure law at all," and plaintiffs failed to show they did not receive information to which they were entitled.
Where do we go from here?
This case is sure to be used by many debt collectors especially when defending FDCPA letter claims and other FDCPA claims where plaintiffs might not explain how they were individually affected by the alleged harm.
We also expect the case to drive changes in FDCPA plaintiff pleading strategy. Lower courts have already asked parties in FDCPA cases to submit supplemental briefing on standing based on the Trichell case.
And, while Trichell is only binding precedent in Florida, Alabama, and Georgia federal courts, we are monitoring how other courts outside the 11th Circuit begin to evaluate this important ruling.
Questions? As always, we are here to help.
