Last month, the Sixth Circuit in Macy et al v. GC Services Ltd Partnership unanimously upheld certification of a class under the Fair Debt Collection Practices Act (FDCPA), despite arguments that the named plaintiffs failed to establish Article III standing. The court held the plaintiffs established a concrete injury in fact, without alleging any additional harm beyond a procedural violation of the FDCPA, because they demonstrated that the allegedly incomplete disclosures in debt collection letters sent by GC posed a sufficient “risk of real harm” to the interests protected by the statute – namely, being misled by debt collectors about their rights under the FDCPA.
Plaintiffs Wilbur Macy and Pamela J. Stowe both received a letter from a debt collector that their credit card accounts had been referred to the debt collector for collection. Macy et al v. GC Services Ltd Partnership, No. 17-5593, 2018 WL 3614580, at *1 (6th Cir. Jul. 30, 2018). The plaintiffs alleged the letters violated the FDCPA because they did not inform the plaintiffs that the defendant debt collector was required to provide certain debt and creditor information, and to stop collection activities, only if the plaintiffs disputed their debts in writing. Id.
The defendant moved to dismiss for lack of subject matter jurisdiction, arguing that the plaintiffs did not have standing under Article III of the U.S. Constitution. Macy v. GC Servs. Ltd. P’ship, No. 3:15-CV-819-DJH, 2016 WL 5661525, at *1 (W.D. Ky. Sept. 29, 2016). The district court disagreed, and relying on Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), found that the complaint had adequately alleged an injury in fact under the FDCPA. Id. at *4. The defendant’s letters allegedly violated the FDCPA’s notice provisions by failing to mention the “in-writing” requirement. Id. Because of that omission, then, the “least sophisticated debtor” might make an oral request for the debt and creditor information, and waive the protections of the statute. Id. The risk that the debtor would waive those protections was enough to satisfy Spokeo. Id. at *3.
In opposition to the plaintiffs’ motion to class certification, the defendant again challenged the plaintiffs’ standing. Macy v. GC Servs. Ltd. P’ship, 318 F.R.D. 335, 338 (W.D. Ky. Feb 6, 2017). The defendant argued that no class could be certified because neither the named plaintiffs nor the proposed class members could show an injury in fact. Id. The court rejected the defendant’s argument for the same reasons it denied the motion to dismiss, and further held that each class member’s individual standing need not be established. Id. The court then certified a class of consumers who received an initial communication from the defendant that did not contain the FDCPA’s “in-writing” requirement. Id. at 343.
On appeal to the Sixth Circuit, the defendant again argued that the plaintiffs’ claims should be dismissed for lack of standing and that the class should not have been certified because it was not limited to persons who suffered a concrete injury. 2018 WL 3614580, at *1.
The court reviewed Spokeo’s analysis of whether a statutory violation, on its own, is sufficient to establish an injury in fact. According to the Sixth Circuit, Spokeo categorizes statutory violations into two categories: 1) violations of statutory procedural rights sufficient by themselves to create injuries in fact because the violations present material risks of real harm to the interests created by Congress and protected by the statute; and 2) “‘bare’ procedural violations” that do not rise to that level, in which case the plaintiff must allege some additional harm beyond what Congress had identified. Id.
The court held that the allegedly deficient letters sent to the plaintiffs by the defendant presented a “risk of real harm” to the FDCPA’s purpose – protecting consumers from deceptive debt-collection practices – because the letters provided misleading information about the consumer’s rights under the FDCPA. Id. at *6. If the consumer did not inquire about the debt in writing, but instead contacted GC by telephone, they would waive most of the protections of the FDCPA’s notice requirements because the collector would not be required to verify the debt or cease collection activity. Id. at *7. Without that information about the requirement to inquire in writing, the plaintiffs were at “a materially greater risk of falling victim to abusive debt collection practices.” Id. (internal citations omitted). The harm the plaintiffs alleged – being misled by the debt collector through its letters about their rights under the FDCPA – was “precisely” the type of harm the FDCPA was intended to prevent. Id. at *9.
The court rejected the defendant’s arguments that it had a policy to honor verbal disputes because the court was bound by the four corners of the complaint, and that the alleged violations never materialized into actual harm because a material risk of harm to a congressionally recognized interest was sufficient under Spokeo. Id. at *7-8. The court also found that because the plaintiffs satisfied the concreteness prong of Article III’s injury in fact requirement, the court rejected GC’s challenge to the district court’s certification of the class. Id. at *11. The court affirmed the district court’s grant of class certification and held that the plaintiffs had Article III standing. Id.