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Defending Baseless Consumer Finance Lawsuits After Spokeo v. Robins

Lawsuits against lenders and their attorneys under consumer protection laws such as the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), Truth In Lending Act (TILA), and Real Estate Settlement Procedures Act (RESPA) have been on the rise. Although in proper circumstances these statutes serve an important and legitimate purpose, unfortunately, they are often used by conniving plaintiffs to stall foreclosures or coerce a settlement against an entity who would rather pay a small settlement than face the possibility of time consuming and expensive litigation. In this type of environment, lenders and their attorneys need tools that allow a quick and inexpensive resolution to the most baseless consumer lawsuits. The Supreme Court’s recent decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) has the potential to offer some relief to lenders struggling with spurious consumer litigation.

The question presented to the Court in Spokeo was whether the plaintiff had standing under Article III of the United States Constitution to bring a federal lawsuit under the FCRA. Spokeo operates a “people search engine,” which searches a wide spectrum of databases to gather and provide personal information about individuals to users. The plaintiff, Robins, alleged that Spokeo performed a search on him and some of the information disseminated was incorrect. After Robins discovered that his Spokeo-generated profile contained inaccurate information, he filed a federal class-action complaint against Spokeo. The District Court dismissed Robins’ complaint, holding that he had not properly pleaded an injury in fact, but the Ninth Circuit reversed. The United States Supreme Court ultimately vacated and remanded the Ninth Circuit’s decision, holding that the injury in fact requirement of Article III standing requires a plaintiff to allege an injury that is both “concrete” and “particularized.”

The Court elaborated that standing under Article III requires (1) an injury in fact, (2) fairly traceable to the challenged conduct of the defendant, and (3) likely to be redressed by a favorable judicial decision. Lujan v. Defendanrs of Wildlife, 504 U.S. 555, 560-561, 112 S. Ct. 2130. At issue in the Spokeo case was whether the plaintiff had satisfied the “injury in fact” element of standing, which requires the plaintiff to allege an injury that is both “concrete and particularized.” Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC) Inc., 528 U.S. 167, 180-181, 120 S. Ct. 693, (2000). The Court concluded that the Ninth Circuit’s analysis focused on “particularity,” but it overlooked “concreteness.” A “concrete” injury must be “de facto”; that is, it must actually exist. Spokeo, 136 S.Ct. at 1548. In other words, it must be “real,” and not “abstract.” Id.

That is not to say that “concrete” is synonymous with “tangible.” The Court explained that “[a]lthough tangible injuries are perhaps easier to recognize, … intangible injuries can nevertheless be concrete.” Id. at 1549. The judgment of Congress plays an important role in determining whether an intangible harm constitutes an injury in fact. Id. However, “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id.

Many federal consumer protection statutes do not require actual injury in order to bring a claim, but the Spokeo decision requires a plaintiff to at least plausibly allege a particularized and concrete injury, which apparently must be something more than a “bare procedural violation.”

Lower courts addressing Spokeo’s impact on claims under federal consumer protection statutes have been split. Some courts, led by the Eleventh Circuit’s decision in Church v. Accretive Health, Inc., 2016 U.S. App. LEXIS 12414 (11th Cir. 2016), have held that a violation of the FDCPA, by itself, is a violation of a right that Congress sought to elevate to a concrete injury. The Church decision held that Congress had created a right through the FDCPA to receive certain disclosures in a debt collector’s initial communication to a consumer, and that the failure to receive such disclosures was “a new injury.” Id. Many other courts throughout the country have followed Church’s lead in analyzing standing in FDCPA cases. See, e.g., Quinn v. Specialized Loan Servicing, LLC, 2016 U.S. Dist. LEXIS 107299 (N.D. Ill. 2016); Allah-Mensah v. Law Office of Patrick M. Connelly, 2016 U.S. Dist. LEXIS 159354 (D. Maryland 2016).

Other courts, however, have declined to follow a broad reading of Spokeo, and some courts have specifically noted their disagreement with the Church decision. See e.g., Nokchan v. Lyft, Inc., 2016 U.S. Dist. LEXIS 138582 (N.D. Cal. 2016); Macy v. GC Servs. L.P., 2016 U.S. Dist. LEXIS 134421 (W.D. Ky. 2016); Dolan v. Select Portfolio Servicing, 2016 U.S. Dist. LEXIS 101201 (E.D.N.Y. 2016) (rejecting the view that Spokeo established the proposition that every statutory violation of an informational right automatically gives rise to standing). These courts have cited Spokeo’s statement that a plaintiff does not automatically satisfy the injury in fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.

In post-Spokeo FCRA cases, courts have looked to the violation itself to determine whether it is something more than a “bare procedural violation” – such as an incorrect zip code—that cannot cause harm or present any material risk of harm. See Patel v. Trans Union, LLC, 2016 U.S. Dist. LEXIS 146326 (N.D. Cal. 2016) (finding a terrorist designation as a sufficient injury in fact); but see Nokchan v. Lyft, Inc., 2016 U.S. Dist. LEXIS 138582, (N.D. Cal., 2016) (court ruled that plaintiff did not have Article III standing where plaintiff alleged violations of FCRA due to the fact that disclosures were not on a “stand-alone document” and the fact that defendant failed to inform him that he had a right to request a summary of his rights under the FCRA.)

In post-Spokeo TILA cases, courts have for the most part rejected plaintiffs’ arguments that procedural violations, with nothing more, confer standing. See e.g., Jamison v. Bank of Am., N.A., 2016 U.S. Dist. LEXIS 88326 (E.D. Cal. 2016) (a procedural violation of the TILA provision, which requires certain information on the payoff statement, “may result in no concrete harm if the lender provides the omitted information through other means.”); McQuinn v. Bank of Am., N.A., 2016 U.S. App. LEXIS 13434 (9th Cir. 2016) (the Spokeo decision “calls into question whether a violation of the Truth in Lending Act’s notice requirement, 15 U.S.C. § 1641(g), without more, creates an injury that is sufficiently concrete).

Although RESPA cases with Spokeo issues have been sparse, in Dolan v. Select Portfolio Servicing, 2016 U.S. Dist. LEXIS 101201 (E.D.N.Y 2016), the court held that the procedural violations of allegedly failing to send “Hello” and “Goodbye” letters, with nothing more, did not constitute a concrete injury sufficient to confer standing to sue. The Dolan court read Spokeo as affirming the principle that a claim of a bare procedural statutory violation will be insufficient to confer standing, except in situations where Congress clearly intended to create a right to bring suit regardless of the existence or non-existence of actual harm.

Although practitioners should be aware of the Spokeo decision when seeking an early dismissal of baseless consumer litigation, in most circuits the Spokeo decision did not dramatically change Article III standing jurisprudence. Rather, Spokeo’s main impact is that courts are now forced to distinguish between “concreteness” and “particularity” when analyzing standing.

If you have any questions about this case, please contact Supervising Bankruptcy Attorney, Caleb J. Halberg at or (312) 263.0003, ext. 2125.

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