A recent opinion issued by the Tenth Circuit serves as further confirmation that plaintiffs bringing Fair Debt Collection Practices Act (FDCPA) claims in federal court must allege sufficient concrete injury — tangible or intangible — to confer Article III standing. The holding also underscores that FDCPA claims predicated on disclosure of debtor information to third parties must be public. A debt collector’s limited, private disclosure to its mailing vendor does not suffice.

The plaintiff’s allegations in Shields v. Professional Bureau of Collections of Maryland, Inc., focused on three letters she received from the defendant in July and August 2019 seeking payment on her outstanding student loan debt. Each letter contained the balance at the time the debt was assigned to the defendant as well as the balance owed as of the date of the mailing, the latter being substantially higher. According to the plaintiff, each of the letters failed to explain the differing amounts and failed to inform her that her debt could potentially increase due to fees, interest, and other charges. In addition to the allegedly misleading substance, the plaintiff claimed that the defendant’s disclosure of her debt to its mailing vendor violated FDCPA provisions prohibiting public disclosure of debtor information.

Based on these allegations, the plaintiff filed suit in the U.S. District Court for the District of Kansas in April 2020. The defendant moved to dismiss on the grounds that the complaint failed to allege concrete injury sufficient to confer Article III standing. In response, the plaintiff submitted a declaration attempting to bolster her allegations of harm and a proposed amended complaint alleging the same.

Treating the defendant’s motion as a facial challenge to subject matter jurisdiction, the district court refused to consider the supplemental declaration and dismissed the case without prejudice for lack of subject matter jurisdiction. The plaintiff moved for reconsideration and to reopen the case based on the allegations in her proposed amended complaint, which the district court denied. On appeal, the plaintiff argued that the defendant harmed her in two distinct ways sufficient to confer Article III standing: (1) by wrongfully disclosing her debt to its mailing vendor, and (2) by including misleading and/or confusing information as to the amount of debt owed. The Tenth Circuit rejected both arguments.

As to the plaintiff’s alleged “disclosure injury,” the Tenth Circuit, citing to Hunstein III discussed here, held that the limited disclosure of the plaintiff’s debt to a mailing vendor did not implicate the kind of intangible harm redressable at common law. While a debt collector’s “use of billboards to publicly shame a private citizen into paying his debt” would qualify as actionable public disclosure under the FDCPA, the plaintiff’s “alleged harm was that one private entity (and, presumably, some of its employees) knew of the debt.” The latter is “not the same kind of harm as public disclosure of private facts, which is concerned with highly offensive information being widely known.”

The plaintiff’s other claimed injury — her purported confusion as to the amount of debt owed — met a similar fate. First, because the defendant’s motion was construed as a facial challenge to subject matter jurisdiction — one based solely on the allegations in the pleadings — the appellate court held that the district court did not err in refusing to consider the plaintiff’s declaration in opposition. Confined to the allegations in the complaint, the Tenth Circuit determined that the plaintiff failed to allege that the letters “caused her to do anything.” Absent allegations of reliance, the appellate court held the plaintiff’s “confusion and misunderstanding . . . insufficient to confer standing” under the standard set by the Supreme Court in Transunion LLC v. Ramirez.

Troutman Pepper's Take:

The Tenth Circuit’s opinion in Shields is one more nail in the coffin of mailer-vendor FDCPA claims, and further reinforces that aggrieved plaintiffs bringing suit in federal court under the FDCPA must allege concrete injury to meet Article III standing requirements.

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