In an appeal that can only be described at best as a head-scratcher, in its attempt to pursue a bona fide error defense without producing a written procedure, a debt collector managed only to give consumers a path forward on Article III standing issues. On August 17, 2021, in the case of Lupia v. Mericredit Inc. (Case #20-1294, 10th Cir), the Tenth Circuit Court of Appeals held (1) a single unanswered telephone call/voicemail made to a consumer is sufficient for standing, and (2) a bona fide error defense requires the production of procedures.

The Background:

The facts of the Lupia case are simple: Mericredit Inc. (Mericredit) received a dispute, cease and desist letter from the consumer. The next day, before Mericredit processed the letter, it called the consumer again and left a voicemail when she did not pick up the call. This phone call is the sole basis for the consumer's Debt Collection Practices Act (FDCPA) suit. In response, Mericredit alleged that the consumer lacked Article III standing to bring the suit and raised a bona fide error defense.

Although Mericredit claimed that calling the consumer after she sent a dispute and cease and desist letter resulted from a bona fide error, it failed to provide a mail handling procedure. At the discovery phase, Mericredit claimed that such policies “do not exist.” At the summary judgment phase, it described its mail procedure generally and submitted an affidavit from its Senior Vice President of Operations that indicated it generally takes about three days to enter cease and desists into their system.

Ultimately, the district court granted summary judgment in the consumer’s favor and, despite its failure to produce any written procedures in support of its bona fide error defense, Mericredit filed an appeal. Interestingly, although the August 17, 2021, opinion focuses heavily on standing, the appellant brief filed by Mericredit was based on the bona fide error defense, not the standing issue.


Although Ms. Lupia did not pick up the phone, did not speak to a collector, and did not allege specific damages, the Tenth Circuit held receiving the call and voicemail was sufficient for Article III standing. The court cited Spokeo v. Robins578 U.S. 330 (2016) for the principle that “concrete” doesn’t necessarily mean “tangible” and then looked to whether an intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts. Deciding whether an injury is similar to harms that have traditionally provided a basis for a lawsuit does not require a finding that the harm is to the same degree as that which has been historically required. Instead, the analysis is whether the alleged harm “poses the same kind of harm.”

In its analysis, the court focused on the tort of intrusion upon seclusion, which protects people against those who intrude on their solitude. According to the court, the unwanted call and voicemail left for the consumer after she sent a dispute and a request to cease calls is an injury that bears “a close relationship” to this historic cause of action, even where no specific damages were alleged. According to the court, since the harm alleged by Ms. Lupia (i.e. receiving unwanted calls after she asked for them to stop) bore a close relationship to the tort of intrusion upon seclusion, this case is factually distinguishable from Transunion v. Ramirez in which the plaintiffs who lacked standing were unable to show that their harms tracked the requirements for a traditionally recognized cause of action. 

Regarding the flurry of Seventh Circuit cases regarding standing, the court noted that those cases preceded the SCOTUS decision in TransUnion, and none of them involved telephone calls received after a dispute. The only case to address a call  to a consumer after a cease and desist request was sent to the debt collector, dealt with complaints of “stress and confusion” not an invasion of privacy.  

The Bona Fide Error Defense:

Mericredit did not deny calling the consumer; instead Mericredit argued the call was the result of a bona fide error. It is well settled legal doctrine that to prevail on a bona fide error defense a debt collector must show that the violation (1) was unintentional; (2) a bona fide error; and (3) made despite procedures reasonably adapted to avoid the violation. Despite the clear requirements of element number three, Mericredit moved forward on this defense without having any written procedures. As mentioned above, the district court didn’t buy it and Mericredit’s bona fide error defense was unsuccessful.

On appeal, although couched in various legal and procedural theories, Mericredit essentially argued that the district court erred in entering summary judgment for the consumer because she had a burden to disprove that the Mericredit’s policies were reasonably adapted to prevent the type of error from occurring. Mericredit claimed that by failing to disprove that the phone call was the result of a bona fide error, the consumer conceded the point.

In response, the Tenth Circuit took a moment to provide a civil procedure lesson to Mericredit and its counsel. Specifically, the court noted, when a party raises an affirmative defense, like bona fide error, that party must prove all of the elements of that defense. In other words, if a debt collector says a violation of the FDCPA is the result of a bona fide error, the debt collector needs to prove the three elements required for that defense.

According to the court, Mericredit and its counsel got this standard backward. By failing to present any procedures in support of its bona fide error defense, the defense was insufficient.  Further, the court reasoned that even if Mericredit had produced a procedure, those procedures (i.e. 3 days to process mail) are not reasonably adapted to prevent such an error from occurring, thus the bona fide error defense would still fail.

The full opinion can be found here.

insideARM Perspective

In this hyper-regulated and litigious environment in which we exist, it is crucial—absolutely crucial—that collection agencies and their attorneys appeal the right cases. Of course, there are no guarantees regarding how a court will rule, nor am I suggesting that collection agencies adopt a hyper risk-averse approach, but when a case is a Loser (yes with a capital L) like this one, no good can come from appealing it.

Regardless of the procedural window dressing Mericredit and its counsel put into its brief, ultimately, there is no conceivable way Mericredit could have been successful on a bona fide error defense without producing a procedure. I wanted to give Mericredit and its counsel the benefit of the doubt; I thought maybe they focused their appeal on standing grounds and threw the bona fide error stuff in as an extra. Unfortunately, however, it seems the bona fide error argument (again- without any supporting procedure!) was the crux of their appeal. It seems Mericredit, and presumably its counsel, thought they could be successful on a bona fide error defense without producing a single written procedure.

Let that sink in: a debt collector, without having a written mail procedure, attempted to argue that it had “reasonable procedures in place” … in a brief filed in 2020. What??? How?? Not only did they argue this in the district court, they took this misguided argument all the way up to the Tenth Circuit Court of Appeals.

So, what was the net result? Mericredit succeeded only in racking up more attorney fees for the consumer’s counsel and garnering an opinion that diminishes the ground the ARM industry has made on standing over the last year. For a bonus, we now have an opinion coming from the Tenth Circuit which unequivocally states that a phone call is akin to the tort of invasion of solitude.  Rest assured future cases filed by consumer attorneys across the country will cite this language or a variation of it.

Assuming there was some prohibition to settling the matter pre-judgment, Mericredit should have taken its proverbial lumps when it lost at summary judgment. This case proves that no good comes from appealing a Loser of a case. It is also a stark reminder that (1) written policies and procedures are necessary, and (2) when defending FDCPA actions, it is imperative that ARM entities find counsel who are experienced and knowledgeable in that area of the law and can see the bigger picture.

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