The U.S. Court of Appeals for the Fifth Circuit recently reversed the class certification order of a trial court, finding sua sponte that the plaintiff lacked standing to bring a claim against a debt collection law firm under the federal Fair Debt Collection Practices Act (FDCPA).

In so ruling, the Fifth Circuit held that the plaintiff failed to establish that the law firm’s debt collection letter inflicted an injury with a “close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts.” Without this showing, the Court held that the plaintiff could not establish the first element of standing: that she suffered a concrete harm.

A copy of the opinion in Perez v. McCreary, Veselka, Bragg is available at:  Link to Opinion.

The plaintiff received a debt collection letter from a law firm that specialized in collecting debt on behalf of the Texas state government. However, the limitations period for the debt mentioned in the letter had run. The plaintiff then filed a claim against the law firm under the FDCPA. The plaintiff also sought and obtained class certification. The law firm timely appealed the trial court’s certification order.

Federal courts are courts of limited subject matter jurisdiction. A court’s power to resolve disputes is limited to “Cases” and “Controversies,” U.S. Const. art. III, § 2. A lawsuit is not a “Case[ ]” or “Controvers[y]” unless the plaintiff can prove that he has standing to bring suit. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992).

Standing requires the plaintiff to “show (i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021),

This case involved the first element of standing: the requirement that the plaintiff show he has suffered a concrete injury-in-fact. A purported injury is not concrete for purposes of Article III unless it has a “ʻclose relationship’ to a harm traditionally recognized as providing a basis for a lawsuit in American courts.” Id., at 2200.

Even though the law firm failed to allege on appeal that the plaintiff did not suffer a concrete injury, the Fifth Circuit decided to analyze this question anyway because it noted that appellate courts have an obligation to assure themselves of jurisdiction — even in “limited” Rule 23(f) interlocutory appeals that typically embrace “only the issue of class certification.” Bertulli v. Indep. Ass’n of Cont’l Pilots, 242 F.3d 290, 294 (5th Cir. 2001).

The plaintiff advanced five theories for the assertion that she suffered a concrete injury-in-fact. First, she claimed that the violation of her statutory rights under the FDCPA itself qualified as a concrete injury. However, the Fifth Circuit noted that TransUnion explicitly held that “Article III standing requires a concrete injury even in the context of a statutory violation.” 141 S. Ct. at 2205 (quoting Spokeo, 578 U.S. at 341).

Second, the plaintiff maintained that the law firm’s letter subjected her to a material risk of financial harm and that this exposure qualified as a concrete injury. Specifically, the plaintiff claimed that her receipt of the letter subjected her to a risk that she might accidentally pay her time-barred debts. But the Fifth Circuit determined that this theory too was foreclosed by TransUnion, which held that merely being subjected to a risk of future harm cannot support a suit for damages. 141 S. Ct. at 2210–11.

Third, the plaintiff argued that the confusion she experienced from the law firm’s letter qualified as a concrete injury, which the Fifth Circuit analogized to the common law tort of fraudulent misrepresentation. Restatement (First) of Torts §§ 525, 549, 553 (Am. L. Inst. 1938). The Fifth Circuit again disagreed with the plaintiff because the nature of the harm recognized by fraudulent misrepresentation is a traditional, tangible harm: the “pecuniary loss” the plaintiff sustains. The Court reasoned that confusion can only be an intangible harm, so it is necessarily different “in kind” from the common-law analog of fraudulent misrepresentation. Gadelhak v. AT&T Services Inc., 950 F.3d 458, 462 (7th Cir. 2020).

Fourth, the plaintiff alleged the time she wasted by consulting with her lawyer after receiving the letter qualified as a concrete injury. Absent an allegation that the plaintiff paid her attorney anything for the consultation, the Fifth Circuit assumed that the purported injury was solely lost time. However, the plaintiff did not offer a common-law analog to the time-based injury she claimed to have suffered, so the Court held that she did not meet her “burden [to] demonstrate[e] that [she has] standing” based on that theory. TransUnion, 141 S. Ct. at 2207.

Lastly, the plaintiff claimed that her receipt of an unwanted letter caused her to suffer a concrete injury analogous to the tort of intrusion upon seclusion. Once again, the Fifth Circuit disagreed.

A person commits the tort of intrusion upon seclusion by “intentionally intrud[ing], physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns . . . if the intrusion would be highly offensive to a reasonable person.” Restatement (Second) § 652B. One pattern of liability is for repeated, harassing communications. See id. cmt. d; Gadelhak, 950 F.3d at 462.

The Fifth Circuit recognized that harms analogous to this tort can qualify as concrete. See TransUnion, 141 S. Ct. at 2204 (citing Gadelhak, 950 F.3d at 462). However, the Court also concluded that Congress did not elevate the receipt of a single, unwanted message to the status of a legally cognizable injury in the FDCPA. Instead, its closest analog to an unwanted letter — unwanted telephone calls — must be made “repeatedly or continuously.” 15 U.S.C. § 1692d(5).

Accordingly, the Fifth Circuit vacated the trial court’s class certification order and remanded the case with instructions to dismiss for want of jurisdiction.

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