COURT PROVIDES FAVORABLE GUIDANCE ON INJURY-IN-FACT ELEMENT OF STANDING IN CONTEXT OF FDCPA CLAIM

This month the Sixth Circuit Court of Appeals affirmed the District Court’s dismissal of an FDCPA case filed by Gustav Buchholz (“Buchholz”), a debtor, against Meyer Njus Tanick, PA (“MNT”), a law firm engaged in debt collection activities. Buchholz v. Meyer Njus Tanick, PA. Buchholz was behind on payments on two credit cards, so MNT sent two letters which contained information about the past due amounts for each account and “provided contact information for him to either challenge or pay the debts.” Buchholz did not dispute the veracity of the letters, but the “letters made him feel anxious and fear that MNT would sue him if he did not promptly pay.” Ostensibly, that fear of litigation passed, and Buchholz sued MNT.

The Court noted the merits of Buchholz’s claim were based on “a series of inferences” culminating in the conclusion that MNT could not have engaged in a meaningful review of the two collection letters it sent to Buchholz because of the sheer number of collection letters it was sending out on a daily basis. Buchholz argued an attorney’s signature on both letters he received from MNT “created the impression that the attorney…reviewed the file and made the professional, considered determination to send the letter.” Buchholz reasoned the attorney-signed letters constituted a violation of several subsections of § 1692e of the FDCPA which prohibited “the use of any false, deceptive, or misleading representation[s] or means in connection with the collection of any debt.”

Notwithstanding the tenuous nature of Buchholz’s argument, the Sixth Circuit noted it could not even consider the merits of Buchholz’s claim because he failed to show he suffered an “injury in fact that is traceable to MNT’s challenged conduct.” The Court, relying heavily on the Supreme Court’s ruling in Spokeo, Inc., engaged in a detailed analysis of the three elements necessary to establish a plaintiff’s standing to sue, focusing most of its analysis on the first element, injury in fact.

The three elements of standing are that the plaintiff “must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.”

The Court noted an injury in fact must be both (i) concrete and particularized and (ii) actual or imminent. The Court explained a concrete injury “is like it sounds, ‘real and not abstract’.” Although the Court noted all concrete injuries are not necessarily “tangible economic or physical harms”, the Court was “skeptical” about whether Buchholz’s receipt of the two MNT letters constituted “extreme and outrageous” conduct which would cause “severe” anxiety or emotional distress – a standard employed by other courts when evaluating “psychological injuries.

Likewise, the Court rejected Buchholz’s argument that MNT’s alleged FDCPA violation by itself constituted an injury in fact. The Court explained that injury in fact can be established and no “additional harm beyond the one Congress…identified” need be alleged if “the plaintiff alleges a violation of a procedural right that protects a concrete interest.” However, again relying on Spokeo, the Court explained that a “bare procedural violation, divorced from any concrete harm,” cannot satisfy Article III’s injury-in-fact requirement, even if the plaintiff has a statutory basis for litigating the claim in federal court. The Court surmised MNT’s alleged FDCPA violation did not result in any harm, “much less harm that Congress intended to prevent when it enacted the FDCPA.” The Court also noted Buchholz failed to “identify an analogous harm and corresponding common law cause of action” which would support his claim that the alleged anxiety he suffered constituted a concrete injury.

Finally, the Court explained that even disregarding the “concrete injury” requirement for standing, Buchholz also failed to establish his injury was “actual or imminent,” the second element in the injury-in-fact analysis. The Court looked to Buchholz’s complaint allegations where he stated he “felt an undue sense of anxiety that he would be subjected to legal action” if he did not pay promptly. The Court explained “[i]n other words, Buchholz was nervous about being sued at some point in the future,” but “the fear of a future harm” is an injury “that is rarely cognizable.” The Court surmised the potential litigation Buchholz was anxious about fell short of the injury-in-fact requirement because litigation was not “certainly impending” but rather was something that “may or may not occur in the future.”

Lastly, the Court discussed the second and third elements necessary for standing which it labeled “traceability and redressability” prerequisites. The Court agreed with MNT that Buchholz’s anxiety stemmed from his “decision to not pay the debts that he does not dispute he owes” and not from the two MNT letters. The Court concluded anxiety stemming from failure to pay one’s debts “looks like a self-inflicted injury” which is not an injury in fact, and which cannot be traced back to the defendant. The Court affirmed the District Court’s order of dismissal finding Buchholz lacked standing to bring his claim and the Court lacked subject-matter jurisdiction to consider it.

Buchholz did not move for rehearing so this opinion is now final and sets a binding precedent which the district courts must follow when evaluating whether a party has standing to bring an action. In any lawsuit it is imperative standing be analyzed and addressed first – for a plaintiff before bringing suit and for a defendant before answering the complaint. Both Buchholz and Spokeo demonstrate that standing is a procedural hurdle that is not easy to overcome and cannot be fixed retroactively. In the context of FDCPA and related claims, a defensive filing based on lack of standing, if applicable, is crucial as it can serve to wean out claims early.