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  • 3rd Circuit holds unpaid highway tolls are not “debts” under the FDCPA

    Courts

    On August 7, the U.S. Court of Appeals for the 3rd Circuit held that unpaid highway tolls are not “debts” under the FDCPA because they are not transactions primarily for a “personal, family, or household” purpose. According to the amended class action complaint at issue in the case, after a consumer’s electronic toll payment system account became delinquent, a debt collection agency sent notices containing the consumer’s account information in the viewable display of the notice envelope. The consumer filed suit alleging the collection agency violated the FDCPA. While the lower court held that the consumer had standing to bring the claim, it dismissed the action on the ground that the unpaid highway tolls fell outside the FDCPA’s definition of a debt. The 3rd Circuit affirmed the lower court’s decision. On the issue of standing, citing the Supreme Court’s 2016 ruling in Spokeo, Inc. v. Robins (covered by a Buckley Sandler Special Alert), the panel reasoned that the exposed account number “implicates a core concern animating the FDCPA—the invasion of privacy” and is a legally cognizable injury that confers standing. The panel agreed with the consumer that the obligation to pay the highway tolls arose out of a “transaction” for purposes of the FDCPA because he voluntarily chose to drive on the toll roads, but found the purpose of the transaction was “public benefit of highway maintenance and repair”—not the private benefit of a “personal, family, or household” service or good as required by the FDCPA. Moreover, the court concluded that while the consumer chose to drive on the roads for personal purposes, the money being rendered was primarily for public services, as required by the statute to collect tolls “to acquire, construct, maintain, improve, manage, repair and operate transportation projects.”

    Courts Third Circuit Appellate FDCPA Debt Collection Spokeo U.S. Supreme Court

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  • 6th Circuit cites Spokeo, but holds plaintiffs alleged sufficient harm from deficient debt collection letters

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    On July 30, the U.S. Court of Appeals for the 6th Circuit held that consumers had standing to sue a debt collector whose letters allegedly failed to instruct them that the Fair Debt Collection Practices Act (FDCPA) makes certain debt verification information available only if the debt is disputed “in writing.” The court found that these alleged violations of the FDCPA presented sufficiently concrete harm to satisfy the “injury-in-fact” required for standing under Article III of the Constitution.

    The debt collector had filed a motion to dismiss in the lower court, arguing that the putative class action plaintiffs lacked Article III standing under the Supreme Court’s 2016 ruling in Spokeo, Inc. v. Robins (covered by a Buckley Sandler Special Alert). The district court denied the motion, determining that the letters “created a ‘substantial’ risk that consumers would waive important protections afforded to them by the FDCPA” due to the insufficient instructions. The 6th Circuit affirmed. After analyzing Spokeo, the court agreed that the “purported FDCPA violations created a material risk of harm to the interests recognized by Congress in enacting the FDCPA,” namely the risk of unintentionally waiving the verification and suspension rights afforded by the FDCPA when a debt is disputed.

    Courts Appellate Sixth Circuit Spokeo Debt Collection Debt Verification FDCPA

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  • Sixth Circuit rules borrowers lack standing under FDCPA

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    On February 16, the U.S. Court of Appeals for the Sixth Circuit held that a letter sent from an attorney on behalf of a mortgage servicing company to consumers violated the Fair Debt Collection Practices Act (FDCPA), but because the alleged violation did not meet the “injury in fact” requirement for standing, the consumers had no standing to sue. According to the opinion, the letter confirmed receipt of an executed warranty deed in lieu of foreclosure and reaffirmed that the mortgage servicer would “not attempt to collect any deficiency balance.” When the mortgage servicer attempted to collect the debt, the consumers cited the letter and the servicer agreed that nothing was owed. However, the consumers sued the attorney and the mortgage servicer claiming that the letter violated the FDCPA and the Ohio Consumer Sales Practices Act because it did not include a notice that it was from a debt collector. The claims against the servicer were resolved through arbitration, but a district court ruled that the attorney violated Ohio law for failing to include the appropriate disclosures. The attorney appealed, arguing that the consumers did not have standing to assert their federal and state law claims. However, citing the Supreme Court ruling in Spokeo, Inc. v. Robins, the Sixth Circuit held that the consumers must show more than a “bare procedural violation.” Even though the letter lacked the required disclosures required by the FDCPA, this lack of disclosures caused no harm to the consumers, and in fact, the “letter was good news when it arrived, and it became especially good news when [the servicer] persisted in trying to collect a no-longer-collectible debt.” Because the letter created no cognizable injury, the Sixth Circuit reversed the district court’s decision and dismissed the claims brought under the FDCPA and the Ohio Consumer Sales Practice Act for lack of standing.

    Courts Appellate Sixth Circuit FDCPA Spokeo Debt Collection

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  • TCPA lawsuit passes Spokeo, survives motion to dismiss

    Courts

    On February 20, a judge for the U.S. District Court for the Northern District of Illinois denied a national insurance company’s motion to dismiss a proposed Telephone Consumer Protection Act (TCPA) class action suit brought by a California-based plumbing company. The plaintiff had sued the insurance company and one of its agents for using an autodialer to make prerecorderd sales calls. One call was answered by the plaintiff’s principal and interrupted business, which Plaintiff alleges violated the TCPA. The plaintiff also alleges that the autodialed calls “seized and trespassed upon the use of its cell phones.” In its motion to dismiss, the insurance company argued, among other things, that the plaintiff failed to allege a concrete injury, which is required to establish standing. Citing the Supreme Court ruling in Spokeo, Inc. v. Robins, the judge held that the plaintiff had alleged sufficient facts, including the disruption to its business, to establish a concrete harm.

    Courts TCPA Spokeo Autodialer

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  • Supreme Court denies writ challenging data breach standing

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    On February 20, the U.S. Supreme Court denied without comment a medical insurance company’s petition for writ of certiorari to challenge an August 2017 D.C. Circuit Court of Appeals decision, which reversed the dismissal of a data breach suit filed by the company’s policyholders in 2015. According to the D.C. Circuit opinion, the policyholders sued the medical insurance company after the company announced that an unauthorized party had accessed personal information for 1.1 million members. The lower court dismissed the policyholder’s case, holding that they did not have standing because they could not show an actual injury based on the data breach. In reversing the lower court’s decision, the D.C. Circuit, citing the Supreme Court ruling in Spokeo, Inc. v. Robins, held that it was plausible that the unauthorized party “has both the intent and the ability to use [the] data for ill.” This was sufficient to show that the policyholders had standing to bring the claims because they alleged a plausible risk of future injury.

    Courts Privacy/Cyber Risk & Data Security Spokeo Class Action U.S. Supreme Court Appellate D.C. Circuit Data Breach

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  • Supreme Court denies cert petition in Spokeo

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    On January 22, the U.S. Supreme Court denied a second petition for writ of certiorari in Spokeo v. Robins, thereby declining to reconsider its position on Article III’s standing to sue requirements or to provide further clarification on what constitutes injury in fact. Citing “widespread confusion” over how to determine whether intangible injuries qualify as injury in fact, and therefore meet the standing threshold, Spokeo argued in its petition that review is “warranted to ensure that the jurisdiction asserted by the federal courts remains within constitutional limits.” The second petition was filed by Spokeo last December to request a review of the U.S. Court of Appeals for the Ninth Circuit’s August 2017 decision—on remand from the Supreme Court (see Buckley Sandler Special Alert here)—which ruled that Robins had established standing to sue for alleged violations of the Fair Credit Reporting Act (FCRA) by claiming an intangible statutory injury without any additional harm. The 9th Circuit opined that information contained in a consumer report about age, marital status, educational background, and employment history is important for employment and loan applications, home purchases, and more, and that it “does not take much imagination to understand how inaccurate reports on such a broad range of material facts about Robins’s life could be deemed a real harm.” Further, guaranteeing the accuracy of such information “seems directly and substantially related to FCRA’s goals.” The 9th Circuit reversed and remanded the case to the Central District of California after finding that Robins had adequately alleged the essential elements of standing (see previous InfoBytes coverage here).

    Courts U.S. Supreme Court Ninth Circuit Appellate FCRA Litigation Spokeo

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  • Second Circuit Cites Spokeo, Rules No Standing to Sue for Violation of FACTA

    Courts

    On September 19, the U.S. Court of Appeals for the Second Circuit issued an opinion ruling that a merchant who had printed the first six numbers of a consumer’s credit card on a receipt violated the Fair and Accurate Credit Transactions Act (FACTA), but that because the violation did not cause a concrete injury, the consumer did not have standing to sue the merchant. Under FACTA, merchants are prohibited from including more than the final five digits of a consumer’s credit card number on a receipt. In this instance, the plaintiff filed a complaint in 2014, followed by an amended complaint later that same year, in which he alleged that he twice received printed receipts containing the first six digits of his credit card number, in violation of FACTA. The plaintiff claimed that the risk of identity theft was a sufficient injury to establish standing. The defendants argued that that the first six digits of the credit card account only identified the card issuer and did not reveal any information about the consumer, which did not “raise a material risk of identity theft.” Citing a Supreme Court ruling in Spokeo v. Robins, the district court opined that a procedural violation of a statute is not enough to allow a consumer to sue, because it must be shown that the violation caused, or at least created a material risk of, harm to the consumer—which, in this case, was not present. Accordingly, the appellate court affirmed the district court’s dismissal for lack of subject matter jurisdiction, but found that the district court erred in dismissing the suit with prejudice.

    Courts Litigation FACTA Second Circuit U.S. Supreme Court Spokeo

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  • District Court Cites Spokeo, Refuses to Certify TCPA Class Action Suit

    Courts

    On August 15, a federal judge in the U.S. District Court for the Northern District of Illinois Eastern Division granted a pet health insurance company’s (defendants) motion to strike class allegations in a Telephone Consumer Protection Act (TCPA) lawsuit over alleged robocalls. Citing a recent Supreme Court ruling in Spokeo v. Robins, the judge opined that because evidence proved some of the class members agreed to receive calls, plaintiffs failed to establish a lack of consent and could therefore not claim to have suffered a concrete injury. In 2014, plaintiffs filed a suit against the defendants proposing certification of two classes—“advertisement” and “robocall”—alleging that calls were made to individuals’ cell phones without specific consent and arguing that these calls were a form of “advertising,” which, pursuant to FTC rules, requires express written consent. However, the defendants’ position—for which the judge ruled in favor—was that because affidavits signed by individuals during the pet adoption process show that some of the class members consented to receive calls about special offers (electing not to opt-out), these individuals would not be able to prove injury under the Spokeo standard. Thus, issues of individualized consent would predominate, making it impossible for plaintiffs to “establish a lack of consent with generalized evidence.” Furthermore, the court stated that if plaintiffs agreed to receive calls—as defendants claim a significant number did, just not in writing—a lack of written evidence does not make the calls unsolicited.

    Courts TCPA Class Action Litigation U.S. Supreme Court Spokeo

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  • Ninth Circuit Rules FCRA Plaintiff Has Article III Standing

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    On August 15, the U.S. Court of Appeals for the Ninth Circuit issued an opinion, on remand from the U.S. Supreme Court, ruling that a consumer plaintiff could proceed with his Fair Credit Reporting Act (FCRA) claims because he had sufficiently alleged a “concrete” injury and therefore had standing to sue under Article III of the Constitution. Robins v. Spokeo, Inc., No. 11-56843, 2017 WL 3480695 (9th Cir. Aug. 15, 2017). By way of background, the plaintiff had alleged that the defendant consumer reporting agency “willfully violated various procedural requirements under FCRA,” and consequently published an inaccurate consumer report on its website that “falsely stated his age, marital status, wealth, education level, and profession” and “included a photo of a different person.” In May 2016, the Supreme Court vacated an earlier Ninth Circuit decision, finding that the court failed to consider an essential element of Article III standing: whether the plaintiff alleged a “concrete” injury. (See previous Special Alert here.) After providing some guidance—including that the plaintiff’s injury must be “real” and not “abstract” or merely “procedural”—the high court remanded to the Ninth Circuit for further consideration. 

    On remand, the court first asked “whether the statutory provisions at issue were established to protect [the plaintiff’s] concrete interests (as opposed to purely procedural rights).” The court answered affirmatively, finding that “the FCRA procedures at issue in this case were crafted to protect consumers’ . . . concrete interest in accurate credit reporting about themselves.” Next, the court asked “whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests.” The court again answered affirmatively, finding that the plaintiff sufficiently alleged that he suffered a “real harm” to his “concrete interests in truthful credit reporting.” That is, the plaintiff sufficiently alleged that the defendant “prepared . . . an [inaccurate] report,” “that it then published the report on the Internet,” and that “the nature of the specific alleged reporting inaccuracies” was not “trivial or meaningless,” but instead covered “a broad range of material facts” about the plaintiff’s life “that may be important to employers or others making use of a consumer report.” Finally, the court found that the plaintiff’s allegations were not too speculative, because “both the challenged conduct and the attendant injury have already occurred.” After reaffirming that the plaintiff had adequately alleged the other essential elements of standing, the court remanded to the Central District of California for further proceedings.

    Courts FCRA Appellate Litigation Ninth Circuit U.S. Supreme Court Spokeo

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  • Second Circuit Affirms No Actual Harm in FACTA Suit

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    On June 26, the U.S. Court of Appeals for the Second Circuit held that, without concrete evidence of actual harm, a consumer lacks standing under the Fair and Accurate Credit Transactions Act (FACTA) to sue a merchant for printing credit card expiration dates on receipts. The consumer alleged that printing the expiration date on her credit card receipt led to a material risk of identity theft, and therefore constituted an injury-in-fact sufficient to confer Article III standing. The court disagreed, noting that Congress’s amendments to FACTA belie that expiration dates on credit card receipts increase the risk of identity theft. Moreover, the court held that the consumer failed to allege actual harm from the merchant’s practice.

    The court’s decision in Cruper-Wienmann comes approximately one month after the U.S. Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016), as revised (May 24, 2016), which held that “bare procedural violation[s], divorced from any concrete harm” are not enough to establish standing.

    Courts Second Circuit Litigation FACTA Spokeo

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