Evans v. Portfolio Recovery Assocs., LLC

• Decision Date: 02 May 2018
• Docket Number: 17-1866,17-2622,17-1860,17-2756 & 18-1374,Nos. 17-1773,s. 17-1773
• Citation: 889 F.3d 337
• Parties: Katherine EVANS, Plaintiff–Appellee, v. PORTFOLIO RECOVERY ASSOCIATES, LLC, Defendant–Appellant. and Lusvina Paz, Plaintiff–Appellee, v. Portfolio Recovery Associates, LLC, Defendant–Appellant. and Peter Bowse, Plaintiff–Appellee, v. Portfolio Recovery Associates, LLC, Defendant–Appellant. and Evelyn Gomez, Plaintiff–Appellee, v. Portfolio Recovery Associates, LLC, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

889 F.3d 337

Katherine EVANS, Plaintiff–Appellee,

v.PORTFOLIO RECOVERY ASSOCIATES, LLC, Defendant–Appellant.andLusvina Paz, Plaintiff–Appellee,

v.Portfolio Recovery Associates, LLC, Defendant–Appellant.andPeter Bowse, Plaintiff–Appellee,

v.Portfolio Recovery Associates, LLC, Defendant–Appellant.andEvelyn Gomez, Plaintiff–Appellee,

v.Portfolio Recovery Associates, LLC, Defendant–Appellant.

Nos. 17-1773

17-1860

17-1866

17-2622

17-2756 & 18-1374

United States Court of Appeals, Seventh Circuit.

Argued April 18, 2018

Decided May 2, 2018

Bryan Paul Thompson, Attorney, CHICAGO CONSUMER LAW CENTER, P.C., Chicago, IL, Michael Hilicki, Attorney, KEOGH LAW, LTD., Chicago, IL, for Plaintiffs–Appellees.

David M. Schultz, Attorney, HINSHAW & CULBERTSON LLP, Chicago, IL, Stephen R. Swofford, Attorney, HINSHAW & CULBERTSON LLP, Chicago, IL, for Defendant–Appellant.

Brian Melendez, Attorney, BARNES & THORNBURG LLP, Minneapolis, MN, for Amicus Curiae ACA INTERNATIONAL.

Bryan Paul Thompson, Attorney, CHICAGO CONSUMER LAW CENTER, P.C., Chicago, IL, for Plaintiff–Appellee PETER BOWSE.

Before Wood, Chief Judge, and Flaum and Easterbrook, Circuit Judges.

Flaum, Circuit Judge.

This appeal concerns four consolidated cases involving similar alleged violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692e(8). Plaintiffs defaulted on credit cards, and defendant Portfolio Recovery Associates ("PRA"), an Illinois debt collection agency, bought the accounts for collection. The Debtors Legal Clinic (the "Clinic") sent separate letters on behalf of each plaintiff to PRA, stating "the amount reported is not accurate." PRA later reported each debt to credit reporting agencies without noting that the debt was "disputed." Plaintiffs each filed a suit against PRA for violations of the FDCPA, alleging that PRA communicated their debts to credit reporting agencies without indicating they had disputed the debt. The district courts granted summary judgment in favor of plaintiffs. We affirm.

I. Background

A. Factual Background¹

Each plaintiff defaulted on their credit card account, and PRA purchased the debts from the original creditors. As required by 15 U.S.C. § 1692g, PRA sent plaintiffs validation letters detailing the debt.² Each plaintiff then sought the advice of the Clinic, a non-profit legal aid organization. More than thirty days after PRA sent the validation letters, Andrew Finko, a volunteer attorney at the Clinic, faxed separate letters to PRA on behalf of each plaintiff (hereinafter, the "Letters"). The Letters stated:

This letter is concerning the above referenced debt.

Debtors Legal Clinic is a non-profit legal services organization that advises senior citizens, veterans, and low-income individuals whose income is protected by law of their rights under various state and federal statutes. Our clinic represents the above referenced client for the purposes of enforcing their rights pursuant to all applicable debt collection laws.

This client regrets not being able to pay, however, at this time they are insolvent, as their monthly expenses exceed the amount of income they receive, and the amount reported is not accurate. If their circumstances should change, we will be in touch.

Our office represents this client with respect to any and all debts you seek to collect, now or in the future, until notified otherwise by our office. As legal representative for this client, all communication must be through our office, please do not contact them directly.³

If you wish to discuss this matter, please contact our office directly at [phone number] to speak with the attorney assigned to the matter, Andrew Finko.

Subsequent to receiving the Letters, PRA reported the amount of the debt, the account number, and the original creditor to credit reporting agencies. However, PRA did not inform the credit reporting agencies that the debt was disputed.

PRA admits it received and reviewed the Letters. It says it treated them as "attorney representation letters," but did not believe the Letters communicated disputes. According to Nyetta Jackson, PRA's Vice President of Operations:

There was nothing [in the Letters] that indicated that this was a clear dispute that needed to be processed. What was clear is that the attorney was letting us know that they now represent the customer. What was clear is that they said they didn't have the money to pay and they regretted that.

To support this view, Jackson states that Finko did not fax the Letters to PRA's special disputes department; rather, he sent the Letters to PRA's general counsel. Additionally, Jackson notes that on prior occasions, Finko sent letters that expressly stated his client "disputes the debt."

B. Procedural Background

The plaintiffs alleged that PRA violated 15 U.S.C. § 1692e(8), which prohibits debt collectors from "[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed." Plaintiffs maintained that they "disputed" the debt when the Clinic sent the Letters to PRA, and PRA admits that it did not inform the credit reporting agencies that the debt was disputed. The parties filed cross-motions for summary judgment, and the district courts each granted summary judgment for plaintiffs. We consolidated PRA's appeals for argument and disposition.⁴

II. Discussion

"We review de novo a district court's decision on cross-motions for summary judgment, construing all facts and drawing all reasonable inferences in favor of the party against whom the motion under consideration was filed." Hess v. Bd. Of Trs. Of S. Ill. Univ. , 839 F.3d 668, 673 (7th Cir. 2016). "Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law." Id. (citing Fed. R. Civ. P. 56(a) ).

PRA makes four arguments: (1) plaintiffs did not have Article III standing; (2) the Letters did not "dispute" the debt within the meaning of § 1692e(8) ; (3) even if PRA violated the statute, the violation was not material; and (4) PRA has a bona fide error defense under § 1692k(c). We address each in turn.

A. Standing

First, PRA argues that plaintiffs lacked Article III standing. To establish standing, a plaintiff must show:

(1) an "injury in fact," that is, "an invasion of a legally protected interest which is ... concrete and particularized, and ... actual or imminent"; (2) a causal connection between the injury and the challenged conduct, meaning that the injury is "fairly traceable" to the challenged conduct; and (3) a likelihood "that the injury will be redressed by a favorable decision."

Dunnet Bay Const. Co. v. Borggren , 799 F.3d 676, 688 (7th Cir. 2015) (alterations in original) (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). Relying primarily on the Supreme Court's recent opinion in Spokeo, Inc. v . Robins , ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), PRA argues plaintiffs do not have standing because they "did nothing to show that they had an injury in fact." We disagree.

In Spokeo , the defendant generated a consumer report that inaccurately stated the plaintiff's address, marital status, age, occupation, finances, and education. Id. at 1546. The plaintiff filed a class action, alleging the defendant failed to comply with the Fair Credit Reporting Act ("FCRA"); however, he did not identify any monetary harm. Id. Although the Court took no position as to whether the plaintiff actually had standing, id. at 1550, it expounded on whether violation of a congressional statute necessarily satisfies the "injury in fact" element. On the one hand, the Court stressed that a plaintiff "cannot satisfy the demands of Article III by alleging a bare procedural violation" because "[a] violation of one of the FCRA's procedural requirements may result in no harm."⁵ Id. Indeed, the Court stated that "Article III standing requires a concrete injury even in the context of a statutory violation." Id. at 1549 ; see also Summers v. Earth Island Inst. , 555 U.S. 488, 496, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009) ("[D]eprivation of a procedural right without some concrete interest that is affected by the deprivation ... is insufficient to create Article III standing.").

On the other hand, however, the Court made clear that " ‘[c]oncrete’ is not ... necessarily synonymous with ‘tangible.’ " Spokeo , 136 S.Ct. at 1549. The Court affirmed that "Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before." Id. (quoting Lujan , 504 U.S. at 580, 112 S.Ct. 2130 (Kennedy, J., concurring in part and concurring in the judgment) ). It emphasized that Congress's judgment is "instructive and important" because Congress "is well positioned to identify intangible harms that meet minimum Article III requirements." Id. Therefore, the Court concluded that "the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact," such as where the statutory violation creates "risk of real harm." Id. "In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified." Id.

Here, PRA's alleged violation of § 1692e(8) is sufficient to show an injury-in-fact. Because PRA failed to report to a credit reporting agency that the debt is disputed, the plaintiffs suffered "a real risk of financial harm caused by an inaccurate credit rating." Sayles v. Advanced Recovery Sys., Inc. , 865 F.3d 246, 250 (5th Cir. 2017) ; see also Saunders v. Branch Banking & Tr. Co. , 526 F.3d 142, 146–47 (4th Cir. 2008) ("[The defendant's] decision to report the debt but not the dispute resulted in a much lower credit score for [the plaintiff] than a report of both the debt and the dispute."). An inaccurate credit report produces a variety of negative...