Ewing v. Med-1 Solutions, LLC
| Decision Date | 02 February 2022 |
| Docket Number | No. 21-1299,No. 21-1276,21-1276 |
| Parties | Laura EWING, Plaintiff-Appellant, v. MED-1 SOLUTIONS, LLC, Defendant-Appellee. September Webster, Plaintiff-Appellant, v. Receivables Performance Management, LLC, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
David J. Philipps, Attorney, Philipps & Philipps, Ltd., Palos Hills, IL, for Plaintiff-Appellants.
Nicholas W. Levi, Attorney, Kightlinger & Gray LLP, Indianapolis, IN, Nicholas Moline, Attorney, MED-1 Solutions, LLC, Greenwood, IN, for Defendant-Appellee MED-1 Solutions, LLC.
Sean Patrick Flynn, Attorney, Gordon, Rees, Scully, Mansukhani, LLP, Las Vegas, NV, Ilan Rosenberg, Attorney, Gordon Rees Scully Mansukhani LLP, Philadelphia, PA, for Defendant-Appellee Receivables Performance Management, LLC.
Before Sykes, Chief Judge, and Hamilton and St. Eve, Circuit Judges.
Laura Ewing and September Webster disputed certain debts they allegedly owed to debt-collection companies. Under the Fair Debt Collection Practices Act ("FDCPA"), debt-collection companies must report such disputes to credit reporting agencies, see 15 U.S.C. § 1692e(8), but the companies here failed to do so. Ewing and Webster sued separately, seeking actual and statutory damages. See id. § 1692k(a). The companies prevailed at summary judgment because the district courts in both cases determined that the companies' mistakes were bona fide errors. See id. § 1692k(c).
On appeal, both Ewing and Webster argue that the debt collectors' actions were not bona fide errors. We have consolidated their cases for decision. Before we may reach the merits, though, we must reexamine the requirements for Article III standing, particularly in light of the Supreme Court's recent decision in TransUnion LLC v. Ramirez , ––– U.S. ––––, 141 S. Ct. 2190, 210 L.Ed.2d 568 (2021), which clarified what counts as an injury-in-fact.
Laura Ewing sought to dispute medical debts by faxing a letter to MED-1 Solutions, LLC, a debt-collection company assigned to her case. MED-1's receptionist, however, misrouted the fax, forwarding it to the client-care department rather than the legal department. According to MED-1's fax-distribution policy, any faxed legal communication regarding contested debts was to be forwarded to the legal department. That day the receptionist received five additional dispute letters, which she correctly forwarded to the legal department. But as a result of the misrouted fax, Ewing's dispute was never recorded.
Two years later, Ewing obtained her credit report and saw that her debts, as reported by MED-1, were not indicated as disputed. After MED-1 eventually recorded the debts as disputed, her credit score rose.
Ewing sued MED-1 for violations of the FDCPA. She asserted that MED-1 reported her debts to a credit reporting agency without noting that the debts were disputed. See 15 U.S.C. § 1692e(8). MED-1 admitted that it had received Ewing's dispute letter and failed to report the dispute to the credit reporting agency, and it raised the affirmative defense of bona fide error under § 1692k(c). This provision provides safe harbor for debt collectors when they make an unintentional error, so long as they maintained procedures reasonably adapted to avoid it. MED-1 argued that the bona fide error defense applied because its failure to report the dispute arose from an unintentional error and it maintained procedures reasonably adapted to ensure that it reported faxed disputes. After discovery both parties moved for summary judgment, and the district judge entered summary judgment for MED-1 based on its affirmative defense.
September Webster discovered that her credit report reflected a debt that she did not believe she owed. She sought to dispute that debt, so her attorney faxed a dispute notice to the debt collector, Receivables Performance Management, LLC. The attorney faxed the notice after verifying that Receivables's fax number—one he had used on behalf of other clients—remained listed with the Nationwide Multistate Licensing System & Registry, the entity responsible for licensing debt collectors in Indiana. He received a confirmation that the fax was sent successfully.
Unbeknownst to Webster's attorney, Receivables had decided several months earlier—without announcement—to stop monitoring its electronic fax inbox. It stopped checking its inbox after removing from its website the fax number Receivables had used to communicate about disputes with debtors and their attorneys. Receivables had general policies for handling known disputes but no procedure in place to check its fax inbox periodically for new disputes or to notify senders that the inbox was unmonitored. As a result, Receivables was unaware that Webster had faxed any dispute. Because Receivables did not disconnect or disable the fax number, however, the line sent confirmations upon receipt of faxes, including those sent by Webster's attorney.
Webster sued after she obtained an updated credit report that reflected her DirecTV debt but not her dispute. She alleged that Receivables's failure to communicate her dispute harmed her credit reputation and credit score. She submitted evidence that her credit score rose once her credit report reflected her other disputed debts. Receivables countered that even if it had violated the FDCPA, its violation was excused by the bona fide error defense. See id. § 1692k(c). Both parties moved for summary judgment and the district judge granted Receivables's motion based on her assessment that Receivables violated the statute, but its error was bona fide.
In these appeals, the Debt Collectors1 raise a threshold standing argument. They assert that under TransUnion , which was decided while these appeals were pending, the Consumers lack standing because any risk of future harm they face is not sufficiently concrete to support a suit for damages. And without a concrete injury, there is no case or controversy for us to adjudicate. Carney v. Adams , ––– U.S. ––––, 141 S. Ct. 493, 498, 208 L.Ed.2d 305 (2020).
We begin with a few words about the law of standing. Article III standing requires the party invoking federal jurisdiction to demonstrate that (1) the plaintiff has suffered an injury-in-fact, (2) the injury was caused by the defendant, and (3) the injury is redressable by judicial relief. Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). An injury-in-fact must be concrete, particularized, and actual or imminent. Id. A concrete injury is essential to standing: "No concrete harm, no standing." TransUnion , 141 S. Ct. at 2200.
To be concrete, an injury must be " ‘real,’ and not ‘abstract,’ " but concrete need not mean tangible. Spokeo, Inc. v. Robins , 578 U.S. 330, 340–41, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). Traditional tangible harms, such as physical or monetary harm, easily meet the concreteness requirement. TransUnion , 141 S. Ct. at 2204. Intangible harms can be more difficult to assess. Intangible harms are concrete if the plaintiff's alleged injury bears a "close relationship" to the sort of harms traditionally recognized by American courts, such as reputational harm. Spokeo , 578 U.S. at 341, 136 S.Ct. 1540. The close-relationship inquiry looks for "a close historical or common-law analogue" to the alleged injury but does not require an "exact duplicate." TransUnion , 141 S. Ct. at 2204. When determining if a statutorily identified, intangible harm has a close-but-not-exact match in American history or at common law, we look to the kind of injury the statute protects, not the degree of harm suffered. Gadelhak v. AT&T Servs., Inc. , 950 F.3d 458, 462 (7th Cir. 2020).
When considering intangible harm, we start from a place of respect for Congress's prerogative to create statutory rights and obligations. TransUnion , 141 S. Ct. at 2204. But Congress may not make up injuries and decree them to be actionable. Id. at 2205. Thus, while Congress may elevate de facto injuries that once were thought to be insufficiently injurious to form the basis of a federal lawsuit, such an injury must still cause real-world harm in order to confer standing. Id. at 2204–05. In this context, then, Congressional authorization to sue is a necessary, but not sufficient, condition because one still must be "concretely harmed by a defendant's statutory violation." Id. at 2205 (emphasis in original).
Concrete harms are sometimes difficult to identify, especially when the harm is intangible. For example, in Spokeo the Court indicated that, for standing purposes, a material risk of harm could be concrete. Spokeo , 578 U.S. at 341–42, 136 S.Ct. 1540. The Court wrote that, although procedural violations do not automatically create concrete injuries, "[t]his does not mean ... that the risk of real harm cannot satisfy the requirement of concreteness." Id. at 341, 136 S.Ct. 1540 (citing Clapper v. Amnesty Int'l USA , 568 U.S. 398, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013) ).
The Court's recent decision in TransUnion clarified that a risk of future harm is concrete only if the suit is for injunctive relief. See TransUnion , 141 S. Ct. at 2210. The plaintiffs in TransUnion were a class of individuals whose credit reports contained a false notice that the individual was considered a potential threat to national security. Id. at 2201–02. They sued TransUnion under the Fair Credit Reporting Act ("FCRA"), alleging violations of three of the FCRA's provisions. Id. at 2200–01 ; see 15 U.S.C. §§ 1681e(b), 1681g(a)(1), (c)(2).
The Court divided the plaintiff class into two subgroups based on whether the individual's credit report (with the misleading alert) had been disseminated to third parties. TransUnion , 141 S. Ct. at 2208–13. It then examined whether each subgroup had suffered an injury that bore a close relationship...
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...Discussion of just a few of these leaves the line clear enough to resolve this case. We found standing in Ewing v. MED-1 Solutions, LLC , 24 F.4th 1146, 1149–50 (7th Cir. 2022), where a debt collector failed to notify a credit-reporting agency that the plaintiffs had disputed the debts in q......
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