Hustedt v. Hunter Warfield Inc.
| Docket Number | 4:21CV59-PPS/JEM |
| Decision Date | 24 January 2022 |
| Parties | ALEXANDRA HUSTEDT, Plaintiff, v. HUNTER WARFIELD, INC., Defendant. |
| Court | U.S. District Court — Northern District of Indiana |
Alexandra Hustedt alleges that Hunter Warfield, Inc., a large debt collection agency, attempted to collect a debt owed to Granite Management for damage to an apartment Hustedt lived in while a student at Purdue University. [DE 26 at ¶¶8 & 9.[1] Hustedt alleges that she sent HW a letter disputing the debt, but that even after receiving it, HW continued to attempt to collect the debt from Hustedt. [DE 26 at ¶¶40-41.[2] HW's alleged conduct included “reporting the subject account to consumer reporting agencies with a balance owed, ” which “HW knew or should have known to be false.” [DE 26 at ¶43 ¶¶46-48.] According to Hustedt, she “never owed anything to HW or Granite Management LLC...at any time HW furnished information concerning Ms. Hustedt to any credit reporting agency.” [DE 26 at ¶60.]
Hustedt's Amended Complaint filed in the Circuit Court of Tippecanoe County alleged that HW violated the Fair Credit Reporting Act, 15 U.S.C. §1681 et seq., and the Fair Debt Collections Practices Act, 15 U.S.C. §1692 et seq. [DE 5 at ¶3.] HW removed the case to federal court based on the Amended Complaint's invocation of the two federal statutes. [DE 1 at ¶3.] Since the removal, plaintiff has amended her complaint a second time. [DE 26.] She now brings an amended motion to remand arguing that HW cannot demonstrate that she has alleged a concrete harm brought upon her, which is a threshold requirement of Article III standing. [DE 29 at 1.] If all of this seems a little odd, that's because it is. Hustedt is trying to convince me she has no concrete injury, while the defendant insists Hustedt has indeed been injured by its conduct. It's a bit topsy-turvy. How we got here starts with the Supreme Court's standing jurisprudence, which is where I'll begin.
Article III of the United States Constitution limits the jurisdiction of federal courts to “cases” and “controversies, ” which the Supreme Court has interpreted to require, among other things, a plaintiff with “standing” to assert her claims. Lujan v Defenders of Wildlife, 504 U.S. 555, 560 (1992). When a case is removed to federal court, the removing defendant has the burden “to establish that all elements of jurisdiction - including Article III standing - existed at the time of removal.” Collier v. SP Plus Corporation, 889 F.3d 894, 896 (7th Cir. 2018). Hustedt invokes the standing concept along with the requirement of 28 U.S.C. §1447(c)): “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” [DE 30 at 6.] Because “[f]ederal courts have subject-matter jurisdiction only if constitutional standing requirements also are satisfied ” Hustedt contends that if HW concedes or fails to demonstrate Article III standing, her case should be remanded to state court. Collier, 889 F.3d at 896.
One of the elements of standing is an “injury in fact, ” which means “an invasion of a legally protected interest which is (a) concrete and particularized...and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal citations and quotation marks omitted).[3] Hustedt's argument for remand is based on two recent Supreme Court cases that addressed the concrete injury requirement in the Fair Credit Reporting Act context. Hustedt argues that under these decisions, and lower court cases interpreting them, HW cannot identify within the Second Amended Complaint allegations of an injury in fact sufficient to support Article III standing. “The injury analysis often occurs at the pleading stage, where we are limited to the complaint's ‘general factual allegations of injury resulting from the defendant's conduct' to evaluate standing.” Wadworth v Kross, Lieberman & Stone, Inc., 12 F.4th 665, 667 (7th Cir. 2021), quoting Lujan, 504 U.S. at 661.
“The ‘irreducible constitutional minimum of standing' requires the plaintiff or party invoking federal jurisdiction to demonstrate that he has suffered an injury in fact that is fairly traceable to the defendant's conduct and redressable by a favorable judicial opinion.” Pennell v. Global Rust Management, LLC, 990 F.3d 1041, 1044 (7th Cir. 2021), quoting Lujan, 504 U.S. at 560-61. The requirement of a concrete and actual injury is not necessarily met by the allegation of a statutory violation. Instead, “a bare procedural violation, divorced from any concrete harm, ” does not satisfy the injury-in-fact requirement because “[a] violation of one of the FCRA's procedural requirements may result in no harm.” Spokeo, Inc. v. Robins, 578 U.S. 330, 341, 342 (2016). See also Pennell, 990 F.3d at 1044. “This does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.” Id. As the Supreme Court noted in Spokeo “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.” Spokeo, 578 U.S. at 342. Because the Ninth Circuit's analysis had focused on particularity to the exclusion of the concreteness requirement, the Supreme Court remanded the case for a determination “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement” to adequately allege an injury in fact. Id. at 343. On remand in Spokeo II, the Ninth Circuit found such a risk. Robins v. Spokeo, Inc., 867 F.3d 1108, 118 (9th Cir. 2017).
The other Supreme Court decision chiefly relied upon by Hustedt is TransUnion v. Ramirez, U.S., 141 S.Ct. 2190 (2021), a class action. There, on the one hand, the Court held that class-members whose allegedly inaccurate credit reports had been provided to third-party businesses “demonstrated concrete reputational harm and thus have Article III standing to sue.” Id. at 2200. But on the other hand, the plaintiffs whose credit reports had not been provided to third-party businesses during the relevant time period had “not demonstrated concrete harm and thus lack Article III standing to sue.” Id.
The exact meaning of these cases has been hotly debated in the Seventh Circuit and around the country. Unlike some other circuits, the Seventh Circuit has taken a very restrictive view on the standing requirement in FCRA and FDCPA cases, dismissing many cases over the past couple years on standing grounds. Pennell v. Global Trust Mgmt., LLC, 990 F.3d 1041 (7th Cir. 2021); Smith v. GC Servs. Ltd. P'ship, 986 F.3d 708 (7th Cir. 2021); Nettles v. Midland Funding LLC, 983 F.3d 896 (7th Cir. 2020); Spuhler v. State Collection Serv., Inc., 983 F.3d 282 (7th Cir. 2020); Bazile v. Fin. Sys. of Green Bay, Inc., 983 F.3d 274 (7th Cir. 2020); Gunn v. ThrasherBuschmann & Voelkel, P.C., 982 F.3d 1069 (7th Cir. 2020); Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067 (7th Cir. 2020); Larkin v. Fin. Sys. of Green Bay, Inc., 982 F.3d 1060 (7th Cir. 2020); Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329 (7th Cir. 2019). But some judges in the Seventh Circuit have disagreed with the crabbed reading of the standing requirement in FDCPA and FCRA cases. See Markakos v. Medicredit, Inc., 997 F.3d 778, 781 and 785 (7th Cir. 2021) (Ripple J. and Rover J, concurring). See also Thornley v. Clearview AI, Inc., 984 F.3d 1241, 1251 (7th Cir. 2021)(Hamilton J., concurring).
As alluded to above, the situation before me involves a strange procedural posture in which the plaintiff invokes the defendant's burden to show that she has alleged a concrete injury-in-fact, when she says she has not (so as to avoid an unwanted removal to federal court). Ordinarily defendants challenge the existence of jurisdiction and plaintiffs defend their standing to bring suit. But this reversal of roles is inherent in the removal context, and the Seventh Circuit has rejected a defendant's contention “that once removal based on a federal question gets a defendant's foot in the door of a federal court, the slate is wiped clean and the defendant can challenge jurisdiction.” Collier, 889 F.3d at 896. For this reason, HW correctly concedes that it bears the burden of demonstrating the existence of federal jurisdiction. [DE 33 at 7.]
Hustedt's basic point is that her amended complaint contains no allegation of concrete harm and thus Article III standing is lacking. [DE 30 at2, 5; DE 36 at 10.] But this leaves me to wonder how, in the absence of any such injury, Hustedt will be able to demonstrate to a state court an entitlement to the damages she seeks in her complaint. (No injunctive relief is prayed for, and the complaint makes no reference to statutory damages.) I am also left to wonder how Hustedt's complaint would fare in the face of a standing challenge under state law. Although, of course, Article III of the U.S Constitution does not govern the state courts, Indiana also has a doctrine of standing, limiting the jurisdiction of its courts to matters brought by a party who can “show adequate injury or the immediate danger of sustaining some injury.” Pence v. State, 652 N.E.2d 486, 488 (Ind. 1995), quoted in Horner v. Curry, 126 N.E.3d 584, 589 (Ind. 2019). As the Indiana Supreme Court explains, “[b]y requiring a party to show a specific injury, the doctrine limits the judiciary to resolving concrete disputes between private litigants while leaving questions of public policy to the legislature and the executive.” Horner, 125 N.E.3d at 589. In any event, because I am remanding this case for the reasons stated below, these are questions the state court...
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