Pierre v. Midland Credit Mgmt., Inc.

Decision Date01 April 2022
Docket NumberNos. 19-2993 & 19-3109,s. 19-2993 & 19-3109
Parties Renetrice R. PIERRE, individually and on behalf of all others similarly situated, Plaintiff-Appellee/Cross-Appellant, v. MIDLAND CREDIT MANAGEMENT, INC., Defendant-Appellant/Cross-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Karl Leinberger, Paul F. Markoff, Attorneys, Markoff Leinberger, Chicago, IL, for Plaintiff-Appellee/Cross-Appellant.

Michael T. Brody, Gabriel Gillett, Attorneys, Jenner & Block LLP, Chicago, IL, David M. Schultz, Todd P. Stelter, Stephen R. Swofford, Attorneys, Hinshaw & Culbertson LLP, Chicago, IL, for Defendant-Appellant/Cross-Appellee.

Before Sykes, Chief Judge, and Hamilton and Brennan, Circuit Judges.

Sykes, Chief Judge.

Midland Credit Management, Inc., sent Renetrice Pierre a letter offering to resolve a long-unpaid debt at a discount. The statute of limitations on the debt had run. The letter advised Pierre that because of the age of the debt, Midland Credit would neither sue her for it nor report it to a credit agency and that her credit score would be unaffected by either payment or nonpayment.

Pierre did not take Midland Credit up on the offer. Instead, she sued the company alleging that it violated the Fair Debt Collection Practices Act. Asking for payment of a time-barred debt isn't unlawful, but Pierre contended that the collection letter was a deceptive, unfair, and unconscionable method of debt collection, in violation of the Act. She sought to represent a class of Illinois residents who had received similar letters from Midland Credit. The district court certified the class and entered summary judgment in its favor on the merits. A jury awarded statutory damages totaling $350,000.

The parties have cross-appealed, raising issues related to standing, class certification, and the merits. We begin and end with standing. The letter might have created a risk that Pierre would suffer a harm, such as paying the time-barred debt. But a risk, at most, is all it was. That's not enough to establish an Article III injury in a suit for money damages, as the Supreme Court held last year in TransUnion LLC v. Ramirez , ––– U.S. ––––, 141 S. Ct. 2190, 2210–11, 210 L.Ed.2d 568 (2021). Accordingly, we vacate and remand with instructions to dismiss the case for lack of subject-matter jurisdiction.

I. Background

In 2006 Pierre opened a credit-card account with Target National Bank. She accumulated consumer debt on the account and defaulted on it. Midland Funding, LLC, bought the debt and sued Pierre for it in Illinois state court in 2010. Midland Funding later voluntarily dismissed the lawsuit.

Fast forward to 2015. Midland Credit, which collects debts for Midland Funding, sent Pierre a letter seeking payment of the debt. The letter told Pierre that she had been "pre-approved for a discount program designed to save [her] money." It listed multiple payment plans—one promising savings of 40%—and said that the offer would expire in 30 days.

Because the debt was so old, the statute of limitations had run. See 735 ILL. COMP. STAT. 5/13-205. Midland Credit could ask for payment, but it couldn't sue for it. The letter ended with this: "The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, we will not report it to any credit reporting agency, and payment or non-payment of this debt will not affect your credit score."

The letter surprised and confused Pierre. Midland Funding had sued her for the debt and then dropped the case. Now a company with a slightly different name sought payment. The new company with the similar name said it wouldn't sue her, but perhaps it (or another entity) could sue her if it really wanted to. Concerned about another lawsuit, she called Midland Credit to contest the collection effort. Then she contacted a lawyer and sued Midland Credit.

Pierre claimed that the collection letter violated various provisions of the Fair Debt Collection Practices Act ("FDCPA"). She alleged that the letter falsely represented the character and legal status of the debt, 15 U.S.C. § 1692e(2) ; was a deceptive means to attempt to collect the debt, id. § 1692e(10) ; and was an unfair or unconscionable means to attempt to collect the debt, id. § 1692f. She sought to represent a class of Illinois residents who had received similar letters from Midland Credit.

The district judge certified the class and entered summary judgment in its favor on the merits based on our holding in Pantoja v. Portfolio Recovery Associates, LLC , 852 F.3d 679 (7th Cir. 2017). Damages were left to a jury, and it awarded just over $350,000. (Pierre also brought individual claims, but those were settled before final judgment so we mention them no further.)

Midland Credit twice asked the judge to dismiss the suit for lack of Article III standing. Both times he declined to do so, reasoning that the misleading nature of the letter risked real harm to the interests that Congress sought to protect with the FDCPA.

II. Discussion

Article III of the Constitution limits the jurisdiction of the federal courts to "Cases" and "Controversies." U.S. CONST. art. III, § 2. The case-or-controversy requirement ensures that the judiciary "confines itself to its constitutionally limited role of adjudicating actual and concrete disputes, the resolutions of which have direct consequences on the parties involved." Genesis Healthcare Corp. v. Symczyk , 569 U.S. 66, 71, 133 S.Ct. 1523, 185 L.Ed.2d 636 (2013). Requiring a plaintiff to establish standing to sue is an essential component of the case-or-controversy limitation, "serv[ing] to prevent the judicial process from being used to usurp the powers of the political branches." Clapper v. Amnesty Int'l USA , 568 U.S. 398, 408, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013).

Standing has three elements. A plaintiff must have (1) a concrete and particularized injury in fact (2) that is traceable to the defendant's conduct and (3) that can be redressed by judicial relief. Lujan v. Defs. of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Without "an injury that the defendant caused and the court can remedy, there is no case or controversy for the federal court to resolve." Casillas v. Madison Ave. Assocs., Inc. , 926 F.3d 329, 333 (7th Cir. 2019).

The concreteness requirement is our concern here. A concrete injury is "real, and not abstract." Spokeo, Inc. v. Robins , 578 U.S. 330, 340, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016) (quotation marks omitted). Qualifying injuries are those with "a ‘close relationship’ to a harm ‘traditionally’ recognized as providing a basis for a lawsuit in American courts." TransUnion , 141 S. Ct. at 2204 (quoting Spokeo , 578 U.S. at 341, 136 S.Ct. 1540 ). This standard includes "traditional tangible harms, such as physical harms and monetary harms," as well as "[v]arious intangible harms," such as "reputational harms, disclosure of private information, and intrusion upon seclusion." Id. ; see also Spokeo , 578 U.S. at 340–42, 136 S.Ct. 1540.

Congress's decision to create a statutory cause of action may "elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law." Lujan , 504 U.S. at 578, 112 S.Ct. 2130. This does not mean, however, that Congress may "enact an injury into existence, using its lawmaking power to transform something that is not remotely harmful into something that is." TransUnion , 141 S. Ct. at 2205 (quotation marks omitted). History and tradition remain our ever-present guides, and legislatively identified harms must bear a close relationship in kind to those underlying suits at common law. See Gadelhak v. AT&T Servs., Inc. , 950 F.3d 458, 462–63 (7th Cir. 2020).

Until recently there was a hint that the mere "risk of real harm" could concretely injure plaintiffs seeking money damages. Spokeo , 578 U.S. at 341, 136 S.Ct. 1540. However, as the Supreme Court clarified in TransUnion , a risk of harm qualifies as a concrete injury only for claims for "forward-looking, injunctive relief to prevent the harm from occurring." 141 S. Ct. at 2210 ; see Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc. , 528 U.S. 167, 185, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) ("[A] plaintiff must demonstrate standing separately for each form of relief sought."). A plaintiff seeking money damages has standing to sue in federal court only for harms that have in fact materialized. TransUnion , 141 S. Ct. at 2210–11.

Many of our recent decisions mark the line between FDCPA violations inflicting concrete injuries and those causing no real harm. 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 question. There was evidence that the statutory violations caused the plaintiffs' credit scores to decline. Id. We reasoned that the incomplete reporting worked a harm analogous to that associated with common-law defamation. Id. at 1153–54. That "intangible, reputational injury [was] sufficiently concrete for purposes of Article III standing." Id. at 1154.

Casillas sits on the other side of the line. A debt collector sent Paula Casillas a notice demanding payment of a debt and informed her that she could dispute or request verification of it. Casillas , 926 F.3d at 332. But the notice failed to specify that any dispute or verification request must be made in writing to trigger certain statutory protections. Id. The failure, though a statutory violation, caused Casillas no harm. Id. at 334. She hadn't even considered disputing or seeking verification of the debt, and the omission deprived her of no benefit. Id. As such, there was nothing for the court to remedy. See id. at 339.

We also found no standing in Larkin v. Finance System of Green...

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