Smith v. GC Servs. Ltd. P'ship

• Decision Date: 21 January 2021
• Docket Number: No. 19-3494,19-3494
• Citation: 986 F.3d 708
• Parties: Francina SMITH, Plaintiff-Appellant, v. GC SERVICES LIMITED PARTNERSHIP and ORG GC GP Buyer, LLC, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

986 F.3d 708

Francina SMITH, Plaintiff-Appellant,

v.GC SERVICES LIMITED PARTNERSHIP and ORG GC GP Buyer, LLC, Defendants-Appellees.

No. 19-3494

United States Court of Appeals, Seventh Circuit.

Submitted January 4, 2021

Decided January 21, 2021

Rehearing and Rehearing En Banc Denied March 15, 2021

Leah M. Nicholls, Attorney, PUBLIC JUSTICE, Washington, DC, David J. Philipps, Attorney, PHILIPPS & PHILIPPS, Palos Hills, IL, for Plaintiff.

Hilary L. Palazzolo, Attorney, Leah T. Rudnicki, Esq., Attorney, Rudnicki Firm, Oklahoma City, Crystal G. Rowe, Attorney, Kightlinger & Gray LLP, New Albany, IN, for Defendants.

Before Easterbrook, Kanne, and Brennan, Circuit Judges.

Easterbrook, Circuit Judge.

The first time this suit was here, we held that GC Services, a debt collector, had waived or forfeited any entitlement to arbitrate its dispute with Francina Smith. 907 F.3d 495 (7th Cir. 2018). The district court then held that Smith had not been injured and dismissed the suit. 2019 WL 7944350, 2019 U.S. Dist. LEXIS 227464 (S.D. Ind. Dec. 2, 2019). The district judge relied principally on Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 194 L.Ed.2d 635 (2016), and Casillas v. Madison Avenue Associates, Inc ., 926 F.3d 329 (7th Cir. 2019) (Barrett, J.).

We put Smith's appeal on hold while the court considered several other cases that presented questions about standing to sue under the Fair Debt Collection Practices Act (FDCPA or the Act). See Larkin v. Finance System of Green Bay, Inc ., 982 F.3d 1060 (7th Cir. 2020) ; Gunn v. Thrasher, Buschmann & Voelkel, P.C ., 982 F.3d 1069 (7th Cir. 2020) ; Brunett v. Convergent Outsourcing, Inc ., 982 F.3d 1067 (7th Cir. 2020) ; Spuhler v. State Collection Service, Inc ., 983 F.3d 282 (7th Cir. 2020) ; Bazile v. Finance System of Green Bay, Inc ., 983 F.3d 274 (7th Cir. 2020). See also Nettles v. Midland Funding LLC , 983 F.3d 896 (7th Cir. 2020). Now that those opinions have issued, and the parties have filed supplemental memoranda, the appeal is ready for decision.

Smith complains that GC Services violated 15 U.S.C. § 1692g(a)(3), part of the Act, because a debt-collection letter stated, among other things:

If you dispute this balance or the validity of this debt, please let us know in writing. If you do not dispute this debt in writing within 30 days after you receive this letter, we will assume this debt is valid.

As Smith sees things, these sentences conflict with § 1692g(a)(3), which requires a debt collector to send each consumer "a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector". The Act does not say how a consumer may dispute a debt's validity. It follows, Smith insists, that the consumer is entitled to choose how to dispute a debt. One might say in opposition that, precisely because the statute is silent on the means of disputing a debt, a debt collector may decide how it wants disputes to be presented. Many potential litigants believe that writings are desirable because they eliminate controversies about who said what to whom and when. This circuit has not addressed the question whether a debt collector violates § 1692g(a)(3) by telling consumers to put their disputes in writing. We do not take up that subject today, because we agree with the district court that Smith lacks standing to sue.

Spokeo holds that the requirement of injury as an element of standing is essential to suits under consumer-protection statutes, and Casillas applies that holding to the Fair Debt Collection Practices Act. In the wake of Spokeo and Casillas , many litigants and some district judges distinguished between "procedural" claims, which would be governed by Spokeo and Casillas , and "substantive" claims, for which any asserted violation of the statute would be treated as an injury. Larkin and its successors in this circuit disapprove that distinction and hold that injury in fact is essential to standing, whether the asserted violation is best understood as substantive or procedural. Several of these decisions, such as Larkin and Gunn , add that a consumer's assertion that she was confused by a debt-collection letter does not show injury unless the confusion leads the consumer to take some detrimental step. Smith, who says that she was confused by the letter she received, does not contend that the letter's supposed lack of clarity led her to take any detrimental step, such as paying money she did not owe. She therefore needs some other way to show injury.

Casillas dealt with how a debt collector verifies the existence and amount of a debt. The plaintiff in Casillas saw a violation in the debt collector's failure to tell her that she had to communicate in writing in order to avail herself of the Act's protections. We replied: "[N]o harm, no foul." 926 F.3d at 331. Because Casillas didn't want to communicate with the debt collector at all, the omission of details could not have harmed her. Smith takes a position opposite to that of Casillas: that a debt collector violates the Act by telling a consumer to communicate in writing. Her problem is the same: No harm, no foul.

Smith seizes on the fact that Casillas wasn't planning to communicate at all and thus could not have been harmed by what the debt collector said (or didn't say) about the right way to communicate. In her supplemental...