The United States Court of Appeals for the Seventh Circuit recently reiterated that the Fair Debt Collection Practices Act was not intended to penalize a company that made an honest mistake that resulted in no harm to the borrower.
In Casillas v. Madison Avenue Associates, Inc., No. 17-3162, Slip Op. (7th Cir. June 4, 2019), Madison Avenue Associates, Inc. (“Madison”) sent Paula Casillas a debt collection letter that described the process the FDCPA provides for verifying a debt. However, the letter inadvertently omitted listing the statutory requirement that Casillas had to communicate in writing to trigger the statutory protections of the FDCPA. Casillas noticed the error and, instead of contacting Madison to dispute her debt, filed a class action lawsuit.
The Seventh Circuit looked to the United States Supreme Court’s decision in Spokeo, Inc. v. Robins for the rule of law that “a bare procedural violation, divorced from any concrete harm” does not satisfy the injury‐in‐fact requirement of Article III. 136 S. Ct. 1540, 1549 (2016). The Court noted that, while “Article III grants federal courts the power to redress harms that defendants cause plaintiﬀs,” it is “not a freewheeling power to hold defendants accountable for legal infractions.” Casillas, Slip Op. at 2. Further, because Congress itself is limited by the confines of Article III, Casillas could not demonstrate standing merely by alleging a procedural violation of a statute. Id. at 5.
The Court noted that Madison ran no risk of harm – she never alleged she even considered contacting Madison and never alleged that she tried to dispute or verify her debt orally. Id. at 6. Therefore, notice that the FDCPA required written verification instead of a phone call was irrelevant – “[s]he complained only that her notice was missing some information that she did not suggest that she would ever have used.” Id. After evaluating the specific facts of the case (i.e., receipt of an incomplete letter), the Seventh Circuit concluded that “[b]ecause Madison’s violation of the statute did not harm Casillas, there is no injury for a federal court to redress.” Id. at 2. In reaching this conclusion, the Seventh Circuit split with the Sixth Circuit, which evaluated a similar situation in Macy v. GC Services Limited Partnership, but reached the opposite conclusion. Id. at 9.
While this continues to be a developing area of the law, this case joins numerous others in which courts have relied on the Supreme Court’s Spokeo decision to reiterate the need to show an injury-in-fact – a concrete harm – in order for a federal court to adjudicate a matter. A bare procedural violation is not enough – quite simply, “no harm, no foul.”