The Ninth Circuit Court of Appeals, deciding to take up the issue of Plaintiff’s standing sua sponte, recently remanded the case of Adams v. Skagit Bonded Collectors, LLC d/b/a SB&C Ltd. back to the District Court with instructions to dismiss the case without prejudice for lack of jurisdiction. This case involved an FDCPA complaint by Brett Adams (“Adams”) against Skagit Bonded Collectors, LLC (“Skagit”) alleging that he received debt collection letters that failed to clearly identify the current creditor.
Adams argues that, by failing to clearly identify the underlying creditor, Skagit’s letters violated § 1692g(a)(2) and § 1692e, and he was harmed because, “upon reading the letter, [he] was unsure of who the current creditor was.” Skagit filed a Motion for Judgment on the Pleadings, which was granted, and Adams subsequently appealed.
The Ninth Circuit went another direction, and, though the issue was not raised on the parties’ briefs on appeal, ordered supplemental briefing on Adams’ Article III standing based on whether Adams suffered any injury from Skagit’s failure to disclose the underlying creditor. The Court took a two-step approach to address whether a statutory violation of the FDCPA causes a concrete injury sufficient to satisfy Article III standing. It held that not every misleading statement in a debt collection letter necessarily threatens the recipient’s concrete interests, and it found any violation by Skagit to be procedural, rather than substantive.
Because Adams did not allege actual harm or a material risk of harm due to Skagit’s omission, the Court found that the complaint did not support an inference that Adams himself was ever at risk of detrimental reliance. In short, because Adams’ damages were conjectural and without additional factual allegations, the court found that he did not adequately plead a material risk of injury, and thus lacked Article III standing.
This case illustrates how a rarely used defense in FDCPA cases of Article III standing can come into play. A plaintiff must allege a concrete actual harm or material risk of harm to consumer interests protected by the FDCPA in order to have Article III standing. Simply alleging confusion at a letter simply won’t cut it, at least now in the Ninth Circuit.