In Wadsworth v. Kross, Liberman & Stone, Inc., the Seventh Circuit Court of Appeals reversed a district court’s entry of summary judgment for the plaintiff in a Fair Debt Collection Practices Act (FDCPA) case and remanded the case with instructions to dismiss for lack of jurisdiction. In its holding, the court emphasized that in order to establish Article III standing, a plaintiff must establish concrete harm that he/she would not have incurred had the debt collector complied with the FDCPA.
In Wadsworth, the plaintiff was hired by Pharmaceutical Research Associates, Inc. (PRA) and offered a signing bonus that would pay her $3,750 after 30 days of employment and another $3,750 after 180 days of employment. However, the offer letter stated that the plaintiff was obligated to repay the full bonus if she voluntarily ended her employment or was fired for cause within 18 months of the second payment. Accordingly, after PRA fired the plaintiff for cause within 18 months of the second bonus payment, PRA hired the defendant to collect the signing bonus from the plaintiff. The defendant mailed the plaintiff a collection letter and called her four times in an effort to collect the bonus payment.
The plaintiff subsequently sued, alleging that the defendant’s letter and calls violated the FDCPA because the defendant “failed to provide complete written notice of her statutory rights within five days of the initial communication,” and the defendant’s representative “never identified herself as a debt collector or stated that she was attempting to collect a debt” in phone calls made to the plaintiff.
The defendant argued that the FDCPA was inapplicable as the signing bonus “was not a ‘debt,'” and the defendant was not “acting as a ‘debt collector’ … because [the plaintiff’s] debt was not in default at the time of the letter and phone calls.” However, the district court rejected the defendant’s arguments and entered summary judgment for the plaintiff.
On appeal, the Seventh Circuit reversed the district court’s entry of summary judgment and remanded the case with instructions to dismiss for lack of jurisdiction. It reasoned that the plaintiff failed to establish concrete injury sufficient for Article III standing at the summary judgment stage. Specifically, the Court of Appeals reasoned that the plaintiff failed to allege that the defendant’s failure to provide her with notice of statutory rights “caused her to suffer a harm identified by the [FDCPA], ‘such as paying money she did not owe’ or would have disputed.” Indeed, it emphasized that the plaintiff testified that she only suffered emotional harms, did not pay the defendant any money, and did not “rely on [the defendant’s] communication to her detriment in any other way.”
Highlighting other recent Seventh Circuit Court of Appeals FDCPA decisions holding that mere anxiety, embarrassment, stress, annoyance, intimidation, infuriation, disgust, or a sense of indignation are insufficient to establish concrete injury sufficient for Article III standing, the Court of Appeals reversed the district court’s entry of summary judgment for the plaintiff and remanded the case with instructions to dismiss for lack of jurisdiction (standing).