Appeals Court Overturns Article III Case Even Though Overcharged Balance Was Refunded

Simply refunding someone who was overcharged is not enough to argue that the individual does not have standing to sue under Article III of the Constitution, an Appeals Court has ruled, overturning a lower court’s dismissal of a case because the plaintiff should have been paid $3.76 in interest.

A copy of the ruling in the case of Van v. LLR can be accessed by clicking here.

The defendant was accused of mistakenly charging sales tax on purchases made by its customers. The plaintiff was refunded $531.25 by the defendant when it was made aware that the sales tax was charged when it should not have been, but the plaintiff sued because she felt she should receive interest for the duration that the overpaid funds were not in her possession. A District Court judge granted the defendant’s motion to dismiss, ruling that the $3.76 in interest was not enough for the plaintiff to suffer a concrete injury.

But the Ninth Circuit Court of Appeals ruled that losing the $531.25 was enough to confer standing, even if it was fully refunded when the defendant was made aware of the mistake. The defendant attempted to argue that the loss of time alone was not enough to confer standing, but the Appeals Court disagreed.

While not directly related to the credit and collection industry, this case does potentially have some impact on cases filed against collectors, especially those that accidentally overcharge individuals for what they are owed. Even refunding the balance is not enough to get the company out of hot water, according to the Ninth Circuit. “In sum, we hold that the temporary loss of use of one’s money constitutes an injury in fact for purposes of Article III,” the Appeals Court wrote.

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