Seventh Circuit Reverses Ruling in Letter Case Over Lack of Standing

The Court of Appeals for the Seventh Circuit continued its attack on standing in Fair Debt Collection Practices Act cases yesterday, vacating the denial of a defendant’s motion to compel arbitration because the court lacked jurisdiction after it ruled that the plaintiff failed to allege she suffered an injury after receiving a collection letter from the defendant that sought to collect more than what was owed.

A copy of the ruling in the case of Nettles v. Midland Funding LLC and Midland Credit Management, Inc., can be accessed by clicking here. In an interesting footnote, the Seventh Circuit revealed that Associate Justice Amy Coney Barrett was a member of the panel that heard arguments in this case, but she did not participate in the decision or judgment before being named to the Supreme Court.

The plaintiff defaulted on a credit card debt, which was acquired by the defendant. The defendant sued the plaintiff in state court and the two sides reached a consent agreement where money would be automatically withdrawn from the plaintiff’s bank account every month. The law firm that the defendant used went out of business, and the defendant took back servicing of the account. It sent the plaintiff a letter, but mis-stated the amount that was owed by about $100.

The plaintiff filed suit, alleging the letter violated Sections 1692e and 1692f of the FDCPA. The defendant moved to compel arbitration, using the arbitration provision from the original cardholder agreement, but a District Court judge denied the motion, saying that the plaintiff’s claim was outside the scope of the provision.

While the plaintiff claimed in her complaint that the letter she received violated her rights under the FDCPA, she did not allege that the statutory violation “harmed her in any way or created any appreciable risk of harm to her,” the Seventh Circuit noted. In fact, the plaintiff went as far as to admit that the letter “did not affect her at all” and that the only reason she sued was because the amount of the debt in the letter was incorrect. The plaintiff did try to walk that statement back and argued that she became “annoyed” and that having to consult with a lawyer was sufficient to establish injury, but the Seventh Circuit rejected the argument.

This is the latest in a series of cases that the Seventh Circuit has issued in the past week dealing with the issue of standing, or lack thereof, among plaintiffs filing FDCPA lawsuits.

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