Judge Grants MTD in FDCPA Case Over Lack of Verification Notice

A District Court judge in Arkansas has granted a defendant’s motion to dismiss for lack of standing and failure to state a claim in a Fair Debt Collection Practices Act case even though it failed to send a timely validation notice, ruling that am underlying collection lawsuit provided the plaintiff will all the information he needed.

A copy of the ruling in the case of Cheatham v. Adams can be accessed by clicking here.

The plaintiff defaulted on a car loan and surrendered the vehicle, which was sold at auction. The proceeds from the sale did not cover the balance on the auto loan, so the defendant filed a lawsuit against the plaintiff in state court to obtain a deficiency judgment. Ultimately, the plaintiff prevailed in his suit and the debt was deemed unenforceable and he was awarded attorney’s fees. The plaintiff then turned around and sued the collection attorney for violating the FDCPA because, when the defendant sent an email to the plaintiff’s attorney with responses to discovery requests, that constituted an initial communication under the FDCPA, which meant that the defendant also had to send the verification rights notice, something that she did not do.

The defendant sought a motion to dismiss, arguing the plaintiff did not suffer a concrete injury as a result of the omission. As Judge Lee Rudofsky of the District Court for the Eastern District of Arkansas notes, the plaintiff took “several swings” at establishing standing, but ultimately “str[uck] out.”

Looking at the Supreme Court rulings in Spokeo v. Robins and TransUnion v. Ramirez, Judge Rudofsky could not buy the plaintiff’s argument that he had standing to sue. After all, the plaintiff won the state court collection lawsuit — the debt was legally erased and his attorney’s fees were covered. What harm did the plaintiff suffer?

Ultimately, the plaintiff received the information required under the FDCPA, but just not in the format that the FDCPA lays out. The complaint in the state court collection lawsuit contained the amount owed and the name of the creditor, as well as a copy of the original contract, Judge Rudofsky noted.

“By the time the alleged violation occurred, Mr. Cheatham had hired an attorney, filed an Answer, and sent discovery requests to Ms. Adams,” Judge Ruofsky wrote. “No matter how favorably one reads his Complaint, his allegations make it impossible to believe that Mr. Cheatham was unaware that Ms. Adams was a debt collector.”

Not receiving the information in the format prescribed by the FDCPA did not harm the plaintiff in any way, the judge ruled. The plaintiff did not pay a debt he did not owe nor did he lose any money paying an attorney to defend himself against a debt he did not owe.

“In sum, Mr. Cheatham is not alleging that he did not receive the actual information required by the FDCPA,” Judge Rudofsky wrote. “His Complaint shows only that he got it ‘in the wrong format’ or at the wrong time. Without ‘downstream consequences,’ this is not a concrete injury. Without a concrete injury, Mr. Cheatham does not have standing.”

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