The Caselaw That Shaped the ARM Industry in 2022

Hey! Let’s celebrate! I asked six lawyers a question and not one of them said, “It depends.” 🎉⚖️🪩 In all seriousness, there were a lot of important cases that came down the pike in 2022, changing the landscape of how FDCPA, FCRA, and TCPA cases are litigated. Here are the most important cases, decisions, and legal trends that impacted the ARM industry in 2022.

Patrick Newman, Bassford Remele

My pick is the Tenth Circuit’s holding that “a representation violates § 1692e only if it is materially false, deceptive, or misleading to the reasonable consumer.” Tavernaro v. Pioneer Credit Recovery, Inc., 43 F.4th 1062, 1072 (10th Cir. 2022) (emphasis added).

That’s a positive departure from the “unsophisticated” (or “least sophisticated”) consumer standard we’ve all come to know and love (hate?), and one that bears a much closer resemblance to reality. The Taverno decision got some decent airtime in the third quarter of the year, but I expect it’s full potential will not be realized until late into 2023, or even early 2024, as more defense counsel work to extend the holding into other districts and jurisdictions.

Brit Suttell, Barron & Newburger

The case law that shaped the industry the most in 2022 was, without a doubt, the numerous decisions regarding standing. It began at the end of 2021 and continued into this year, but the wave of cases being dismissed because a consumer has not suffered a concrete injury continued to grow. As a result, more cases are being remanded (or even just filed) to state court. I think the industry is going to continue to feel these effects and the result is going to be creating new case in the states.

David Schultz, Hinshaw Culbertson

There is so much litigation involved in the accounts receivable industry that it can be hard to identify the ones that have the biggest impact. However, two decisions in 2022 stand out to me for fairly obvious reasons. First is the Eleventh Circuit Court of Appeals en banc ruling in Hunstein v. Preferred Collection & Management Services, Inc. There have been significant repercussions in the industry since the original ruling, both on the Article III issue and on the letter vendor theory. The whole industry has followed the case and it continues to have an impact.  

Second is the Fifth Circuit Court of Appeals ruling in Community Financial Services Association v CFPB. The CFPB has had a huge impact on the industry, yet its constitutionality has been questioned since it was created. The opinion so far does not seem to have slowed down the CFPB but it cannot be ignored and the impact will likely be felt well into the future. The next step of that journey is whether the Supreme Court will accept review of the Fifth Circuit’s ruling, which the CFPB has asked it to do. It is hard to imagine it will receive a better reception in the Supreme Court.  

Rick Perr, Kaufman, Dolowich & Voluck

Even though it was issued in 2021, the case law that shaped the industry the most in 2022 was TransUnion v. Ramirez, 594 U.S. ___ (2021). In 2022, trial courts (and some appellate courts) firmly grappled with the doctrine of concrete injury and standing in federal court with the vast majority dismissing statutory damages cases. The ARM Industry was faced with a new reality – most of the consumer litigation filed against it was going to be venued in state courts. Decades of federal court decisions on substantive FDCPA matters are coming to an abrupt end.  While many FCRA and TCPA claims will continue to be maintained in federal court, state court will be the new home of the FDCPA for the foreseeable future.

Xerxes Martin, Martin Lyons Watts Morgan

I will make a shameless plug and say a case our firm handled, Perez v. McCreary, Veselka, Bragg & Allen, P.C. et al, 45 F. 4th 816 (5th Cir. 2022), was a case that shaped the body of case law in the industry in 2022. In Perez, The Fifth Circuit requested argument on the plaintiff’s own standing when certification of a class in an FDCPA letter case was appealed and challenged on Article III standing. The Court of Appeals followed the Supreme Court of the United States decision in TransUnion v. Ramirez,141 S.Ct. 2190 (2021) and in doing so, provided this great line—“[s]o TransUnion is clear: A plaintiff always needs a concrete injury to bring suit, and injuries are concrete only if they bear a ‘close relationship’ to injuries that courts have traditionally recognized as concrete.” Perez, 45 F. 4th at 822. In doing so, the Fifth Circuit analyzed Perez’s five attempted theories of damages, and none pasted muster. With that, the Court vacated the class certification and remanded the case to be dismissed for lack of Article III standing.

Perez should make potential plaintiffs and their counsel really consider whether or not there is an injury caused by a letter before filing a lawsuit. The opinion may also reduce the number of lawsuits alleging FDCPA violations solely due to a letter. A last effect of Perez is that it may cause more letter based FDCPA allegations to be filed in state courts rather than federal courts. It will be interesting to see what happens in 2023!

Caren Enloe, Smith Debnam

2022 will be remembered as the year the gates to federal courts slammed shut on FDCPA cases. A series of decisions from across the country took the US Supreme Court decision in TransUnion v. Ramirez as an invitation to punt a slew of FDCPA cases on the basis of Article III standing. See Ergas v. Eastpoint Recovery Grp., Inc., No. 20-CV-333S, 2022 U.S. Dist. LEXIS 84493 (W.D.N.Y. May 10, 2022);  Schmelczer v. Penn Credit Corp., No. 20-CV-2380, 2022 U.S. Dist. LEXIS 52623 (S.D.N.Y. Mar. 23, 2022); Rodriguez v. Awar Holding, Inc. , No. 18-16251, 2022 U.S. Dist. LEXIS 28313 (D.N.J. Feb. 15, 2022); Pagan v. Convergent Outsourcing, Inc., No. 21-12130, 2022 U.S. Dist. LEXIS 71428 (D.N.J. Mar. 30, 2022); Pruitt v. Resurgent Cap. Servs., LP, No. 21-2615, 2022 U.S. Dist. LEXIS 121057 (D. Md. July 7, 2022); Perez v. McCreary, Veselka, Bragg & Allen, P.C., 45 F.4th 816 (5thCir. 2022); Pierre v. Midland Credit Mgmt, 29 F. 4th 934 (7th Cir. 2022); Ewing v. Med-1 Sols. LLC, 24 F.4th 1146 (7th Cir. 2022);  Hunstein v. Preferred Collection & Management Services, Inc., 48 F. 4th 1236, 2022 U.S. App. LEXIS 25233 (11th Cir. 2022). From debt validation to cease and desist  to statute of limitation disclosures issues, courts around the country examined whether the consumer had Article III standing to bring their claims in federal court and concluded they did not. 

2023 is likely to see the discussion in 2023 turn to whether the pendulum has swung too far and when, if ever, a consumer has alleged a sufficient injury in fact to have standing in federal court. Additionally, in 2023 we are likely to see new jurisprudence being developed for the FDCPA – this time, in state court.

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