Appeals Court Vacates Award for Defendant in FDCPA Case to Determine if Plaintiff had Standing in the First Place

The Court of Appeals for the Third Circuit has vacated a judgment on the pleadings in favor of a defendant and remanded a Fair Debt Collection Practices Act case back to the District Court in order to determine whether the plaintiff had standing to sue in the first place.

A copy of the ruling in the case of Lezark v. I.C. System can be accessed by clicking here.

The plaintiff originally filed suit accusing the defendant of violating the FDCPA because in a collection letter, it mentioned that the client had authorized the defendant to “pursue additional remedies to recover the balance due, including referring the account to an attorney.” The suit accused the defendant of making a threat that it did not intend to act on as a means of inducing the plaintiff to pay the debt.

A District Court judge agreed with the defendant, saying, “…it creates no false sense of urgency; it does not threaten litigation; and it does not suggest or imply that a lawyer has, at the time the letter was sent, meaningfully reviewed the debtor’s account and/or arrived at any considered judgment as to whether to proceed with legal action.”

The issue of whether the plaintiff had standing to sue in the first place was not brought up until the defendant mentioned it on appeal. The plaintiff in his reply brief indicated he had standing because the letter made him feel “overwhelmed” and caused him to contact a lawyer to file for bankruptcy protection.

Given that the original complaint was filed “well before” the Supreme Court issued its ruling in TransUnion v. Ramirez and because the issue of standing was never discussed while the case was at the District Court level, the Appeals Court vacated the ruling to give the plaintiff “an opportunity to move for leave to amend his complaint to include additional allegations of concrete injury.” If the plaintiff opts not to amend his complaint, the District Court would then tackle the issue of standing based on the original complaint.

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