To dispute or not to dispute? That may be the question for Plaintiffs’ counsel, but courts nationwide continue to say ‘tis nobler to show true inaccuracy.

By on March 31, 2022

Author: Avanti Bakane, Neha Dagley, and Melissa Manning

Eastern District of Michigan court dismisses Credit Repair Lawyers of America’s non-dispute claims under the FCRA.

While Plaintiff freely admitted that in the past she disputed her accounts with the credit reporting agencies, she subsequently had a change of heart. As a result, Plaintiff took umbrage with the ‘account in dispute’ notation appearing on her credit reports. Instead of communicating her current lack of dispute directly to the furnishers, Plaintiff alleged she provided notice only to the CRAs. Importantly, any supporting documentation was wholly missing from Plaintiff’s amended complaint. When the notation was not removed, Plaintiff filed suit alleging that defendants furnishers and credit reporting agencies violated the FCRA with their inaccurate reporting.

In a succinct opinion, without holding any oral argument, District Judge Nancy G. Edmunds disposed of Plaintiff’s claims against multiple furnisher defendants, granting their motions to dismiss.

First, the Court found that Plaintiff’s failure to allege that she sent her non-dispute letter directly to furnisher PRA was fatal to her claims.

Further, the court found that Plaintiff’s bare bones and boilerplate recitation that her prior dispute notations were no longer accurate failed to meet the standard of pleading an FCRA claim, i.e. to claim a reasonable investigation was not performed, in the first instance, Plaintiff must establish a true inaccuracy:

Plaintiff simply makes the conclusory allegation that these “dispute” notations are inaccurate, without further identifying how so. “It is well settled that, regardless of the particular breach of the FCRA that is alleged, ‘a threshold showing of inaccuracy or incompleteness is necessary in order to succeed on a claim under § 1681s-2(b).’” Tillman v. Michigan First Credit Union, 2021 WL 1267583 (E.D. Mich. Apr. 5, 2021) (discussed on summary judgment)(citing Pittman v. Experian Information Solutions, Inc., 901 F.3d 619, 629 (6th Cir. 2018)).

In denying leave to amend as futile, the Court found that Plaintiff’s amended complaint suffered the same deficiencies as her original. Also, Plaintiff has had the benefit of the “growing body of case law that address the deficiencies of her claims.”

The ruling comes as a welcome victory for Gordon & Rees and the industry as this theory spreads, albeit now under the FDCPA.

Chandra Young v. Portfolio Recovery Associates, et al. (E.D. Mich. 21-10095 March 29, 2022).

Filed under FCRA

Second Circuit Says No Standing for Alleged ADA Website Violation Where Plaintiff Had No Intention of Visiting Defendant’s Hotel

By on March 30, 2022

Author: Thomas Blatchley

On March 18, 2022, the Second Circuit affirmed the judgment of the district court and held that a disabled plaintiff’s lawsuit alleging an ADA violation because defendant’s website deprived him of the information required to make meaningful hotel choices for travel failed to allege an informational injury sufficient for Article III standing since plaintiff had no intention of visiting defendant’s hotel. See Harty v. West Point Realty, Inc., No. 20-2672-cv, 2022 WL 815685 (2d. Cir. Mar. 18, 2022). Plaintiff lacked standing because he failed to allege a concrete injury in fact. The decision is a significant victory for defendants facing ADA website violations, especially where plaintiffs troll hotel websites to manufacture ADA website claims when they have no intention to visit the subject property.

The background is straightforward. Plaintiff, a disabled person that uses a wheelchair and is a self-proclaimed “advocate [for] the rights of similarly situated disabled persons” and “tester” who monitors ADA website compliance, appealed from the judgment of the Southern District of New York, which dismissed his complaint against defendant for alleged regulation violations under the Americans with Disabilities Act or ADA. Plaintiff did not allege in his complaint that he visited defendant’s website with the intention of visiting defendant’s hotel. Instead, plaintiff alleged that he frequently visits hotel websites to determine whether those websites comply with the ADA regulations. Looking only to the allegations of plaintiff’s complaint, and not at an affidavit filed by plaintiff in support of his opposition to defendant’s motion to dismiss for lack of subject matter jurisdiction, the district court dismissed plaintiff’s claims for lack of standing due to plaintiff’s failure to allege a concrete injury in fact.

On appeal, the Second Circuit affirmed the dismissal, holding that: (1) plaintiff failed to allege a concrete injury in fact and thus lacked standing to assert his ADA claim; (2) the district court did not abuse its discretion by considering only the allegations in plaintiff’s complaint when deciding defendant’s motion to dismiss; and (3) the district court did not dismiss plaintiff’s complaint with prejudice.

As to the standing issue, the Second Circuit began its analysis by setting forth the long established standard for a plaintiff to establish Article III standing: (1) plaintiff must have an injury in fact; (2) that there is a causal connection between plaintiff’s injury and the conduct complained of; and (3) that plaintiff’s injury will be redressed by a favorable judicial decision. The Second Circuit then highlighted the Supreme Court’s recent clarification in TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (2021) that a plaintiff has standing to bring a claim for monetary damages following a statutory violation only when plaintiff can show a current or past harm beyond the statutory violation itself. Notably, the Supreme Court rejected the standard articulated in Strubel v. Comenity Bank, 842 F. 3d 181, 190 (2d Cir 2016), which held that a plaintiff has standing to sue for a violation of a procedural right created by Congress if (i) “Congress conferred the procedural right to protect a plaintiff’s concrete interests” and (ii) “the procedural violation presents a risk of real harm to that concrete interest.” (internal quotation marks omitted). TransUnion now makes clear that in a suit damages, mere risk of future harm, standing alone, cannot qualify as a concrete harm. 141 S.Ct. at 2210-11.

Plaintiff alleged in his complaint that because defendant’s website did not comply with the ADA, the website infringed his wright to travel free from discrimination. The Second Circuit acknowledged, however, that plaintiff did not allege in his complaint that he was using the website to arrange for future travel. Instead, plaintiff acknowledged that his review of defendant’s website was done in his capacity as a “tester” of ADA compliance, not as a prospective traveler seeking a wheelchair-accessible hotel. Looking to TransUnion and recent Circuit Court decisions, the Second Circuit found that because plaintiff asserted no plans to visit the defendant hotel property (or surrounding area), he could not allege that his ability to travel was hampered by defendant’s website in a way that caused him a concrete harm. See TransUnion, 141 S.Ct. at 2205 (“Article III grants federal courts the power to redress harms that defendants cause plaintiffs, not a freewheeling power to hold defendants accountable for legal infractions.”) (internal quotation marks omitted). Thus, the Second Circuit found that plaintiff lacked standing to bring a suit for damages.

As to plaintiff’s requests for prospective relief, the Second Circuit held that while plaintiff alleged that “in the near future” he intended to “utilize the website to reserve a guest room,” that was not sufficiently imminent to create an injury in fact. In other words, such “some day” intentions, without any description of concrete plans, or even any specification of when the some day will be, do not support a finding of the actual and imminent injury required by Article III.

The Second Circuit also rejected plaintiff’s claim that defendant deprived him of the information required to make meaningful choices for travel, which plaintiff asserted as an “informational injury” for purposes of standing. The Second Circuit found that even assuming that plaintiff could allege that he was deprived of information to which he was entitled under the ADA, he still failed to allege downstream consequences from failing to receive the required information. Put another way, plaintiff failed to show that he had an interest is using the information beyond bringing the lawsuit. Thus, the Second Circuit held that plaintiff failed to allege an information injury sufficient for Article III standing.

Lastly, the Second Circuit rejected plaintiff’s claim that he suffered and would continue to suffer direct and indirect injury as a result of “the discriminatory conditions present at [defendant’s] website.” The Second Circuit found that plaintiff’s complaint did not specify how defendant’s website violated the ADA regulations or how those alleged violations discriminated against disabled people. The Second Circuit also found that plaintiff’s complaint contained a boilerplate assertion that defendant failed to comply with the ADA regulations, and that TransUnion makes clear that a statutory violation alone, however labeled by Congress, is not sufficient for Article III standing.

Filed under ADA

It Was a Reasonable Investigation Just See the Police Officer’s Comment

By on March 15, 2022

Author: Lori Quinn

Anyone who has been met with a Fair Credit Reporting Act against furnisher of credit information case knows that it turns on the “reasonableness” of the investigation. After a parade of letters and disputes concerning a debt for a one-way plane ticket purchased on a credit card that Woods claimed was the result of identity theft – a claim rejected by the original creditor validated and, in turn, LVNV’s collection agent Resurgent validated the debt, Wood obtained a police report. The extensive record of letters, disputes and, critically, an Automated Consumer Dispute Verification (“ACDV”), which included a copy of the police report noting that the original creditor validated the account were analyzed by the Court.

Woods sued Resurgent and LVNV for violations of the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. The District Court granted defendants’ motion for summary judgment and Woods appealed. In Woods v LVNV Funding, LLC, No. 21-1981, 2022 WL 594277 (7th Cir. Feb. 28, 2022), the 7th Circuit affirmed the District Court’s granting LVNV and Resurgent’s motion for summary judgment. Woods argued that Resurgent’s investigation of the dispute could have gone further, and that, as a result, the investigation was not “reasonable”. Woods suggests that a reasonable investigation would have included subpoenaing the airline to identify the person who took the flight to track down the identity thief or confirm the validity of the debt. In other words, Woods argued that defendants’ investigation was not reasonable because it was not exhaustive. The 7th Circuit found this to be outside Congress’ intent stating that it was “…implausible that Congress, in drafting a consumer protection statute like the FDCPA, would have sent consumers on such a wild goose chase.”

In a classic rejection of the FCRA requiring a “perfect” investigation, the 7th Circuit confirmed Section 1681-s(2)(b) requires only a reasonable investigation dependent on the nature of the dispute. The 7th Circuit noted that, even though the notice of a dispute (the ACDV), included a police report, the report advised that the investigating officer noted that the creditor concluded that the debt was not the result of identity theft or fraud. Therefore, Resurgent was within its rights to rely on those representations in the ACDV. Ultimately, Resurgent’s issuance of similar letters to Woods, concluding that Woods was responsible for the debt and Resurgent’s repeated (and unanswered) requests for Woods to provide information to assist in its investigation, was part and parcel of a reasonable investigation. Be warned, however, the 7th Circuit concluded their opinion but stating this decision provides “no license for furnishers to offload their § 1681s-2(b)(1)(A) investigation obligations to consumers by spamming them with request for additional information.”

Finally, Woods argued that Resurgent’s letters were false representations or a deceptive means to collect a debt because the original creditor later found he did not owe the debt. The 7th Circuit was unconvinced, noting there is a difference between “literal falsity” and “false” under the 1692e of the FDCPA. The 7th Circuit found that “a statement isn’t false unless it would confuse the unsophisticated consumer and that Woods’ appeal is based on the applicable statutory language in 1692e”. Despite the strict liability of the FDCPA, Woods failed to explain why Resurgent’s letters were materially false.

Filed under Fair Credit Reporting Act, FCRA

Faulty service? Default judgment? Garnishment? No harm, no foul.

By on March 4, 2022

Author: Avanti Bakane

Eastern District of Michigan court finds lack of Article III standing where plaintiffs alleged faulty service, wrongful default judgments, and garnishments issued as a result.

Plaintiffs were the targets of collection lawsuits filed by the defendant law firm and its various collection lawyers. In their federal lawsuit against defendants, plaintiffs pursued FDCPA claims, alleging that the lawyers falsely attested to proofs of service of the lawsuits upon them such that default judgments were then entered against them. What’s more, plaintiffs set forth that defendants issued garnishments pursuant to those judgments, and “[t]he garnishees withheld money” due to Plaintiffs. 

Pretty wild, right? Of course, you’re wondering whether the plaintiffs were in fact, the correct debtors of the outstanding accounts. Well, the court grasped on to this as well. 

In a succinct nine-page ruling, without holding any argument, the United States District Court for the Eastern District of Michigan disposed of plaintiffs’ claims, granting defendants’ motion to dismiss based upon lack of Article III standing and denying each of plaintiffs’ amended motion for class certification, motion to stay, and motion to limit communication as moot.

In doing so, the court found that plaintiffs’ argument that they sustained damages in the form of reputational harm, deprivation of due process, and monetary loss was not supported by their complaint allegations, which only made “a general reference to ’emotional’ and ‘general’ damages.” Further,  plaintiffs failed to allege that they did not owe these accounts or otherwise explain how the default judgments were defamatory, thus, negating any argument that defendants harmed plaintiffs’ reputation in conveying falsities regarding private financial information to third parties.

The court then visited the argument that by way of faulty proofs of service, plaintiffs were deprived of their right to notice and the opportunity to be heard, such that they were unable to challenge the collection actions. Here, the court again found plaintiffs’ complaint devoid of any such allegations. Interestingly, the court held, “And state court records show the Kline Plaintiffs have set aside the default judgments entered against them and Plaintiff Byrd does not assert she is unable to do so. Thus, at best, this is a risk of harm argument that is insufficient to establish concrete harm under Ramirez.”

Finally, as to any allegations of monetary loss, the general allegations that “garnishees withheld money” from plaintiffs were insufficient to establish concrete harm, particularly where with respect to each plaintiff, funds were either released, returned (prior to plaintiffs filing their federal lawsuit), or never held. 

In disposing of plaintiffs’ complaint without prejudice, the court noted that other courts have rejected the argument that the cost of hiring an attorney to defend a state collection action is sufficient to satisfy the injury-in-fact requirement. 

As to any opportunity to amend, the court disallowed this because plaintiffs had not filed any motion to amend nor attach a copy of a proposed amended complaint to their response to motion to dismiss. 

We have all not only seen our clients sued for (much) less but also – perhaps due to optics – on the hook for damages and fees in such situations. The court took a hard stance here, requiring the complaint to address injury, harm, and damages with specificity, and where it did not, finding it deficient as to standing. Plaintiffs’ failure to amend their complaint put the nail in the coffin in a suit we would otherwise expect to generate traction, particularly, where the underlying conduct had accompanying criminal charges.  

Kline, et al. v. Fishman Group, et al. (E.D. Mich. 2:21-11272 Feb. 28, 2022).

Filed under FDCPA