Are Lost Sleep and Annoyance Enough to Convey Standing?

Author: Melissa Manning

An ongoing question in consumer protection litigation is, how concrete does an injury need to be in order to confer standing?

Well, according to a recent Northern District of Illinois decision, a mere “sense of indignation,” “lost sleep” and “aggravated annoyance” won’t cut it. (Side note: This is probably for the best or the makers of Wordle might be in for a world of hurt.)

In Milisavljevic v. Midland Credit Management, LLC et al, 1:19-cv-08449, Milisavljevic was sued in state court after failing to make required payments towards his credit card debt. When he then filed no responsive pleading, defendant debt buyer sent Milisavljevic a copy of its filed motion for default judgment and an unsigned proposed judgment order. Thinking that the unsigned order meant he already lost in state court, Milisavljevic didn’t respond and a judgment order was indeed entered against him. Plaintiff then retained counsel to vacate the default judgment and file a purported class action against defendants for violations of the FDCPA alleging that defendants regularly present draft orders of judgment to the Illinois courts that are different than those they send to consumers in connection with the motions of default judgments they file in collection cases.

Unfortunately for Milisavljevic, the Court found that his allegations of  “severe emotional distress,” and “lost sleep” were not sufficient to confer standing under Article III. Quoting the Seventh Circuit in Gunn v. Thrasher, Buschmann & Voelkel, P.C., 982 F.3d 1069, 1072 (7th Cir. 2020) “the Supreme Court has never thought that having one’s nose out of joint and one’s dander up creates a case or controversy.”

What’s a five letter word for the Seventh Circuit’s response to dubious injury allegations: snark.

Significant Win in the USDC for the Northern District of Georgia

Author: Andrew Schwartz

Significant Win in the USDC for the Northern District of Georgia

Shipley v. Equifax Info. Servs., LLC, No. 1:20-cv-4295-JPB (N.D. Ga. Jan. 25, 2022).

What is a reasonable investigation of true identity theft under the Fair Credit Reporting Act, 15 U.S.C. §1681s-2(b)?

A thief (probably with one of those Snidley Whiplash mustaches) stole Ms. Shipley’s identity and rented an apartment in Georgia. Fair Collections & Outsourcing (“FCO”) was tasked with collecting the unpaid rent. The collection odyssey began in 2018, with a call to Ms. Shipley. During this call, Ms. Shipley claimed that she was a victim of identity theft and that she possessed proof that the subject debt arose from identity theft. She agreed to send this proof to FCO, but she did not follow through. The pattern continued over the years, FCO contacting Ms. Shipley, Ms. Shipley claiming she was a victim of identity theft and that she had proof. Ms. Shipley deciding not to follow through.

In 2020, Ms. Shipley sent a dispute letter to Equifax claiming she was a victim of identity theft. FCO received notice of the dispute from Equifax, triggering an obligation on FCO, the furnisher, to conduct a reasonable investigation of the alleged identity theft.

What did FCO do? It reviewed the dispute letter Ms. Shipley provided to Equifax. It reviewed the dispute information from Equifax – what the cool kids know as an “ACDV”. It reviewed the records from the creditor – the lease, the ledger, and the move out statement and it contacted the creditor. At each stage in FCO’s investigation, the personal identifying information matched (this being true identity theft, such a match is not surprising). So, FCO contacted Ms. Shipley and provided her with a fraud affidavit. Ms. Shipley elected not to respond to the fraud affidavit. Thereafter, FCO completed its investigation and verified the debt to Equifax as belonging to Ms. Shipley. Ms. Shipley finally responded by suing FCO for alleged violations of the FCRA.

After wrapping up discovery, FCO filed a motion for summary judgment, asserting that no reasonable finder-of-fact could find that FCO’s investigation was anything other than reasonable and in compliance with the FCRA. As most Plaintiffs are wont to do, Ms. Shipley strenuously opposed the motion, claiming that FCO could have done more in its investigation (handwriting analysis, driver’s license verification, and the like).

On October 29, 2021, the Magistrate Judge issued a Report and Recommendation in favor of FCO. Ms. Shipley objected, but the District Judge overruled the objections, holding that it is not what additional investigation could have been done by FCO, but whether the investigation FCO undertook was reasonable. And it was. And FCO won.

In so ruling, the Court set a standard for reasonable investigations in instances of alleged identity theft under the FCRA. If a furnisher received an identity theft dispute, and it reviews the dispute and documents accompanying the dispute, if it reviews its records and the records of the creditor, if it confirms the personal identifying information with the creditor and, also issues a fraud affidavit, the investigation is a reasonable investigation under Section 1681s-2(b) of the FCRA.

This was a rock solid win on a significant and hotly contested issue in consumer law. With the invaluable assistance of Jasmine Peele and Leslie Eason, in our Atlanta office and Matt Johnson, in our Philadelphia office, and the support (and guts) of FCO and its insurance carrier, Great American, we were able to score a significant victory for FCO and for the collection industry.

Ninth Circuit Affirms Summary Judgment in Favor of TCPA Defendant on Duguid Footnote 7 Argument

Author: Thomas Blatchley

On January 19, 2022, the Ninth Circuit affirmed a District Court’s Order granting summary judgment to defendant, holding that the subject dialing platform was not an automatic telephone dialing system or ATDS under the TCPA. Meier v. Allied Interstate LLC, Case No. 20-55286 (9th Cir. Jan. 19, 2022). The decision is yet another victory for TCPA defendants rejecting plaintiffs’ Duguid footnote 7 argument that an ATDS simply use a random number generator to determine the order in which to ptick numbers from a pre-produced list and then store those numbers to be dialed in the future.

On appeal, plaintiff-appellant argued that defendant’s LiveVox Platform is an ATDS under the TCPA. The LiveVox platform requires customers (including defendant) to upload lists of telephone numbers; it does not produce the numbers it dials using a random or sequential number generator. Significantly, during the pendency of the appeal, the U.S. Supreme Court held that an ATDS “must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.” Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1167 (2021).1

The Ninth Circuit found that plaintiff must show that the dialing platform stores telephone numbers using a random or sequential generator. Plaintiff-appellant did not argue that the LiveVox system stored telephone numbers using a random number generator, but instead argued that it stored telephone numbers using a sequential number generator because it uploads a customer’s list of numbers and produces them to be dialed in the same order they were provided, e.g., sequentially. The Ninth Circuit rejected this argument, finding that virtually every system that stores a pre-produced list of telephone numbers would qualify as an ATDS if it could also autodial the stored numbers. Of course, this is the same outcome the Supreme Court rejected in Duguid when it reversed a district court holding that an ATDS need only have the capacity to store numbers to be called and to dial such numbers automatically. Not surprisingly, the Ninth Circuit rejected plaintiff-appellant’s expansive interpretation and reliance on footnote 7 of the Duguid decision that endeavored to explain why Congress might have used both “produce” and “store” in the ATDS definition. Accordingly, the Ninth Circuit held that the LiveVox system did not qualify as an ATDS under the TCPA simply because it stores pre-produced lists of telephone numbers in the order in which they are uploaded.
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1 For a comprehensive overview of the Duguid decision, see here.

Turned Out to Be a White Christmas After All

Authors: Avanti Bakane, Thomas Blatchley, and Mary Curtin

In a late December holiday present to furnishers everywhere, the Eleventh Circuit struck another blow to Plaintiffs’ “dispute/non-dispute” scheme wherein Plaintiffs seek to hold furnishers liable for failing to investigate a dispute, when in fact the furnishers have been notified by one or more credit reporting agencies that the account was no longer being disputed. In White v. Equifax Info. Serv’s LLC , Case No. 21-11840 (11th Cir. Dec. 23, 2021), the Court affirmed what Fair Credit Reporting Act (FCRA) reasonableness actually requires of furnishers faced with these tenuous claims.

The underlying facts are straightforward and recognizable to those in the industry. When Plaintiff Veda White observed in credit reports from two CRAs a notation that she disputed her Wells Fargo tradeline, she sent a letter to those CRAs saying she no longer disputed the tradeline. The CRAs then forwarded that letter to Wells Fargo asking that Wells Fargo investigate the dispute.

Because Wells Fargo had not received any direct contact from Plaintiff saying she no longer disputed the tradeline, Wells Fargo’s records indicated that the tradeline was still in dispute. Wells Fargo reported as much to the CRAs, who left the dispute notation on Plaintiff’s reports. After seeing that the notation remained, Plaintiff filed suit against Wells Fargo in federal court for the Northern District of Georgia alleging that it violated the FCRA by failing to investigate her dispute.

Here, two key facts made the difference for the panel: (1) the confusing nature of Plaintiff’s “non-dispute” letter to the CRAs and (2) the fact that the letter was sent to the CRAs and not to the furnisher, Wells Fargo.

Plaintiff’s letter to the CRAs, which is contained in the body of the Eleventh Circuit’s opinion, stated:

The panel rejected Plaintiff’s tortured arguments, which relied on the unreasonable assumption that the above correspondence should have informed the furnisher that the dispute was resolved and no longer disputed by Plaintiff. In a terse opinion of just eight pages, the Eleventh Circuit neatly dismantled Plaintiff’s theory, explaining:

What Ms. White wants Wells Fargo to do—either (1) to intuit that she no longer disputed the tradeline from her report to the CRAs or (2) to reach out to her directly to clarify and confirm that she no longer wished to dispute the tradeline—goes beyond what FCRA reasonableness requires.

However, furnishers and defense counsel alike should note that the Court took care to observe that perhaps there may be other, better practices available to furnishers, such as contacting the consumer to determine whether she was, as an initial matter, attempting to resolve the underlying dispute with that furnisher through the CRAs as an intermediary. Of note, the Court unequivocally held that such “better” practices are not what FCRA reasonableness requires. This direct and unwavering statement of the law from the Eleventh Circuit should stem the tide of FCRA “non-dispute” claims which have flooded federal dockets for the past few years.

Next up – we watch (and defend) as the ever-persistent plaintiffs’ bar tries to skirt White and similar rulings across the circuits by abandoning their FCRA theory and testing their “non-dispute” claims under the Fair Debt Collections Practices Act (FDCPA) instead.

A complete copy of the White v. Equifax Info. Serv’s, LLC opinion can be accessed via the Eleventh Circuit at this link.