A collection agency contracted with a mailing company to mail debt collection notices. The mailing company mailed a debt collection notice to a debtor of the collection agency. The debtor had not consented to the collection agency’s release of her personal information to the mailing company. Subsequently, the debtor sued the collection agency for violating the Fair Debt Collection Practices Act (FDCPA). The debtor alleged this violation of the FDCPA invaded her privacy and caused her embarrassment, stress, and emotional harm. The collection agency moved to dismiss on the basis that the debtor lacked standing. The debtor responded by focusing on the fact that the mailing company’s employees had access to her records. She also argued she had standing due to the anticipated risk of future harm from the mailing company possessing her personal information. The district court sided with the collection agency and dismissed the debtor’s complaint with prejudice for lack of standing. The debtor appealed.
In Barclift v. Keystone Credit Servs., LLC, 93 F.4th 136 (3rd Cir. 2024), the appellate court held the debtor lacked standing to sue the collection agency because she failed to show a concrete harm. The court began by explaining the intricacies of the standing issue before it on appeal. Although the FDCPA grants plaintiffs statutory standing to sue debt collectors for providing information to mailing companies, plaintiffs must still satisfy the injury-in-fact element of constitutional standing. Here, the court characterized the debtor’s alleged injuries as intangible harms, harms that do not have an objective economic value. In TransUnion LLC v. Ramirez, 594 U.S. 413 (2021), the Supreme Court had held an intangible injury satisfies the cause-in-fact element of standing if it bears “a close relationship to harms traditionally recognized as providing a basis for lawsuits in American courts.” The court noted a federal circuit split exists on the application of TransUnion. The Eleventh and Seventh Circuits compare an intangible harm to a traditional harm protected by tort and analyze whether the intangible harm is “missing an element essential to liability” under the comparable tort whereas the Tenth Circuit analyzes whether the type of harm alleged is sufficiently similar to that of a traditional harm.
In this case, the court adopted the latter approach believing it more accurately reflected the “close relationship” standard of TransUnion, generally requiring plaintiffs to show similar––but not identical––elements. Employing this standard, the court held the debtor lacked standing. The court analogized the debtor’s claim to the traditional tort of public disclosure of private information. However, the court thought the two harms were not comparable because the debtor alleged the mailing company had used her information solely within the company and had not disclosed it to the public (under the tort of public disclosure of private information, the information must be publicly disclosed). The court held the debtor did not have standing because the type of harm the debtor suffered from her information being available strictly to employees of a single company was not comparable to the harm suffered by public disclosure. The court additionally held the debtor’s anticipation of future harm was not a concrete injury because the debtor did not provide facts showing “a sufficient likelihood” that the mailing company would release the debtor’s information publicly. Although the appellate court affirmed, it modified the district court’s dismissal with prejudice because the appellate court believed dismissal without prejudice is the appropriate remedy where lack of standing is the basis for the dismissal.
By Gregory Ferrer [email protected]
Edited By Joshua Shetler [email protected]
Edited By Peter Benson [email protected]