Opinion
CASE NO. C16-0391JLR
03-03-2017
KELLY ERICKSON, Plaintiff, v. ELLIOT BAY ADJUSTMENT COMPANY INC. and JOHN DOES 1-25, Defendant.
SHOW CAUSE ORDER REGARDING STANDING UNDER SPOKEO
I. INTRODUCTION
The court is in receipt of Plaintiff Kelly Erickson's motion for class certification. (Mot. (Dkt. # 11).) Having reviewed Ms. Erickson's motion, Defendant's ("Elliot Bay") response to the motion (Resp. (Dkt. # 13)), Ms. Erickson's reply memorandum (Reply (Dkt. # 16)), Ms. Erickson's complaint (Dkt. # 1), Elliot Bay's answer (Dkt. # 6), the relevant portions of the record, and the applicable law, the court defers its consideration of Ms. Erickson's motion and instead ORDERS Ms. Erickson to show cause why the court has subject matter jurisdiction over this action.
II. BACKGROUND
Defendant Elliot Bay is a "collection agency" and "debt collector" as defined by the Federal Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692a(6). In 2015, Elliot Bay attempted to collect a debt from Plaintiff (and putative class representative), Ms. Erickson on behalf of Family Health Care ("FHC"), one of Elliot Bay's clients. (Compl. (Dkt. # 1), ¶¶ 15, 16; Resp. at 2.) Ms. Erickson alleges that many of Elliot Bay's attempts to collect the debt violated the FDCPA and two Washington consumer protection statutes. (See generally Compl.)
On March 17, 2015, in its first attempt to collect the debt, Elliot Bay delivered a letter to Ms. Erickson:
NOT HAVING HEARD FROM YOU ON THIS ACCOUNT, LEGAL ACTION IS NOW BEING CONSIDERED. TO AVOID PAYING ADDITIONAL COURT CHARGES AS WELL AS THIS AMOUNT, IMMEDIATELY SEND THE BALANCE IN FULL BY RETURN MAIL TO THE ABOVE ADDRESS.((Id., ¶ 21; Ex. A (emphasis in original).) Elliot Bay admits that at least forty custumers in addition to Ms. Erickson received collection letters with identical language. (Mot., Ex. B at 6 (attaching Ms. Erickson's requests for admission and responses thereto).) In fact, the Collection Letter contains standard language included in letters to all of Elliot Bay's costumers "on all types of accounts and on all types of amounts owed." (Id.) Although Ms. Erickson's two claims on behalf of the class—Counts II and III—allege many other FDCPA violations, Ms. Erickson seeks class certification solely on the basis of the March 17, 2015, collection letter. (See Mot. at 1, 7.) Ms. Erickson claims that the letter violates the FDCPA by threatening "additional court charges . . . [f]alsely representing that if payment [is] not made in full that court charges would automatically be added to the balance of the alleged debt." (Id. ¶¶ 26, 52, 53(e).)
On May 12, 2015, Elliot Bay sent a second letter to Ms. Erickson listing Ms. Erickson's alleged debt in the categories of "Principal," "Interest," and "Misc./CC." (Id., ¶ ¶ 27, 28; Answer ¶¶ 27, 28.) When Ms. Erickson's counsel contacted Elliot Bay about the "Misc./CC" charge, Ms. Erickson claims that Elliot Bay explained that the charge, totaling $283.00, represented $200.00 in attorney's fees and $83.00 in filing fees. (Id., ¶ 30.) According to Ms. Erickson, Elliot Bay had no legal or contractual right to attorney's fees. (Id. ¶ 31.)
On June 5, 2015, Ms. Erickson notified Elliot Bay that she had retained counsel and directed Elliot Bay not to contact her and to address all future communications regarding the debt to her attorney. (Id., ¶¶ 33-34 (citing Exs. C, D).) Nevertheless, Ms. Erickson received a third collection letter on September 10, 2015. (Compl. ¶ 37; Answer ¶ 37.) This time, the collection letter listed Ms. Erickson's debts as $120.00 in "Principal," $61.32.00 in "Interest," and $323.00 in "Misc./CC." (Compl. ¶ 39; Answer ¶ 39.) Ms. Erickson believes Elliot Bay did not have a legal or contractual right to charge $323.00 in "Misc./CC" fees. (Compl. ¶ 40.) The third collection letter also stated:
IF YOU PAY THE ACCOUNT IN FULL AND ASK FOR DELETION FROM YOUR CREDIT FILE(S), WE WILL REQUEST DELETION ON YOUR BEHALF.(Compl. ¶ 41; id., Ex. E (emphasis in original); Answer ¶ 41.) Ms. Erickson claims that the third collection letter misleads by implying that Ms. Erickson could only clear her credit report by asking Elliot Bay for deletion, when there are other avenues for removing the debt from her report. (Compl. ¶ 42.)
On September 3, 2015, and January 19, 2016, Elliot Bay reported Ms. Erickson's debt to a credit bureau. (Id. ¶ 35; Answer ¶ 35.) Ms. Erickson alleges that Elliot Bay did not notify the credit bureau that her debt was disputed, as required under the FDCPA. (Compl. ¶ 36.)
On April 28, 2015, after six weeks of failed attempts to recover payment, Elliot Bay filed a collection lawsuit against Ms. Erickson in Snohomish County District Court. (Berggren Decl. (Dkt. # 15) ¶ 6, Ex. A.) The collection lawsuit was eventually dismissed after Elliot Bay made seven unsuccessful attempts to serve Ms. Erickson. (Id. ¶¶ 10, 12.)
On March 16, 2016, Ms. Erickson filed a putative class action complaint alleging that Elliot Bay violated certain provisions of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., as well as two Washington statutes—the Washington Collection Agency Act (WCAA), RCW § 19.16 et seq., and the Washington Consumer Protection Act (CPA), RCW § 19.86. (See generally Compl.) Ms. Erickson asserts that the court has federal question jurisdiction over the FDCPA claims and pendent jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367(a). (Compl. ¶ 2.) // //
III. ANALYSIS
A. Standing Following Spokeo , Inc. v. Robins
The court has an obligation to raise issues concerning its subject matter jurisdiction, including Article III standing, sua sponte. Bernhardt v. Cty. of L.A., 279 F.3d 862, 871 (9th Cir. 2002). The "irreducible constitutional minimum" of standing consists of three elements: (1) the plaintiff must have suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000). With respect to the first element, an injury in fact must be "(a) concrete and particularized . . . ; and (b) actual or imminent, not conjectural or hypothetical." Lujan, 504 U.S. at 560 (internal citations and quotations omitted). The standing doctrine serves to ensure that the authority of federal courts extends only to "cases" and "controversies" as mandated by Article III of the United States Constitution. U.S. Const. art. III, § 2. "The existence of Article III standing is not subject to waiver . . . [i]t must be demonstrated 'at the successive stages of the litigation.'" Chapman v. Pier 1 Imports (U.S.) Inc., 631 F.3d 939, 954 (9th Cir. 2011) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).
The Supreme Court recently revisited the principles of standing and the first injury-in-fact element in Spokeo, Inc. v. Robins, --- U.S. ---, 136 S. Ct. 1540 (2016), as revised (May 24, 2016). Spokeo involved a class action lawsuit under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681e, which imposes various procedural requirements on consumer reporting agencies to ensure credit reporting is fair and accurate. 136 S. Ct. at 1545. In Spokeo, the defendant company compiled profiles of individuals from information in online databases and then provided the profiles to its users through its website. Id. at 1546. The profiles could include the individual's address, phone number, marital status, approximate age, occupation, hobbies, finances, shopping habits, and musical preferences. Id. The plaintiff sued the defendant company for violating the FCRA's procedural requirements by allegedly providing incorrect information about the plaintiff to the company's users. Id. at 1545-46. The district court found that the plaintiff failed to allege an injury in fact and dismissed the complaint for lack of standing. Id. at 1546. The Ninth Circuit reversed the district court and held that the plaintiff's injury "satisfied the injury-in-fact requirement of Article III" because the defendant "violated [the plaintiff's] statutory rights, not just the statutory rights of other people." Id.
The Supreme Court reversed the Ninth Circuit because the Ninth Circuit's injury-in-fact analysis focused exclusively on whether the plaintiff's injury was particularized. Id. at 1550. The Supreme Court emphasized that to satisfy the injury-in-fact element of Article III standing, the plaintiff's injury must be both particularized and concrete. See id. The Supreme Court, therefore, remanded the case to the Ninth Circuit so that it could consider the concreteness of the plaintiff's injury. Id.
In remanding, the Supreme Court emphasized that to be concrete an injury "must be 'de facto'; that is, it must actually exist." Id. at 1548. However, the Supreme Court also explained that "concrete" does not necessarily mean "tangible." Id. at 1549. An intangible harm, such as the loss of one's right to free speech or to religious practice, can constitute a concrete injury. Id. (citing Pleasant Grove City v. Summum, 555 U.S. 460 (2009) (free speech); Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520 (1993) (free exercise)). Indeed, "Congress may 'elevat[e] to the status of legally cognizable injuries, de facto injuries that were previously inadequate in law.'" Id. (alterations in original) (quoting Lujan, 504 U.S. at 578). However, a plaintiff does not "automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right." Id. "Article III standing requires a concrete injury even in the context of a statutory violation." Id. A plaintiff may not "allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III." Id.
In certain circumstances, "the risk of real harm" can also be enough to satisfy the concreteness requirement. Id. For example, the Supreme Court noted that harms associated with certain torts can be difficult to prove or measure. Id. (citing libel and slander as examples). Thus, the Court acknowledged that in some circumstances the violation of a procedural right granted by a statute could be sufficient to constitute an injury in fact, and in such cases, the plaintiff need not allege any additional harm beyond the harm Congress had identified. Id. at 1549-50. In so ruling, the Supreme Court cited two prior cases involving informational injuries. Id. (citing Fed. Election Comm'n v. Alans, 524 U.S. 11, 20-25 (1998) (confirming that a group of voters' "inability to obtain information" that Congress had decided to make public was a sufficient injury in fact to satisfy Article III); Pub. Citizen v. Dep't of Justice, 491 U.S. 440, 449 (1989) (holding that two advocacy organizations' failure to obtain information subject to disclosure under the Federal Advisory Committee Act "constitutes a sufficiently distinct injury to provide standing to sue")).
B. Order to Show Cause
The Spokeo analytical framework requires the court to determine whether the alleged FDCPA violations in Ms. Erickson's complaint and motion for class certification satisfy the concreteness requirement of the injury-in-fact component of Article III standing. Standing is a "threshold question" that a litigant invoking federal jurisdiction must demonstrate before the court may hear the case. Warth v. Seldin, 422 U.S. 490, 498 (1975). Neither Ms. Erickson's complaint nor her motion for class certification address standing. (See generally Compl.; Mot.) The court is concerned that it does not have subject matter jurisdiction over the claims asserted in Ms. Erickson's motion for class certification because Ms. Erickson's pleadings do not allege that any concrete harm resulted from the various actions Elliot Bay took in attempting to collect the debt.
Ms. Erickson makes several factual assertions in support of her claims: (1) Elliot Bay had "no contractual or legal right" to certain sums listed in the collection letters, (Compl. ¶¶ 31, 40); (2) the collection letters contain misleading statements, (id. ¶¶ 25-26, 42-43); (3) Elliot Bay continued to contact Ms. Erickson after she notified Elliot Bay that she was represented by counsel, (id. ¶¶ 33-34); and (4) Elliot Bay reported Ms. Erickson's debt to a credit bureau without notifying the bureau that the debt was disputed, as required by the FDCPA, (id. ¶¶ 35-36). Ms. Erickson's first three allegations—regarding Elliot Bay's demands for incorrect sums, misleading statements, and failure to cease contact with Ms. Erickson after she notified Elliot Bay that she was represented by an attorney—are not coupled with allegations of concrete harm. (See Compl.) Under Spokeo, a violation of the FDCPA does not automatically constitute an injury-in-fact. 136 S. Ct. at 1549 ("Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right."); see also Perry v. Columbia Recovery Grp., LLC, No. C16-0191JLR, 2016 WL 6094821, at *6 (W.D. Wash. Oct. 19, 2016). Ms. Erickson has not alleged that she paid an erroneous sum or felt harassed as a result of Elliot Bay's actions. Nor has she suggested that the violations affected her behavior, caused her to pay the debt when she otherwise would not have, or caused her undue pressure. Ms. Erickson has simply failed to allege any harm at all. Such allegations of "bare procedural violation[s] divorced from any concrete harm" cannot confer Article III standing. Spokeo, 136 S. Ct. at 1549.
The court is aware that a number of post-Spokeo cases have held that "making a false statement in connection with an attempt to collect a debt is sufficient harm [under 15 U.S.C. § 1692(e)] for standing purposes." Bautz v. ARS Nat'l Servs., Inc., No. 16-CV-768JFBSIL, 2016 WL 7422301, at *9-10 (E.D.N.Y. Dec. 23, 2016); see also Long v. Fenton & McGarvey Law Firm P.S.C., No. 115-CV-01924LJMDKL, 2016 WL 7179367, at *3 (S.D. Ind. Dec. 9, 2016) (holding that the plaintiff's allegation that she received deceptive and misleading information, "is a [concrete] harm made cognizable under the FDCPA"); Prindle v. Carrington Mortgage Servs., LLC, No. 3:13-CV-1349-J-34PDB, 2016 WL 4369424, at *8 (M.D. Fla. Aug. 16, 2016) (finding standing where the plaintiff solely alleged that she was the "object of allegedly false, deceptive, and/or misleading representations in connection with the collection of a debt . . . [an] injury in precisely the form the [FDCPA] was intended to guard against") (internal citations omitted). In contrast, other courts have held that to establish standing, the plaintiff must allege that the statutory violation caused a specific harm. Tourgeman v. Collins Fin. Servs., Inc., 197 F. Supp. 3d 1205, 1209 (S.D. Cal. 2016) (finding no standing where the plaintiff could not establish a specific harm had resulted from an alleged violation of 15 U.S.C. § 1692(e)); see also May v. Consumer Adjustment Co., Inc., No. 4:14CV166 HEA, 2017 WL 227964, at *3 (E.D. Mo. Jan. 19, 2017) (same). The Ninth Circuit has not addressed the issue before the court: whether pleading a violation of 15 U.S.C. § 1692(e), without a further allegation of harm, is sufficient to establish Article III standing. In order to demonstrate standing, Ms. Erickson must show cause why the court should adopt the position taken by Bautz, Long, and Prindle, supra. --------
Only Ms. Erickson's fourth allegation—that her debt was improperly reported to a credit bureau without notifying the bureau that the debt was disputed—can support an inference that Ms. Erickson was harmed in the form of diminished credit. (Compl. ¶¶ 35-36.) However, the court is also concerned that this allegation does not provide Ms. Erickson with the required standing. Under the FDCPA, a consumer has 30 days after receipt of the notice of debt to dispute the validity of the debt or "the debt will be assumed to be valid by the debt collector." 15 U.S.C. § 1692(g)(a)(3). According to Ms. Erickson's complaint, Elliot Bay sent an initial collection letter March 17, 2015 (Compl. ¶ 15), but Ms. Erickson's first alleged contact with Elliot Bay occurred May 27, 2015, (id. ¶ 29), well-outside the 30-day window for disputing the debt. 15 U.S.C. § 1692(g)(a)(3). Accordingly, with reference to Ms. Erickson's allegation that Elliot Bay improperly reported her debt to a credit bureau, the court is concerned that Ms. Erickson failed to plead a statutory violation because, as pled, Elliot Bay had no statutory obligation to report the debt as disputed.
For each of her other allegations, the court is concerned that Ms. Erickson has only alleged "bare statutory violation[s]," 136 S. Ct. at 1550, without any allegations that Elliot Bay caused her concrete harm or introduced a risk of harm. The court, therefore, is concerned that Ms. Erickson has failed to demonstrate standing. Accordingly, before this matter can proceed, Ms. Erickson show cause that the court has subject matter jurisdiction over the claims contained in her complaint and asserted in her motion for class certification.
IV. CONCLUSION
Based on the foregoing, the court ORDERS Ms. Erickson to show cause why the court has subject matter jurisdiction over this action. Ms. Erickson's response may not exceed ten (10) pages and is due no later than ten (10) days after the filing of this order. Although not required, Elliot Bay may also submit a simultaneous brief on the topic of Ms. Erickson's standing that does not exceed ten (10) pages and is also due ten (10) days after the filing of this order. Finally, the court DIRECTS the clerk to re-note Ms. Erickson's motion for class certification for the same day that her response to this order to show cause is due.
Dated this 3rd day of March, 2017.
/s/_________
JAMES L. ROBART
United States District Judge