The Court of Appeals for the Seventh Circuit on Friday reversed a jury award of $350,000 against a collector in a Fair Debt Collection Practices Act case over the collection of a time-barred debt, ruling the plaintiff lacked standing.
A copy of the ruling in the case of Pierre v. Midland Credit Management can be accessed by clicking here.
The plaintiff defaulted on a credit card debt, which was purchased by the defendant. The defendant filed a collection lawsuit against the plaintiff seeking to recover the unpaid balance, but then voluntarily dismissed the suit. Five years later, the defendant sent the plaintiff a collection letter. The letter included a disclosure that, because of the age of the debt, the defendant would not sue or credit report the debt and payment or non-payment would not affect the plaintiff’s credit score. The plaintiff filed suit, alleging the letter violated Sections 1692e(2), 1692e(10), and 1692f of the FDCPA. A District Court judge certified the class and granted summary judgment in favor of the plaintiffs. A jury awarded the class $350,000 in damages. The defendant twice sought dismissal of the case on the grounds that the plaintiff lacked standing to sue.
At the end of the day, the Appeals Court ruled, the plaintiff never made a payment as a result of receiving the letter, nor did she make a promise to do so or otherwise “act to her detriment in response to anything in or omitted from the letter.” Calling the collector to dispute the debt and then contacting an attorney is not enough to be the “basis for a lawsuit,” the Appeals Court wrote.
In a dissenting opinion, Judge David Hamilton of the Seventh Circuit hints that the Supreme Court may need to asked to weigh in on whether “Congress has the power under the Constitution to create private causes of action under the Fair Debt Collection Practices Act and other consumer protection statutes for injuries that are intangible but quite real.”
