In Casillas v. Madison Avenue Associates, Inc., 926 F.3d 329, 333 (7th Cir. 2019), the Seventh Circuit upheld the district court’s holding that a plaintiff lacked standing to pursue a claim under the Fair Debt Collection Practices Act (FDCPA) against a debt collector because the plaintiff could not establish that any damages were caused by the FDCPA violation.
The FDCPA requires a debt collector to give written notice to a consumer within five days of its initial communication. 15 U.S.C. § 1692g(a). The notice must include, among other things, a description of two mechanisms that the debtor can use to verify his or her debt in writing. Id. The FDCPA also renders a debt collector liable for “fail[ing] to comply with any provision of [the Act].” Id. § 1692k(a).
In Casillas, the debt collector sent the debtor a debt collection letter that failed to specify that the debtor had to notify the debt collector in writing to contest the claimed debt. This omission of the required FDCPA language in the debt collection letter resulted in the debtor filing a class action lawsuit seeking statutory damages for herself and unnamed class members.
While Casillas was pending in the district court, the Seventh Circuit decided Groshek v. Time Warner Cable, Inc., 865 F.3d 884 (7th Cir. 2017), which held that a plaintiff cannot satisfy the injury-in-fact element of standing simply by alleging that the defendant violated a disclosure provision of a consumer protection statute. After the Groshek decision came out, the district court in Casillas held that Groshek required it to dismiss the plaintiff’s complaint because the plaintiff failed to allege that the debt collector’s omission put her in any harm. Therefore, the plaintiff lacked standing to sue.
On appeal, the plaintiff challenged the injury-in-fact requirement held by the district court. Upon review, the Seventh Circuit noted that the plaintiff did not allege that: (1) she planned to dispute the debt or verify her creditor; (2) the debt collector’s actions harmed or posed any risk of harm to her interests under the FDCPA; or (3) she even read the disclosure or relied on it to her detriment. Instead, the only harm that the plaintiff claimed to have suffered was the receipt of the “incomplete letter.” Casillas, 926 F.3d at 332.
The Seventh Circuit quoted the United States Supreme Court’s holding in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), and held that plaintiff cannot claim “a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” Casillas, 926 F.3d at 332 (quoting Spokeo, 136 S. Ct. at 1549). The Court noted that, while “Article III grants federal courts the power to redress harms that defendants cause plaintiffs,” it is “not a freewheeling power to hold defendants accountable for legal infractions.” Id. Because the debt collector’s violation of the statute did not harm the plaintiff, the Court found that there was no injury for a federal court to redress. The Seventh Circuit stated that the bottom line of its opinion could be succinctly stated as “no harm, no foul.”
The holding in Casillas limits consumer lending cases against debt collectors that are based strictly on “bare procedural violations.” Casillas also places the burden on plaintiffs to show “concrete injury to confer standing” in consumer lending matters and deters consumers from seeking statutory damages based on an oversight in a debt collection letter that does not harm the consumer. As such, debt collectors should evaluate all facts and investigate a debtor’s alleged damages before settling disclosure cases to protect against “bare procedural” claims as those asserted in Casillas.