A Swing and a Miss: Court Finds Plaintiff Lacks Standing to Assert FDCPA Claim After Prevailing in State Court

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In Cheatham v. Adams, a U.S. district judge in Arkansas recently granted the defendant McKendra Adams’s (Adams) motion to dismiss for lack of standing involving an alleged violation of the Fair Debt Collection Practices Act (FDCPA). In its holding, the court determined that even though defendant Adams failed to send a timely validation notice, plaintiff Shelby Cheatham’s (Cheatham) underlying collection lawsuit provided him with all the information he needed.

The case began when Cheatham defaulted on a car loan and surrendered the vehicle, which was sold at auction. Because the sale of the car did not cover the full balance on the auto loan, Adams filed a lawsuit against Cheatham in state court to obtain a deficiency judgment on behalf of her client. Cheatham won the state court suit, and the debt was deemed to be unenforceable because notice was deficient under Arkansas law. Cheatham was also awarded attorney’s fees. Cheatham then sued the collection attorney, Adams, in federal court for a violation of the FDCPA and Arkansas Fair Debt Collection Practices Act (AFDCPA). Cheatham alleged that when Adams sent an email to his attorney with responses to discovery requests, that email constituted an initial communication under Title 15 U.S.C. § 1692(g)(a) of the FDCPA. This also meant that Adams had to send a verification notice, as required in 15 U.S.C. § 1692(g)(a)(1)-(5), which she did not do.

Title 15 U.S.C. § 1692(g)(a)(1)-(5), stated in relevant part below, required Adams to send written notice containing the following:

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

Adams sought a motion to dismiss under the Federal Rules of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, arguing Cheatham did not suffer a concrete injury as a result of the omission and therefore did not have standing to sue. The court granted Adams’s motion, noting that while Cheatham took “several swings” at establishing standing, he ultimately “struck out.”

The court, relying on Spokeo v. Robins, 578 U.S. 330 (2015) and TransUnion v. Ramirez, 594 U.S.___, 141 S. Ct. 2190 (2021), found that although Cheatham could point to a particular violation of the FDCPA, he had not alleged that he was ever exposed to real harm by the Adams’s alleged failure under the statute. The court found that Cheatham had not alleged a concrete injury or “downstream consequences” of Adams’s failure. Thus, Cheatham did not have Article III standing.

The court’s analysis centered on the fact that Cheatham was made aware of all necessary information despite the defendant’s failure, noting that “[b]y the time the alleged violation occurred, Mr. Cheatham had hired an attorney, filed an Answer, and sent discovery requests to Ms. Adams. No matter how favorably one reads his Complaint, his allegations make it impossible to believe that Mr. Cheatham was unaware that Ms. Adams was a debt collector.” The court emphasized that after prevailing in state court, Article III “does not allow [the plaintiff] and his attorney to treat the FDCPA as a green light to take a victory lap in federal court.”

This case provides another example of the concrete injury requirement for claims under the FDCPA. In addition to showing a technical violation of the statute, a plaintiff must show that he has suffered “downstream consequences” for his claim to have standing.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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