DUNHAM v. ROBERT CRANE & ASSOCIATES, LLC

Filing 59

ORDER - ADOPTING REPORT AND RECOMMENDATIONS ; The Magistrate Judge's Report and Recommendation on Defendant's Motion to Dismiss Docket No. 45 is ADOPTED in full, and Defendants' Motion to Dismiss Docket No. 18 is DENIED.. Signed by Judge Sarah Evans Barker on 6/20/2017.(CKM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

DAVID DUNHAM individually and on behalf
of all others similarly situated,
Plaintiff,
vs.
ROBERT CRANE & ASSOCIATES, LLC an
Indiana limited liability company,
Defendant.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

No. 1:16-cv-2100-SEB-MPB

ORDER AFFIRMING MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION
AND DENYING DEFENDANTS’ MOTION TO DISMISS
Plaintiff David Dunham has brought this action against Defendant Robert Crane and
Associates, LLC, claiming violations of the Federal Debt Collection Practices Acts, 15 U.S.C. §
1692 et seq. (“FDCPA”). Now pending before us is Defendant Robert Crane & Associates’
objection [Docket No. 46] to the Magistrate Judge’s Report and Recommendation [Docket No.
45] on Defendant’s Motion to Dismiss for lack of Jurisdiction [Docket No. 18] under Federal
Rule of Civil Procedure 12(b)(1), filed on September 22, 2016. 1 Having reviewed and considered

1

In addition to the Motion to Dismiss, Plaintiff’s Motion to Certify Class [as
amended, Docket No. 38] is pending before us. The Federal Rules of Civil Procedure
direct district courts to grant or deny class certification “early” in the litigation. Fed. R.
Civ. Pro. 23(c)(1); see Larson v. JPMorgan Chase & Co., 530 F.3d 578, 581 (7th Cir.
2008); Weismuller v. Kosobucki, 513 F.3d 784, 784 (7th Cir. 2008) (holding that the issue
of class certification generally should be addressed prior to a decision on the merits of the
case, particularly before a ruling on summary judgment). But the court retains discretion
to decide a Rule 12(b) motion before determining whether to certify a putative class.
McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 879 n. 4 (7th Cir. 2012) (“there

the Magistrate Judge=s Report and Recommendation, Defendant’s Objection to that Report and
Recommendation and Plaintiff’s response to the Objection [Docket No. 42], for the reasons
detailed below, we OVERRULE the Firm’s objections, ADOPT the conclusions of the
Magistrate Judge, and DENY Defendant’s motion.
Factual and Procedural Background 2
Mr. Dunham was obligated on a delinquent consumer debt to Springleaf Financial
Services of Indiana, which engaged the Crane Firm (“Firm”), a debt collection agency, to collect
payment from Mr. Dunham. On January 29, 2016, the Firm sent to Mr. Dunham a form
collection letter in an attempt to secure repayment. Docket No. 1 at para. 5.
Mr. Dunham initiated this lawsuit on August 4, 2016, on behalf of himself and others
similarly situated, alleging that the Crane Firm, by failing to state in its collection letter that a
dispute must be submitted in writing to obtain validation of the debt, violated
§ 1692(g)(a)(4) of the FDCPA. Docket No. 1 at ¶ 11; Docket No. 2 at 1-4. He also alleges that
this omission constituted an unfair and unconscionable collection practice against him and others
similarly situated in violation of FDCPA §1692f. Id.

is no fixed requirement that the court must always defer a decision on a Rule 12(b)(6)
motion until after the court addresses class certification.”); Costello v. BeavEx, Inc., 810
F.3d 1045, 1058 (7th Cir. 2016) (approving of addressing a dispositive motion before
adjudicating the propriety of class certification). We have stayed action on the class
certification issue at Defendant Crane’s request [Docket No. 20] pending adjudication of
Crane’s Motion to Dismiss.
2

The facts recited herein are adopted from the Magistrate Judge’s Report and
Recommendation [Docket No. 45], which have not been disputed or objected to by the
parties.
2

On September 22, 2016, the Firm moved to dismiss the Complaint arguing that Mr.
Dunham “failed to plead any injury in fact, which is an indispensable prerequisite for standing to
assert a claim.” Docket. No. 18 at 1. In advancing this argument, the Firm has relied on the U.S.
Supreme Court’s recent decision in Spokeo, Inc. v. Robins,--U.S.--, 136 S. Ct. 1540, 1547
(2016), which we discuss more fully below. According to the Firm, Mr. Dunham has not
identified any concrete injury resulting from Crane’s omission of the words “in writing” in its
collection letter; rather, he has raised only a procedural statutory violation, which, under Spokeo,
does not confer Article III standing. Docket. No. 19 at 6.
Mr. Dunham opposes dismissal arguing that a plaintiff’s statutory right to receive
information is in and of itself a concrete injury. Docket. No. 21 at 7. He asserts that the standard
in cases such as this is “based on the perspective of the unsophisticated consumer, not
necessarily the individual plaintiff himself, ‘meaning that it is unimportant whether the
individual that actually received a violative letter was misled or deceived.’” Docket No. 21 at 9
(citing Lox v. CDA, Ltd., 689 F.3d 818, 826 (7th Cir. 2012)). Mr. Dunham contends that “the
overwhelming majority of district and appellate courts interpreting Spokeo have found that
violations of the information disclosures requirements of the FDCPA confer standing on
consumers.” Docket No. 21 at 5.
On October 16, 2016, the Firm’s Motion to Dismiss was referred to Magistrate Judge
Brookman for issuance of proposed findings and recommendations. Docket No. 45 at 4. On
April 19, 2017, the Magistrate Judge issued his report and recommendation concluding that the
injury alleged by Mr. Dunham is a defined and cognizable harm under the FDCPA, and as such
is a concrete injury in fact sufficient to satisfy Article III standing. Docket No. 45. The Firm filed

3

a timely objection [Docket. No. 46], to which Mr. Dunham responded [Docket No. 47]. We
address the objections below.
Relevant Law
Applicable Legal Standard
Rule 72(b) of the Federal Rules of Civil Procedure requires a party who disagrees with a
magistrate judge’s report and recommendation on a dispositive motion to file “specific written
objections to the proposed findings and recommendations.” Fed. R. Civ. P. 72(b)(2); see also 28
U.S.C. § 636(b)(1); Johnson v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999). “The district
court ‘makes the ultimate decision to adopt, reject, or modify’ the report and recommendation,
and it need not accept any portion as binding; the court may, however, defer to and adopt those
conclusions where a party did not timely object.” Jamerson v. Colvin, 2013 WL 6119245, at *1
(S.D. Ind. Nov. 21, 2013). Upon a timely objection, the district court must determine de novo,
“any part of the magistrate judge’s disposition that has been properly objected to.” Fed. R. Civ.
P. 72(b)(3); see also 28 U.S.C. § 636(b)(1); Remy Inc. v. Tecnomatic, S.P.A., 2013 WL 1311095,
at *1 (S.D. Ind. Mar. 26, 2013).
Our review of the challenged portions of the Magistrate Judge’s Report and
Recommendation on Defendant’s motion to dismiss is conducted pursuant to Federal Rule of
Civil Procedure 12(b)(1), which commands that a court dismiss any suit over which it lacks
subject matter jurisdiction. See Fed. R. Civ. Pro. 12(b)(1). In ruling on a Rule 12(b)(1) motion to
dismiss, we “must accept the complaint’s well-pleaded factual allegations as true and draw
reasonable inferences from those allegations in the plaintiff’s favor.” Franzoni v. Hartmax Corp.,
300 F.3d 767, 771 (7th Cir. 2002); Transit Express, Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th
Cir. 2001). We may, however, “properly look beyond the jurisdictional allegations of the

4

complaint and view whatever evidence has been submitted on the issue to determine whether in
fact subject matter jurisdiction exists.” See Capitol Leasing Co. v. F.D.I.C., 999 F.2d 188, 191
(7th Cir. 1993); Estate of Eiteljorg ex rel. Eiteljorg v. Eiteljorg, 813 F. Supp. 2d 1069, 1074
(S.D. Ind. 2011).
The two objections interposed to the Magistrate Judge’s Report and Recommendation are
limited to the finding of standing to sue on the part of Mr. Dunham, based on his having suffered
an injury-in-fact and Mr. Dunham’s injury not falling within the scope of the cognizable harm
provided for by the statute.
The Standing Requirement and the Supreme Court’s Decision in Spokeo, Inc. v.
Robbins, 136 S.Ct. 1540 (2016)
Standing is, of course, a threshold requirement under Article III to pursue a claim in
federal court, and it applies to plaintiffs in class actions. See, e.g., Lewis v. Casey, 518 U.S. 343,
357 (1996). To meet this requirement, a plaintiff must allege that he “has suffered (or is
imminently threatened with) (1) a concrete and particularized ‘injury in fact’ (2) that is fairly
traceable to the challenged action of the defendant, and that is (3) likely to be redressed by a
favorable judicial decision.” Spokeo, 136 S. Ct. at 1547 (citing Lujan v. Defs. of Wildlife, 504
U.S. 555, 560-61 (1992)). “Article III standing requires a concrete injury even in the context of a
statutory violation” and, accordingly, a plaintiff must present more than “a bare procedural
violation, divorced from any concrete harm.” Spokeo, 136 S. Ct. at 1549. Relevant here, “a
concrete injury must be ‘de facto’: that is, it must actually exist,” id. at 1548, but it may be either
a tangible or an intangible harm. Id. at 1549. As the party seeking federal jurisdiction, the
plaintiff has the burden of establishing these three elements. Id. at 1547 (citing WB/PBS, Inc. v.
Dallas, 493 U.S. 215, 231 (1990)).

5

In Spokeo, the Supreme Court focused on the injury-in-fact element necessary to satisfy
Article III standing. As plaintiff, Robbins had claimed on his own behalf and others similarly
situated that Spokeo, a consumer reporting agency operating a “people search engine,” violated
the Fair Credit Reporting Act of 1970 (“FCRA”) by disseminating inaccurate credit information
derived from a variety of sources about him and others. Spokeo, 136 S.Ct. at 1544-45. The
District Court had dismissed Robbins’s complaint for lack of standing, having concluded that he
had not properly pled an injury-in-fact. Id. On appeal, the Ninth Circuit reversed, holding that the
complaint had sufficiently alleged that Spokeo violated Robbins’s statutory rights and that his
personal interests in the handling of his credit information were sufficiently individualized to
constitute an injury-in-fact under the statute. Id. at 1545. The Supreme Court vacated the Ninth
Circuit decision and remanded the case on the grounds that its decision as to the individualized
issue did not adequately address the concreteness factor, which is necessarily a separate inquiry.
Id. at 1550.
In Spokeo, the Supreme Court explained that a statutory violation can constitute an
injury-in-fact in some cases, and not rise to that level in other cases. Id. at 1549-15. The Spokeo
decision by the Supreme Court required remand to the Ninth Circuit because the FCRA violation
at issue—inaccurate personal information contained on a consumer reporting website—was a
bare procedural violation. With the decision in Spokeo to guide our analysis, we now turn to
Crane’s objections to the Magistrate Judge’s Report and Recommendation.
Discussion
In his Report and Recommendation on the Defendant Crane’s Motion to Dismiss for lack
of subject matter jurisdiction, Magistrate Judge Brookman thoroughly analyzed Spokeo, 136
S.Ct. at 1546-50, and ultimately rejected the Crane’s arguments that Spokeo forecloses Article III

6

standing in this case. Magistrate Judge Brookman noted that, while the Seventh Circuit has not
yet applied Spokeo in analyzing the issue of standing in an FDCPA case, several other courts
within this circuit and elsewhere have considered the question, all concluding that FDCPA
violations constitute concrete injuries-in-fact sufficient to satisfy standing requirements. Docket
No. 45 at 5-7 (citing, inter alia, Church v. Accretive Health, Inc., 654 Fed. Appx. 990 (11th Cir
2016), and Long v. Fenton & McGarvey Law Firm P.S.C., --F. Supp.3d-- (S.D. Ind. 2016). Judge
Brookman prior to Spokeo, the Seventh Circuit had held in an analogous ruling that the FDCPA
recognized legal rights and injuries based on violations of that statute. Docket No. 45 at 7 (citing,
inter alia, Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 324 (7th Cir. 2016) “With
that specific disclosure requirement [in Section 1692g], Congress decided that failure to make
the disclosure is a failure the Act is meant to penalize.”).
Judge Brookman also discussed Crane’s reliance on Jackson v. Abendroth & Russell,
P.C., 2016 WL 4942074 (S.D. Iowa 2016) (holding that a violation of the disclosure requirement
in FDCPA section 1692g is not, on its own, sufficient to confer standing post-Spokeo), among
other judicial rulings, observing that, while informative, such cases lack precedential effect in
our circuit and were not in any event consistent with Seventh Circuit decisions following the
Spokeo opinion’s issuance.
Magistrate Judge Brookman cited the passage of the FDCPA which requires debt
collectors to make certain disclosures to consumers and which incorporated a new form of injury
incurred by consumers who do not receive the benefit of the required disclosures. Docket No. 45
at 8. Because Mr. Dunham alleged that the disclosure he received was deficient under the
statutory requirements, he was not properly informed as to the manner for disputing the validity
of his purported debt. The complaint encompasses a “harm defined and made cognizable” by the

7

FDCPA, Mr. Dunham contends. Id. (citing Saenz v. Buckeye Check Cashing of Ill., --F.Supp.
3d--, 2016 WL 5080747 at *2 (N.D. Ill. 2016)). Adopting this rationale, Magistrate Judge
Brookman concluded, Mr. Dunham has standing to pursue his claims in this litigation.
Crane specifically challenges as well the Magistrate Judge’s conclusion that Mr.
Dunham’s alleged injury is a defined and cognizable harm under the FDCPA and that, postSpokeo, he has standing to pursue his claims, relying on the same arguments in its motion to
dismiss. Docket No. 46. In its objection, Crane criticizes the Report and Recommendation for
relying in part on an unpublished Eleventh Circuit opinion, Church v. Accretive Health, Inc., 654
Fed. Appx. 990 (11th Cir. 2016). Docket No. 46 at 7. That case involved a hospital’s attempted
to collect an outstanding debt, and, according to Crane is distinguishable from Mr. Dunham’s
claim because the hospital’s debt collection letter contained none of the disclosures required by
the FDCPA (whereas the Crane letter omitted only the words “in writing”). However, the
Seventh Circuit has held that “that [when the] specific disclosure requirement [in Section
1692g]” is not made, this is a failure the Act is meant to penalize.” Janetos, 825 F.3d at 324. In
any event, the Magistrate Judge cited that case, among several others, as support for his
conclusion that several district courts within the Seventh Circuit as well as other circuit courts
have consistently held that violations of the FDCPA constitute concrete injuries-in-fact sufficient
to support Article III standing. See Docket No. 45 at 6-8 (listing cases).
Crane invokes the Report and Recommendation’s explicit acknowledgment that the
Seventh Circuit has not addressed, post-Spokeo, the FDCPA disclosure requirements at issue
here, insisting that the Seventh Circuit’s application of Spokeo in other contexts supports its
position on the standing issue. Docket No. 46 at 7-9. In particular, Crane relies on Myers v.
Nicolet Restaurant of DePere, LLC, 843 F.3d 724 (7th Cir. 2016), which involved an alleged

8

violation of a different statute, the Fair and Accurate Credit Transactions Act (“FACTA”), 15
U.S.C. of §1681c. There, plaintiff Myers was given a receipt that, contrary to FACTA
§1681c(g)(1), did not truncate the expiration date of his card, but he had not alleged any harm
aside from that statutory violation. 843 F.3d 726. The district court rejected certification of
Myers’ proposed class consisting of “everyone who has been provided [by the restaurant] noncompliant receipt.” On appeal, the Seventh Circuit addressed standing before reaching the class
certification issue, holding that Myers’s claim did not include an allegation of a concrete injury
sufficient to satisfy the injury-in-fact requirement. Crane relies on the Myers Court’s observation
to argue that the case at bar involves a “violation of a statute, completely divorced from any
potential real-world harm” (Myers, 843 F.3d at 729). Docket. No. 46 at 8-9.
Crane also relies on Gubula v. Time Warner Cable, Inc., 846 F.3d 909 (7th Cir. 2017),
which involved a dispute over defendant Time Warner’s retention of Gubala’s personal
information for two years following termination of the residential services. Gubala sued Time
Warner under 47 U.S.C. § 551(e) of the Cable Communications Policy Act (“CCPA”), which
directs cable operators to “destroy personally identifiable information if the information is no
longer necessary for the purpose for which it was collected and there are no pending requests or
orders for access to such information[.]” Id. at 901. The district court found that Gubula had
suffered no concrete injury and, accordingly, lacked standing to sue. The Seventh Circuit
affirmed, holding that, while there was “unquestionably a risk of harm in such a case,” Gubala
did not present any allegation claiming that during the decade since he subscribed to Time
Warner’s services the company gave away or lost any of his personal information or intended to
give it away or poses a risk of having the information stolen. Id. at 910-11. Crane argues
similarly that Mr. Dunham suffered nothing more than a bare statutory violation. We find this

9

argument unpersuasive, however, because Gubala addressed only whether CCPA—and not
FDCPA—violations constitute concrete injuries. Our court addressed this same argument in
Long, --F. Supp. 3d--, 2016 WL 7179367 at *3, reaching an identical conclusion. We disagree
with the Crane’s contention that it is legally insignificant that this case involves the FDCPA and
Spokeo and other cases relying on Spokeo involve alleged violations of other statutes. We
disagree. Although courts have found that violations of other statutes do not create concrete
injuries in fact, violations of the FDCPA are distinguishable from these other statutes and,
accordingly, courts routinely find that FDCPA violations establish concrete injuries for standing
purposes.
Crane’s final argument is that Spokeo forecloses Mr. Dunham’s claim that having been
previously deprived of information, even though he now possesses it, that deprivation still
constitutes a concrete injury-in-fact. Specifically, Crane argues that Spokeo makes clear that
plaintiffs who have been deprived of statutory information to which they are entitled have
standing to sue only in an effort to obtain such information; the injury-in-fact consists of the
inability to obtain information. We are unpersuaded by this argument for the simple reason that
“[t]he FDCPA does not require proof of actual damages as a precursor to the recovery of
statutory damages.” Keele v. Wexler, 149 F.3d 589, 593-94 (7th Cir. 1998). This provision
strengthens our rationale and conclusions with regard to standing.

10

Conclusion
For the reasons explained above, the Magistrate Judge’s Report and Recommendation on
Defendant’s Motion to Dismiss [Docket No. 45] is ADOPTED in full, and Defendants’ Motion
to Dismiss [Docket No. 18] is DENIED.
IT IS SO ORDERED.
Date: ________________
6/20/2017

_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana

Distribution:
David J. Phillips
Phillips & Phillips, Ltd.
[e-mail]
Mary E. Phillips
Phillips & Phillips, Ltd.
[e-mail]
Angie K. Robertson
Phillips & Phillips, Ltd.
[e-mail]
Stephen J. Halbert
[e-mail]
Dina M. Cox
Lewis Wagner LLP
[e-mail]
Joseph Neal Bowling
Lewis Wagner LLP
[e-mail]

11