Sebestyn v. Leikin, Ingber & Winters P.C.

Filing 52

OPINION and ORDER Granting Defendants' 43 Motion to Dismiss, Finding as Moot Plaintiff's 42 Motion to Certify Class; and Dismissing Case. Signed by District Judge Stephen J. Murphy, III. (DPar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CAROLYN SEBESTYEN,
Plaintiff,

Case No. 2:13-cv-15182

v.

HONORABLE STEPHEN J. MURPHY, III

LEIKIN, INGBER, & WINTERS, P.C.,
and PAUL M. INGBER,
Defendants.
______________________________/
OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS [43],
FINDING MOOT PLAINTIFF'S MOTION TO CERTIFY CLASS [42], AND DISMISSING
THE CASE
Five years ago, Plaintiff Carolyn Sebestyen received a letter that she claims
violated the Fair Debt Collection Practices Act. Defendants moved to dismiss and
Sebestyen moved to certify a class. The Court, Judge Patrick Duggan, resolved the
motions and after a trip to and from the Sixth Circuit, Sebestyen and the Defendants are
back with the same motions—but different arguments. For the reasons below, the Court
will dismiss the case for lack of jurisdiction.
STANDARD OF REVIEW
Defendants simultaneously move to dismiss the case under Rule 12(b)(1) and for
summary judgment under Rule 56. See ECF 43, PgID 346. The sole basis of Defendants'
Rule 12 motion is factual: they contend that Plaintiff has not pled an injury in fact and thus
has not carried her burden to establish standing. Accordingly, when the Court reviews the
argument it is empowered to consider "evidence outside of the pleadings, and has the

power to weigh the evidence and determine the effect of that evidence on the court's
authority to hear the case." Cartwright v. Garner, 751 F.3d 752, 759–60 (6th Cir. 2014).
BACKGROUND
Sebestyen racked up some medical bills from Beaumont Hospital and, in January
2013, she received a letter about them. The letterhead identified the law firm of Leikin,
Ingber & Winters, P.C. ("Leikin") and it bore Paul Ingber's signature. The letter began with
the following caption:
Re: WILLIAM BEAUMONT, a Michigan Non-Profit Corp.
Past Due Amount: $6,839.35
Our File Number 3-328969
ECF 1, PgID 3–4; ECF 42-2. The letter explained that Beaumont retained Leikin to obtain
payment from Sebestyen and it directed Sebestyen to mail her payment to Ingber's
attention. The letter stated that if Sebestyen felt her insurance company was responsible
for the payment being sought, it was her obligation to contact her insurance company.
The letter recited the language that forms the matter in dispute:
This debt will be assumed to be valid unless you dispute the validity of the
debt or any portion thereof, within 30 days after you receive this letter. If you
notify this office, in writing, within said 30 day period that you dispute all or
any portion of the debt, I will then obtain verification of the indebtedness
and forward a copy of such verification to you. Any information which you
may provide to this office will be used to recover this indebtedness or
resolve the matter as the case may be.
If I do not hear from you, it will be assumed that you do not intend to settle
this account voluntarily and appropriate action will be taken.
This communication is an attempt to collect a debt and any information
obtained will be used for that purpose.
ECF 42-2.
Sebestyen filed suit later that year and the complaint hinges on a single, alleged
shortcoming in the letter. She correctly notes that the FDCPA required Ingber's letter to
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include "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[.]" 15 U.S.C. § 1692g(a)(3); ECF 1, PgID 4, ¶ 20. The
relevant portion of the letter stated, "If I do not hear from you, it will be assumed that you
do not intend to settle this account voluntarily and appropriate action will be taken."
Plaintiff concludes that the letter incorrectly stated who would assume the validity of the
debt. ECF 1, PgID 4, ¶ 21.
DISCUSSION
The parties' two motions put three matters before the Court: (1) standing, and
hence, jurisdiction, (2) class certification, and (3) the merits of the case as pled. The Court
must begin with the question of standing because without it, the Court lacks jurisdiction
to take any action other than dismissal. See Moir v. Greater Cleveland Reg'l Transit Auth.,
895 F.2d 266, 269 (6th Cir. 1990).
Article III of the U.S. Constitution limits federal courts' jurisdiction to cases and
controversies. Thus, a party seeking relief in federal court must have standing to sue.
Nat'l Air Traffic Controllers Ass'n v. Sec'y of Dep't of Transp., 654 F.3d 654, 659 (6th Cir.
2011). At a minimum, the plaintiff must show three things to demonstrate standing: (1)
she has suffered an injury in fact "that is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical," (2) her injury is "fairly traceable to the
challenged action of the defendant," and (3) the injury will likely be redressed by a
favorable decision. Id. (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528
U.S. 167, 180–81 (2000)).
Consumer protection statutes like the one in this case can pose a particular
standing problem. The FDCPA requires debt collectors to include certain information in
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their correspondence with debtors and it empowers consumers to bring a private action
against a "debt collector who fails to comply with any provision" of the FDCPA. 15 U.S.C.
§ 1692k(a). An individual plaintiff who sues under the subsection can recover actual
damages and up to $1,000 in "additional damages as the court may allow." And the cap
increases for class actions. Id. But the Supreme Court explained in Spokeo, Inc. v. Robins
that "Article III standing requires a concrete injury even in the context of a statutory
violation" and thus "a bare procedural violation, divorced from any concrete harm" does
not satisfy the injury-in-fact requirement. 136 S. Ct. 1540, 1549 (2016).
In the wake of Spokeo, courts have looked more carefully at the alleged injuries of
FDCPA plaintiffs. For instance, in Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d
337 (7th Cir. 2018), the defendant reported plaintiffs' debts to credit agencies, but failed
to mention that the debts were disputed—a violation of the FDCPA. The plaintiffs sued
on the basis of the omission and a panel of the Seventh Circuit found they had standing
specifically because they alleged that the omission carried the real risk of credit reporting
agencies lowering their credit scores. See id. at 346. In Zirogiannis v. Seterus, Inc., the
plaintiffs alleged that defendants inaccurately reported the amount of a debt. A panel of
the Second Circuit concluded that the plaintiffs pled a "material risk of harm," and thus
had standing, because underreporting the amount of the debt put the plaintiff in a
"materially greater risk of falling victim to 'abusive debt collection practices[.]'" 707 F.
App'x 724, 727 (2d Cir. 2017) (quoting Alibrandi v. Fin. Outsourcing Servs., Inc., 333 F.3d
82, 85 (2d Cir. 2003)). On the other hand, Plaintiffs who have not pled a particular injury
have had their cases dismissed. See, e.g., Gathers v. CAB Collection Agency, Inc., No.
3:17-cv-261-HEH, 2017 WL 2703686, at *3–4 (E.D. Va. June 22, 2017) (noting that

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"conspicuously absent" from the complaint was "any allegation that Plaintiff suffered any
actual harm").
The standard for making these distinctions, however, has not been uniform.
Several courts have concluded that the FDCPA's conferral of a "right to be free from
abusive collection practices" means that a plaintiff need only plead that the letter she
received was false, deceptive, or misleading—and no further harm need be mentioned.
See, e.g., Prindle v. Carrington Mortg. Servs., LLC, No. 3:13-CV-1349-J-34PDB, 2016
WL 4369424, at *11 (M.D. Fla. Aug. 16, 2016) (citing Spokeo, 136 S. Ct. at 1554 (Thomas,
J., concurring)). Other courts have focused on a consumer's statutory entitlement to
information and thus have found a concrete injury when the consumer is deprived of the
information. See Long v. Fenton & McGarvey Law Firm P.S.C., 223 F. Supp. 3d 773, 777
(S.D. Ind. 2016) (finding standing solely because the FDCPA created a "new right to
receive required disclosures from debt collectors and a new injury for failure to receive
such disclosures"); Allah-Mensah v. Law Office of Patrick M. Connelly, P.C., No. CV PX16-1053, 2016 WL 6803775, at *7–8 (D. Md. Nov. 17, 2016) (finding standing based on
an "informational injury," though reasoning in the alternative that the deprivation can
present a material risk that the consumer will inadvertently waive protections of the
statute); see also Hayes v. Convergent Healthcare Recoveries, Inc., No. 14-1467, 2016
WL 5867818, at *5 (C.D. Ill. Oct. 7, 2016) (finding standing when a letter failed to disclose
that the collection of the debt was not legally enforceable).
Following briefing in this case, the Sixth Circuit provided some clear guidance on
the issue in Hagy v. Demers & Adams, 882 F.3d 616 (6th Cir. 2018). There, the plaintiffs
worked out a deal to avoid foreclosure on their home and received a letter from a law firm

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that confirmed they had nothing to fear. Nevertheless, they sued the law firm on the
grounds that the letter did not disclose that the sender was a debt collector, as required
by another portion of the FDCPA, 15 U.S.C. § 1692e(11). The plaintiffs, however, failed
to plead (or prove) that they sustained any actual injury beyond not getting the disclosure
information. For that reason, the court concluded they lacked standing, and specifically
rejected the notion that FDCPA claimants need only plead that Congress "has created a
new right—the right to receive the required disclosures in communications governed by
the FDCPA—and a new injury—not receiving such disclosures." Id. at 622.
Perhaps seeing the writing on the wall following the Hagy decision, Sebestyen filed
a notice of supplemental authority here. In it, she explained that the Seventh Circuit
decided a different case in 2016 that "is directly on point with this case and distinguishable
from the Sixth Circuit's recent holding in Hagy[.]" ECF 51, PgID 497. In Marquez v.
Weinstein, Pinson & Riley, PS, the plaintiffs received a debt-collection letter and then a
summons for a lawsuit arising from the debt. The plaintiffs filed a separate, FDCPA suit
challenging the language used in the complaint, but the district court granted the
defendants' 12(b)(6) motion because it found that the disputed portion of the complaint
"was not misleading or deceptive as a matter of law[.]" 836 F.3d 808, 810 (7th Cir. 2016).
The Court of Appeals reviewed the language, concluded otherwise, and reversed.
That case has little bearing on the question of standing. For one, the Seventh
Circuit did not even address standing in its opinion, much less the strictures of the Spokeo
holding that had been released just a few months before. Moreover, the facts are
inapposite to those here. In Marquez, the complaint stated, "the debt referenced in this
suit will be assumed to be valid and correct if not disputed in whole or in part within thirty

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(30) days from the date hereof." Id. at 810. The court concluded that because the
language appeared in a complaint, the phrasing might mislead a consumer to think that
the court would assume the debt was valid. Id. at 814. Although the instant case arises
from a similar alleged misstep—a regrettable use of the passive voice—it is not otherwise
comparable to Marquez.
Despite a difference in facts, the Hagy holding is directly applicable to the present
case. At its core, Hagy affirms that a plaintiff must do more than assert that a defendant
has not followed the letter of the FDCPA. There must also be a concrete or imminent
injury. Here, Sebestyen has not pled anything close to such an injury: no change in credit
score, no resulting anxiety, no forbearance in future actions. In fact, she does not even
allege that she found the letter confusing. In other words, it is precisely the case described
in Hagy.
Sebestyen has failed to carry her burden in establishing the court's jurisdiction
because she has failed to plead an injury in fact. Accordingly, the Court must grant
Defendants' motion and dismiss the case for lack of jurisdiction. Sebestyen's motion to
certify class is therefore moot.
ORDER
WHEREFORE, it is hereby ORDERED that Defendants' Motion to Dismiss [43] is
GRANTED.
IT IS FURTHER ORDERED that Plaintiff's Motion to Certify Class [42] is MOOT.
IT IS FURTHER ORDERED that the case is DISMISSED WITHOUT PREJUDICE.
SO ORDERED.

Dated: June 19, 2018

s/Stephen J. Murphy, III
STEPHEN J. MURPHY, III
United States District Judge
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CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on June 19, 2018, by electronic and/or ordinary mail.
s/David P. Parker
Case Manager

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