Taggatz et al v. Midland Credit Management, Inc. et al

Filing 92

ORDER DENYING 87 Motion to Dismiss for Lack of Jurisdiction. The Court previously stayed Plaintiffs deadline to respond to Defendants motion for judgment on the pleadings. See docket no. 82. Plaintiffs are hereby ORDERED to respond to that motion within fourteen (14) days of this order. Signed by Judge Xavier Rodriguez. (bc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
LIZA KRANZ, on behalf of herself and all
others similarly situated,
Plaintiff,
vs.
MIDLAND CREDIT MANAGEMENT,
INC., et al.,

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SA-18-CV-169-XR

Defendants.
ORDER
On this date, the Court considered Defendants’ motion to dismiss for lack of jurisdiction
(docket no. 87), Plaintiff’s response (docket no. 89), and Defendants’ reply (docket no. 91). After
careful consideration, Defendants’ motion is DENIED.
BACKGROUND
This lawsuit is brought under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq., and the Texas Debt Collection Practices Act (“TDCA”), TEX. FIN. CODE § 392.001
et seq. Docket no. 1. Plaintiffs Jeffrey Taggatz (“Taggatz”) and Liza Kranz (“Kranz”), on behalf
of themselves and all similarly situated, filed suit on February 19, 2019, complaining of the debt
collection practices of Defendants1 in 2017 and 2018.
In December 2013, Defendants obtained a judgment against Kranz on a consumer debt in
the County Court at Law in Bexar County. Id. at 8. On October 12, 2017, Defendants attempted to

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Defendants initially included Midland Credit Management, Inc.; Asset Acceptance, LLC; Encore
Capital Group, Inc; a group of six “lawyer defendants”; and John and Jane Does 1–100. The Doe defendants
are those persons or business entities who “conspired with, engaged in, and oversaw the violative policies
and procedures” used by the named Defendants. On March 20, 2020, the parties filed a stipulation of
dismissal as to the lawyer defendants. Docket no. 74.

collect that debt from Kranz by mailing her a “Subpoena Letter.” Id.; see docket no. 1-1 (titled
“SUBPOENA FOR ORAL DEPOSITION AS AID TO ENFORCEMENT OF EXECUTION”).2
The header of each letter is styled as a typical case caption including the parties’ names, a cause
number, and the phrase “IN THE COUNTY COURT AT LAW NO. 3, BEXAR COUNTY,
TEXAS.” Id. They “commanded” a “Sheriff or constable of the State of Texas or other person
authorized to serve and execute subpoenas” to summon Kranz to appear at a specific location in
San Antonio at which Defendants would orally depose her “as an aid of enforcement of execution.”
Id. The letter warned that “[f]ailure by any person without adequate excuse to obey a subpoena
served on that person may be deemed a contempt of the court from which the subpoena is
issued…and may be punished by fine or confinement or both.” Id. at 3. The letters indicate that
they were “issued at the request of [Defendant Asset Acceptance]” and are signed by the six
“lawyer defendants.” Id. at 3. Plaintiffs allege, however, that the subpoena letters “were drafted,
authorized, prepared, and sent by non-attorney debt collectors with no meaningful attorney review
or involvement.” Id. at 11.
Plaintiffs allege the statements contained in these letters are false and were created by a
template Defendants used to mail similarly false letters to hundreds of others in Texas. Docket no.
1 at 9. Specifically, Plaintiffs allege that (1) the statement that a Texas court would hold the
recipient “in contempt” was false; (2) the statement that the recipient may be punished by fine or
confinement was false; and (3) Defendants never requested a person authorized to serve and
execute subpoenas to serve the subpoenas (or any documents) in this case, so the subpoena’s
reference “commanding” a “Sheriff or constable” to serve the letter was false. Id. at 10. Further,
Plaintiffs allege that these subpoena letters were sent via first-class U.S. Mail from Troy,

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The same letter was sent to Plaintiff Taggatz. See docket no. 1-2. Plaintiffs believe this letter was
created by merging information specific to a debt with a template. Docket no. 1 at 9.

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Michigan, an improper method of service of a subpoena under the Texas Rules of Civil Procedure.
Id. at 11 (citing TEX. R. CIV. P. 176.5). Plaintiffs argue that because Defendants did not properly
serve the subpoena letters, the threat of contempt in those letters was false, and because the letters
falsely appeared to be valid court documents issued by an officer of the Texas courts, the letters
were misleading to the “least sophisticated consumer.” Id. Between the allegedly false or
misleading statements and the improper service of the letters, Plaintiffs argue that Defendants had
neither the intent nor the ability to enforce the threats contained in those letters, thereby violating
§ 1692e(5) which forbids debt collectors from making a “threat to take any action…that is not
intended to be taken.” Id.
Weeks after Plaintiffs received their subpoena letters, Defendants allegedly sent follow-up
letters to Plaintiffs. Id. at 12; see also docket nos. 1-3, 1-4. Plaintiffs claim that these follow-up
letters falsely implied that the original subpoena letters had the legal force of a proper subpoena.
Id. at 13; see also docket no. 1-4 at 1 (“We recently sent you a subpoena which requires you to
appear in-person to provide your sworn testimony at a deposition….”). As with the initial subpoena
letters, Plaintiffs allege that the letters were prepared and sent by non-attorney debt collectors with
no meaningful attorney review or involvement. Docket no. 1 at 13.
The follow-up letters also included a “Financial Disclosure Form” that Plaintiffs could
return in lieu of attending the scheduled deposition. Id. That disclosure form noted that its purpose
is to tell the “judgment creditor” what money or property might be exempt from the creditors’
judgment. Id. at 3. Plaintiffs allege that this Financial Disclosure Form “is not a recognized or
permissible form of discovery” in Texas. Docket no. 1 at 13.
At the named deposition date, Plaintiffs allege that, on information and belief , one or more
lawyer defendants was present at a rented office space in San Antonio. Id. at 14. But, Plaintiffs

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assert, these lawyers did not take the promised deposition (nor did they intend to), and none of the
letter recipients “was allowed or permitted to provide ‘sworn testimony.’” Id. Instead, Defendants
handed the recipients the same “Financial Disclosure Form” that was attached to the follow-up
letter. Id. Many “frightened consumers” thereafter filled out the forms and entered into payment
agreements. Id. Plaintiffs Taggatz and Kranz, however, did not appear as commanded; they allege
that “Defendants took no action to enforce their threat of pursuing ‘contempt’ by a Texas court or
obtaining ‘punish[ment] by fines or confinement” against either of them, or any other letter
recipient who failed to personally appear as required in the subpoena letter. Id. at 15.
On February 1, 2018, Plaintiffs allege that Defendants served Plaintiff Kranz with an
“Application for Appointment of Receiver After Judgment” which sought turnover relief. Id. at
15; see also docket no. 1-5. The motion explains that Defendants had made a “good faith effort to
collect the judgment” but had been unsuccessful. Specifically, the motion references postjudgment discovery requests to discover the nature and extent of Plaintiff Kranz’s assets, as well
as unsuccessful attempts to contact Plaintiff Kranz. Docket no. 1-5 at 4.3 An attached affidavit
explains those efforts, though it does not reference the subpoena letter or the follow-up letter. See
id. at 6. Instead, it describes Defendant as having “mailed post-judgment discovery to [Plaintiff
Kranz] by regular first class mail to determine if [Plaintiff Kranz] possesses any property subject
to execution sufficient to satisfy the judgment. [Plaintiff Kranz] was advised to respond to
discovery within 30 days of its receipt.” Id. Plaintiffs allege that “Defendants had no legal basis to
obtain the relief sought in their Turnover Motion” and that Defendants have used the same template

Plaintiffs’ complaint does not allege this separate discovery request; however, attached to the
turnover motion is a letter sent by Midland Credit Management to Plaintiff Kranz on August 3, 2016, over
a year before Plaintiff Kranz alleges that the subpoena letter was sent to her. The letter includes the Financial
Disclosure Form and says that if Plaintiff Kranz does not provide the requested form within 30 days, “we
may issue a subpoena” that “would require you to make a personal appearance to testify to the questions
outlined in the form.” Docket no. 1-5 at 7.
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“as leverage against Texas consumers to collect debts and successfully coerce payments from
Texas consumers by threatening to obtain relief from Texas courts to which Defendants are not
legally entitled.” Docket no. 1 at 15–16. Further, Plaintiffs allege that the motion falsely stated that
Defendants had “good faith to believe Kranz owned ‘non-exempt property rights to present and
future property, such as bank accounts or real property.’” Id. at 15.
A hearing was set for the turnover motion on February 16, 2018. Id. at 16. Plaintiff Kranz
alleges that Defendants neither appeared nor had the intention of appearing for the hearing, which
she attended with counsel. Id. At that hearing, the judge denied the turnover motion. Id.; see also
docket no. 1-6 (“Order Denying Plaintiff’s Application for Appointment of Receiver After
Judgment”). Plaintiffs allege that the presiding judge similarly denied the same turnover motions
filed against other Texas consumers. Docket no. 1 at 16.
In total, Plaintiffs brought thirteen claims under the FDCPA, fourteen claims under the
TDCA, and a tort claim for unreasonable debt collection. Docket no. 1 at 19–25. Plaintiffs Taggatz
and Kratz defined the class as those who received the same subpoena and follow-up letters. Id. at
17. Plaintiffs alleged that there were at least 600 members of the class. Id. at 18. The complaint
defines the class as:
Each natural person to whom any Defendant mailed a letter or notice to a Texas
address during the Class Period which either: (1) appeared to compel the
addressee’s appearance at a deposition under threat of contempt for failure to
appear including, but not limited to, letters substantially the same as Exhibits 1, 2,
3, or 4 to the Complaint [the subpoena and follow-up letters]; or (2) sought an
Application for Appointment of Receiver After Judgment substantially the same as
Exhibit 5 [the turnover motion].
Docket no. 1 at 17.
Plaintiffs allege that they “have incurred actual damages in the form of unnecessary
expense and time, and [have] suffered emotion [sic] distress and upset” because of Defendants’

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letters (the subpoena letter and follow-up letter). Id. at 16. Additionally, Plaintiff Kranz alleges she
incurred additional damages due to the turnover motion, including the expense of attending the
hearing. Id. Plaintiffs alleged that “[t]he conduct of Defendants invaded the rights of Plaintiff
which are protected by the FDCPA, the invasion of which caused an injury-in-fact.” Id. at 21.
On November 27, 2018, this Court granted Defendants’ motion to compel arbitration and
dismiss claims with respect to Plaintiff Taggatz. Docket no. 59. Taggatz’s individual claims were
ordered to arbitration, and his class claims were dismissed. Id. at 13. The case remained open
pending resolution of Plaintiff Kranz’s (hereinafter, “Plaintiff”) claims. On November 25, 2019,
the Court granted the parties’ joint motion for referral to mediation (docket no. 65), which was
conducted in two rounds in front of Magistrate Judge Elizabeth Chestney on December 5, 2019
and January 9, 2020. Mediation was unsuccessful. Docket no. 70. After that failed mediation,
Plaintiff filed a motion to voluntarily dismiss without prejudice. Docket no. 73. In that motion, she
sought an order, on behalf of herself and all others similarly situated, dismissing this action without
prejudice. Further, she sought for the Court to toll the limitations period “so as to permit [Kranz]
to litigate her claims in an action she will commence in a Texas state court.” Id. at 1. Plaintiff filed
the motion to dismiss, in part, because Defendants “refuse to abandon all standing challenges,”
and “[i]nstead of litigating standing, Plaintiff seeks to proceed to the merits by bringing her claims
in a Texas state court where standing is not limited by the constraints imposed on a federal court
under Article III….” Id. at 2.4

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On April 4, 2020, Defendants filed a motion for judgment on the pleadings. Docket no. 79.
Plaintiffs thereafter filed a motion seeking for the Court to stay that motion until the Court ruled on
Plaintiff’s motion for voluntary dismissal. Docket no. 81. The Court agreed with Plaintiff and stayed
Defendants’ motion for judgment on the pleadings pending resolution of both the motion for voluntary
dismissal and the expected challenge to standing that came once that voluntary dismissal was either
withdrawn or denied. Docket no. 82.

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On May 8, 2020, the Court conditionally granted the motion to dismiss. Docket no. 84. The
Court found that the balance of factors to consider under Fed. R. Civ. P. 41(a)(2) counseled in
favor of granting Plaintiff’s motion for voluntary dismissal but found that such dismissal should
be with prejudice. Id. at 5. The Court found that Defendants faced a “cognizable legal prejudice”
with Plaintiff’s motion filed only two months before trial was scheduled to begin, and where
Defendants had already expended significant costs in litigating the case. Id. at 5–6. The Court
further found that Plaintiff had not provided an adequate justification for the dismissal, as
Defendants’ “refus[al] to abandon all standing challenges” was insufficient given that Article III
standing is a constitutional limitation that is not subject to waiver. Id. at 6. Accordingly, the Court
found it appropriate to grant the motion to dismiss—as the Court must “freely do”—but found that
doing so with prejudice was necessary to adequately cure the prejudice to and protect the interests
of Defendants. Id. at 7. The Court nonetheless gave Plaintiff the opportunity to retract her motion
rather than accept the dismissal with prejudice¸ id. at 8, which Plaintiff did on May 11. Docket no.
85. Thereafter, Defendants brought the present motion to dismiss for lack of jurisdiction, raising
the expected challenge to standing. Docket no. 86.
DISCUSSION
I.

Standard of Review
Defendants move to dismiss for lack of jurisdiction pursuant to Rule 12(b)(1) based on a

purported lack of Article III standing. The Court must dismiss a cause for lack of subject matter
jurisdiction “when the court lacks the statutory or constitutional power to adjudicate the case.” See
Home Builders Ass’n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998).
A motion to dismiss for lack of Article III standing is properly considered under Rule 12(b)(1).
Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 795 n.2 (5th Cir. 2011). A motion to

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dismiss for lack of jurisdiction under 12(b)(1) may be decided on: (1) the complaint alone; (2) the
complaint supplemented by undisputed evidence in the record; or (3) the complaint supplemented
by undisputed facts, plus the Court’s resolution of disputed facts. Freeman v. United States, 556
F.3d 326, 334 (5th Cir. 2009). Unlike a 12(b)(6) motion, the district court is empowered to consider
matters outside the Complaint and matters of fact that may be in dispute. Ramming v. United States,
281 F.3d 158, 161 (5th Cir. 2001). The party asserting jurisdiction—Plaintiff—bears the burden
of proving that jurisdiction exists. Id.
II.

Application
Defendants argue that the Court should dismiss Plaintiff’s individual claims because she

lacks standing.5 They next argue that the class claims should be dismissed because Plaintiff as the
class representative lacks standing or, alternatively, because the unnamed class members
themselves lack standing. The Court will consider individual and class standing in turn.
A. Plaintiff Kranz’s Individual Standing
Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994). The standing doctrine concerns who may properly bring a suit in federal
court; the “irreducible constitutional minimum” of such standing contains three elements. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560 (1992). These elements are: (1) an injury in fact that is

Defendants’ motion argues that Plaintiff lacks standing for her FDCPA and TDCA claims. As to
the unreasonable debt collection tort, Defendants raise that claim solely in a footnote in which they argue
that the claim “is a non-starter” because post-judgment discovery “obviously does not constitute ‘malicious
harassment with the intention of inflicting mental anguish or physical harm.’” See docket no. 87 at 10, note
1. This is not a standing challenge; rather this is a 12(b)(6)-type argument—that Plaintiff fails to meet the
“high threshold” she must satisfy for a claim for unreasonable debt collection. But this is not a 12(b)(6)
motion, and accordingly, Plaintiff’s standing with respect to the debt collection tort is not challenged in
Defendants’ motion, and the merits of the claim will be analyzed under Defendants’ motion for judgment
on the pleadings, where Defendants make—verbatim—the same argument they do in the instant motion to
dismiss. See docket no. 79 at 3; see Hanson v. Veterans Admin., 800 F.2d 1381, 1385 (5th Cir. 1986) (“It
is inappropriate for the court to focus on the merits of the case when considering the issue of standing.”).
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(a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) a
causal connection between the injury and the conduct complained of; and (3) the likelihood that a
favorable decision will redress the injury. Croft v. Gov. of Tex., 562 F.3d 735, 745 (5th Cir. 2009)
(citing Lujan, 504 U.S. at 560–61). “The plaintiff, as the party invoking federal jurisdiction, bears
the burden of establishing these three elements.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547
(2016).
i. Injury-in-Fact
To establish the first element of standing, injury-in-fact, “a plaintiff must show that he or
she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and
‘actual or imminent, not conjectural or hypothetical.’” Id. at 1548 (quoting Lujan, 504 U.S. at 560).
The mere “violation of a procedural right granted by statute can be sufficient in some
circumstances to constitute injury in fact,” id. at 1548–49, but “deprivation of a procedural right
without some concrete interest that is affected by the deprivation…is insufficient to create Article
III standing.” Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009); see also Spokeo, 136 S.
Ct. at 1549 (“[Plaintiff] could not, for example, allege a bare procedural violation, divorced from
any concrete harm, and satisfy the injury-in-fact requirement of Article III.”).
The distinction, then, between a procedural and substantive violation is paramount.
Landrum v. Blackbird Enters., LLC, 214 F. Supp. 3d 566, 571 (S.D. Tex. 2016) (“Whether a
statutorily created right confers standing turns on whether the right is substantive or merely
procedural.”). Defendants here argue that Plaintiff has merely alleged a procedural violation and
that the alleged violations here “do not create any real risk of harm—that is, abusive debt collection
practices—that [the] debt collection laws at issue were meant to prevent.” Docket no. 87 at 13
(citing Buchholz v. Meyer Njus Tanick, PA, 946 F.3d 855 (6th Cir. 2020)). Defendants argue that

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this is a “no harm no foul” scenario, focusing on Plaintiff’s allegations that the subpoena was
improperly served in violation of the Texas Rules of Civil Procedure. Id. at 14. But Plaintiff’s
allegation that the subpoenas were procedurally improper does not transform her claim into a claim
for a procedural violation. On the contrary, Plaintiff alleges a substantive claim under the FDCPA;
that is, she alleges that Defendants’ letters were harassing and abusive (15 U.S.C. § 1692d) and
were false or misleading (§ 1692e(2)-(13)). Plaintiff alleges that the letters were false or
misleading, in part, because the subpoenas were not sent in accordance with Texas procedural
rules. But that does not make Plaintiff’s FDCPA claim a procedural claim. Her claim is a
substantive one—the letters were false or misleading, in part, because they were not procedurally
proper. See docket no. 89 at 18 (“The state [procedural] law is not the basis for the FDCPA
violation. Instead, state law helps to explain why Defendants’ statements were false, deceptive, or
misleading.”).
Nor does Plaintiff merely allege a procedural defect that rendered the communications
misleading; that is to say, her claim is not limited to the procedural violations in the service of the
subpoena. She alleges further substantive falsehoods contained within that subpoena, the followup letter, and the receiver motion. For instance, the subpoena was allegedly false addressed “TO:
Any Sheriff or constable of the State of Texas…” when, in reality, Defendants never requested
any such official to serve and execute the subpoenas. Docket no. 1 at 10. Moreover, Plaintiff
alleges the letters are false in that they order the recipient to appear for an “oral deposition” when,
in reality, Defendants had no intention of taking a deposition or “sworn oral testimony” as the
previous communications stated. Id. at 13. She further argues that Defendants threatened to take
legal action when they had no intention to do so. Id. Finally, she alleges the turnover motion falsely

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states that Defendants had “good faith belief” that Plaintiff owned non-exempt property subject to
collection. Id. at 15.
Her claim, therefore, is of a violation that created the risk of harm that the FDCPA was
intended to prevent: protecting consumers from false, misleading, or unfair debt collection
communications. See Hamilton v. United Healthcare of La., Inc., 310 F.3d 385, 392 (5th Cir. 2002)
(“Congress, through the FDCPA, has legislatively expressed a strong public policy favoring
dishonest, abusive, and unfair consumer debt collection practices….”); see also Guerrero v. GC
Servs. Ltd. P’ship, No. CV 15-7449, 2017 WL 1133358, at *10 (E.D.N.Y. Mar. 23, 2017) (“[T]he
majority of post-Spokeo decisions which have analyzed standing within the context of the FDCPA
have determined that, unlike the FCRA section at issue in Spokeo, which contains only procedural
requirements, the FDCPA creates a substantive right, the violation of which would itself give rise
to a concrete injury.”); see also Ghanta v. Immediate Credit Recovery Inc., No. 3:16-cv-573-O,
2017 WL 1423597, at *4 (N.D. Tex. Apr. 18, 2017) (“In evaluating FDCPA claims post-Spokeo,
courts have found that an alleged FDCPA violation is sufficient to confer standing because it
establishes the consumer suffered the type of harm Congress intended to prevent—abusive debt
collection practices.”).6 Defendants’ argument—that Plaintiff’s claimed injury-in-fact is that she

The same holds true for Plaintiff’s standing under the TDCA. The TDCA provides a state law
remedy for wrongful debt collection actions, including improper threats of arrest or filing of criminal
charges without proper court proceedings (TEX. FIN. CODE § 392.301(a)(5)-(6)), the threat that nonpayment
will result in taking property without proper court proceedings (id. § 392.301(a)(8)); falsely representing a
consumer’s status in a judicial proceeding (id.), using a communication that falsely represents to be a courtapproved document ( id. § 392.304(a)(10)); and generally the use of false representations or deceptive
means to collect a debt (id. § 392.304(a)(19)). Plaintiff alleges that Defendant violated these various
substantive provisions.
Under the TDCA, “[a] person may sue for: actual damages sustained as a result of a violation of
this chapter.” Id. § 392.403(a)(2). And according to the Fifth Circuit, “persons who have sustained actual
damages from a [TDCA] violation have standing to sue.” McCaig v. Wells Fargo Bank (Tex.), N.A., 788
F.3d 463, 473 (5th Cir. 2015). Actual damages sufficient to allege TDCPA standing include the “loss of
money, time, and emotional distress” which Plaintiff here alleges. Smith, No. 3:18-CV-2449-D, 2019 WL
201839, at *4 (N.D. Tex. Jan. 15, 2019); docket no. 1 at ¶ 111 (alleging actual damages of “unnecessary
expense, time, and…emotional distress”). Plaintiff, therefore, has standing to bring her TDCA claims. See
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would be required to pay a court-ordered judgment and that such an injury is not what the debt
collections laws are intended to prevent—is misguided because Plaintiff’s alleged injury is not that
she would be forced to pay her judgment; rather, her alleged injury is that she received false,
misleading, and deceptive debt collection communications, and that is precisely what the debt
collection laws are, in part, intended to prevent. See Long v. Fenton & McGarvey Law Firm,
P.S.C., 223 F. Supp. 3d 773, 777 (S.D. Ind. 2016) (“Plaintiff alleges that she received deficient
and misleading information…which is a harm defined and made cognizable by FDCPA. Because
the alleged injury is a defined and cognizable harm under the FDCPA, it is more than a bare
procedural violation of the statute.”); Reed v. Receivable Recovery Servs., LLC, No. 16-12666,
2017 WL 1399597, at *6 (E.D. La. Aug. 28, 2017) (“[W]here…the plaintiff alleges that he has
been victimized by harassment and false or misleading debt collection communications, he seeks
to vindicate his substantive right to be free from debt collector abuse, which sufficiently alleges a
concrete and particularized injury in fact.”) (emphasis added).
Even to the extent Plaintiff’s claims may be considered procedural—such as the alleged
failure to conduct “meaningful attorney review” of the letters—the Court finds that this is one of
the circumstances identified in Spokeo in which “the violation of a procedural right granted by
statute [is] sufficient…to constitute injury in fact.” Spokeo, 136 S. Ct. at 1549. Since Spokeo,
courts have routinely found that FDCPA violations—including procedural violations—are
sufficient to confer standing, even with no additional harm alleged aside from the statutory
violation. Indeed, “[c]ourts across the country, including in the Fifth Circuit, have considered
whether a violation of the FDCPA itself confers standing on a plaintiff, and they have answered
that question in the affirmative.” Smith v. Moss Law Firm, P.C., No. 3:18-CV-2449-D, 2020 WL

Ozmun v. Portfolio Recovery Associates, LLC, No. A-16-CA-940-SS, 2017 WL 3140660, at *6 (W.D. Tex.
July 24, 2017) (finding TDCA standing because mental anguish is a form of actual damages).

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584617, at *4 (N.D. Tex. Feb. 6, 2020) (internal quotations omitted). In Sayles, the Fifth Circuit
affirmed a district court holding that the plaintiff had standing to bring an FDCPA claim where the
defendant’s alleged violations exposed the plaintiff to a risk of harm protected by the FDCPA.
Sayles v. Advanced Recovery Sys., Inc., 865 F.3d 246, 250 (5th Cir. 2017); see also Tourgeman v.
Collins Fin. Servs. Inc., 755 F.3d 1109, 1116 (9th Cir. 2014) (“[T]he violation of [the] right not to
be the target of misleading debt collection communications…constitutes a[n] injury under Article
III.”).7; Busby v. Vacation Resorts Int’l, No. H-18-4570, 2019 WL 669641, at *5 (S.D. Tex. Feb.
19, 2019) (“Most district courts in the Fifth Circuit have denied motions to dismiss based on
insufficient allegations of injury in FDCPA cases.”); Thomas v. John A. Youderian Jr., LLC, 232
F. Supp. 3d 656, 671 (D.N.J. 2017) (“Deprivation of the right to be free of false or deceptive
collection information, with the attend risk of economic injury, is an interest recognized by the
[FDCPA], and one reasonably rooted in the traditions of the common law.”).8
Thus, even to the extent Plaintiff’s allegations are mere procedural violations, the violation
of the FDCPA in this case created the real risk of harm to Plaintiff’s right to be free from abusive
debt collection practices, such as false, deceptive, or misleading representations, the very harm
Congress sought to avoid through enacting the FDCPA. Hamilton, 310 F.3d at 392. This is
particularly true where the communications in this case contained allegedly false threats of fine or
imprisonment for failure to comply with the purported subpoena, threats which Plaintiff alleges

This Court, too, has previously found that a violation of the FDCPA which creates a “real risk of
harm” is sufficient to constitute standing. See Hackler v. Tolteca Enters., Inc., No. SA-18-CV-911-XR,
2019 WL 7759523, at *2 (W.D. Tex. Sept. 9, 2019).
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Circuit courts have upheld the district courts’ refusal to dismiss on standing challenges in the postSpokeo context. See, e.g. Sayles, 865 F.3d at 250; Papetti v. Does 1-25, 691 F. App’x 24, 26 (2d Cir. 2017);
Church v. Accretive Health, Inc., 654 F. App’x 990, 995 (11th Cir. 2016) (“[The plaintiff] has sufficiently
alleged that she has sustained a concrete—i.e., ‘real’—injury because she did not receive the allegedly
required [FDCPA] disclosures.”); Ben-Davies v. Blibaum & Assocs., 695 F. App’x 674, 676 (4th Cir. 2017)
(finding standing where alleged FDCPA violations led to “emotional distress, anger, and frustration”).
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caused her “emotional distress and upset” as well as the loss of time and money—and threats that,
if true, would squarely violate the FDCPA’s prohibition on “representation[s]…that nonpayment
of any debt will result in the arrest or imprisonment of any person…unless…the debt collector or
creditor intends to take such action.” Docket no. 1-1 at 3. See Buchholz, 946 F.3d at 864
(contrasting the lack of injury in that case to scenarios where, for example, “the debt collector
threatened the consumer with arrest and criminal prosecution unless the consumer paid
promptly”); Ozmun v. Portfolio

Recovery Assocs., LLC, No. A-16-CA-940-SS, 2017 WL

3140660, at *5–6 (W.D. Tex. July 24, 2017) (finding standing from violation of same FDCPA
provisions at issue here); Hsu v. Enhanced Recovery Co., LLC, No. 1:17-CV-128-RP, 2017 WL
4310643 (W.D. Tex. July 24, 2017) (finding that the plaintiff did not need to allege an additional
harm beyond merely alleging an FDCPA violation).9 Accordingly, the Court finds that Plaintiff
has established injury-in-fact because the FDCPA provides the right to receive truthful, nonmisleading communications from a debt collector, and Plaintiff alleges that Defendants violated
that right, a practice clearly prohibited under the FDCPA.
ii. Traceability
The second element of Article III standing—traceability—requires there be a “causal
connection between the injury and the conduct complained of—the injury has to be fairly traceable
to the challenged action of the defendant, and not the result of the independent action of some third

Some courts have also found that allegations of emotional distress and anxiety, like Plaintiff’s
allegations here, themselves constitute sufficient “additional” injury sufficient to confer standing. See, e.g.
Smith, 2020 WL 584617, at *5 (“Alternatively, even if [the defendant] is correct that, under Sayles , [the
plaintiff] is required to show, in addition to the FDCPA violation itself, that he suffered a “real risk of
harm,” [the plaintiff] has met that burden” by producing evidence of anxiety, worry, and attendant legal
costs. See also Ben-Davies, 695 F. App’x at 676 (holding that emotional distress is a concrete injury
sufficient to support standing in an FDCPA case); see also Edeh v. Midland Credit Mgmt., Inc., 748 F.
Supp. 2d 1030, 1041 (D. Minn. 2010) (“A consumer who has suffered emotional distress has suffered
[actionable damage under the FDCPA] even if the emotional distress was not severe.”). Thus, even to the
extent Plaintiff does need to prove an injury in addition to the violation of the FDCPA, she has done so.
9

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party not before the court.” Lujan, 504 U.S. at 560. The traceability, or causation, element “asks
whether the line of causation between a plaintiff’s injury and the defendants’ alleged wrongdoing
is ‘too attenuated.’” Hollis v. Lynch, 121 F. Supp. 3d 617, 628 (N.D. Tex. 2015) (quoting Hanson,
800 F.2d at 1385). The standard for establishing such traceability for standing purposes is less
demanding than the standard for proving tort causation. Pub. Interest Research Grp. of N.J., Inc.
v. Powell Duffryn Terminals Inc., c, 72 (3d Cir. 1990).
Defendants argue that Plaintiff cannot establish traceability because she, not Defendants,
caused the injury in her alleged non-payment of the underlying judgment. Docket no. 87 at 16
(arguing that Plaintiff’s injuries are “self-inflicted” and “not traceable to anyone but her”). In
support, Defendants cite to a recent Sixth Circuit case which found a lack of traceability in an
FDCPA case where the plaintiff’s failure to pay his debt was the “cause” of his alleged injury,
anxiety. See Buchholz, 946 F.3d at 867 (“The cause of that anxiety falls squarely on Buchholz
because he chose not to pay his debts—and now fears the consequences of his delinquency.”).
Plaintiff responds that her injuries did not flow from the underlying debt but rather “directly flowed
from Defendants’ misrepresentations” that Plaintiff could face contempt, fine, or jail time for
failure to comply with the purported subpoena. Docket no. 89 at 8. Plaintiff’s injuries “were not
self-inflicted but flowed from Defendants’ false statements.” Id. at 9.
The Court finds Defendants’ arguments here difficult to square with the existence of the
FDCPA as a remedial statute. If a plaintiff lacks standing because he or she is at fault for the
underlying debt, then rare indeed would be the case in which a plaintiff would have standing under
the statute, save for certain cases in which the defendant erroneously sends a collections letter to a
plaintiff who has no such underlying debt. Such a reading of the statute is hard to reconcile with
the broad remedial purpose of the FDCPA and the provisions which prohibit far more than merely

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sending letters to consumers who do not actually have any debt. See Obduskey v. McCarthy &
Holthus, LLP, 139 S. Ct. 1029, 1041 (2019) (Sotomayor, J., concurring) (describing the “broad,
consumer-protective purposes” of the FDCPA); see also Daugherty v. Convergent Outsourcing,
Inc., 836 F.3d 507, 511 (5th Cir. 2016) (explaining that because “Congress clearly intended the
FDCPA to have a broad remedial scope,” it “should therefore be construed broadly and in favor
of the consumer.”). Accepting Defendant’s strict understanding of traceability would, for instance,
render meaningless the prohibition on collecting an amount not “expressly authorized by the
agreement creating the debt.” 15 U.S.C. § 1692f(1). Such a prohibition assumes the preexistence
of a valid underlying debt, a debt which—by definition—arises due to an underlying obligation
owed by the debtor-plaintiff. See id. § 1692a(5) (defining “debt”). The prohibition in § 1692f(1)
would be meaningless if the very existence of that valid debt simultaneously provided a
precondition to a cause of action while also prohibiting the debtor-plaintiff from ever establishing
standing because she “caused” the debt to arise. The “broad remedial scope” of the FDCPA does
not counsel in favor of adopting such a constricted understanding of traceability, particularly where
the burden of establishing traceability is “relatively modest.” Bennett v. Spear, 520 U.S. 154, 171
(1997).
Further, Defendants’ reliance on Buchholz is misguided. An analysis of traceability
requires there be a connection “between the plaintiff’s injury and the complained-of conduct of
the defendant.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 103 (1998). Some courts,
including the Sixth Circuit in Buchholz, explain that, although the plaintiff’s burden in establishing
such traceability is indeed “relatively modest,” there are still “cases when a plaintiff will fail to
meet the traceability standard, such as when an injury is “so completely due to the [plaintiff’s] own
fault as to break the causal chain.” Buchholz, 946 F.3d at 866 (citing Petro-Chem Processing, Inc.

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v. E.P.A., 866 F.2d 433, 438 (D.C. Cir. 1989)). But in Buchholz, “the anxiety [the plaintiff] alleges
is not because of anything [the defendant] wrote.” Id. Such is not the case here, where the
complained-of conduct is entirely what Defendants wrote: the alleged misrepresentations and
falsehoods in Defendants’ various collection letters, including the purportedly false threat of
imprisonment for failure to comply with the subpoena. Plaintiff does not complain that she might
be forced to pay the debt—a debt that is clearly traceable to her—but rather, Plaintiff complains
that Defendants’ methods of seeking such collection violate the debt collection statutes. The
existence of Plaintiff’s debt did not cause Defendants to send allegedly false and misleading letters;
Defendants’ own conduct did. Therefore, Plaintiff has established traceability.10
B. Class Standing
Defendants next argue that Plaintiff’s class claims should be stricken for lack of standing.
Docket no. 87 at 16. Defendants argue that the proposed class lacks standing because a “class
cannot be certified if members of the putative class would not have had standing to individually
sue the defendants.” Docket no. 87 at 18.11 That is to say, if the class were to be certified under
Rule 23, that Rule “does not—and indeed cannot—obviate constitutional standing requirements,”
thereby depriving Defendants of a defense—standing—that they would otherwise have. Id. (citing
28 U.S.C. § 2072(a), or the Rules Enabling Act, which states that the Federal Rules of Civil
Procedure “shall not abridge, enlarge, or modify any substantive right”).12

The parties do not dispute whether Plaintiff’s injuries can be redressed by a favorable decision, the
third element of standing. That is because “this Court could provide Plaintiff with the relief she desires by
ordering Defendant[s] to pay her the requested statutory damages, a remedy which is available to her
pursuant to § 1692k. Therefore, it is likely that Plaintiff’s injury would be ‘redressed by a favorable
decision.’” Hackler, 2019 WL 7759523, at *2 (citing Lujan, 504 U.S. at 560).
10

11

Because the Court found that Plaintiff has individual standing, the Court does not address
Defendants’ alternative argument that the class lacks standing because its representative, Plaintiff, lacks
standing. Docket no. 87 at 17.

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A recent Fifth Circuit opinion casts doubt on the validity of Article III standing for some
FDCPA classes. See Flecha v. Medicredit, Inc., 946 F.3d 762 (5th Cir. 2020). The facts of Flecha
are similar to this case, though the procedural posture differs; there, the plaintiff brought suit over
a letter from Medicredit that the plaintiff claimed gave her the impression she would be sued to
collect the debt and that, as in this case, the letter violated the FDCPA because the defendant “in
fact never intended to sue her over the unpaid” debt. Id. at 765. The trial court, after disposing of
summary judgment motions, certified a class consisting of:
[A]ll persons in Texas from whom Medicredit attempted to collect and who
received a form collection letter from Medicredit containing these statements:
Your seriously delinquent Seton Medical Center Hays account remains
unpaid despite past requests for payment.
At this time, a determination must be made with our client as to the
disposition of your account. Your failure to cooperate in satisfying this debt
indicates voluntary resolution is doubtful. However, if it is now your desire
to clear your account, you need to promptly remit the balance in full.
Id. The defendants thereafter appealed that class certification under Rule 23(f). Id.
The Fifth Circuit reversed, finding that the plaintiff failed to meet her burden of
establishing commonality because the letters to some class members may not have been misleading
to the extent the defendant may have actually intended to sue those particular consumers. Id. at
767 (“Every member of the putative class received the same allegedly threatening letter from
Medicredit. But the FDCPA penalizes empty threats, not all threats. So the letter alone is
insufficient to certify a class.”).
The Court then, in dicta, discussed the “substantial questions of Article III standing”
presented by the putative class. Id. at 764. The Court remarked that “[o]ur court has not yet decided
whether standing must be proven for unnamed class members, in addition to the class
representative” unlike “some circuits [which] have held that ‘no class may be certified that contains
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members lacking Article III standing.’” Id. at 768 (quoting Denney v. Deutsche Bank AG, 443 F.3d
253, 264 (2d Cir. 2006)). It continued:
That is significant, because there are undoubtedly many unnamed class members
here who lack the requisite injury to establish Article III standing. After all, the
putative class sweeps in “all persons in Texas…who received a form collection
letter” from Medicredit. As a result, the putative class inevitably includes people
who received the letter, but ignored it as junk mail or otherwise gave it no
meaningful attention—and therefore lack a cognizable injury under Article III.
Id. But, the Court concluded, “we do not reach the issue” of Article III standing for the class
because there “is no need to answer the latter question [standing] if the class fails under the former
[Rule 23].” Id. at 768–69.13
Flecha does raise questions as to the eventual viability of Plaintiff’s proposed class, at least
as it is currently defined, where there well may be unnamed class members who would not have
standing. But Plaintiff has not yet sought class certification, and thus a determination as to the
standing of any such class is premature, particularly where Plaintiff may seek to redefine her
proposed class so as to avoid the issues raised in Flecha. The Supreme Court has noted that the
resolution of class certification issues is “logically antecedent to the existence of any Article III
issues.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 612 (1997); see also Ortiz v. Fibreboard
Corp., 527 U.S. 815, 831 (1999) (“Ordinarily, of course, this or any Article III court must be sure
of its own jurisdiction before getting to the merits…But the class certification issues are…logically
antecedent to Article III concerns.”). The Fifth Circuit in Flecha itself remarked that a
determination of the class representative’s standing must be addressed prior to deciding class
certification—which the Court here has done—but then notes that “if it is only the unnamed class

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Judge Oldham, in a concurrence, would have decided the standing question first. He remarked that
“we must consider unnamed class members’ standing before adjudicating the merits of their claims.”
Flecha, 946 F.3d at 771. He agreed that “countless unnamed class members lack standing” and would have
held that “that lack of standing is sufficient to decide the case.” Id. at 770.

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members who present a standing problem, then we are duty-bound to follow Amchem and Ortiz”
by deciding class certification before addressing the class members’ standing. Flecha, 946 F.3d at
769. Under those cases, “there is no need to analyze the Article III standing of the unnamed
members of a non-existent class.” Id. When Plaintiff seeks to certify a class, Defendant may then
raise its challenges to the class members’ standing based on Flecha and the arguments set forth in
this motion to dismiss.
CONCLUSION
For the foregoing reasons, Defendants’ motion to dismiss (docket no. 87) is DENIED. The
Court previously stayed Plaintiff’s deadline to respond to Defendants’ motion for judgment on the
pleadings. See docket no. 82. Plaintiffs are hereby ORDERED to respond to that motion within
fourteen (14) days of this order.
It is so ORDERED.
SIGNED this 10th day of July, 2020.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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