Gaithers v. CAB Collection Agency, Inc.

Filing 10

MEMORANDUM OPINION. Signed by District Judge Henry E. Hudson on 6/22/2017. (jsmi, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA

Richmond Division

KEGNTE GATHERS,
Plaintiff,
Civil Action No. 3:17cv261-HEH

V.

CAB COLLECTION AGENCY,
INC.,
Defendant,
MEMORANDUM OPINION

(Granting Motion to Dismiss for Lack of Jurisdiction)
THIS MATTER is before the Court on Defendant CAB Collection Agency, Inc.'s

("Defendant") Motion to Dismiss for Lack of Jurisdiction pursuant to Federal Rule of
Civil Procedure 12(b)(1). (ECF No. 6.)
On April 4,2017, Plaintiff Keonte Gathers ("Plaintiff) filed her Complaint

alleging that Defendant violated 15 U.S.C. § 1692, etseq., commonly known as the Fair
Debt Collections Practices Act ("FDCPA"). (ECF No. 1.) On April 27,2017, Defendant

filed the present Motion contending that Plaintiff failed to allege any facts sufficient to
satisfy the injury-in-fact requirement to establish Article III standing. All parties have
filed memoranda supporting their respective positions. (ECF Nos. 7, 8, 9.)
The Court will dispense with oral argument because the facts and legal contentions

are adequately presented in the materials before it, and oral argument would not
materially aid in the decisional process. E.D. Va. Local Civ. R. 7(J).

For the reasons stated herein, the Court will grant Defendant's Motion and will
dismiss Plaintiffs Complaint without prejudice.
1. BACKGROUND

Plaintiff begins her one-count Complaint by asserting that "[o]n information and
belief, on a date better known to Defendant, Defendant began collection activities on an

alleged consumerdebt from the Plaintiff." (Compl. T 7.) The Complaintnotes that this
alleged debt was incurred as a financial obligation that was primarily for personal, family
or household purposes, and that Charleston Radiologists, PA, was the original creditor.
{Id.

8, 9.) Though it is unclear when, at some point Defendant reported the debt on

Plaintiffs credit report. (Jd. H 11-)

Plaintiff sent a letter to Defendant on December 6, 2016, disputing the debt. {Id. ^

12.) Approximately two months later, on February 16,2017, Plaintiff examined her

credit report and found that Defendant had re-reported the debt, but had not listed it as
being "disputed by consumer." {Id. H13.) As a result. Plaintiff summarily alleges that
she "has been damaged" and that she "is entitled to damages in accordance with the
FDCPA." {Id

14, 17.)

However, at no point in her Complaint does Plaintiff specify how she has allegedly

been damaged.^

^Inher brief in opposition to the Motion to Dismiss, Plaintiff attempts to bolster her Complaint
by stating that she "has received a significantly lower credit score due to the failure of the
Defendant to properly update her report," that the lower credit score "gives a false and negative
picture of her credit to anyone that would pull her credit during this time period," and that
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IL LEGAL STANDARD

Structurally, our Constitution divides the Federal Government into three discrete

branches, each with specifically defined powers. As such, it is well settled that judicial
power is limited to the extent that federal courts may exercise jurisdiction only over
"cases" and "controversies." U.S. Const, art. Ill, § 2; Lujan v. Defenders of Wildlife, 504
U.S. 555, 559 (1992). Thus, subject-matter jurisdiction requires a justiciable case or
controversy within the meaning of Article III of the United States Constitution. See Allen

V. Wright, 468 U.S. 737, 750-51 (1984), abrogated on other grounds by Lexmark Int'l,
Inc. V. Static Control Components, Inc., 134 S. Ct. 1377 (2014). Standing constitutes one
component ofjusticiability. Lujan, 504 U.S. at 560. Whether a plaintiff has standing
presents a "threshold question in every federal case, determining the power of the court to
entertain the suit." Warth v. Seldin, 422 U.S. 490,498 (1975). "The objection that a

federal court lacks subject-matter jurisdiction may be raised by a party, or by a court on
its own initiative, at any stage in the litigation." Arbaugh v. Y&H Corp., 546 U.S. 500,
506 (2006) (internal citation omitted).
The Supreme Court has established that the "irreducible constitutional minimum"

of standing includes three elements: (1) an injury-in-fact; (2) a causal connection between
"[cjurrent issuers of credit to [Plaintiff].., constantly peak at her credit to determine if they
should continue to extend the current credit line or lessen the credit lines that she currently has
access to." (PL's Mem. Opp'n Mot. Dismiss 3-4, EOF No. 8.) She goes on to note "that the
lower credit score can restrict [Plaintiff] in multiple facets of her life including denial of credit,
difficulty obtaining financing for cars, and mortgages, as well as increased cost of insurance
policies." (Jd. at 4 (emphasis added).) Because the Court's analysis is confined to the facts as
pleaded in the Complaint, it cannot consider these possible credit-related injuries that Plaintiff
raises for the first time in her brief.
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the injury and the alleged misconduct; and (3) a likelihood that the injury will be
redressed by a favorable decision. Lujan, 504 U.S. at 560-61 (citations and quotation
marks omitted). Because Plaintiff seeks to invoke this Court's jurisdiction, she bears the
burden of establishing all three elements. Id. at 561. "Where, as here, a case is at the

pleading stage, the plaintiff must 'clearly ... allege facts demonstrating' each element."
Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), as revised (May 24, 2016)
(quoting Warth, 422 U.S. at 518).

In Spokeo, the Supreme Court reiterated the basic tenets of the standing doctrine.
Id, at 1547. It noted that to satisfy the injury-in-fact requirement, a plaintiff must show
"'an invasion of a legally protected interest' that is 'concrete and particularized' and

'actual and imminent, not conjectural or hypothetical.'" Id. at 1548 {citing Lujan, 504
U.S. at 560).

To satisfy the particularization requirement, the plaintiff "must allege a distinct
and palpable injury to himself" Warth, 422 U.S. at 501 (citations omitted). The injury
must "affect the plaintiff in a personal and individual way." Lujan, 504 U.S. at 560 n.l.
Claims asserting '"generalized grievance[s]' shared in substantially equal measure by all
or a large class of citizens ... normally do[ ] not warrant exercise ofjurisdiction."
Warth, 422 U.S. at 499 (citations omitted).
Standing's concreteness requirement demands that an injury be real, not abstract.
Spokeo, 136 S. Ct. at 1548. However, it is possible for an intangible harm to be

concrete.^ Id. at 1549. When determining whether such intangible harms are sufficiently
concrete to satisfy Article Ill's requirements, Congress' "judgment is ... instructive and
important." Id.

In creating statutory rights of action, "Congress may 'elevat[e] to the status of
legally cognizable injuries concrete, defacto injuries that were previously inadequate in
law.'" Id. (quoting

504 U.S at 578) (alteration in original). However, "Congress'

role in identifying and elevating intangible harms does not mean that a plaintiff
automatically satisfies the injury-in-fact requirement whenever a statute grants a person a

statutory right and purports to authorize that person to sue to vindicate that right." Id.
The Supreme Court has made clear that "Article III standing requires a concrete
injury even in the context ofa statutory violation.'^ Id. (emphasis added).

When a plaintiff alleges a statutory violation, she usually must plead an additional
injury in order to satisfy the concreteness requirement. Concreteness can certainly be

satisfied by alleging a harm—either tangible or intangible—^which has already occurred
or is continuing to occur. But concreteness can also be satisfied where the plaintiff faces
a "risk of real harm" likely to occur in the future. Id.

The Supreme Court has noted that in some circumstances, however, merely
pleading "the violation of a procedural right granted by statute" may be sufficient to

^Examples ofthese intangible injuries include libel, slander, and violations ofthe constitutional
rights to free speech and free exercise. See Spokeo, 136 S. Ct. at 1549 (citing Pleasant Grove
City v. Summum, 555 U.S. 460 (2009); Church ofLukumi Babalu Aye, Inc. v. City ofHialeah,
508 U.S. 520 (1993); Restatement (First) of Torts §§ 569, 570).
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satisfy concreteness. Id. This occurs in situationswhere the legislature has codified
causes of action with intangible harms where recovery was long permitted at common
law. Id. (citing Restatement (First) of Torts §§ 569 (libel), 570 (slander per se)

(1938); Fed. Election Comm 'n v. Akins, 524 U.S. 11, 20-25 (1998) (access to public
information); Pub. Citizen v. U.S. Dep't ofJustice, 491 U.S. 440,449 (1989) (access to

public information)). "[A] plaintiff in such a case need not allege any additional harm
beyond the one Congress has identified." Id.

However, absent this narrow exception where Congress has codified a common

law intangible injury, standingonly exists for a statutory violationwhere the plaintiff has
also alleged an additional concrete harm. For example, the Supreme Court noted

in Spokeo that a consumer reporting agency may fail to provide the statutorily required
notice to the user of consumer information, even if that information is entirely accurate.

Id. at 1550. Or, the agency might provide some wholly inaccurate, yet benign,

information, such as an incorrect zip code. Id. While both of these situations constitute
statutory violations, the "victim" has no standing because the conduct does not "cause
harm or present any material risk of harm." Id.
III. ANALYSIS

The entirety of Plaintiffs Complaint amounts to an allegation that Defendant

violated various provisions of the FDCPA by failing to list her account as "disputed by
consumer" when it reported the debt on her credit report in February 2017. {See
generally CompL) However, conspicuously absent is any allegation that Plaintiff
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suffered any actual harm from these violations. Consequently, she has failed to plead that
she suffered a sufficiently "concrete and particularized" harm that is "actual and
imminent, not conjectural or hypothetical" to confer Article III standing. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560 (1992).
Without such an allegation, the next step in the Court's inquiry is to determine

whether Plaintiff has sufficiently pleaded that she faces a "risk of real harm" that is likely
to occur in the future. Spokeo, 136 S.Ct. at 1549. Despite the fact that she made no

allegation to this effect in her Complaint, Plaintiff has attempted to bolster her position in
this regard.
Plaintiff contends that "the failure to communicate that a disputed debt is disputed
... presents a risk of harm to the consumer sufficient to create Article III standing

"

(PL's Mem. Opp'n Mot. Dismiss 11.) To support this proposition. Plaintiff cites one
published case and one unpublished case from the Northern District of Illinois—^both of
which are currently on appeal to the Seventh Circuit—^and one unpublished case from the
District of Maryland. (Id. at 6-9 (citing Bowse v. Portfolio Recovery Assocs., LLC, 218
F.Supp.3d 745 (N.D. 111. 2016); Evans v. Portfolio Recovery Assocs., No. 15C-4498,

2016 WL 6833930 (N.D. 111. Nov. 20, 2016); Allah-Mensah v. Law Office ofPatrick M.
Connelly, P.C, No. PX-16-1053, 2016 WL 6803775 (D. Md. Nov. 17,2016)).) While
these cases are informative, they are not binding on this Court, especially in light of the
Fourth Circuit's recent decision in Beck v. McDonald, 848 F.3d 262 (4th Cir. 2017).

In Beck, the court consolidated two cases involving data breaches at the Dom
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Veterans Affairs Medical Center ("Dom VAMC") in Columbia, South Carolina. Id. at

267-68. The plaintiffs alleged that both data breaches constituted violations of the
Privacy Act. Id. at 266-68. However, they did not "allege that Dom VAMC's violations
of the Privacy Act alone constitute[d] an Article III injury-in-fact." Id. at 271 n.4.

Rather, the plaintiffs asserted that they suffered a concrete injury from the future risk of
identity thefl. Id. at 266-67.

The Fourth Circuit found that the plaintiffs' speculative allegations were
"insufficient to establish a 'substantial risk' of harm" necessary to show concrete injury.

Id. at 275. Consequently, it held that plaintiffs' abstract claim of harm was inadequate to
confer standing. Id. at 276-67.

In this case, the Court concludes that Plaintiff has attempted to make similarly
speculative claims in her memorandum in opposition to the Motion to Dismiss and has
pleaded no facts in her Complaint to support any reasonable inference that she faces an
impending risk of actual harm. Thus, the Court finds that Plaintiff cannot claim standing
on this ground.

Therefore, the final step in the Court's inquiry is to determine whether the
statutory provisions Plaintiff alleges to have been violated are the type where Congress

has codified causes of action with intangible harms where recovery was long permitted at
common law. See Spokeo, 136 S. Ct. at 1549.

"In determining whether an intangible harm constitutes injury in fact, both history
and the judgment of Congress play important roles." Id. Therefore, "it is instructive to
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consider whether an alleged intangible harm has a close relationship to a harm that has
traditionally been regarded as providing a basis for a lawsuit in English or American
courts." Id. Plaintiff does not suggest "a common law analogue" for her alleged FDCPA
injury, and there seems to be "no traditional right of action in common law that is

comparable." Dreher v. Experian Info. Sol., Inc., 856 F.3d 337, 345 {4th Cir. 2017).
The Fourth Circuit's recent decision in Dreher does not alter this Court's analysis.

In Dreher, the plaintiff was associated with a delinquent credit card account listed on his
credit report under the name of "Advanta." Id. at 340. Unbeknownst to the plaintiff,

another entity, CardWorks, had acquired Advanta and decided to continue servicing
Advanta's accounts using Advanta's name. Id. at 341. As a result of CardWorks' failure

to use its own name when reporting the Advanta accounts, the plaintiff alleged that "he
suffered a cognizable 'informational injury' because he was denied 'specific information'
to which [he was] entitled under the FCRA." Id. at 345.

After determining that there was no common law analogue to Dreher's alleged
FCRA violation, the Fourth Circuit suggested that he may have nonetheless suffered a
concrete injury if "he [was] denied access to information required to be disclosed by

statute, and he 'suffer[ed], by being denied access to that information, the type of harm
Congress sought to prevent by requiring disclosure.'" Id. (quoting Friends ofAnimals v.
Jewell, 828 F.3d 989, 992 (D.C. Cir. 2016)). The court concluded, however, that the

harm which Dreher allegedly suffered was not the type which Congress sought to prevent
in enacting the FCRA. Id. at 346.

Similarly in this case, Plaintiff claims that she "has been damaged" by

Defendant's actions. (Compl.

14, 17.) But her Complaint fails to indicate that she

suffered "the type of harm Congress sought to prevent by" enacting the FDCPA. Dreher,
856 F.3d at 345. In fact, the Complaint fails to identify what Plaintiffs harm is at all.
Therefore, the Court must conclude that Plaintiffs injury is not an intangible harm
sufficient to confer standing under either Spokeo or Dreher,
IV. CONLUSION

In conclusion. Plaintiffs mere allegation of a failure to disclose the disputed status
of her debt is insufficient to confer constitutional standing because she failed to plead a

risk of harm and did not "identify either a common law analogue or a harm Congress

sought to prevent." Dreher, 856 F.3d at 346. Plaintiff is thus "left with a statutory
violation divorced from any real world effect." Id. This does not mean that Plaintiff

could never have standing to bring an action to recover for the FDCPA violations that she
alleges. But she must plead a concrete harm in order to satisfy the injury-in-fact
requirement of Article III.

Therefore, the Court will grant Defendant's Motion (ECF No. 6) and will dismiss
Plaintiffs Complaint without prejudice. (ECF No. 1.)

An appropriate Order will accompany this Memorandum Opinion.

Henry E. Hudson

DateitTunc.

United States District Judge

Richmond, Virginia
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