New York District Court Dismisses Six FDCPA Class Action Suits for Lack of Article III standing

New York District Court Dismisses Six FDCPA Class Action Suits for Lack of Article III standing

On July 23, 2021, the United States District Court Eastern District of New York dismissed six class action suits on the ground of lack of Article III standing. The six class action suits alleged that the debt collectors violated the FDCPA by sharing the collected data about plaintiffs’ debts with the mailing vendors. In re FDCPA Mailing Vendor Cases, Civil Action Nos. 21-2312, 21-2587, 21-3002, 21-3383, 21-3434 & 21-3462.

In the class action suits, the plaintiffs referred the Eleventh Circuit’s ruling in Hunstein v. Preferred Collection and Management Services, No. 19-14434 and alleged that sharing of debt information by a debt collector to its letter vendor could violate the FDCPA’s limits on third party communicators.

However, Judge Gary R. Brown did not find any merit in plaintiffs’ class action suits. Judge Brown first criticized lawyers representing the plaintiffs for filing “legions of FDCPA cases that may have little to do with the purpose of the statute” Further, Judge Brown discussed the recent ruling passed by the U.S. Supreme Court in the matter of TransUnion, LLC. v. Ramirez, No. 20-297. The said ruling held that only class members who were harmed by the TransUnion’s FCRA violation had Article III standing to seek damages from the company. The Supreme Court found that only class member who had demonstrated concrete harm sufficient to have Article III standing were the ones whose credit reports having incorrect OFAC alerts had been provided to the third parties. Therefore, the plaintiffs whose information was not given to a third party by TransUnion, did not have an Article III standing.

Judge Brown rejected plaintiffs’ attempt to prove concrete harm through asserting that they suffered a material risk of future harm. He was of the opinion that the Supreme Court in the TransUnion case emphasized that the mere risk of future harm cannot alone qualify as a concrete harm. Judge Brown concluded that the claims of future harm made by the plaintiffs vide the release of information by the mailing vendors, would not be sufficient to establish their Article III standing.

Judge Brown observed that “[i]n contrast to the spurious information at issue in TransUnion, to wit: erroneously branding class members as terrorists, the cases at issue involve debts ranging from $482.28 to as little as $25.00”  He further commented that “[i]t is one thing to falsely brand someone a drug trafficker; reporting that they failed to satisfy a modest obligation is quite another”.

Therefore, Judge Brown dismissed the six class action suits, without prejudice subject to repleading within fourteen days. The period of fourteen days was given to allow the plaintiffs to amend their complaints to allege facts establishing concrete damages. It is pertinent to note that class actions relying upon the Hunstein ruling has been filed throughout the States, in hundreds.