Monday, February 13, 2017

District Court Opinion Serves as a Reminder of the Limitations of Spokeo

A district court out of Missouri has served up a reminder as to the limitations of a motion to dismiss based upon subject matter jurisdiction.  In May v. Consumer Adjustment Co., the consumer filed an FDCPA complaint is state court alleging that the initial demand letter violated 15 U.S.C. §1692g.  May v. Consumer Adjustment Co., 2017 U.S. Dist. LEXIS 7401 (E.D. Mo. Jan. 19, 2017).  Specifically, the plaintiff alleged that defendants had failed to disclose the amount they sought to collect included accruing interest.  The plaintiff, however, failed to allege that she incurred any actual harm as a result.  Instead, Ms. May alleged only a statutory violation.  The debt collector removed the case to federal court and then proceeded to file a motion to dismiss asserting that the federal court lacked subject matter jurisdiction because the plaintiff had failed to allege a concrete injury.

In reviewing the substance of the complaint, the court agreed with the debt collector that Ms. May had failed to show a concrete injury.  While the court acknowledged that violations of the FDCPA disclosure requirements might result in concrete injuries, the plaintiff had pled none in this matter.  “[H]er only alleged injury is that Defendants failed to include in the collection letter that interest was continuing to accrue.  Such a bare procedural violation does not constitute an intangible harm that satisfies the injury-in-fact requirement.” Id. at *12.

Had that been the end of the story, it would have been good news: case dismissed.  In fact, had the case been originally filed in federal court that would have been the end of the story and the case would have been dismissed.  However, because the case had been removed from state court based upon the federal court’s jurisdiction, the court (now divested of subject matter jurisdiction) had no alternative but to remand the matter to state court. 

The case brings home a couple of key points about the Supreme Court’s decision in Spokeo v. Robins:

1.       Spokeo v. Robins makes mere statutory violations difficult to prevail upon and therefore, require more specificity in pleading statutory violations in order to satisfy the concrete injury requirement.

2.      A favorable analysis under Spokeo v. Robins divests the federal court of subject matter jurisdiction under Article III.  It, however, does not divest a state court of jurisdiction.  Defense counsel using motions to dismiss for lack of subject matter jurisdiction need to keep this in mind and be judicious in their use. A case that has been removed to federal court from state court is not a good candidate for a motion under Rule 12(b)(1) as the likely result, as seen in May, is a remand to state court.

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