The Sixth Circuit recently made clear its position that
“Congress cannot override the baseline requirement[s] of Article III of the
U.S. Constitution by labeling the violation of any requirements of a statute a cognizable injury.” In Hagy
v. Demers & Adams, 2018 U.S. App. LEXIS 3710, 882 F.3d 616 (6th
Cir. 2018), a letter from a law firm advising the consumer that the creditor
would not seek recovery of the deficiency balance resulted in an FDCPA claim. The alleged violation? The letter violated
the 15 U.S.C. §1692e(11) because it did not disclose the communication was from
a debt collector.
The letter read as follows:
This letter is in follow
up to our conversation of Monday, June 28, 2010 wherein we discussed the above
referenced matter.
Pursuant to our
conversation, I informed you that we have received the executed Warranty Deed
in Lieu of Foreclosure signed by the Hagy[s]. Furthermore, you inquired as to should a deficiency
balance be realized after the sale of the collateral would Green Tree pursue
Mr. & Mrs. Hagy for the amount of the deficiency. I have been informed by
my client that in return for Mr. & Mrs. Hagy executing the Warranty Deed in
Lieu of Foreclosure Green Tree will not attempt to collect any deficiency
balance which may be due and owing after the sale of the collateral.
I believe this letter
satisfies any and all of your concerns.
Should you have any
questions with respect to this matter, please do not hesitate to contact me.
Hagy at *7-8.
As acknowledged by the consumers, the letter was accurate
and, “[f]ar from causing the Hagys any injury, tangible or intangible, the…
letter gave them peace of mind…”
Importantly, there were no allegations that the consumers suffered
actual injury or damages from the letter.
The issue on appeal was whether Congress’ creation of a
statutory injury and damages pursuant to 15 U.S.C. §1692e(11) satisfied Article
III’s requirement of an injury in fact.
The court held that it did not.
In doing so, the court refused to endorse an
“anything-hurts-so-long-as-Congress-says-it-hurts theory” of Article III and
further rejected the Eleventh Circuit’s rationale in Church v. Accretive Health, Inc.- that a bare violation of section 1692e(11)
is sufficient to create standing. Looking
to the legislative record and the FDCPA, the court found no finding by Congress
that the failure to disclose the communication was from a debt collector always creates injury. The court concluded that “[a]lthough Congress
may ‘elevate’ harms that ‘exist’ in the real world before Congress recognized
them to actionable legal status, it may not simply enact an injury into
existence, using something that is not remotely harmful into something that
is.” Hagy
at *11. The court’s opinion
emphasizes the limitations of statutory violations and the importance for
defense counsel to continue to analyze bare statutory violations against the
Article III minimum standing requirements.
At a minimum, the court’s opinion should provide debt collectors with some
solace against the absurd.
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