Church Provides No Sanctuary: Sixth Circuit’s FDCPA Decision May Breathe New Life into TCPA Spokeo Arguments

This article originally appeared on the Consumer Financial Services Legal Update. It is republished with permission from the author.

A number of Circuit Courts of Appeal have addressed Spokeo challenges to consumer protection statutes in the 646 days (and counting) since the U.S. Supreme Court handed down Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016). Most of those decisions have given the issue of standing short shrift, leapt to conclusions or—perhaps worst of all—shown a deep and unrelenting deference to Congressional legislative power in assessing Article III limits. The result has been languid opinions and squishy legal doctrine in the arena of standing, where only precision and intellectual rigor ought to prevail.

No case better exemplifies this unfortunate era of judicial abdication than the Eleventh Circuit’s flubbed-and-yet-often-cited-unpublished-nightmare-opinion of Church v. Accretive Health, Inc., 654 Fed. Appx. 990 (11th Cir. 2016). There it was held, in essence, that whenever Congress passes a statute purporting to create a new right, it also creates a new harm—the deprivation of that right when the statute is not complied with. Just like that, it seemed, Spokeo was de-fanged in the consumer-protection context—all a plaintiff had to do was cast the elements of a consumer protection statute as an affirmative or substantive right and any statutory violation of that “right” necessarily amounted to proof of a concrete “harm” for standing purposes. It was a neat trick, although utterly transparent and intellectually dishonest to high heaven.

Hagy v. Demers & Adams, No. 17-3696, 2018 U.S. App. LEXIS 3710 (6th Cir. Feb. 16, 2018) marks a stark departure from its soft-thinking predecessors, and represents the first intellectual tour-de-force of the post-Spokeo era.

Finally, an opinion that gets it—Spokeo is not some trifling legal curiosity, it is thunder called down from on high to demarcate the limits of Congressional authority to legislate the trifling and insincere. Just as Congress does not have a general police power, it also does not have the power to convert Article III courts into wealth-shifting apparatuses that dispense lotto-style winnings to uninjured plaintiffs fortunate enough to be on the wrong side of a sterile statutory violation. Hagy rejects the “anything-hurts-so-long-as-Congress-says-it-hurts theory of Article III injury,” and reminds that Congress cannot use “its lawmaking power to transform something that is not remotely harmful into something that is.” But I digress.

The facts here are pretty straightforward. A debt collection attorney sends a letter to Plaintiff—ironically enough stating that the creditor will not be taking further steps to collect the debt—but fails to include the required statement that the letter is coming from a debt collector. The requirement of a rubber-stamped debt collector disclosure is one of the myriad ticky-tack requirements of the FDCPA that I find almost as frustrating as errant TCPA jurisprudence (almost). The Plaintiff sued the debt collection lawyer seeking his statutory pound of flesh. The Defendant challenged Plaintiff’s Article III standing, noting that the letter had not caused any harm at all. The district court disagreed and, following Church for the charming principle that the FDCPA “created a new right—the right to receive the required disclosures in communications governed by the FDCPA—and a new injury—not receiving such disclosures,” overruled the Defendant’s motion to dismiss.

The Sixth Circuit Court of Appeals reversed, calling out Church for what it was—weak-willed judicial abdication. Setting the stage, the Court reminds that “[b]road though Congress’s powers may be to define and create injuries, they cannot override constitutional limits.” Drawing from examples of Congressional overreach in other settings—such as legislating without a link to commerce or redefining “property” so as to effect a taking—the Court emphasizes the core obligation of the federal court system to check legislative exuberance when Congress runs roughshod on Constitutional principles. “These limits are essential when it comes to preserving structural boundaries…” the opinion explains. Abdicating to Congress the right to define harms effects a degradation of “the horizontal separation of powers at the national level” and in a manner “that eliminates Article III safeguards…” Accordingly, “[j]ust as there must be some limits on Congress’s power to regulate commerce, there must be some limits on Congress’s power to create injuries in fact suitable for judicial resolution.”

Applying these doctrines, the Sixth Circuit parts ways with Church and concludes that the letter at issue could not possibly have caused “a cognizable injury in fact” and, noting a lack of any Congressional record supporting a contrary view, dismisses the case.

For TCPA defense litigants, there are three key takeaways from Hagy.

1. A separate showing of standing is required for each TCPA claim. This concept is easily stated but regularly forgotten. Just because a plaintiff may have been injured by one phone call does not mean he was injured by another. The Sixth Circuit re-emphasizes this issue in Hagy: “A claimant bears the burden of establishing standing and must show it ‘for each claim he seeks to press.’”

2. If a statutory violation doesn’t actually cause harm, then it doesn’t matter if it violates a statutory right. This sounds like Spokeo, which is not surprising since that’s where Hagy derived the rule. Nonetheless, courts have applied Spokeo unevenly, if not unfaithfully, especially in the TCPA setting. Hagy’s effort to get back to basics—while emphasizing the sophisticated legal and social-theory rationales underlying them—should help re-awaken district courts to the true weight and depth of the Spokeo opinion.

3. The absence of a Congressional record related to the “harm” caused by a statutory violation may mean that no such harm exists. Hagy is the first court to study the legislative record underlying an enactment to ascertain the absence of an articulation of harm for the specific injury-causing device before it. This is pretty neat and something to keep in mind given the lean record supporting the enactment of the TCPA—only telemarketing and random-fired calls are discussed in that legislative history. (I have echoes of Judge Bencivengo’s opinion in Selby v. Ocwen Loan Servicing, LLC, Case No.: 3:17-CV-973-CAB-BLM, 2017 U.S. Dist. LEXIS 189995 (S.D. Cal. Nov. 16, 2017) that the TCPA was only enacted to prevent telemarketing ringing in my ears.)

Also, note that Hagy comes tantalizingly close to interpreting Spokeo as imposing limits on Congressional authority to legislate as opposed to merely imposing jurisdictional limitations on Article III courts. Imagine the possibilities!