Seventh Circuit holds Article III analysis also applies to substantive violations of the FDCPA

The district court dismissed two complaints alleging that a dunning letter was false and misleading under the FDCPA on the grounds that it failed to state a claim. The Seventh Circuit in Larkin v. Financial System of Green Bay, Inc., No. 18-3582 (7th Cir. Dec. 14, 2020) affirmed but on the grounds that the debtors failed to show they had Article III standing.

The letters at issue pertained to a debt from a radiology clinic. They stated that “[y]ou want to be worthy of the faith put in you by your creditor … . We are interested in you preserving a good credit rating with the above creditor.” Debtors, on behalf of a class, sued alleging these sentences were false, deceptive, or misleading in violation of the FDCPA. She also alleged that the statements amount to an unfair or unconscionable means of collecting a debt.

The district court flagged the standing issue but ultimately tossed the case for failure to state a claim, holding as a matter of law that the statements did not violate the FDCPA. The appellate court affirmed but on the basis that Plaintiffs had not alleged a concrete injury so lacked Article III standing.

The debtors tried to distinguish these cases from recent Seventh Circuit authority, Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329 (7th Cir. 2019) which held that a debt validation letter which omitted a reference that any dispute must be in writing technically violated the FDCPA but because the debtor did not allege any injury, other than that the letter failed to tell her of the “in writing” requirement, she had not suffered a concrete harm. The Court noted that the debt collectors here were asserting substantive violations which they contended distinguish their cases from Casillas which concerned only a procedural violation.

The Court was not persuaded that the procedural/substantive distinction made Casillas inapplicable or altered the Article III calculus. An FDCPA plaintiff must allege a concrete injury regardless of whether the alleged statutory violation is characterized as procedural or substantive. Neither debtor had done so. Debtors did not contend, for example, that the letter caused them to pay debts they did not owe or created an appreciable risk that they might do so. They did not claim they were confused or misled to their detriment by the statements, or otherwise relied to their detriment on the contents of the letters. Nor did they suggest they would have pursued a different course of action were it not for the statutory violations. The suits should have been dismissed for lack of standing.


  • James Noonan

    Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.

Download Related Document