The Seventh Circuit recently gave defendants another arrow in their quiver to use when arguing that plaintiffs lack Article III standing to assert claims for violations of federal laws, even when the plaintiff demonstrated that she suffered emotional distress as a result of those violations.

In Pierre v. Midland Credit Mgmt., Inc., — F.4th —, 2022 WL 986441, at *2 (7th Cir. Apr. 1, 2022), the Seventh Circuit reversed a district court’s judgment requiring the defendant to pay damages on a class-wide basis for violations of the Fair Debt Collection Practices Act (“FDCPA”).  The defendant had sent a letter that improperly failed to disclose that plaintiff’s debt had fallen outside of the statute of limitations—and thus was a type of debt sometimes referred to as “zombie” debt because it can come back to life if the debtor makes a payment or promises to do so.  Id. at *1.  Plaintiff alleged she was injured by feeling emotional distress and confusion as a result of receiving the letter, as well as by having to contact the defendant and hire an attorney to dispute the debt.  Id. at *4.  She further alleged she was at risk of economic injury if her debt came back to life.  Id. 

Relying on the Supreme Court’s decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), the Seventh Circuit reversed the district court, holding these injuries were insufficient to confer standing.  It noted that to establish standing for a “legislatively identified harm[],” that harm must “bear a close relationship in kind to those underlying suits at common law.”  Id. at *2.  And where a plaintiff is seeking money damages, in particular, the plaintiff has standing “only for harms that have in fact materialized.”  Id. at *3. 

Applying that framework to the facts in Pierre, the court held that “[p]sychological states induced by a debt collector’s letter”—in this case “confusion” and “emotional distress”—are not cognizable injuries in the context of the FDCPA.  Id. at *4.  Nor was the time spent contacting the defendant or her attorney “legally cognizable,” as otherwise “the concreteness requirement would be an empty one if all it took was contacting a lawyer and filing suit.”  Id.  As for the risk that plaintiff might revive her debt, the court held that because she “didn’t make a payment, promise to do so, or other-wise act to her detriment”—there was no present injury.  Id.  For these reasons, plaintiff had no standing, requiring dismissal of her case.  Id.

In a lengthy dissent, Judge Hamilton highlighted that one of the purposes of the FDCPA was to prevent the abusive tactics at issue in this case—i.e. attempting to bring “zombie” debt back to life with tactics that caused “stress and fear.”  Id. at *7.  Utilizing the same TransUnion framework cited by the majority, the dissent pointed out, inter alia, that the emotional distress the plaintiff felt constituted a cognizable injury because it bore a close relationship to the common law torts of reckless infliction of emotional distress, defamation, and invasion of privacy, as well as constitutional torts.  Id. at *11–12.  The dissent expressed “fear” that “our circuit has committed itself so thoroughly to this mistaken path that now only the Supreme Court can provide a correction.”  Id. at *16. 

Pierre therefore gives defendants another tool to use when arguing that federal courts lack jurisdiction over these claims.  But the consequence of such a victory might be that defendants would have to litigate those cases in state court.  See Liu v. MRS BPO, LLC, 2021 WL 5630764, at *4 (N.D. Ill. Nov. 30, 2021) (remanding FDCPA case to state court on standing grounds); Hopkins v. Staffing Network Holdings, LLC, 2016 WL 6462095, at *4 (N.D. Ill. Oct. 18, 2016) (dismissing FDCPA case, but remanding to state court because Article III “‘limitations apply only to federal courts’” and because “Illinois’ doctrine of standing is ‘the business of the [Illinois] courts’”); see also Loeb v. ZipRecruiter, Inc., 2019 WL 4201082, at *7 (C.D. Cal. Sept. 5, 2019) (remanding case brought under Fair Credit Reporting Act to state court on standing grounds “because ‘[t]he constraints of Article III do not apply to state courts’”).