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’”).

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Photo of Alex Setzepfandt Alex Setzepfandt

Focusing on class actions, Alex Setzepfandt regularly advises clients in the life sciences and financial services industries in complex litigations involving product defects and mass torts. He also has experience representing both plaintiffs and defendants in commercial actions, including breach of contract, insurance…

Focusing on class actions, Alex Setzepfandt regularly advises clients in the life sciences and financial services industries in complex litigations involving product defects and mass torts. He also has experience representing both plaintiffs and defendants in commercial actions, including breach of contract, insurance recovery, and business tort actions.

Alex handles all phases of litigation, including initial pleadings, discovery, trial, and appeals. His experience includes drafting complaints and dispositive motions, arguing discovery motions, taking and defending depositions, negotiating discovery and pre-trial stipulations, and assisting with a broad range of tasks at trial.

Through his active pro bono practice, Alex has honed his oral advocacy skills. His experience includes:

  • Directly examining his client and giving the closing argument at a jury trial in SDNY;
  • Arguing motions in limine and other pre-trial matters;
  • Presenting an oral argument in the 11th Circuit; and
  • Acting as lead counsel at multiple mediations in federal courts.
Photo of Andrew Soukup Andrew Soukup

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which…

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which were defeated through dispositive pre-trial motions.
Andrew is co-chair of the firm’s Class Action Litigation practice group.

Andrew has helped his clients achieve successful outcomes at all stages of litigation, including through trial and appeal. He has helped his clients prevail in litigation against putative class representatives, government agencies, and commercial entities. Representative victories include:

  • Delivered wins in multiple nationwide class actions on behalf of large financial companies related to fees, disclosures, and other banking practices, including the successful defense of numerous lenders accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recent recognition as a “Class Action Group Of The Year.”
  • Successfully defending several of the nation’s leading financial institutions in a wide variety of litigation and arbitration proceedings involving alleged violations of RICO, FCRA, TILA, TCPA, FCBA, ECOA, EFTA, FACTA, and state consumer protection and unfair and deceptive acts or practices statutes, as well as claims involving breach of contract, fraud, unjust enrichment, and other torts.
  • Successfully defended several of the nation’s leading companies and brands from claims that they deceptively marketed their products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Obtained favorable outcomes for numerous clients in commercial disputes raising contract, fraud, and other business tort claims.

Because many of Andrew’s clients are subject to extensive federal regulation and oversight, Andrew has significant experience successfully invoking federal preemption to defeat litigation.

Andrew also advises clients on their arbitration agreements. He has successfully helped numerous clients avoid multi-district class-action litigation by successfully enforcing the institutions’ arbitration agreements.

Clients praise Andrew for his personal attention to their matters, his responsiveness, and his creative strategies. Based on his “big wins in his class action practice,” Law360 named Mr. Soukup a “Class Action Rising Star.

Prior to practicing law, Andrew worked as a journalist.