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The Sixth Circuit Applies Spokeo to Dismiss FDCPA Claims for Lack of Cognizable Injury

Posted By USFN, Tuesday, March 13, 2018
Updated: Monday, March 12, 2018

March 13, 2018

by Ellen Fornash
Anselmo Lindberg & Associates, LLC – USFN Member (Illinois)

On February 16, 2018 the U.S. Court of Appeals for the Sixth Circuit vacated summary judgment and dismissed claims under the Fair Debt Collection Practices Act (FDCPA) against an Ohio attorney and his firm in Hagy v. Demers & Adams, 2018 U.S. App. LEXIS 3710, 2018 FED App. 0032P (6th Cir.). Drawing on the U.S. Supreme Court’s holding in Spokeo, Inc. v. Robins, 578 U.S. __, 136 S. Ct. 1540 (2016), the Sixth Circuit found that the debtors failed to show that the violation caused any harm and, therefore, failed to establish standing under U.S. Const. Art. III.1 (The Sixth Circuit is comprised of Kentucky, Michigan, Ohio, and Tennessee.)

The underlying facts of the dispute are quite plain and begin in 2002, when the Hagys obtained a note and mortgage on a mobile home and property upon which the home rested.2 Eight years later the Hagys defaulted on their loan, and foreclosure proceedings were commenced.3 Settlement was achieved and thereafter, on June 30, 2010, the lender’s counsel, Demers & Adams, sent the Hagys’ attorney a letter advising that no deficiency judgment would be pursued.4 The Hagys filed suit.5 In addition to claims against their lender for telephonic collection attempts on a waived debt, the Hagys filed claims against Demers & Adams, alleging that the June 30th letter failed to disclose that it was from a debt collector, in violation of 15 U.S.C. 1692e(11). On the FDCPA claims, the Hagys were awarded statutory damages, costs, and over $74,000 in attorneys’ fees.7 Demers & Adams appealed.

Among other errors, Demers & Adams asserted that the district court lacked jurisdiction due to the Hagys’ lack of standing.8 In consideration of this argument, the Sixth Circuit noted that any dispute set forth before a federal court under U.S. Const. Art. III must, at a minimum, contain a particular injury caused by the defendant to be remedied by the court.9 The appellate court found that no such burden was met.10 The court agreed that Demers had a duty under the FDCPA to include a required disclosure in its correspondence, and that the duty was breached; however, the court held that Congress lacked the authority to create an injury on behalf of a claimant.11

The Sixth Circuit observed that no harm or injury was caused by the letter from Demers; in fact, the letter served to give the Hagys peace of mind. Leaning on Spokeo, the court agreed that “a bare procedural violation” does not equate to actual harm or injury.12 Further, in its finding of summary judgment, the district court had relied on Church v. Accretive Health, Inc. for its holding that a bare violation sufficed to create an injury. Church has since been rejected by the Sixth Circuit Court of Appeals.13 Because no cognizable injury existed, or was even alleged, the FDCPA claims were dismissed for lack of standing.

While the holding in Hagy appears to extend further protection to debt collectors in the Sixth Circuit, it should be noted that the underlying facts in Hagy are somewhat incredibly favorable to the debt collector. The court makes mention throughout its opinion that the very letter upon which the lawsuit was based served to help the debtors — not to hurt them. Moreover, the debtors admitted that the letter did just that. Such a perfect set of facts are few and far between.

Since Spokeo was first reported nearly two years ago, the decision has been interpreted and applied numerous times. Interpretations of Spokeo in the context of the FDCPA have resulted in findings of the existence of standing despite a lack of tangible injury in the majority of cases.14 Without a similarly favorable fact pattern, despite Hagy, this debtor-friendly trend may continue.


Hagy v. Demers & Adams, 2018 U.S. App. LEXIS 3710, 2018 FED App. 0032P (6th Cir.), citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 194 L. Ed. 2d 635, 2016 U.S. LEXIS 3046, 84 U.S.L.W. 4263, 100 Empl. Prac. Dec. (CCH) P45, 556, 26 Fla. L. Weekly Fed. S 128.
2  Hagy v. Demers & Adams, 2018 U.S. App. LEXIS 3710, 2018 FED App. 0032P (6th Cir.) [*2].
3  Id., [*2].
4  Id.
5  Id., [*3].
7  Id., [*5].
8  Id.
9  Id., [*6]; citing, Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S. Ct. 2130, 119 L. Ed. 2d 351, 1992 U.S. LEXIS 3543, 60 U.S.L.W. 4495, 92 Cal. Daily Op. Service 4985, 92 Daily Journal DAR 7876, 92 Daily Journal DAR 8967, 22 ELR 20913, 34 ERC (BNA) 1785, 6 Fla. L. Weekly Fed. S 374.
10  Id.
11  Id., [*7].
12  Id., [*9]; citing, Spokeo, 136 S. Ct. at 1550.
13  Id., citing, Lyshe v. Levy, 854 F.3d 855, 2017 U.S. App. LEXIS 6855, 2017 FED App. 0088P (6th Cir.), 2017 WL 1404182, declining to follow Church v. Accretive Health, Inc., 654 Fed. Appx. 990, 2016 U.S. App. LEXIS 12414.
14  Ezra Church, Brian Ercole, Christina Vitale, Warren Rissier, Ken Kliebard, The Meaning of Spokeo, 365 Days and 430 Decisions Later, Law360, New York, Mary 15, 2017.

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