THE BRIEF FINANCIAL SERVICES LITIGATION QUARTERLY - WINTER 2021
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THE BRIEF
FINANCIAL SERVICES
LITIGATION QUARTERLY
WINTER 2021
1
MESSAGE FROM THE EDITOR
Over the past decade, the complexity of the legal and
regulatory framework governing the delivery of financial
services to consumers has increased dramatically. As
a consequence, many of our clients in the industry find
themselves managing through waves of litigation. As we enter
a new year, we have decided to compile relevant substantive
and procedural developments in the law and to share some
commentary. Our first quarterly newsletter is attached. We
hope you find it informative.
TABLE OF CONTENTS
A New Justice Takes Her Seat 3
Scotus Hears Argument In Pivotal TCPA Case 5
Noteworthy 7
CFPB Revises Reg F (FDCPA) 7
CFPB Advisory Opinion Policy 8
Eleventh Circuit Agrees No Facta Claim
For Receipts With More Than Five Digits 8
Ninth And Seventh Circuits Hold That
Consumer “Confusion” Is Not An Injury In Fact 8
Eleventh Circuit Resolves Intra-Circuit Split
Concerning FCRA Accuracy Standard 9
Eighth Circuit: Debt Buyers Are
Debt Collectors 10
Supreme Court To Address Standing
For Absent Class Members 11
2 HuntonAK.com
A NEW JUSTICE TAKES HER SEAT
The arrival of a new justice on the Supreme Court leads many
businesses, including financial services providers, to wonder
how the new justice might rule on issues of importance to them.
Justice Amy Coney Barrett’s recent ascent is no exception. We
look below at her record in an effort to understand how her votes
might influence areas of the law of most interest to the financial
services industry.
Most of Justice Barrett’s career prior In 2018, the DC Circuit held that The Supreme Court granted certiorari
to her Supreme Court appointment the FCC’s guidance failed to satisfy in Duguid seemingly to resolve the
was in academia, where she focused the requirement of reasoned circuit split regarding the definition of
on constitutional issues with little decision-making and vacated the ATDS—i.e., whether liability attaches
direct bearing on financial services FCC’s interpretation of an ATDS. to automated calls made from a list,
companies. But in her three-year ACA Int’l v. FCC, 885 F.3d 687 (2018). or only to calls made using a random
tenure on the Seventh Circuit, she ACA more or less erased fifteen years or sequential number generator.
wrote or signed-on to three opinions of TCPA jurisprudence, leaving the Justice Barrett will not need to
addressing issues of note to financial courts to wrangle with the text of recuse herself from consideration
services providers: what then-Judge Barrett described as of Duguid, meaning that users of
a “thorny” statutory provision. automated dialing equipment almost
TELEPHONE CONSUMER certainly have one justice in their
In Gadelhak v. AT&T Svcs., Inc., 950
PROTECTION ACT F.3d 458 (7th Cir. 2020), Justice
corner. Assuming that she votes
consistently with her opinion in
Liability under the most frequently Barrett wrote for a unanimous three- Gadelhak, and her view is held by
invoked section of the TCPA is judge panel which held that dialers the majority of the Court, it would
predicated on whether the phone that do not use random or sequential not be surprising to see Justice
system used to place a call qualifies number generators are not within the Barrett as the author of a majority
as an “Automatic Telephone Dialing definition of an ATDS, and therefore opinion narrowing the scope of what
System” (ATDS). Many financial that companies using them are not constitutes an ATDS.
services providers contact consumers subject to TCPA liability. The ruling
using systems that dial phone
numbers automatically from their
was seen as a victory for companies STANDING AFTER
that contact customers by phone
customer lists. Most courts, relying using predictive dialers. Gadelhak
SPOKEO
on FCC guidance dating back to decided the issue consistently The Supreme Court’s 2016 decision
2003, had held that such automated with the 11th and 3rd Circuits, but in Spokeo, Inc. v. Robbins addressed
systems qualified as ATDSs, and differently from the 9th and 2nd whether a plaintiff had Article
therefore that companies employing Circuits, and is thus part of the circuit III standing to bring suit for a
them could be liable for significant split to be resolved by the Supreme statutory violation that resulted in
damages under the TCPA, if calls to Court this term in Facebook Inc. v. no concrete harm. The Court held
cellphones using those systems were Duguid, No. 19-511, cert. granted, that a plaintiff must show a concrete
made without first obtaining consent. Jul. 9, 2020. See “SCOTUS Hears and particularized injury to a legally
Argument in Pivotal TCPA Case” on p. 7. protected interest, and not simply
3
a “bare procedural violation,” to have Many statutes that apply to financial a court wouldn’t have jurisdiction over
standing to bring suit in federal court. services providers, like the FDCPA, contain claims to which the court didn’t have a
While the opinion provided a framework to detailed provisions governing the conduct nexus. The Bristol-Myers court held that a
lower courts to use in evaluating standing, of those to which they apply. Justice Rule 23 class, by contrast, involves claims
lower courts have differed on how to apply Barrett’s approach to Spokeo makes it of lead plaintiffs who “earn the right to
it, particularly as to many of the statutes less likely that a violation of one of those represent the interests of absent class
to which financial services providers detailed provisions would be sufficient, members” by satisfying Rule 23. Id. 450.
are subject. by itself, to confer standing to sue for the Absent class members “are not full parties
violation in federal court. to the case for many purposes,” and thus
Justice Barrett weighed in on the are not required to demonstrate either
application of Spokeo in Casillas v. The Court just granted certiorari in a case general or specific jurisdiction. Whether
Madison Ave. Assocs., 926 F.3d 329 concerning injury requirements for absent the claims of absent class members have
(7th Cir. 2019). The Fair Debt Collection class members (see “Supreme Court to a nexus to the forum therefore is irrelevant
Practices Act (FDCPA) requires debt Address Injury Requirements for Absent to whether a court has jurisdiction over a
collectors to give written notice to a Class Members” on p. 13), so we likely nationwide class action, according to
debtor describing how a debtor can verify will see soon whether Justice Barrett’s the opinion.
the validity of the debt being collected. narrower approach to standing becomes
The FDCPA requires that the verification the law of the land. Businesses had hoped that Bristol-Myers
requests must be made in writing to would be extended by a conservative
trigger the statute’s protections. The NATIONWIDE court and applied to nationwide
debt collector in Casillas sent a notice to CLASS ACTIONS class actions, which would present a
the debtor that described the debtor’s jurisdictional hurdle to the maintenance
verification options, but the notice failed In Bristol-Myers Squibb Co. v. Superior of such actions against corporate
to specify that the debtor’s request must Court, 137 S. Ct. 1773 (2017), the Supreme defendants. That view thus far though has
be in writing. The debtor brought a class Court held that state courts do not have failed to gain much traction. With Justice
action against the debt collector for failing personal jurisdiction over out-of-state Barrett now on the Supreme Court, the
to advise her that verification requests defendants for mass tort claims with no likelihood of expanding Bristol-Myers to
must be in writing. connection to the forum state. Lower limit nationwide class actions appears to
courts since Bristol-Myers have been be further diminished.
Justice Barrett, in a unanimous opinion, faced with the question of whether the
held that the debt collector’s failure to same analysis would apply to a putative Justice Barrett’s opinions in Gadelhak
advise that verification requests must be nationwide class in federal court, which and Casillas are consistent with views
in writing amounted to a bare procedural potentially would limit the ability of normally associated with conservative
violation divorced from any concrete plaintiffs to bring nationwide class actions justices, i.e., careful textual analysis
harm, so there was “no injury for a federal in a single court. Does a court have of statutes (rather than attempting
court to redress” and no standing under jurisdiction over a nationwide class action to divine how Congress would wish a
Spokeo. Id. at 330. Significantly, the against an out-of-state defendant, when statute to be applied), and a more limited
Sixth Circuit had reached the opposite the claims of absent class members have view of federal court jurisdiction. The
conclusion in a case that was factually no nexus to the forum? opinion in Mussat seems driven in large
indistinguishable, and the Second Circuit part by reluctance to upend 50 years
found a plaintiff to have standing in a In the first circuit court opinion on the of class action precedent that more
similar case under a different statute. The issue, the Seventh Circuit, in an opinion or less assumed that federal courts
circuit split triggered a Seventh Circuit by Chief Judge Wood that was joined by had jurisdiction over nationwide class
rule requiring Justice Barrett’s opinion to Justice Barrett, declined to extend the actions, rather than a desire to maintain
be circulated to the other active judges on holding of Bristol-Myers to nationwide the current class action framework. On
the Seventh Circuit to consider whether class actions. Mussat v. IQVIA, Inc., 953 balance, Justice Barrett’s ascent is likely
the case should be reheard en banc. A F.3d 441 (7th Cir. 2020). In Bristol-Myers, to be a favorable development on legal
majority of the judges denied en banc plaintiffs were all named parties to a issues important to the financial
rehearing, but three of the judges took “mass action” (a creature of California services industry.
the unusual step of writing separately state law), making their claims more
to dissent from the denial of en banc akin to consolidated individual cases. In
rehearing, because of their view of the effect, the jurisdictional nexus for each
importance of the issues presented. party could be determined, and therefore
4 HuntonAK.com
SCOTUS HEARS ARGUMENT
IN PIVOTAL TCPA CASE
On December 8, the United States Supreme Court heard oral
argument on a case expected to resolve a circuit split regarding the
reach of the Telephone Consumer Protection Act (TCPA).
The TCPA prohibits, among other dialers, which are commonly
things, calls made without prior used devices that automatically
consent to a cell phone by use of dial numbers from a list of phone
an Automatic Telephone Dialing numbers, but do not generate and
System (ATDS). The TCPA defines dial random or sequential numbers.
an ATDS as equipment that has the
capacity “(a) to store or produce The Third, Seventh, and Eleventh
telephone numbers to be called, Circuits disagree with the Ninth
using a random or sequential number Circuit’s interpretation, and read the
generator; and (b) to dial such TCPA to require an ATDS to generate
numbers.” 47 U.S.C. § 227(a)(1). The and dial random and sequential
key issue in TCPA cases is whether numbers, so as not to apply to
the Act applies to dialing systems predictive dialers.
that dial from a list of numbers, such
Divining the Court’s likely ruling
as a customer list, or whether the
is always difficult based on oral
Act applies only to systems that dial
argument. The Justices’ questions,
from a list of random or sequentially
however, provide at least some
generated numbers.
indication of how they may approach
On June 13, 2019, the Ninth Circuit the case. One major theme for
in Duguid v. Facebook, Inc., 926 Justices of course was how to parse
F.3d 1146 (9th Cir. 2019) reaffirmed the definition: should the phrase
its decision in Marks v. Crunch San “using a random or sequential
Diego, LLC, 904 F.3d 1041 (9th Cir. number generator” be read as
2018) that an ATDS “need not be modifying both “to store” and
able to use a random or sequential “produce telephone numbers to be
generator to store numbers—it called”—as Facebook argued—or
suffices to merely have the capacity just the latter—as Duguid
to ‘store numbers to be called’ and maintained? The parties devoted
‘to dial such numbers automatically.’” considerable attention to how
926 F.3d at 1151. Under this various grammatical and interpretive
interpretation of an ATDS, the TCPA’s canons supported their respective
prohibition on calls to cell phones interpretations, but Justice Alito’s
applies to so-called predictive statement that the interpretation
5
of the statute should be based on imagined. He then asked Duguid’s different interpretation of an ATDS
“what makes sense,” instead of strict counsel whether in that case it that would be entitled to deference
grammatical rules, was reflected in would be appropriate for the Court under Chevron. While neither
questions from a number of to “contract” the meaning of the Justice pursued that issue very far,
the Justices. statute—which he seemed to it suggests that the Court may be
assume covered all devices that concerned with the impact of its
A number of Justices noted generally can automatically dial stored decision on the ability of the FCC to
that Facebook’s interpretation was numbers—to account for those offer future guidance on the TCPA.
likely the interpretation that an changes in technology.
English speaker would reach, but Throughout oral argument, perhaps
acknowledged it would be difficult Justice Sotomayor seemed to take the most pervasive theme was the
to justify that definition if an ATDS a different view, suggesting that if Court’s dilemma regarding laws that
could not “store” numbers using such unintended consequences arose may have been rendered obsolete by
a random or sequential number from Duguid’s definition of an ATDS, technological advances. The TCPA
generator. Justices Kagan, Breyer, that might be evidence that the TCPA was drafted in the early 1990s. Since
and Gorsuch inquired whether the as a whole was simply outdated, in then, technology has progressed in
technical capacities of dialers when which case Congress, not the Court, ways that make it difficult to apply
the TCPA was enacted was probative should address those consequences. the statute to modern practices.
of whether Congress had devices Justice Thomas seemed to take a What can courts do in such
that “stored” numbers with random similar view, saying that the “ill fit” circumstances? Does the Court have
or sequential number generators in between the TCPA and smartphones the authority to update a statute
mind in drafting the TCPA. showed the TCPA to be “almost through interpretation to avoid
anachronistic.” Justice Alito echoed outcomes that do not make sense in
Most attention focused on the effect Justices Sotomayor’s and Thomas’ light of changed technology? Or is it
of post-1991 changes in technology concerns, and noted that the TCPA up to Congress alone to address laws
on the definition of an ATDS and the might be a “good candidate” for that no longer “fit” the technological
application of the TCPA. Facebook being declared obsolete under milieu? In light of the rapid advance
argued that Duguid’s definition the doctrine of desuetude; on the of technology, it is clear that the
meant that ordinary smartphones other hand, he suggested that the issue will arise again, perhaps quite
would be ATDSs, and so the millions Court might ignore the “parade of frequently. How the Court addresses
of Americans who use such devices horribles” allegedly resulting when the “technological obsolescence”
would be subject to the TCPA. Justice Duguid’s interpretation is applied issue in Duguid could well be the
Breyer suggested that that “parade to smartphones. most lasting aspect of the case.
of horribles” did not necessarily cut
against Duguid’s definition, but might Chief Justice Roberts and Justice
just be the result of technological Barrett raised the intriguing question
change that expanded the TCPA of how the Court’s decision would
far beyond what Congress initially affect the FCC’s ability to proffer a
6 HuntonAK.comNOTEWORTHY
CFPB REVISES REG F reach a consumer (e.g., unanswered is in a place that is inconvenient
telephone calls that do not result to the consumer when the
(FDCPA) in a voicemail). communication is initiated.
On October 30, 2020, the CFPB
• It provides examples of procedures
issued its Final Rule revising in part The Rule also provides debt
that satisfy the FDCPA’s
Regulation F, which implements the collectors with guidance for limiting
requirement that consumers have
Fair Debt Collection Practices Act their exposure under the FDCPA when
“reasonable and simple” methods
(FDCPA) and governs the activities using electronic communications.
of opting out of communications
of debt collectors (as defined under For instance:
via email or text.
the FDCPA). The Rule updates the • The Rule introduces the concept
Bureau’s interpretation of the FDCPA, • It also establishes a rebuttable
of a “limited-content message,”
principally regarding debt collectors’ presumption that a debt collector
which is a voicemail message
uses of electronic communications— has complied with the statute’s
containing only very limited
voicemail, email, text, and mobile prohibition on repeated telephone
information prescribed in the Rule,
devices—with consumers, but also calls if it calls a person no more
and for which a debt collector
regarding disclosure requirements. than seven times in a seven-day
cannot be liable under the Act.
period or within seven days of
The Rule states that the FDCPA’s • The Rule also clarifies the effect speaking with that person on
restrictions on debt collectors’ of mobile devices on the FDCPA’s the telephone.
communications with consumers prohibition on a debt collector
• The Rule also creates various safe
applies to any medium, including contacting a consumer at a
harbors from liability for violation
telephone, audio recording, text, place the debt collector knows
of the FDCPA’s requirements
email, and social media. The Rule is inconvenient to the consumer.
regarding disclosures made
further clarifies that whenever Recognizing that emails, texts,
through the mail and by email or
a debt collector tries to initiate and mobile phone numbers are
text message.
a communication about a debt, not associated with a particular
that qualifies as an “attempt to place—and so a debt collector The final rule will be effective as of
communicate” and so falls within the cannot always know when it should November 30, 2021.
scope of the FDCPA. Thus, the Rule avoid using such media—the Rule
holds that the FDCPA applies not creates a safe harbor allowing the
just to communications that reach a debt collector to use those media
consumer, but also those that do not unless it knows that the consumer
7CFPB ADVISORY ELEVENTH CIRCUIT FACTA in some circumstances, as
evidence that Congress did not
OPINION POLICY AGREES NO FACTA regard every FACTA violation as
The CFPB has published a final rule, CLAIM FOR RECEIPTS creating a risk of harm. It then held
effective November 30, 2020, setting WITH MORE THAN that while an increased risk of a
out the Bureau’s procedures for
advisory opinions and the effect of
FIVE DIGITS concrete injury may, under Spokeo,
itself be sufficient to create standing,
its advisory opinions. Under the new In Muransky v. Godiva Chocolatier,
such a risk must be “substantial”
Advisory Opinion Policy, the Bureau Inc., 979 F.3d 917 (11th Cir. 2020),
or “significant,” and that a bare
may issue an advisory opinion in the Eleventh Circuit vacated a class
statutory violation does not, by
response to a specific request by settlement because the only injury
itself, imply such a substantial risk
a regulated entity, or may act on alleged—the defendant printed more
to the plaintiff.
its own in response to questions it than five digits of class members’
receives from the public. The Bureau credit cards on their receipts, in The three dissenters rejected the
will focus on clarifying significant violation of the Fair and Accurate majority’s view that at the pleading
issues, but will not opine on subjects Credit Transactions Act (FACTA)— stage the plaintiff needed to allege
that are part of an ongoing Bureau was not sufficient to create Article specific facts as to how the violation
investigation or enforcement action. III standing under Spokeo, Inc. v. substantially increased his risk of
An advisory opinion will have the Robins, 136 S. Ct. 1540 (2016). In so identity theft. They cited Jeffries v.
status of an interpretive rule under holding, the Eleventh Circuit joined Volume Servs. Am., Inc., 928 F.3d
the Administrative Procedures Act, the Second, Third, and Ninth 1059 (D.C. Cir. 2019), in which the
and will be applicable to the party Circuits in holding that such a DC Circuit reversed the dismissal of
that requested it and any “similarly violation of FACTA cannot create a FACTA truncation claim and held
situated parties.” federal jurisdiction. that standing required only that the
plaintiff allege a violation and allege
Advisory opinions may provide Muransky was filed while Spokeo was
generally that the violation increased
entities subject to those opinions pending before the Supreme Court.
her risk of identity theft. But the DC
with a safe harbor against liability. The parties knew that a decision
Circuit is the only Court of Appeals to
Several statutes administered by in Spokeo would likely affect their
have held that a FACTA violation is a
the CFPB, including the Fair Debt negotiating positions, and so both
concrete injury, and did so under very
Collection Practices Act, the Truth desired to settle before Spokeo was
different circumstances in which all
in Lending Act, and the Real Estate decided. Spokeo was decided just
the digits of the plaintiff’s credit card
Settlement Procedures Act, contain prior to the fairness hearing, where
were printed on the receipt, and so
provisions that shield acts from an objector argued that the district
clearly created an increased risk of
liability if they were performed or court had to determine if the plaintiff
identity theft.
omitted in good-faith reliance on had standing under Spokeo. The
district court granted final approval
Bureau opinions. But other statutes
without addressing Spokeo or the
NINTH AND SEVENTH
administered by the Bureau,
including the Fair Credit Reporting plaintiff’s standing. CIRCUITS HOLD
Act, Secure and Fair Enforcement THAT CONSUMER
The objector appealed. After a panel
for Mortgage Licensing Act, and
initially affirmed final approval, the
“CONFUSION” IS NOT
Home Mortgage Disclosure Act,
full Eleventh Circuit vacated the AN INJURY IN FACT
do not include such provisions, in
panel’s decision and held (voting In Adams v. Skagit Bonded Collectors,
which case good-faith reliance on
7-3) that the settling parties could LLC, 2020 WL 7055395 (9th Cir.
Bureau interpretations may not
not “bargain around Spokeo,” and Dec. 2, 2020), the Ninth Circuit
provide a safe harbor against liability.
that “[b]ecause the plaintiff alleged held that a debtor who brought a
Nevertheless, the Rule says that the
only a statutory violation, and not a Fair Debt Collection Practices Act
Bureau “would not expect” to pursue
concrete injury, he has no standing.” claim based on the debt collector’s
enforcement actions against persons
In holding that the bare FACTA failure to identify clearly his current
who “conformed their conduct in
violation alleged by the plaintiff creditor in a collection letter had not
good faith to an advisory opinion”
did not satisfy Spokeo, the court suffered a concrete injury sufficient
because of potential concerns under
referred to the Credit and Debit Card to confer Article III standing. The
the Due Process Clause.
Receipt Clarification Act, which was plaintiff in this case claimed to have
enacted to eliminate liability under been injured by a violation of Section
8 HuntonAK.com1692e of the Act, which prohibits 15, 2020) (allegation that dunning On appeal, the Eleventh Circuit
false or misleading representations, letter “annoyed or intimidated” held that because FCRA requires
because “upon reading the letter, debtor does not allege a concrete “maximum possible accuracy,”
[he] was unsure of who the current injury sufficient to create subject- the statute requires not just that
creditor was.” The Ninth Circuit, matter jurisdiction). reports be factually true, but that
which raised the jurisdictional they also be unlikely to lead to a
question sua sponte, held that such ELEVENTH CIRCUIT misunderstanding. Id. at *4. The
a “bare allegation of confusion” RESOLVES INTRA- court further held that in order to
“d[id] not constitute an actual harm balance the interests of consumers
to [plaintiff]’s concrete interests”
CIRCUIT SPLIT and potential creditors, the relevant
and did not suggest a material CONCERNING FCRA sense of misunderstanding must
risk of harm to his interests. The ACCURACY STANDARD be applied objectively and from the
Court vacated the judgment on the In Erickson v. First Advantage perspective of a reasonable user of
pleadings and remanded the case to Background Servs. Corp., 2020 WL the report. Id. The court then held
be dismissed without prejudice for 7086059 (11th Cir. Dec. 4, 2020), the that First Advantage’s report satisfied
lack of jurisdiction. Eleventh Circuit construed the Fair FCRA’s requirement of “maximum
Credit Reporting Act’s “maximum possible accuracy” because
In a similar case two weeks later, the report was true—Erickson’s
possible accuracy” standard to
the Seventh Circuit in Brunett v. name was in fact on the list of sex
require that a consumer report be
Convergent Outsourcing, Inc., offenders—and not objectively
both “technically accurate” (i.e.,
2020 WL 7350277 (7th Cir. Dec. 15, misleading, since the caveats
not false) and “not misleading.”
2020), remanded an FDCPA claim included in the report ensured that a
Erickson thus resolves a division
with instructions that the district reasonable user of the report would
among district courts in the Eleventh
court dismiss it for lack of subject- not take adverse action against
Circuit between those holding that
matter jurisdiction. The plaintiff Erickson. It therefore affirmed the
FCRA is satisfied as long as the report
there received a dunning letter, dismissal of Erickson’s claim.
is merely technically accurate and
but admitted that she did not pay
those requiring that the report also
anything or suffer any negative effect
not be misleading.
on her credit report because of the
letter. Instead, she claims she was Erickson agreed to a background
confused by the letter, in which the check for sex offenders performed
debt collector offered to forgive a by First Advantage as part of his
portion of her debt, but stated that application to coach Little League
if more than $600 was forgiven, it baseball. The notice First Advantage
would be required to inform the IRS sent to Little League baseball stated
about the release of indebtedness that Erickson’s name matched an
because that is taxable income. entry in the sex-offender database
The court held that the consumer’s and that “further review of the
confusion itself was not a concrete State Sex Offender Website is
injury. The plaintiff therefore lacked required in order to determine if
standing, and the district court this is your subject.” It turned out
lacked subject-matter jurisdiction. that the individual in the database
The court further held that the was not Erickson, who then sued
plaintiff’s allegation that the letter First Advantage for violating FCRA
was “intimidating” was similarly by failing to follow reasonable
insufficient to create subject-matter procedures to assure maximum
jurisdiction. See also Gunn v. possible accuracy. First Advantage
Thrasher, Buschmann & Voelkel, P.C., was granted judgment as a matter of
2020 WL 7350278, at *2 (7th Cir. Dec. law after a jury trial.
9EIGHTH CIRCUIT: indirectly, debts owed or due or Following the US Supreme Court’s
asserted to be owed or due another.” decision in Henson v. Santander
DEBT BUYERS ARE Regarding prong (1), DNF argued Consumer USA Inc., 137 S. Ct. 1718
DEBT COLLECTORS that as a “passive” debt buyer that (2017)—which rejected the argument
In Reygadas v. DNF Assocs., LLC, did not itself attempt to collect the that buyers of defaulted debt were
2020 WL 7329111 (8th Cir. Dec. 14, debts it purchased, its “principal automatically debt collectors, and
2020), the Court held that a person purpose” was debt purchasing, not so narrowed the definition of “debt
is a debt collector for purposes of debt collection. collector” under the FDCPA—debt
the FDCPA as long as the principal buyers may have seen a possible
purpose of that person’s business The district court rejected DNF’s exemption from the statute’s
involves the collection of debts, claim regarding prong (1), holding requirements. With its decision
even if it does not involve direct that the plain text of the definition in Reygadas, however, the Eighth
interaction with consumers. meant that a business is a “debt Circuit joins the Third and Ninth
collector” if its “primary objective is Circuits in closing the exemption
The defendant, DNF bought the to ensure that debts it is owed are suggested by Henson, holding that
plaintiff’s defaulted debt and collected,” no matter who collects the statute is still applicable to debt
retained a third party to collect it. them. The Eighth Circuit affirmed that buyers, not because they purchase
When the debt collector sent the decision, rejecting DNF’s argument defaulted debt, but because the
plaintiff, rather than her attorney, that “collection” in the statute “principal purpose” of their business
a letter offering to settle, she sued requires an interaction with debtors, is debt collection.
DNF for violation of the FDCPA. and held instead that it refers to any
DNF argued that it was not a “debt “act whose purpose is collection.”
collector,” which the statute defines The “foreseeable and logical
as (1) “any person… in any business consequence” of DNF’s purchasing a
the principal purpose of which is debt and hiring an agency to collect
the collection of any debts” or (2) that debt is collection, and so DNF
“any person who regularly collects satisfied the statutory definition of
or attempts to collect, directly or “debt collector.”
10 HuntonAK.comSUPREME COURT sending class members letters saying The Supreme Court granted
they were “potential matches” to certiorari on the question of
TO ADDRESS STANDING OFAC’s list. “[w]hether either Article III or Rule
FOR ABSENT CLASS 23 permits a damages class action
MEMBERS On appeal, TransUnion argued that where the vast majority of the class
only the class representative, Mr. suffered no actual injury, let alone
Since 2016, federal courts have
Ramirez, had shown he suffered an an injury anything like what the
often been asked to apply the
injury sufficient to create Article III class representative suffered.” In
principles laid out in the Supreme
standing. It noted that three-quarters its petition, TransUnion argued that
Court’s decision in Spokeo, Inc. v.
of the class never had a credit report whatever risk was raised was too
Robins, 136 S. Ct. 1540 (2016), to
containing the false OFAC alert sent attenuated to satisfy the Supreme
determine when statutory violations
to a third party and that only Mr. Court’s requirement in Clapper v.
are sufficient to create Article III
Ramirez submitted evidence of actual Amnesty Int’l USA, 568 U.S. 398
standing issues and have often
harm resulting from the false alert. (2013), that an injury that is merely
come to different conclusions. The
Supreme Court now has the chance “threatened,” but not actual, “must
The Ninth Circuit agreed that every
to clarify those principles, having be certainly impending to constitute
class member had to have Article
agreed on December 16, 2020, to injury in fact.” It also argued that any
III standing to recover monetary
hear TransUnion’s appeal of the “shock” and “confusion” caused by
damages. However, it held that even
Ninth Circuit’s February 27, 2020 the letters from TransUnion could not
those class members whose reports
decision in Ramirez v. TransUnion confer standing because that “shock”
had not been shared with third
LLC, 951 F.3d 1008 (9th Cir. 2020), and “confusion” would not have been
parties suffered a “material risk of
in which the Ninth Circuit held that caused by the complained-of FCRA
harm” to interests protected by FCRA
absent class members had Article III violation (i.e., the inaccurate OFAC
because TransUnion failed to follow
standing to recover money damages alert), and so would not satisfy the
reasonable procedures to assure
for Fair Credit Reporting Act (FCRA) requirement that an injury be “fairly
maximum possible accuracy of their
violations that increased their risk of traceable” to the alleged wrong.
reports, and so under Spokeo, Inc.
injury but did not cause any actual v. Robins, 136 S. Ct. 1540 (2016), TransUnion also noted that the Ninth
concrete injury to them. suffered injuries sufficient for Article Circuit’s holding that inaccurate
III standing. Moreover, it held that the credit reports confer Article III
In Ramirez, a jury found that
letters class members received from standing, even if they are not
TransUnion was liable for FCRA
TransUnion notifying them that they disclosed to third parties, contradicts
violations by incorrectly placing
were “considered a potential match” decisions by the DC, Seventh, and
alerts in class members’ credit
to OFAC’s list were “inherently Eighth Circuits, and that the Fourth,
reports saying their names matched
shocking and confusing,” and so Fifth, Sixth, and Seventh Circuits have
names of persons on the Office of
caused a concrete injury. held that the mere receipt of
Foreign Assets Control’s (OFAC) list
of terrorists and drug traffickers and a deficient credit report cannot
confer Article III standing.
11CONTRIBUTORS
BRIAN V. OTERO MICHAEL B. KRUSE
Co-Head, Financial Services Litigation Counsel
botero@HuntonAK.com mkruse@HuntonAK.com
+1 212 309 1020 +1 212 309 1387
STEPHEN R. BLACKLOCKS SIMA KAZMIR
Partner Associate
sblacklocks@HuntonAK.com skazmir@HuntonAK.com
+1 212 309 1052 +1 212 309 1112
RYAN A. BECKER
Partner
rbecker@HuntonAK.com
+1 212 309 1055
Hunton Andrews Kurth’s Financial Services Litigation Team—based in New York,
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high-profile disputes presenting multifront challenges to fundamental
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