New Jersey Law Journal: The Aftermath of ‘TransUnion v. Ramirez’: An Emerging Circuit Split

New Jersey Law Journal, January 3, 2023 

Diana M. Eng, Andrea M. Roberts, and Alina Levi


For years, federal courts relied on the U.S. Supreme Court’s decision in Spokeo v. Robins, 578 U.S. 330 (2016), to ascertain whether a federal plaintiff demonstrated “concrete harm” such that his claims conferred Article III standing. However, the Spokeo standard was sufficiently vague, resulting in a circuit split regarding what constitutes “concrete harm.” In June 2021, the Supreme Court addressed this split in its TransUnion v. Ramirez, 141 S. Ct. 2190 (2021) (TransUnion) decision by attempting to clarify the Spokeo standard for “concrete harm.” In a 5-4 decision authored by Justice Brett Kavanaugh, the Supreme Court unequivocally rejected “the proposition that ‘a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right,’” 141 S. Ct. at 2205 (quoting Spokeo, 578 U.S. at 341). The court emphasized that “an important difference exists between a plaintiff’s statutory cause of action to sue a defendant over the defendant’s violation of federal law, and a plaintiff’s suffering concrete harm because of the defendant’s violation of federal law.” The latter is required to satisfy Article III standing to confer federal jurisdiction: “Only those plaintiffs who have been concretely harmed by a defendant’s statutory violation may sue that private defendant over that violation in federal court.” As Kavanaugh succinctly stated: “No concrete harm, no standing.”

TransUnion was viewed as a significant win for financial institutions and the defense bar thought it would reduce the number of federal lawsuits, particularly from plaintiffs who alleged purely statutory violations. However, despite the Supreme Court’s clarification in TransUnion, courts are still reaching different conclusions on what constitutes concrete harm, and a new circuit split is already emerging, particularly with respect to intangible harms, such as economic or emotional distress, and informational harms.

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New York Further Extends the COVID-19 Emergency Eviction and Foreclosure Prevention and Small Businesses Acts to January 15, 2022, but Provides a Way to Challenge Hardship Declarations

Wayne StreibichDiana M. Eng, and Chenxi Jiao


Lenders, mortgage servicers, and other financial institutions should take note that the New York State legislature has extended the COVID-19 Emergency Eviction and Foreclosure Prevention Act (“CEEFPA”) and the COVID-19 Emergency Protect Our Small Businesses Act to January 15, 2022. Therefore, the requirements and stays with respect to residential and commercial foreclosures and evictions and credit reporting remain effective through January 22, 2021, to the extent a tenant or mortgagor has submitted a Hardship Declaration. The legislature also amended the statutes, in part, to address the United States Supreme Court’s August decision blocking the enforcement of Part A of the CEEFPA for violating landlords’ due process rights. Per the amendments, landlords and mortgagees can now challenge a self-certified Hardship Declaration in Court.

On September 2, 2021, through a Special Legislative Session, New York State extended the COVID-19 Emergency Eviction and Foreclosure Prevention Act (“CEEFPA”) and the COVID-19 Emergency Protect Our Small Businesses Act (“SBA”) through January 15, 2022. As discussed in our August 17, 2021 Alert, in Chrysafis v. Marks, No. 21A8, — S. Ct. –, 2021 WL 3560766 (Aug. 12, 2021), the United States Supreme Court (“SCOTUS”) granted an injunction blocking the enforcement of CEEFPA and held that Part A of the CEEFPA, a provision allowing tenants to submit an affidavit self-certifying their pandemic-related hardship to prevent eviction, violated the plaintiffs-landlords’ due process rights (“Hardship Declaration”) and was unconstitutional. New York’s new legislation attempts to address this constitutional issue by providing a mechanism for landlords and mortgagees in residential and commercial evictions and foreclosures to challenge the Hardship Declarations by filing a motion.

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U.S. Supreme Court Blocks Enforcement of a Limited Part of New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act

Wayne Streibich, Diana M. Eng, and Chenxi Jiao


Financial institutions, lenders, and servicers should take note that the United States Supreme Court (“SCOTUS”) granted an injunction filed by plaintiffs-landlords seeking to prevent the enforcement of New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (“CEEFPA”) because it violates their due process rights. However, SCOTUS limited its ruling to enjoin the enforcement of only Part A of the CEEFPA, which provides that if a tenant self-certifies financial hardship, a landlord generally cannot contest the certification and denies the landlord a hearing. Thus, financial institutions, lenders, and servicers should continue to abide by other prohibitions regarding foreclosures, evictions, and credit reporting in the CEEFPA.

On August 12, 2021, in Chrysafis v. Marks, No. 21A8, — S. Ct. –, 2021 WL 3560766 (Aug. 12, 2021), the United States Supreme Court granted an injunction blocking the enforcement of New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020—an anti-eviction law originally passed on December 28, 2020, and subsequently extended. SCOTUS found that the provision allowing tenants to submit an affidavit self-certifying their pandemic-related hardship to prevent eviction violated the plaintiffs-landlords’ due process rights (“Hardship Declaration”).

Background

When enacted on December 28, 2020, the CEEFPA stayed all pending residential eviction proceedings and foreclosure actions for 60 days and provided a further stay through May 1, 2021, to those defendants who provided their landlord or lender/servicer, as applicable, with a Hardship Declaration certifying that they have been negatively impacted as a result of the COVID-19 pandemic. On May 4, 2021, the CEEFPA was extended to, among other things, protect tenants who submitted a Hardship Declaration from eviction until August 31, 2021.

On May 6, 2021, a small group of landlords and the Rent Stabilization Association (“Landlords”) filed a lawsuit in the Eastern District of New York challenging the constitutionality of the CEEFPA. The district court dismissed the Landlords’ complaint and the United States Court of Appeals for the Second Circuit denied the Landlords’ request for an injunction pending their appeal. The Landlords then filed for a petition for a writ of certiorari to the Supreme Court and, on July 26, 2021, filed an application for emergency injunctive relief, which was presented to Justice Sotomayor and referred to SCOTUS.

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How SCOTUS Clarified the Spokeo Standard of “Concrete” Harm Necessary to Establish Article III Standing, and What It Means for the Future of Class Actions

Ana Tagvoryan, Deborah A. Skakel, Edward W. Chang, Scott E. Wortman, Jeffrey N. Rosenthal, Chenxi Jiao, and Harrison M. Brown

On June 25, 2021, the United States Supreme Court issued its decision in TransUnion LLC v. Ramirez, No. 20-297, 2021 WL 2599472 (U.S. June 25, 2021) (“TransUnion”), providing much needed clarity regarding the type of “concrete” harm necessary to establish a plaintiff’s standing under Article III of the United States Constitution.

In a 5-4 decision authored by Justice Kavanaugh, the Court expounded on its ruling in Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), using several examples to illustrate how to measure the harm plaintiffs allege from a statutory violation. As Justice Kavanaugh succinctly stated: “No concrete harm, no standing.”

In TransUnion, the lower court certified a class of 8,124 absent class members who purportedly suffered injury under the Fair Credit Reporting Act (“FCRA”) because TransUnion had placed an alert on their credit report indicating that the consumer’s name was a “potential match” to a name on the list maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) of terrorists, drug traffickers, and other serious criminals.

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U.S. Supreme Court Holds “Autodialer” Definition under the TCPA Is Limited to Equipment Using a Random or Sequential Number Generator

Wayne StreibichDiana M. Eng, and Andrea M. Roberts

Financial institutions, debt collectors, and consumer-facing businesses should take note that the United States Supreme Court has ruled that the definition of an “autodialer” under the Telephone Consumer Protection Act, as written, requires that the device must use a random or sequential number generator. This narrow interpretation should shield companies from liability in current or future actions, where the consumers’ telephone numbers are known and not random or sequentially generated.

In Facebook, Inc. v. Duguid, 592 U.S. ___ (2021), the United States Supreme Court (“SCOTUS”) narrowly interpreted the definition of “autodialer” under the Telephone Consumer Protection Act (“TCPA”), holding the definition excludes equipment that does not use a random or sequential number generator. SCOTUS specifically held that an “automatic telephone dialing system” is limited to equipment that either stores a telephone number using a random or sequential number generator, or produces a telephone number using a random or sequential number generator.

Summary of Facts and Background

Plaintiff Noah Duguid (“Plaintiff”) began receiving several login-notification text messages from defendant Facebook, Inc. (“Facebook”), alerting him that someone had attempted access to the Facebook account associated with his phone number from an unknown browser. Plaintiff never had a Facebook account and had not given Facebook his phone number. As such, Plaintiff commenced a putative class action in the District Court for the Northern District of California (“District Court”) against Facebook, alleging it violated the TCPA by maintaining a database that stored phone numbers and programmed its equipment to send automated text messages to the stored phone numbers each time the person’s account was accessed by an unrecognized device or browser.

Facebook moved to dismiss, arguing that it did not violate the TCPA because Facebook did not use an automatic dialer, as its text messages were not sent to phone numbers that were randomly or sequentially generated. Rather, Facebook sent targeted, individualized texts to phone numbers linked to specific accounts. The District Court agreed with Facebook and dismissed Plaintiff’s complaint with prejudice.

Plaintiff appealed, and the United States Court of Appeals for the Ninth Circuit (“Ninth Circuit”) reversed the District Court’s order. The Ninth Circuit held that an autodialer “need not be able to use a random or sequential generator to store numbers; it need only have the capacity to ‘store numbers to be called’ and ‘to dial such numbers automatically.’” SCOTUS granted certiorari to resolve a circuit split among the Courts of Appeals regarding whether the definition of an “automatic telephone dialing system” includes equipment that can “store” and dial phone numbers, even if such equipment does not “us[e] a random or sequential number generator.”

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U.S. Supreme Court Rules Statute of Limitations for FDCPA Claim Runs One Year from Alleged Violation, Not Discovery

Wayne Streibich, Diana M. Eng, Jonathan M. Robbin, Scott E. Wortman, and William L. Purtell

The Supreme Court of the United States (“Supreme Court”) recently affirmed the Third Circuit’s decision holding Fair Debt Collection Practices Act (“FDCPA”) claims are subject to a one-year statute of limitations from the date of an alleged violation and rejecting the Fourth and Ninth Circuit’s adoption of a broad “discovery rule.” However, debt collectors should take note that equitable tolling principles may still apply in certain circumstances. 

On December 10, 2019, in Rotkiske v. Klemm, — S. Ct. — (2019), the Supreme Court issued an opinion holding that the one-year statute of limitations under the FDCPA accrues when a violation of the FDCPA occurs, not when that violation is discovered by the consumer. The Justices ruled 8-1 in the case, with Justice Thomas writing the opinion and Justice Sotomayor concurring. Justice Ginsburg filed a dissent, which would have remanded the case back to the district court to re-review the consumer’s separate allegations of equitable tolling of the statute of limitations.

Summary of Facts

In 2009, respondent Klemm & Associates (“Klemm”) sued petitioner Kevin Rotkiske (“Rotkiske”) in state court to enforce a credit card debt, which was allegedly beyond Pennsylvania’s statute of limitations for enforcement (“2009 Action”). Klemm issued service of process to an address where Rotkiske did not live, which Klemm allegedly had reason to know was inaccurate. An unknown individual accepted service on behalf of Rotkiske. Ultimately, Klemm obtained a default judgment against Rotkiske based on this return of service. Rotkiske was unaware of the default judgment against him until 2014, when his mortgage loan application was denied based on this default judgment.

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U.S. Supreme Court Excludes Banks Collecting Purchased Delinquent Debt from Definition of “Debt Collector” under the FDCPA

By: Diana M. Eng and Louise Marencik

Banks and other consumer finance firms that purchase delinquent debt and then collect on their own behalf are not “debt collectors” under the Fair Debt Collection Practices Act. However, this limitation still does not apply to those institutions that collect on behalf of another.

In a unanimous decision in Henson et al. v. Santander Consumer USA Inc., the United States Supreme Court held that the Fair Debt Collection Practices Act (“FDCPA”) does not apply to banks and other consumer finance firms that purchase and then collect on defaulted debt that they own. No. 16-349, ____ U.S. ____ (2017).

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