Tag Archives: Standing

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

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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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Farewell, Hunstein—Eleventh Circuit Holds Disclosing Debtor’s Information to Mail Vendor Does Not Establish Concrete Harm

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Wayne Streibich, Diana M. Eng, and Andrea M. Roberts ●

Financial institutions, debt collectors, debt collection law firms, and consumer-facing businesses should take note that the Eleventh Circuit Court of Appeals reversed the prior panel’s decision and has ruled that merely providing a consumer’s information to a mail vendor to send a debt collection letter did not violate the FDCPA since it is not a public disclosure and, therefore, the consumer did not suffer concrete harm sufficient to confer Article III standing. The Eleventh Circuit En Banc Panel’s decision should result in the dismissal of other pending FDCPA actions based on this mailing vendor theory and reduce future actions. Further, the decision has broader implications beyond FDCPA cases, as it outlines the Eleventh Circuit’s overall approach in evaluating whether a plaintiff has sufficiently alleged concrete harm. 

In Hunstein v. Preferred Collection and Management Services, Inc., 2022 WL 4102824 (11th Cir. Sept. 8, 2022), the Eleventh Circuit’s En Banc Panel reversed the prior panel’s decision and held “no concrete harm, no standing,” citing the United States Supreme Court’s decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). As such, the Eleventh Circuit held that the United States District Court for the Middle District of Florida (“District Court”) lacked jurisdiction to adjudicate plaintiff’s claim, vacated the District Court’s Order, and remanded with instructions to dismiss the case without prejudice. 

Summary of Facts and Background

After Richard Hunstein (“Plaintiff”) failed to timely pay a medical bill, the hospital transferred the debt to Preferred Collection and Management Services, Inc. (“Defendant”), a debt collection agency. Defendant sent Hunstein a debt collection letter through a commercial mail vendor. In preparation for mailing the letter, Defendant provided the mail vendor with certain information, including Hunstein’s name, his son’s name, and the amount of the debt. 

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Fifth Circuit Holds Mere Statutory Violation of the FDCPA, Future Risk of Harm, Confusion, and Lost Time Are Insufficient to Establish Article III Standing

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Wayne Streibich, Diana M. Eng, and Alina Levi

Financial institutions, debt collectors, debt collection law firms, and consumer-facing businesses should take note that the Fifth Circuit Court of Appeals has ruled that merely asserting a statutory violation of the Fair Debt Collection Practices Act (“FDCPA”), confusion, lost time, and/or a future risk of harm are insufficient to establish Article III standing. The Fifth Circuit’s application and clarification of the United States Supreme Court’s 2021 decision in TransUnion LLC v. Ramirez, —U.S.—, 141 S. Ct. 2190, 2200 (2021) (“TransUnion”) should result in the dismissal of other pending actions and prevent future actions based on allegations of a mere statutory violation of the FDCPA, future risk of harm, lost time, and/or confusion resulting from debt collection communications.

In Perez v. McCreary, Veselka, Bragg & Allen, P.C., — F.4th —, No. 21-50958, 2022 WL 3355249, at *1 (5th Cir. Aug. 15, 2022), the Fifth Circuit Court of Appeals (“Fifth Circuit”) vacated a class certification order and remanded the case to be dismissed for lack of jurisdiction, holding that a statutory violation of the FDCPA, alone, is insufficient to confer Article III standing. Further, the Fifth Circuit held that a purported future risk of harm, experiencing confusion, and/or lost time are insufficient to allege the required injury-in-fact for Article III standing to maintain a lawsuit in federal court.

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Magistrate Judge Declines to Apply Spokeo to FCRA Case Against TransUnion

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By: Louise Bowes Marencik

On January 18, 2017, a federal magistrate judge concluded that the ruling in Spokeo does not apply to a putative class action brought against TransUnion.

In Miller v. TransUnion, LLC, the plaintiff alleged that TransUnion violated Section 1681g(a) of the Fair Credit Reporting Act by providing misleading and confusing information to consumers which suggested that their names appear on the Office of Foreign Assets Control’s (OFAC) list of terrorists, money launderers, drug traffickers, and other enemies of the United States.  No. 3:12-CV-1715, 2017 U.S. Dist. LEXIS 7622 (M.D. Pa. Jan. 18, 2017).  On August 3, 2015, the United States District Court for the Middle District of Pennsylvania stayed the proceedings because the United States Supreme Court had granted certiorari in Spokeo Inc. v. Robins. On May 16, 2016, the Spokeo Court opined on the standard for the injury-in-fact requirement to establish standing under Article III of the United States Constitution, which requires that plaintiffs must show “concrete” and “particularized” injuries, as it relates to claims under the Fair Credit Reporting Act (FCRA). 136 S. Ct. 1540 (2016). The Court held that the appellate court’s standing analysis was incomplete because it failed to consider the distinction between concreteness and particularization, and it did not address whether the particular procedural violations alleged in the case caused sufficient risk to meet the concreteness requirement.

In the instant case, the Court lifted the stay on May 31, 2016, and allowed for briefing on the issue of whether the Spokeo decision had any impact on the plaintiff’s motion for class certification. TransUnion argued that Miller failed to argue a sufficiently “concrete” injury to support standing under Article III.  In his January 18, 2017 Report and Recommendation, Magistrate Judge Martin C. Carlson noted that, in Spokeo, the Court explained that a bare procedural violation does not satisfy this requirement, using the example of a credit report containing an incorrect zip code as a FCRA violation that would not constitute a concrete harm. However, the Spokeo Court clarified that an intangible harm may be sufficiently concrete to allow standing under Article III. The Judge chose to follow the United States District Court for the Northern District of California’s decision in a similar case involving OFAC disclosures, where the Court found that the confusing disclosure could cause concrete harm in the form of emotional distress about whether the recipient is listed in the OFAC database. Larson v. TransUnion, LLC, 2016 WL 4367253, *2 (N.D. Cal. Aug. 11, 2016).   Accordingly, the Judge recommended that the United States District Court for the Middle District of Pennsylvania decline to accept TransUnion’s interpretation of Spokeo, and find that Miller’s alleged injuries were sufficiently particularized and concrete to establish standing under Article III.  Assuming the Court follows this recommendation, the decision could suggest that Spokeo’s impact on a plaintiffs’ ability to show injuries caused by FCRA violations will be less substantial than originally thought.

 

 

 

California Supreme Court issues narrow holding that, post-foreclosure, borrowers have standing to assert wrongful foreclosure based on allegations that an underlying assignment is void

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By: Shawnda M. Grady

On February 18, 2016, the California Supreme Court resolved a split in the Courts of Appeal and unanimously held that a mortgage loan borrower has standing to sue for wrongful foreclosure based on an allegedly void assignment.  Tsvetana Yvanova v. New Century Mortgage Corp. et al., Case No. S218973 (Cal. Feb. 18, 2016).   The Court followed the reasoning in Glaski v. Bank of America, 218 Cal.App.4th 1079 (2013), which held that foreclosure itself is sufficient prejudice for standing purposes.  The Yvanova opinion did not extend to pre-foreclosure claims, did not address whether a borrower must allege tender to state a cause of action for wrongful foreclosure, did not address what facts render an assignment void, and explicitly limited its ruling to void – not voidable – mortgage assignments.  Three additional cases currently pending before the California Supreme Court, which have not yet been briefed, also address a homeowner’s standing to assert a claim for wrongful foreclosure and have the potential to expand the Yvanova ruling.

Background
Plaintiff-borrower Tsvetana Yvanova sued her mortgage lender, New Century Mortgage Corporation (“New Century”), and others for various foreclosure-related causes of action, with a single cause of action for quiet title remaining in her second amended complaint.  Yvanova alleged that in 2006, she obtained a $483,000 loan from New Century, for which she provided a deed of trust as security.  In 2007, New Century filed for bankruptcy and was liquidated in August 2008.  In December 2011, the servicer, on behalf of New Century, executed an assignment transferring the Deed of Trust to Deutsche Bank National Trust Company (“Deutsche Bank”) as trustee for a securitized trust.  The closing date for the securitized trust was in January 2007.  In August 2012, Western Progressive LLC recorded (1) a substitution of trustee, substituting itself for Deutsche Bank, and (2) a notice of trustee’s sale.  On September 14, 2012, the property was sold at public auction by Western Progressive LLC to a third party.

Yvanova alleged the December 2011 Assignment of the Deed of Trust from New Century to Deutsche Bank was void because:  (1) New Century lacked authority to transfer the Deed of Trust in 2011, because its assets were transferred to the bankruptcy trustee in 2008, and (2) the investment trust was closed in 2007, four years before the assignment.  The superior court sustained defendants’ demurrer without leave to amend.

The Court of Appeal affirmed the judgment, concluding that Yvanova could not state a claim for quiet title, because Yvanova had not alleged tender of the amount due.  The Court of Appeal also determined that Yvanova could not, on the facts alleged, amend her complaint to state a claim for wrongful foreclosure.  The Court of Appeal reasoned that, as a third party unrelated to the assignment at issue, Yvanova was not affected by any alleged deficiencies in the assignment and, therefore, lacked standing to enforce the terms of the agreements allegedly violated.  In so ruling, the Court of Appeal declined to follow the holding of Glaski.  Yvanova petitioned for review before the California Supreme Court, which granted review on August 27, 2014.  Yvanova v. New Century Mortg. Corp., 331 P.3d 1275 (Cal. 2014).

California Supreme Court Decision
In Yvanova,  California Supreme Court limited its review to the following:  “In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void?”  Yvanova, 331 P.3d at 1275.  The Court found in the affirmative, following the reasoning in Glaski, supra,  and rejecting the holding in Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497 (2013), to the extent that those cases addressed a borrower’s standing to assert a post-foreclosure claim of wrongful foreclosure based on a void assignment.  Specifically, the Court found that an entity foreclosing following a void assignment of the deed of trust, as opposed to a merely voidable assignment, acts without legal authority to do so.  Under such circumstances, a borrower has standing to state a claim for wrongful foreclosure, because he or she has suffered the loss of ownership of the property.

The Court explicitly noted that its holding was limited to the issue of standing in post-foreclosure cases.  The Court did not determine whether the defects alleged by Yvanova would render an assignment void, and declined to address what facts must be alleged to demonstrate a void assignment.  The Court further declined to extend its analysis of prejudice beyond the standing context.

Additional Cases Pending Review
Three additional cases remain pending before the California Supreme Court that also address a borrower’s standing to challenge foreclosure based on allegations of a void assignment:  Boyce v. TD. Service Company, 352 P.3d 390 (Cal. 2015) (post-foreclosure action); Keshtgar v. U.S. Bank, 334 P.3d 686 (Cal. 2014) (pre-foreclosure action); Mendoza v. JP Morgan Chase Bank, 337 P.3d 493 (Cal. 2014) (post-foreclosure action).  In each of these cases, the plaintiff asserted a wrongful foreclosure claim, alleging the assignment of the subject deed of trust was void because it was reportedly transferred into a securitized trust after the trust’s closing date; in Keshtgar and Medoza, the plaintiffs also challenged the authority of the individual who executed the assignment to do so.  In each of the three cases, the Court of Appeal declined to follow Glaski v. Bank of America, 218 Cal.App.4th 1079 (2013) and instead followed the reasoning in Jenkins, supra, holding that the borrowers had no standing.  The Supreme Court deferred briefing in each of these three cases pending the Court’s disposition of Yvanova, and no further orders have been issued.

Although borrowers may attempt to rely on Yvanova to assert wrongful foreclosure claims based on allegedly void assignments, the limitations of the Court’s holding in Yvanova still permit defendants to challenge the borrower’s failure to tender, whether the underlying facts regarding the assignment render it void and whether the borrower has sufficiently alleged prejudice as an element of wrongful foreclosure.  It is not yet clear whether the Court’s anticipated disposition of Boyce, Keshtgar, and Mendoza will extend to these issues or clarify the Yvanova holding.