By:  Linda Sackey

In Wadsworth v. Kross, Lieberman & Stone, Inc., 2021 WL 3877930, at *1 (7th Cir. Aug. 31, 2021), the United States Court of Appeals for the Seventh Circuit addressed “a problem that has become familiar to our circuit: alleged violations of the Fair Debt Collection Practices Act that have not caused the plaintiff any concrete harm.” Concluding that Article III prevented it from adjudicating such claims, the court reversed and remanded the case to the district court with instructions to dismiss for lack of subject matter jurisdiction.

In September 2016, a healthcare research company hired plaintiff as a study manager responsible for developing clinical trials. The company offered plaintiff a $7,500 signing bonus, half of which would be payable after 30 days of employment and the other half would be payable after roughly six months’ employment. That said, the company provided that if plaintiff left her position or if it fired her for cause within 18 months of the second payment, she would have to repay the full bonus. Plaintiff agreed. In September 2017, after one year on the job, the company discharged her.

The following week, the company hired a debt-collection agency to retrieve the bonus payments. The agency mailed plaintiff a collection letter shortly after she was fired, and one of its employees called her by telephone four times in the weeks after that. Plaintiff sued the debt collection agency, arguing that its letter and phone calls violated the Fair Debt Collection Practices Act (“FDCPA” or “the Act”), 15 U.S.C. §§ 1692 et seq.

Both parties moved for summary judgment. The agency did not dispute her allegations about its conduct but argued that the Act was inapplicable because (1) the signing bonus was not a “debt” within the meaning of the Act, and (2) the agency was not acting as a “debt collector” under the Act because plaintiff’s debt was not in default at the time of the letter and phone calls. The district court rejected both arguments and entered summary judgment for plaintiff.

On the agency’s appeal, the Seventh Circuit found that plaintiff had not suffered a concrete injury traceable to the agency’s alleged violations of the Act; therefore, she lacked standing to sue. The court explained that to establish standing in federal court, a plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the defendant’s conduct, and (3) that is likely to be redressed by a favorable judicial decision.

On the first prong, the court noted that an injury must be concrete to be cognizable in federal court. In other words, it must be real, and not abstract. A plaintiff cannot establish standing simply by pointing to a procedural violation of a statute; instead, she must show that the violation harmed or presented an appreciable risk of harm to a concrete interest that Congress sought to protect.

In this case, the Seventh Circuit found that plaintiff had not established that the agency’s communications caused her any harm under the Act. Plaintiff alleged that she suffered personal humiliation, embarrassment, mental anguish, and emotional distress because of the agency’s conduct. The court concluded that anxiety and embarrassment were not injuries in fact. Rather, it determined that stress and embarrassment were “quintessential abstract harms” that were beyond its power to remedy.