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Saenz v. Buckeye Check Cashing of Illinois

United States District Court, N.D. Illinois, Eastern Division

September 20, 2016

Juan Saenz, Plaintiff,
Buckeye Check Cashing of Illinois, Checksmart Financial, LLC, and Community Choice Financial, Inc., Defendants.


          Manish S. Shah United States District Judge

         Juan Saenz defaulted on his personal loan. Buckeye Check Cashing of Illinois mailed Saenz a letter informing Saenz of his missed payment and attempting to collect his debt. Saenz alleges that by sending this letter Buckeye violated the Fair Debt Collections Practices Act in two respects. First, Buckeye failed to include in the letter notices of Saenz's rights under the FDCPA. Second, Buckeye made false, deceptive, and misleading representations in the letter in order to collect the alleged debt. Saenz named Buckeye and affiliated companies, Checksmart Financial, LLC, and Community Choice Financial, Inc., as defendants. The defendants move to dismiss Saenz's complaint for lack of subject-matter jurisdiction under Rule 12(b)(1) and for failure to state a claim under Rule 12(b)(6).

         I. Legal Standards

         A court must dismiss an action if it determines, at any time, it lacks subject-matter jurisdiction, Fed.R.Civ.P. 12(h)(3), and a defendant may move to dismiss an action for lack of subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). The plaintiff bears the burden of proving that jurisdiction is proper. Transit Express, Inc. v. Ettinger, 246 F.3d 1018, 1022 (7th Cir. 2001) (citation omitted). To prevail, “a plaintiff need only show the existence of facts that could, consistent with the complaint's allegations, establish standing.” Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009) (citations omitted).

         To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain factual allegations that plausibly suggest a right to relief. Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 558 (2009)). “The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits.” Triad Assocs., Inc. v. Chicago Hous. Authority, 892 F.2d 583, 586 (7th Cir. 1989). With a 12(b)(6) motion, a court may only consider allegations in the complaint, documents attached to the complaint, and documents that are both referred to in the complaint and central to its claim(s). Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998). The court must construe all factual allegations as true and draw all reasonable inferences in the plaintiff's favor, but the court need not accept legal conclusions or conclusory allegations. Virnich, 664 F.3d at 212 (citing Ashcroft v. Iqbal, 556 U.S. 662, 680-82 (2009)).

         II. Background

         Saenz took out a consumer payday loan for personal purposes. [1] at ¶ 12. He was unable to pay it and he defaulted on the loan. [1] at ¶ 13. Buckeye sent a letter to Saenz on Buckeye's letterhead, which said, “Your loan is in default.” [1-1] at 8. It also stated: “Your debt has now been transferred to our office for collection, ” and referred to a contract with Buckeye. [1-1] at 8. The collection letter was Buckeye's first and last communication with Saenz; it did not provide notices about Saenz's rights to dispute or verify the debt, or to obtain additional information about the creditor. [1] at ¶¶ 15-19. The complaint alleges that Buckeye's letter was false, deceptive, and misleading because Buckeye represented itself as a debt collector to instill fear in Saenz and to induce Saenz to pay the debt. [1] at ¶¶ 31.

         III. Analysis

         A. Saenz Has Standing to Bring This Lawsuit

         Saenz alleges he suffered “a concrete informational injury” due to Buckeye's “failure to provide truthful information” in its collection letter to Saenz-an injury which can be redressed by a favorable decision by this court. [1] ¶¶ 3-4. Buckeye argues that “[n]one of the asserted violations worked an actual harm, ” [12] at 4, nor did they pose a “risk of real harm, ” [12] at 6-7, and thus, there is no injury-in-fact. Without an injury-in-fact, Buckeye notes, Saenz has no standing to bring this FDCPA lawsuit.

         A federal court does not have subject-matter jurisdiction over a dispute unless the plaintiff has “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547, as revised (May 24, 2016). An injury-in-fact is a concrete and particularized invasion of a legally protected interest. Id. at 1548. In Spokeo, the Supreme Court held that even lawsuits based on statutory violations require proof of a concrete injury, which is not met automatically by citing a statute that grants a right and authorizes a suit to vindicate that right. Id. at 1549. “This does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.” Id. (citation omitted). In some circumstances, violation of a statutory procedural right will be enough to confer standing. Id. For some plaintiffs, alleging the harm identified by Congress in the statute is sufficient. Id.

         The Seventh Circuit has not had occasion to consider Article III standing for FDCPA violations after Spokeo. But nothing in Spokeo overruled the Seventh Circuit's decisions that emphasized and affirmed the power of Congress to pass legislation creating new rights, which if violated, would confer standing under Article III. See, e.g., Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618, 623 (7th Cir. 2014) (citing Kyles v. J.K. Guardian Sec. Servs., Inc., 222 F.3d 289, 294 (7th Cir. 2000)). Indeed, the Supreme Court endorsed the view that “Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.” Spokeo, 136 S.Ct. at 1549 (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 580 (1992) (Kennedy, J., concurring)).

         Congress gave consumers a legally protected interest in certain information about debts, and made the deprivation of information about one's debt (in a communication directed to the plaintiff consumer) a cognizable injury. The violations alleged here are distinguishable from the “bare procedural violation” imagined in Spokeo. 136 S.Ct. at 1550. Saenz was harmed by receiving a deficient and allegedly misleading communication from Buckeye-a harm defined and made cognizable by the statute, but a concrete harm nonetheless. The alleged violations of the FDCPA in this case are concrete and particularized to Saenz, and he has Article III standing to bring suit. Buckeye's motion to dismiss for lack of subject-matter jurisdiction is denied.

         B. The Complaint Fails to State a ...

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