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Flores v. Portfolio Recovery Associates, LLC

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

November 29, 2017



          Honorable Edmond E. Chang, United States District Judge.

         Editha Flores claims that Portfolio Recovery Associates, LLC (which does business under the acronym “PRA”) violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., by communicating information about her consumer debt to a credit reporting agency without disclosing that the debt was disputed.[1] R. 1, Cmplt. ¶¶ 9-16.[2] After discovery, Flores moved for summary judgment, R. 38, Pl. Mot. Summ. J. PRA cross-moved for summary judgment, arguing that Flores lacked standing, that she had failed to establish elements of her FDCPA claim, and, in the alternative, that PRA's actions were bona fide error. R. 45, Def. Resp. and Cross-Mot. Summ. J. For the reasons stated below, summary judgment is granted to Flores. PRA's cross-motion for summary judgment is denied.

         I. Background

         PRA is in the business of collecting defaulted consumer debts. R. 38-2, PSOF ¶ 3.[3] In July 2012, PRA purchased a credit card obligation owed by Flores. R. 46, DSOF ¶ 1. Flores used the card in question to buy clothes. PSOF ¶ 6; PSOF Exh. G at 82:3-16. Sometime after PRA bought the credit card obligation, Flores met with and retained attorneys at the Debtors Legal Clinic, because she was worried that PRA would take legal action to collect the obligation. PSOF ¶ 8; PSOF Exh. G at 74:21-75:11. Flores reviewed her credit report with her attorneys, and told them that she thought the $748 balance claimed by PRA was not accurate. PSOF ¶ 10; PSOF Exh. G at 60:17-20.[4]

         On July 3, 2014, Debtors Legal Clinic faxed PRA a letter about Flores's account. PSOF ¶ 11. The contents of the letter are undisputed. The letter informed PRA that Debtors Legal Clinic represented Flores, and stated: “This client regrets not being able to pay, however, at this time they are insolvent, as their monthly expenses exceed the amount of income they receive, and the amount reported is not accurate.” R. 49-1, DSOF Exh. C. PRA's records for Flores's account show that it received and processed the letter the next day.[5]

         In December 2014 (months after PRA received the letter from Flores's lawyers), PRA provided information about Flores's obligation to Experian, a credit reporting agency. PSOF ¶ 15. PRA communicated a balance of $748 to Experian, but did not inform Experian that the amount of the obligation was disputed. PSOF ¶¶ 16-17.

         II. Summary Judgment Standard

         Summary judgment must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine issue of material fact exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating summary judgment motions, courts must view the facts and draw reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). The Court may not weigh conflicting evidence or make credibility determinations, Omnicare, Inc. v. United Health Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011), and must consider only evidence that can “be presented in a form that would be admissible in evidence.” Fed.R.Civ.P. 56(c)(2). However, affidavits, depositions, and other written forms of testimony can substitute for live testimony. Malin v. Hospira, Inc., 762 F.3d 552, 554-55 (7th Cir. 2014). The party seeking summary judgment has the initial burden of showing that there is no genuine dispute and that they are entitled to judgment as a matter of law. Carmichael v. Village of Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this burden is met, the adverse party must then “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.

         III. Analysis

         A. Standing

         As a threshold matter, the Court cannot hear this case unless Flores has Article III standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992). At minimum, Flores must show that she has (1) an injury in fact, (2) which is fairly traceable to the defendant's challenged conduct, and (3) which is likely to be redressed by a favorable judicial decision. Id. An “injury in fact” is an invasion of a legally protected interest which is concrete and particularized, and actual or imminent (as opposed to conjectural or hypothetical). Lujan, 504 U.S. at 560. PRA argues that Flores has not alleged an injury in fact that is sufficient to establish Article III standing. Def. Cross-Mot. Summ. J. at 17.

         PRA and Flores stake out two extreme positions on standing, and neither is quite right. On one hand, PRA claims that Flores does not have standing because she seeks only statutory damages. Def. Cross-Mot. Summ. J. at 18. On the other hand, Flores argues that an FDCPA violation alone is enough to constitute an injury in fact for standing purposes. R. 59, Pl. Resp. at 20. The truth is somewhere in the middle. In Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), the Supreme Court reiterated that a “bare procedural violation” is not necessarily an injury in fact. Id. at 1549. Article III requires a concrete injury even in the context of a statutory violation. Id. But Spokeo also affirmed 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.” Id. (quoting Lujan, 504 U.S. at 580 (Kennedy, J., concurring in part)). The Supreme Court noted that Congress's judgment is “instructive and important, ” because “Congress is well positioned to identify intangible harms that meet minimum Article III requirements.” Spokeo, 136 S.Ct. at 1549. Crucially, Spokeo held that “the real risk of harm” from violation of a procedural right may be enough to establish injury. Id. Spokeo did not hold that a plaintiff must suffer measurable financial harm in order to establish an injury in fact. To the contrary, the Supreme Court reiterated that difficult-to-measure intangible harms may be concrete injuries in fact. Id; see also Lane v. Bayview Loan Servicing, LLC, 2016 WL 3671467, at *3 (N.D. Ill. July 11, 2016) (discussing the distinction between actual damages and the concrete-harm requirement).

         In this case, PRA disclosed Flores's debt to a credit reporting agency without reporting that the debt was disputed. Congress, with its unique fact-finding ability and sensitivity to the public interest, made the judgment that communicating credit card information without communicating that the debt is disputed is a “false, deceptive, or misleading representation” in violation of the FDCPA. 15 U.S.C. § 1692e(8). Reporting a debt on a credit report without noting a dispute poses a real risk of serious economic and reputation consequences. An incorrectly reported debt can be a “red flag” to “anyone who runs a background or credit check, including landlords and employers, ” and thus could be used to pressure a debtor to pay a debt without exploring their legal options. See Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1082-83 (7th Cir 2013) (pending legal actions, even if not served, constituted a sufficient harm for standing); see also Bowse v. Portfolio Recovery Assocs., LLC, 218 F.Supp.3d 745, 749 (N.D. Ill. 2016) (“[A]n inaccurate credit rating creates a substantial risk of harm”). This violation is not a harmless procedural misstep like disseminating an incorrect zip code; it is an error with easily appreciable real-world effects. See Spokeo, 136 S.Ct. at 1550. The substantial risk of harm from an inaccurate credit report is a concrete injury for Article III standing.

         B. ...

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