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Baranowski v. Portfolio Recovery Associates, LLC

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

March 29, 2018



          John Z. Lee United States District Judge

         Plaintiff Yvonne Baranowski has sued Portfolio Recovery Associates, LLC (“PRA”) for violating the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692e(8), alleging that PRA communicated Baranowski's debt to credit reporting agencies without indicating that she had disputed the debt. The parties have cross-moved for summary judgment [84] [89], and for the following reasons, the Court grants Baranowski's motion and denies PRA's motion.

         Factual Background[1]

         Baranowski fell behind on her credit card payments to Comenity Capital Bank/Home Shopping Network (“HSN credit account”) in 2012. Def.'s LR 56.1(a)(3) Stmt. ¶ 1. She had used the credit card to purchase items such as clothing, small electronics, and household items. Pl.'s LR 56.1(b)(3)(C) Stmt. ¶ 6. Defendant PRA purchased the obligation owed on the HSN credit account in 2014, after Baranowski's debt became delinquent. Def.'s LR 56.1(a)(3) Stmt. ¶ 1.

         When PRA sued Baranowski regarding the debt, she hired attorneys during the first week of October 2014. Pl.'s LR 56.1(b)(3)(C) Stmt. ¶ 8.[2] Baranowski met with her attorneys and reviewed her credit report to ensure that it was accurate and to correct any inaccuracies. Id. ¶ 9. She told her attorneys that she did not believe that the amount of $1, 550.00 was accurate and that it should have been around $700 or $800. Id. ¶ 10.

         On October 17, 2014, Baranowski's attorneys faxed a letter to PRA that stated in part that “the amount reported is not accurate.” Id. ¶ 11; see Def.'s Ex. C, 10/17/14 Letter from Attorney Finko to PRA. That day, PRA received the letter and reviewed it. Pl.'s LR 56.1(b)(3)(C) Stmt. ¶ 12. After receiving and reviewing the letter, PRA communicated credit information to the Experian, Equifax, and TransUnion credit-reporting agencies related to the alleged debt without also noting that the debt was disputed. Id. ¶ 15.

         Baranowski filed this lawsuit alleging that PRA's conduct violated the FDCPA. Discovery has concluded, and the parties have cross-moved for summary judgment. PRA argues that Baranowski lacks Article III standing to bring suit. Alternatively, PRA contends that Baranowski has failed to establish an FDCPA violation and that the bona fide error defense applies. Baranowski counters that there are no triable issues of fact regarding whether PRA violated the FDCPA.

         Legal Standard

         “The court shall grant summary judgment 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). The Court gives “the non-moving party the benefit of conflicts in the evidence and reasonable inferences that could be drawn from it.” Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir. 2013). “At summary judgment a court may not assess the credibility of witnesses, choose between competing inferences or balance the relative weight of conflicting evidence; it must view all the evidence in the record in the light most favorable to the non-moving party and resolve all factual disputes in favor of the non-moving party.” Abdullahi v. City of Madison, 423 F.3d 763, 773 (7th Cir. 2005). The nonmovant “must establish some genuine issue for trial such that a reasonable jury could return a verdict in her favor.” Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73 (7th Cir. 2012).


         I. Standing

         To have Article III standing, Baranowski must establish “(i) an injury in fact, which is an invasion of a legally protected interest that is concrete and particularized and, thus, actual or imminent, not conjectural or hypothetical; (ii) a causal relation between the injury and the challenged conduct, such that the injury can be fairly traced to the challenged action of the defendant; and (iii) a likelihood that the injury will be redressed by a favorable decision.” Wis. Right to Life, Inc. v. Schober, 366 F.3d 485, 489 (7th Cir. 2004) (quotations omitted); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). PRA asserts that Baranowski has not suffered an injury in fact, relying on Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016).

         In Spokeo, the plaintiff alleged a violation of the Fair Credit Reporting Act based on a website's inaccurate profile of him that stated he was married with children, in his 50's, was employed and relatively affluent, and held a graduate degree-none of which were true. Id. at 1546. Although the Ninth Circuit held that plaintiff's allegations were sufficient for Article III standing, the Supreme Court vacated the decision and remanded the case, holding that concrete injury is required “even in the context of a statutory violation” because “not all inaccuracies cause harm or present any material risk of harm.” Id. at 1549-50. The Court explained that “[t]his does not mean, however that the risk of real harm cannot satisfy the requirement of concreteness.” Id. “[B]ecause Congress is well positioned to identify intangible harms that meet minimum Article III requirements, its judgment is also instructive and important.” Id. “Congress may ‘elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.'” Id. (quoting Lujan, 504 U.S. at 578). “In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.” Id.

         “Although the Seventh Circuit has not had occasion to consider Article III standing for FDCPA violations after Spokeo, several district courts within the Seventh Circuit and other circuit courts have . . . held that violations of the FDCPA constitute concrete injuries in fact, sufficient to find Article III standing.” Smith v. GC Servs. Ltd. P'ship, No. 116CV01897RLYDML, 2017 WL 2629476, at *2 (S.D. Ind. June 19, 2017); see Sayles v. Adv. Recovery Sys., Inc., 865 F.3d 246, 250 (5th Cir. 2017); Church v. Accretive Health, Inc., 654 F. App'x 990, 994 (11th Cir. 2016); Flores v. Portfolio Recovery Assocs., LLC, No. 15 C 02443, 2017 WL 5891032, at *3 (N.D. Ill. Nov. 29, 2017); Paz v. Portfolio Recovery Assocs., LLC, No. 15 C 5073, 2016 WL 6833932, at *2 (N.D. Ill. Nov. 21, 2016); Evans v. Portfolio Recovery Assocs., LLC, No. 15 C 4498, 2016 WL 6833930, at *3 (N.D. Ill. Nov. 20, 2016); Bowse v. Portfolio Recovery Assocs., LLC, 218 F.Supp.3d 745, 749 (N.D. Ill. 2016). And several courts have specifically held that Congress, in enacting section 1692e(8), recognized that a debt collector's failure to report a disputed debt presents a risk of real harm because it detrimentally affects one's credit score. See Sayles, 865 F.3d at 250 (holding that a violation of § 1692e(8) “exposed Sayles to a real risk of financial harm caused by an inaccurate ...

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