MEMORANDUM AND ORDER
Plaintiff Virginia T. Bautz (“plaintiff’ or “Bautz”) brings this putative class action
Defendant now moves to dismiss plaintiffs complaint, pursuant to Federal Rule of Civil Procedure 12(b)(1), for lack of standing. Because the Court concludes that plaintiff has sufficiently alleged (1) a substantive violation of the FDCPA that demonstrates a concrete and particularized injury-in-fact; or, alternatively, (2) a procedural violation of the FDCPA that poses a “risk of real harm” to plaintiffs statutory interests, Strubel v. Comenity Bank,
Plaintiff alleges that defendant violated Section 1692e of the FDCPA by including a “false, deceptive, or misleading representation” in a letter to her concerning the collection of outstanding credit card debt, and the Court previously determined that plaintiff had plausibly stated a claim that the representation at issue was materially misleading to the least sophisticated consumer. The Court now holds, consistent with Supreme Court and Second Circuit precedent, that adequately alleging a “false, deceptive, or misleading representation” under Section 1692e that is materially misleading to the least sophisticated consumer satisfies the concrete injury component of Article III standing because such conduct violates an individual’s substantive statutory right to be free of abusive debt practices. The Supreme Court’s decision in Spokeo, as well as the Second Circuit’s decision in Strubel, do not suggest otherwise; rather, both cases addressed alleged procedural violations of statutes, which do not automatically confer standing absent a concrete harm that satisfies the injury-in-fact requirement of Article III. In contrast, here, the claim involves an alleged materially false and misleading statement that is a substantive violation of Section 1692e, and confers standing upon the plaintiff without running afoul of the guidance in Spokeo and Strubel. In any event, even assuming ar-guendo that plaintiffs alleged Section 1692e claim could somehow be considered to be a procedural, rather than substantive, violation of the FDCPA, the Court holds that plaintiff still has standing, under Spokeo and Strubel, because, as to the particular alleged violation in this case, she has “demonstrate® a sufficient ‘risk of real harm’ to the underlying [statutory] interest to establish concrete injury without ‘need to allege any additional harm beyond the one Congress has identified.’ ” Strubel,
I. Background
A. The FDCPA
Because the instant motion and the Court’s analysis address plaintiffs interests under the FDCPA, a brief discussion of the purpose and structure of the relevant statutory scheme is required.
Congress enacted the FDCPA because of “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by. many debt collectors,” which “contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” 15 U.S.C. § 1692(a). The statute’s purpose is “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvan
As a remedy for statutory infractions, the FDCPA permits recovery in individual actions for damages equal to the plaintiffs actual loss and/or statutory damages of no more than $1,000, id. §§ 1692k(a)(1)-(2)(A); and in class actions for “(i) such amount for each named plaintiff as could be recovered” in an individual action, “and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector,” id. § 1692k(a)(2)(B). In addition, a successful individual or class action may recover “the costs of the action, together with a reasonable attorney’s fees as determined by the court.” Id. § 1692k(a)(3).
B. Facts
The following facts are taken from the complaint. The Court assumes them to be true for the purpose of deciding this motion and construes them in the light most favorable to the plaintiff as the non-moving party.
Prior to December 2015, plaintiff incurred a credit card debt owed to Department Stores National Bank (“DSNB”). (Compl., EOF No. 1, ¶ 13.) On or about December 31, 2015, defendant, a debt collector, mailed or caused to be mailed to plaintiff a letter (the “Letter”) that attempted to collect that debt. (Id. ¶¶ 10-12, 18; id. Ex. A.) The Letter stated that plaintiff had an outstanding debt of $849,35 and “offer[ed] to settle [her] account for the reduced amount of $467.15. That’s a savings of $382.20.” (Id. ¶¶ 22-23; id. Ex. A.) In addition, it said that “Department Stores National Bank will report forgiveness of debt as required by IRS [i.e., Internal Revenue Service] regulations.” (Id. ¶ 24; id. Ex. A.)
Plaintiff alleges that the language in the Letter “is deceptive and misleading and violated the FDCPA,” that defendant’s “debt collection practice is largely automated and utilizes standardized form letters,” and that defendant mailed or caused to be mailed similar correspondence “over the course of the past year to hundreds of New York consumers ....” (Id. ¶¶ 25, 27, 30.) Specifically, plaintiff asserts that the statement that “‘Department Stores National Bank will report forgiveness of debt as required by IRS regulations’ [the “IRS Language”] could reasonably be understood by the least sophisticated consumer to mean that IRS regulations require that Department Stores National bank report all forgiveness of debt.” (Id. ¶ 38.) Plaintiff claims that the IRS Language “giv[es] erroneous and incomplete tax information because in actual fact and according to IRS regulations, Department Stores National Bank ‘will not’ report to the IRS forgiveness of debt of less than $600.” (Id. ¶ 39.) Because the Letter offered to settle plaintiffs debt for only $382.20, plaintiff alleges that the IRS Language was “an attempt by ARS to make consumers think that the IRS requires the reporting of all forgiveness of debt.” (Id. ¶ 42.) Plaintiff further claims that “[s]uch a statement in a collection letter suggests to the least sophisticated consumer that failure to pay
Accordingly, plaintiff asserts that defendant violated the FDCPA, 15 U.S.C. §§ 1692e, 1692e(2), and 1692e(10); and seeks statutory damages, attorney’s fees, and costs on behalf of herself and a putative class pursuant to 15 U.S.C. § 1692k. (Id. at 9.)
C. Procedural History
Plaintiff commenced this action on February 15, 2016. (ECF No. 1.) On June 2, 2016, defendant filed its first motion to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 13.) That motion was fully briefed on July 14, 2016 (ECF No. 15), and the Court held oral argument on August 24, 2016 (ECF No. 17.)
The Court denied the first motion to dismiss in an oral ruling on August 31, 2016. (ECF No. 19.) It held that plaintiff had sufficiently pled that the Letter contained a “false, deceptive, or misleading representation” under an “an objective test based on the understanding of the least sophisticated consumer.” (Tr. of Aug. 31, 2016 Oral Ruling, ECF No. 21, at 3:5-6, 18-22 (citing Bentley v. Great Lakes Collection Bureau,
Defendant subsequently filed the instant motion to dismiss for lack of subject matter jurisdiction on September 30, 2016. (ECF No. 22.) Plaintiff submitted her opposition on October 31,2016 (ECF No. 23), and defendant filed its reply on November 14, 2016 (ECF No. 24). On December 5, 2016, defendant submitted a supplemental authority letter providing a copy of the Second Circuit’s recent decision in Strubel,
II. Standard of Review
When a court reviews a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), it “must accept as true all material factual allegations in the complaint, but [it is] not to draw inferences from the complaint favorable to plaintiffs.” J.S. ex rel. N.S. v. Attica Cent. Schs.,
Federal courts are courts of limited jurisdiction and may not preside over cases if subject matter jurisdiction is absent. See Lyndonville Sav. Bank & Trust Co. v. Lussier,
III. Discussion
Defendant argues that this Court lacks subject matter jurisdiction because plaintiff has failed to allege the injury-in-fact necessary to establish Article III standing. For the reasons set forth below, the Court disagrees.
A. Applicable Law
“The jurisdiction of federal courts is defined and limited by Article III of the Constitution[, and] the judicial power of federal courts is constitutionally restricted to ‘cases’ and ‘controversies.’” Flast v. Cohen,
Article Ill’s injury-in-fact component requires that a plaintiffs alleged injury “must be ‘concrete and particularized’ as well as ‘actual or imminent, not conjectural or hypothetical.’ ” Baur v. Veneman,
In Spokeo, the Supreme Court addressed whether the respondent had standing to assert a claim under the Fair Credit Reporting Act (the “FCRA”), 15 U.S.C. §§ 1681 et seq.
Congress’ role in identifying and elevating intangible harms does not mean 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. Article III standing requires a concrete injury even in the context of a statutory violation.
Id. at 1549. Accordingly, “a bare procedural violation, divorced from any concrete harm, [would not] satisfy the injury-in-fact requirement of Article III.” Id. (citing Summers v. Earth Island Inst.,
Nevertheless, the Supreme Court recognized that “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact,” and “a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.” Id. As examples, the Court cited two of its precedents concerning statutes that conferred informational rights of access: (1) Federal Election Commission v. Akins,
The Supreme Court ultimately concluded that the FCRA embodied Congress’s intent to “curb the dissemination of false information by adopting procedures designed to decrease that risk,” but that the respondent could not “satisfy the demands of Article III by alleging a bare procedural violation.” Id. at 1550. The Court remanded to the Ninth Circuit for a determination as to “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement,” and it cautioned that those violations may not constitute injury-in-fact because, for example, the misinformation at issue might turn out to be
The Second Circuit recently applied Spokeo in Strubel to a suit brought under the Truth In Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq. There, the plaintiff sought statutory damages for an allegedly deficient credit card agreement, arguing that the defendant had failed to disclose that
(1) cardholders wishing to stop payment on an automatic payment plan had to satisfy certain obligations; (2) [the defendant] was statutorily obliged not only to acknowledge billing error claims within 30 days of receipt but also to advise of any corrections made during that time; (3) certain identified rights pertained only to disputed credit card purchases for which full payment had not yet been made, and did not apply to cash advances or checks that accessed credit card accounts; and (4) consumers dissatisfied with a credit card purchase had to contact [the defendant] in writing or electronically.
Strubel,
As a threshold matter, the Second Circuit held that it did “not understand Spok-eo categorically to have precluded violations of statutorily mandated procedures from qualifying as concrete injuries supporting standing.” Id. at 189, Instead, the Supreme Court.made clear that “some violations of statutorily mandated procedures may entail the concrete injury necessary for standing,” id. and “where Congress conferred [a] procedural right to protect a plaintiffs concrete interests,” the critical inquiry is whether “the procedural violation presents a ‘risk of real harm’ to that concrete interest,” id. at 190 (quoting Spokeo,
Under that framework, the Second Circuit concluded that the plaintiff had standing to assert two of her four TILA claims concerning “required notice that (1) certain identified consumer rights pertain only to disputed credit card purchases not yet paid in full, and (2) a consumer dissatisfied with a credit card purchase must contact the creditor in writing or electronically.” Id. The Court found that
[tjhese disclosure requirements do not operate in a vacuum ... Rather, each serves to protect, a consumer’s concrete interest in “avoiding the uninformed use of credit,” a core object of the TILA.... For that reason, a creditor’s alleged violation of each notice requirement, by itself, gives rise to a “risk of real harm” to the consumer’s concrete interest in the informed use of credit. Having alleged such procedural violations, Strubel was not required to allege “any additional harm” to demonstrate the concrete injury necessary for standing.
Id. at 190-91 (brackets, citations, and footnote omitted). Moreover, the Second Circuit held, with respect to those claims, that the.plaintiff sought
to vindicate interests particular to her— specifically, access to disclosures of her own obligations ... The failure to provide such required disclosure of consumer obligations thus affects Strubel “in a personal and individual way,” and her suit is not “a vehicle for the vindication of the value interests of concerned bystanders” or the public at large.
Id. at 191 (citations omitted).
In contrast, the Court found that the plaintiff did not have standing as to her claims concerning notice of automatic pay
Read together, Spokeo and Strubel reaffirm the long-standing principle that Congress can recognize new interests—either tangible or intangible—through legislation and confer private rights of action to protect those interests. However, identifying a statutory violation does not automatically establish injury-in-fact for purposes of Article III standing. Where a plaintiff sues to enforce a statutory right, the test for standing under Spokeo and Strubel is twofold. First, a court must determine whether the purported infraction is procedural in nature. Second, if so, a court must determine whether that procedural violation presents a “material risk of harm” to the underlying interest(s) that Congress sought to protect by enacting the apposite statute. If a plaintiff satisfies this standard, then she need not allege “any additional harm”—pecuniary or otherwise—beyond the procedural violation itself.
B. Analysis
Defendant argues that plaintiff does not have standing to assert her FDCPA claims because she has “failed to allege a concrete and particularized injury-in-fact” connected to the IRS Language, which defendant characterizes as a “voluntary disclosure” that “merely informed] Ms. Bautz that DSNB will comply with federal law and the Internal Revenue Service (IRS) regulations.” (Def.’s Mem. of Law in Supp. of Mot. to Dismiss for Lack of Subject Matter Jurisdiction (“Def.’s Br.”), ECF No. 22-1, at 1.) Defendant invokes Spokeo, and Strubel in its supplemental authority letter, to advance that argument, claiming that plaintiffs complaint asserts a “bare procedural violation” of the FDCPA. (Def.’s Br. at 5; Def.’s Letter of Dec. 5, 2016 (“Def.’s Suppl. Letter”), ECF No. 25, at 1.)
For the reasons stated below, that reb-anee is misplaced, and the Court concludes that plaintiff has alleged (1) a substantive violation of the FDCPA resulting in a concrete and particularized injury; or, alternatively, (2) a procedural violation of the FDCPA that poses a “material risk of harm” to plaintiffs statutory interests sufficient to satisfy Article Ill’s injury-in-fact requirement.
1. Substantive Violation
a. Concrete Injury
As a threshold matter, the test articulated in Spokeo and Strubel and summarized supra concerns procedural violations of statutory schemes. In such cases, a court must determine whether the purported infraction presents a “risk of real harm” to
However, as noted, Spokeo did not disturb the Supreme Court’s prior precedent recognizing that “Congress may ‘elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.’”
' Thus, in cases where a plaintiff sues to enforce a substantive legal right conferred by statute, she has standing to pursue that claim without need to allege a “material risk of harm” because the infringement of that right constitutes, in and of itself, a concrete injury. See, e.g., Church v. Accretive Health, Inc.,
Accordingly, the Supreme Court found standing in a Fair Housing Act (“FHA”) case where “ ‘testers’ ... who, without an intent to rent or purchase a home or apartment, pose[d] as renters or purchasers for
Moreover, the fact that a “tester may have approached the real estate agent fully expecting that he would receive false information, and without any intention of buying or renting a home, [did] not negate the simple fact of injury within the meaning of § 804(d).” Id. at 374,
As with the FHA, Congress enacted the FDCPA to remedy a distinct problem: “abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). To that end, in Section 1692e Congress specifically precluded the “use [of] any false, deceptive, or misleading representation or means in connection with the collection of any debt,” id. § 1692e, and to “accomplish these goals, the FDCPA creates a private right of action for debtors who have been harmed by abusive debt collection practices,” Benzemann v. Citibank N.A.,
The Second Circuit has “‘consistently interpreted the statute with [these] congressional object[s] in mind,’” and “because the FDCPA is ‘primarily a consumer protection statute,’ ” courts “must construe its terms ‘in liberal fashion [to achieve] the underlying Congressional purpose.’ ” Avila v. Riexinger & Assocs., LLC,
Here, the Court has already determined that plaintiff sufficiently alleged a material violation of the FDCPA based on the IRS Language because a “belief that tax consequences [would] stem[ ] from debt forgiveness could potentially impact whether the Plaintiff decides to pay the lesser amount offered, as opposed to the entire debt owed or even some other option.” (Tr. of Aug. 31, 2016 Oral Ruling at 6:21-7:1.) The Court also found that “[t]he least sophisticated consumer afraid of audit may be pressured by any statement such as one made by the Defendant into paying more of his debt to avoid the risk of triggering an IRS audit.” (Id. at 7:16-19). Thus, defendant is wrong to claim that plaintiff has not alleged a concrete injury because she failed to identify “any actual damages” stemming from the IRS Language, such as that “she paid the Debt [that plaintiff owed] or that the Letter influenced her decision to pay the Debt in any way.” (Def.’s Br. at 8, 13; see also id. at 14 (“Ms. Bautz has identified no economic harm; no particularized damage to her; no concrete injury in the Complaint. She pleads that she did not respond to the Letter, she did not call ARS and she did not speak to anyone from ARS concerning alternative arrangements to settle the Debt if she cannot make the offered payments-as proposed to her in the Letter. In fact, the Complaint fails to provide any idea at all as to what she may have done in response to the Letter or how she felt when she received it.”).) Under Miller, making a false statement in connection with an attempt to collect a debt is sufficient harm for standing purposes. In other words, a plaintiff who receives such a misrepresentation “has suffered injury in precisely the form [Section 1692e of the FDCPA] was intended to guard against,” Havens,
Moreover, the FDCPA provision at issue here—15 U.S.C. § 1692e—differs from the FCRA section discussed in Spokeo, which “imposes a host of [procedural] requirements concerning the creation and use of consumer reports” that consumer reporting agencies must follow,
Accordingly, the majority of post-Spok-eo decisions that have analyzed standing under the FDCPA have found that alleging a “use [of] any false, deceptive, or misleading representation or means in connection with the collection of any debt,” 15 U.S.C. § 1692e, establishes a concrete injury. In Church,
Several district courts have taken the same approach, finding that the “FDCPA unambiguously grants recipients of debt-collection communications ... a right to be free from abusive collection practices,” and that a plausible allegation that the defendant violated that right through use of a false, deceptive, or misleading debt collection communication establishes concrete harm. Prindle,
Finally, defendant relies on Dolan v. Select Portfolio Servicing, No. 03-CV-3285 PKC AKT,
In sum, the Court finds that plaintiff has pled a concrete interest for the purpose of Article III standing based on her receipt of the IRS Language in the Letter because a material violation of FDCPA Section 1692e infringes plaintiffs substantive statutory'right to be free from abusive debt practices.- •
b. Particularity
Spokeo also emphasized that Article Ill’s injury-in-fact component requires that an alleged harm be both concrete and particular, and “[f]or an injury to be particularized, it must affect the plaintiff in a personal and individual way.”
Here, defendant contends that plaintiff does not allege that the IRS Language
affected her personally at all. Instead, and contrary to the recent law of this Circuit, Ms. Bautz asserts that a voluntary disclosure of possible IRS regulation applicability “tends to give erroneous and/or incomplete tax advice to consumers”—not to Ms. Bautz herself. Complaint, ¶ 43. The Complaint also alleges that the Letter “suggests to the least sophisticated consumer that failure to pay will get the consumer into trouble with the IRS.” Id. at ¶ 44. Therefore, Plaintiff’s Complaint suffers from a fundamental lack of particularized injury to confer standing under recent Second Circuit and Supreme Court jurisprudence.
Def.’s Suppl. Letter at 2.
This, argument is meritless. Like the plaintiff in Strubel, who, with respect to the claims for which the Second Circuit found standing, “sue[d] to vindicate interests particular to her—specifically, access to disclosures of her own obligations,”
Therefore, for the foregoing reasons, the Court finds that plaintiff has met Article Ill’s injury-in-fact requirement by alleging a concrete and particular harm based on a violation a substantive statutory right.
2. Procedural Violation
Assuming arguendo that the IRS Language constitutes a procedural violation of the FDCPA, the Court finds that plaintiff has met the test set forth in Spok-eo and Strubel because she has “demonstrate[d] a sufficient ‘risk of real harm’ to the underlying interest to establish concrete injury without ‘need [to] allege any additional harm beyond the one Congress has identified.’” Strubel,
As already discussed, the Court previously concluded that the IRS Language presents a material risk of injury to plaintiffs interests under the FDCPA— freedom from deceptive debt collection practices—because a “belief that tax consequences [would] stem[] from debt forgiveness could potentially impact whether the Plaintiff decides to pay the lesser amount offered, as opposed to the entire debt owed or even some other option,” and “[t]he least sophisticated consumer afraid of audit may be pressured by any statement such as one made by the Defendant into paying more of his debt to avoid the risk of triggering an IRS audit.” (Tr. of Aug. 31, 2016 Oral Ruling at
Further, plaintiffs claim is distinct from those in Stmbel that lacked standing. Unlike the automatic payment plan challenge—where it was “undisputed that [the defendant] did not offer an automatic payment plan at the time Strubel held the credit card at issue,”
Accordingly, plaintiff has adequately pled a violation of the FDCPA that poses a “material risk of harm” to her statutory interests and has, thus, satisfied the injury-in-fact requirement of Article III.
IV. Conclusion
For the foregoing reasons, defendant’s motion to dismiss for lack of subject matter jurisdiction (ECF No. 22) is denied.
SO ORDERED.
Notes
. To the extent that defendant argues that the IRS Language allegation is "frivolous'' or immaterial (Def.’s Br, at 9), that argument is foreclosed by this Court's August 31, 2016 oral ruling denying defendant’s 12(b)(6) motion to dismiss. See Johnson v. Holder,
. Spokeo's citation to Summers and Lujan for these propositions is instructive. In Summers, the plaintiffs asserted they had "suffered procedural injury” because they were "denied the ability to file comments on some Forest Service actions and w[ould] continue to be so denied.”
As discussed supra and infra, unlike Summers and Lujan, plaintiff has asserted a violation of a substantive statutory right that resulted in harm to her, and not the public generally. Accordingly, she has pled a concrete and particular injury that supports Article III standing.
. In addition, plaintiffs opposition brief aggregates the extensive and ever-growing array of district court decisions adopting this position. (PL’s Resp. Br. Opposing Def.’s Mot. for Dismissal, ECF No. 23, at 24-28.)
. Insofar as Chad also determined that intangible harms are insufficient to establish Article III injury-in-fact, such a finding is clearly contrary to Spokeo, which re-affirmed its precedents Akins and Public Citizens holding that intangible informational injuries are constitutionally cognizable, Spokeo,
. For that reason, defendant's string cite of decisions finding a lack of standing based on procedural violations of other statutes (Def.’s Br. at 10-11, 15-16) is also largely inapposite. The one FDCPA-related decision in that chain, Tourgeman v. Collins Financial Services, Inc., No. 08-CV-1392 CAB (NLS),
. Accordingly, the Court also disagrees with defendant’s claim that the IRS language did "not result in an injury comparable to the injury in Havens (Def.’s Reply Br. at 8-9.)
. Defendant also argues that the alleged FDCPA violation at issue was procedural because it included the IRS Language in the Letter pursuant to bulletins issued by the Consumer Financial Protection Bureau ("CFPB”), Defendant claims that "CFPB Bulletins 2013-07 and 2013-08 state that debt collectors may not misrepresent the consequences and circumstances of forgiveness of debt, may not misrepresent the consequences and circumstances of forgiveness of debt and must take steps to ensure that any claims that they make about the effect of paying debts are not deceptive.” (Def.’s Br. at 18.) However, those bulletins do not impose a mandatory requirement on defendant to disclose the possible tax consequences of repaying a debt, and defendant's decision to include the IRS Language in the Letter was thus volitional and not pursuant to a procedural obligation. Cf. Strubel,
. As discussed supra, the Court also finds this injury to be sufficiently particular.