Business Law

Larkin v. Finance System of Green Bay, Inc. (7th Cir.); Bazille v. Finance System of Green Bay, Inc. (7th Cir.)

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The following is a case update written by the Hon. Meredith A. Jury (United States Bankruptcy Judge, C.D. Cal., Ret.), analyzing a recent decision of interest:


In two opinions issued a day apart, the United States Court of Appeals for the Seventh Circuit analyzed the injury in fact requirement for plaintiffs to have standing to sue debt collectors for violations of the Fair Debt Collection Practices Act (FDCPA). In the first case, Larkin v Finance System of Green Bay, Inc., 2020 WL 7332483 (7th Cir. 12/14/20), the Court affirmed dismissal of the case because the consumer plaintiff failed to allege injury in fact sufficient to confer standing. In the second case, Bazille v. Finance System of Green Bay, Inc. 2020 WL 7351092 (7th Cir. 12/15/20), the Court vacated the district court’s order dismissing the case and remanded for the district court to conduct an evidentiary hearing to determine whether the consumers actually suffered concrete injury sufficient to confer standing.

To view the Larkin opinion click here.

To view the Bazille opinion, click here.


In Larkin, two consumers brought separate putative cases (consolidated for appeal) against Finance System of Green Bay, Inc. (“debt collector”), alleging that collection letters for medical debt were false, deceptive, or misleading or otherwise unfair or unconscionable, in violation §§ 1692e and 1692f of the FDCPA. Each of the letters in question had statements such as “We are interested in you preserving a good credit rating with the above creditor” or “your creditor is interested in you preserving a good credit rating with them.” Both plaintiffs alleged statements such as those in the collection letters were unfair or unconscionable means of collecting a debt in violation of the statute; both also purported to represent a class of those similarly situated by receiving like letters. However, neither plaintiff alleged with specificity why she had been harmed by the inclusion of the purportedly false and misleading language.

The debt collector filed motions to dismiss both cases under Fed. R. Civ. Pro. 12(b)(6), asserting the complaints failed to state claims and the plaintiffs lacked standing. The district court granted the motions for failure to state a claim, holding that the plaintiffs had standing but the language as a matter of law was not violative of the FDCPA as false and misleading. Plaintiffs appealed to the Seventh Circuit, which affirmed the dismissals but on the alternative ground of lack of standing.

In Bazille, a consumer brought a putative class action against the same debt collector (assigned to the same district court judge), alleging that its dunning letter for medical debt was misleading in violation of the FDCPA because it failed to indicate that the amount of the debt would increase with the accrual of interest. The debt collector again brought a Rule 12(b)(6) motion to dismiss on the alternative grounds of lack of standing and failure to state a claim. The district court applied the same reasoning it had applied in Larkin to find the plaintiff had standing because the alleged violation amounted to a concrete injury by itself. However, on the merits it agreed with the debt collector that the complaint failed to state a claim and dismissed the case. Upon the plaintiff’s appeal to the Seventh Circuit, the Court again did not reach the merits, ruling on the standing issue but with a somewhat different result than in Larkin. Instead, it remanded for an evidentiary hearing to resolve a factual dispute about whether the plaintiff suffered “concrete” injury.


The Larkin panel centered its discussion of standing on the recent Supreme Court decision on that issue, Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), and the Seventh Circuit’s subsequent ruling in Casillas v. Madison Avenue Associates, Inc., 926 F.3d 329 (7th Cir. 2019). Those authorities held that for a plaintiff to establish standing under Article III of the Constitution, she had the burden to prove she 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 ruling.” Spokeo, 136 S.Ct. 1547. The crux of most standing arguments turns on the “injury in fact” which requires a showing of “an invasion of a legally protected interest that is concrete and particularized” and “actual or imminent.” Id. at 1548. “A particularized injury affects the plaintiff personally and a concrete injury must be de facto, that is, it must actually exist.” Id. The panel determined those requirements must be met whether the alleged statutory violation was characterized as procedural or substantive.

The Larkin plaintiffs had made no attempt to allege in their pleadings the necessary particularized and concrete injury. They had relied instead on their assertion that the wording of the collection letters was misleading, a per se “harm” as a violation of the statute. The Court found that totally insufficient to establish the necessary harm required by Spokeo’s injury in fact requirement.

In Bazille, the panel (with only Judge Easterbrook serving on both panels) was willing to infer that the omission of a reference to interest increasing the amount of debt could cause the necessary injury in fact. However, in its motion to dismiss, the debt collector had asserted the conflicting fact that interest was not accruing on the debt in question. The panel seized on that allegation to observe there was more to standing than just alleging the injury; the plaintiff was required “to secure it at each stage of the litigation.” This observation took it down a different procedural path. Instead of a Rule 12(b)(6) inquiry, the proper manner to address standing was under Rule 12(b)(1), which is the means by which a defendant raises a defense that the court lacks subject matter jurisdiction. The defense may be raised as either a facial or a factual attack. Since in this case, the debt collector had raised the factual question of whether interest was in fact accruing, the attack would be construed as factual. The panel opined that in the context of a factual attack to standing, “the court may consider and weigh evidence outside the pleadings to determine whether it has power to adjudicate the action,” citing Venezuela v. Helmerich & Payne Int’l Drilling Co., 137 S.Ct. 1312, 1316 (2017). Thus, the Court vacated the dismissal and remanded for an evidentiary hearing on the factual dispute regarding accrual of interest.


The analysis in these two Seventh Circuit cases regarding the injury in fact allegations, now spotlighted in many consumer cases where the class action plaintiffs are alleging some violation of a federal statute as the necessary harm, is instructive. That the alleged harm must be “particularized” and “concrete” not just vacuous and indefinite has been drilled into the district courts by Spokeo, one of the most widely cited Supreme Court decisions of the last ten years. The Seventh Circuit first analyzed the standing requirements after Spokeo in Casillas, which it followed closely in determining that the Larkin plaintiffs—asserting that alleging facial violation of the statute was sufficient—failed to allege the necessary concrete and particularized harm. That makes total sense to me. I think the only reason it published Larkin after Casillas was to lay to rest the notion that it made any difference whether the alleged statutory violations were procedural or substantive. Whichever the nature of the violation, a specific injury must be pled.

Where I get lost is trying to see the difference in the pleading in Bazille from the pleading in Larkin. Nowhere in the Bazille opinion does the panel point to any specific allegation of harm to the plaintiff as a result of the missing disclosure re accruing interest. As far as I can tell, Bazille relied on the allegation of the statutory violation alone to show harm in the same way that Larkinhad. That would be no surprise because the same law firm prepared the complaints and made the arguments on the motions to dismiss. Notwithstanding this similarity, the Bazille panel was willing to imply potential harm from the statutory violation alone. Once it accepted that implication, it went a step further to remind us all that the burden on the plaintiff to establish standing remains at every step of the litigation and may be addressed before trial with the special evidentiary hearing it called for here. That lesson is indeed a useful one for the bar. I just wonder how the Circuit found the opportunity to teach it based on these facts.

These materials were authored by the Hon. Meredith A. Jury (United States Bankruptcy Judge, C.D. Cal., Ret.), a member of the ad hoc group, with editorial contributions by Monique D. Jewett-Brewster, a shareholder-elect of Hopkins & Carley, ALC, a member of the ad hoc group and past Chair of the CLA Business Law Section. Thomson Reuters holds the copyright to these materials and has permitted the Insolvency Law Committee to reprint them. This material may not be further transmitted without the consent of Thomson Reuters.

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