Business Law

Shields v. Professional Bureau of Collections of Maryland, Inc., 55 F.4th 823 (10th Cir. 2022)

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The following is a case update written by Reno Fernandez, a bankruptcy appellate specialist with the Complex Appellate Litigation Group LLP, analyzing a recent decision of interest:

SUMMARY

On December 16, 2023, the U.S. Court of Appeals for the Tenth Circuit published an opinion holding that a collector’s use of an outside mailer was not similar enough to the publicity requirement under the tort of public disclosure of private facts, and therefore the consumer lacked standing to bring a claim for improper communication with third parties under section 1692c(b) of the Federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (FDCPA).  Shields v. Professional Bureau of Collections of Maryland, Inc., 55 F.4th 823 (10th Cir. 2022). 

To view the opinion, click here.

FACTS

Elizabeth Shields had significant unpaid student debt.  Claims against her were assigned to Professional Bureau of Collections of Maryland, Inc., which sent her collection letters inconsistently referring to the outstanding balance as three different amounts.  Professional Bureau did not explain the differences and did not state that the debt could increase due to interest, fees, and other charges.  Professional Bureau used an outside mailing service to compose and send the letters.

Shields brought an action primarily alleging violations of FDCPA § 1692c(b), which generally prohibits communicating about a consumer’s debt with any third party, subject to several exceptions.  Specifically, Shields alleged that disclosure of her debt to the third-party mailer was a violation.  She also alleged that inaccuracies and omissions in Professional Bureau’s collection letters violated sections 1692e(2)(A), (10), and 1692g(a)(1), which generally prohibit the use of “any false, deceptive, or misleading representation or means” to collect a debt, including “[t]he false representation of… the character, amount, or legal status of any debt….”  FDCPA § 1692e(2)(A).

Professional Bureau moved to dismiss the action for lack of subject matter jurisdiction.  Fed. R. Civ. P. 12(b)(1).  The district court determined that Shields lacked standing, and it dismissed the action.  Shields appealed, and the Tenth Circuit affirmed.

REASONING

The Tenth Circuit determined that Professional Bureau’s motion was a “facial challenge” to subject matter jurisdiction, requiring the court to look only to the allegations of the complaint.  Accordingly, the court properly disregarded a declaration offered by Shields.

The court acknowledged that the FDCPA creates a private right of action for violation of its terms, but only where there is harm sufficient to confer standing.  The harm can be tangible or intangible, but it must be concrete.  Here, Shields alleged a kind of intangible harm.

The court followed the U.S. Supreme Court’s recent decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), which holds that alleged intangible harm must have a “close relationship” to a harm that is “traditionally recognized as providing a basis for a lawsuit in American courts.  Id. at 2200.

Here, the court compared the alleged violations of FDCPA § 1692c(b) to the common law tort of public disclosure of private facts.  Among other elements, the tort requires “publicity,” meaning that the objectionable information is transmitted “to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge.”  Restatement (Second) of Torts § 652D (Am. L. Inst. 1977).

The court found that Shields’ allegations were insufficient to support the requirement of publicity.  Shields alleged disclosure to the third-party mailer and, presumably, some of its employees.  The court determined that this is not the same kind of harm as public disclosure.  Shields also attempted to analogize to the torts of defamation and intrusion upon seclusion, but the court disposed of these for similar reasons, without much discussion.

Shields also argued that her allegations of harm were similar to common law fraud.  Although not expressly mentioned in the opinion, it appears that this argument was aimed at her claims under FDCPA §§ 1692e(2)(A), (10), and 1692g(a)(1).  The court rejected this argument in a single short paragraph.  Specifically, the court noted that fraud requires harm that flows from reliance on a misrepresentation, and Shields did not allege reliance.  Accordingly, the court concluded that Shields lacked standing to bring these claims.

AUTHOR’S COMMENTS

When is harm similar enough to a common law tort to support a claim for violation of the FDCPA?  This opinion attempts to provide a framework, but it leaves plenty of room for doubt.

The court agreed that Shields was harmed in some way by disclosure to the third-party mailer but concluded that the harm was not similar enough to public disclosure of private facts.  Would disclosure to an additional individual have saved Shields’ claims?  How about disclosure to a neighbor, or to a family member?

To identify a threshold, one could look to authorities applying the publicity requirement under the tort of public disclosure of private facts.  However, the Tenth Circuit emphasizes that the harms under consideration need not be identical; in fact, it need not be sufficient for the plaintiff to prevail on the tort claim.  Lupia v. Medicredit, Inc., 8 F.4th 1184, 1192 (10th Cir. 2021).  Accordingly, authorities concerning the elements of common law torts are likely to be of limited use.

To be sure, the opinion is useful and important for at least establishing that the extreme condition—i.e., disclosure to a single person or a very small group—is insufficient to confer standing.  Beyond this, there remains a lot of room for argument and creativity.

This review was written by Reno Fernandez, a bankruptcy appellate specialist with the Complex Appellate Litigation Group LLP, a member of the ad hoc group.  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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