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FDCPA Plaintiff Lacks Standing to Bring Class Action for Validation Letter

In Pozzuolo v. Portfolio Recovery Associates, LLC, the Eastern District of Pennsylvania recently dismissed the named plaintiff of a putative class action for lack of standing to bring suit. Pozzuolo sought to represent a class of individuals who received validation notice letters from Portfolio Recovery Associates, LLC (PRA), which arguably ran afoul of the Fair Debt Collection Pracitces Act (FDCPA)—and more specifically 15 U.S.C. § 1692g—by stating disputes could be made telephonically when the FDCPA requires them in writing. PRA moved to dismiss for lack of subject matter jurisdiction, arguing Pozzuolo lacked standing because he had not suffered concrete injury. In fact, his deposition testimony shows he “merely skimmed the letter and had no intention to dispute the debt.” PRA also noted that it treats telephonic and written disputes the same. Moreover, PRA stressed that Pozzuolo’s allegations, even if all true, at best state a mere procedural violation of § 1692g(a) occurred. Ultimately, the Court agreed.

The court began its analysis by laying out the relevant, well-known standing landscape. While violation of a statute alone may suffice, “bare procedural violation[s] divorced from any concrete harm” will not. Yet, when the statutory violation is “the very harm that Congress sought to prevent,” procedural violations may be enough. The Court then turned to Spokeo and its illustrative examples under the Fair Credit Reporting Act (FCRA) of procedural violations that fail to qualify as concrete harms, namely: (1) accurate reporting without notice; and (2) reporting of incorrect zip codes. With this in mind, the court stated it would apply the Third Circuit Court of Appeals’ adoption of the Spokeo II/Strubel test. In other words, when the U.S. Supreme Court remanded Spokeo, the Ninth Circuit Court of Appeals (in Spokeo II) said it would follow the Second Circuit’s two-part articulation of standing (Strubel), which appears to additionally be endorsed by both the Fourth and Sixth Circuits. Under that test “an alleged procedural violation . . . manifests concrete injury if the violation actually harms or presents a material risk of harm to the underlying concrete interest.”  In applying that test, the court found Pozzuolo’s case fell apart. Though the court noted that “PRA’s letter . . . constituted a procedural violation of the FDCPA,” Pozzuolo “[b]y his own admission, . . . was not hurt as a result of receiving this letter.” Indeed, he “ [did not] dispute the debt with any of the credit reporting agencies. He had no reason to do so. He acknowledges the debt and the amount.” In short, “because he never intended to dispute the debt, the violation did not harm or present a material risk of harm to Pozzuolo.”

Pozzuolo shows that standing challenges remain a viable means to toss cases, individual and class actions alike. Claims under 15 U.S.C. § 1692g remain particularly vulnerable to such standing challenges, and litigants should be sure to use discovery effectively to establish standing arguments where applicable. Moreover, because standing calls into question subject matter jurisdiction, it remains a viable out at all stages of litigation.