If you have read what the experts write regularly in the Compliance Digest and listened to what they say during webinars and podcasts, you’ll no doubt know that there is an interesting battle going on in courts across the country — whether being harmed by what’s in a collection letter or by what a collector says constitutes a concrete injury sufficient for an individual to have met a minimum threshold in order to be able to file a lawsuit in federal court. This battle has turned the legal world upside-down and now you can add Judge Philip P. Simon of the District Court for the Northern District of Indiana to the list of those who aren’t sure which side is up anymore. Judge Simon recently granted a plaintiff’s motion to remand her lawsuit back to state court, after the defendant had moved it to federal court, because the plaintiff amended her complaint to remove any reference to having suffered a concrete injury in order to keep the case in state court.
A copy of the ruling in the case of Hustedt v. Hunter Warfield can be accessed by clicking here.
The plaintiff filed a lawsuit in state court after the defendant reported an unpaid debt that the plaintiff claims not to have owed to the credit reporting agencies while also sending a collection letter attempting to collect on the debt. The plaintiff claimed the defendant violated the Fair Credit Reporting Act and the Fair Debt Collection Practices Act. The defendant had the case moved to federal court on the grounds that the plaintiff was suing because two federal statutes were allegedly violated. The plaintiff subsequently filed an amended complaint, removing any allegations of having suffered an injury, and filed a motion to have the case remanded back to state court.
All of this legal manoeuvring is occurring because judges have issued a number of rulings in the past year that have chipped away at the arguments normally raised by plaintiffs in FDCPA cases, raising the bar that plaintiffs need to surpass in order to be able to pursue their lawsuits. Under the Constitution, plaintiffs need to have suffered a concrete, particularized injury in order to have standing to sue in federal courts, and judges have ruled in many cases that being harmed by what a collector says in a letter or over the phone is not automatically a concrete injury.
In this case, Judge Simon notes how “topsy-turvy” things have become because the defendant is arguing that the plaintiff suffered a concrete injury and the plaintiff is trying to argue that she hasn’t been injured. “Ordinarily defendants challenge the existence of jurisdiction and plaintiffs defend their standing to bring suit,” he writes.
While seeing through the plaintiff’s motivations for seeking to remand the case back to state court, there was little that Judge Simon could to to keep from allowing it to happen.
“Because Hustedt expressly pleads federal questions and has only avoided pleading Article III standing by performing plastic surgery on her complaint, I share HW’s frustration at the outcome I believe is required by the Seventh Circuit, but perhaps not other circuits,” he wrote. “Hustedt has scrubbed all references to her damages from her pleading. Whether that effort will fly in state court, I do not know. But if Hustedt is compelled in state court to amend her complaint to again make her injury allegations plain, that will likely trigger another trip to federal court. All of which causes me to agree with the Collier court’s expression of lament at the ‘dubious strategy [that] has resulted in a significant waste of federal judicial resources.’ “