Blog LenderLaw Watch May 24, 2022

District Court Declines to Extend Debt Collector’s Reading of TransUnion v. Ramirez Standing Requirements

On April 27, 2022, the U.S. District Court for the Western District of Pennsylvania certified a class comprised of individuals alleging the Defendants violated the Fair Debt Collection Practices Act (FDCPA).  Plaintiffs allege Defendants violated the FDCPA by sending collections letters encouraging individuals to accept discounted repayment offers before a court judgment was entered against them, even though there were no such court cases pending against them.

In granting class certification, the Western District rejected Defendants’ argument class certification should be denied because Plaintiffs failed to establish each putative class members had standing to sue.  Specifically, Defendants argued that the U.S. Supreme Court’s ruling in TransUnion v. Ramirez required Plaintiffs to show each individual putative class member had standing to sue in order for a court to certify a class.

The Court disagreed with Defendants’ reading of TransUnion, instead finding the decision in only required each class member to establish standing in order to recover damages after trial, not as a prerequisite to class certification.  In reaching this determination, the Court relied on the Supreme Court’s statement in TransUnion that whether all putative class members must show standing at the class certification stage was a “distinct issue,” and one they expressly declined to address.

As further support for declining to require each putative class member to establish standing prior to certification, the Western District pointed to existing Third Circuit precedent.  In particular, the Court pointed to Third Circuit cases holding that, at the certification stage, the standing inquiry focused solely on the named plaintiff and not individual class members.  Thus, the Western District emphasized that because TransUnion only required class members to establish standing to recover damages after trial, it did not abrogate any existing Third Circuit precedent.

In addition, the court also held that FDCPA claims accrued at the time the letters were sent, as liability under the FDCPA turns on the debt collector’s “use” of prohibited representations or means to collect a debt.  The Court held that such “use” occurred when the debt collector sends a letter to a consumer.  Once the letter is sent “a consumer has a ‘complete and present cause of action’ under the FDCPA, regardless if he or she is yet aware of it.”

The Court rejected Defendants’ argument that defining a class based on time-of-sending would result in a nearly-impossible to ascertain class, particularly given that debt collection lawsuits could be filed and concluded within the time frame stated within the letter’s offer.  Rather, the Court found that the time-of-sending would result in a far more readily ascertainable class, as determining the date a letter was sent would merely require an inquiry into a debt collector’s records, as opposed to the individualized, plaintiff-by-plaintiff determination a time-of-receipt approach would require.

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