Fair Debt Collection Practices Act
Pucillo v. National Credit Systems Inc.
Date: April 26, 2023
Issue: Does a plaintiff have Article III standing to sue a debt collector for violating the Fair Debt Collection Practices Act (FDCPA) by sending misleading letters to a debtor?
Case Summary: In a 2-1 decision, a divided Seventh Circuit panel dismissed an individual’s FDCPA lawsuit against debt collector National Credit Systems for lack of Article III standing, ruling the individual’s alleged injury of receiving two collection letters about a debt previously discharged in bankruptcy was not sufficiently concrete nor particularized.
Kenneth Pucillo sued debt collector National Credit Systems Inc., alleging the company violated the FDCPA by demanding payment of debt not owed and not ceasing communications and collections. Pucillo filed for Chapter 7 bankruptcy in May 2017. Pucillo listed as debt past-due rent owed on an apartment he leased. The bankruptcy court granted him a discharge in September 2017, which included any debt owed to his former lessor, Main Street Renewal LLC. Main Street was not notified of the bankruptcy case and placed the account with National Credit. In February 2018, National Credit sent Pucillo a collection letter describing settlement options and explained if a payment were made, the company would update credit data it may have sent about the debt. National Credit sent the same letter in February 2019. Pucillo alleged he suffered emotional injuries and National Credit’s continued communications “confused and alarmed” him.
The district court dismissed the case, concluding Pucillo lacked Article III standing to sue. The court noted Pucillo’s allegations of suffering confusion, stress, concern, and fear were not concrete enough to confer standing. The court also asserted Pucillo did not claim National Credit reported the alleged Main Street debt to credit reporting agencies. Therefore, he could not argue his credit was affected. If Pucillo argued his credit was affected his claim would have been considered tangible harm.
On appeal, the Seventh Circuit affirmed the district court’s dismissal. The majority opined the district court correctly determined Pucillo did not allege a particularized injury in fact and therefore did not possess Article III standing. The majority also found Pucillo did not allege any concrete injuries. According to the majority, Pucillo’s complaints of being “concerned and upset” were like being “worried or stressed,” which were descriptive terms the panel concluded did not constitute concrete injury. The majority explained Pucillo needed to show a harm beyond emotional response, such as an adverse credit rating.
In reaching its decision, the majority relied on the Supreme Court’s decision in Transunion LLC v. Ramirez (2021). In TransUnion LLC, the U.S. Supreme Court limited the intangible harms which are considered concrete. The Court clarified the risk of actual harm qualifies as a concrete injury only for claims for “forward-looking, injunctive relief to prevent the harm from occurring.” According to the Supreme Court, the risk of actual harm is not enough to establish standing. The majority reasoned Pucillo did not “act to his detriment” in response to National Credit’s letters, therefore the risks he pleas of possible futility to his bankruptcy or potential harm did not satisfy the standing requirement of a concrete and particularized injury in fact.
In dissent, Judge John Z. Lee asserted Pucillo satisfied Article III standing requirements set forth by Supreme Court precedent recognizing intangible harms, including reputational harms, disclosure of private information and intrusion upon seclusion. According to Lee, the majority mischaracterized Pucillo’s allegations as complaining only about the risk of future harm, when Pucillo suffered emotional concrete injuries from Nation Credit’s actions.
Bottom Line: As of June 1, 2023, Pucillo has not specified if he will file an en banc (full panel) petition for a rehearing.