California Court Dismisses Action for Lack of Jurisdiction Pursuant to Spokeo

On August 11, 2017, a judge from the Central District of California dismissed a complaint for lack of subject-matter jurisdiction in a Federal Debt Collection Practices Act, 15 USC 1692 et seq. (FDCPA) case. Yes, it is from a few months back but any case that discusses dismissal of an FDCPA claim for lack of standing is worth highlighting. The case is Blue v. Diversified Adjustment Service (5:17-cv-366), U.S.D.C., Central District of California). 

You can find a copy of the order here. 

Background 

Defendant Diversified Adjustment Service (DAS) sent plaintiff Shon Blue a collection letter containing a number of payment options including via mail, online, phone or in-person. If deciding to pay online, the consumer needed to affirmatively opt-in, but DAS charged a convenience fee to process the payment. The plaintiff logged onto the online pay portal, but did not pay the debt or the convenience fee. Plaintiff then filed suit against DAS alleging that because DAS directed consumers to the website and then charged a convenience fee that was not part of the initial debt, it violated the FDCPA and Rosenthal Fair Debt Collection Practices Act (RFDCPA). 

Defendant moved for summary judgment.

Editor’s note: A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

The Court's Decision 

The court ruled in favor of defendant and dismissed the action for lack of subject matter jurisdiction. 

The court relied heavily on Spokeo v. Robins, 136 S. Ct. 1540 (2016) in its decision, stating that per Spokeo, in order to have Article III standing, several criteria must be met, including that the plaintiff must have "suffered an injury-in-fact." A mere procedural violation does not give the court adequate jurisdiction. The court determined that plaintiff did not suffer an actual injury as he did not pay the convenience fee or the debt, and his claims were “conjectural or hypothetical.” 

insideARM Perspective

The impact of the Spokeo decision on FDCPA actions has been, at best, mixed. This decision, however, offers a ray of sunshine. While this was not a letter case, the decision suggests that FDCPA actions based on an agency process, such as access to an online portal, may require a consumer to prove they were harmed by that process to allege an FDCPA violation.