Francina Smith v. GC Services Limited Partnersh ( 2021 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-3494
FRANCINA SMITH,
Plaintiff-Appellant,
v.
GC SERVICES LIMITED PARTNERSHIP and ORG GC GP BUYER,
LLC,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:16-cv-01897-RLY-DLP — Richard L. Young, Judge.
____________________
SUBMITTED JANUARY 4, 2021 — DECIDED JANUARY 21, 2021
____________________
Before EASTERBROOK, KANNE, and BRENNAN, Circuit Judg-
es.
EASTERBROOK, Circuit Judge. The first time this suit was
here, we held that GC Services, a debt collector, had waived
or forfeited any entitlement to arbitrate its dispute with
Francina Smith. 907 F.3d 495 (7th Cir. 2018). The district
court then held that Smith had not been injured and dis-
missed the suit. 2019 U.S. Dist. LEXIS 227464 (S.D. Ind. Dec. 2,
2 No. 19-3494
2019). The district judge relied principally on Spokeo, Inc. v.
Robins, 136 S. Ct. 1540 (2016), and Casillas v. Madison Avenue
Associates, Inc., 926 F.3d 329 (7th Cir. 2019) (Barreb, J.).
We put Smith’s appeal on hold while the court consid-
ered several other cases that presented questions about
standing to sue under the Fair Debt Collection Practices Act
(FDCPA or the Act). See Larkin v. Finance System of Green Bay,
Inc., 982 F.3d 1060 (7th Cir. 2020); Gunn v. Thrasher, Busch-
mann & Voelkel, P.C., 982 F.3d 1069 (7th Cir. 2020); BruneJ v.
Convergent Outsourcing, Inc., 982 F.3d 1067 (7th Cir. 2020);
Spuhler v. State Collection Service, Inc., 983 F.3d 282 (7th Cir.
2020); Bazile v. Finance System of Green Bay, Inc., 983 F.3d 274(7th Cir. 2020). See also NeJles v. Midland Funding LLC, No.
19-3327 (7th Cir. Dec. 21, 2020). Now that those opinions
have issued, and the parties have filed supplemental memo-
randa, the appeal is ready for decision.
Smith complains that GC Services violated 15 U.S.C.
§1692g(a)(3), part of the Act, because a debt-collection leber
stated, among other things:
If you dispute this balance or the validity of this debt, please let
us know in writing. If you do not dispute this debt in writing
within 30 days after you receive this leber, we will assume this
debt is valid.
As Smith sees things, these sentences conflict with
§1692g(a)(3), which requires a debt collector to send each
consumer “a statement that unless the consumer, within
thirty days after receipt of the notice, disputes the validity of
the debt, or any portion thereof, the debt will be assumed to
be valid by the debt collector”. The Act does not say how a
consumer may dispute a debt’s validity. It follows, Smith in-
sists, that the consumer is entitled to choose how to dispute
No. 19-3494 3
a debt. One might say in opposition that, precisely because
the statute is silent on the means of disputing a debt, a debt
collector may decide how it wants disputes to be presented.
Many potential litigants believe that writings are desirable
because they eliminate controversies about who said what to
whom and when. This circuit has not addressed the question
whether a debt collector violates §1692g(a)(3) by telling con-
sumers to put their disputes in writing. We do not take up
that subject today, because we agree with the district court
that Smith lacks standing to sue.
Spokeo holds that the requirement of injury as an element
of standing is essential to suits under consumer-protection
statutes, and Casillas applies that holding to the Fair Debt
Collection Practices Act. In the wake of Spokeo and Casillas,
many litigants and some district judges distinguished be-
tween “procedural” claims, which would be governed by
Spokeo and Casillas, and “substantive” claims, for which any
asserted violation of the statute would be treated as an inju-
ry. Larkin and its successors in this circuit disapprove that
distinction and hold that injury in fact is essential to stand-
ing, whether the asserted violation is best understood as
substantive or procedural. Several of these decisions, such as
Larkin and Gunn, add that a consumer’s assertion that she
was confused by a debt-collection leber does not show injury
unless the confusion leads the consumer to take some detri-
mental step. Smith, who says that she was confused by the
leber she received, does not contend that the leber’s sup-
posed lack of clarity led her to take any detrimental step,
such as paying money she did not owe. She therefore needs
some other way to show injury.
4 No. 19-3494
Casillas dealt with how a debt collector verifies the exist-
ence and amount of a debt. The plaintiff in Casillas saw a vio-
lation in the debt collector’s failure to tell her that she had to
communicate in writing in order to avail herself of the Act’s
protections. We replied: “[N]o harm, no foul.” 926 F.3d at
331. Because Casillas didn’t want to communicate with the
debt collector at all, the omission of details could not have
harmed her. Smith takes a position opposite to that of Casil-
las: that a debt collector violates the Act by telling a consum-
er to communicate in writing. Her problem is the same: No
harm, no foul.
Smith seizes on the fact that Casillas wasn’t planning to
communicate at all and thus could not have been harmed by
what the debt collector said (or didn’t say) about the right
way to communicate. In her supplemental filing after we is-
sued Larkin, Smith proposes to distinguish Casillas on the
ground that, if she had known that she could dispute the
debt orally, she would have done so. We doubt that this be-
lated position is proper. Smith’s complaint does not contain
such an assertion. Indeed, when her standing was chal-
lenged in the district court, Smith replied: “[W]hether Ms.
Smith, herself, intended to dispute the debt cannot be said at
this point in the litigation”. If she had not made up her mind
even after filing suit, she cannot have had an intent to dis-
pute the debt within 30 days of receiving the leber.
No maber. Even in her supplemental memorandum,
Smith has not tried to explain how a need to use a writing
deterred her from disputing a debt (she does not claim to be
illiterate) or what good a dispute would have done her. The
district judge observed that Smith “did not allege she had
any doubt that she owed the creditor the stated amount of
No. 19-3494 5
money. And she failed to allege any injury that flowed from
her failure to dispute the debt.” 2019 U.S. Dist. LEXIS 227464at *5. She does not say, for example, that GC Services took
any debt-collection step during the time that would have
been required for the original creditor to verify the debt, had
it been disputed.
Statutory rights such as the power to dispute the validity
of an asserted debt can be valuable if the debt collector is
mistaken about how much the consumer owes, or to whom.
But when the debt collector is not mistaken—and Smith does
not allege that GC Services has been trying to collect any-
thing that she does not owe—a given statutory right may
have lible or no value.
Standing often depends on what theory a plaintiff ad-
vances and how injury would be proved. See Thornley v.
Clearview AI, Inc., No. 20-3249 (7th Cir. Jan. 14, 2021). We do
not hold that someone asserting a violation of §1692g(a)(3)
cannot establish injury; we hold only that Smith did not allege
injury, because she did not try to show what good a dispute
would have done her. She is no worse off than if the leber
had told her that she could dispute the debt orally. Because
she is uninjured, the judgment of the district court dismiss-
ing the suit for lack of Article III standing is
AFFIRMED.