The Fifth Circuit reversed a class certification order for claims under the Fair Debt Collection Practices Act (“FDCPA”) because the plaintiff lacked Article III standing.  Perez v. McCreary, Veselka, Bragg & Allen, P.C., No. 21-50958, 2022 WL 3355249 (5th Cir. Aug. 15, 2022).  The Court held that merely sending a letter to collect a time-barred debt, although a violation of the FDCPA, does not satisfy Article III’s injury-in-fact requirement.

In the underlying suit, the plaintiff claimed that a debt collector sent her a letter seeking to collect on a debt that was time-barred, but the letter did not disclose this.  The plaintiff filed a putative class action under the FDCPA, on behalf of a class of other Texas residents who had received the same letter.  The plaintiff acknowledged that she had not paid the debt, but she claimed that the letter had created a risk of payment, that it had confused her about the debt’s enforceability, and required her to consult an attorney.  At class certification, the defendant argued that the plaintiff lacked standing because she had not suffered a concrete injury in fact.  The district court disagreed, holding that the violation of the plaintiff’s statutory rights provided sufficient standing, and the court certified the class.

The Fifth Circuit accepted an appeal of the district court’s decision under Rule 23(f).  Although the defendant did not raise the issue of plaintiff’s standing to sue on appeal, the Fifth Circuit addressed it sua sponte.  On the merits of the standing issue, relying primarily on the Supreme Court’s decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), the Fifth Circuit found that the plaintiff did not have standing because she could not demonstrate an injury that bore a “‘close relationship’ to injuries that courts have traditionally recognized as concrete.”  The Court held that a violation of the plaintiff’s statutory rights under the FDCPA did not qualify as a concrete injury, and that her other theories of harm were equally unavailing primarily because the risks of injury did not materialize.

Perez has important implications for defendants facing class actions, even if they are not at risk of claims under the FDCPA.  First, the case is a reminder that defendants can use Rule 23(f) to challenge unfavorable standing decisions via interlocutory appeals, rather than waiting for judgment to be entered.  Second, the case confirms how rigorously courts are applying Article III’s standing requirements and concluding that plaintiffs lack standing when, as here, a plaintiff attempts to sue to enforce statutory violations based on mere risks of harm that never ultimately materialize.