The opinion
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION at LAFAYETTE
ALEXANDRA HUSTEDT, )
)
Plaintiff, )
)
vs. ) 4:21CV59-PPS/JEM
)
HUNTER WARFIELD, INC., )
)
Defendant. )
OPINION AND ORDER
Alexandra Hustedt alleges that Hunter Warfield, Inc., a large debt collection
agency, attempted to collect a debt owed to Granite Management for damage to an
apartment Hustedt lived in while a student at Purdue University. [DE 26 at ¶¶8 & 9.1]
Hustedt alleges that she sent HW a letter disputing the debt, but that even after
receiving it, HW continued to attempt to collect the debt from Hustedt. [DE 26 at ¶¶40-
41.2] HW’s alleged conduct included “reporting the subject account to consumer
reporting agencies with a balance owed,” which “HW knew or should have known to
be false.” [DE 26 at ¶43, ¶¶46-48.] According to Hustedt, she “never owed anything to
HW or Granite Management LLC...at any time HW furnished information concerning
Ms. Hustedt to any credit reporting agency.” [DE 26 at ¶60.]
1 In ¶9, the Second Amended Complaint refers to “Mai,” but from the context I construe
that as an intended reference to Hustedt.
2 In ¶40, Hustedt appears to have erroneously swapped references to “HW” and
“Plaintiff.”
Hustedt’s Amended Complaint filed in the Circuit Court of Tippecanoe County
alleged that HW violated the Fair Credit Reporting Act, 15 U.S.C. §1681 et seq., and the
Fair Debt Collections Practices Act, 15 U.S.C. §1692 et seq. [DE 5 at ¶3.] HW removed
the case to federal court based on the Amended Complaint’s invocation of the two
federal statutes. [DE 1 at ¶3.] Since the removal, plaintiff has amended her complaint a
second time. [DE 26.] She now brings an amended motion to remand arguing that HW
cannot demonstrate that she has alleged a concrete harm brought upon her, which is a
threshold requirement of Article III standing. [DE 29 at 1.] If all of this seems a little
odd, that’s because it is. Hustedt is trying to convince me she has no concrete injury,
while the defendant insists Hustedt has indeed been injured by its conduct. It’s a bit
topsy-turvy. How we got here starts with the Supreme Court’s standing jurisprudence,
which is where I’ll begin.
Article III of the United States Constitution limits the jurisdiction of federal
courts to “cases” and “controversies,” which the Supreme Court has interpreted to
require, among other things, a plaintiff with “standing” to assert her claims. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560 (1992). When a case is removed to federal court,
the removing defendant has the burden “to establish that all elements of jurisdiction –
including Article III standing – existed at the time of removal.” Collier v. SP Plus
Corporation, 889 F.3d 894, 896 (7th Cir. 2018). Hustedt invokes the standing concept
along with the requirement of 28 U.S.C. §1447(c)): “If at any time before final judgment
it appears that the district court lacks subject matter jurisdiction, the case shall be
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remanded.” [DE 30 at 6.] Because “[f]ederal courts have subject-matter jurisdiction
only if constitutional standing requirements also are satisfied,” Hustedt contends that if
HW concedes or fails to demonstrate Article III standing, her case should be remanded
to state court. Collier, 889 F.3d at 896.
One of the elements of standing is an “injury in fact,” which means “an invasion
of a legally protected interest which is (a) concrete and particularized...and (b) actual or
imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal citations and
quotation marks omitted).3 Hustedt’s argument for remand is based on two recent
Supreme Court cases that addressed the concrete injury requirement in the Fair Credit
Reporting Act context. Hustedt argues that under these decisions, and lower court
cases interpreting them, HW cannot identify within the Second Amended Complaint
allegations of an injury in fact sufficient to support Article III standing. “The injury
analysis often occurs at the pleading stage, where we are limited to the complaint’s
‘general factual allegations of injury resulting from the defendant’s conduct’ to evaluate
standing.” Wadworth v. Kross, Lieberman & Stone, Inc., 12 F.4th 665, 667 (7th Cir. 2021),
quoting Lujan, 504 U.S. at 661.
“The ‘irreducible constitutional minimum of standing’ requires the plaintiff or
party invoking federal jurisdiction to demonstrate that he has suffered an injury in fact
that is fairly traceable to the defendant’s conduct and redressable by a favorable judicial
3 The other two elements are “that the injury was likely caused by the defendant,” and
“that the injury would likely be redressed by judicial relief.” Lujan, 504 U.S. at 560-61. These
elements are not the subject of the standing dispute in this case.
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opinion.” Pennell v. Global Rust Management, LLC, 990 F.3d 1041, 1044 (7th Cir. 2021),
quoting Lujan, 504 U.S. at 560-61. The requirement of a concrete and actual injury is not
necessarily met by the allegation of a statutory violation. Instead, “a bare procedural
violation, divorced from any concrete harm,” does not satisfy the injury-in-fact
requirement because “[a] violation of one of the FCRA’s procedural requirements may
result in no harm.” Spokeo, Inc. v. Robins, 578 U.S. 330, 341, 342 (2016). See also Pennell,
990 F.3d at 1044. “This does not mean, however, that the risk of real harm cannot satisfy
the requirement of concreteness.” Id. As the Supreme Court noted in Spokeo “the
violation of a procedural right granted by statute can be sufficient in some
circumstances to constitute injury in fact,” such as where the statutory violation creates
“risk of real harm.” Spokeo, 578 U.S. at 342. Because the Ninth Circuit’s analysis had
focused on particularity to the exclusion of the concreteness requirement, the Supreme
Court remanded the case for a determination “whether the particular procedural
violations alleged in this case entail a degree of risk sufficient to meet the concreteness
requirement” to adequately allege an injury in fact. Id. at 343. On remand in Spokeo II,
the Ninth Circuit found such a risk. Robins v. Spokeo, Inc., 867 F.3d 1108, 118 (9th Cir.
2017).
The other Supreme Court decision chiefly relied upon by Hustedt is TransUnion
v. Ramirez, U.S. , 141 S.Ct. 2190 (2021), a class action. There, on the one hand,
the Court held that class-members whose allegedly inaccurate credit reports had been
provided to third-party businesses “demonstrated concrete reputational harm and thus
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have Article III standing to sue.” Id. at 2200. But on the other hand, the plaintiffs whose
credit reports had not been provided to third-party businesses during the relevant time
period had “not demonstrated concrete harm and thus lack Article III standing to sue.”
Id.
The exact meaning of these cases has been hotly debated in the Seventh Circuit
and around the country. Unlike some other circuits, the Seventh Circuit has taken a
very restrictive view on the standing requirement in FCRA and FDCPA cases,
dismissing many cases over the past couple years on standing grounds. Pennell v.
Global Trust Mgmt., LLC, 990 F.3d 1041 (7th Cir. 2021); Smith v. GC Servs. Ltd. P'ship, 986
F.3d 708 (7th Cir. 2021); Nettles v. Midland Funding LLC, 983 F.3d 896 (7th Cir. 2020);
Spuhler v. State Collection Serv., Inc., 983 F.3d 282 (7th Cir. 2020); Bazile v. Fin. Sys. of
Green Bay, Inc., 983 F.3d 274 (7th Cir. 2020); Gunn v. ThrasherBuschmann & Voelkel, P.C.,
982 F.3d 1069 (7th Cir. 2020); Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067 (7th
Cir. 2020); Larkin v. Fin. Sys. of Green Bay, Inc., 982 F.3d 1060 (7th Cir. 2020); Casillas v.
Madison Ave. Assocs., Inc., 926 F.3d 329 (7th Cir. 2019). But some judges in the Seventh
Circuit have disagreed with the crabbed reading of the standing requirement in FDCPA
and FCRA cases. See Markakos v. Medicredit, Inc., 997 F.3d 778, 781 and 785 (7th Cir.
2021) (Ripple J. and Rover J, concurring). See also Thornley v. Clearview AI, Inc., 984 F.3d
1241, 1251 (7th Cir. 2021)(Hamilton J., concurring).
As alluded to above, the situation before me involves a strange procedural
posture in which the plaintiff invokes the defendant’s burden to show that she has
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alleged a concrete injury-in-fact, when she says she has not (so as to avoid an unwanted
removal to federal court). Ordinarily defendants challenge the existence of jurisdiction
and plaintiffs defend their standing to bring suit. But this reversal of roles is inherent in
the removal context, and the Seventh Circuit has rejected a defendant’s contention “that
once removal based on a federal question gets a defendant’s foot in the door of a federal
court, the slate is wiped clean and the defendant can challenge jurisdiction.” Collier, 889
F.3d at 896. For this reason, HW correctly concedes that it bears the burden of
demonstrating the existence of federal jurisdiction. [DE 33 at 7.]
Hustedt’s basic point is that her amended complaint contains no allegation of
concrete harm and thus Article III standing is lacking. [DE 30 at2, 5; DE 36 at 10.] But
this leaves me to wonder how, in the absence of any such injury, Hustedt will be able to
demonstrate to a state court an entitlement to the damages she seeks in her complaint.
(No injunctive relief is prayed for, and the complaint makes no reference to statutory
damages.) I am also left to wonder how Hustedt’s complaint would fare in the face of a
standing challenge under state law. Although, of course, Article III of the U.S.
Constitution does not govern the state courts, Indiana also has a doctrine of standing,
limiting the jurisdiction of its courts to matters brought by a party who can “show
adequate injury or the immediate danger of sustaining some injury.” Pence v. State, 652
N.E.2d 486, 488 (Ind. 1995), quoted in Horner v. Curry, 126 N.E.3d 584, 589 (Ind. 2019).
As the Indiana Supreme Court explains, “[b]y requiring a party to show a specific
injury, the doctrine limits the judiciary to resolving concrete disputes between private
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litigants while leaving questions of public policy to the legislature and the executive.”
Horner, 125 N.E.3d at 589. In any event, because I am remanding this case for the
reasons stated below, these are questions the state court will have to grapple with.
Returning to the present motion, what does HW say in response to Hustedt?
First, HW points out that Hustedt removed injury allegations from the original
complaint, suggesting that Hustedt has engaged in strategic game-playing. [DE 33 at 1-
2.] The standing question necessarily turns on what and how the plaintiff has chosen to
plead the complaint. “When courts analyze standing, ‘allegations matter.’... What
matters here, then, is what [plaintiff] alleged in her operative complaint.” Pennell, 990
F.3d at 1045, quoting Thornley v. Clearview AI, Inc., 984 F.3d 1241, 1246 (7th Cir. 2021).
At the time of removal, the First Amended Complaint governed, and under that
version of the complaint, standing was fairly clear. As noted by HW in its opposition to
remand [DE 33 at 2], Hustedt alleged in that version of the complaint that “[e]ach time
the CRA Defendants issued a report concerning Ms. Hustedt, such report included the
inaccurate HW tradeline.” [DE 5 at 6, ¶71.] The problem is that this allegation is absent
from the Second Amended Complaint. According to Hustedt, this change in the
complaint was made “to remove inadvertently included mention of ‘CRA Defendants,’
which were never sued and inadvertently not removed from a draft.” [DE 30 at 2.]
(“CRA Defendants” apparently refers to credit reporting agencies, none of which is
named as a defendant in any of Hustedt’s three complaints.) HW also asserts that
“Plaintiff’s counsel has certified...[in] both the Original and First Amended Complaints,
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that his client ‘was harmed’, that she suffered ‘actual damages’, emotional distress,
incurred costs and HWI’s conduct ‘caused damages.’” [DE 33 at 3.] But HW makes this
assertion without citation to either of those pleadings. [Id.]
HW’s frustration with Hustedt’s pleadings is apparent in its suggestion that “the
ever changing nature of the allegations...give[s] substantial basis for further discovery
on these issues.” [DE 33 at 5.] HW cites no authority for the notion that it could shore
up its demonstration of standing by means of discovery, instead of making the
necessary showing based on the pleadings. To the contrary, Hustedt cites the Seventh
Circuit’s holding that standing must be established at the time the court’s jurisdiction is
invoked, and cannot be “manufacture[d]” afterwards. Pennell, 990 F.3d at 1044; Pollack
v. U.S. Dep’t of Justice, 577 F.3d 736, 742 n.2 (7th Cir. 2009). Where “a case is at the
pleading stage, the plaintiff must ‘clearly...allege facts demonstrating’ each element” of
standing. Spokeo, 578 U.S. at 338, quoting Warth v. Seldin, 422 U.S. 490, 498-99 (1975).
This is true of each subsequent pleading given that “[p]laintiffs must maintain their
personal interest in the dispute at all stages of litigation.” TransUnion, 141 S.Ct. at 2208.
Later and more helpfully, HW turns its focus to the Second Amended Complaint,
and contends that various specific allegations in it establish concrete injury-in-fact that
supports Article III standing. These are:
• that HW violated §1692e(8) of the FDCPA by reporting inaccurate debt
information on Hustedt, citing ¶¶72-74 of the SAC;
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• relatedly, that HW “furnished inaccurate information to Trans Union and
Equifax after having documentation showing the information was inaccurate,”
citing ¶65 of the SAC;
• and finally that HW both “failed to notify the consumer reporting agencies that
the information furnished was inaccurate” and “failed to notify the consumer
reporting agencies that information was incorrectly reflected by the CRA,” citing
¶¶66-67 of the SAC.
[DE 33 at 7-8, 9.] HW cites the Seventh Circuit’s decision in Evans v. Portfolio Recovery
Assocs., LLC, 889 F.3d 337, 344 (7th Cir. 2018) in support of the conclusion that these
allegations of a violation of ¶1692e(8) constitute an allegation of an injury sufficient to
support Article III standing. [DE 33 at 8-9.]
Section 1692e(8) prohibits debt collectors from “[c]ommunicating or threatening
to communicate to any person credit information which is known or which should be
known to be false, including the failure to communicate that a disputed debt is
disputed.” In Evans, the Seventh Circuit held that the plaintiffs, who “pointed to the
risk of financial harm as a result of credit reporting agencies lowering their credit score”
had Article III standing for a claim under §1692e(8). Evans, 889 F.3d at 345-46. A district
judge in this Circuit has questioned whether that portion of Evans survived the
Supreme Court’s decision in TransUnion, 141 S.Ct. at 2210-11, which cast doubt on
whether “a risk of harm is enough to show an injury in fact in a suit...that doesn’t seek
injunctive relief.” Tolliver v. National Credit Systems, Inc., No. 20-cv-728-jdp, 2021 WL
4306056, at *2 (W.D.Wis. Sep. 22, 2021).
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The Seventh Circuit’s own interpretation of Evans shows its limits. In Markakos v.
Medicredit, Inc., 997 F.3d 778, 786 (7th Cir. 2021), Judge Rovner remarked in her
concurrence that “the Evans court made clear that it is not enough that the statutory
violation presented a risk of harm – the plaintiff has to explicitly allege a risk of concrete
harm.” In Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329, 333 (7th Cir. 2019), the court
noted that the availability of a cause of action under the FDCPA does not automatically
confer standing on a plaintiff alleging a failure to comply with an FDCPA requirement.
The judge in Tolliver surveyed district court decisions and found that “[d]istrict courts
applying Evans have likewise required the plaintiff to show some change in the
plaintiff’s status beyond the bare violation of the law.” Tolliver, 2021 WL 4306056, at * 3
(collecting cases).
Whether or not Evans is impacted by Ramirez, the application of Evans to
Hustedt’s case would not support a finding of Article III standing. In Evans, the
plaintiffs alleged that the debt collector defendant communicated debts to credit
reporting agencies without reporting that the debts were disputed, resulting in a risk of
a lower and inaccurate credit rating. Evans, 889 F.3d at 343, 345. By contrast, Hustedt
does not allege this, and in fact acknowledges that Hunter Warfield did show the debt as
disputed and that the report would therefore not impact her credit score. [DE 36 at 8.]
Hustedt does not allege that the credit reporting agencies to which HW gave the
disputed debt information then lowered her credit score as a result.
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The portions of Hustedt’s pleading cited by HW allege that HW reported
inaccurate debt information to credit reporting agencies, but nothing beyond that – not
that those agencies had provided inaccurate credit reports or scores on Hustedt to any
third-parties, or that Hustedt had otherwise been concretely and negatively impacted
by HW’s sharing of erroneous information. Compare this with Judge Hanlon’s very
recent decision concluding that a plaintiff had standing under the FCRA based on his
allegation that inaccurate credit reports and a lowered credit score received by third-
parties put him at risk of higher interest rates on loans. Woessner v. Midland Funding
LLC, No. 1:21-cv-02149-JPH-MG, 2021 WL 6000514, at *1 (S.D.Ind. Dec. 20, 2021).
The Seventh Circuit’s analysis in Evans focuses not on the nature of the statutory
violation alleged, but on how the plaintiff has pleaded her resulting injury. That is how
the Evans court distinguished Gubala v. Time Warner Cable, Inc., 846 F.3d 909 (7th Cir.
2017), a case under the Cable Communication Policy Act, where the risk of harm from
the statutory violation was likely, but wasn’t pleaded. Evans, 889 F.3d at 345-46. In
other words, Gubala’s pleadings had not articulated his fears of actual financial harm,
whereas the Evans plaintiffs “explicitly alleged a risk of concrete harm” by “point[ing]
to the risk of financial harm as a result of credit reporting agencies lowering their credit
score.” Id. at 346.
At oral argument, HW relied heavily on the Seventh Circuit’s recent decision in
Persinger v. Southwest Credit Systems, L.P., 2021 WL 6058148, No. 21-1037 (7th Cir. Dec.
22, 2021), a case not yet decided at the time HW filed its memorandum in opposition.
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HW argues that Persinger stands for the idea that allegations that are akin to a common
law tort cause of action create standing. But Persinger actually underscores that the
standing inquiry first focuses on the plaintiff’s allegations about the harm she has
suffered, not the nature of the alleged legal claim: “When reviewing potential injuries
for standing purposes, we are constrained by the operative complaint.” Persinger, 2021
WL 6058148, at *3. In that case, the complaint “alleged ‘financial and dignitary
harm…and an injury to [plaintiff’s] credit rating and reputation.’” Id. Persinger is
immediately distinguishable because such allegations are clearly absent here. After
admissions in Persinger’s deposition, the Seventh Circuit was left with “dignitary harm
as the only allegation in Persinger’s complaint that might qualify as a concrete injury.”
Id. Note again that the analysis is limited to the harms alleged in the plaintiff’s
complaint.
Persinger goes on to conduct a careful analysis concluding that invasion of
privacy constitutes a “concrete injury because it is analogous to the common law tort of
intrusion upon seclusion.” Id. at *5. But that is no help to HW’s position in this case.
The Persinger opinion starts by identifying what if any harms were alleged in the
operative complaint. Admittedly, because that case was at the summary judgment
stage, the plaintiff’s burden was more developed than in our case, and the court could
consider whether her proof supported the existence of a concrete injury-in-fact. See
TransUnion, 141 S.Ct. at 2208 (“A plaintiff must demonstrate standing ‘with the manner
and degree of evidence required at the successive states of the litigation.’” Quoting
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Lujan, 504 U.S. at 561.) Even so, the Seventh Circuit noted that “the only eligible harm
for standing purposes” is “one that is both grounded in the complaint and
uncontradicted by the record.” Id. at *3. By contrast, our case is only at the pleading
stage. And although the operative complaint alleges various types of statutory
violation which may (or may not) give rise to concrete injuries in a given case, no such
concrete injuries are alleged by Hustedt in the operative complaint here.
HW has failed to demonstrate how the operative complaint alleges a concrete
injury in fact so as to establish Hustedt’s standing to bring the action. In Collier, in
which the defendants were in the same frustrating position of having to defend their
removal of the case by establishing the plaintiffs’ standing, the Seventh Circuit held that
because the complaint “did not sufficiently allege an actual injury” then “§1447(c)
required the district court to remand this case to state court.” Collier, 889 F.3d at 896,
897. The unhappy defendants in that case argued that the plaintiffs should be ordered
to amend their complaint to support their conclusory prayer for damages, but the court
dusted that aside noting that there was “no basis to order these plaintiffs how to plead
their case in state court after remand.” Id. at 897. But the Seventh Circuit did note that
if, after remand, the complaint were amended to state an injury in fact, or the defendant
received any paper that demonstrated the predicates for removal, Ҥ1446(b)(3) would
permit [the defendant] to then remove the case to federal court” a second time. Id. The
same is true here.
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Because Hustedt expressly pleads federal questions and has only avoided
pleading Article III standing by performing plastic surgery on her complaint, I share
HW’s frustration at the outcome I believe is required by the Seventh Circuit, but
perhaps not other circuits. See Markakos, 997 F.3d at 787 (Rovner, J., concurring).
Hustedt has scrubbed all references to her damages from her pleading. Whether that
effort will fly in state court, I do not know. But if Hustedt is compelled in state court to
amend her complaint to again make her injury allegations plain, that will likely trigger
another trip to federal court. All of which causes me to agree with the Collier court’s
expression of lament at the “dubious strategy [that] has resulted in a significant waste
of federal judicial resources.” Id. at 897.
ACCORDINGLY:
Plaintiff Alexandra Hustedt’s Amended Motion to Remand for Lack of Article III
Jurisdiction [DE 29] is GRANTED.
This action is remanded to the Circuit Court of Tippecanoe County.
SO ORDERED.
ENTERED: January 24, 2022.
/s/ Philip P. Simon
PHILIP P. SIMON, JUDGE
UNITED STATES DISTRICT COURT
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