BROWN v. ALLTRAN FINANCIAL, LP

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

TARA BROWN, on behalf of herself )

and all others similarly situated, )

)

Plaintiff, )

)

v. ) 1:21-CV-595

)

ALLTRAN FINANCIAL, LP, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

Catherine C. Eagles, District Judge.

The plaintiff, Tara Brown, filed suit in state court alleging that the defendant,

Alltran Financial, LP, communicated information about her alleged debt to a third party.

Alltran removed the case to this court, asserting federal question jurisdiction based on

Ms. Brown’s federal Fair Debt Collection Practices Act claim. Because neither Alltran

nor Ms. Brown have identified allegations of concrete harm resulting from Alltran’s

alleged federal statutory violations, Ms. Brown lacks standing for her claim to remain in

federal court. The Court declines to exercise supplemental jurisdiction over the state law

claims and remands the case to state court.

I. Procedural History

In July 2021, Ms. Brown brought this putative class action in North Carolina state

court alleging Alltran violated the North Carolina Debt Collection Act, N.C. Gen. Stat.

§ 75-50 et seq., the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen.

Stat. § 75-1.1, and the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et

seq. Doc. 2. The putative class consists of consumers in North Carolina whose debt

information Alltran sent to a third party without consent. Doc. 2 at ¶ 29; Doc. 24 at ¶ 27.

Alltran removed the action to this court based on federal question jurisdiction

arising out of the FDCPA claim. Doc. 1 at ¶ 3. The Court sua sponte questioned

standing in light of TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) and ordered the

parties to show cause why the case should not be remanded to state court for lack of

subject matter jurisdiction. Doc. 21.

Ms. Brown has since amended her complaint. Doc. 24. She removed her claims

under the NCDCA, N.C. Gen. Stat. § 75-50 et seq., and the associated treble damages

provision of the UDTPA, N.C. Gen. Stat § 75-1.1, and she added a claim under the North

Carolina Collection Agency Act, N.C. Gen. Stat § 58-70 et seq. Her federal claim was

unaffected.

II. Facts

The Court has the original and amended complaints before it.1 Doc. 2, 24. The

Court offered the parties an opportunity to present evidence in support of subject matter

jurisdiction, Doc. 21 at 2; neither party responded to that invitation. The Court will thus

apply the usual test for analyzing standing at the pleadings stage and will accept as true

1 Ms. Brown amended her complaint, Doc. 24, after this case was removed to federal court.

Doc. 1. Alltran, the removing party, bears the burden of demonstrating subject matter

jurisdiction when the case is removed and thereafter. See Strawn v. AT&T Mobility LLC, 530

F.3d 293, 296–97 (4th Cir. 2008). The Court will consider allegations in Ms. Brown’s original

and amended complaints.

the factual allegations in the complaints.2 See Beck v. McDonald, 848 F.3d 262, 270 (4th

Cir. 2017) (accepting as true factual allegations in complaint when analyzing standing at

the pleadings stage).

According to the original and amended complaint, Ms. Brown owes money to an

unidentified creditor, and that debt was in default. Docs. 2, 24 at ¶¶ 13, 18. The creditor

“transferred” the debt to Alltran, a debt collector. Docs. 2, 24 at ¶¶ 9, 11, 17.

As part of attempting to collect that debt, Alltran used a third-party vendor to

prepare and send letters to Ms. Brown from Alltran about her debt. Docs. 2, 24 at ¶¶ 19–

20. Alltran sent information about Ms. Brown’s debt to the third-party vendor, Docs. 2,

24 at ¶ 21, who “populated” some or all the debt information into a “prepared template,”

printed the resulting letter, and mailed it to Ms. Brown. Docs. 2, 24 at ¶ 24.

In May 2021, Ms. Brown received and read one such letter from Alltran about her

debt. Docs. 2, 24 at ¶ 25. Ms. Brown did not consent to Alltran sharing her debt

information with the third-party vendor. Doc. 2 at ¶¶ 45–47; Doc. 24 at ¶¶ 43–45.

III. Fair Debt Collection Practices Act

Section 1692c(b) of the FDCPA, titled “Communication with third parties,”

prohibits debt collectors from communicating with “any person other than the consumer”

in connection with an alleged debt held by the consumer, with only limited exceptions.

2 The factual allegations in Ms. Brown’s original complaint, Doc. 2, and amended complaint,

Doc. 24, as relevant to Ms. Brown’s FDCPA claim are almost identical. Any differences are

minor and do not influence the Court’s standing analysis.

See Bryan v. Allied Interstate LLC, 513 F. Supp. 3d 686, 691 (W.D.N.C. 2021). As is

relevant here, the statute provides that—

Except as provided in section 1692b of this title, without the

prior consent of the consumer given directly to the debt

collector . . . a debt collector may not communicate, in

connection with the collection of any debt, with any person

other than the consumer, his attorney, a consumer reporting

agency if otherwise permitted by law, the creditor, the attorney

of the creditor, or the attorney of the debt collector.

15 U.S.C. § 1692c(b). The § 1692b exceptions to this “no communication” rule address

the way a debt collector may communicate “with any person other than the consumer for

the purpose of acquiring location information.” Id.

The FDCPA thus broadly prohibits a debt collector from communicating with

anyone other than the consumer “in connection with the collection of any debt,” subject

to several carefully crafted exceptions—some enumerated in § 1692c(b), and others in

§ 1692b. Ms. Brown alleges that the third-party vendor does not fall within any of the

exceptions and that Alltran violated the FDCPA when it “communicated” with the third-

party vendor “in connection with the collection of a debt” by giving the vendor

information about Ms. Brown’s debt.3

3 This case is one of many where a debtor/letter recipient is pursuing FDCPA liability

based on disclosure to the debt collector’s mailing vendor. See Hunstein v. Preferred Collection

& Mgmt. Servs, 17 F.4th 1016 (11th Cir. 2021), reh’g en banc granted, opinion vacated, 17

F.4th.1103 (11th Cir. 2021); Stewart v. Healthcare Revenue Recovery Grp., No. 20-CV-00679,

2022 WL 200371 (M.D. Tenn. Jan 21, 2022); Nyanjom v. NPAS Sols., LLC, No. 21-CV-1171,

2022 WL 168222 (D. Kan. Jan. 19, 2022); Sputz v. Alltran Fin., LP, No. 21-CV-4663, 2021 WL

5772033 (S.D.N.Y. Dec. 5, 2021); Liu v. MRS BPO, LLC, No. 21-C-2919, 2021 WL 5630764

(N.D. Ill. Nov. 30, 2021); Ciccone v. Cavalry Portfolio Servs., LLC, No. 21-CV-2428, 2021 WL

5591725 (E.D.N.Y. Nov. 29, 2021); Shields v. Prof’l Bureau of Collections of Md., Inc., No. 20-

CV-02205, 2021 WL 4806383 (D. Kan. Oct. 14, 2021); Thomas v. Unifin, Inc., No. 21-CV-

IV. Standing and TransUnion

The United States Constitution limits federal courts to deciding “cases” or

“controversies.” U.S. Const. art. III § 2; see also TransUnion, 141 S. Ct. at 2203.

“Standing to sue is a doctrine rooted in the traditional understanding of a case or

controversy.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). “For there to be a case

or controversy under Article III, the plaintiff must have a personal stake in the case—in

other words, standing.” TransUnion, 141 S. Ct. at 2203 (cleaned up).

To satisfy the standing requirement, a “plaintiff must have (1) suffered an injury in

fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is

likely to be redressed by a favorable judicial decision.” Spokeo, 578 U.S. at 338. The

burden of establishing standing here is on the defendant, Alltran, because it is Alltran that

has invoked the jurisdiction of this court. See Lujan v. Defenders of Wildlife, 504 U.S.

555, 561 (1992); Bryant v. Woodall, 1 F.4th 280, 285 (4th Cir. 2021). Alltran must show

that the complaint includes “clearly allege[d] facts demonstrating each element” of

standing. Spokeo, 578 U.S. at 338 (cleaned up).

To establish injury in fact, the allegations must be sufficient to show a plaintiff has

suffered a concrete harm. Id. at 339–40. Tangible harms, such as physical harm and

monetary harm, “readily qualify as concrete injuries under Article III.” TransUnion, 141

S. Ct. at 2204. Although less readily identifiable, intangible harms, too, can be concrete.

See Spokeo, 578 U.S. at 340. Intangible harms are concrete when the asserted harm has a

3037, 2021 WL 3709184 (N.D. Ill. Aug. 20, 2021); In re FDCPA Mailing Vendor Cases, No. 21-

CV-2312, 2021 WL 3160794 (E.D.N.Y. July 23, 2021).

“close relationship to harms traditionally recognized as providing a basis for lawsuits in

American courts.” TransUnion, 141 S. Ct. at 2204.

While Congress’s views on harm may be “instructive,” a plaintiff does not

“automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person

a statutory right and purports to authorize that person to sue to vindicate that right.”

Spokeo, 578 U.S. at 341. “Only those plaintiffs who have been concretely harmed by a

defendant’s statutory violation may sue that private defendant over that violation in

federal court.” TransUnion, 141 S. Ct. at 2205. In other words, “an injury in law is not

an injury in fact.” Id.

The Supreme Court recently applied these standards in TransUnion. In that case,

a class of consumers sued TransUnion, a credit reporting agency, alleging violations of

the Fair Credit Reporting Act. Id. at 2200. Specifically, the class members claimed that

TransUnion did not adopt reasonable procedures to ensure the accuracy of their

internally-maintained credit files when it used a product that wrongfully designated the

class members as potential terrorists, drug traffickers, or other serious criminals. Id. at

2200–01.

For some of the class members, TransUnion provided internal credit reports with

this misleading information to third-party businesses, but for others, it did not share the

misleading internal credit files with any third party. Id. at 2200. In analyzing whether

the class members suffered an intangible concrete harm arising from TransUnion’s

FCRA violation, the Court separately examined whether the two categories of class

members had standing.

The Supreme Court compared the harm suffered by class members whose

misleading credit reports TransUnion had shared with third-party businesses to the kind

of harm in a defamation action and determined that the class members’ harm had a “close

relationship” to the reputational harm associated with defamation. Id. at 2208–09.

“Under longstanding American law, a person is injured when a defamatory statement that

would subject him to hatred, contempt, or ridicule is published to a third party,” id. at

2208, and the TransUnion plaintiffs who were falsely labeled as potential terrorists, drug

traffickers, or serious criminals in reports disseminated to third parties faced a closely-

related concrete harm. Id. at 2209.

The result was different for those class members whose credit files TransUnion

did not share with a third party. Although the internal credit files contained misleading

information, there was no historical or common law analogue “where the mere existence

of inaccurate information, absent dissemination, amounts to concrete injury.” Id.

Likewise, the risk of harm if the information was disseminated did not create a concrete

harm, as there was no historical analogue, and the risk of harm was speculative in nature.

Id. at 2211–12.

V. Analysis

The Court assumes without deciding that it was a violation of the Fair Debt

Collection Practices Act for Alltran to share Ms. Brown’s debt information with a third-

party mailing vendor. But a statutory violation alone is not sufficient to confer standing.

As the Supreme Court has made clear, a statutory violation does not necessarily cause

concrete harm. See Spokeo, 578 U.S. at 341; TransUnion, 141 S. Ct. at 2205.

Nor is it enough that both parties agree that Ms. Brown has standing. See Docs.

22, 23. The parties cannot avoid the requirements of standing through consent, see

Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d 474, 480 (4th Cir.

2005) (stating that parties cannot consent to subject matter jurisdiction that does not

otherwise exist), and it is a requirement that cannot be waived or forfeited. See, e.g.,

United States v. Wilson, 699 F.3d 789, 793 (4th Cir. 2012). The Court “has an

independent obligation to assure that standing exists,” Summers v. Earth Island Inst., 555

U.S. 488, 499 (2009), and it is not required to manufacture standing arguments the parties

do not present. See United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020) (“[A]s

a general rule, our system is designed around the premise that parties represented by

competent counsel know what is best for them, and are responsible for advancing the

facts and argument entitling them to relief.”) (cleaned up).

As the Supreme Court noted in TransUnion, American courts have traditionally

recognized disclosure of private information and intrusion upon seclusion as intangible

harms that are an appropriate basis for a lawsuit. 141 S. Ct. at 2204.4 On suitable facts,

violations of the FDCPA could cause intangible harm closely related to the harm caused

4 Both torts are part of a general category of “invasion of privacy” tort that future-Justice

Louis Brandeis and Samuel D. Warren identified in 1890. See Samuel D. Warren & Louis D.

Brandeis, The Right to Privacy, 4 HARV. L. REV. 193 (1890). In 1960, William Prosser split the

general “invasion of privacy” tort into four separate causes of action recognized by many courts

today: appropriation of one’s name or likeness, intrusion upon the seclusion of another, public

disclosure of private facts, and placing another in a false light before the court. See William L.

Prosser, Privacy, 48 CALIF. L. REV. 383 (1960).

by these invasion of privacy torts. See Foley v. Mary Washington Healthcare Servs.,

Inc., No. 21-CV-239, 2021 WL 3193177, at *3 (E.D. Va. July 28, 2021).

But the question is not a generic one. See Smith v. GC Servs. Lim. P’ship, 986

F.3d 708, 711 (7th Cir. 2021) (“Standing often depends on what theory a plaintiff

advances and how injury would be proved.”). The question is whether the complaint

includes allegations that Ms. Brown suffered harms with a “close relationship” to the

harms caused by those or other traditional torts. TransUnion, 141 S. Ct. at 2208–10

(distinguishing between class members with the same cause of action when analyzing

standing because of different evidence of harm).

The original complaint is almost silent on the kind of harm Ms. Brown says she

has suffered from Alltran’s illegal sharing of her debt information with the third-party

vendor. She alleges that “[Alltran] uses a third party without regard to the propriety and

privacy of the information it discloses to such third party,” Doc. 2 at ¶ 50, and makes a

vague reference to “the harm to [Ms. Brown] . . . that could result from [Alltran’s]

unauthorized disclosure of private and sensitive information.” Id. at ¶ 51. She also

alleges with no detail that “[t]he unauthorized disclosure of a consumer’s private and

sensitive information is both unfair and unconscionable.” Id. at ¶ 54.

The amended complaint does not cure the problem. It contains the same relevant

underlying factual allegations and nonspecific references to the “unfair and

unconscionable” disclosure of Ms. Brown’s private information. Doc. 24 at ¶ 51. Ms.

Brown does include further detail on her alleged harm, noting that Alltran caused harm

through its “unauthorized disclosure of private and sensitive financial information to the

third party in the form of consumer informational injury.” Id. at ¶ 49. But in her brief,

Ms. Brown has not explained what she means by “informational injury” or identified a

historical analogue for her asserted informational harm.

Ms. Brown and Alltran both assert that Ms. Brown has alleged intangible and

concrete harm similar to that caused by the tort of disclosure of private information. See

Doc. 22 at 5; Doc. 23 at 3–4. Ms. Brown’s bare allegations of speculative harm do not

show the kind of public disclosure or reputational harm caused by tortious disclosure of

private information.5 See In re FDCPA Mailing Vendor Cases, 21-CV-2312, 2021 WL

3160794, at *6 (E.D.N.Y. July 23, 2021) (noting that “[i]t would be difficult to suggest”

that a communication about “a relatively de minimis debt to a mailing vendor is “highly

offensive to a reasonable person”). Nor do the facts alleged show the kind of harm

giving rise to tortious intrusion upon seclusion, as Ms. Brown contends, such as

“physically invading a person’s home or other private place, eavesdropping by

wiretapping or microphones, peering through windows, persistent telephoning,

unauthorized prying into a bank account, and opening personal mail of another.” Tillet v.

Onslow Mem’l Hosp., Inc., 215 N.C. App. 382, 384, 715 S.E.2d 538, 540 (2011) (listing

examples of conduct that gives rise to an intrusion upon seclusion action); see also

Restatement (Second) of Torts § 652B cmt. b.

5 Even applying the broadest definition of public disclosure adopted by some courts, see, e.g.,

McSurely v. McClellan, 753 F.2d 88, 112–13 (D.C. Cir. 1985) (applying Kentucky law and

holding disclosure of premarital relationships to spouse gave rise to disclosure of private

information action), Ms. Brown has not alleged a harm closely related to the harm occurring

from tortious disclosure of information.

Alltran relies on Ben-Davies v. Blibaum & Assocs., P.A., 695 F. App’x 674, 676—

77 (4th Cir. 2017) (per curiam) (unpublished), in which the Fourth Circuit held that a

plaintiff alleging emotional harm from a FDCPA violation had standing. The plaintiff in

Ben-Davies made specific allegations of harm, unlike Ms. Brown; her complaints contain

only vague allegations of harm “from [Alltran’s] unauthorized disclosure of private and

sensitive information,” and contain no allegations of emotional injury. Doc. 24 at 49;

Doc. 2 at 951. As noted supra, standing is not a generic analysis. Alltran has not

identified any specific allegations to support its contention that Ms. Brown alleged a

concrete intangible harm—much less the same or similar harm as the plaintiff in Ben-

Davies.

Spokeo requires the complaint to include “clearly allege[d] facts demonstrating

each element” of standing. 578 U.S. at 338 (cleaned up). Neither Alltran nor Ms. Brown

have identified specific allegations of injury in fact from the alleged disclosure at issue.

The Court does not have subject matter jurisdiction and remand is appropriate.

It is ORDERED that:

1. The case is remanded to the Superior Court of Guilford County.

This the 8th day of February, 2022.

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UNITED STATES DIS >» JUDGE

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