Sonja Pennell v. Global Trust Management, LLC

In the

United States Court of Appeals

For the Seventh Circuit

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No. 20-1524

SONJA PENNELL,

Plaintiff-Appellant,

v.

GLOBAL TRUST MANAGEMENT, LLC,

Defendant-Appellee.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:18-cv-01698-JRS-DLP — James R. Sweeney, II, Judge.

____________________

ARGUED DECEMBER 9, 2020 — DECIDED MARCH 11, 2021

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Before WOOD, BRENNAN, and ST. EVE, Circuit Judges.

BRENNAN, Circuit Judge. Sonja Pennell defaulted on a loan

from MobiLoans, LLC, a lender. Pennell sent MobiLoans a let-

ter refusing to pay her debt and requesting that all future debt

communications cease. Soon after, MobiLoans sold Pennell’s

debt to Global Trust Management, LLC, a debt collector. In

purchasing the debt, Global Trust obtained no actual

knowledge that Pennell refused to pay her debt and that she

was represented by counsel.

2 No. 20-1524

In November 2017, Pennell received a dunning letter from

Global Trust. Odd, she thought, because her counsel had al-

ready asked the lender to stop directly communicating with

her about the debt. Through a letter from her counsel, Pennell

notified Global Trust that she refused to pay the debt and re-

quested all debt communications stop. Global Trust complied

with her request and did not take any further actions.

Pennell sued. She alleged that Global Trust violated 15

U.S.C. § 1692c(a)(2) and (c) of the Fair Debt Collection Prac-

tices Act (the “FDCPA”), which regulates debt collectors’

communications with consumers. Section 1692c(a)(2) prohib-

its a debt collector from directly communicating with a con-

sumer who is represented by an attorney with respect to the

debt. And § 1692c(c) proscribes a debt collector from directly

communicating with a consumer who notifies a debt collector

in writing that she refuses to pay the debt or that she wishes

the debt collector to stop communicating with her. In her

complaint, Pennell claimed “stress and confusion” as her in-

juries. She asserted Global Trust’s dunning letter made her

think that “her demand had been futile” and that she did not

have rights under the FDCPA “to refuse to pay [her] debt and

to demand that collection communications cease.” The dun-

ning letter, Pennell added, led her “to question whether she

was still represented by counsel as to this debt, which caused

stress and confusion as to whether she was required to pay

the debt at issue.”

The district court granted summary judgment for Global

Trust on the merits. It reasoned that Global Trust could not

have violated § 1692c(a)(2) and (c) without having actual

knowledge of Pennell’s cease-communication request.

No. 20-1524 3

Pennell then filed a motion to reconsider, which the district

court denied.

Pennell appealed. Neither party has raised the issue of Ar-

ticle III standing in their briefs. After hearing oral argument,

we directed the parties to file supplemental memoranda ad-

dressing subject-matter jurisdiction in light of our court’s re-

cent FDCPA standing decisions. See, e.g., 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 Col-

lection 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. Thrasher,

Buschmann & Voelkel, P.C., 982 F.3d 1069 (7th Cir. 2020); Bru-

nett 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). Of these recent FDCPA cases, this is the first to im-

plicate § 1692c.

To resolve this appeal, we must answer the jurisdictional

question whether Pennell has Article III standing to sue.

Article III of the Constitution limits the “judicial Power of

the United States” to “Cases” and “Controversies.” From this

text comes the standing doctrine, which “confines the federal

courts to a properly judicial role” and “limits the category of

litigants empowered to maintain a lawsuit in federal court to

seek redress for a legal wrong.” Spokeo, Inc. v. Robins, 136 S.

Ct. 1540, 1547 (2016). The “irreducible constitutional mini-

mum of standing” requires the plaintiff or party invoking fed-

eral 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 decision. Lujan v. Defs. of

Wildlife, 504 U.S. 555, 560–61 (1992). The plaintiff “must estab-

lish standing at the time suit is filed and cannot manufacture

4 No. 20-1524

standing afterwards.” Pollack v. U.S. Dep’t of Just., 577 F.3d

736, 742 n.2 (7th Cir. 2009). The Article III standing inquiry

“remains open to review at all stages of the litigation.” Nat’l

Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 255 (1994).

This case turns on the “foremost” standing requirement—

injury in fact. Steel Co. v. Citizens for Better Env’t, 523 U.S. 83,

103 (1998). To establish injury in fact, a plaintiff must allege a

“concrete and particularized” injury. Friends of the Earth, Inc.

v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 180 (2000). An

injury is particularized if it “affect[s] the plaintiff in a personal

and individual way,” Lujan, 504 U.S. at 560 n.1, and it is con-

crete if it is “real, and not abstract.” Spokeo, 136 S. Ct. at 1548

(internal quotation marks omitted). But a concrete injury need

not be tangible; a risk of real harm can constitute concrete

harm. See id. at 1549. For a statutory violation, a plaintiff does

not automatically satisfy concreteness “whenever a statute

grants a person a statutory right and purports to authorize

that person to sue to vindicate that right.” Id. That is because

“a bare procedural violation, divorced from any concrete

harm” cannot satisfy the injury-in-fact requirement. Id.

In Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329 (7th

Cir. 2019), this court applied Spokeo’s holding in the FDCPA

context. There, the plaintiff contended that the defendant vi-

olated 15 U.S.C. § 1692g(a) by failing to provide consumers

with adequate notice about preserving their statutory rights

to dispute their debt. Id. at 333–34. The plaintiff, however, did

not assert any actual harm or risk of harm. She “complained

only that her notice was missing some information” that the

statute requires, without claiming that the defendant’s mis-

take put her “in harm’s way.” Id. at 334. We dismissed the ac-

tion for lack of subject-matter jurisdiction, noting that to

No. 20-1524 5

satisfy the injury-in-fact requirement, an FDCPA plaintiff

must allege in the complaint that “the violation harmed or

presented an appreciable risk of harm to the underlying con-

crete interest that Congress sought to protect.” Id. at 333 (in-

ternal quotation marks omitted). We concluded, “no harm, no

foul.” Id. at 331.

Pennell alleged in her complaint that Global Trust’s dun-

ning letter caused stress and confusion. But we made clear in

Brunett that “the state of confusion is not itself an injury.” 982

F.3d at 1068. Nor does stress by itself with no physical mani-

festations and no qualified medical diagnosis amount to a

concrete harm. Cf. United States v. All Funds on Deposit with R.J.

O’Brien & Assocs., 783 F.3d 607, 616 (7th Cir. 2015) (noting that

“purely psychological harm” does not suffice to establish Ar-

ticle III standing). For the alleged injury to be concrete, a

plaintiff must have acted “to her detriment, on that confu-

sion.” Brunett, 982 F.3d at 1068. Pennell failed to show that

receiving Global Trust’s dunning letter led her to change her

course of action or put her in harm’s way. Instead, she merely

pointed to a statutory violation, which is not enough to estab-

lish standing under Article III. See Bazile, 983 F.3d at 279 (ex-

plaining that “a plaintiff must do more than allege an FDCPA

violation to establish standing; she must also show personal

harm”). So we conclude Pennell failed to allege concrete in-

jury in her complaint.

To save her claim, Pennell contends that the dunning letter

invaded her privacy, which she submits as her injury for the

first time in her supplemental memorandum. Pennell relies

on Gadelhak v. AT&T Servs., Inc.—a case involving unwanted

text messages and the Telephone Consumer Protection Act—

6 No. 20-1524

to argue that Global Trust invaded her privacy by sending her

an unwanted collection letter. 950 F.3d 458 (7th Cir. 2020).

But we need not entertain Pennell’s invasion of privacy ar-

gument. When courts analyze standing, “allegations matter.”

Thornley v. Clearview AI, Inc., 984 F.3d 1241, 1246, 1248 (7th Cir.

2021) (“Our job is to decide whether [plaintiffs] have Article

III standing to pursue the case they have presented in their

complaint.”). What matters here, then, is what Pennell alleged

in her operative complaint. See id. at 1242; see also Borelli v. City

of Reading, 532 F.2d 950, 951 (3d Cir. 1976) (per curiam) (noting

that “[t]he question of standing is generally determined from

the face of the complaint”). Pennell did not complain that her

injuries included any perceived invasion of privacy. On

appeal she cannot broaden her complaint by inserting a new

injury. That is because “an important corollary” to the injury-

in-fact determination “is the requirement that the plaintiff

must clearly allege facts demonstrating each element.” Thorn-

ley, 984 F.3d at 1245–46 (internal quotation marks omitted); see

also Collier v. SP Plus Corp., 889 F.3d 894, 896 (7th Cir. 2018)

(per curiam) (looking at plaintiffs’ complaint to determine

whether they sufficiently alleged an actual injury). The only

injuries Pennell included in her complaint were stress and

confusion, and those do not suffice for standing.

We therefore VACATE the district court’s judgment and

REMAND with instructions to dismiss for lack of subject-mat-

ter jurisdiction.