Barrett could cement court’s restrictive view of debt collection cases

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There has been scant attention paid to the financial policy views of newly confirmed Supreme Court Justice Amy Coney Barrett, but her ruling in a recent debt collection case has caught the interest of some banking law experts.

As a federal appeal courts judge, Barrett wrote an opinion in 2019 suggesting that consumers must show concrete harm in order to sue debt collectors.

“The bottom line of our opinion can be succinctly stated: no harm, no foul," Barrett wrote in the decision for Casillas v. Madison Ave. Associates Inc.

Barrett, who was sworn in as a Supreme Court justice late Monday, had ruled that Paula Casillas lacked standing to claim a violation of the Fair Debt Collection Practices Act because she was not harmed when third-party collector Madison Ave. Associates did not provide written notice about a debt.

"The only harm that Casillas claimed to have suffered ... was the receipt of an incomplete letter — and that is insufficient to establish federal jurisdiction," Barrett wrote in the decision.

Her ruling cited the Supreme Court’s 2016 decision in Spokeo, Inc. v. Robins, in which the high court adopted a restrictive view of when Congress can impose penalties for procedural violations of statutes.

“The bottom line of our opinion can be succinctly stated: no harm, no foul," now-Supreme Court Justice Barrett wrote in an earlier appeals court decision.
“The bottom line of our opinion can be succinctly stated: no harm, no foul," now-Supreme Court Justice Barrett wrote in an earlier appeals court decision.

But observers said Barrett's views on the legal bar for plaintiffs bringing debt collection cases could be significant if the issue comes again before the high court. Other jurists have argued that the standard laid out by Barrett and in the Spokeo case is too restrictive.

“What’s at stake is just how wide open the courthouse door should be when it comes to bringing these consumer protection claims,” said Chris Odinet, a law professor at the University of Iowa. “Judge Barrett essentially followed that narrow view of Spokeo’s requirements for consumer harm, which other judges have argued actually ignores the broader harms that lie at the heart of these violations."

In written questions from lawmakers prior to her confirmation, Barrett was asked whether her decision in the Casillas case reflected a deferential standard to corporations.

"My decision for a unanimous panel in Casillas did not 'apply a more deferential standard to corporations than to pro se litigants,' " she wrote in response to the congressional inquiry. "The defendant in this case sent the plaintiff a debt-collection letter that described the process for verifying a debt but did not specify that the plaintiff had to communicate in writing to trigger the statutory protections."

"The Supreme Court has emphasized that 'a bare procedural violation, divorced from any concrete harm' fails to 'satisfy the injury-in-fact requirement of Article III,' " she continued.

Still, a different court, the 6th U.S. Circuit Court of Appeals, had reach a different conclusion in a similar case than Barrett did in the 7th Circuit decision, meaning the issue could be looked at again by the high court.

Some legal observers say Barrett has taken a more nuanced approach, sometimes siding with businesses and other times with consumers, depending on the facts.

“Justice Barrett did not say that companies are shielded from liability for violating the FDCPA, merely that this particular plaintiff in this particular case was not the consumer to sue for this violation," said David Cohen, of counsel at Orrick Herrington & Sutcliffe. “The issue at play in Casillas was not the question of whether the company violated the act, but whether this particular consumer was the right person to enforce that alleged violation. Justice Barrett’s opinion left open the ability of a different consumer who had suffered a concrete injury to sue.”

But some consumer advocates claim that Barrett’s ruling indicates that a mistake or even misconduct can be excused if a consumer cannot prove harm.

"Decisions like Judge Barrett's in Casillas throw up obstacles to enforcement of key consumer protection laws, threatening to make them a dead letter," said Carolyn Carter, deputy director of the National Consumer Law Center.

The issue of what constitutes “concrete” harm is still the subject of much debate. While the court set one standard in the Spokeo case, such standards can be interpreted in many ways.

After the ruling by Barrett's panel, the full 7th Circuit declined to hear an appeal of the case, yet three judges on the full circuit dissented from that opinion.

Barrett's opinion “will make it much more difficult for consumers to enforce the protections against abusive debt collection practices that Congress conferred in the Act," the three judges wrote in their dissent. "That alone is troublesome.”

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