Shields v. Professional Bureau of Collections of Maryland

Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 1
FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS December 16, 2022
Christopher M. Wolpert
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
ELIZABETH SHIELDS,
Plaintiff - Appellant,
v. No. 22-3006
PROFESSIONAL BUREAU OF
COLLECTIONS OF MARYLAND, INC.,
Defendant - Appellee.
_________________________________
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 2:20-CV-02205-HLT-GEB)
_________________________________
Russell S. Thompson, IV, Thompson Consumer Law Group, PC, Scottsdale, Arizona, for
Plaintiff-Appellant.
Joshua C. Dickinson (Kersten L. Holzhueter with him on the brief), Spencer Fane LLP,
Kansas City, Missouri, for Defendant-Appellee.
_________________________________
Before TYMKOVICH, PHILLIPS, and McHUGH, Circuit Judges.
_________________________________
TYMKOVICH, Circuit Judge.
_________________________________
Professional Bureau of Collections of Maryland, Inc. sent three collection
letters to Elizabeth Shields over outstanding student loan debt. It used an outside
mailer to send the letters. The letters did not indicate the debt balance could increase
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due to interest and fees from the date of the letters. Shields sued, alleging the
disclosure of her debt and the misleading letters violated the Fair Debt Collection
Practices Act (FDCPA).
The district court dismissed because it found Shields lacked a concrete injury
necessary for standing. We affirm. Shields did not allege that Professional Bureau’s
use of a mailer and the content of its letters sufficiently harmed her.
I. Background
Shields has significant outstanding student loan debt. In July 2019,
Professional Bureau sent her a collection letter that listed the assigned balance as
$184,580.73 and the debt balance as $217,657.60 without explaining the
difference or that the debt could increase due to interest, fees, and other charges.
In early August, Professional Bureau sent a second letter with the same debt
balance. It later sent a third letter with a debt balance of $218,727.01 without
explaining the increase. Professional Bureau used an outside mailer to compose
and send the letters.
Shields sued under the FDCPA. She alleged Professional Bureau violated
15 U.S.C. § 1692c(b) by communicating her debt to the mailer and violated
§ 1692e(2)(A), (10) and § 1692g(a)(1) by misrepresenting her debt. Professional
Bureau moved to dismiss, alleging Shields lacked standing because she lacked a
concrete injury. Shields responded and included a declaration of additional facts
to show her injuries. The district court treated Professional Bureau’s motion as a
facial challenge to subject matter jurisdiction, declined to consider the
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declaration, and dismissed Shields’s complaint without prejudice because she
lacked standing. It later rejected Shields’s requests to reopen the case, reconsider
dismissal, and allow an amended complaint.
II. Analysis
Shields asserts she has standing because she suffered both concrete
tangible and intangible injuries. And she claims the district court erroneously
rejected her efforts to reopen the case and allow her to file an amended
complaint.
A. Standing
The FDCPA limits how debt collectors can pursue certain types of debt and
creates a private right of action when they violate those limitations. See
Tavernaro v. Pioneer Credit Recovery, Inc., 43 F.4th 1062, 1067 (10th Cir.
2022). But to invoke that right, “a violation of a legal entitlement alone is
insufficient.” Laufer v. Looper, 22 F.4th 871, 878 (10th Cir. 2022). Article III of
the Constitution requires a plaintiff have standing to sue, meaning she has
incurred (or will incur) (1) “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, Inc. v. Robins, 578 U.S. 330, 338 (2016).
The injury must be concrete—real, not abstract—and can be either tangible (e.g.,
physical) or intangible (e.g., reputational). Id. at 340. We determine “standing
on a claim-by-claim basis.” Santa Fe All. for Pub. Health and Safety v. City of
Santa Fe, 993 F.3d 802, 813 (10th Cir. 2021), cert. denied, 142 S. Ct. 12283
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(2022). Although a district court has discretion in how it resolves standing
challenges under Rule 12(b)(1), Sizova v. Nat’l Inst. of Standards & Tech., 282
F.3d 1320, 1326 (10th Cir. 2002), we review its ultimate decision de novo, Baker
v. USD 229 Blue Valley, 979 F.3d 866, 871 (10th Cir. 2020).
Tangible harms in the FDCPA context include familiar injuries like
detrimental reliance on a collection letter that misrepresents debt. An intangible
harm might occur if a collector used billboards to publicly shame a private citizen
into paying his debt. When considering “whether an intangible harm constitutes
injury in fact, both history and the judgment of Congress play important roles.”
Spokeo, 578 U.S. at 340. “Congress may ‘elevat[e] to the status of legally
cognizable injuries concrete, de facto injuries that were previously inadequate in
law.’” Id. at 341 (alteration in Spokeo) (quoting Lujan v. Defs. of Wildlife, 504
U.S. 555, 578 (1992)). But the central question is “whether the asserted harm has
a ‘close relationship’ to a harm traditionally recognized as providing a basis for a
lawsuit in American courts.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2200
(2021). The harms must be similar “in kind, not degree.” Lupia v. Medicredit,
Inc., 8 F.4th 1184, 1192 (10th Cir. 2021) (internal quotation marks omitted).
Because an “exact duplicate” is unnecessary, TransUnion, 141 S. Ct. at 2204, a
plaintiff may have standing for a statutory claim even if she could not succeed on
the traditional tort, Lupia, 8 F.4th at 1192.
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Shields alleges Professional Bureau injured her in two ways: by disclosing
her debt and sending misleading letters. We conclude neither caused a concrete
injury.
1. Disclosure
The FDCPA generally prohibits debt collectors from communicating, “in
connection with the collection of any debt, with any person” without the
consumer’s consent or court permission. § 1692c(b). 1 There are, however, a few
exceptions, such as the consumer, the consumer’s attorney, and the collector’s
attorney. Id. Outside mailers are not one of the enumerated exceptions.
Shields asserts Professional Bureau’s disclosure violated the FDCPA and
injured her. Here, like below, she primarily relies on a close relationship with the
traditional tort of public disclosure of private facts. That tort occurs when a
tortfeasor gives “publicity to a matter concerning the private life of another” and
“the matter publicized is of a kind that (a) would be highly offensive to a
reasonable person, and (b) is not of legitimate concern to the public.”
1
In relevant part, the statute says,
[W]ithout the prior consent of the consumer given directly
to the debt collector, or the express permission of a court
of competent jurisdiction, or as reasonably necessary to
effectuate a postjudgment judicial remedy, 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.
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Restatement (Second) of Torts § 652D (Am. L. Inst. 1977). “Publicity” means
the information is conveyed “to the public at large, or to so many persons that the
matter must be regarded as substantially certain to become one of public
knowledge.” Id. cmt. a.
The Eleventh Circuit recently rejected a similar argument in Hunstein v.
Preferred Collection and Management Services, Inc. (Hunstein III), 48 F.4th
1236, 1240 (11th Cir. 2022) (en banc). There, the plaintiff sued after a debt
collector used an outside mailer to send a collection letter. Id. A panel twice
found he had standing. Hunstein I, 994 F.3d 1341, 1348–49 (11th Cir. 2021)
(pre-TransUnion); Hunstein II, 17 F.4th 1016, 1027 (11th Cir. 2021) (post-
TransUnion). But the en banc court concluded otherwise because the plaintiff
failed to allege publicity and “without publicity, there is no invasion of privacy.”
Hunstein III, 48 F.4th at 1245. This means that without publicity, there is “no
harm, at least not one that is at all similar to that suffered after a public
disclosure.” Id. The Eleventh Circuit observed the difference between private
and public disclosure “is qualitative, not quantitative.” Id. at 1249.
Like Hunstein, Shields failed to allege anything close to the required
publicity element. She only alleged Professional Bureau disclosed her debt to its
outside mailer—certainly not the public at large nor someone likely to widely
communicate her debt. Shields did not have to plead and prove the tort’s
elements to prevail. But to proceed, she had to at least allege a similar harm. For
example, we recently found a plaintiff who received one improper call about her
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alleged debt could pursue an FDCPA claim because her harm was analogous to
the tort of intrusion upon seclusion. Lupia, 8 F.4th at 1191–92. Although a
single call may have been insufficient for traditional tort liability, it was still the
same kind of harm, i.e., an intrusion into her privacy. Id. at 1192.
But here, Shields’s alleged harm was that one private entity (and,
presumably, some of its employees) knew of her debt. That is not the same kind
of harm as public disclosure of private facts, which is concerned with highly
offensive information being widely known. See Restatement, supra, § 652D cmt.
a (“[I]t is not an invasion of the right of privacy, within the rule stated in this
Section, to communicate a fact concerning the plaintiff’s private life to a single
person or even to a small group of persons.”). Like Hunstein, Shields alleged
private—not public—disclosure.
Beyond public disclosure, Shields briefly tries to link the statutory
violation to intrusion upon seclusion. But she never alleged Professional Bureau
intruded her “private solitude.” Cf. Lupia, 8 F.4th at 1191. She throws out other
torts, like defamation, but fails to explain their relevance. See DePaula v. Easter
Seals El Mirador, 859 F.3d 957, 967 (10th Cir. 2017) (declining to consider
inadequately briefed arguments). In short, Shields did not suffer a concrete
injury when Professional Bureau used the outside mailer.
2. Substance of the Letters
The FDCPA also regulates how collectors communicate with consumers.
Collectors may not falsely represent “the character, amount, or legal status of any
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debt,” § 1692e(2)(A), or use “any false representation or deceptive means to
collect or attempt to collect any debt or to obtain information concerning a
consumer,” § 1692e(10). And “[w]ithin five days after the initial communication
with a consumer in connection with the collection of any debt, a debt collector
shall, unless . . . contained in the initial communication or the consumer has paid
the debt, send the consumer a written notice containing the amount of the debt.”
§ 1692g(a)(1). Shields alleges Professional Bureau violated these provisions by
not truthfully informing her about her debt balance and that the balance could
increase.
When Shields responded to Professional Bureau’s dismissal motion, she
attached a declaration of facts to show the letters caused, among other injuries,
detrimental reliance. The district court declined to consider the declaration
because Professional Bureau facially challenged subject matter jurisdiction. A
facial challenge “assumes the allegations in the complaint are true and argues
they fail to establish jurisdiction,” while a factual challenge “goes beyond the
allegations in the complaint and adduces evidence to contest jurisdiction.” Baker,
979 F.3d at 872.
Professional Bureau did not provide evidence outside the pleadings. By
contrast, Shields tried to use the declaration to bolster her complaint and defeat
the facial challenge. See Harty v. W. Point Realty, Inc., 28 F.4th 435, 442 (2d
Cir. 2022). The district court did not abuse its discretion by not considering her
declaration. See id.8
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Confined to her complaint, Shields pleaded only that the letters were
generally prejudicial to consumers and caused her to be confused and believe her
debt was not accruing interest. But she never alleged the letters caused her to do
anything. Her confusion and misunderstanding are insufficient to confer
standing. See Pierre v. Midland Credit Mgmt., Inc., 29 F.4th 934, 939 (7th Cir.
2022). And it would be unreasonable for a debtor in Shields’s position to believe
that her debt would not continue to accrue interest, absent a well-pleaded
allegation to the contrary.
As a last attempt, Shields tries to link her alleged harms to common-law
fraud. But fraud recognizes that harm may flow from relying on a
misrepresentation, and Shields never pleaded reliance. See Trichell v. Midland
Credit Mgmt., Inc., 964 F.3d 990, 998 (11th Cir. 2020). In other words, she did
not allege the same kind of harm as required by the tort of fraud.
In sum, Shields did not plead any concrete tangible or intangible harms.
B. Post-Judgment Motions
We review a district court’s rulings on Rule 59(e) and Rule 60(b)(6)
motions and requests for leave to amend a complaint for an abuse of discretion.
Nelson v. City of Albuquerque, 921 F.3d 925, 929 (10th Cir. 2019); Kile v. United
States, 915 F.3d 682, 688 (10th Cir. 2019); Hertz v. Luzenac Grp., 576 F.3d 1103,
1117 (10th Cir. 2009).
After the district court dismissed the case and entered judgment, Shields
requested the court reopen the case, reconsider dismissal, and allow her to file an
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amended complaint with the allegations contained in her declaration. She asserts
she was entitled to relief because the Supreme Court issued TransUnion, the
Eleventh Circuit issued Hunstein II, and she must pay to refile. Her arguments
are unavailing.
A party may move “to alter or amend a judgment.” Fed. R. Civ. P. 59(e).
Such relief may be warranted because of “an intervening change in the controlling
law” or “the need to correct clear error or prevent manifest injustice.” Servants of
the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). The court may also
relieve a party from a final judgment for “any other reason that justifies relief.” Fed.
R. Civ. P. 60(b)(6). Because Rule 60(b)(6) is “a grand reservoir of equitable power
to do justice in a particular case,” a court may grant relief “only in extraordinary
circumstances and only when necessary to accomplish justice.” Cashner v. Freedom
Stores, Inc., 98 F.3d 572, 579 (10th Cir. 1996) (internal quotation marks omitted).
First, assuming TransUnion changed the law of standing rather than
explained Spokeo, it was not an intervening change. The Supreme Court issued
its opinion before Shields responded to Professional Bureau’s motion. The
district court even gave her additional time to respond because of TransUnion.
Second, after the district court dismissed Shields’s complaint, the Eleventh
Circuit issued Hunstein II, which found the plaintiff had standing. Obviously,
this Eleventh Circuit case was not controlling (and not a change—it confirmed
Hunstein I).
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Third, Shields asserts the court should have reopened the case because she
must pay filing and service fees to refile. But she had the burden to establish
standing, so she bears the cost of her deficient pleading. Lujan, 504 U.S. at 560–
61. It is not manifestly unjust nor an extraordinary circumstance that she must
pay to refile.
The district court did not abuse its discretion by denying Shields’s request
to reopen the case and reconsider dismissal. And because it did not reopen the
case, it properly declined to allow an amended complaint. See Combs v.
PriceWaterhouseCoopers LLP, 382 F.3d 1196, 1205 (10th Cir. 2004).
III. Conclusion
For the foregoing reasons, we affirm.
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