Sandra Bazile v. Finance System of Green Bay, I

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19‐1298
SANDRA BAZILE, individually and on behalf of all others simi‐
larly situated,
Plaintiff‐Appellant,
v.
FINANCE SYSTEM OF GREEN BAY, INC.,
Defendant‐Appellee.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 18‐cv‐1415 — William C. Griesbach, District Judge.
____________________
ARGUED APRIL 14, 2020 — DECIDED DECEMBER 15, 2020
____________________
Before EASTERBROOK, KANNE, and WOOD, Circuit Judges.
KANNE, Circuit Judge. This appeal centers on Article III
standing to sue for an alleged violation of the Fair Debt Col‐
lection Practices Act (“FDCPA”). The district court was satis‐
fied of the plaintiff’s standing based on the court’s reasoning
in a similar case, Larkin v. Finance System of Green Bay Inc., No.
18‐C‐496, 2018 WL 5840769 (E.D. Wis. Nov. 8, 2018). We have
since reversed the district court’s decision with respect to
2 No. 19‐1298
standing in Larkin because the plaintiff in that case failed to
allege any injury. See Larkin v. Fin. Sys. of Green Bay, Inc., Nos.
18‐3582 & 19‐1557, ‐‐‐ F.3d ‐‐‐, 2020 WL 7332483, at *4 (7th Cir.
2020).
Here, the plaintiff’s complaint may survive dismissal as a
matter of pleading. But that’s not enough for the district court
to decide the merits of the action; the truthfulness of the facts
necessary for standing have been called into doubt, requiring
further inquiry into whether the court has subject‐matter ju‐
risdiction.
At this stage in the litigation, the appropriate mechanism
to resolve factual disputes about standing is an evidentiary
hearing on the defendant’s motion to dismiss under Rule
12(b)(1). In that setting, the district court may receive evi‐
dence, outside the complaint, on whether the plaintiff meets
the standing requirements of Article III. We are not positioned
to make the necessary findings of fact, so we remand for the
district court to do so.
I. BACKGROUND
According to Sandra Bazile’s complaint, Finance System
of Green Bay sent her a letter seeking to collect medical debts
she had incurred. The dunning letter stated the date (Septem‐
ber 19, 2017) and the total balance of the debt ($92.23), without
indicating whether that amount may increase with the accrual
of interest. Bazile filed a complaint against the debt collector.
She alleged that the letter’s exclusion of information concern‐
ing the accrual of interest was a violation of the FDCPA be‐
cause the letter was misleading and did not provide “the
amount of the debt.” 15 U.S.C. § 1692g(a)(1); see id. § 1692e.
No. 19‐1298 3
The collector moved to dismiss the complaint on two
grounds: Bazile lacked standing to sue; and she failed to state
a claim upon which relief can be granted, Fed. R. Civ. P.
12(b)(6).
The district court determined that its reasoning in Larkin
applied: Bazile had sufficiently demonstrated standing be‐
cause, like in Larkin, the violation she alleged amounted to a
concrete injury by itself. The court agreed with the collector
on the merits, however, and dismissed the complaint under
Rule 12(b)(6). Bazile appealed.1
II. ANALYSIS
We are presented with one question about subject‐matter
jurisdiction (whether Bazile has Article III standing to sue),
and one question about the merits of the parties’ dispute
(whether Bazile’s complaint states a claim upon which relief
can be granted). We don’t reach the merits, though, because
jurisdiction is a threshold matter that needs to be further as‐
sessed on remand. See Warth v. Seldin, 422 U.S. 490, 498 (1975).
Standing is a threshold requirement because it derives
from the Constitution’s limit on federal courts’ authority to
resolve “cases” and “controversies.” U.S. Const. art. III, § 2,
cl. 1; see Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101–
02 (1998). The plaintiff, as the party invoking the court’s juris‐
diction, must establish the elements of standing: she must
prove that she has suffered a concrete and particularized in‐
jury that is both fairly traceable to the challenged conduct and
likely to be redressed by a favorable judicial decision. Spokeo,
1 For briefing, we consolidated this appeal with one in Spuhler v. State
Collection Service, Inc., No. 19‐2630 (7th Cir. Dec. 15, 2020).
4 No. 19‐1298
Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (citing Lujan v. Defs.
of Wildlife, 504 U.S. 555, 560–61 (1992)). Whether the plaintiff
has satisfied these criteria is a matter we review de novo. See
Lewert v. P.F. Chang’s China Bistro, Inc., 819 F.3d 963, 966 (7th
Cir. 2016).
Because standing is an essential ingredient of subject‐mat‐
ter jurisdiction, it must be secured at each stage of the litiga‐
tion. Lujan, 504 U.S. at 561. At the pleading stage, “general fac‐
tual allegations of injury resulting from the defendant’s con‐
duct may suffice.” Id. That’s because “we ‘presum[e] that gen‐
eral allegations embrace those specific facts that are necessary
to support the claim,’” id. (alteration in original) (quoting
Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 889 (1990)), and the
allegations of fact—though they must be clearly alleged,
Spokeo, 136 S. Ct. at 1547—need only “plausibly suggest” each
element of standing, with the court drawing all reasonable in‐
ferences in the plaintiff’s favor, Silha v. ACT, Inc., 807 F.3d 169,
173–74 (7th Cir. 2015).
But even when a plaintiff’s allegations sufficiently demon‐
strate standing at the outset of the action, they don’t show
standing for long. Once the allegations supporting standing
are questioned as a factual matter—either by a party or by the
court—the plaintiff must support each controverted element
of standing with “competent proof,” McNutt v. Gen. Motors
Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936), which we’ve
understood as “a showing by a preponderance of the evi‐
dence, or proof to a reasonable probability, that standing ex‐
ists,” Retired Chi. Police Ass’n v. City of Chicago, 76 F.3d 856, 862
(7th Cir. 1996).
Importantly, even if a party does not challenge the court’s
subject‐matter jurisdiction, “federal courts are obliged to
No. 19‐1298 5
police the constitutional … limitations on their jurisdiction.”
Kanzelberger v. Kanzelberger, 782 F.2d 774, 777 (7th Cir. 1986).
Thus, when a court is put on notice that an allegation integral
to standing is probably false or if the complaint “fairly
shriek[s] that there is no federal jurisdiction, the district judge
must conduct whatever supplementary factual proceedings
are necessary to resolve the doubt.”2 Id.Here, Bazile alleged that the dunning letter did not “dis‐
close that the amount of the debt may increase due to the ac‐
crual of interest” and that it failed “to disclose the amount of
the debt as required by the FDCPA.”
The collector responded to these allegations by moving to
dismiss the complaint for failure to state a claim under Rule
12(b)(6). At the same time, the collector argued that Bazile
lacked Article III standing. Although the collector did not
identify its standing argument as a defense under Rule
12(b)(1), that is how we understand it and how the collector
recognizes it on appeal.
Rule 12(b)(1) is the means by which a defendant raises a
defense that the court lacks subject‐matter jurisdiction. See
Fed. R. Civ. P. 12(b)(1). This defense can take the form of a
facial or a factual attack on the plaintiff’s allegations. See Apex
Dig., Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443–44 (7th Cir.
2009). A facial attack tests whether the allegations, taken as
true, support an inference that the elements of standing exist.
See id. In this way, a facial attack does not challenge the al‐
leged facts themselves. But a factual attack does, testing the
2 When a district court finds facts material to whether jurisdiction ex‐
ists, we review those findings for clear error. Reid L. v. Ill. State Bd. of Educ.,
358 F.3d 511, 515 (7th Cir. 2004).
6 No. 19‐1298
existence of jurisdictional facts underlying the allegations. See
id. at 444. Accordingly, a plaintiff undergoing only a facial at‐
tack enjoys treatment of her allegations as true, but that ben‐
efit does not carry into the context of a factual challenge. See
id. (quoting Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d
884, 891 (3d Cir. 1977)). In that context, the court may consider
and weigh evidence outside the pleadings to determine
whether it has power to adjudicate the action. See Venezuela v.
Helmerich & Payne Int’l Drilling Co., 137 S. Ct. 1312, 1316 (2017);
Craftwood II, Inc. v. Generac Power Sys., Inc., 920 F.3d 479, 481
(7th Cir. 2019).
When the collector here moved to dismiss the complaint,
it did not declare whether it was launching a facial or factual
attack on Bazile’s allegations. Most of the collector’s asser‐
tions are facial in form; they point out how Bazile failed to
allege certain injuries that she might have sustained. But the
collector also made a factual assertion that conflicts with an
inference one could reasonably draw from Bazile’s complaint:
while Bazile’s allegations support an inference that interest
was accruing on the debt, the collector asserted that interest
was not accruing. The collector emphasized this factual con‐
tention on appeal, and also questioned whether the letter’s
omission of information about interest affected Bazile’s re‐
sponse to the correspondence or to the debt. The collector did
not press the district court on these factual challenges or ask
the district court for an evidentiary hearing on them. And the
district court did not address the factual dispute. It instead
decided the jurisdictional matter on the pleadings, alone,
based on its reasoning in Larkin.
The district court in Larkin concluded that an alleged vio‐
lation under § 1692e or § 1692f of the FDCPA by itself
No. 19‐1298 7
amounts to a concrete injury. But we held on appeal that
“[i]t’s not enough for an FDCPA plaintiff to simply allege a
statutory violation; he must allege (and later establish) that
the statutory violation harmed him ‘or “presented an appre‐
ciable risk of harm to the underlying concrete interest that
Congress sought to protect.”’” Larkin, 2020 WL 7332483, at *4
(quoting Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329, 333
(7th Cir. 2019)).
So a plaintiff must do more than allege an FDCPA viola‐
tion to establish standing; she must also show personal harm.
Which brings us to the key question in this case: Did Bazile
suffer—or has she faced a real risk of suffering—a concrete
injury from the collection letter’s lack of information about
whether the debt amount was increasing from the accrual of
interest?
The nonreceipt of information to which a plaintiff is enti‐
tled under a statute may amount to a concrete injury, but only
if it impairs the plaintiff’s “ability to use [that information] for
a substantive purpose that the statute envisioned.” Robertson
v. Allied Sols., LLC, 902 F.3d 690, 694 (7th Cir. 2018). In other
words, a “bare procedural violation, divorced from any con‐
crete harm,” does not satisfy the injury‐in‐fact requirement of
Article III. Spokeo, 136 S. Ct. at 1549. Compare Lavallee v. Med‐1
Sols., LLC, 932 F.3d 1049, 1053 (7th Cir. 2019) (plaintiff who
was denied information, disadvantaging her in ongoing liti‐
gation, suffered a concrete injury), and Robertson, 902 F.3d at
695–98 (plaintiff whose allegations suggested she had been
denied substantive information, which limited her ability to
respond to an adverse employment decision, adequately pled
a concrete injury), and Evans v. Portfolio Recovery Assocs., LLC,
889 F.3d 337, 345 (7th Cir. 2018) (plaintiffs who suffered a real
8 No. 19‐1298
risk of financial harm caused by an inaccurate credit rating
had standing), with Casillas, 926 F.3d at 334–38 (plaintiff who
alleged a procedural violation about the form of notice but
who would have acted no differently if given proper notice
did not plead a concrete injury).
The FDCPA requires collectors to inform debtors of the
amount owed to protect debtors from collection abuses that
impinge their choices about how to respond to their debts and
to the collection attempt. See generally 15 U.S.C. §§ 1692(e),
1692e(2), 1692g(a)(1). If the required information is omitted
without hindering those choices or some other substantive in‐
terest the statute protects, there is no harm done—no concrete
injury‐in‐fact. Cf. Casillas, 926 F.3d at 334.
Bazile’s allegations may support an inference that she suf‐
fered a concrete injury. She pled that the collector’s letter de‐
prived her of information, which resulted in a misleading or
inaccurate statement of the debt’s amount.3 She also made
these allegations against the backdrop of Wisconsin law,
which—in at least some circumstances—permits interest to
accrue on medical debts. See, e.g., Aker v. Americollect, Inc., 854
F.3d 397, 399–400 (7th Cir. 2017).
3 To be clear, we do not decide whether the alleged withholding of
required information was a violation of the FDCPA. The merits of a dis‐
pute can be decided by a federal court only if the court has jurisdiction to
do so, and we are not assured of that authority. Nor is this a situation in
which an abysmally unmeritorious claim dictates the absence of jurisdic‐
tion. See Steel Co., 523 U.S. at 89 (recognizing that subject‐matter jurisdic‐
tion may be lacking based on inadequacy of a claim only when the claim
is so “completely devoid of merit as not to involve a federal controversy”)
(quoting Oneida Indian Nation of N.Y. v. County of Oneida, 414 U.S. 661, 666
(1974)).
No. 19‐1298 9
Her complaint thus suggests that interest was accruing on
the debt. And her allegations may also support an inference
that the lack of information about accruing interest detrimen‐
tally altered her choice about how to respond to and repay her
debts. Indeed, it would be reasonable to expect discovery to
reveal a detailed way in which the omitted information was
detrimental to Bazile’s substantive interests: Bazile, not know‐
ing that the debt mentioned in the letter was accruing interest,
chose to pay another debt with a lower interest rate, causing
her to lose the difference between the interest that accrued un‐
der the two rates. See Bell Atlantic v. Twombly, 550 U.S. 544, 555,
570 (2007) (A complaint “does not need detailed factual alle‐
gations” but rather “enough fact to raise a reasonable expec‐
tation that discovery will reveal evidence of [a necessary ele‐
ment].”)
True, her complaint didn’t detail such an injury. But
“[c]omplaints need not be elaborate.” Aker, 854 F.3d at 399–
400 (quoting S. Austin Coal. Cmty. Council v. SBC Commc’ns
Inc., 274 F.3d 1168, 1171 (7th Cir. 2001)). What matters is
whether the allegations support a plausible inference that Ba‐
zile suffered a concrete detriment to her debt‐management
choices. And given the circumstances alleged, the details
about how Bazile would have acted differently would have to
be resolved later. When she filed her complaint, she could rea‐
sonably believe that interest was accruing, but she didn’t
know how much. As a result, she also didn’t know at that time
exactly how her choice in debt management would have dif‐
fered with that information. Cf. All. for Clean Coal v. Miller, 44
F.3d 591, 594 (7th Cir. 1995).
So, Bazile may have sufficiently alleged a concrete injury.
But even if she did, the action may not proceed without
10 No. 19‐1298
additional inquiry into whether she actually suffered such a
harm. That’s because the collector has challenged the truth of
the jurisdictional facts underlying Bazile’s allegations, and
that factual dispute about the court’s adjudicatory compe‐
tency must be resolved before the court can address the merits
(if the court has jurisdiction to do so). The collector specifi‐
cally maintains that no interest has or will accrue on the debt,
implying that Bazile could not have suffered an injury from
the letter’s omission concerning interest accrual. The truth of
this assertion, along with Bazile’s actions or inactions in re‐
sponse to the letter’s exclusion of information about interest,
should be determined through an evidentiary hearing. Cf.
Hemmings v. Barian, 822 F.2d 688, 693 (7th Cir. 1987) (“[I]f ju‐
risdiction is alleged and a question is raised—either by a party
or as here by the district judge on his own initiative—about
the truth of the allegation, the proper course is not to dismiss
outright but to determine whether federal jurisdiction in fact
exists.”).
Although the collector, when moving to dismiss, did not
highlight its factual challenge to Bazile’s standing, waiver is
off the table when it comes to subject‐matter jurisdiction. Fed‐
eral courts “have an independent obligation to ensure that
they do not exceed the scope of their jurisdiction, and there‐
fore they must raise and decide jurisdictional questions that
the parties either overlook or elect not to press.” Henderson ex
rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011). The collec‐
tor’s factual assertions here cast doubt on the court’s adjudi‐
catory authority. And that doubt triggers an obligation to
“conduct whatever supplementary factual proceedings are
necessary to resolve [it].” Kanzelberger, 782 F.2d at 777.
No. 19‐1298 11
We therefore remand for an evidentiary hearing on
whether Bazile has standing to sue. If Bazile assures the court
that she in fact has standing, a deficiency in her complaint is
not necessarily fatal. See Fed. R. Civ. P. 15(a)(2) (providing
that the court “should freely give leave” to amend a pleading
“when justice so requires”); cf. Casio, Inc. v. S.M. & R. Co., 755
F.2d 528, 530 (7th Cir. 1985); see also Lewert, 819 F.3d at 969
(recognizing that a dismissal for lack of subject‐matter juris‐
diction is a dismissal without prejudice).
III. CONCLUSION
Although more detailed facts consistent with Bazile’s
complaint may demonstrate standing, the existence of those
facts has been called into doubt, requiring further inquiry into
the court’s subject‐matter jurisdiction. We therefore VACATE
the judgment and REMAND for proceedings consistent with
this opinion.