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Bartl v. Enhanced Recovery Co., LLC

United States District Court, D. Minnesota

May 3, 2017

CHRISTOPHER M. BARTL, Plaintiff, [1]


          Joan N. Ericksen United States District Judge

         Plaintiff Christopher M. Bartl brought claims against Defendant Enhanced Recovery Company, LLC (“ERC”) for unlawful debt collection activities in violation of the Fair Debt Collection Practices Act (“FDCPA”). Bartl primarily claims that ERC violated 15 U.S.C. § 1692g(b) when ERC continued to collect a debt, without verifying the debt, after Bartl disputed the debt by letter. ERC moved to dismiss on the theory that Bartl lacks standing to bring this action for want of a concrete injury in fact. (See Dkt. No. 46.) Bartl moved for summary judgment. (See Dkt. No. 49.) For the reasons that follow, the Court denies ERC's motion to dismiss and grants summary judgment in Bartl's favor on the § 1692g(b) claim.

         I. BACKGROUND

         Bartl had a personal phone account with Sprint. (See Deposition of Christopher M. Bartl (“Bartl Dep.”) 21:7-22:17, Dkt. No. 41-1.) Sprint engaged ERC to collect a $1, 024.88 balance on the account (the “Sprint debt”). (See Dkt. No. 41-1 at 34.) ERC, in a collection notice dated March 18, 2015, informed Bartl that Sprint placed the account with ERC for collection. (See id.)

         Prior to receiving ERC's collection notice, Bartl was in the process of improving his credit. (See Bartl Dep. 45:7-46:22.) He engaged a third party to help him achieve this goal. (See Id. at 46:11-22.) After Bartl received the collection notice from ERC, the third party sent a dispute letter to ERC on Bartl's behalf. (See Id. at 25:3-5, 68:2-11; Dkt. No. 41-1 at 36.) ERC received the letter and recorded it in its system as a dispute letter on April 15, 2015. (Deposition of James Davis (“Davis Dep.”) 37:6-9, Dkt. No. 37-2; Dkt. No. 42-3 at 2.)

         Despite receiving the dispute letter and treating it as such, ERC did not investigate or verify the debt. (See Davis Dep. 45:22-46:1, 52:22-24.) ERC reported the debt to credit agencies Experian, TransUnion, and Equifax on May 3, 2015. (See Id. at 52:22-24; Dkt. No. 42-3 at 2.) These agencies added the debt to Bartl's credit reports. (See, e.g., Dkt. No. 41-1 at 41.) Due to ERC's reporting, Bartl suffered irritation and anxiety; he worried about his ability to obtain a mortgage to purchase a home. (See Bartl Dep. 70:14-73:1, 74:21-77:23.) The reporting also delayed Bartl's process of obtaining a mortgage, (see Id. at 51:19-53:1), and negatively affected his credit score, (see Dkt. No. 41-1 at 49, 52-53, 56-57, 60). ERC later reported the debt deleted on July 19, 2015. (Davis Dep. 52:25-53:2; Dkt. No. 42-3 at 2.)

         Bartl claims that ERC violated the FDCPA when it reported the Sprint debt without verifying the debt (under 15 U.S.C. § 1692g(b)), failed to inform Equifax that Bartl disputed the Sprint debt when ERC nevertheless unlawfully reported the debt (under 15 U.S.C. § 1692e and § 1692e(8)), and used unfair and unconscionable means to collect or attempt to collect the Sprint debt (under 15 U.S.C. § 1692f). (See Am. Compl. ¶¶ 17-20, 57-60, Dkt. No. 8.)


         ERC filed a motion to dismiss under Rule 12(b)(1), asserting that Bartl lacks standing to bring this action. (See Dkt. No. 46.) One day later, Bartl filed a motion for summary judgment on all claims. (See Dkt. No. 49.) The Court heard argument from the Parties on both motions, (see Dkt. No. 57), and addresses both motions herein.

         A. Motion to Dismiss under Rule 12(b)(1) for Lack of Standing

         ERC makes a factual challenge to the Court's subject-matter jurisdiction and argues that Bartl lacks standing to pursue this action. (Defendant's Memorandum in Support of Its Motion to Dismiss (“Def. Dismiss Br.”) 5, Dkt. No. 48.) In a factual challenge, the Court evaluates subject-matter jurisdiction by considering matters outside the pleadings, such as testimony and affidavits. Branson Label, Inc. v. City of Branson, 793 F.3d 910, 915 (8th Cir. 2015). The Court does not accept the facts alleged in the complaint as true, and the plaintiff bears the burden of establishing subject-matter jurisdiction. Id. at 915, 917.

         In order for the Court to exercise its judicial power, Bartl (as plaintiff) must establish the “irreducible constitutional minimum” of standing, which is shown if he “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of [ERC], and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). ERC primarily argues that Bartl lacks an injury in fact. (See Def. Dismiss Br. 9-19; Defendant's Reply Memorandum in Support of Its Motion to Dismiss (“Def. Dismiss Reply Br.”) 3-5, Dkt. No. 56.) To show injury in fact, Bartl must have suffered “an invasion of a legally protected interest that is concrete and particularized.” Spokeo, 136 S.Ct. at 1548. (internal quotation marks omitted). Such an injury must be “actual or imminent, not conjectural or hypothetical.” Id.

         Prior to ERC's reporting, Bartl had other disputed debts on his credit report. (See, e.g., Bartl Dep. 58:9-59:10, 62:2-17, 63:2-64:9.) He previously applied for a mortgage as early as late 2014, but was told that he did not qualify for a mortgage at that time. (Id. at 45:7-46:6.) Bartl sought help improving his credit score and decided to dispute certain debts. (See Id. at 46:11-22, 51:10-18.) ERC's reporting occurred during these efforts. (See Id. at 51:19-52:1.) Bartl was told he had to wait to apply for a mortgage after ERC reported the Sprint debt because it would be more difficult for him to get approved with the disputed Sprint debt on his credit report. (See Id. at 52:2-21.) This caused Bartl to suffer emotional distress in the form of frustration, anxiety, and irritation. (See Id. at 70:14-73:1.) He further suffered a “meltdown” that included “crying, shaking, [and] convulsing” due to the pressure caused by ERC's credit reporting and his concerns that he would not close on a home.[2] (Id. at 74:21-77:23.)

         The emotional distress Bartl suffered constitutes concrete and particularized injury in fact sufficient to meet the “irreducible constitutional minimum” of standing. See Krottner v. Starbucks Corp., 628 F.3d 1139, 1142 (9th Cir. 2010) (holding that “generalized anxiety and stress” was sufficient to confer standing); Potocnik v. Carlson, No. 13-CV-2093 (PJS/HB), 2016 WL 3919950, at *3 (D. Minn. July 15, 2016) (“There is no doubt that emotional distress is an injury in fact . . . .”); Davis v. Astrue, 874 F.Supp.2d 856, 863 (N.D. Cal. 2012) (“[M]any courts have found that emotional distress may constitute an injury-in-fact for purposes of standing.”); cf. Czyzewski v. Jevic Holding Corp., 137 S.Ct. 973, 983 (2017) (stating that, “[f]or standing purposes, a loss of even a small amount of money is ordinarily an ‘injury'”). This injury is fairly traceable to ERC's conduct because it resulted from that conduct. See Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 592 (8th Cir. 2009). And the injury is redressable under the FDCPA. See Edeh v. Midland Credit Mgmt., Inc., 748 F.Supp.2d 1030, 1041 (D. Minn. 2010) (“A consumer who has suffered emotional distress has suffered [actionable damage under the FDCPA] even if the emotional distress was not severe.”), aff'd, 413 F. App'x 925 (8th Cir. 2011) (unpublished). Therefore, Bartl has standing.

         B. ...

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