A TCPA Violation Confers Standing Under Spokeo in the 3rd Circuit

By Stephen A. Fogdall

The United States Court of Appeals for the Third Circuit has concluded that an alleged violation of the Telephone Consumer Protection Act creates a sufficiently concrete injury to give a plaintiff standing to sue under Spokeo, Inc. v. Robbins.

The U.S. Supreme Court held last year in Spokeo that while a violation of a statutory right does not by itself constitute a concrete injury for purposes of Article III standing, Congress nevertheless can by statute elevate an intangible harm “to the status of a legally cognizable injury” where the “intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.”

The Third Circuit applied this principle to the TCPA in Susinno v. Work Out World Inc.  The plaintiff alleged that she received an unsolicited call on her cell phone from a fitness company, and the company left a one minute prerecorded voicemail message when she did not answer.  She was not charged for the call.

The Third Circuit held, first, that that these allegations were sufficient to state a claim for a violation of the TCPA, and second, that the plaintiff had standing to bring the claim under Spokeo.  The court explained that “when one sues under a statute alleging the very injury the statute is intended to prevent, and the injury has a close relationship to a harm traditionally providing a basis for a lawsuit in English and American courts, a concrete injury has been pleaded.”

The court found that both of these requirements were met on the plaintiff’s allegations.  The alleged “nuisance and invasion of privacy” resulting from a single unsolicited cell phone call and prerecorded voicemail message were “the very harm Congress sought to prevent” under the TCPA, and bore a close relationship to claims for invasion of privacy and “intrusion upon seclusion” that traditionally have been protected under the common law.

Third Circuit Holds that Consumers are Not Required to Seek Validation of a Debt before Filing Suit under the FDCPA

By Christian Sheehan

On June 26, 2014, in McLaughlin v. Phelan Hallinan & Schmieg, LLP, the Third Circuit held that a consumer is not required to seek validation of a debt he believes is inaccurately described in a debt collection communication before filing suit under the Fair Debt Collection Practices Act (FDCPA).

The FDCPA provides that if the consumer “notifies the debt collector in writing . . . that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt” and mail a copy to the consumer.  15 U.S.C. § 1692g(a)(4). Although the plaintiff in McLaughlin believed the debt collection communication he received was inaccurate, he did not seek validation of the debt. Instead, he filed suit against the debt collector.  The District Court dismissed the complaint, concluding that the plaintiff could not bring an FDCPA claim without first disputing the debt and seeking validation from the collector.

The Third Circuit reversed, holding that to require the consumer to seek validation of the debt prior to filing suit under the FDCPA would be inconsistent with the text and purpose of the statute.  The Court observed that the FDCPA lists various consequences “if” the consumer disputes a debt, suggesting that the validation provisions are optional, rather than mandatory.  The Court further explained that imposing a validation prerequisite would frustrate the protective purpose of the FDCPA, and immunize misconduct by debt collectors based on a procedural nuance that many consumers would fail to understand. Finally, the Third Circuit downplayed the concern raised by other courts (which held that the validation procedures were mandatory) that the lack of a validation prerequisite would discourage the use of the statute’s validation procedures.  The Court explained that debtors will still have an incentive to utilize the validation procedures in order to facilitate the quick and inexpensive resolution of debt disputes.

Third Circuit Predicts Punitive Damages Available Under the Pennsylvania Uniform Fraudulent Transfer Act

By Edward J. Sholinsky

The United States Court of Appeals for the Third Circuit has predicted that the Pennsylvania Supreme Court would hold that punitive damages are available in cases under the Uniform Fraudulent Transfer Act (UFTA).

The court in Klein v. Weidner, reasoned that even though the UFTA does not specifically provide for punitive damages, they are available because the UFTA gives courts “broad authority” to award a “package of remedies” based on a case’s individual circumstances.

In Klein, the plaintiff brought a claim under the UFTA against her ex-husband, his current wife, and his business.  In response to a California judgment awarding the plaintiff spousal and child support, the ex-husband defendant transferred his assets and an interest in his business to his wife to insulate them from the California judgment and the plaintiff.  The district court held that this violated the Act and awarded $548,797.07 in punitive damages.  The defendants appealed.

After affirming the district court’s decision that the defendants violated the UFTA, the Third Circuit addressed the issue of punitive damages.  While the UFTA does not expressly provide that punitive damages are available, it contains three provisions that the court believed pointed to an overall statutory scheme to permit punitive damages.  Specifically, the court considered that the Act contained a “catch-all” provision providing for “any other relief the circumstances may require”; a provision awarding all damages necessary to make the creditor whole; and a provision stating that all remedies available under law and equity are available unless specifically displaced by the UFTA.  The court reasoned that because the remedies under the UFTA are “cumulative,” and punitive damages are available at both law and equity in Pennsylvania, the UFTA permitted punitive damages.   The court also held that under the UFTA it was appropriate to consider the ex-husband’s outrageous conduct in conjunction with the fraudulent transfers—including harassing the plaintiff and threatening her attorney—which supported the district court’s award of punitive damages.

The court distinguished the UFTA from cases where the Pennsylvania Supreme Court has held that punitive damages were not available when not directly provided for in the statute.  Specifically, the court focused on the Pennsylvania Supreme Court’s holding in Hoy v. Angelone that punitive damages were not available under the Pennsylvania Human Relations Act.  The court held that the UFTA differed from the Human Relations Act, because the latter was remedial in nature and required “affirmative action” to remedy discrimination.  The UFTA, however, was at least in part based on common law fraud, under which punitive damages have historically been available.  Thus, the court held that punitive damages could supplement the remedies specifically provided for by the UFTA.

%d bloggers like this: