NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________
No. 22-3388 _____________
IVELIZ MORALES, on behalf of herself and all others similarly situated, Appellant v.
COMMONWEALTH FINANCIAL SYSTEMS, INC. ________________
On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 2-22-cv-01319) District Judge: Honorable Evelyn Padin ______________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a) November 14, 2023 ______________
Before: CHAGARES, Chief Judge, MATEY and FUENTES, Circuit Judges.
(Opinion filed: November 22, 2023) ____________
OPINION * ____________
* This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent. CHAGARES, Chief Judge.
Iveliz Morales filed a lawsuit against Commonwealth Financial Systems, Inc.
(“Commonwealth”) alleging that Commonwealth violated the Fair Debt Collection
Practices Act (“FDCPA”) by sending her a false, deceptive, or misleading debt collection
letter. The District Court granted Commonwealth’s motion to dismiss for failure to state
a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), finding that the language in
Commonwealth’s letter does not run afoul of the FDCPA. Morales appealed.
While Morales’s appeal was pending, this Court published its recent decision
Huber v. Simon’s Agency, Inc., 84 F.4th 132 (3d Cir. 2023). Without the benefit of
Huber’s guidance, neither the District Court nor the parties raised concerns about
Morales’s standing under Article III of the United States Constitution. We hold that
Morales lacks standing. Accordingly, we will vacate the District Court’s order and
remand for the District Court to consider, in its discretion, whether to grant Morales leave
to amend or dismiss without prejudice due to lack of jurisdiction.
I.
Because we write for the parties, we recite only the facts pertinent to our decision.
Morales is a New Jersey resident. At some time before September 17, 2021, she incurred
a financial obligation to Southern Bank Emergency Physicians, a medical services
provider. This debt was later acquired by Pendrick Capital Partners LLC (“Pendrick”).
Pendrick then referred Morales’s debt to Commonwealth, a debt collector, for collection.
To collect this debt, Commonwealth sent Morales a letter dated September 17,
2021. The letter listed Morales’s “account balance” as $100.00 and provided a “discount
2 offer” of $50.00. Appendix (“App.”) 107-08 ¶¶ 31-32; App. 114. The letter also
contained a time-bar disclosure 1 that discussed the effect of the passage of time on
Morales’s debt. In relevant part, the time-bar disclosure read:
The law limits how long you can be sued on a debt. Because of the age of your debt, the creditor cannot sue you for it. In many circumstances, you can renew the debt and start the time period for the filing of a lawsuit against you if you take specific actions such as making certain payments on the debt or making a written promise to pay. You should determine the effect of any actions you take with respect to this debt.
App. 108 ¶ 33; App. 114.
Morales filed a putative class action lawsuit on behalf of herself and other
similarly situated New Jersey residents who received Commonwealth’s collection letters.
She alleged that Commonwealth violated the FDCPA because its debt collection
letter — specifically the time-bar disclosure — was false, deceptive, or misleading. See
15 U.S.C. § 1692e (prohibiting debt collectors from making a “false, deceptive, or
misleading representation . . . in connection with the collection of any debt.”). 2 Morales
alleged that the time-bar disclosure is misleading because by writing the “creditor cannot
sue you for [the debt],” Commonwealth failed to inform her that she may, in fact, be sued
on time-barred debt, despite having a complete legal defense to such a suit. She averred
1 The parties both refer to this language a “time-bar disclosure.” We will use this term when referring to the disputed language. 2 Morales also alleged that the letter violated 15 U.S.C. § 1692e(2)(A) (prohibiting false representation of the “character, amount, or legal status of a debt”), 1692e(5) (prohibiting a debt collector from threatening “to take any action that cannot legally be taken or that is not intended to be taken”), and 1692e(10) (prohibiting the use of any “false representation or deceptive means to collect or attempt to collect any debt”) in addition to section 1692e.
3 that Commonwealth’s language “implies that if [Pendrick] or a successor creditor did file
a suit against [Morales], then [Morales] would not need to take any action to preserve her
rights.” App. 108 ¶ 38 (emphasis added). Further, Morales alleged “[i]f [she] or others
similarly situated failed to assert that the obligations were time-barred in response to
being sued by [Pendrick], then Pendrick could seek and would likely be awarded
judgments.” App. 109 ¶ 39 (emphasis added). She also alleged that the time-bar
disclosure is misleading because by writing “[i]n many circumstances, you can renew the
debt and start the time period for the filing of a lawsuit against you if you take specific
actions such as making certain payments on the debt or making a written promise to pay,”
Commonwealth “falsely represents” the actions required to revive time-barred debt under
New Jersey law. App. 108, ¶ 33; App. 109 ¶¶ 40, 41-43.
The District Court granted Commonwealth’s motion to dismiss the complaint for
failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). It examined
numerous district court opinions analyzing substantially similar debt collection letters.
Joining this chorus of district courts, it found Commonwealth’s letter does not violate the
FDCPA. Morales appealed.
While Morales’s appeal was pending, this Court issued an opinion concerning
plaintiffs’ standing under the FDCPA. In Huber, this Court considered whether an
FDCPA plaintiff had Article III standing under the informational injury doctrine and
traditional standing principles in light of the Supreme Court’s recent guidance in
TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). See Huber, 84 F.4th at 144-49.
4 We requested supplemental briefing on whether Morales has Article III standing and how
Huber affects this inquiry.
II.
The District Court had subject matter jurisdiction under 28 U.S.C. § 1331 and our
appellate jurisdiction to review the District Court’s decision is authorized by 28 U.S.C.
§ 1291.
Any questions of this Court’s jurisdiction “must be resolved as a threshold matter”
by this Court sua sponte despite neither the District Court nor the parties raising Article
III standing as an issue below. St. Pierre v. Retrieval-Masters Creditors Bureau, Inc., 898
F.3d 351, 356 (3d Cir. 2018); see also McCauley v. Univ.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________
No. 22-3388 _____________
IVELIZ MORALES, on behalf of herself and all others similarly situated, Appellant v.
COMMONWEALTH FINANCIAL SYSTEMS, INC. ________________
On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 2-22-cv-01319) District Judge: Honorable Evelyn Padin ______________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a) November 14, 2023 ______________
Before: CHAGARES, Chief Judge, MATEY and FUENTES, Circuit Judges.
(Opinion filed: November 22, 2023) ____________
OPINION * ____________
* This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent. CHAGARES, Chief Judge.
Iveliz Morales filed a lawsuit against Commonwealth Financial Systems, Inc.
(“Commonwealth”) alleging that Commonwealth violated the Fair Debt Collection
Practices Act (“FDCPA”) by sending her a false, deceptive, or misleading debt collection
letter. The District Court granted Commonwealth’s motion to dismiss for failure to state
a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), finding that the language in
Commonwealth’s letter does not run afoul of the FDCPA. Morales appealed.
While Morales’s appeal was pending, this Court published its recent decision
Huber v. Simon’s Agency, Inc., 84 F.4th 132 (3d Cir. 2023). Without the benefit of
Huber’s guidance, neither the District Court nor the parties raised concerns about
Morales’s standing under Article III of the United States Constitution. We hold that
Morales lacks standing. Accordingly, we will vacate the District Court’s order and
remand for the District Court to consider, in its discretion, whether to grant Morales leave
to amend or dismiss without prejudice due to lack of jurisdiction.
I.
Because we write for the parties, we recite only the facts pertinent to our decision.
Morales is a New Jersey resident. At some time before September 17, 2021, she incurred
a financial obligation to Southern Bank Emergency Physicians, a medical services
provider. This debt was later acquired by Pendrick Capital Partners LLC (“Pendrick”).
Pendrick then referred Morales’s debt to Commonwealth, a debt collector, for collection.
To collect this debt, Commonwealth sent Morales a letter dated September 17,
2021. The letter listed Morales’s “account balance” as $100.00 and provided a “discount
2 offer” of $50.00. Appendix (“App.”) 107-08 ¶¶ 31-32; App. 114. The letter also
contained a time-bar disclosure 1 that discussed the effect of the passage of time on
Morales’s debt. In relevant part, the time-bar disclosure read:
The law limits how long you can be sued on a debt. Because of the age of your debt, the creditor cannot sue you for it. In many circumstances, you can renew the debt and start the time period for the filing of a lawsuit against you if you take specific actions such as making certain payments on the debt or making a written promise to pay. You should determine the effect of any actions you take with respect to this debt.
App. 108 ¶ 33; App. 114.
Morales filed a putative class action lawsuit on behalf of herself and other
similarly situated New Jersey residents who received Commonwealth’s collection letters.
She alleged that Commonwealth violated the FDCPA because its debt collection
letter — specifically the time-bar disclosure — was false, deceptive, or misleading. See
15 U.S.C. § 1692e (prohibiting debt collectors from making a “false, deceptive, or
misleading representation . . . in connection with the collection of any debt.”). 2 Morales
alleged that the time-bar disclosure is misleading because by writing the “creditor cannot
sue you for [the debt],” Commonwealth failed to inform her that she may, in fact, be sued
on time-barred debt, despite having a complete legal defense to such a suit. She averred
1 The parties both refer to this language a “time-bar disclosure.” We will use this term when referring to the disputed language. 2 Morales also alleged that the letter violated 15 U.S.C. § 1692e(2)(A) (prohibiting false representation of the “character, amount, or legal status of a debt”), 1692e(5) (prohibiting a debt collector from threatening “to take any action that cannot legally be taken or that is not intended to be taken”), and 1692e(10) (prohibiting the use of any “false representation or deceptive means to collect or attempt to collect any debt”) in addition to section 1692e.
3 that Commonwealth’s language “implies that if [Pendrick] or a successor creditor did file
a suit against [Morales], then [Morales] would not need to take any action to preserve her
rights.” App. 108 ¶ 38 (emphasis added). Further, Morales alleged “[i]f [she] or others
similarly situated failed to assert that the obligations were time-barred in response to
being sued by [Pendrick], then Pendrick could seek and would likely be awarded
judgments.” App. 109 ¶ 39 (emphasis added). She also alleged that the time-bar
disclosure is misleading because by writing “[i]n many circumstances, you can renew the
debt and start the time period for the filing of a lawsuit against you if you take specific
actions such as making certain payments on the debt or making a written promise to pay,”
Commonwealth “falsely represents” the actions required to revive time-barred debt under
New Jersey law. App. 108, ¶ 33; App. 109 ¶¶ 40, 41-43.
The District Court granted Commonwealth’s motion to dismiss the complaint for
failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). It examined
numerous district court opinions analyzing substantially similar debt collection letters.
Joining this chorus of district courts, it found Commonwealth’s letter does not violate the
FDCPA. Morales appealed.
While Morales’s appeal was pending, this Court issued an opinion concerning
plaintiffs’ standing under the FDCPA. In Huber, this Court considered whether an
FDCPA plaintiff had Article III standing under the informational injury doctrine and
traditional standing principles in light of the Supreme Court’s recent guidance in
TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). See Huber, 84 F.4th at 144-49.
4 We requested supplemental briefing on whether Morales has Article III standing and how
Huber affects this inquiry.
II.
The District Court had subject matter jurisdiction under 28 U.S.C. § 1331 and our
appellate jurisdiction to review the District Court’s decision is authorized by 28 U.S.C.
§ 1291.
Any questions of this Court’s jurisdiction “must be resolved as a threshold matter”
by this Court sua sponte despite neither the District Court nor the parties raising Article
III standing as an issue below. St. Pierre v. Retrieval-Masters Creditors Bureau, Inc., 898
F.3d 351, 356 (3d Cir. 2018); see also McCauley v. Univ. of the V.I., 618 F.3d 232, 238
(3d Cir. 2010) (“[W]e are required to raise issues of standing sua sponte if such issues
exist before considering the merits of this appeal . . . .”) (citation and quotation marks
omitted). Of course, “[w]e have jurisdiction to determine our own jurisdiction.” United
States v. Kwasnik, 55 F.4th 212, 215 (3d Cir. 2022).
To establish Article III standing, Morales must show she suffered (1) a concrete,
particularized, and actual or imminent injury, (2) that was likely caused by the defendant,
and (3) would likely be redressable by a favorable judicial decision. TransUnion, 141
S. Ct. at 2203 (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). Mere
violation of a federal statute does not necessarily constitute a concrete injury.
TransUnion, 141 S. Ct. at 2205-07; see also Spokeo, Inc. v. Robins, 578 U.S. 330, 340-42
(2016) (explaining that although Congress may identify legally cognizable harms
sufficient to confer standing, some federal statutory violations still may be insufficiently
5 concrete). Violations of statutory rights may give rise to standing when they engender
either “traditional tangible harms, such as physical harms and monetary harms” or
“intangible harms” that have a “close relationship to harms traditionally recognized as
providing a basis for lawsuits in American courts.” TransUnion, 141 S. Ct. at 2204.
However, one species of intangible harms — informational injuries — are excepted from
the usual requirement of showing a close relationship to traditionally recognized harms.
See Huber, 84 F.4th at 145 (citing Kelly v. RealPage, Inc., 47 F.4th 202, 212 n.8 (3d Cir.
2022)).
This Court’s recent decision in Huber applied these standing principles to a
plaintiff’s FDCPA claim. In Huber, the FDCPA plaintiffs filed a putative class action
alleging violations of the same statute at issue here, 15 U.S.C. § 1692e. Id. at 142. This
Court first concluded that the plaintiffs had not suffered an informational injury because
they had not identified any information to which they were entitled and failed to receive.
Id. at 145-46. But this Court held that the named plaintiff had standing because she
suffered an intangible harm closely related to a traditionally recognized harm. Id. at 149-
150. We held that violations of § 1692e for the use of a “false, deceptive, or misleading
representation or means in connection with the collection of any debt” are closely
analogous to the common law tort of fraudulent misrepresentation. Id. at 148. But we
explained that the “mere receipt of a misleading statement, or even confusion, without
any further consequence” is not the traditionally recognized harm providing a basis for
fraudulent misrepresentation in American courts. Id. “[C]onfusion, without more, is not
a concrete injury.” Id. at 149. Rather, “to analogize to the tort of fraudulent
6 misrepresentation, a § 1692e claimant must suffer some cognizable harm that flows from
that confusion.” Id. An FDCPA plaintiff must identify “a consequential action or
inaction following receipt of a misleading or deceptive collection letter.” Id. (quotation
marks omitted). In other words, the plaintiffs must have relied upon the false, deceptive,
or misleading statements contained in the letter to some consequence. See id. The
“‘mere risk’ that plaintiffs who receive a misleading letter from a debt collector will
suffer such a cognizable injury is ‘too speculative to support Article III standing.’” Id.
(quoting TransUnion, 141 S. Ct. at 2211-12). This Court held that the Huber named
plaintiff had standing because she relied upon the misleading debt collection letter and
incurred two financial consequences because of it: a consultation with her financial
advisor about the collection letter at an additional cost and the failure to pay down her
debts or do anything beyond that consultation. Id.
In contrast to the Huber named plaintiff, Morales lacks standing because she has
only shown the “mere risk” of harm, which cannot support standing. Id. (quotation
marks omitted). Under either the informational injury doctrine or traditional standing
principles, Morales must plead facts showing that she suffered some adverse consequence
or downstream consequence from her receipt of the allegedly false or misleading letter.
TransUnion, 141 S. Ct. at 2214 (“An asserted informational injury that causes no adverse
effects cannot satisfy Article III.”) (quotation marks omitted); Huber, 84 F.4th at 149
(holding that a § 1692e claimant “must suffer some cognizable harm that flows from that
confusion” to confer standing under traditional principles).
7 Morales has not pled any facts showing either that she relied upon
Commonwealth’s letter or that she suffered any consequence flowing from that reliance.
Reading her complaint in the most favorable light, Morales has simply shown she
received an allegedly misleading letter — nothing more. All the consequences she
alleges are hypothetical and illusory. The “mere risk” of litigation unsupported by any
facts showing that it is certainly impending cannot be a cognizable injury conferring
standing. See Whitmore v. Arkansas, 495 U.S. 149, 158 (1990) (“Allegations of possible
future injury do not satisfy the requirements of Art. III. A threatened injury must be
certainly impending to constitute injury in fact.”) (quotation marks omitted); Sherwin-
Williams Co. v. County of Delaware, 968 F.3d 264, 269-71 (3d Cir. 2020) (holding that a
“supposedly imminent lawsuit” where the plaintiff had purported “affirmative defenses it
could raise in response” was not a sufficient injury conferring standing). As pled,
Morales did not suffer a concrete injury.
Morales’s complaint is replete with “ifs” and “coulds” and “woulds.” It is bereft
of any factual allegations other than that she incurred a debt and received a misleading
debt collection letter. Mere confusion and the speculative risk of a lawsuit are not
enough to confer standing to an FDCPA plaintiff.
III.
For the foregoing reasons, we will vacate the District Court’s order dismissing
Morales’s complaint with prejudice for failure to state a claim. We will also remand for
the District Court to decide whether to grant Morales leave to amend her complaint to
8 allow her to plead additional facts that show she has standing or dismiss without
prejudice due to lack of jurisdiction.