Shields v. Professional Bureau of Collections of Maryland

55 F.4th 823

• Court: Court of Appeals for the Tenth Circuit
• Decided: December 16, 2022
• Docket: 22-3006
• Status: Published

Opinion

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 Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 2

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 2 Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 3

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. 1228 3 Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 4

(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. 5 Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 6

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

6 Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 7

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

7 Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 8

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.

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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

9 Appellate Case: 22-3006 Document: 010110784515 Date Filed: 12/16/2022 Page: 10

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.