Mark Patterson v. Howard Howe, No. 22-2602 (7th Cir. 2024)

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In the United States Court of Appeals For the Seventh Circuit ____________________ Nos. 22-2602 & 22-3083 MARK A. PATTERSON, Plaintiff-Appellee, v. HOWARD HOWE, Defendant-Appellant. ____________________ Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:16-cv-03364-DML-SEB — Debra McVicker Lynch, Magistrate Judge. ____________________ ARGUED SEPTEMBER 12, 2023 — DECIDED MARCH 21, 2024 ____________________ Before EASTERBROOK, HAMILTON, and PRYOR, Circuit Judges. HAMILTON, Circuit Judge. Attorney Howard Howe led suit for a client in an Indiana state court against Mark Patterson to collect an unpaid educational debt. Along with the complaint and summons, Howe served Patterson with four requests for admission, as allowed by Indiana law. Howe did not warn Patterson that the requests would be deemed admitted if Patterson did not respond within thirty days. Patterson 2 Nos. 22-2602 & 22-3083 answered the complaint but did not respond to the requests for admission. As we explain below, however, Patterson did not alter his behavior in response to the requests for admission, and during the state-court proceedings, Howe never tried to take advantage of Patterson’s failure to respond. Instead, while that action was pending, Patterson led this separate federal lawsuit alleging that Howe’s practice of serving requests for admission, at least without warning him of the consequences of failing to respond, violated the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. The district court granted summary judgment to plainti Patterson. The parties later stipulated to an award of statutory damages of $1,000 to Patterson, and the court awarded him more than $58,000 in attorney fees and costs. Defendant Howe has appealed both the merits judgment and the award of fees and costs. We vacate both judgments and order dismissal of the case. Under circuit law, Patterson lacks standing to bring his claim because he was not concretely harmed by Howe’s alleged statutory violation. I. Factual and Procedural Background The parties do not dispute the facts of this case except in a few instances noted below. In 2012, plainti Mark Patterson began studying at the Indiana Institute of Technology, also known as Indiana Tech. Patterson thought nancial aid would cover the cost of his classes. But he submitted his nancial aid paperwork for the rst semester too late and lost his nancial aid for that semester. Patterson contends that the school’s nancial aid o ce was responsible for his tardiness because it gave him the wrong deadline. Howe, who had led the collection suit on behalf of Indiana Tech, disagreed with that assessment. Regardless of fault, though, the parties agree that Nos. 22-2602 & 22-3083 3 Patterson accumulated about $7,500 in student loan debt from his rst semester. Indiana Tech then put a hold on his transcript, causing him to interrupt his education. For several years, Patterson tried to resolve his debt. He emailed the school’s nancial aid o ce and tried to settle the matter, but the parties could not reach a resolution. Eventually, in May 2016, Indiana Tech retained attorney Howe to sue Patterson on the debt. When Howe led suit, he served four documents: a summons, a complaint, a copy of the Payment Options Form that Patterson had signed when he began taking classes, and a one-page document that listed four requests for admission. Two requests were particularly signi cant. They asked Patterson to admit that the complaint’s allegations were true and that Patterson had no valid counterclaim. Patterson answered the complaint but did not respond to the requests for admission. Under Indiana Trial Rule 36, which parallels Federal Rule of Civil Procedure 36, requests for admission are deemed admitted if the recipient does not respond within thirty days. Patterson claims that when the thirty-day window expired, he did not know the requests for admission would be deemed admitted. He learned of this consequence later. Though he had no attorney in the state-court action against him, Patterson hired an attorney to le this putative class-action lawsuit against attorney Howe for serving the requests for admission without warning that they would be admitted absent a response within thirty days. Patterson alleged that this practice violated 15 U.S.C. § 1692e and § 1692f of the Fair Debt Collection Practices Act, which prohibit false, deceptive, misleading, unfair, and unconscionable means in 4 Nos. 22-2602 & 22-3083 collecting consumer debts owed to someone other than the collector. The state and federal cases proceeded separately for a few months. Patterson and Indiana Tech then settled the state case. Patterson agreed to pay $150 per month until he paid o his outstanding student debt of $7,500. He also agreed to pay $181 in court costs. In exchange, Indiana Tech agreed to release Patterson’s transcript, allowing him to continue his education elsewhere. For reasons not included in our record, the settlement did not address Patterson’s related claim in this federal case against attorney Howe. Patterson continued to press this FDCPA action in federal court. In 2017, the parties led cross-motions for summary judgment. Patterson argued that the requests for admission violated the Act as a matter of law because they were a deceptive and misleading debt collection practice. Howe argued, among other points, that Patterson lacked standing to pursue his claim. The district court held in favor of Patterson, nding that he had su ered an injury in fact when he was misled by the requests for admission. Patterson v. Howe, 307 F. Supp. 3d 927, 939 (S.D. Ind. 2018). The district court also held that Howe violated the Act because the requests for admission “would confuse an unsophisticated debtor … about the required timing and manner of a response to the plainti ’s claims.” Id. at 936. The district court later certi ed a class of “All persons in the State of Indiana who received … from Defendant requests for admission served along with the complaint or notice of claim that were not accompanied by the noti cation that the requests are deemed admitted unless the defendant serves a written answer or objection to the requests upon the plainti within thirty days.” Nos. 22-2602 & 22-3083 5 In August 2020, Howe asked the district court to reconsider its decision regarding Patterson’s standing. Howe argued that our decision in Casillas v. Madison Avenue Associates, Inc., 926 F.3d 329 (7th Cir. 2019), reshaped this circuit’s standing doctrine and undercut the district court’s decision that Patterson had standing here. The district court granted Howe’s motion for reconsideration insofar as it allowed him to conduct additional discovery pertaining to Patterson’s standing. Patterson v. Howe, No. 1:16-cv-3364, 2021 WL 1124610, at *1, *6 (S.D. Ind. Mar. 23, 2021). The district court ultimately still found that Patterson had standing to pursue his individual claim under the Act. Patterson v. Howe, No. 1:16-cv-3364, 2022 WL 20814938, at *6 (S.D. Ind. July 25, 2022). The district court found that Patterson would have denied the requests for admission within thirty days if he had known they would be deemed admitted otherwise, and that his subjective perception that he had lost negotiating leverage was a concrete injury su cient to support his standing. Applying the Supreme Court’s intervening decision in TransUnion LLC v. Ramirez, 594 U.S. 413 (2021), however, the district court decerti ed the class. The parties then stipulated to a statutory damages award of $1,000. The district court later awarded Patterson $58,475.32 in attorney fees and costs under 15 U.S.C. § 1692k(a)(3). II. Analysis Howe argues that the district court erred in its standing determination, merits analysis, and award of costs and fees. In our review here, we view the evidence in the light reasonably most favorable to Patterson, but we review de novo legal issues concerning Patterson’s standing. Spuhler v. State Collection Service, Inc., 983 F.3d 282, 285 (7th Cir. 2020). The 6 Nos. 22-2602 & 22-3083 undisputed facts show here that Patterson did not have standing to bring his FDCPA claim. We therefore do not reach the remaining issues raised by Howe. To establish standing, a plainti must show that he has su ered or is at imminent risk of su ering an injury caused by the defendant and that the injury could likely be redressed by favorable judicial relief. TransUnion, 594 U.S. at 423. Not all injuries satisfy this requirement. Only injuries that are concrete, particularized, and actual or imminent qualify as injuries in fact. Id. at 423–24. A concrete injury is one that is “real, and not abstract.” Id. at 424. Tangible harms such as monetary loss and physical damage ordinarily su ce. An intangible harm can also be concrete if it bears “a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts.” Id. (internal quotations omitted). For example, reputational and privacy harms are su ciently concrete because they have established common-law analogues. Id. at 425. The relationship between a harm made actionable under a statute and a common-law counterpart need not be exact: the resemblance must exist only “in kind, not degree.” Nabozny v. Optio Solutions LLC, 84 F.4th 731, 736 (7th Cir. 2023), quoting Gadelhak v. AT&T Services, Inc., 950 F.3d 458, 462 (7th Cir. 2020), citing Spokeo, Inc. v. Robins, 578 U.S. 330, 341 (2016). Intangible harms arising from statutory violations can satisfy the injury-in-fact requirement so long as they are su ciently concrete. Congress may create civil liability for conduct that is not actionable under the common law, and consumer-protection statutes like the Fair Credit Reporting Act and the Fair Debt Collection Practices Act are prime examples. Nos. 22-2602 & 22-3083 7 In TransUnion, the Supreme Court laid out how lower courts should address standing based on an intangible harm made actionable by a statute. Courts must consider whether the harm bears a close relationship to any harms traditionally recognized as providing a basis for lawsuits in American courts, including those harms speci ed by the Constitution itself, and must a ord “due respect to Congress’s decision” to impose obligations on a defendant and to grant a private cause of action. TransUnion, 594 U.S. at 425. Courts must not defer automatically to Congress’s judgment, id. at 426–27, but common-law and constitutional analogues need not provide an exact match, id. at 424–25. Congress cannot “transform something that is not remotely harmful into something that is,” id. at 426, quoting Hagy v. Demers & Adams, 882 F.3d 616, 622 (6th Cir. 2018), but it may “elevate to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law,” id. at 425. This respect for congressional action is “essential to the Constitution’s separation of powers.” Id. at 429. Just as courts may not overstep their role by adjudicating non-justiciable cases, so too they should not overstep their role by refusing to allow remedies for injuries that Congress reasonably deemed compensable. The Supreme Court gave these general principles more speci c content in applying them to the plainti s’ Fair Credit Reporting Act claims in TransUnion, allowing some class members’ claims and rejecting others’ claims. The plainti class alleged that TransUnion had violated the Act by including in credit reports unreliable information indicating that the subjects had potential terrorist ties. Id. at 430. 8 Nos. 22-2602 & 22-3083 The Supreme Court held rst that a subset of class members—those whose reports with potential terrorist ties had been disseminated to potential lenders—had standing. Their asserted harm had a close relationship to harms long recognized under the common law tort of defamation. Id. at 433. Those class members had standing based on the distribution of the information without showing more concrete harm, such as an actual refusal to extend credit because of the distributed information. The Court then held that class members whose TransUnion les included the misleading potential terrorism alerts, but without evidence that the information had been disseminated any further, lacked standing. Id. at 433–34. The Court compared the undisseminated information to a defamatory letter that is never sent but kept in a desk drawer. In addition, the Court held that the risk of future harm did not, considered alone, support standing for a claim for damages. Id. at 436–37. Returning from these general principles to this case, plainti Patterson o ers two related theories to establish standing. First, he contends that he would have denied the requests for admission if he had been warned they would be deemed admitted after thirty days without a response. The fact that he would have taken a di erent course of action, he argues, suf ces to show a concrete injury. Second, Patterson argues that his inadvertent admissions caused him to lose negotiating leverage in the debt-collection suit, ultimately forcing him to settle for the full amount he allegedly owed. Neither of these theories shows a concrete injury under our circuit’s recent case law on standing under the Fair Debt Collection Practices Act. First, even if we assume that Patterson’s behavior might have been altered by Howe’s alleged Nos. 22-2602 & 22-3083 9 statutory violation, he still did not show that he su ered concrete harm from that change. Second, the harm that he alleges he ultimately su ered—monetary loss due to a lack of leverage in settlement negotiations—occurred after he led his complaint, which means it cannot provide the basis for standing in this case. A. Di erent Course of Action Patterson contends that he would have denied the requests for admission if he had known they would be deemed admitted without a timely response. We assume that is correct as a matter of fact. He argues that this alteration to his behavior—misleading him into not denying the requests for admission instead of denying them—amounted to a concrete injury. Patterson’s argument picks up a thread in our case law recognizing that altered behavior can be a concrete harm. Regarding debt collection practices, we said in Markakos v. Medicredit, Inc., 997 F.3d 778, 780 (7th Cir. 2021), that “an FDCPA violation might cause harm if it … alters a plainti ’s response to a debt.” For example, a plainti might su er an injury if a misleading debt collection practice “leads her to pay something she does not owe, or to pay a debt with interest running at a low rate when the money could have been used to pay a debt with interest running at a higher rate.” Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067, 1068 (7th Cir. 2020). But not all actions taken or not taken due to confusion, misunderstanding, or ignorance amount to concrete injuries. Hiring an attorney to seek guidance or to le a lawsuit is not a concrete harm, even though it is behavior in reaction to a debt collection practice. Id. at 1069; Nettles v. Midland Funding, LLC, 983 F.3d 896, 900 (7th Cir. 2020); cf. Choice v. Kohn Law 10 Nos. 22-2602 & 22-3083 Firm, S.C., 77 F.4th 636, 640–41 (7th Cir. 2023) (Hamilton, J., dissenting) (hiring lawyer to defend state-court debt collection action should support standing where debt collector allegedly violated FDCPA in connection with the suit). That is because hiring an attorney to le a new lawsuit is not a personalized injury. Otherwise, anyone could sue for any alleged FDCPA violation, whether or not he su ered any other injury from the allegedly misleading practice. For an injury in fact, a statutory violation must cause a plainti to change his behavior in a way that in icts concrete harm on the plainti . A good example is Lavallee v. Med-1 Solutions, LLC, 932 F.3d 1049 (7th Cir. 2019). A debt collector had sued plainti Lavallee in state court for unpaid medical bills but did not send her written notice of her rights under 15 U.S.C. § 1692g(a) and (b). The plainti responded to this statutory violation by suing the debt collector in federal court. We a rmed summary judgment for the plainti , holding that she had standing to pursue her claims because it was “reasonable to infer that she would have exercised her statutory rights” to dispute and insist on veri cation of her debts if the debt collector had provided the required disclosures. Id. at 1053. If she had exercised those rights, the Act would have required a halt in the debt collection action against her. To be sure, Patterson’s situation resembles that in Lavallee in some ways. Both plainti s were victims of allegedly misleading debt collection practices that caused them to forgo taking actions they otherwise would have taken. The lack of warning caused Patterson not to deny the requests for admission, which resembles the theory that the lack of written Nos. 22-2602 & 22-3083 11 notice caused the plainti in Lavallee not to dispute or verify her debts. The decisive di erence, however, is that Patterson lacks the most essential component for purposes of Article III standing: concrete harm. Howe never so much as hinted that he might use the admissions against Patterson. Any subjective beliefs or fears that Patterson harbored about the admissions imposed no greater injury than other mental states, like confusion, that we have previously deemed inadequate to confer standing. 1 If Patterson’s confusion had caused him to act to his detriment, then he might have had standing. See Brunett, 982 F.3d at 1068. But Patterson’s confusion, by itself, was not enough. Pierre v. Midland Credit Management, Inc., 29 F.4th 934, 939 (7th Cir. 2022), rehearing en banc denied, 36 F.4th 728 (7th Cir. 2022). Patterson’s argument also fails because he has not identi ed a “close historical or common-law analogue” that resembles the e ects of failing to answer requests for admission. See TransUnion, 594 U.S. at 424. Identifying such an analogue can help show that intangible injuries can support standing even if they are not easily reduced to monetary gures. See Ewing v. MED-1 Solutions, LLC, 24 F.4th 1146, 1153–54 (7th Cir. 2022) (holding that plainti s had standing because failing to report to a credit reporting agency that plainti disputed her debts resembled common-law tort of defamation); Persinger v. Southwest Credit Systems, L.P., 20 F.4th 1184, 1191–93 (7th Cir. 1 We have previously implied, but not decided, that psychological states like worry and confusion might confer standing if they manifest in harm that is supported by a medical diagnosis. Pennell v. Global Trust Management, LLC, 990 F.3d 1041, 1045 (7th Cir. 2021). There is no such evidence or claim here. 12 Nos. 22-2602 & 22-3083 2021) (concluding that plainti had standing because unauthorized inquiry into consumer’s propensity-to-pay score resembled common-law tort of intrusion upon seclusion). Patterson’s brie ng did not try to identify any historical or common-law analogue for the harm he allegedly su ered. In response to a question at oral argument, his counsel suggested when asked that his claim was analogous to common-law fraud. Oral argument is too late for such a new theory, which in any event misses the point, which is whether the alleged injury has a reasonable common-law (or constitutional) analog. It is not the courts’ responsibility to develop an argument for a party. 2 2 The alleged unfair action here is the use of a common discovery method authorized by both Indiana and federal rules of procedure, neither of which requires a party serving a request for admission on another party to explain the applicable rules. The Ninth Circuit has held that a debt collector can violate the FDCPA by serving requests for admission of facts the debt collector knows are incorrect. McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 952 (9th Cir. 2011) (affirming summary judgment for plaintiff). In McCollough, the Ninth Circuit explained that debt collection practices are viewed from the standpoint of “the least sophisticated debtor,” who cannot be expected to anticipate that a response within thirty days is required. Id. Our circuit uses a standard of “an unsophisticated consumer.” See Gammon v. GC Services Ltd. P’ship, 27 F.3d 1254, 1258–60 & n.† (7th Cir. 1994) (Easterbrook, J., concurring) (noting that “the least sophisticated consumers” believed that twelve United States Senators were from other planets) (emphasis added). Such differences in the standard may not matter when it comes to consumer-debtors’ understanding of discovery rules for litigation. In any event, a warning about failure to respond to a request for admissions would seem readily comparable to the requirements in Federal Rule of Civil Procedure 4(a)(1)(D) & (E) and Indiana Trial Rule 4(C)(5) that a summons inform the defendant when a response is due and that a failure to appear and defend may result in a default judgment. In another analogous situation—motions for summary Nos. 22-2602 & 22-3083 13 B. Diminished Negotiating Leverage Patterson also argues that his uninformed failure to deny the requests for admission left him with no negotiating leverage, causing him to settle the state-court action for more money than he believed he owed. We see numerous problems with this theory. For example, it seems to call for pure speculation about how the state-court action might have been resolved absent the actual settlement. The theory also makes us wonder about causation since (a) attorney Howe never took any steps to take advantage of Patterson’s failure to respond to the requests for admission, and (b) Patterson’s own lawyer led this FDCPA action apparently without informing Patterson that he could ask the state court to allow him to withdraw the admissions under the escape hatch in Indiana Trial Rule 36(B), which parallels that in Federal Rule of Civil Procedure 36(b). Without answering these questions, however, we nd this theory for standing faces a more basic problem. Standing must exist at the time a lawsuit is led. Milwaukee Police Ass’n v. Board of Fire & Police Comm’rs, 708 F.3d 921, 928 (7th Cir. 2013). Patterson led his initial complaint in this case on December 14, 2016. He did not settle his state-court case until four months later. When Patterson led his federal complaint, the mere possibility that his deemed admissions might be judgment filed against pro se prisoner-plaintiffs—this court has long required a moving defendant to notify the plaintiff of the consequences of failing to respond to the motion with affidavits of his own. Lewis v. Faulkner, 689 F.2d 100, 102 (7th Cir. 1982). But failure to give the required Lewis notice means only that summary judgment may not be granted. We have never suggested that such a failure is tortious or could support a separate lawsuit akin to this one. 14 Nos. 22-2602 & 22-3083 used against him was neither concrete nor imminent. Such speculative injuries do not support standing for damages claims. TransUnion, 594 U.S. at 436–37. Any number of intervening events could have prevented Patterson from feeling obliged to settle for the full amount, including the possibility that his attorney in this case—who presumably understood Indiana Trial Rule 36, since the rule is at the heart of this case—could have advised Patterson to move under Rule 36(B) to withdraw the admissions. To the extent that Patterson argues that he was injured by merely believing that he had lost negotiating leverage, as opposed to any monetary loss that resulted from that belief, he still fails to establish standing. This sort of worry resembles the psychological states we have previously deemed inadequate. See, e.g., Wadsworth v. Kross, Lieberman & Stone, Inc., 12 F.4th 665, 668 (7th Cir. 2021) (listing psychological states that do not support standing). Because Patterson lacks standing, the judgment of the district court, ECF 155, is VACATED and the case is REMANDED to the district court to dismiss the case for lack of subject matter jurisdiction. The district court’s award of fees and costs, ECF 168, is also VACATED.

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