Consumer Finance Litigation

In Pucillo v. National Credit Systems, Inc., No. 21-3131, 2023 WL 3090627 (7th Cir. Apr. 26, 2023), the Seventh Circuit Court of Appeals affirmed the district court's dismissal of the plaintiff's FDCPA claims for lack of Article III standing. The Seventh Circuit held that the plaintiff, a Chapter 7 bankruptcy debtor, did not allege a concrete injury where he asserted that the defendant's collection letters "confused," "scared," and "alarmed" him.

Factual and Procedural Background

Plaintiff Kenneth Pucillo, formerly known as Kenneth Lock, filed for Chapter 7 bankruptcy in May 2017. He listed his past-due rent as a debt he owed. The bankruptcy court granted Pucillo a discharge in September 2017, and the discharge included the debt for his past-due rent.

Pucillo's landlord was never notified about the bankruptcy case. Before the discharge, the landlord placed Pucillo's account with National Credit Systems, Inc. for collection. National Credit sent Pucillo two collection letters in 2018 and 2019 after the discharge was granted. However, National Credit never furnished information about Pucillo or Pucillo's account to any credit reporting agency before or after the bankruptcy case.

Pucillo initiated a lawsuit against National Credit after he received the first collection letter. The Complaint was later amended to include the second letter. Pucillo asserted that National Credit violated the FDCPA.

Eventually, both parties moved for summary judgment. In support of his motion, Pucillo attached a declaration in which he testified that the collection letters caused him to be "confused and concerned as to whether [his] debt to [his landlord] had been discharged." If it had not, he "feared" that "the nonpayment of the debt would impact [his] credit." Pucillo further testified that receiving the letters "scared" him because he "thought that it would take even longer to improve [his] credit score and reputation," and that they "alarmed and upset" him and "destroyed the 'fresh start'" he had sought in his bankruptcy case.

The Southern District of Indiana denied the motions for summary judgment and dismissed Pucillo's case for lack of standing. The district court held that Pucillo's alleged injuries—"confusion," "stress," "concern," and "fear"—are not concrete. The district court also noted that Pucillo could not argue his credit was negatively affected because National Credit never reported Pucillo's information to the credit reporting agencies.

Pucillo then moved to amend or alter the judgment, arguing the collection letters were an invasion of privacy. The district court denied the motion, and Pucillo appealed.

The Seventh Circuit's Decision and Analysis

The Seventh Circuit affirmed the Southern District of Indiana's decision below, holding Pucillo's "intangible harms" were insufficiently concrete to confer Article III standing. In reaching its decision, the Seventh Circuit stated that Pucillo's "fear" reflected a harm that might occur in the future, not a harm that had already occurred. The Court also noted Pucillo's "confusion" and "alarm" was a mere emotional response, and Pucillo needed to allege a harm beyond the emotional response to have standing.

The Seventh Circuit also rejected Pucillo's argument that the collection letters constituted an invasion of privacy, specifically an intrusion upon seclusion. The Court held this argument failed for the same reason Pucillo did not have standing—intrusion upon seclusion requires more than an emotional response. Such claim requires a particular offensive intrusion. The Court went on to note that two collection letters sent via U.S. Mail over a year apart were not inherently bothersome, intrusive, or invasive, especially considering the fact that National Credit never reported Pucillo's information to the credit reporting agencies. Accordingly, the Seventh Circuit refused to morph Pucillo's FDCPA claims into tort claims in order to confer Article III standing. The dismissal was affirmed.