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Wheeler v. American Profit Recovery, Inc.

United States District Court, E.D. Missouri, Eastern Division

September 29, 2017

EVAN WHEELER, Plaintiff,



         This matter is before the Court on Defendants' Motion for Summary Judgment and/or Dismissal (ECF No. 43). The motion is fully briefed and ready for disposition.

         I. BACKGROUND

         This case stems from a series of collection letters sent to Plaintiff by Defendant American Profit Recovery, Inc. ("APR") regarding a debt Plaintiff owed to Defendant Anheuser-Busch Employees' Credit Union ("A-B Credit Union"). The letters identified APR as the collection agency obtained by A-B Credit Union to collect the debt. (Pl.'s First Amended Complaint ("FAC") ¶¶ 11, 13, 18, ECF No. 20) A-B Credit Union contracted with APR for comprehensive debt collection services. (Defs.' Statement of Material Facts ("SMF") ¶ 2, ECF No. 66) Under the Contract, there were two tiers pertaining to the collection process. APR charged a pre-paid fixed fee per Tier I account, and APR sent a total of 5 letters before placing the account into Tier II. (Pl.'s Resp. in Opp. to SMF Ex. 3 ("Contract"), ECF No. 70-3) With regard to Tier II, APR received a percentage of the amounts recovered under that tier. (Id.)

         In his First Amended Complaint, Plaintiff brings an action seeking statutory damages for violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA"). (FAC ¶ 1) Plaintiff alleges that he received letters from APR purporting to collect a $120.00 debt for A-B Credit Union. (Id. at ¶ 10; Pl.'s Resp. Ex. 5, ECF No. 70-5) The letters, which were created by APR without A-B Credit Union input, contained APR letterhead, business address, and phone number; directed correspondence to APR; and were sent on a schedule imposed by APR. (Defs.' SMF ¶¶ 8-9) The payment remittance slip went directly to A-B Credit Union. (Pl.'s Resp. Ex. 5, ECF No. 70-5) Plaintiffs account was placed with APR for collection under Tier I on October 9, 2014, and he received a series of five collection letters from APR. (Defs.' SMF ¶¶ 16-17) On December 3, 2014, Plaintiff called APR to get more information about the debt using his attorney's cellular telephone. (Defs.' SMF ¶ 19; Pl.'s Resp. Ex. 11, ECF No. 70-10) Plaintiff was informed that he would need to call the number on the top of the letter belonging to A-B Credit Union, and the credit union could assist Plaintiff. (Pl.'s Resp. Ex. 11, ECF No. 70-10) Plaintiff did not contact A-B Credit Union. (Defs.' SMF ¶ 21) On December 8, 2014, Plaintiff received another letter from APR indicating that Plaintiffs failure to resolve the delinquent account would result in the account being sent to the Tier II collection division. (FAC ¶ 20)

         Plaintiff alleges that APR furnished the collection letter knowing that said letter would create the false belief that APR was participating in the debt collection when such was not true. (Id. at ¶ 21) This alleged scheme, known as "flat-rating" is prohibited by 15 U.S.C. § 1692j, which makes it "unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating." 15 U.S.C. § 1692j(a). Specifically, Plaintiff alleges that the collection activity was a false representation or deceptive means because it created the false impression that the debt had been sent to collection; that failure to pay would result in more rigorous Tier II collection; and that A-B Credit Union's phone number was the number for a third-party collection agency. (FAC ¶ 25) Plaintiff initially sought class certification in this action, which the Court denied on January 3, 2017. (ECF No. 58) Plaintiff now proceeds on his individual claims.

         On March 27, 2017, Defendants filed the present Motion for Summary Judgment and/or Dismissal, asserting that Plaintiff is unable to establish Article III standing and, even if standing exists, APR was meaningfully involved in the collection of Plaintiff s debt on behalf of A-B Credit Union; A-B Credit Union is a creditor and is not liable under the FDCPA; and neither APR nor A-B Credit Union made any false, misleading, or deceptive representation to Plaintiff. In response, Plaintiff contends that he has sufficiently alleged a concrete harm sufficient to establish standing and that evidence exists from which a reasonable jury could find that Defendants engaged in a flat-rating scheme in violation of the FDCPA.


         Defendants move for summary judgment under Federal Rule of Civil Procedure 56 on the basis of lack of standing. A court may grant a motion for summary judgment only if all of the information before the court shows "there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). '"Under Article III of the United States Constitution, federal courts may only adjudicate actual cases or controversies.'" Constitution Party of S. Dakota v. Nelson, 639 F.3d 417, 420 (8th Cir. 2011) (quoting Pucket v. Hot Springs Sch. Dist. No. 23-2, 526 F.3d 1151, 1157 (8th Cir. 2008)). "[I]t is Article III standing that enforces this case-or-controversy requirement." Id.

         "The plaintiff must have standing for the court to have jurisdiction." Woods v. Caremark, L.L.C, No. 4:15-cv-00535-SRB, 2016 WL 6908108, at *2 (W.D. Mo. July 28, 2016) (citing Hargis v. Access Capital Funding, LLC, 674 F.3d 783, 793 (8th Cir. 2012)). To establish standing, the plaintiff must demonstrate (1) an injury in fact, (2) fairly traceable to the defendant's challenged conduct, and (3) that is likely to be redressed by a judicial decision in Plaintiffs favor. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-560 (1992)). "When the defendant challenges standing at the summary judgment stage, the plaintiff must submit affidavits or other evidence that demonstrate through specific facts that he has suffered an injury in fact." Woods, 2016 WL 6908108, at *2 (citations omitted).


         Defendants assert that Plaintiff lacks standing because he merely alleges a statutory violation, not an injury in fact. In Spokeo, an action brought under the Fair Credit Reporting Act of 1970 ("FRCA"), the United States Supreme Court addressed Article III standing in the context of the alleged violation of a statutory right and found:

Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, [plaintiff] could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.

Spokeo, 136 S.Ct. at 1549. The Spokeo Court acknowledged that "the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute an injury in fact." Id. The Court further noted, however, that in certain scenarios, a violation of a statutory procedural requirement would not ...

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