7th Circuit vacates judgment for debt collector lack of jurisdiction

A woman who claimed “stress and confusion” as injuries after she was contacted by a debt collector without her permission could not convince the 7th Circuit Court of Appeals that the company had violated the Fair Debt Collection Practices Act.

When Sonja Pennell defaulted on a loan from lender MobiLoans, Pennell sent a letter refusing to pay her debt and requesting that all future debt communications stop. The communications stopped coming from MobiLoans – but then resumed when the lender sold Pennell’s debt to Global Trust Management, a debt collector, without informing the collector of Pennell’s refusal. It also declined to inform Global Trust that Pennell was represented by counsel.

After receiving a letter from the debt collector in November 2017, Pennell’s counsel notified Global Trust that she refused to pay the debt and requested all debt communications stop. Global Trust complied with her request and took no further action, but Pennell sued.

Specifically, Pennell alleged Global Trust violated 15 U.S.C. § 1692c(a)(2) and (c) of the Fair Debt Collection Practices Act. She claimed “stress and confusion” as injuries and asserted Global Trust’s letter made her think that “her demand had been futile,” among other things.

The U.S. District Court for the Southern District of Indiana granted summary judgment to the debt collector on the merits, finding Global Trust could not have violated § 1692c(a)(2) and (c) without having actual knowledge of Pennell’s cease-communication request.

But a panel of the 7th Circuit on Thursday vacated and remanded for lack of subject-matter jurisdiction in Sonja Pennell v. Global Trust Management, LLC, 20-1524.

Answering the question of whether Pennell had Article III standing to sue, the 7th Circuit first noted her allegation that Global Trust’s letter caused stress and confusion. But as decided in Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067 (7th Cir. 2020), “the state of confusion is not itself an injury.”

“Nor does stress by itself with no physical manifestations and no qualified medical diagnosis amount to a concrete harm,” Circuit Judge Michael Brennan wrote for the panel, concluding Pennell failed to allege concrete injury in her complaint.

The panel likewise denied her invasion of privacy argument, concluding that the only injuries in her complaint were stress and confusion and that those do not suffice for standing.

The 7th Circuit thus vacated the district court’s judgment and remanded with instructions to dismiss for lack of subject-matter jurisdiction.

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