The last few years have given us more than enough cases discussing Article III standing. Despite the ebb and flow of some of these standing decisions, a judge in the Eastern District of Wisconsin has decided the issue is now so clear in the Seventh Circuit that improperly attempting to remove a case is enough to warrant awarding attorney fees to a consumer.

Some history: over the last few years, we've learned what standing is. We've seen some big-name cases get dismissed for lack of it. Some debt collectors have argued in favor of dismissals, while others have argued against dismissing casesWe've seen judges ask whether it has all gone too farand we have questioned whether any of this is good for the ARM industry

It appears at least one judge in Wisconsin has had enough. In Clark v. Client Services, Inc., (Case No. 22-cv-1410, E.D. Wis. 2023), a consumer filed her complaint in state court. She chose state court to, in her words,  proceed in the “fastest way possible” to obtain the $1,000.00 statutory award allowed under the Fair Debt Collection Practices Act (FDCPA). 


Since the consumer requested “actual damages” in her complaint, the debt collector attempted to move the matter to federal court. In the debt collector’s opinion, “actual damages” imply an “actual injury,” which would allow one to infer that the actual injury was a “concrete injury” sufficient for Article III standing.

The consumer disagreed, contending that “actual damages” and “concrete injury” are not interchangeable. In contesting the removal, she pointed out that she never alleged she had to pay any extra money, that her credit was affected, or that she responded differently due to receiving the letter. 

Inferences are not enough, according to the judge. In siding with the consumer, the judge cited previous Seventh Circuit precedent that held “what matters is what the plaintiff alleges in the complaint.”  A vague reference to “actual damages” without more in the complaint is not enough to plead a concrete injury sufficient to move a case to federal court.

The judge did not stop there, though. Since the Seventh Circuit precedent was clear when the debt collector attempted to move the matter to federal court, the judge found it was objectively unreasonable for the debt collector to attempt to remove the case to federal court. Therefore, the consumer was entitled to recover attorney fees and costs from the debt collector. 

Find the full Order here

insideARM perspective:

There are two takeaways from this case: (1) the do they/don’t they Article III standing opinions may be winding down, and (2) this case underscores the importance of vetting the pros and cons of litigation strategies prior to embarking down any one path.

Lawyers, particularly defense counsel, can sometimes be accused of being overly negative or doomsday-ish. But the law doesn't always follow logic, and it doesn’t always make sense. Try telling a random stranger on the street that “actual damages” don't imply an “actual injury.” This disconnect between law and logic is why it's important to listen and consider the risks outlined by defense counsel when deciding a litigation strategy, no matter how far-fetched or illogical they might seem. The risk may be worth taking, but it's important to consider all the potential outcomes. 

Historically, there hadn’t been much downside to making an attempt to remove a case to federal court. If the attempt was unsuccessful, the case would be transferred right back to state court. This case may be isolated, but maybe it isn’t. At the very least, it's yet another thing for ARM entities to consider when deciding their litigation strategy. 

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