Alert

NY District Court: Legal Fees Are Sufficient for Standing in FDCPA Claims

May 30, 2024

On May 20, 2024, the United States District Court for the Southern District of New York issued a decision holding that legal fees resulting from violations of the Fair Debt Collection Practices Act (FDCPA) constitute a cognizable monetary harm for the purpose of establishing constitutional standing.

Case Overview

In Levy, Plaintiff brought claims for violations of the FDCPA against a debt-collector law firm, its principal, and a company through which the attorney practiced judgment enforcement. Defendants sent Plaintiff, who resided in Florida, a letter and purported post-judgment subpoena duces tecum in relation to a money judgment awarded in a New York City Civil Court case. The subpoena commanded Plaintiff to appear at a deposition in New York City on a federal holiday and to bring comprehensive financial documentation, including bank account statements as well as federal and state tax returns. It stated that failure to comply is punishable as a contempt of court and indicated “FINAL Notice” across each page.

On summary judgment, the court determined that the subpoena was unlawful, awarded judgment to Plaintiff for claims under 15 U.S.C. §§ 1692e(5) and 1692e(13), and directed an inquest on emotional distress damages. Following the inquest, Defendants challenged Plaintiff’s standing. However, the court denied Defendants’ motion and found that “Plaintiff has satisfied his burden to establish standing.”

Distinguishing Legal Fees

The court noted that “[c]ourts in this Circuit have repeatedly found the expense of money, such as legal fees, to determine a course of action in response to a FDCPA violation to not allege a concrete harm.” However, it distinguished the legal fees in those cases from the legal fees incurred by Plaintiff for defense against the judgment, as such fees were for taking action rather than seeking advice, consulting, or determining a course of action in response to an FDCPA violation.

Legal Fees as Monetary Harm

Moreover, the court observed that Plaintiff’s fees had a clear nexus to the subpoena, which was issued to enforce the judgment, and that Plaintiff faced a sufficient risk of harm in the form of imminent legal action arising from the unlawful subpoena. Thus, the court concluded that “[t]he cost incurred by Plaintiff of hiring an attorney to defend him against the Morrison Judgment is sufficient to satisfy the injury-in-fact requirement” as such legal fees “constitute a cognizable monetary harm.”

Impact of Levy Decision on FDCPA Claims

The Levy decision indicates that consumers may satisfy their burden of establishing constitutional standing for a claim under the FDCPA merely with legal fees incurred specifically due to an FDCPA violation that presents an imminent threat of legal action to the consumer.