The U.S. Constitution vests Congress with enumerated “legislative Powers,” confers upon the President “the executive Power,” and endows the federal courts with “the judicial Power of the United States.” The “standing” doctrine, including a related body of judicial principles as precedent, has developed over many years in defining the test for cases to be heard before the federal judiciary.
The Supreme Court’s 2016 ruling in Spokeo v. Robins, although designed to clarify the “injury-in-fact” principle of Article III standing, has in fact yielded a line of Article III analysis that deviates from the traditional principles of the standing doctrine and arguably bestows judicial power to Congress. In applying such analysis, courts authorize Congress to elevate intangible harms to the status of legally cognizable injuries. This analysis effectively appoints Congress as the arbiter of standing—an authority held by the courts under its judicial power.
This case note explores the interplay between statutory damages for procedural violations by creditors and the principles of Article III standing. There is an inherent tension between the “injury-in-fact” requirement for standing and statutory damages for mere procedural violations (without further harm to the petitioner) as awarded by statutes such as the Fair Credit Reporting Act.
This case note also examines how post-Spokeo cases, specifically Hagy v. Demers & Adams, LLC, acknowledged standing and granted statutory damages for a procedural violation in the face of Spokeo, and explores additional factors beyond standing that may impact debtors’ access to statutory damages for procedural violations.
1. Hagy Facts and Procedural Background
In 2002, the Hagys financed the purchase of a mobile home and related real estate. In 2010, they subsequently defaulted on their loan obligations. The law firm defendants, Demers & Adams, LLC, filed a foreclosure action against the Hagys on behalf of the loan servicer. On June 8, 2010, the loan servicer’s attorney, David Demers, sent the Hagys a letter that accompanied a warranty deed in lieu of foreclosure. The June 8th letter advised the Hagys that Demers & Adams, LLC had been retained to represent the loan servicer in regards to the delinquent account, and that in return for the Hagy’s execution of the deed in lieu, the loan servicer would waive any deficiency balance.
Plaintiffs James and Patricia Hagy executed the deed in lieu of foreclosure in exchange for the deficiency waivers. On behalf of his law firm, Mr. Demers sent a letter on June 30th to the Hagy’s attorney confirming receipt of the executed deed and stating that there would be no additional attempts to collect the deficiency balance. Thereafter, the foreclosure complaint against plaintiffs was dismissed; however, the loan servicer began contacting the Hagys by telephone for the collection of the deficiency.
Hagy sued the loan servicer, one of its employees, the loan servicer’s law firm, Demers & Adams, LLC, and Mr. Demers in federal court alleging that the phone calls and letters violated the Fair Debt Collection Practices Act (FDCPA) and Ohio Consumer Sales Practices Act (OCSPA).
The loan servicer and its employee/phone callers resolved the dispute using previously agreed upon arbitration rights. The cause of action against Demers and his law firm alleging that the June 8th letter violated the FDCPA was denied due to the applicable statute of limitations. The issue of whether the June 30th letter violated the FDCPA remained, and both plaintiffs and defendants moved for summary judgment.
The district court in Hagy granted summary judgment and awarded statutory damages to plaintiffs. The court held that the letter from Demers and his law firm violated the FDCPA and OCSPA (which incorporates the FDCPA disclosure requirement) because it was a letter from a debt collector that did not make that disclosure as required.
Defendants appealed the decision and alleged that the court did not have jurisdiction because plaintiffs did not have standing to bring suit. During the appeal process, Demers asked the district court to reconsider its decision in light of the U.S. Supreme Court’s ruling in Spokeo, once again claiming that plaintiffs lacked standing to bring federal suit. The district court rejected the argument.
On appeal, the Sixth Circuit reversed the district court’s decision and dismissed the case for lack of jurisdiction, relying heavily on the U.S. Supreme Court’s analysis in Spokeo.
2. Standing Analysis under Spokeo
Spokeo is a search engine that reports online information about people whose names are searched. In this case, the search engine reported some inaccurate information about Thomas Robins and he sued, claiming a violation of his statutory rights under the Fair Credit Reporting Act (FCRA). He cited the section that obligates consumer reporting agencies to ensure their reports are accurate. The FCRA provides for statutory damages if its provisions are violated.
The issue for the Supreme Court was whether Robins had adequately pleaded an “injury-in-fact” that satisfied the standing requirements under Article III. The court ruled that in order to establish an injury-in-fact, plaintiff must show that he or she suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent,” and not “conjectural or hypothetical.”
The court further explained the “concrete” prong by stating that a plaintiff cannot allege a “bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” To show that an injury is concrete, it must be “de facto,” meaning that it must actually exist—it must be real and not abstract. For these reasons, the court vacated the Ninth Circuit’s decision and held that Robins met the Article III standing requirements.
3. How the District Court in Hagy Granted Standing in the Face of Spokeo’s Concreteness Analysis
A. Spokeo’s Analysis Is Conflicting, Causing the District Court and Other Courts to Follow an Article III Analysis that Grants Judicial Powers to Congress
There are principles in the Spokeo ruling that are conflicting and confusing for courts to interpret. On the one hand, Spokeo held that standing requires an actual injury that is not hypothetical and that is not a “bare procedural violation, divorced from any concrete harm.” On the other hand, Spokeo held that intangible harm in the form of a violation of a procedural right granted statutorily can be sufficient in some circumstances to constitute an injury-in-fact, and a plaintiff need not allege any additional harm beyond the one Congress identified.
The inconsistency arising from Spokeo is that intangible harm deriving from a procedural violation, without any additional harm, is in fact conjectural, hypothetical, and a bare procedural violation. The district court in Hagy, like other courts facing interpretation of Spokeo, found itself wedged between two conflicting prongs of Spokeo’s Article III analysis. Spokeo forces courts to decide between following the “Congressionally created harm” prong or holding true to the traditional standing principles of the “no bare procedural violation” prong—two diametrically opposed lines of analyses.
The district court in Hagy is not the only post-Spokeo court following the Congressional-harm prong. For example, the post-Spokeo case Church v. Accretive Health, Inc. held that “an injury-in-fact . . . may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing . . . .” The court held in applying Spokeo that “while this injury may not have resulted in tangible economic or physical harm that courts often expect, the Supreme Court [in Spokeo] has made it clear that an injury need not be tangible to be concrete.” The Supreme Court further acknowledged in Spokeo that Congress may elevate intangible harms to the status of legally cognizable “concrete” injuries.
The introduction of Congressionally created intangible harms as “concrete injuries” deviates from the original core principles of Article III standing, which require actual, nonhypothetical injuries and which preclude bare procedural violations as sufficient grounds for standing. Under the Congressionally created harm line of analysis, Congress can effectively create causes of action with statutorily mandated damages for plaintiffs who have incurred no substantive, actual injury.
Actual harm means actual harm—not some intangible harm fantasized by Congress. Under the Congressionally created harm analysis, plaintiffs can point to Congress and say, “I’m harmed because Congress says so,” regardless of the actual injury limitations of Article III. There is reason for concern when Congressional power overrides established Constitutional principles. As the Sixth Circuit noted in Hagy, “Congressional leeway cannot mean judicial abdication. Broad though Congress’s power may be to define and create injuries, they cannot override constitutional limits” and “Congress . . . may not simply enact an injury into existence, using its lawmaking power to transform something that is not remotely harmful into something that is.”
B. The District Court in Hagy Followed What the Supreme Court Said, and Ignored What the Supreme Court Did, in Spokeo
Although the Supreme Court stated in Spokeo that no additional harm may be necessary in the case of a procedural violation of a Congressionally created right, a close examination of Spokeo reveals that the court did in fact look for additional harm. After the court acknowledged that “a plaintiff . . . need not allege any additional harm beyond the one Congress has identified,” the court recognized that a violation of one of FCRA’s procedural requirements may in fact result in no harm.
In furtherance of this analysis, the Supreme Court considered a hypothetical in which Spokeo disseminates an incorrect zip code. The court found it “difficult to imagine” how this, without more, could create concrete harm. This analysis establishes the important Spokeo principal (which appears to be ignored in post-Spokeo cases) under the Congressionally created harm line of analysis that if the procedural violation is likely to or could possibly result in no harm, then the existence of a concrete harm is unlikely and “difficult to imagine.”
The district court in Hagy ignored this important component of the Congressionally created harm analysis and focused narrowly on what Spokeo said in a vacuum (i.e., that a violation of a procedural right without any additional harm can constitute an injury-in-fact), and not what the Supreme Court did in Spokeo (i.e., consider whether the procedural violation could possibly result in no harm).
The district court in Hagy never considered the question of whether the failure to disclose the fact that the June 30th letter was from a debt collector could result in no harm to the Hagys. In reality, had the court so considered, it likely would have concluded that such a failure very well could have resulted in no harm to the Hagys.
The June 30th letter simply confirmed receipt of the executed deed and stated that there would be no additional attempts to collect the deficiency balance. The letter was not an attempt to collect a debt. It summarized a mutually agreed upon resolution to the debt—a letter that the Hagys surely considered favorable as evidence that the debt collection activities would cease. Thus, defendants’ failure to disclose their status as debt collectors posed absolutely no risk of harm to the Hagys because it was not drafted for the purpose of collecting a debt, but rather confirmed the great news that debt collection activities would cease due to settlement. If the Hagy court had followed Spokeo’s consideration of whether the violation could possibly result in no harm, standing would have likely been denied.
C. The District Court in Hagy Followed a More Speculative View of the Definition of “Concrete”
The district court in Hagy relied on Macy v. GC Services Limited Partnership, a pre-Spokeo case, in addition to post-Spokeo cases to support applying a more speculative definition of “concrete.”
In Macy, the Eastern District of Kentucky held that “the concreteness requirement may be satisfied by the risk of real harm.” Further, the court acknowledged that in cases involving alleged procedural violations, the court must determine whether the particular procedural violations alleged in the case entail a degree of risk sufficient to meet the concreteness requirement.
In Macy, the plaintiffs alleged that defendant violated the FDCPA by sending debt collection letters that did not inform them that defendant was only obligated to provide additional debt and creditor information if plaintiffs disputed their debts in writing. The court held that the possibility that the failure to provide such warnings might lead a least sophisticated debtor to waive certain statutory rights met the concreteness standard.
The “possibility” that there “might” be harm is completely contrary to traditional Article III principles holding that the injury must be “actual or imminent” and not “conjectural or hypothetical.” It is surprising that the district court in Hagy relied on such a speculative, pre-Spokeo analysis that exemplifies the type of conjectural harm Spokeo rejects as sufficient to grant standing.
4. How Arbitration Provisions in Consumer Contracts Impact Harmed Consumers’ Accessibility to Statutory Damages
There is a notable trend in the United States toward including binding arbitration provisions in consumer contracts. Such binding arbitration provisions leave consumers who believe they are entitled to statutory damages, regardless of the amount of actual harm, with significantly fewer avenues to seek damages.
In AT&T Mobility L.L.C. v. Concepcion, the Supreme Court reaffirmed the supremacy of the Federal Arbitration Act and the validity of contractual binding arbitration clauses in agreements between businesses and their customers. The Supreme Court strongly reaffirmed this decision in DirecTV, Inc. v. Imburgia in an opinion stating, “The Federal Arbitration Act is the law of the United States, and Concepcion is an authoritative interpretation of the Act. Consequently, the judges of every state must follow it.”
The Consumer Financial Protection Bureau, now known as the Bureau for Consumer Financial Protection, issued its binding arbitration rule on September 18, 2017, with a March 19, 2018 mandatory compliance date. Although it continued to allow arbitration of disputes between consumer financial service providers and their customers, it required that such provisions be limited in scope to allow class-action lawsuits. That rule was invalidated by Congress under the Congressional Review Act by H.J. Res. 111, which passed the House and the Senate (with the vice president casting the tie-breaking vote) and was signed by the president on November 1, 2017. Consequently, the rule limiting the scope of arbitration provisions to enable class-action lawsuits is not effective, and the Bureau for Consumer Financial Protection is precluded from again issuing a similar rule.
As a result, cases are often subject to commonly used binding arbitration clauses in disputes between consumers and financial service providers and, depending upon the scope of the arbitration clause, the consumers’ available options for resolution are often limited to third-party service providers of the lender, such as collection attorneys, collection agencies, and servicers retained by the lender.
As courts continue to keep the window of litigation open for consumers experiencing harm—even intangible, Congressionally created, procedural harm—arbitration provisions play a key role as a countervailing force limiting litigation and other avenues for seeking recourse and statutory damages. Sophisticated lenders are incentivized to close the litigation window as much as possible through broad, one-sided arbitration provisions.
5. Complex and Inconsistent Statutory Requirements May Play a Role in Courts Defaulting Toward Granting Statutory Damages
Numerous federal statutes, other than the FDCPA at issue in Hagy, provide for statutory damages. Such statutes include the Fair and Accurate Credit Transactions Act provisions as added to the Fair Credit Reporting Act in 2003 ($1,000), the Telephone Consumer Protection Act ($500), and the Truth in Lending Act ($5,000).
However, the FDCPA violations create perhaps the most fertile ground for statutory damages claims because of its hyper-technical and inconsistent requirements applicable to communications by debt collectors to debtors. For example, the federal courts of appeal are split as to whether section 1692g(a)(3) requires that a dispute over the validity of a debt by a consumer be in writing.
Some courts have held that the debtor may dispute the debt orally and do not require the debt collector to advise the debtor that the dispute must be in writing to be valid. There is also disagreement even within a circuit regarding whether the debt collector is required to disclose that the balance may increase and whether such disclosure can be general or specific.
The courts have also rejected the use of safe-harbor language and federal courts have also been inconsistent on whether the FDCPA bars the collection of time-barred debt if the debt collector does not threaten legal action.
The bottom line is that the statutory damage provisions of the FDCPA and the uncertainty and judicial inconsistency for complying with such law can create numerous instances in which alleged technical violations, typically with no debtor harm, are successfully used to claim a right to statutory damages. Simply put, it is easier and convenient for courts to grant statutory damages where there might be some level of statutory noncompliance where the statute is ambiguous.
6. A Consideration of the Implications of State Constitutions and Due Process on Statutory Damages for Procedural Violations
Although the “case or controversy” requirement applies to actions in federal court related to enforcement of state law requirements and limitations, there is also the issue, under state constitutions, of whether there is a similar “case or controversy” prerequisite to standing under state constitutions. As stated in Asarco, Inc. v. Kadish, “[T]he constraints of Article III do not apply to state courts, and accordingly the state courts are not bound by the limitations of a case or controversy or other federal rules of justiciability even when they address issues of federal law.” Many state constitutions lack the Article 3 standing requirements, arguably providing an easier litigation venue for procedural violations with statutory damages.
The due process requirements of the 5th and 14th amendments may play a role by limiting otherwise “grossly excessive” damages in individual and class-action cases. Although the application of this limitation will typically not apply to individual or class-action awards for statutory damages, but rather to punitive awards, one can speculate that a future Spokeo 2.0 case will consider whether a litigant’s claim for statutory damages where little or no actual harm exists is “grossly excessive” in violation of due process.
The Hagy district court and the Hagy circuit court decisions illustrate the inherent conflict in the Spokeo decision regarding whether mere Congressionally created, intangible harm or true “actual harm” is required for Article III standing. This conflict is now playing out in federal courts across the United States and may have to be ultimately resolved by the U.S. Supreme Court in a future “son of Spokeo” case. Further, it remains to be seen whether plaintiffs will increase reliance on state courts and state credit reporting and debt collection laws to avoid the Article III analysis altogether, and whether statutory damages may be limited or denied based upon a due process analysis.
 U.S. Const. art. I § 1.
 U.S. Const. art. II § 1, cl. 1.
 U.S. Const. art. III § 1.
 Hagy v. Demers & Adams, LLC, 882 F.3d 616, 618 (6th Cir. 2018).
 Hagy v. Demers & Adams, LLC, No. 2:11-cv-530, 2013 WL 434053, at *1 (S.D. Ohio Feb. 5, 2013).
 Id. at *2.
 Hagy v. Demers & Adams, LLC, No. 2:11-cv-530, 2017 WL 1134408, at *1 (S.D. Ohio Mar. 27, 2017).
 Hagy, 2013 WL 434053, at *2.
 Hagy, 2017 WL 1134408, at *1.
 Hagy, 882 F.3d at 620.
 See id. at 623.
 Spokeo v. Robins, 136 S. Ct. 1540, 1542 (2016).
 See id.
 See id. at 1545.
 Id. at 1544.
 Id. at 1547.
 Id. at 1548.
 Id. at 1545.
 Id. at 1549 (citing Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009)).
 Id. (citing Federal Election Comm’n v. Akins, 524 U.S. 11, 20-25 (1998)).
 See, e.g., Church v. Accretive Health, Inc., 654 F. App’x 990, 994 (11th Cir. 2016) (“through the FDCPA, Congress has created a new right—the right to receive the required disclosures in communications governed by the FDCPA—and a new injury—not receiving such disclosures.”); Linehan v. AllianceOne Receivables Mgmt., No. C15-1012-JCC, 2016 WL 4765839, at *8 (W.D. Wash. Sept. 13, 2016) (“The goal of the FDCPA is to protect consumers from certain harmful practices; it logically follows that those practices would themselves constitute a concrete injury.”); Daubert v. Nra Grp., LLC, No. 3:15-CV-00718, 2016 WL 4245560, at *4 (M.D. Pa. Aug. 11, 2016) (“Plaintiff’s injury is also the unlawful disclosure of legally protected information . . . . Both history and the judgment of Congress demonstrate that the unlawful disclosure of legally protected information is a concrete harm that is sufficient to confer standing.”); Dickens v. GC Servs. Ltd. P’ship, No. 8:16-cv-803-T-30TGW, 2016 WL3917530, at *2 (M.D. Fla. July 20, 2016) (“Congress, through the FDCPA, entitles the plaintiff to certain information, and thus an alleged invasion of this right is not hypothetical or uncertain.”).
 Church, 654 F. App’x at 993 (2016) (citing Havens Realty Corp. v. Coleman, 455 U.S. 363, 373 (1982)).
 Id. at 995.
 Spokeo, 136 S. Ct. at 1549.
 Hagy, 882 F.3d at 623.
 Id. at 622.
 Spokeo, 136 S. Ct. at 1549 (citing Federal Election Comm’n, 524 U.S. 11 at 20–25).
 Id. at 1549–50.
 Id. at 1550.
 See id.
 See generally Hagy, 2017 WL 1134408, at *1.
 Hagy, 2013 WL 434053, at *1.
 See id.
 See, e.g., Anda v. Roosen Varchetti & Oliver, PLLC, No. 1:14-CV-295, 2016 WL 7157414 (W.D. Mich. Oct. 31, 2016); Church, 654 F. App’x at 994; Sayles v. Advanced Recovery Systems, 206 F. Supp. 3d 1210, 1212 (S.D. Miss. 2016); Dickens, 2016 WL 3917530, at *2.
 See Hagy, 2017 WL 11344008, at *3.
 Macy v. GC Services Limited P’ship, No. 3:15-cv-819-DJH, 2016 WL 5661525, at *2 (E.D. Ky. Sept. 29, 2016) (citing Spokeo, 136 S. Ct. 1540) (citing Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (2013)).
 Id. at *2 (citing Spokeo, 136 S. Ct. at 1550).
 See id. at *1.
 Hagy, 2017 WL 11344008, at *3 (citing id. at *4).
 Consumers Want the Right to Resolve Bank Disputes in Court (2016), http://www.pewtrusts.org/-/media/assets/2016/08/consumerswanttherighttoresolvebankdisputesincourt.pdf.
 563 U.S. 333, 333, 131 S. Ct. 1740, 179 L.Ed.2d 742 (2011).
 136 S. Ct. 463, 468, 193 L.Ed.2d 365 (2015).
 15 U.S.C. § 1681n(a) (2008).
 47 U.S.C. § 227(b)(3)(B) (2018).
 15 U.S.C. § 1640(a)(2)(A) (2010).
 Hooks v. Forman, Holt, Eliades & Ravin, LLC, 717 F.3d 282 (2d Cir. 2013); Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991); Clark v. Absolute Collection Serv., Inc., 741 F.3d 487 (4th Cir. 2014); Camacho v. Bridgeport Financial, Inc., 430 F.3d 1078 (9th Cir. 2005).
 Miller v. McCalla, Raymer, Padrick, Cobb, Nichols & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000); Avila v. Riexinger & Associates, 817 F.3d 72 (2d Cir. 2016); Carlin v. Davidson Fink, 285 F.3d 207 (2d Cir. 2017); Taylor v. Financial Recovery Services, 886 F.3d (2d Cir. 2018).
 Boucher v. Finance System of Green Bay, Inc., 880 F.3d 362 (7th Cir. 2018).
 McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014); Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir. 2011); Freyermuth v. Credit Bureau Servs, Inc., 248 F.3d 767 (8th Cir. 2001).
 DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 126 S. Ct. 1854 (2006).
 490 U.S. 605, 617 (1989).
 William A. Fletcher, The “Case or Controversy” Requirement in State Court Adjudication of Federal Questions, 78 Cal. L. Rev. 263 (1990).
 See generally Sheila B. Scheuerman, Due Process Forgotten: The Problem of Statutory Damages and Class Actions, 74 Mo. L. Rev. 103 (2009).