Second Circuit Says Plaintiff Has Standing for Some, but Not All, Truth-In-Lending Procedural Violations

Steven D. Schwinn, John Marshall Law School

The Second Circuit ruled today that a class representative had standing to challenge a creditor's failure to disclose certain requirements under the Truth In Lending Act, but lacked standing to challenge other failures to disclose.

The ruling means that two of the plaintiff's claims are dismissed for lack of standing. The court dismissed the other two on the merits.

The court's ruling applies last Term's Spokeo v. Robins, dealing with a plaintiff's ability to challenge a defendant's failure to comply with "procedural" statutory requirements, absent a more traditional injury. The Court in Spokeo held that a plaintiff who seeks to challenge a defendant's failure to comply with a statute also has to allege and show a concrete injury in order to show Article III standing. (The statutory violation is called a "procedural violation," because the statute in Spokeo (and this case) required the defendant to follow certain procedures--in particular, to disclose certain things to consumers. The Court in Spokeo said that sometimes those procedural violations also come with a concrete harm, and sometimes they don't. A plaintiff has to plead and show that they do.)

The case arose when Abigail Strubel sued a credit-card issuer for failing to make four disclosures required by TILA: (1) that cardholders wishing to stop payment on an automatic payment plan had to satisfy certain obligations; (2) that the bank was statutorily obliged not only to acknowledge billing error claims within 30 days of receipt but also to advise of any corrections made during that time; (3) that certain identified rights pertained only to disputed credit card purchases for which full payment had not yet been made, and did not apply to cash advances or checks that accessed credit card accounts; and (4) that consumers dissatisfied with a credit card purchase had to contact the creditor in writing or electronically.

The court held that Strubel had standing to challenge 3 and 4, but not 1 and 2.

As a starting point, here's what the court said about Spokeo:

Thus, we understand Spokeo, and the cases cited therein, to instruct that an alleged procedural violation can by itself manifest concrete injury where Congress conferred the procedural right to protect a plaintiff's concrete interests and where the procedural violation presents a "risk of real harm" to that concrete interest. But even where Congress has accorded procedural rights to protect a concrete interest, a plaintiff may fail to demonstrate concrete injury where violation of the procedure at issue presents no material risk of harm to that underlying interest.

As to 3 and 4, the court said that Strubel sufficiently demonstrated a concrete interest in "avoid[ing] the uninformed use of credit," "a core object of TILA." It said that a "consumer not given notice of his obligations is likely not to satisfy them and, thereby, unwittingly to lose the very credit rights that the law affords to him." The court went on to dismiss these claims on the merits.

As to 1 and 2, the court said that Strubel didn't show a concrete interest, because (as to 1) the creditor had no automatic payment plan when Strubel had her card and (as to 2) Strubel never had any reason to report a billing error (which would have triggered the creditor's obligation to "advise of corrections." In other words, because the conditions for violating the underlying requirements were absent, the creditor's failure to notify Strubel of the requirements couldn't have caused any concrete harm. The court dismissed these claims for lack of standing.

The court noted that a different plaintiff could have standing to challenge 1 and 2, so long as the plaintiff could also show a concrete harm. The court also noted that the CFPB can enforce these provisions independently.