Calvin Choice v. Kohn Law Firm, S.C.

                               In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 21-2288
CALVIN J. CHOICE,
                                                  Plaintiff-Appellant,
                                 v.

KOHN LAW FIRM, S.C. and UNIFUND CCR, LLC,
                                    Defendants-Appellees.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
         No. 19-cv-5773 — Sharon Johnson Coleman, Judge.
                     ____________________

      ARGUED APRIL 5, 2023 — DECIDED AUGUST 11, 2023
                 ____________________

   Before SYKES, Chief Judge, and HAMILTON and BRENNAN,
Circuit Judges.
    BRENNAN, Circuit Judge. Calvin Choice alleges a collection
agency and its law firm violated the Fair Debt Collection Prac-
tices Act (FDCPA), 

 et seq., when they made
contradictory statements about the recovery of statutory at-
torney’s fees in a debt-collection action. The district court dis-
missed Choice’s complaint, holding that he had not shown a
concrete harm for Article III standing. We affirm.
2                                                  No. 21-2288

                               I.
    Calvin Choice defaulted on a debt incurred on a Citibank,
N.A. consumer credit account. Unifund CCR, LLC purchased
that debt and hired the Kohn Law Firm to collect it. Kohn
sued Choice in state court on behalf of Unifund, seeking judg-
ment in the amount of the debt as well as “statutory attorney
fees.” Attached to the complaint was an affidavit of Unifund’s
agent indicating that the company was not seeking additional
amounts after the charge-off date, including attorney’s fees.
To Choice, because the affidavit contradicted the request for
judgment in the state court complaint, one of the statements
must have been false. He also contends that no applicable stat-
ute permitted the recovery of such attorney’s fees in the state
court action.
    In response, Choice sued under the FDCPA in federal dis-
trict court, alleging injury from the receipt of false, mislead-
ing, and deceptive communications from Kohn and Unifund.
In an amended complaint Choice alleged he “became con-
cerned, and worried as the result of the reference to ‘statutory
attorney fees’ being sought.” Choice asserted that upon read-
ing the state court complaint, he “was confused regarding the
amount of money that was being sought from him.” Choice
alleged “he hired an attorney to help him ascertain the
amount of the alleged debt owed, whether attorney fees could
be imposed, and in what amount.” He also paid an appear-
ance fee to a lawyer in the state court action.
   In his amended complaint, Choice claims he would have
sought to resolve the debt instead of hiring a lawyer and liti-
gating. But he alleges that the statements “caused him to also
consider paying a debt that he would rather have chosen to
dispute due to his fear that attorney fees would be assessed in
No. 21-2288                                                       3

a greater amount as he litigated the case forward.” Choice fur-
ther pleaded that he believed that a decision to contest the
debt could have turned out to be more costly than paying it.
    Despite his allegation that, but for the statements, he
would have paid or settled the debt, during discovery Choice
denied owing any debt. He later said he lost sleep due to con-
cern over the extent of his liability. Choice’s amended com-
plaint does not articulate an FDCPA claim based on the un-
derlying debt, as opposed to the statements about statutory
attorney’s fees.
    The defendants each moved to dismiss Choice’s complaint
for lack of subject matter jurisdiction, and Kohn also moved
to dismiss for failure to state a claim. The district court
granted those motions, concluding that Choice had not estab-
lished Article III standing. The court reasoned that neither
confusion, lost sleep, nor hiring a lawyer are concrete harms.
It also noted Choice had admitted in discovery that he did not
suffer any actual damages. Choice appeals.
                                II.
    We review de novo dismissals for lack of subject matter
jurisdiction and for failure to state a claim. Dinerstein v. Google,
LLC, 

 (7th Cir. 2023). We construe the defend-
ants’ challenges under Federal Rule of Civil Procedure
12(b)(1) as facial attacks on the complaint, contesting whether
the allegations, taken as true, support standing. See Prairie
Rivers Network v. Dynegy Midwest Generation, LLC, 

 (7th Cir. 2021). We therefore accept the well-
pleaded facts as true and draw all reasonable inferences in
Choice’s favor. See 

4                                                     No. 21-2288

    “To establish standing under Article III of the Constitu-
tion, a plaintiff must demonstrate (1) that he or she suffered
an injury in fact that is concrete, particularized, and actual or
imminent, (2) that the injury was caused by the defendant,
and (3) that the injury would likely be redressed by the re-
quested judicial relief.” Thole v. U.S. Bank N.A., 

 (2020). Choice contends he suffered two concrete inju-
ries: he hired an attorney to defend him in the collection ac-
tion and paid an appearance fee, and he lost sleep due to con-
cern about having to pay statutory attorney’s fees.
     Choice’s decisions to hire an attorney and pay an appear-
ance fee are insufficient to establish standing. See Pierre v. Mid-
land Credit Mgmt., Inc., 

, 939 (7th Cir. 2022); Nettles
v. Midland Funding LLC, 

 (7th Cir. 2020); Bru-
nett v. Convergent Outsourcing, Inc., 

 (7th
Cir. 2020). In Brunett, the plaintiff hired a lawyer after being
confused by a dunning letter, which stated that a creditor who
forgives more than $600 in debt must report the forgiven
amount to the IRS as taxable income. 

.
This court explained that although acting to one’s detriment
due to confusion may be enough to establish standing, con-
sulting counsel did not meet this standard. 

 at 1068–69. That
is, “[a] desire to obtain legal advice is not a reason for univer-
sal standing.” 

. Indeed, hiring counsel should yield
advice for the client to resolve confusion. Choice’s decision to
retain counsel fails to establish concrete injury.
    Choice also contends, however, that the statement about
statutory attorney's fees led him to take a detrimental step by
choosing to litigate the debt and paying an appearance fee, as
opposed to paying or settling the debt. But this factual allega-
tion is contradicted by others in his complaint. Although
No. 21-2288                                                             5

Choice claimed he “would” have “paid or settled” the debt
instead of litigating had the statement about statutory attor-
ney’s fees not been made, he also alleges the statement
“caused him to … consider paying a debt that he would rather
have chosen to dispute” and “could have led to a decision to
pay a debt that he would have preferred to contest.” These
contradictory allegations show that instead of being induced
into hiring an attorney and litigating, the statement about stat-
utory attorney’s fees left Choice confused about the proper
course of action. 1 As we have consistently explained, confu-
sion leading one to hire a lawyer is insufficient to establish
standing. 2 See, e.g., Pierre, 29 F.4th at 939; Brunett, 

. We also see no material distinction between hiring a
lawyer and paying an appearance fee for purposes of Article
III standing. Nothing in Pierre, Nettles, or Brunett suggests
counsel in those cases provided free legal services. 3


    1 Choice’s argument here also runs into an estoppel problem: during

discovery he denied owing the debt, but on appeal he contends he would
have paid it but for defendants’ statements.
    2 The dissent acknowledges that Choice’s complaint contains “conces-

sions and contradictions” but characterizes them as inconsistent theories
permitted under Federal Rule of Civil Procedure 8(d). Yet, how Choice
would have responded to the collection action absent the defendants’
statements is a fact known only to Choice. See, e.g., Am. Int’l Adjustment
Co. v. Galvin, 

 (7th Cir. 1996) (“[A] pleader may assert
contradictory statements of fact only when legitimately in doubt about the
facts in question.”); 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER,
FEDERAL PRACTICE AND PROCEDURE § 1285 (4th ed. 2023).
    3 The dissent analogizes Choice’s case to a common-law tort claim,

like malicious prosecution or abuse of process, because Choice hired de-
fensive counsel. Though Choice asserted he does not owe the debt, he does
not allege an FDCPA claim based on the underlying debt.
6                                                             No. 21-2288

    Nor is Choice’s lost sleep a concrete harm that supports
standing. Wadsworth v. Kross, Lieberman & Stone, Inc., 

 (7th Cir. 2021), controls on this point. There, the plaintiff
sued under the FDCPA, alleging that a debt collector failed to
provide her with complete and timely written notice of her
statutory rights and that the debt collector’s employee neither
identified herself as a debt collector on the phone nor stated
the purpose of the call. 

 at 666–67. We explained that the
plaintiff’s emotional harms, including that “she got less
sleep” because of the communications, were insufficient to es-
tablish standing. 

 at 668–69. Choice’s loss of sleep is like-
wise insufficient to show a concrete harm. 4
                             *       *        *
    Choice has not established Article III standing, and his
complaint was therefore properly dismissed for lack of sub-
ject matter jurisdiction. We AFFIRM.




    4 Choice also argues the district court erred in relying on his admission

that he did not suffer actual damages. We need not address this argument
because even when his admission is not considered, he fails to demon-
strate a concrete harm for Article III standing.
No. 21-2288                                                      7

    HAMILTON, Circuit Judge, dissenting. We should reverse
the dismissal of this case for lack of standing and remand for
further proceedings. I respectfully dissent.
    The majority opinion relies on a series of decisions that
this court issued beginning in late 2020 restricting standing
under the Fair Debt Collection Practices Act to an extraordi-
nary and erroneous degree. I have explained my views on
these questions in Pierre v. Midland Credit Mgmt., Inc., 

 (7th Cir. 2022), both in a panel dissent, 29 F.4th at 940–56,
and in dissent from denial of rehearing en banc, 36 F.4th at
729–37. Pierre and other recent cases in this circuit have failed
to give due respect to the judgments of Congress and have
overlooked close historical parallels from both the common
law and constitutional law that support Congress’s creation
of statutory claims for similar injuries. As Judge Ripple put
the matter, our circuit’s law on standing under the FDCPA has
been “traveling far out in front of our Spokeo-provided head-
lights,” and I would add now the TransUnion-provided head-
lights as well. See Markakos v. Medicredit, Inc., 

(7th Cir. 2021) (Ripple, J., concurring in the judgment); see
generally TransUnion LLC v. Ramirez, 

 (2021);
Spokeo, Inc. v. Robins, 

 (2016).
    Pierre and the recent cases it relied upon are the law of the
circuit, whether I agree with them or not, of course. I do not
concur in the judgment of affirmance, however, because a fea-
ture of this case warrants a different result despite those prec-
edents.
    Plaintiff Choice claims that defendant Kohn Law Firm
filed a collection suit against him that included a prayer for
attorney fees that was baseless under state law and thus ille-
gal under the FDCPA. See 15 U.S.C. § 1692e(2), (5) & (10), and
8                                                    No. 21-2288

§ 1692f. Choice responded by retaining a lawyer, paying an
appearance fee in the state-court action, and defending him-
self in state court.
    In Pierre and similar cases rejecting hiring counsel as a ba-
sis for standing, plaintiffs alleged that the defendants’ viola-
tions of the FDCPA had confused them and led them to hire a
lawyer for guidance and/or to file an action themselves. See
Pierre, 29 F.4th at 939; Nettles v. Midland Funding LLC, 

 (7th Cir. 2020) (becoming annoyed and consulting a
lawyer not sufficient for standing); Brunett v. Convergent Out-
sourcing, Inc., 

 (7th Cir. 2020) (becoming
confused and hiring lawyer for advice not sufficient for stand-
ing); Gunn v. Thrasher, Buschmann & Voelkel, P.C., 

, 1071–72 (7th Cir. 2020) (hiring lawyer to bring suit does
not show standing).
    This case is very different. Hiring a lawyer to defend your-
self in state court in an action where the debt collector violated
the FDCPA is readily distinguishable from consulting a law-
yer to clear up your own confusion or to file your own law-
suit. The expense of hiring a lawyer to defend a baseless or
illegal lawsuit is a concrete injury. It should support standing
under the FDCPA. That expense is virtually identical to inju-
ries compensable in a common-law tort claim for malicious
prosecution or abuse of process. That common-law founda-
tion should surely suffice for constitutional standing under
TransUnion, 

 (close common-law analogue
for asserted injury can support standing under federal stat-
utes). See Restatement (Second) of Torts §§ 670, 671 & 681
(Am. L. Inst. 1977) (damages for malicious prosecution and
wrongful civil proceedings include emotional distress
No. 21-2288                                                     9

resulting from proceedings and expense reasonably incurred
in defending the proceeding).
     I do not read the majority opinion as actually holding that
hiring defensive counsel is not sufficient to establish standing.
Rather, as the majority opinion notes, plaintiff Choice has re-
sponded somewhat erratically on the standing issue. He filed
this action before our circuit’s sharp narrowing of FDCPA
standing began in late 2020. In response to those changes,
Choice has been inconsistent about his theories for injury and
standing, including particularly how his alleged injuries
might have been caused by defendant’s alleged violation.
Still, our circuit’s case law has also been inconsistent. In re-
sponse, Choice has tried to find a path to constitutional stand-
ing for an ordinary sort of FDCPA violation where the statute
offers at least statutory damages. In any event, parties are en-
titled to plead in the alternative and even to contradict them-
selves in their pleadings, see Fed. R. Civ. P. 8(d), and some-
times in their testimony. See generally, e.g., Bank of Illinois v.
Allied Signal Safety Restraint Systems, 

 (7th
Cir. 1996). An incidental effect of hiring defensive counsel
might be to clear up a borrower’s confusion. That effect
should not defeat otherwise sufficient standing under the
FDCPA.
   Accordingly, even under Pierre and its family of new
standing cases under the FDCPA, we should vacate and re-
mand to allow Choice to clarify his theory on injury and
standing. Perhaps he could not satisfy those (erroneous)
standards, but perhaps he could. Because of the changes in
our circuit law, I would give Choice more leeway to correct
course than my colleagues do—reasonable judges and law-
yers can answer that question differently. Nevertheless,
10                                                No. 21-2288

future plaintiffs who seek damages under the FDCPA for de-
fensive attorney fees and emotional distress should be able to
distinguish this case based on Choice’s concessions and con-
tradictions. They should also be able to show how the cost of
defensive counsel is a concrete injury under TransUnion and
Spokeo.