Persinger v. Sw. Credit Sys., L.P.

20 F.4th 1184

Brooke PERSINGER, Plaintiff-Appellant,

v.SOUTHWEST CREDIT SYSTEMS, L.P., Defendant-Appellee.

No. 21-1037

United States Court of Appeals, Seventh Circuit.

Argued October 27, 2021

Decided December 22, 2021

David M. Marco, Esq., Larry P. Smith, Attorneys, SMITHMARCO, P.C., Chicago, IL, for Plaintiff-Appellant.

Eugene Xerxes Martin, IV, Robbie Malone, Attorney, MALONE FROST MARTIN PLLC, Dallas, TX, Patrick A. Watts, Attorney, MALONE FROST MARTIN, PLLC, St. Louis, MO, for Defendant-Appellee.

Before Manion, Wood, and Brennan, Circuit Judges.

Brennan, Circuit Judge

In 2017, a bankruptcy court discharged Brooke Persinger's debts. A few months later, Southwest Credit Systems began collection efforts on a pre-petition debt of Persinger's, including by acquiring a type of credit information called her "propensity-to-pay score." Alleging that this information had been secured without a permissible purpose, Persinger sued Southwest under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. The district court granted summary judgment to Southwest, holding that Southwest's compliance procedures were reasonable and thus met the FCRA's requirements. For the reasons that follow, we affirm.

I

Persinger and her husband jointly filed for bankruptcy in 2017. Their bankruptcy petition listed each creditor to which they individually, or jointly, owed a debt. One such creditor was Southwest, who was servicing an AT&T debt incurred by Persinger's husband in 2014. This was the only debt for which Southwest was listed as a creditor.

The bankruptcy court ordered a discharge of the Persingers' debts under 11 U.S.C. § 727. The discharge order listed Brooke Persinger's four former names, including, as relevant here, Brooke Casey.

Following the discharge order, the bankruptcy court notified all known creditors, including Southwest, of its ruling.

When Southwest received this notice, it scanned its system for affected accounts. Per company policy, Southwest closes accounts subject to bankruptcy. But by the time Southwest received notice of the Persingers' 2017 bankruptcy, it had already closed the AT&T account.

Bankruptcy notices are not the only way Southwest learns about discharged debts. Upon receiving a new account, Southwest orders a "bankruptcy scrub" from LexisNexis—a process by which LexisNexis searches for bankruptcy information connected to that account. If matching bankruptcy data is discovered, it is immediately returned to Southwest. If no immediate match is discovered, LexisNexis stores the account information, continuously searches for matches, and forwards any bankruptcy data it later finds. As with bankruptcy notices, if a bankruptcy scrub reveals that an account is subject to bankruptcy, Southwest closes the account.

In January 2018, Southwest received a delinquent account in Brooke Persinger's former name, Brooke Casey, for a debt owed to Viasat Residential. This debt, though delinquent since 2014, was not listed on Persinger's 2017 bankruptcy petition. Southwest, as a matter of course, ordered a bankruptcy scrub. Because LexisNexis did not immediately return any bankruptcy results, Southwest proceeded in its collection efforts.

To form a collection strategy, Southwest orders a "propensity-to-pay score" from a consumer credit reporting agency. This is not a full credit report but rather a form of "soft pull" indicating the likelihood of repayment on a scale of 400 to 800. Unlike a "hard pull," a soft pull is not visible to third parties and does not affect one's credit score. Because the bankruptcy scrub did not return any bankruptcy data, Southwest ordered Persinger's propensity-to-pay score. Several months later, though, LexisNexis updated Persinger's account with information about her 2017 bankruptcy. Upon receiving this update, Southwest closed the account.

After learning that Southwest accessed her credit information, Persinger filed a class-action complaint against Southwest, alleging violations of the FCRA. Following discovery, the parties filed cross-motions for summary judgment; the district court granted Southwest's motion and denied Persinger's motion. On appeal, Persinger challenges the grant of summary judgment to Southwest.

II

Before proceeding to the merits, we must answer the jurisdictional question of whether Persinger has standing to sue. Although the district court did not address Southwest's argument that Persinger lacked standing, we have an "independent obligation" to inspect, and remain within, jurisdictional boundaries. Bazile v. Fin. Sys. of Green Bay, Inc. , 983 F.3d 274, 281 (7th Cir. 2020) (quoting Henderson ex rel. Henderson v. Shinseki , 562 U.S. 428, 434, 131 S.Ct. 1197, 179 L.Ed.2d 159 (2011) ). "The Article III standing inquiry remains open to review at all stages of the litigation." Pennell v. Glob. Tr. Mgmt., LLC , 990 F.3d 1041, 1044 (7th Cir. 2021) (internal quotation marks omitted). But the plaintiff's "burden to demonstrate standing changes as the procedural posture of the litigation changes." Gracia v. SigmaTron Int'l, Inc. , 986 F.3d 1058, 1063 (7th Cir. 2021). Where, as here, the procedural posture is summary judgment, the plaintiff must "set forth by affidavit or other evidence specific facts, which for purposes of the summary judgment motion will be taken to be true."

Lujan v. Defs. of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotation marks omitted).

Federal jurisdiction "extends only to ‘Cases’ and ‘Controversies.’ " Spokeo, Inc. v. Robins , 578 U.S. 330, 337, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016) (quoting U.S. CONST. art. III, § 2). Standing doctrine enforces this limitation by ensuring that courts only adjudicate disputes in which the plaintiff has a "personal stake." TransUnion LLC v. Ramirez , ––– U.S. ––––, 141 S. Ct. 2190, 2203, 210 L.Ed.2d 568 (2021). Standing consists of three elements: injury in fact, causation, and redressability. Lujan , 504 U.S. at 560–61, 112 S.Ct. 2130. This case concerns the first element—injury in fact—which means the injury must be both "concrete and particularized," and "actual or imminent, not conjectural or hypothetical." Id. at 560, 112 S.Ct. 2130 (internal quotation marks omitted).

For an injury to be concrete, it must be "real, and not abstract." Spokeo , 578 U.S. at 340, 136 S.Ct. 1540 (internal quotation marks omitted). Tangible harms, like physical or monetary harms, "readily qualify as concrete injuries." Ramirez , 141 S. Ct. at 2204. Intangible harms may also be concrete, for example, "reputational harms, disclosure of private information ... intrusion upon seclusion[,] ... [a]nd those traditional harms ... specified by the Constitution itself." Id. In determining whether a harm is concrete, "history and tradition offer a meaningful guide." Sprint Commc'ns Co. v. APCC Servs., Inc. , 554 U.S. 269, 274, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008). "[C]ourts should assess whether the alleged injury to the plaintiff has a ‘close relationship’ to a harm ‘traditionally’ recognized as providing a basis for a lawsuit in American courts." Ramirez , 141 S. Ct. at 2204 (quoting Spokeo , 578 U.S. at 341, 136 S.Ct. 1540 ).

When it comes to identifying concrete harms, Congress's judgment is important. But even if Congress imposes a "statutory prohibition or obligation and a cause of action," courts must still "independently decide whether a plaintiff has suffered a concrete harm under Article III." Id. at 2205. "[U]nder Article III, an injury in law is not an injury in fact. Only those plaintiffs who have been concretely harmed by a defendant's statutory violation may sue that private defendant over that violation in federal court." Id.

The FCRA imposes statutory prohibitions and obligations, including that a person shall not use or obtain a consumer report without a permissible purpose. 15 U.S.C. § 1681b(f). The Act also provides a cause of action for negligent and willful violations. 15 U.S.C. §§ 1681n –o. Persinger asserts that Southwest violated § 1681b(f), causing her harm. This is not enough on its own to confer standing. We must decide whether this harm qualifies as a concrete injury.

When reviewing potential injuries for standing purposes, we are constrained by the operative complaint. Pennell , 990 F.3d at 1045. Persinger's complaint alleged "financial and dignitary harm ... and an injury to her credit rating and reputation."

Persinger's deposition testimony illuminated these allegations. Southwest's counsel asked Persinger how she was harmed by Southwest's inquiry into her propensity-to-pay score. She responded, "Harmed? I mean, there's stress on it, yes." Probing for more, counsel asked her if she had been harmed in any other way. She added, "My personal privacy." To confirm, counsel asked if any she had experienced any harm besides "personal privacy and stress." Persinger answered, "No, sir."

Prompted by Southwest's counsel, Persinger clarified what she meant by harm to her "personal privacy," explaining: "My consumer report is for me and for the people that I allow to look things up in, not for people that I didn't sign off for, didn't give them permission to do." When asked if Southwest's access angered her, Persinger responded "yes."¹

Next, Southwest's counsel questioned Persinger about any harms she may have suffered, making certain that Persinger experienced only "stress" and an infringement of personal privacy, congruent with her earlier answer. He asked her if Southwest's inquiry affected her ability to get a job; she confirmed it did not. She gave the same response regarding her ability to obtain loans or credit cards—Persinger stated it was not affected. Counsel continued: "You haven't lost any money because of Southwest Credit's inquiry on your credit report, have you?" Persinger replied, "Not to my acknowledgement." Pressing on, counsel then asked Persinger whether she had been denied housing, credit, employment, or insurance. Persinger answered in the negative to each. In...