Stevens v. GFC Lending, LLC

138 F.Supp.3d 1345

Duasjer Stevens, Plaintiff,

v.GFC Lending, LLC, Defendant.

Case No.: 2:14-cv-02026-MHH

United States District Court, N.D. Alabama, Southern Division.

Signed September 30, 2015

Judson Eric Crump, Daphne, AL, Samuel Mark Hill, The Law Offices of Sam Hill, LLC, Hoover, AL, for Plaintiff.

Michael R. Pennington, Robert J. Campbell, Bradley Arant Boult Cummings LLP, Birmingham, AL, for Defendant.

MEMORANDUM OPINION

MADELINE HUGHES HAIKALA, UNITED STATES DISTRICT JUDGE

I. Introduction

This matter is before the Court on GFC Lending's motion to dismiss or to compel arbitration, strike class allegations, and stay proceedings. (Doc. 14). Duasjer Stevens alleges that GFC violated the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691a -1691f, by failing to send her timely written notification of the denial of her credit application and the reasons for it. (Doc. 13, ¶¶ 26-43).¹ Ms. Stevens seeks to pursue her claim by certifying a class of consumers who did not receive timely notice when GFC denied their applications for credit. (Doc. 13, ¶ 17). GFC contends that Ms. Stevens lacks standing to pursue her claim because she has not shown that she was injured by GFC's failure to provide timely notice. (Doc. 14, pp. 12-16). Alternatively, GFC argues that Ms. Stevens should be required to arbitrate her claim. (Doc. 14, pp. 6-11). For the reasons stated below, the Court denies GFC's motion.

II. Factual Background

On June 13, 2014, Ms. Stevens "went shopping for a personal vehicle at Champion [Automotive]." (Doc. 13, ¶ 11). After selecting a vehicle, Ms. Stevens filled out a credit application, which employees of Champion sent to GFC. (Doc. 13, ¶ 12). GFC denied Ms. Stevens's application for credit. (Doc. 13, ¶ 12).

Ms. Stevens did not receive an adverse action notice within 30 days of GFC's denial of her credit application. (Doc. 13, ¶ 12). In a statement of adverse action dated August 24, 2014 and mailed to Ms. Stevens, GFC informed Ms. Stevens in writing that her request for credit had not been approved. (Doc. 13, ¶¶ 13-16; Doc. 13-1). Ms. Stevens alleges that her delayed receipt of a written statement of adverse action caused her to suffer the following injuries: "the loss of her rights to determine the basis for credit denial, the loss of her right to obtain a free copy of her credit report, the potential exposure to discrimination, her loss of the credit itself, frustration, anger, humiliation, fear, embarrassment and other emotional and mental anguish." (Doc. 13, ¶ 37).

Ms. Stevens did not sign an arbitration agreement with GFC in 2014, but she did sign a stand-alone arbitration agreement with GFC on November 30, 2012. (Doc. 6-5). That four-page arbitration agreement pertained to a separate vehicle sales transaction. (Compare Doc. 6-5 and Doc. 13-1). GFC attempts to compel arbitration of Ms. Stevens' ECOA claim pertaining to her 2014 credit application under the terms of the 2012 arbitration agreement. (Doc. 14).

III. Discussion

A. Standing

GFC's standing argument implicates the Court's jurisdiction over Ms. Stevens's action.

"[B]ecause the constitutional standing doctrine stems directly from Article III's ‘case or controversy’ requirement, this issue implicates our subject matter jurisdiction, and accordingly must be addressed as a threshold matter regardless of whether it is raised by the parties." When analyzing a defendant's "motion to dismiss we must evaluate standing based on the facts alleged in the complaint, and we may not ‘speculate concerning the existence of standing or piece together support for the plaintiff.’ "

Duty Free Americas, Inc. v. Estee Lauder Companies, Inc. , 797 F.3d 1248, 1271 (11th Cir.2015) (quoting Nat'l Parks Conservation Ass'n v. Norton, 324 F.3d 1229, 1242 (11th Cir.2003), and Shotz v. Cates, 256 F.3d 1077, 1081 (11th Cir.2001) ).

Federal courts, as courts of limited jurisdiction, may hear only those cases that have been entrusted to them by the United States Constitution and a Congressional grant of authority. See Univ. of S. Ala. v. Am. Tobacco Co. , 168 F.3d 405, 409 (11th Cir.1999). The Constitution restricts the jurisdiction of federal courts to "Cases" and "Controversies," as those terms are understood within the context of Article III of the Constitution. U.S. Const. art. III, § 2, cl. 1. "[T]he doctrine of standing serves to identify those disputes which are appropriately resolved through the judicial process." Whitmore v. Arkansas , 495 U.S. 149, 155, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990).

At a minimum, a plaintiff wishing to establish standing to sue must show an injury in fact that has been caused by the defendant and that is capable of being redressed by the court. Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ; see also Duty Free Americas, 797 F.3d at 1271. An injury in fact is "an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical." Lujan , 504 U.S. at 560, 112 S.Ct. 2130 (internal citations and quotation marks omitted).

GFC argues that Ms. Stevens has alleged "potential injuries" that are too "abstract, conjectural, or hypothetical in nature" to satisfy the requirements of Article III. (Doc. 14, pp. 13-14). Some of the injuries that Ms. Stevens alleges, such as "potential exposure to discrimination," may be too conjectural or hypothetical. (Doc. 13, ¶ 36). However, Ms. Stevens's central contention is not at all conjectural or abstract. Under the ECOA, Ms. Stevens was entitled to written notification of GFC's action on her credit application within thirty days of June 13, 2014, the date on which GFC received the completed application. 15 U.S.C. § 1691(d)(1). Because GFC denied her application, Ms. Stevens also was entitled to a written statement of the reasons for the denial. 15 U.S.C. § 1691(d)(2) ; 12 C.F.R. §§ 1002.9(a)(1)(i), (a)(2). GFC did not prepare a statement of adverse action until August 24, 2014. As a consequence, Ms. Stevens asserts that she lost her right to determine the basis for the denial of her credit application, lost the right to obtain a free copy of her credit report, lost credit, and suffered emotional and mental anguish. (Doc. 13, ¶¶ 36-37). These alleged injuries, if proven, constitute actual losses for which Ms. Stevens may recover damages. See Oden v. Vilsack , No. 1000212, 2013 WL 4046456, at *13 (S.D.Ala. Aug. 9, 2013) (describing mental anguish as a form of actual damages available under the ECOA); Fischl v. General Motors Acceptance Corp. , 708 F.2d 143, 148 (5th Cir.1983) ("[U]nder § 1691e,...actual damages may include out-of-pocket monetary losses, injury to credit reputation and mental anguish, humiliation or embarrassment.").²

Citing two opinions that are not binding Eleventh Circuit precedent,³ GFC argues that "[a] federal ‘statutory violation alone will not suffice to create standing.’ " (Doc. 17, p. 10) (quoting Morales v. U.S. Dist. Court for the Southern Dist. of Fla ., 580 Fed.Appx. 881, 886–87 (11th Cir.2014), and Trujillio v. Florida , 481 Fed.Appx. 598 (11th Cir.2012) ). The law in this circuit is not as clear as GFC suggests. In a decision that is binding on this Court, the Eleventh Circuit noted that, "Congress may enact statutes creating legal rights, the invasion of which creates standing, even though no injury would exist without the statute." United States v. Weiss , 467 F.3d 1300, 1311 (11th Cir.2006) (quoting Linda R.S. v. Richard D. , 410 U.S. 614, 617, 93 S.Ct. 1146, 35 L.Ed.2d 536 (1973) ). By enacting the ECOA, Congress created a legal right to timely written information regarding credit decisions and provided for the private enforcement of that right by "aggrieved applicants." See 15 U.S.C. § 1691e(a) ("Any creditor who fails to comply with any requirement imposed under this subchapter shall be liable to the aggrieved applicant for any actual damages sustained by such applicant acting either in an individual capacity or as a member of a class."). The provisions of the ECOA sufficiently "identify the injury [Congress] seeks to vindicate and relate the injury to the class of persons entitled to bring suit." Lujan , 504 U.S. at 580, 112 S.Ct. 2130 (Kennedy, J., concurring in the judgment).

The United States Supreme Court has acknowledged that being denied information can confer standing because "a plaintiff suffers an ‘injury in fact’ when the plaintiff fails to obtain information which must be publicly disclosed pursuant to a statute."

Fed. Election Comm'n v. Akins , 524 U.S. 11, 21, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998). Ms. Stevens's circumstances present an even stronger argument for standing given that she was denied information concerning her own creditworthiness, not simply information that might be of equal interest to any member of the public. Ultimately, though, the point is academic for purposes of this action because Ms. Stevens has alleged actual injuries. Ms. Stevens has identified consequences of "an invasion of a legally protected interest" that are both "concrete and particularized," that GFC caused, and for which the Court may provide a remedy via an award of damages pursuant to § 1691e(a). Therefore, the Court finds that Ms. Stevens has standing to proceed with her suit.

B. Arbitration

The Federal Arbitration Act ("FAA") provides that an agreement to arbitrate a dispute "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "Pursuant to the FAA, a claim is arbitrable if the following three criteria are satisfied: (1) there is a valid agreement to arbitrate; (2) the claim falls within the scope of the agreement to arbitrate; and (3) the claim, if a statutory one, must not be one which the legislative body enacting it intended to be precluded from arbitration." Vanhorn v. Locklear Auto. Grp., Inc. , No. 2:15–CV–467, 2015 WL 4470320, at *2 (N.D.Ala. July 22, 2015) (cit...