17-1132-cv
Aikens v. Portfolio Recovery Assocs., LLC

                                        UNITED STATES COURT OF APPEALS
                                           FOR THE SECOND CIRCUIT

                                            SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 21st day of November, two thousand seventeen.

PRESENT:
           GERARD E. LYNCH,
           SUSAN L. CARNEY,
                       Circuit Judges,
           ERIC N. VITALIANO,*
                       District Judge.
_________________________________________

SHARON AIKENS,

                    Plaintiff-Appellant,

                              v.                                              No. 17-1132-cv

PORTFOLIO RECOVERY ASSOCIATES, LLC,

           Defendant-Appellee.
_________________________________________

FOR APPELLANT:                                           DAVID N. MCDEVITT, Thompson
                                                         Consumer Law Group, PLLC, Mesa, AZ.




*
  Judge Eric N. Vitaliano, of the United States District Court for the Eastern District of New York,
sitting by designation.
FOR APPELLEE:                                       DAVID L. HARTSELL (Sarah A. Zielinski,
                                                    on the brief), McGuireWoods LLP, Chicago,
                                                    IL.

       Appeal from a judgment of the United States District Court for the Eastern District
of New York (Wexler, J.).

       UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment entered on March 22, 2017 is
AFFIRMED insofar as the District Court dismissed the case for lack of subject matter
jurisdiction. We REMAND, however, with an instruction that the District Court enter an
amended judgment of dismissal without prejudice.

       Plaintiff-appellant Sharon Aikens appeals from the dismissal of her putative class
action against defendant-appellee Portfolio Recovery Associates, LLC (“PRA”) for alleged
violations of the Electronic Fund Transfer Act (“EFTA”). The EFTA provides that “[a]
preauthorized electronic fund transfer from a consumer’s account may be authorized by the
consumer only in writing, and a copy of such authorization shall be provided to the
consumer when made.” 15 U.S.C. § 1693e(a). The District Court dismissed the action for
lack of standing. We assume the parties’ familiarity with the facts and the record of prior
proceedings, which we reference only as necessary to explain our decision.

       Aikens’s complaint alleges that on March 11, 2015, a PRA associate telephoned her to
discuss an outstanding credit card debt.1 During the call, Aikens agreed to a repayment plan
under which PRA would make monthly withdrawals from her bank account. PRA debited
Aikens’s account for the first time in April 2015 without obtaining her written authorization,
and continued making monthly withdrawals thereafter. In March 2016, Aikens filed suit
against PRA under the EFTA. She sought to represent the class of individuals who had
entered into automated payment plans with PRA over the telephone and without a
contemporaneous writing. See 15 U.S.C. § 1693m(a) (providing for individual and class


1
 Although Aikens did not allege the amount of the debt, PRA later submitted evidence showing that
Aikens owed $395.
                                               2
actions against “any person who fails to comply with any provision of [the EFTA] with
respect to any consumer”).

       PRA moved under Federal Rule of Civil Procedure 12(b)(1) to dismiss the complaint
for lack of standing. It attached to the motion an audio recording of the March 2015
telephone conversation. The recording reflected that Aikens verbally consented to recurring
monthly payments of $32.91, and that she provided her bank account information to the
PRA associate in order to facilitate those transfers. PRA also attached to its motion a copy
of a confirmation letter addressed to Aikens and dated March 17, 2015—six days after the
phone conversation—which summarized Aikens’s payment plan terms and the disclosures
made during the call.

       The District Court concluded that, under Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016),
Aikens failed to show a concrete injury and therefore lacked constitutional standing to
pursue the asserted claim. The court dismissed the action with prejudice.

       On appeal, Aikens contends that the District Court erred in its standing
determination, and also that its dismissal for want of standing should have been entered
without prejudice. We review the District Court’s determination de novo.2 See Carter v.
HealthPort Techs., LLC, 822 F.3d 47, 56–57 (2d Cir. 2016). In determining factual issues, we
may properly consider the extrinsic evidence attached to PRA’s Rule 12(b)(1) motion. Id.
at 57. As to any issue beyond the scope of PRA’s evidence, we accept Aikens’s allegations as
true and draw all reasonable inferences in her favor. Id.




2
  When a district court concludes that a plaintiff has failed to establish standing on the face of the
pleadings, we review the dismissal de novo. Carter, 822 F.3d at 56–57. Because PRA’s Rule 12(b)(1)
motion relied on evidentiary exhibits, we construe the motion, in part, as a fact-based challenge to
the District Court’s subject matter jurisdiction. See id. at 57. Had the District Court made factual
findings based on “material and controverted” evidence, we would “accept [those] findings unless
they [were] clearly erroneous.” Id. In this case, however, it does not appear that the District Court
had cause to “resolve[ ] disputed facts.” Id. PRA’s evidence did not contradict any pertinent
allegations, nor did Aikens challenge the authenticity or the factual interpretation of PRA’s evidence.
Aikens is thus entitled to de novo review of the District Court’s determination based on the
undisputed facts that were before the District Court.
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       Aikens invoked federal jurisdiction by filing her lawsuit in a federal court. She
therefore bears the burden of establishing that she has standing to sue. Spokeo, 136 S. Ct.
at 1547. A plaintiff satisfies Article III’s requirements for standing by showing, inter alia, that
she has suffered “an injury in fact to a legally protected interest that is both (a) concrete and
particularized, and (b) actual or imminent, not conjectural or hypothetical.” Crupar-Weinmann
v. Paris Baguette Am., Inc., 861 F.3d 76, 79 (2d Cir. 2017) (internal quotation marks omitted);
see also Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). Even plaintiffs who seek to
“represent a class must allege and show that they personally have been injured.” Spokeo, 136
S. Ct. at 1547 n.6 (emphasis added) (internal quotation marks omitted).

       Congress may create new causes of action by statute, but “Article III standing
requires a concrete injury even in the context of a statutory violation.” Id. at 1549. “For that
reason,” the Supreme Court has explained, a plaintiff may not “allege a bare procedural
violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of
Article III.” Id. This Court has elicited the following principles from Spokeo and the cases on
which that decision relied:

               [A]n 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 [those same] concrete
               interest[s]. But even where Congress has accorded procedural
               rights to protect [ ] concrete interest[s], a plaintiff may fail to
               demonstrate concrete injury where violation of the procedure at
               issue presents no material risk of harm to [those] underlying
               interest[s].

Strubel v. Comenity Bank, 842 F.3d 181, 190 (2d Cir. 2016) (quoting Spokeo, 136 S. Ct. at 1549).
In addition, we have recently reiterated that “where a case is dismissed for lack of Article III
standing, . . . that disposition cannot be entered with prejudice, and instead must be
dismissed without prejudice.” Katz v. Donna Karan Co., L.L.C., 872 F.3d 114, 121 (2d Cir. 2017)
(emphasis in original).

       Aikens contends on appeal that she suffered actual financial harm sufficient to
support Article III standing because “PRA took her money without the [written]
                                                 4
authorization required by [the EFTA].” Appellant’s Reply Br. 8 (emphasis omitted). We find
that reasoning unpersuasive. As the District Court explained, Aikens “authorized PRA to
withdraw money from her account to repay the debt she owed. PRA did not take more
money than was agreed to . . . [or] withdraw the money from any other account than that
which [Aikens] authorized.” App’x 189. We note, in addition, that although the EFTA limits
consumer liability for “unauthorized electronic fund transfers,” 15 U.S.C. § 1693g, it treats a
transfer as “unauthorized” only if the “the consumer receives no benefit,” id. § 1693a(12).
Here, PRA’s withdrawals provided Aikens the decided benefit of reducing her debt.
Moreover, a transfer is not “unauthorized” under the EFTA when, as here, the consumer
herself furnished the “means of access” to her bank account and never asked her bank to
stop the transfers. Id. § 1693a(12)(A).3 We therefore conclude that Aikens has failed to show
that she suffered any financial harm.

       Aikens could nonetheless establish standing by showing that PRA’s alleged
procedural violation created a “risk of real harm.” Spokeo, 136 S. Ct. at 1549 (emphasis
added). In Strubel, we explained accordingly that a defendant’s failure to make statutorily
mandated disclosures may confer standing based on a risk that “the challenged disclosure
would have [ ] an effect on consumers generally,” even if the plaintiff herself was not directly
harmed. 842 F.3d at 193. The District Court’s order did not expressly address risk-based
standing under Spokeo, but we conclude on de novo review that Aikens failed to make such a
showing.

       In opposing PRA’s motion to dismiss, Aikens asserted that Congress passed the
EFTA based on a concern that electronic transactions “are much more vulnerable to fraud,
embezzlement, and unauthorized use than the traditional payment methods.” App’x 120.
Although she posited that “Section 1693e(a) is the shield that insulates consumers from
these inherent risks,” id., she failed to allege in her complaint that she herself was exposed to


3
  The EFTA’s definition of “unauthorized electronic fund transfer” excludes any transfer “initiated
by” a third party to whom a consumer “furnished [ ] the card, code, or other means of access to
[the] consumer’s account . . . , unless the consumer has notified the financial institution involved
that transfers by such other person are no longer authorized.” 15 U.S.C. § 1693a(12)(A).
                                                  5
any such risks. When PRA submitted evidence to challenge her standing, she did not argue
that the evidence tended to show that she bore any increased risks,4 nor did she exercise the
right to submit evidence of her own supporting any such assertion. See Carter, 822 F.3d at 57.

       Even without any direct evidence of risk, Aikens could establish standing if her
complaint supported a reasonable inference that she was exposed to some risk. See id. at 56–57.
Our recent decision in Katz v. Donna Karan Company—which was issued after the close of
briefing in this appeal—offers an example of how a plaintiff might attempt to support such
an inference. There, Katz argued that the defendant merchants “raise[d] a material risk of
identity theft” by printing receipts with more credit card digits than statutorily allowed
because, “[a]s a factual matter, . . . the more digits [a receipt] revealed, the more vulnerable a
card number may be to a brute force cryptological attack.” Katz, 872 F.3d at 119–20 (internal
quotation marks omitted). In light of the defendants’ extrinsic evidence, however, we found
no clear error in the district court’s finding that Katz bore no increased risk of harm. Id.
at 120–21.

       Here, Aikens’s filings in the District Court articulated no theory at all to justify her
hypothesis that PRA created an increased risk of fraud by obtaining her consent over the
phone and mailing her a confirmation letter rather than obtaining her contemporaneous
written authorization. We conclude, therefore, that she has not met her burden of showing
that PRA’s conduct amounted to anything more than a “bare procedural violation,” Spokeo,
136 S. Ct. at 1549, and so she has failed to establish that she has constitutional standing to
assert her EFTA claim.

                                              * * *

       We have considered the remainder of Aikens’s arguments and find them to be
without merit. Accordingly, we AFFIRM the District Court’s conclusion that the case must


4
 In her brief on appeal, Aikens belatedly suggests that she may not have understood what she was
agreeing to during the March 2015 phone call, and also that the PRA associate may have
misleadingly coerced her into repaying a debt that was no longer enforceable. She did not present
these arguments to the District Court, however, and so she has forfeited them on appeal. See New
York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638, 662 (2d Cir. 2015).
                                                 6
be dismissed for lack of subject matter jurisdiction. We REMAND the case, however, with
the instruction that the District Court enter an amended judgment dismissing the action
without prejudice. See Katz, 872 F.3d at 121.

                                                    FOR THE COURT:
                                                    Catherine O’Hagan Wolfe, Clerk of Court




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