Heather Gudex v. Franklin Collection Service, Inc.

What’s at Stake

Standing is the legal principle that decides who gets to bring a lawsuit. Traditionally, a person who has experienced the violation of a statute has standing to bring a claim for that violation. For example, the federal Fair Debt Collection Practices Act says that when a debt collector violates the Act by repeatedly calling a consumer after being asked to stop, the consumer who received those calls can sue and seek damages in court. However, in recent years the U.S. Supreme Court has held that in order to sue in federal court, the person alleging the violation must also show that they suffered a “concrete injury,” distinct from the statutory violation. Following this definition, the consumer who was harassed by a debt collector would also have to prove they suffered a concrete harm (say, lost wages) before they can go to court. Meanwhile, the debt collector who knowingly broke the law sees no consequences.

This case is about whether the state of Wisconsin will continue to recognize that having statutory claims is enough to sue in state court or whether it will follow the federal courts and require concrete injuries to bring a lawsuit.

Summary and Legal Arguments

Franklin Collection Service, Inc. mailed Heather Gudex a letter attempting to collect a debt. The letter offered to settle the account and stated: “if you are not paying this account, contact your attorney regarding our potential remedies, and your defenses, or call (877) 264-2172,” and separately noted that “[w]hen this letter was mailed no attorney has personally reviewed your account.”

Ms. Gudex brought claims against Franklin under the Wisconsin Consumer Act and the Fair Debt Collection Practices Act, alleging that the letter’s representations implied a false threat to take legal action and confused her.

Franklin unsuccessfully argued that Ms. Gudex lacked standing because she had not suffered a concrete injury separate and apart from her allegations of statutory violations. Its argument relied on federal standing doctrine, which was recently narrowed by the U.S. Supreme Court’s decisions in Spokeo and TransUnion and no longer recognizes alleging a statutory violation as a sufficient basis for standing. The Wisconsin Circuit Court and Court of Appeals both held in Ms. Gudex’s favor, determining that federal courts’ interpretation of standing was “inapplicable to Wisconsin courts.” Now, Franklin successfully petitioned the Wisconsin Supreme Court for review on this standing issue, and a class-certification issue created by a Wisconsin statute. We represent Ms. Gudex in the appeal,

Core Legal Problem

Federal courts are continually making it harder to hold corporations accountable when they break the law by limiting the types of harms that establish standing to bring a lawsuit. In TransUnion v. Ramirez, 594 U.S. 413, 440-2 (2021), the U.S. Supreme Court held that, under the U.S. Constitution, “bare procedural violations” of statutes were insufficient to establish standing without additional “downstream consequences.” State courts, however, have largely held to the idea that breaking the law is a good enough reason to be held accountable in court. The Access to Justice Team is fighting to protect standing doctrine in state courts, particularly where it’s now barred in federal court by TransUnion and similar cases.