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Barclift v. Keystone Credit Servs., LLC, 2024 U.S. App. LEXIS 3796 (3rd Cir. February 16, 2024) (Freeman, C.J.).

To facilitate its efforts to collect a debt, Keystone Credit Services, LLC (“Keystone”) sent Paulette Barclift’s personal information to a mailing vendor, RevSpring, which then mailed Keystone’s collection notice to Barclift. Barclift did not authorize Keystone’s communications to RevSpring. So she sued Keystone for an unauthorized communication with a third party in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and she sought to represent a class of similarly situated plaintiffs. The District Court found that Barclift did not allege an injury sufficient to establish standing for purposes of Article III of the United States Constitution and dismissed her suit with prejudice. We agree that Barclift lacks standing, but we will modify the District Court’s order so that the dismissal will be without prejudice.

Congress enacted the FDCPA in 1977 to “eliminate abusive debt collection practices by debt collectors” that had contributed to “personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” 15 U.S.C. §§ 1692(a), (e). To that end, section 1692c(b) prohibits debt collectors from “communicat[ing], in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector” “without the prior consent of the consumer.” 15 U.S.C. § 1692c(b). And it creates a civil cause of action for any individual who sustains damages due to a debt collector’s violation of the Act. 15 U.S.C. § 1692k.

To determine the “concreteness” of intangible injuries, TransUnion instructs us to ask “whether the asserted harm has a ‘close relationship’ to a harm traditionally recognized as providing a basis for a lawsuit in American courts—such as physical harm, monetary harm, or various intangible harms including (as relevant here) reputational harm.” 594 U.S. at 417. TransUnion speaks only of harms, not elements. Indeed, the word “element” does not appear once in the body of the TransUnion opinion. We believe that if the Court wanted us to compare elements, it would have simply said so. So when asking whether a plaintiff’s intangible injury is “concrete,” we will examine the kind of harm at issue.

Here, Barclift alleged that Keystone transmitted her information to RevSpring for one purpose: “to fashion, print, and mail debt collection letters.” Appx. 39. She also alleged that she was “embarrassed and distressed” by the disclosure to RevSpring. Appx. 46. But she did not allege that anyone outside of Keystone or RevSpring accessed her personal information. In short, she alleged that Keystone transmitted her personal information to “a single ministerial intermediary,” Nabozny, 84 F.4th at 736, causing her embarrassment.

Barclift cannot show that she has suffered a concrete injury due to anticipated harm. As a general matter, “[a]llegations of ‘possible future injury’ are not sufficient to satisfy Article III” in a suit for damages. Reilly v. Ceridian Corp., 664 F.3d 38, 42 (3d Cir. 2011) (quoting Whitmore v. Arkansas, 495 U.S. 149, 158, 110 S. Ct. 1717, 109 L. Ed. 2d 135 (1990)); see TransUnion, 594 U.S. at 437 (“Spokeo did not hold that the mere risk of future harm, without more, suffices to demonstrate Article III standing in a suit for damages.”). For a material risk of future harm to be concrete, a plaintiff must show that she was “independently harmed by [her] exposure to the risk itself.” TransUnion, 594 U.S. at 437. In TransUnion, it was not enough that “[the credit report company] could have divulged [the plaintiffs’] misleading credit information to a third party at any moment.” Id. at 438. Similarly, the mere assertion that RevSpring’s employees could access and broadcast Barclift’s personal information to the public is far too speculative to support standing. And even though RevSpring suffered a prior data breach in 2014, Barclift has not alleged facts supporting an inference of “a sufficient likelihood that [RevSpring] would . . . intentionally or accidentally release [her] information to third parties.” Id. Without an actual, materialized injury, “we cannot simply presume a material risk of concrete harm” absent a “serious likelihood of disclosure.” Id. (quoting Ramirez v. TransUnion, 951 F.3d 1008, 1040 (9th Cir. 2020) (McKeown, J., concurring in part and dissenting in part)).

In sum, the type of injury Barclift alleged “is not remotely analogous to the harm caused by the tortious public dissemination of sensitive facts about another’s private life.” Nabozny, 84 F.4th at 737-38 (emphasis omitted). Information transmission that neither travels beyond a private intermediary nor creates a sufficient likelihood of external dissemination cannot compare to a traditionally recognized harm that depends on the humiliating effects of public disclosure. Therefore, we conclude that Barclift lacks a concrete injury and cannot establish Article III standing.

Although the District Court correctly held that Barclift lacked a concrete injury, it erred in dismissing her complaint with prejudice. “Because the absence of standing leaves the court without subject matter jurisdiction to reach a decision on the merits, dismissals ‘with prejudice’ for lack of standing are generally improper.” Cottrell v. Alcon Lab’ys, 874 F.3d 154, 164 n.7 (3d Cir. 2017). That general rule applies here, so we will modify the District Court’s order to dismiss the complaint without prejudice and affirm that order as modified.