Case: 16-60640   Document: 00514061046        Page: 1   Date Filed: 07/06/2017




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT

                                                                   United States Court of Appeals

                                    No. 16-60640
                                                                            Fifth Circuit

                                                                          FILED
                                                                       July 6, 2017
RONALD SAYLES,                                                       Lyle W. Cayce
                                                                          Clerk
             Plaintiff - Appellee

v.

ADVANCED RECOVERY SYSTEMS, INCORPORATED,

             Defendant - Appellant




                Appeal from the United States District Court
                  for the Southern District of Mississippi


Before SMITH, PRADO, and GRAVES, Circuit Judges.
JAMES E. GRAVES, JR., Circuit Judge:
      Appellant Advanced Recovery Systems, Inc. (“ARS”) appeals the district
court’s grant of summary judgment to Appellee Robert Sayles on grounds that
ARS violated § 807(8) of Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692e(8). We AFFIRM the district court’s judgment.


                               BACKGROUND
      ARS is a consumer debt-collection agency. In June and September 2013,
ARS sent Sayles notices regarding two allegedly unpaid debts to St. Dominic’s
Hospital in Jackson, Mississippi. Sayles does not remember receiving the
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notices. He contends that he first became aware of the unpaid debts in
February 2014 when he ran his credit report.
       On March 5, 2014, Sayles faxed a letter to ARS, disputing the validity of
the debts. 1 He received no response. On April 16, 2014, Sayles ran his credit
report again. The new report showed that ARS had updated his debt
information after receiving his dispute letter, but it had failed to mark the St.
Dominic’s debts as “disputed.” Sayles sued ARS, alleging that it had violated §
807(8) of the FDCPA.
       After Sayles initiated his claim, the parties engaged in discovery and
filed cross-motions for summary judgment. During a status conference, the
parties represented to the district court that no factual issues remained. The
court then dismissed the parties’ cross-motions for summary judgment without
prejudice and directed them to brief the sole remaining legal issue: “[W]hether
a violation of [§ 807(8)] is contingent upon compliance with the validation and
dispute requirements contained in [§ 809 of the FDCPA,] 15 U.S.C. § 1692g.”
On August 26, 2016, the district court entered judgment for Sayles, finding
that ARS had violated § 807(8) of the FDCPA, and that § 807(8) does not
incorporate the validation and dispute requirements found in § 809. ARS
timely appeals from the district court’s judgment.


                             STANDARD OF REVIEW
       We review a grant of summary judgment de novo, applying the same
standard as the district court. See Gen. Universal Sys., Inc. v. HAL, Inc., 

, 448 (5th Cir. 2007).




       1 Sayles’ letter stated: “Be advised, this is not a refusal to pay, but a notice sent
pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809(b) that your claim
is disputed and validation is requested.”
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                                 DISCUSSION
      ARS contends that the district court granted summary judgment to
Sayles sua sponte without following the procedures stated in Fed. R. Civ. P.
56(f). ARS also contends that the district court erred by finding that ARS had
violated § 807(8). Finally, ARS contends that, even if it violated § 807(8), Sayles
did not suffer a concrete injury, and thus he lacked Article III standing to bring
the suit. None of these arguments are persuasive.


      I.    The district court did not violate Fed. R. Civ. P. 56(f)

      The district court did not violate Rule 56(f), which states that “[a]fter
giving notice and a reasonable time to respond, the court may . . . consider
summary judgment on its own after identifying for the parties material facts
that may not be genuinely in dispute.” “[D]istrict courts are widely
acknowledged to possess the power to enter summary judgments sua sponte,
so long as the losing party was on notice that she had to come forward with all
of her evidence.” Celotex Corp. v. Catrett, 

, 326 (1986). Here, the
district court gave the parties adequate notice of, and a reasonable time to
respond to, its intention to consider summary judgment. It did so by dismissing
the parties’ cross-motions for summary judgment and directing them to submit
simultaneous briefing on the sole remaining legal issue: whether § 807(8) is
contingent upon compliance with the validation and dispute requirements
contained in § 809.
      Furthermore, even assuming arguendo that the district court erred, “the
harmless error doctrine applies to lack of the notice required by” Rule 56(f).
See Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 

, 1398 (5th Cir. 1994) (quoting Powell v. United States, 

,
1580 (5th Cir. 1988)). In the Rule 56(f) context, an “error in notice is harmless

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if the nonmoving party admits that he has no additional evidence . . . .” 

849 F.2d at 1582). Here, before the district court ruled in
Sayles’ favor, ARS represented that no factual disputes remained. Because
ARS “admit[ted] that [it] ha[d] no additional evidence,” any error was
harmless. 

failure to communicate to credit bureaus that Sayles
            disputed his debts violated § 807(8) of the FDCPA, 15 U.S.C.
            § 1692e(8)

      The district court did not err when it found that ARS violated § 807(8) of
the FDCPA. Section 807(8) states that a debt collector may not
“[c]ommunicat[e] or threaten[] to communicate to any person credit
information which is known or which should be known to be false, including
the failure to communicate that a disputed debt is disputed.” ARS concedes
that it failed to communicate to credit bureaus that Sayles’ “disputed debt
[was] disputed.” 

however, that it did not have to report the
dispute to credit bureaus, because § 807(8) incorporates § 809’s debt dispute
and validation requirements, and Sayles did not satisfy those requirements.
      While ARS is correct that Sayles did not satisfy § 809’s requirement that
consumers must dispute their debts in writing within thirty days after
receiving notice from a debt collector, that requirement does not carry over to
§ 807(8). In Brady v. Credit Recovery Co., Inc., 

, 67 (1st Cir. 1998),
the First Circuit correctly stated that, while § 809 gives requirements for when
a debt collector must verify and cease collecting on disputed debts, § 807(8)
“merely requires a debt collector who knows or should know that a given debt
is disputed to disclose its disputed status to persons inquiring about a
consumer’s credit history.”



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       Moreover, the plain language of § 807(8) contradicts ARS’s argument
that the requirements in § 809 carry over to § 807(8). In Brady, the First
Circuit explained:
              If the meaning of “disputed debt” as used in [FDCPA §
              809(b), 15 U.S.C.] § 1692g(b) carried over to [FDCPA §
              807(8), U.S.C.] § 1692e(8), then, in order to trigger the
              limited protection of [§ 807(8)], a consumer would be
              required to submit written notice to a debt collector
              within the initial thirty-day period. But the plain
              language of [§ 807(8)] requires debt collectors to
              communicate the disputed status of a debt if the debt
              collector “knows or should know” that the debt is
              disputed. This “knows or should know” standard
              requires no notification by the consumer, written or
              oral, and instead, depends solely on the debt collector’s
              knowledge that a debt is disputed, regardless of how
              or when that knowledge is acquired. Applying the
              meaning of “disputed debt” as used in [§ 809(b)] to [§
              807(8)] would thus render the provision’s “knows or
              should know” language impermissibly superfluous.

809’s debt dispute and verification requirements do not carry
over to § 807(8), the district court did not err. 2 

satisfies the elements of Article III standing

       The district court did not err when it found that Sayles satisfied the
elements of Article III standing. For a plaintiff to have standing, she “must
have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged



       2 The plain language of § 807(8) also contradicts ARS’s broader argument that myriad
regulations related to consumer protection, including the Consumer Credit Protection Act
(“CCPA”), 15 U.S.C. §§ 1601-1693r, evidence Congress’s intent “to protect consumers against
disputed debts only where the dispute was material.” “[W]here the language of an enactment
is clear, and construction according to its terms does not lead to absurd or impracticable
consequences, the words employed are to be taken as the final expression of the meaning
intended.” United States v. Mo. Pac. R.R. Co., 

, 278 (1929). Here, § 807(8) clearly
required that ARS communicate to credit bureaus that Sayles’ disputed debt was disputed.
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conduct of the defendant, and (3) that is likely to be redressed by a favorable
judicial decision.” Spokeo, Inc. v. Robins, 

, 1547 (2016). ARS
concedes that the district court correctly determined that Sayles satisfied the
second and third prongs. But ARS claims that Sayles did not suffer, nor did he
risk suffering, a concrete injury as is required under Spokeo.
         In 

, the Supreme Court reiterated that “[a]
‘concrete’ injury must be ‘de facto’; that is, it must actually exist.” However, it
also stated that “’[c]oncrete’ is not . . . necessarily synonymous with ‘tangible.’”

Instead, “the violation of a procedural right granted by statute can
be sufficient in some circumstances to constitute injury in fact.” 

circumstances are cases where a statutory violation creates the ‘risk of
real harm.’” Bowse v. Portfolio Recovery Assocs., LLC, 

, 749
(N.D. Ill. 2016) (quoting 

). Here, ARS’s § 807(8)
violation exposed Sayles to a real risk of financial harm caused by an
inaccurate credit rating. See 

; see also Bowse, 218 F.
Supp.3d at 749 (“Unlike an incorrect zip code, the ‘bare procedural violation’
in Spokeo, an inaccurate credit rating creates a substantial risk of harm.”).
Consequently, the district court did not err when it determined that Sayles’
injury was concrete and that he satisfied all elements of standing. See 

.


                                 CONCLUSION
         For the reasons stated above, we AFFIRM the judgment of the district
court.




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