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Defense Digest

Article III Standing Does Not Come from Violation of Statute Alone

Defense Digest, Vol. 28, No. 12, December 2022

December 1, 2022

by Holly M. Hamilton and Andrew J. Marchese

Key Points:

  • For a claim to survive in federal court, a plaintiff must have standing.
  • For there to be standing, there must be “concrete harm”/injury-in-fact, causation and redressability.
  • An intangible harm resulting from a statutory violation, with nothing more, requires comparison to a civil wrong for which courts traditionally impose liability, and, to survive, the violation of the statute must not be missing an element “essential to liability” under the comparator tort.

For a claim to survive in federal court, a plaintiff must have standing. For there to be standing, there must be “concrete harm”/injury-in-fact, causation and redressability. A statutory violation brings into question the concrete harm/injury-in-fact requirement. Many cases, especially in the Fair Debt Collection Practices Act (FDCPA) and Telephone Consumer Protection Act (TCPA) arena, have grappled with whether a statutory violation alone, with no further action or harm, constitutes concrete harm necessary for standing and for a lawsuit to survive.

In September 2022, in Hunstein v. Preferred Collection & Mgmt. Services, Inc., 48 F. 4th 1236 (11th Cir. 2022), the Eleventh Circuit Court of Appeals concluded that any statutory violation must be likened to the elements of a traditional common-law tort to assess whether concrete harm exists. In other words, an intangible harm resulting from a statutory violation, with nothing more, requires comparison to a civil wrong for which courts traditionally impose liability to survive.

However, the comparison of a statutory violation to a tort, for standing purposes, does not need to be exact. The important part in comparing the statutory violation to a tort is that the violation of the statute must not be missing an element “essential to liability” under the comparator tort.

In Hunstein, the plaintiff alleged that a creditor sent his unpaid medical bill information to a mail vendor, which then sent him a letter on behalf of the creditor reminding him of the debt. The district court dismissed Hunstein’s action for failure to state a claim. He appealed, and a three-judge panel of the 11th Circuit twice concluded, before and after the Supreme Court’s TransUnion decision, that the plaintiff had standing and reversed the district court’s dismissal. The en banc court then vacated the panel’s opinion to reconsider Hunstein’s standing.

In examining his complaint, Hunstein did not allege any concrete injury whatsoever. However, after the complaint was filed, Hunstein’s attorneys argued he experienced concrete injury analogous to the common-law tort of public disclosure. The majority opinion examined each element of a public disclosure tort to ascertain whether concrete harm existed in this case sufficient to survive dismissal. Ultimately, the appellate court decided that because the disclosure was not public in nature, a necessary element for the tort was missing. Without this element, the claim of concrete harm failed, and the complaint was remanded to the Middle District of Florida for dismissal without prejudice.

The lengthy dissent, written by Judge Kevin Newsom and joined by three other Judges, takes issue with the element-by-element approach used by the majority. The dissent states that it is wholly improper to use this approach in analyzing whether a plaintiff has standing to bring a claim under the FDCPA. Finally, the dissent accuses the majority of jumping to a conclusion, over-simplifying the standing issue and not dedicating sufficient effort to analyzing the complexities of standing.

In the future, defense counsel should be aware of and be on the lookout for statutory violation cases where the plaintiff, in alleging standing, links the alleged violation to some form of common-law tort. In so doing, whether the elements of the common-law tort are met to the degree necessary under the current law in this Circuit to implicate standing must be analyzed and evaluated before filing a response. Accordingly, we recommend practitioners monitor how the Hunstein decision is applied in future statutory violation cases.

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The Supreme Court of Ohio has clarified that an administrative appeal under Ohio Revised Code Chapter 2506 does not bar a separate action for damages and declaratory relief that could not have been pursued in the administrative appeal. The Ohio Supreme Court considered Sheetz, Inc. v. Centerville (2026-Ohio-3531) as a result of a certified question from the Southern District of Ohio. The question was whether Sheetz, the gas station/convenience store brand, was barred from seeking damages in a separate action since damages were not sought in their administrative appeal. Ultimately, the Ohio Supreme Court ruled that res judicata does not bar a separate action for damages after ruling on an administrative appeal because R.C. Chapter 2506 is limited to judicial review and cannot grant affirmative relief. The case arose after Centerville’s city council rejected a site plan proposed by Sheetz, Inc. that had received unanimous approval from the City’s planning commission. Sheetz filed an administrative appeal pursuant to R.C. 2506 in the Montgomery County Court of Common Pleas, and two months later filed a complaint for damages and declaratory relief under 42 USC § 1983 as a takings action with the city, city council, and other objectors as improper takings and a violation of due process, as well as interference with business and contractual relationship. The city and city council removed the § 1983 action for damages to federal court. Montgomery County Court of Common Pleas reversed the city council’s denial, and allowed the Sheetz project to move forward. Upon that ruling, the federal court issued a show-cause order questioning whether the § 1983 action was barred by the doctrine of res judicata via claim preclusion (which includes all theories of recovery).  Sheetz argued that Ohio courts of common pleas do not have authority to award damages or declaratory relief as party of the R.C. Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. Further, the Court held that Grava’s conclusion that a final judgment precludes additional litigation for different relief is inapplicable under this fact pattern because it was meant only to apply to those matters in which the plaintiff brings the exact same case twice, but for new relief. The Court found Grava was inapplicable because Sheetz could have requested damages or declaratory relief in the R.C. 2506 appeal. Therefore, Grava would be nothing more than dicta if it even did apply. Going further, the Ohio Supreme Court disavowed Sixth Circuit precedent which, in reliance on Grava and other district court decisions, permitted an owner to seeking relief under 42 U.S.C. § 1983 alongside an administrative appeal. See Moore v Hiram Twp., 988 F.3d 353 (6th Cir.2021). The Ohio Supreme Court found that the Sixth Circuit had disregarded a critical decision in Community Concerned Citizens, Inc. v. Union Twp. Bd. of Zoning Appeals, 1993-Ohio-115, which clearly held that a R.C. Ch. 2506 appeal cannot be combined with a complaint seeking other claims for relief. Id. at ¶ 11. To that end, the Ohio Supreme Court has determined that the decisions Moore relied on (outside of Grava) are no longer good law, and that Moore was wrongly decided. The decision draws a clear procedural boundary: Chapter 2506 provides judicial review of an administrative decision, not a forum for independent claims seeking affirmative relief. Although Grava may place claims arising from a single transaction within the potential scope of claim preclusion, those claims are not barred unless the complete claim-preclusion test is satisfied. Because Sheetz could not have pursued damages or declaratory relief in its Chapter 2506 appeal, the separate action was not precluded. The remaining question for practitioners looking to apply or defend against this exception is when does the statute of limitations begin to run on damages and declaratory relief claims related to an administrative decision on appeal? A takings action in federal court has a 2-year statute of limitations, or as a state claim, 4 years (like the other tortious claims raised therein). Correlating this case with others, an administrative appeal will not likely toll the statute of limitations on claims based on a final decision by a municipal authority. Therefore, practitioners should look for these cases to be brought simultaneously.

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