United States District Court, D. Kansas
MEMORANDUM AND ORDER
W. LUNGSTRUM UNITED STATES DISTRICT JUDGE
matter comes before the Court on defendants' motion to
dismiss plaintiff's claims (Doc. # 18) and
plaintiff's motion for leave to amend his complaint (Doc.
# 39). The Court grants plaintiff leave to
amend, and plaintiff shall file his proposed amended
complaint forthwith. As set forth below, the motion to
dismiss is granted in part and denied in
part. The motion is granted with respect to Counts
II, III, and IV of the amended complaint, and those claims
are hereby dismissed. The motion is denied with respect to
alleged in the complaint, on February 27, 2015, plaintiff
retained defendants to provide credit repair services. In
electronic form, defendants sent an agreement and other forms
and disclosures to plaintiff. Pursuant to the parties'
agreement, plaintiffs paid a “retainer” of $300
to defendants within seven days, before defendants had
completed the services promised in the agreement.
and on behalf of a putative class, plaintiff asserts four
claims against defendants, including three claims for
violations of the federal Credit Repair Organizations Act
(CROA), 15 U.S.C. §§ 1679-1679j. In Count I,
plaintiff alleges that defendants violated Section 1679b(b)
of the CROA by charging or receiving money before the
services for plaintiff were fully performed. In Count II,
plaintiff alleges that defendants violated Section 1679c(b)
by failing to provide a particular disclosure to plaintiff in
a separate document. In Count III, plaintiff alleges that
defendants violated Section 1679d(b)(4) by failing to include
in the disclosures to plaintiff certain language concerning a
cancellation right in a certain format. In Count IV,
plaintiff asserts a claim for breach of fiduciary duty under
state law. Defendants have moved to dismiss all claims under
Fed.R.Civ.P. 12(b)(1) for lack of standing and under
Fed.R.Civ.P. 12(b)(6) for failure to state a claim.
Motion for Leave to Amend
August 2, 2019, after the parties submitted additional
briefing requested by the Court concerning issues relating to
standing, plaintiff moved for leave to amend his complaint.
Plaintiff seeks to add allegations concerning his alleged
injuries in support of his arguments on standing.
to amend a complaint should be “freely” given
“when justice so requires.” See Fed. R.
Civ. P. 15(a)(2). “A district court should refuse leave
to amend only upon a showing of undue delay, undue prejudice
to the opposing party, bad faith or dilatory motive, failure
to cure deficiencies by amendments previously allowed, or
futility of amendment.” See Wilkerson v.
Shinseki, 606 F.3d 1256, 1267 (10th Cir. 2010) (internal
Court rejects defendants' argument that leave should be
denied on the basis of undue delay. The case is still at an
early stage, and the scheduling order's deadline for
amendments has not passed. Most importantly, defendants have
not identified any undue prejudice that they would suffer
from an amendment at this time. Indeed, the Court routinely
allows a party to amend in an attempt to cure pleading
deficiencies, and it would be more efficient in this
case to allow such an amendment before the Court rules on the
pending motion to dismiss.
also argue that plaintiff's proposed amendment would not
cure plaintiff's lack of standing and thus would be
futile. The Court deems it more efficient to address any such
arguments on the merits of the standing issue in the context
of ruling on defendants' motion to dismiss. All parties
have now had the opportunity to brief the effect of the
proposed amendments on plaintiff's standing. Accordingly,
the Court will allow the amendment and then consider the
arguments in defendants' motion to dismiss as asserted
against the allegations in the amended complaint. Plaintiff
is directed to file the proposed amended complaint forthwith.
Motion to Dismiss for Lack of Standing
Defendants move to dismiss plaintiff's claims for lack of
standing. A plaintiff invoking federal jurisdiction bears the
burden of establishing the following elements of standing:
“The plaintiff must have (1) suffered an injury in
fact, (2) that is fairly traceable to the challenged conduct
of the defendant, and (3) that is likely to be redressed by a
favorable judicial decision.” See Spokeo, Inc. v.
Robins, 136 S.Ct. 1540, 1547 (2016). “To establish
injury in fact, a plaintiff must show that he or she suffered
an invasion of a legally protected interest that is
“concrete and particularized” and “actual
or imminent, ” not conjectural or hypothetical. See
Id. at 1548 (internal quotations and citation omitted).
In this case, defendants argue only that plaintiff did not
suffer an injury in fact.
argues that he has alleged a financial injury, specifically
having to pay money before he should have been required to.
Plaintiff notes that any contract subject to the CROA that
does not comply with the statute's requirements shall be
treated as void. See 15 U.S.C. § 1679f(c).
Plaintiff further alleges and argues that he lost the time
value of the money that he paid before the services were
rendered. Plaintiff also argues that he suffered an
intangible injury because he did not receive the benefits of
the statutory provisions that defendants violated.
the Court concludes that the loss of the time value of money
that was paid before it should have been does constitute a
concrete injury for purposes of standing. Defendants do not
dispute that such an injury may satisfy the requirement of
standing (they argue only that such an injury has not been
properly alleged here). Multiple federal courts of appeal
have indicated that the loss of time value represents a
tangible injury, although they have done so in different
contexts. For instance, in Habitat Education Center v.
United States Forest Service, 607 F.3d 453 (7th Cir.
2010) (Posner, J.), the Seventh Circuit concluded a party had
standing to challenge a bond order on appeal even though the
bond had been returned, on the basis that the party had lost
the time value of the amount of the bond; the party
had suffered a loss, the Court held, because
“[e]very day that a sum of money is wrongfully
withheld, its rightful owner loses the time value of the
money - a loss of the use of the [bond amount].”
See Id. at 457. Subsequently, in Dieffenbach v.
Barnes & Noble, Inc., 887 F.3d 826 (7th Cir. 2018),
the Seventh Circuit confirmed that the loss of the time value
of money, even for three days, constituted an economic injury
that satisfied a particular statutory requirement of
“lost money or property.” See Id. at
829. Recently, the D.C. Circuit held that the forgone time
value of money (because of a delay in receiving tax refunds)
“is an actual, tangible pecuniary injury” and
thus satisfies a statute that requires “actual
damages” to have been suffered. See In re U.S.
Office of Personnel Mgmt. Data Sec. Breach Litig., 928
F.3d 42, 66 (D.C. Cir. 2019). District courts have cited such
cases in concluding that the loss of time value of money
satisfies the constitutional requirement of standing.
See, e.g., Porsch v. LLR, Inc., 380
F.Supp.3d 418, 424-25 (S.D.N.Y. 2019) (quoting
Habitat, 607 F.3d at 457; citing
Dieffenbach, 887 F.3d at 828); Santangelo v.
Comcast Corp., 2015 WL 3421156, at *3 (N.D. Ill. May 28,
2015) (citing Habitat, 607 F.3d at 457).
Court agrees with these courts that the loss of the time
value of money - even a small amount - constitutes a tangible
financial injury that satisfies the requirement of an injury
in fact for purposes of standing. The fact of such injury
from the loss of the use of money is an accepted economic
reality, and the Supreme Court has confirmed that “an
identifiable trifle” is enough of an injury to create
standing. See United States v. Students Challenging
Regulatory Agency Procs. (SCRAP), 412 U.S. 669, 689 n.14
(1973); see also American Humanist Ass'n, Inc. v.
Douglas County Sch. Dist. RE-1, 859 F.3d 1243, 1248
(10th Cir. 2017) (quoting SCRAP in rejecting
argument that the injury for standing must meet some
threshold level of pervasiveness).
order by which it requested additional briefing on this
issue, the Court noted the decision in Taylor v. Federal
Aviation Admin., 351 F.Supp.3d 97 (D.D.C. 2018), in
which the court rejected a standing argument based on the
loss of the time value of money. See Id. at 102-03.
In that case, the court declined to decide whether such an
injury could satisfy the requirement of an injury in fact for
purposes of standing, in light of its conclusion that such an
injury had not been properly alleged in that case. See
Id. In stating that the recognition of such an injury
for standing purposes is “far from well established,
” the court cited two cases; but in those cases the
courts did not consider the economic principle of the lost
time value of money, and merely held that a speculative claim
for interest on a refund that fully discharged a debt prior
to the lawsuit did not create standing. See Holaway v.
Protective Life Ins. Co., 2007 WL 2904162, at *2 (M.D.
Ga. Oct. 3, 2007); Amirhamzeh v. Chase Bank USA,
N.A., 2013 WL 7219270, at *4 (C.D. Cal. Oct. 7, 2013)
(citing Holaway). Neither did those courts consider
the Supreme Court's rejection of any de minimis
standard for standing in SCRAP. The Court is
persuaded that the loss of time value of money represents a
tangible economic injury and that such an “identifiable
trifle” is sufficient to confer standing.
Taylor, the court ultimately rejected the
plaintiff's standing argument because he had not alleged
any facts to suggest that if he had not paid the money at
issue he would have invested it to increase its value.
See Taylor, 351 F.Supp.3d at 103. Defendants here
similarly argue that plaintiff has not established standing
because he has not alleged that he would have invested the
$300 that he allegedly had to pay prematurely. The Court
rejects this argument. First, the cases cited in
Taylor in support of this holding are not actually
helpful here. See Id. (citing cases). In Kawa
Orthodontics, LLP v. Secretary, United States Department of
the Treasury, 773 F.3d 243 (11th Cir. 2014), the
plaintiff did not rely on the economic principle of the lost
time value of money that it paid to the defendant; rather,
the plaintiff cited the lost value of time and resources that
it expended because of the defendant's action, and the
court concluded that such an injury was too abstract. See
Id. at 246. In Barber v. Lincoln National Life
Insurance Co., 260 F.Supp.3d 855 (W.D. Ky. 2017),
aff'd, 722 Fed.Appx. 470 (6th Cir. 2018), the
plaintiff did not allege that he was injured because he lost
the time value of money. See Id. at 862.
case, plaintiff has specifically alleged (in his amended
complaint) that he suffered an injury in the form of the lost
time value of money. Nothing in the complaint makes such an
allegation implausible. Moreover, as the court in
Porsch noted, “[it] is a basic [principle] of
economics and accounting that a dollar today is worth more
than a dollar tomorrow, ” see Porsch, 380
F.Supp.3d at 424-25 (citation and internal quotation
omitted), and thus plaintiff suffered a concrete financial
injury if he was deprived the use of his money. Accordingly,
the Court concludes that plaintiff has standing to pursue the
claim asserted in Count I of his complaint. Moreover, that