Sprint Communications Co. v. APCC Services, Inc.
128 S.Ct. 2531, 2008 U.S. LEXIS 5034, 171 L. Ed. 2d 424 (2008)
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Rule of Law:
An assignee of a legal claim for money owed has Article III standing to sue in federal court, even if the assignee has a contractual obligation to remit all litigation proceeds to the assignor.
Facts:
- Long-distance communications carriers, such as Sprint Communications Co., are required by federal law to compensate payphone operators for certain 'dial-around' calls.
- Many carriers failed to pay the required compensation, leaving the payphone operators with legal claims for money owed.
- Approximately 1,400 payphone operators assigned their legal claims for this unpaid compensation to billing and collection firms, known as 'aggregators,' including APCC Services, Inc.
- The assignment agreements transferred 'all rights, title and interest' in the claims to the aggregators for the purpose of collection.
- The agreements also appointed the aggregator as the payphone operator's 'true and lawful attorney-in-fact.'
- Separately from the assignment, the aggregators contractually agreed to remit all proceeds recovered from the litigation back to the respective payphone operators.
- The payphone operators agreed to pay the aggregators a fee for their collection services, which was not contingent on the outcome of the litigation.
Procedural Posture:
- The aggregators (respondents) filed lawsuits in the U.S. District Court for the District of Columbia seeking compensation from Sprint and other carriers (petitioners).
- The carriers filed a motion to dismiss, arguing the aggregators lacked Article III standing.
- The District Court initially granted the motion, but on reconsideration, it reversed its decision and held that the aggregators had standing.
- The carriers appealed to the U.S. Court of Appeals for the D.C. Circuit. A divided panel initially held the aggregators had standing but that the statute did not create a private right of action.
- The aggregators sought certiorari from the U.S. Supreme Court on the statutory question. The Supreme Court granted the petition, vacated the judgment, and remanded in light of Global Crossing Telecommunications, Inc. v. Metrophones Telecommunications, Inc.
- On remand, the Court of Appeals affirmed the District Court's order allowing the litigation to proceed.
- The carriers then successfully petitioned the U.S. Supreme Court for a writ of certiorari on the question of Article III standing.
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Issue:
Does an assignee of a legal claim for money owed, who has promised to remit the proceeds of the litigation to the assignor, have standing to sue in federal court under Article III?
Opinions:
Majority - Justice Breyer
Yes, an assignee of a legal claim for money owed has standing to sue in federal court, even if they have promised to remit all proceeds to the assignor. The Court's reasoning is twofold. First, there is a long and 'well nigh conclusive' historical tradition, both in English and American courts, of permitting assignees—including assignees for collection only—to bring suit on the claims to which they hold legal title. Such lawsuits are 'cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process.' Second, such an assignee satisfies the modern three-part test for standing. Citing Vermont Agency of Natural Resources v. United States ex rel. Stevens, the Court affirmed that an assignment can transfer the assignor's 'injury in fact' to the assignee. The injury is redressable because a favorable court decision would compel the defendant to pay the money owed on the claim, satisfying the injury. The redressability inquiry focuses on whether the injury is remedied, not on what the plaintiff ultimately does with the recovery.
Dissenting - Chief Justice Roberts
No, an assignee who has no right to the substantive recovery lacks Article III standing. The dissent argues that the 'irreducible constitutional minimum' of standing requires the plaintiff to have a direct, personal stake in the outcome of the litigation. Because the aggregators must remit all proceeds, a favorable judgment does not provide them with any tangible, personal benefit. The majority's view of redressability is incorrect; the inquiry must focus on whether the injury to the complaining party is redressed, and here the entire relief runs to a party not before the court. Furthermore, the historical tradition is not as clear as the majority portrays; 19th-century state courts were deeply divided on whether assignees for collection could sue, meaning there is no unbroken tradition informing the original meaning of Article III. The majority's decision improperly turns a legal claim into a 'marketable commodity,' severing the right to sue from the right to recover.
Analysis:
This decision solidifies the standing of assignees, particularly in the context of 'collection-only' assignments that are common in commercial litigation. By prioritizing a long historical tradition and the formal transfer of legal title over a beneficial interest in the outcome, the Court provides a clear and practical rule. This holding validates the business model of collection agencies and other claim aggregators, allowing them to efficiently pursue numerous small claims in a single action. However, the sharp dissent highlights a fundamental jurisprudential divide on the nature of the 'personal stake' requirement, suggesting that future standing cases involving representative or assigned claims will continue to be contentious.
