Last week, the Eleventh Circuit vacated its most recent opinion in the debt-collection case Hunstein v. Preferred Collection & Management Services, Inc., No. 19-14434. The court will re-hear en banc an appeal involving a plaintiff-debtor’s claim that a debt collector violated the Fair Debt Collection Practices Act (“FDCPA”) by transmitting the debtor’s sensitive debt information to the employees of a third-party mailing vendor for the purposes of creating, printing and mailing a notification to the debtor.
The upcoming re-hearing by the entire court represents the second reconsideration of an appeal from the district court order dismissing the action for failure to state a claim.
In a unanimous (and controversial) opinion published this spring, a three-judge panel for the Eleventh Circuit reversed the dismissal. Hunstein v. Preferred Collection & Mgmt. Servs., Inc., 994 F.3d 1341 (11th Cir. 2021). At that time, the panel concluded that the debtor had alleged an injury sufficiently concrete to confer standing—i.e., the right to make a legal claim or seek judicial enforcement of a duty or right—under Spokeo, Inc. v. Robins, 578 U.S. 330 (2016). However, this summer, the United States Supreme Court decided TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), further clarifying when an intangible injury resulting from a statutory violation is sufficiently concrete for standing purposes.
In light of TransUnion LLC v. Ramirez, and upon consideration of a petition for re-hearing, the same panel vacated its prior opinion and substituted a new one last month. Hunstein v. Preferred Collection & Mgmt. Servs., Inc., __ F.4th __, 2021 WL 4998980 (11th Cir. Oct. 28, 2021). A majority of the panel once again concluded that (1) the alleged transmission of sensitive debt information to a third-party mailing vendor constituted a concrete injury-in-fact, and (2) the debtor had adequately stated a claim for relief under the FDCPA. However, the panel was not unanimous: Judge Tjoflat dissented sharply on the question of standing and asserted that Congress did not intend for the FDCPA to prohibit the use of mailing vendors by creditors.
Judge Tjoflat is not alone. Several courts outside of the Eleventh Circuit have questioned the Hunstein panel’s standing analysis in light of the Supreme Court’s Ramirez decision. See, e.g., Shields v. Prof’l Bureau of Collections of Md., Inc., 2021 WL 4806383 (D. Kan. Oct. 14, 2021); In re FDCPA Mailing Vendor Cases, 2021 WL 3160794 (E.D.N.Y. July 23, 2021). Moreover, the Eleventh Circuit’s decision to re-hear the case en banc itself suggests that a significant contingent of the Circuit’s judges have doubts regarding the Hunstein panel’s decision.
The upcoming re-hearing may represent a boon for the debt-collection industry. Debt collectors regularly use third-party entities to facilitate communications with debtors, and the Hunstein panel’s analysis casts doubt upon the legality of that practice. Indeed, the panel itself conceded that its interpretation of the FDCPA “runs the risk of upsetting the status quo in the debt-collection industry” by stifling a common industry practice and imposing new costs that “may not purchase much in the way of ‘real’ consumer privacy.” 994 F.3d at 1352. These concerns will no doubt weigh upon the Eleventh Circuit when it convenes to re-hear the case en banc.
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