Consumer Finance Litigation

The latest update surrounding Hunstein v. Preferred Collection and Management Services, Inc., Case No. 19-14434 centers not on the Eleventh Circuit or the Hunstein decision itself but on the district courts nationwide that are considering numerous copycat cases relying on the Hunstein reasoning.

In one such recent case, Nabozny v. Optio Solutions, LLC, Case No. 21-cv-297-jdp, 2022 WL 293092 (W.D. Wis. Feb. 1, 2022), a district judge from the Western District of Wisconsin considered, and rejected, the plaintiff’s Hunstein argument, finding that Hunstein lacked persuasive authority given the recent vacatur pending a rehearing en banc. The facts in this case are nearly identical to those in all of the copycat cases being filed—the plaintiff alleged that the defendant shared information about her debt to a third party letter vendor by communicating the existence of the debt, the amount owed, the alleged creditor, and the plaintiff’s name and address. Based on these allegations, the plaintiff claimed that the defendant had violated the FDCPA by communicating about her debt with an unpermitted third party.

The court first held that the plaintiff did not have standing to bring this claim because she did not suffer a concrete harm. The plaintiff attempted to analogize her harm to the common-law tort of invasion of privacy, but the court stated that a broad relation to invasion of privacy was insufficient to satisfy the standing requirement from Spokeo, Inc. v. Robbins, 578 U.S. 330 (2016) and TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). Instead, the plaintiff must analogize the harm to one of the specific torts encompassed by invasion of privacy. Considering the tort of publicity given to private life, which the court recognized was the closest tort to plaintiff’s claim, the court held that there was insufficient “publicity” where the information was not disclosed to the public at large. Interestingly, the court cited and relied on a footnote from Ramirez, which was also cited in Judge Tjoflat’s dissent in the most recent Hunstein opinion. While dicta, the footnote suggested that disclosure to a third-party printing vendor was insufficient publication for a defamation claim. Both Judge Tjoflat and the judge in Nabozny found that this footnote provided insight that the court would similarly find insufficient publication here.

Finally, the court also held that Congress did not intend to protect the harm identified by plaintiff under the FDCPA. In so holding, the court relied on the text of the FDCPA as well as legislative history disclosing the privacy interest Congress was most concerned with protecting: “disclosing a consumer’s personal affairs to friends, neighbors, or an employer.” The court also pointed to the inaction of the Consumer Financial Protection Bureau. Despite the CFPB’s knowledge of the widespread use of third-party vendors by debt collection companies, it did not address the practice in its most recent updates to the regulations implementing the FDCPA. Thus, the court rejected the Hunstein opinion and dismissed the case based on lack of standing.

This recent opinion provides insight into the way that district courts are handling these copycat cases while the status of Hunstein is still unsettled, but it remains to be seen whether courts will change their approach after Hunstein is finally resolved. Oral arguments in Hunstein are scheduled for February 22, 2022. We may begin to get more answers in the coming months.

Written by Alan D. Leeth and Ryli Wallace Leader.