Consumer Finance Litigation

The Eleventh Circuit Court of Appeals has issued its ruling on the motion for rehearing in Hunstein v. Preferred Collection and Management Services, Inc., Case No. 19-14434 but most of the troublesome aspects of the Court’s panel opinion remain.  In Hunstein, the Eleventh Circuit reversed the dismissal of a Fair Debt Collection Practices Act (“FDCPA”) lawsuit alleging that the Defendant, a debt collector, had violated third party disclosure prohibitions in the FDCPA by using a mail vendor to mail its dunning letters.  The Plaintiff’s theory is that the use of such vendors necessarily requires communications about the debtor and the debt to the vendor – a third party.  The District Court dismissed the complaint, arguing that the Defendant failed to demonstrate Article III standing to sue insofar as the disclosure had not resulted in an injury, relying extensively on the United States Supreme Court’s opinion in Spokeo, Inc. v. Robbins, 136 S. Ct. 1540 (2016).

However, in its original decision, the Eleventh Circuit reversed and found that the defendant had violated the FDCPA with its disclosures to its mailing vendor and that this resulted in sufficient intangible harm, such as an invasion of privacy, to survive a motion to dismiss. The opinion raised questions about the legality of various vendor services in the context of debt collection and prompted a flurry of interest in the motion for rehearing, including extensive amicus curie briefing.

Upon rehearing, and despite the United States Supreme Court’s intervening decision in Transunion LLC v. Ramirez, 141 S.Ct. 2190 (2021), the Eleventh Circuit largely stuck to its guns, stating:

We hold (1) that the violation of § 1692c(b) alleged in this

case gives rise to a concrete injury in fact under Article III, and

(2) that the debt collector’s transmittal of the consumer’s personal

information to its dunning vendor constituted a communication

“in connection with the collection of any debt” within the meaning

of § 1692c(b). Accordingly, we reverse the judgment of the district

court and remand for further proceedings.

In a spirited dissent, Judge Tjoflat notes that the majority has construed the exception to Spokeo for intangible harm resulting from statutory violations much too broadly.  Judge Tjoflat's dissent is noteworthy because he originally wrote with the majority prior to rehearing but “changed his mind” following the United States Supreme Court’s application of Spokeo in Ramirez.  Reading those opinions together, Judge Tjoflat observes that the majority opinion “goes off the rails because it ignores what [Ramirez] requires a plaintiff to allege in the context of an intangible harm—facts that allow us to find a common-law analog to the alleged statutory violation.”  When analogizing Hunstein’s claim to the common-law tort of public disclosure of private facts, Judge Tjoflat observes that several elements are missing including publishing the facts to the public at large, or that the disclosure was highly offensive to a reasonable person. Thus, Judge Tjoflat argues in dissent that the District Court was correct to dismiss the action.

It remains to be seen if this case will be litigated any further or if the United States Supreme Court has any appetite to revisit this area of law, having done so frequently over the last several years. However, given the immense implications Hunstein may have for the financial services industry, and the widespread interest in the case’s outcome as evidenced by the amicus briefing at the Eleventh Circuit, this may not be the last we hear of the Hunstein case.