A panel of the Eleventh Circuit has once again held that a debt collector possibly violates the Fair Debt Collection Practices Act (FDCPA) by transmitting private information to a third-party commercial mail vendor.

In Hunstein v. Preferred Collection and Management Services Inc., a three-judge panel vacated a prior opinion that had sent shockwaves through the debt-collection and mailing industries only to cause more speculation as to whether the issue is ripe for review by the full court.

Background

The plaintiff in Hunstein alleged that a debt collector violated Section 1692c of the FDCPA when it sent information about a hospital debt he owed – name, balance, son’s medical treatment – to the defendant’s commercial mail vendor for purposes of creating, printing and mailing a letter demanding payment. Such outsourcing is routine practice in the debt collection industry.

The district court dismissed the complaint, holding that the debt collector’s communications did not constitute “an attempt to collect a debt” within the meaning of the FDCPA.

The Eleventh Circuit reversed, holding in Hunstein I that (1) the plaintiff had standing because the statutory violation pled bore a close resemblance to a common law tort of public disclosure of private facts; and (2) the transmission of specific information to its mail vendor was sufficiently related to its debt collection activity to fall within the FDCPA.

The Hunstein Effect
The panel in Hunstein I recognized that its ruling would upset the status quo in the industry and was unlikely to materially enhance consumer privacy protections, it nevertheless determined that its role was to interpret the law as Congress had written. Hunstein I opened the floodgates to new consumer lawsuits that have prompted the debt collection industry to reconsider standard outsourcing practices and pleas for regulators to intervene. See Regulation F. A flurry of amicus briefs from the debt collection and mail vendor industry have called for review by the full Eleventh Circuit.

TransUnion LLC v. Ramirez
The landscape changed this summer when the U.S. Supreme Court decided TransUnion LLC v. Ramirez, where the Court explored the limits of when harm is concrete for purposes of Article III standing. In a footnote, the Supreme Court seemingly weighed in on the Hunstein decision stating “Nor have [American courts] necessarily recognized disclosures to printing vendors as actionable publications … for purposes of the tort of defamation.” 141 S. Ct. 2190, n. 6 (2021).

Panel Rehearing Split Decision

While requests for a full court review was pending, two of the three judges on the Eleventh Circuit panel doubled down on the earlier decision. Finding that the while TransUnion appears to be in “some tension” with its earlier decision, they concluded that the Supreme Court’s decision overall reaffirms that the plaintiff in Hunstein has standing.

The panel majority in Hunstein II noted that the Supreme Court has emphasized that a statutory harm did not need to have an “exact duplicate” of the common law tort, and drew a distinction that a plaintiff “need only show that his alleged injury is similar in kind to the harm addressed by a common law cause of action, not that it is similar in degree.”

In a sharp critique, the dissent stated that the panel majority’s analysis “goes off the rails,” and “sweeps much more broadly” than TransUnion would permit. The dissent noted that TransUnion requires a plaintiff to allege sufficient facts to find a common law counterpart and that debt collector’s communication to its vendor was not public and did not satisfy the first element of the tort of public disclosure of private facts.

Recognition by the panel that its decision will upset the applecart, combined with a critical dissent and an industry unsure whether it needs to completely restructure standard practices at minimum signal a need for the full Eleventh Circuit to accept review. While there remains to be an uptick in consumer litigation, debt collectors and mail vendor professionals should continue to monitor the ongoing developments.

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