On March 15, Judge Eve M. Reilly of the Circuit Court of Cook County, Illinois, dismissed a class action complaint based solely on the allegation that a collection letter was sent by a third-party letter vendor.
In Stallworth v. Terrill Outsourcing Group, LLC et al, the plaintiff alleged that the debt collector communicated her private information to a third-party without her consent in violation of § 1692c(b) of the Fair Debt Collections Practices Act (FDCPA). While the court found that the plaintiff had standing in Illinois to bring her claim, it granted the defendants’ motion to dismiss holding the alleged communication by the debt collector to the letter vendor was not made in connection with the collection of a debt.
The plaintiff received a collection letter from the debt collector containing information about her debt. The letter was allegedly sent by a third-party letter vendor. The plaintiff alleged that the debt collector violated the FDCPA by communicating her private information to a third-party à la Hunstein. The defendants immediately removed the case to federal court, but, after the plaintiff stipulated she suffered no actual damages, the case was remanded.
Following Illinois precedent, the court found the plaintiff had standing to pursue statutory damages based on a purely statutory violation. The court next turned its analysis to § 1692c, which states “a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer.” The court noted that the wording of the statute does not apply to every third-party communication. Following a list of factors offered by the Seventh Circuit to determine whether a communication is made in connection with the collection of a debt, the court found: 1) the plaintiff did not allege the defendant made a demand for payment when it conveyed the plaintiff’s personal information to the letter vendor; 2) the nature of the parties’ relationship shows that the purpose of the communication was not to induce payment; and 3) the purpose and context of the communication was not intended to induce payment. “Even in construing the facts in a light most favorable to [the plaintiff], it is clear that [the defendants’] communication to the letter vendor was not made in connection with the collection of a debt.”
While some may find the decision finding standing disappointing, this opinion should prove helpful in defending lawsuits based on a Hunstein theory on the merits regardless of the venue, but in particular within the states comprising the Seventh Circuit (Illinois, Indiana and Wisconsin), which is particularly important given the increasing number of these cases proceeding in state courts throughout the country.
