Eleventh Circuit orders en banc rehearing in Hunstein

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On November 17, a majority of the active judges of the U.S. Court of Appeals for the Eleventh Circuit issued an order sua sponte to rehear Hunstein v. Preferred Collection and Management Services, Inc., en banc.  The order also vacates the October 28 opinion, meaning that the opinion is no longer binding precedent in the Eleventh Circuit.  The Eleventh Circuit will next state the specific issues on which it requests briefing and establish the timing for rehearing en banc.

In the original opinion, a unanimous three-judge panel in Hunstein ruled that a debt collector may violate §1692c(b) of the Fair Debt Collection Practices Act (FDCPA) by transmitting private information to a third-party commercial mail vendor.  Such an action thereby created a “concrete injury” giving the consumer necessary Article III “standing” to sue the debt collector for damages.  In a later substitute opinion, the same panel – in a 2-1 split – reaffirmed its original holding in light of the U.S. Supreme Court’s intervening decision in TransUnion v. Ramirez in the panel’s standing analysis.  In dissent, Judge Tjoflat argued that the majority’s decision conferred standing too broadly in light of Ramirez and that Congress did not intend for a violation of FDCPA §1692c(b) to create standing in the absence of actual damages.  The defendant-debt collector again petitioned the full Eleventh Circuit with a request to hear the case again, and this week, the Eleventh Circuit agreed to rehear the case en banc.

Putting It Into Practice:  The impact of Hunstein has upended the debt collection landscape where the decision has led to hundreds of new lawsuits, including class actions, against debt collectors for what many consider harmless and industry-standard practices of sending data to third-party vendors to have debt collection letters printed and mailed.  For the time being, however, debt collectors can breathe a sigh of relief as the full circuit plans to rehear the case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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