In a surprise move last week, the Eleventh Circuit vacated its prior ruling in Hunstein but nevertheless doubled down on in a decision that will continue to allow the new wave of claims under the Fair Debt Collection Practices Act (“FDCPA”) to continue in federal courts. Read on to learn more and what it means for the debt collection industry going forward assuming this 2-1 decision stands.
A Recap of the Eleventh Circuit’s Ruling in Hunstein I
First, let’s review Hunstein I. 994 F.3d 1341 (11th Cir. 2021).
Recall that earlier this year in Hunstein v. Preferred Collection and Management Services, Inc., the Eleventh Circuit issued a ground breaking decision concerning application Section 1692c(b) of the Fair Debt Collection Practices Act (“FDCPA”). Plaintiff incurred a debt to a hospital arising out of his son’s medical treatment. The hospital then assigned the debt to a debt collector. The debt collector in turn hired a California-based commercial mail vendor to handle the collection. The debt collector transmitted certain information about Plaintiff to the mail vendor. This included, among other categories of information: (1) his status as a debtor, (2) the exact balance of his debt, (3) the entity to which he owed the debt, (4) that the debt concerned his son’s medical treatment, and (5) his son’s name. The mail vendor used that information to generate and send a dunning letter to Plaintiff.
Plaintiff filed suit, alleging violations of Florida consumer protection law and the FDCPA. The district court, however, dismissed the Complaint for failure to state a claim, concluding that Plaintiff had not sufficiently alleged that the debt collector’s transmittal to the mail vendor violated Section 1692c(b) of the FDCPA. According to the court, this was because it did not qualify as a communication “in connection with the collection of a[ny] debt.” The Eleventh Circuit reversed. In a case of first impression, the Court first held that Plaintiff had alleged a concrete statutory injury under Section 1692c(b) for purposes of satisfying Article III, even where he had not alleged a “risk of real harm” or a “tangible harm,” such as a financial loss or emotional distress.
The Court additionally held that a debt collector’s transmittal of a consumer’s personal information to its letter vendor constituted a prohibited third-party communication “in connection with the collection of any debt” as used in the FDCPA. This determination was based on the plain meaning of the phrase “in connection with” and its cognate word, “connection.” In light of the information about Plaintiff that was transmitted, the Eleventh Circuit found it “inescapable” that the communication at issue “at least ‘concerned,’ was ‘with reference to,’ and bore a ‘relationship [or] association’ to its collection of [Plaintiff’s] debt.” As such, Plaintiff had alleged a communication “‘in connection with the collection of any debt’ as that phrase is commonly understood.”
The Supreme Court’s Ruling in TransUnion and Relation to Hunstein I
Following Hunstein I, which came out in April 2021, the Supreme Court decided TransUnion in June 2021. In Ramirez v. TransUnion, the Supreme Court reconsidered the question of what constitutes an “injury in fact” under Article III, five years after its significant holding in Spokeo, Inc. v. Robins, 136 S. Ct. 1540. The Supreme Court held that “[o]nly plaintiffs concretely harmed by a defendant’s statutory violation have Article III standing to seek damages against that private defendant in federal court.” (emphasis added). The Supreme Court reaffirmed that “Article III standing requires a concrete injury even in the context of a statutory violation” and it was not the case that “a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” As the Supreme Court explained, “[a]n injury in law is not an injury in fact.”
In a footnote in TransUnion, the Supreme Court additionally addressed (as relevant to Hunstein) the Plaintiffs’ argument that “TransUnion ‘published’ the class members’ information internally—for example, to employees within TransUnion and to the vendors that printed and sent the mailings that the class members received.” The Supreme Court held that argument had been forfeited and in any event was “unavailing.” This was because:
Many American courts did not traditionally recognize intra-company disclosures as actionable publications for purposes of the tort of defamation. Nor have they necessarily recognized disclosures to printing vendors as actionable publications. Moreover, even the plaintiffs’ cited cases require evidence that the defendant actually “brought an idea to the perception of another,” and thus generally require evidence that the document was actually read and not merely processed. That evidence is lacking here. In short, the plaintiffs’ internal publication theory circumvents a fundamental requirement of an ordinary defamation claim—publication—and does not bear a sufficiently “close relationship” to the traditional defamation tort to qualify for Article III standing.
141 S. Ct. 2190, 2210 n. 6 (emphasis supplied).
Hunstein II—The Eleventh Circuit Holds That Plaintiff Has Article III Standing (Notwithstanding TransUnion) and Stated Claim for Violation of the FDCPA
Which brings us to Hunstein II. 2021 U.S. App. LEXIS 32325 (Oct. 28, 2021). Confronted with the subsequent TransUnion v. Ramirez decision, the Eleventh Circuit three-judge panel reconsidered its prior, unanimous ruling in a new 2-1 decision.
The Eleventh Circuit in Hunstein II stood by its prior ruling on standing. After citing Spokeo and n. 6 of the TransUnion decision, the Eleventh Circuit nevertheless held that Hunstein had Article III standing. This was based on the determination that Hunstein alleged “an intangible-but-nonetheless-concrete injury, including one resulting from a statutory violation.” The Court commented that “Hunstein has alleged a harm similar in kind to the common-law tort of public disclosure of private facts.” The Eleventh Circuit explained that Hunstein claims that the debt collector,  ‘disclosed’ what he calls ‘sensitive medical information’—including his minor son’s name and prior medical treatment—to ‘the employees of an unauthorized third-party mail house.’” Based upon the Eleventh Circuit’s reading of the allegations of the Complaint, this amounted to an assertion that “some measure of disclosure in fact occurred.”
Addressing the issue of Article III standing, the Eleventh Circuit then turned to the merits of Plaintiff’s claim under the FDCPA. Section 1692c(b) of the FDCPA states that, subject to several exceptions, “a debt collector may not communicate, in connection with the collection of any debt, with any person” other than the consumer. The sole question before the Court was whether the debt collector’s communication with the mail vendor was “in connection with the collection of any debt,” such that it violates § 1692c(b).
After considering the plain language of the statute and dictionary definitions of terms used, the Eleventh Circuit found that the debt collector’s transmittal to the mail vendor “included specific details regarding Hunstein’s debt: Hunstein’s status as a debtor, the precise amount of his debt, the entity to which the debt was owed, and the fact that the debt concerned his son’s medical treatment, among other things.” As such, the Court held, “[i]t seems to us inescapable that [the debt collector’s] communication to [the mail vendor] at least ‘concerned,’ was ‘with reference to,’ and bore a ‘relationship [or] association’ to its collection of Hunstein’s debt.” According, the Eleventh Circuit ruled that “Hunstein has alleged a communication ‘in connection with the collection of any debt’ as that phrase is commonly understood.”
This ruling was in many ways a double-down on the Eleventh Circuit’s prior decision. It has broad implications for all debt collectors doing business in that Circuit (which includes Florida, Alabama and Georgia) where Hunstein II is binding precedent for the lower federal courts. Debt collectors (pre-Hunstein II) have historically heavily relied upon mail vendors—a decision that many are likely now reevaluating (including in relation to online platforms that have the same functionality). As long as Hunstein II stands (an open question, there may still be further word from the Eleventh Circuit on this case), it will continue to spawn a wave of FDCPA litigation with ripple effects across the industry. For more on this, stay tuned. CPW will be there to keep you in the loop.