On October 28, 2021, in a 2-1 split panel decision, the Eleventh Circuit Court of Appeals vacated its prior opinion in Hunstein v. Preferred Collection and Management Services, Inc. (published at 994 F.3d 1341 (11th Cir. 2021)), and substituted a new opinion in its place. The new opinion is published, meaning it has immediate legal effect and is binding on future Eleventh Circuit judicial panels and district courts within the circuit.
On November 2, 2021, from 2:30 p.m. to 3:30 p.m. ET, Ballard Spahr will hold a webinar, “The New Hunstein Opinion-What Does It Mean?” Click here for more information and to register.
While the members of the three-judge panel that reconsidered Hunstein are the same as those who rendered the prior opinion last spring, the Supreme Court’s intervening decision in TransUnion v. Ramirez, 141 S. Ct. 2190 (2021) resulted in divergence among the panel on the standing issue. This time, as a result of TransUnion, the most senior judge on the panel, Judge Tjoflat, penned a dissenting opinion while the other two members ultimately reached the same conclusions on the plaintiff’s Article III standing and the merits of the plaintiff’s underlying 15 U.S.C. § 1692c(b).
As in its prior opinion, the majority determined that the plaintiff had standing to sue because he had suffered an “intangible injury resulting from a statutory violation.” In determining whether the plaintiff had sufficiently alleged that he had suffered an intangible injury, the majority considered both: (1) the history of the alleged intangible harm; and (2) the judgment of Congress as to the FDCPA’s underlying purpose and protections.
Citing both TransUnion and Spokeo, in evaluating the history prong, the majority held that there is a concrete injury where “the asserted harm has a ‘close relationship’ to a harm traditionally recognized as providing a basis for a lawsuit in American courts.” TransUnion, 141 S. Ct. at 2200 (quoting Spokeo, 578 U.S. at 341). Here, the alleged common law harm was an invasion of privacy – specifically, public disclosure of private facts. The majority noted such claim has been long recognized as a valid tort claim for more than a century. The majority further reasoned that Article III does not require a precise fit between an alleged intangible harm and a tort recognized at common law in order to confer standing. Rather, the majority held 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” to satisfy the history prong of Article III’s standing test for intangible harms.
Applying this standard to the facts at issue, the majority held that the plaintiff satisfied the history prong because his alleged harm was similar in kind to the tort of public disclosure of private facts, even if potentially not similar in degree. The majority reasoned that because the plaintiff’s claim alleged the debt collector “disclosed” his personal information and that of his son to the employees of a third-party letter vendor, taking the allegation on its face as required at this stage of litigation, that mean “some measure of disclosure in fact occurred.”
The majority further reasoned that this alleged disclosure of “intensely private information . . . could clearly offend a reasonable person and is not of legitimate public concern.” While recognizing that the alleged disclosure to the third-party letter vendor’s employees may have been less widespread than the types of disclosures typical of public disclosure of private fact claims, that is a matter of degree rather than “kind.” According to the majority, requiring similarity in the degree of harm would be inconsistent with existing Eleventh Circuit jurisprudence and some sister circuits.
Turning to consideration of Article III’s second prong, the majority again determined that the judgment of Congress also weighed in favor of holding that plaintiff had alleged a concrete injury. To do so, the majority looked to the FDCPA’s section on Congressional findings and statement of purpose, where Congress identified invasions of individual privacy as one of the harms against which the FDCPA is directed. As a result, both prongs of Article III’s test for intangible harms were satisfied and sufficient to establish Article III standing.
The majority then addressed the merits of the underlying FDCPA claim. Consistent with the reasoning of the court’s prior decision, the majority again concluded that the plaintiff sufficiently alleged a potential claim for an unauthorized disclosure of the debt under § 1692c(b) of the FDCPA. But the majority did not hold there actually was a violation, which is important to recognize. Rather, consistent with its reasoning in the prior panel opinion, the court repeatedly remarked that it had to assume the truth of the allegations in the plaintiff’s complaint at this stage of the litigation. As such, in a nutshell, the parties’ prior stipulation that the transmission of the information about plaintiff’s debt to the letter vendor was a “communication” under the FDCPA, there could not be any doubt the communication was sent “in connection with the collection of any debt” within the meaning of § 1692c(b). The majority reached this holding by relying on the plain text of the FDCPA and broad, plain language meaning of the phrase “in connection with.”
In dissent, Judge Tjoflat argued that the majority’s decision conferred standing too broadly in light of the Supreme Court’s decision in TransUnion LLC v. Ramirez. The dissent argued that the decision in TransUnion stands for the position that:
the Spokeo analysis for intangible harms based on the violation of a statute – that is, looking at history and the judgment of Congress – is individualized for every plaintiff’s injury. Just because some plaintiffs’ injuries will have a common-law analogue and are the very kind of injuries Congress was trying to prevent does not mean that other plaintiffs, who allege a violation of the very same statute, will get a golden ticket to standing without also satisfying what Spokeo requires.
Regarding the history prong of the analysis, the dissent argued that TransUnion requires plaintiffs to allege facts that allow the court to find a common law analogue to the statutory violation. Judge Tjoflat disagreed with the majority opinion that the plaintiff’s alleged statutory violation is analogous to a public disclosure of private facts, noting that other courts hold that an invasion of privacy claims “requires publicity in the broad, general sense of the word ‘public.’” Here, there was no publicity because only the third-party letter vendor received the plaintiff’s information, not the public at large.
Next, the dissent flatly disagreed with the majority’s opinion that “some measure of disclosure” is similar enough to “publicity” to find the facts analogous to the tort of public disclosure of private facts. The dissent further argued that the majority’s opinion lacked analysis of the second two elements of the tort of invasion of privacy: (i) whether the disclosure could offend a reasonable person and (ii) whether it is not of legitimate public concern. Finally, in concluding the history prong of the court’s standing analysis was not satisfied, the dissent observed that at common law, debt notifications to third-parties were not considered highly offensive to a reasonable person.
Regarding the judgment of Congress, the dissent noted that under the FDCPA, “Congress seemed to explicitly envision the role of intermediaries, like mail vendors, in the statutory scheme,” as not all transmission to third parties are prohibited. As support for this position, the dissent noted that the FDCPA provides restrictions around the use of telegrams, which implies that debt collectors can use telegrams even though the information contained in the telegram would necessarily be transmitted through a telegram operator. Additionally, when a consumer incurs debt, they are consenting to receiving information about the debt because the FDCPA requires debt collectors to communicate with consumers. Therefore, it would be odd for Congress to create an impediment to this process, which is affirmatively required by the FDCPA.
Finally, the dissent noted that the damages provision of the FDCPA, 15 U.S.C. § 1692k presumes that there would be actual damages for a violation of the statute. In Judge Tjoflat’s view, this supported the opinion that Congress did not intend for a violation of 15 U.S.C. § 1692c(b) to create standing.
Unfortunately, this substituted opinion is no less problematic for the debt collection industry than the prior one. As the Eleventh Circuit itself observes:
It’s not lost on us that our interpretation of § 1692c(b) runs the risk of upsetting the status quo in the debt-collection industry. We presume that, in the ordinary course of business, debt collectors share information about consumers not only with dunning vendors like [the defendant’s vendor], but also with other third-party entities. Our reading of § 1692c(b) may well require debt collectors (at least in the short term) to in-source many of the services that they had previously outsourced, potentially at great cost.
As the entire panel recognized, this decision will likely impact the use of third-parties in the collections process beyond just letter vendors. Even before the court’s substituted opinion, Hunstein-related complaints were already being filed in which the use of other communication and scrub vendors violates § 1692c(b) of the FDCPA. In many instances, such complaints also include parallel claims under state law.
Although disappointing in that these claims will continue to be brought and likely expand in the near-term, there are some potential upsides of this new opinion. First is Judge Tjoflat’s dissent. On one hand, had it been the majority opinion, the industry would likely be litigating even more of these claims in state courts. But on the other, Judge Tjoflat provides useful analysis and a helpful outline that may be instructive to litigants and courts as they encounter, evaluate, and decide these claims moving forward. Additionally, both the majority and the dissent seem to express significant doubt as to whether the plaintiff actually will be able to prove that any alleged unauthorized disclosure occurred.