Farewell, Hunstein—Eleventh Circuit Maintains Disclosure of Debtor’s Information to Email Provider Does Not Establish Concrete Harm | Vide Rome LLP

Financial institutions, debt collectors, debt collection law firms, and consumer-facing businesses should note that the Eleventh Circuit Court of Appeals reversed the previous panel’s decision and ruled that the mere act of providing a consumer’s information to a mail seller to send a debt collection letter did not violate the FDCPA since it is not public disclosure and therefore the consumer has not suffered concrete prejudice sufficient to give him standing to bring proceedings under Article III. The Eleventh Circuit En Banc Panel’s decision should result in the dismissal of other pending FDCPA actions based on this courier provider theory and reduce future actions. Additionally, the decision has broader implications beyond the FDCPA cases, as it outlines the Eleventh Circuit’s overall approach to assessing whether a plaintiff has sufficiently alleged concrete harm.

In Hunstein v. Preferred Collection and Management Services, Inc.2022 WL 4102824 (11th Cir. Sept. 8, 2022), the Eleventh Circuit’s En Banc panel reversed the previous panel’s decision and declared “no concrete harm, no standing,” citing the US Supreme Court’s decision- united in TransUnion LLC vs. Ramirez, 141 S.Ct. 2190 (2021). As such, the Eleventh Circuit ruled that the United States District Court for the Intermediate District of Florida (“District Court”) lacked jurisdiction to hear Plaintiff’s claim, set aside the order. from the district court and dismissed him with instructions to dismiss the case without prejudice.

Summary of facts and background

After Richard Hunstein (“Plaintiff”) failed to pay a medical bill on time, the hospital transferred the debt to Preferred Collection and Management Services, Inc. (“Defendant”), a debt collection agency. The defendant sent Hunstein a debt collection letter through a commercial mail provider. In preparation for sending the letter, the defendant provided the mail provider with certain information, including Hunstein’s name, his son’s name, and the amount of the debt.

Upon receipt of the letter, Hunstein filed a lawsuit in the district court against the defendant alleging that he disclosed information about his debt to a third party in violation of the Fair Debt Collection Practices Act (“FDCPA”). ).[1] The district court granted the defendant’s motion to dismiss, finding that the defendant did not violate the FDCPA because the communication with the mail provider “was not related to the collection of a debt.” Hunstein appealed and the Eleventh Circuit overturned, finding that Hunstein’s injury was concrete because it sufficed that his injury had a “close relationship” to the “torts of invasion of privacy”, in particular the ” public disclosure of private facts” (“Huntstein I”).[2] Before Huntstein I entered into force, the Supreme Court of the United States made Trans Union. As such, the Eleventh Circuit left Huntstein I and rendered a new decision (“Hunstein II”), which came to the same conclusion as Huntstein Ifinding that the allegation that a disclosure took place “was close enough to the tort of public disclosure to constitute concrete harm”.[3] The dissent in Hunstein II disagreed, arguing that the logic of the majority “swe[pt] much wider than Trans Union would allow.”[4] In light of the decisions of Spokeo, Muranskiand Trans Unionthe full Eleventh Circuit panel voted to take the case en banc and consider whether Hunstein had standing under Article III.

Eleventh Circuit En Banc Panel Ruling

In determining that Hunstein did not allege concrete harm and therefore lacked standing, the majority panel for the Eleventh Circuit (“Majority Panel”) echoed the findings of Spokeo, Muranskiand Trans Union regarding standing under Article III. Specifically, the majority panel held that (1) a “mere violation of the law” is insufficient;[5] (2) the harm must be concrete because “it ensures that the plaintiffs have a real interest in the actions they bring”;[6] and (3) consideration of traditional torts as a means of determining whether immaterial harm satisfies the concreteness requirement is not “work for the lower courts”, and the comparison must be made “with a view to Assess commonalities between harms. ”[7] As the majority committee explained, “if one element of the common law comparator tort is completely absent, it is difficult to see how a violation of the statute could cause similar harm.”[8]

Applying these principles, the majority panel held that the harm alleged by Hunstein – the disclosure of his information to the mail provider – is not as well as the offense of public disclosure, which requires publicity. Without publicity, there is “no invasion of privacy – which means no harm, at least not at all similar to that suffered after public disclosure”.[9] The majority panel rejected the argument that publicity includes any communication from the defendant to a third party; rather, it “requires that a matter be ‘made public, by communicating it to the general public, or to so many people that the matter is to be considered substantially certain of becoming common knowledge’.”[10] The distinction is between public and private communication, as a disclosure to many people may still be private, or at least not public. Thus, it is the effect of a disclosure that counts, not the number of people to whom it is made. Here, Hunstein made no such claim to suggest advertising and only alleged disclosure of his information to the email provider, an unauthorized third party who “”people all or part of [his] information in a pre-written model, printed and sent the letter to Hunstein. »[11] In fact, the majority committee pointed out that Hunstein’s attorney agreed during oral argument that Hunstein did not allege that employees of the mail provider read or perceived his information.[12] Accordingly, the Majority Committee found that Hunstein’s complaint had been framed to allege a pure violation of law and, therefore, Hunstein had failed to establish concrete harm to confer standing under s. III.

The majority panel also rejected Hunstein’s argument that Congress was targeting “invasions of the privacy of individuals” when it passed the FDCPA because “Congressional intent does not automatically transform every questionable invasion of privacy.” privacy into a concrete and actionable injury”.[13] Further, the Majority Committee noted that the dissenters’ criticism of the “element for element” approach “confuses the question of whether this plaintiff has alleged standing with the question of whether any the plaintiff could claim standing.[14] Further, the majority panel rejected the dissent’s “attempt to fabricate a circuit split” because none of the cases cited in the dissent address the issue here that the complaint did not alleged an essential element of the injury stated at common law. comparator.[15]

Conclusion

The long-awaited ruling by the majority panel is another victory for financial institutions, debt collectors, debt collection law firms and consumer-facing businesses that hire third-party vendors to send letters to consumers. After Huntstein I, the courts have been inundated with FDCPA complaints alleging that using a third-party provider violates the FDCPA. The ruling is expected to reduce the number of actions alleging the direct mail vendor disclosure theory. However, the majority panel noted that Hunstein’s complaint, as pleaded, does not not point to concrete harm because he did so not suggest the publicity, leaving the door open for the plaintiff’s bar to tailor its pleadings to the elements of a public disclosure tort in order to confer Article III standing. Further, the decision has broader implications beyond the FDCPA cases, as the majority panel provided the Eleventh Circuit’s overall approach of applying the “item-for-item” test to assess whether plaintiffs alleged concrete harm. for purposes of federal jurisdiction.


[1] Hunstein alleged that disclosing information about his debt to the mail seller violated FDCPA Section 1692c(b), which prohibits communicating “in connection with the collection of any debt, with anyone other than the consumer.” . hunstein2022 WL 4102824, at *6 (citing 15 USC § 1692c(b)).

[2] Before issuing Huntstein Ithe Eleventh Circuit asked the parties to submit additional information on the quality of Article III in light of the Eleventh Circuit’s decision in Muransky v. Godiva Chocolatier, Inc.979 F.3d 917 (11th Cir. 2020), which made it clear that a mere procedural violation of the FDCPA not survive ongoing investigation and reiterated the direction of the United States Supreme Court in Spokeo, Inc. vs. Robins578 US 330 (2016), that one way to assess legal harm is to compare the harm to traditional common law tort actions.

[3] Huntstein v. Preferred Collection & Mgmt. Servs., Inc.17 F.4e 1016, 1027 (11th Cir. 2021).

[5] Muransky979 F.3d to 936; Spokeo578 US to 341

[6] Trans Union, 141 S.Ct. 2207.

[7] Muransky979 F.3d to 926.

[8] hunstein2022 WL 4102824, at *6.

[9] hunstein2022 WL 4102824, at *6.

[10] ID. at *7 (citing Restatement (Second) of Torts § 652D cmt. a).

[15] Chief Justice Pryor, joined by Circuit Judge Tjoflat, issued a concurring opinion identifying other reasons why the appeal is “an exercise in simplicity.” ID. at 10. Specifically, Chief Justice Pryor indicated that Trans Union resolves the appeal because the United States Supreme Court expressly rejected the dissenting theory that the release of personal information to employees of an email provider has a sufficiently close connection to the tort of public disclosure of facts private. View ID. At 11 o’clock. Moreover, the theory of publication to the mail vendor of dissent “circumvents a fundamental requirement of a [public-disclosure] claims … and is not sufficiently closely related to the traditional tort … to have standing under Article III. ID. (quoting Trans Union, 141 S.Ct. at 2210 n. 6). Further, Chief Justice Pryor found that Hunstein did not allege concrete harm because the complaint does not allege that anyone read his private information, and disclosure of Hunstein’s information is not traditionally recognized. as highly offensive by law. View ID. at *12-13.