In a much anticipated decision released September 8, an en banc panel of the Eleventh Circuit Court of Appeals reversed the district court’s decision that a debt collector’s outsourcing of its letter process to a third-party mail vendor violated the Fair Debt Collection Practices Act’s (FDCPA) prohibition on third-party disclosure and ruled that plaintiff Hunstein lacked standing to bring his claim. The court proclaimed: “Under the most generous reading of his complaint, one company sent his information to another, where it was ‘populated’ into a private letter that was sent to his home. That is simply not enough.”
As we previously posted, on April 21, 2021, the Court of Appeals issued the original Hunstein v. Preferred Collection and Management Services Inc. opinion, which held that (1) a consumer had standing to bring a claim under the FDCPA because he alleged an invasion of privacy based on the spread of his debt-related information; and (2) a debt collector’s outsourcing of its letter process to a third-party mail vendor violated the FDCPA because sending the data to create and mail letters to consumers violates the prohibition on third-party disclosure set forth in FDCPA Section 1692c(b).
The Eleventh Circuit then vacated its original opinion and issued a substitute opinion. See Hunstein vs. Preferred Collection & Management Services, Inc., 17 F. 4th 1016 (11th Cir. 2021) wherein the panel majority reaffirmed its original opinion and held that Hunstein had standing to sue. On November 17, 2021, the Eleventh Circuit vacated the substitute opinion and agreed sua sponte to reconsider en banc whether a debt collector’s transmission of private debtor information to its mail vendor violated the FDCPA. See 2021 WL 5353154 (11th Cir. Nov. 17, 2021). Oral arguments were held on February 22.
Relying heavily on Ramirez, 141 S. Ct. 2190 (2021), which held that a concrete injury under the Fair Credit Reporting Act requires more than the existence of a risk of harm that never materializes, the en banc panel held that Hunstein’s proffered harm of publicity was insufficient to confer Article III standing. “We first identify the precise harm at issue. Hunstein alleged that, rather than preparing a mailing on its own, Preferred Collection sent information about his debt to a mail vendor, which then populated the data in a form letter. That act, according to Hunstein, violated the statutory prohibition on communicating, ‘in connection with the collection of any debt, with any person other than the consumer.’” Hunstein analogized this harm to the tort of public disclosure. However, the court held the disclosure alleged lacked the fundamental requirement of publicity.
According to the en banc panel, publicity requires more than just any communication to a third party. Instead, the private information must be made public. The court noted that Hunstein did not allege that that a single employee ever read or understood the information about his debt. “[N]owhere does Hunstein suggest that Preferred Collection’s communication reached, or was sure to reach, the public. Quite the opposite — the complaint describes a disclosure that reached a single intermediary, which then passed the information back to Hunstein without sharing it more broadly.”
Ultimately, the court held that because Hunstein alleged only a legal infraction and not a concrete harm, the court lacked jurisdiction to consider his claim. “As Hunstein explained, courts have no ‘freewheeling power to hold defendants accountable for legal infractions.’” Although dismissed on Article III standing grounds, the court’s express rejection of the idea that preparation of a letter, without more, constitutes a public disclosure should prove useful in continuing litigation, including in state courts that sometimes have more lax standing requirements.
Troutman Pepper contributed multiple amicus briefs to the Eleventh Circuit on behalf of various industry groups, including the Third-Party Payment Processors Association, Mail Vendors Coalition, as well as individual industry stakeholders.