In an unusual move, an Eleventh Circuit panel doubled down on its prior, industry-disrupting decision that a debt collector may violate the Fair Debt Collection Practices Act (“FDCPA”) by transmitting private information to a third-party commercial mail vendor. The panel vacated its prior decision sua sponte, issuing a new opinion to take its place, even while a petition for rehearing en banc remains pending. One judge of the panel, however, withdrew his support for that outcome concluding that the court’s standing analysis sweeps more broadly than the intervening U.S. Supreme Court decision in TransUnion LLC v. Ramirez would allow.
The District Court Dismisses Hunstein’s Suit
In the district court, Hunstein (the plaintiff) alleged that Preferred (a debt collector) violated the FDCPA when it sent information about a medical debt he owed—including his name, his outstanding balance, the fact that his debt resulted from his son’s medical treatment—to Compumail (Preferred’s commercial mail vendor), which used the information to create, print and mail a letter demanding payment. Such outsourcing is routine in the debt collection industry. The district court dismissed Hunstein’s claims holding that Preferred’s communications to Compumail did not constitute “an attempt to collect a debt” within the meaning of the FDCPA.
The Eleventh Circuit Reverses
On April 21, 2021, the Eleventh Circuit reversed the district court’s decision dismissing Hunstein’s complaint, holding that Preferred’s transmittal of specific information to its mail vendor was sufficiently related to its debt collection activity to fall within the FDCPA. While the court recognized that its ruling would upset the status quo in the industry and was unlikely to materially enhance consumer privacy protections, it nevertheless determined that its role was to interpret the law as written, regardless of whether the resulting implications were sensible or desirable.
The Eleventh Circuit’s original decision reviving Hunstein’s FDCPA claim led to a tidal wave of consumer lawsuits that prompted the debt collection industry to rethink its widespread outsourcing practices and spurred calls for federal regulators to intervene. Preferred petitioned for en banc rehearing, joined by a flurry of amicus briefs from the debt collection industry.
The Supreme Court Decides TransUnion LLC v. Ramirez
In June, the Supreme Court issued the landmark TransUnion LLC v. Ramirez decision, the Supreme Court’s latest pronouncement on Article III standing. In that case, the Court explores the bounds of when harm is concrete. In dicta that was unquestionably directed to the Hunstein decision, the Supreme Court questioned whether providing consumer information to a printing vendor could qualify as a “publication” (citing Eleventh Circuit precedent) and observing that theory was not sufficiently similar to a traditional defamation tort claim to provide standing.
Undaunted, The Eleventh Circuit Doubles Down
Rather than reverse course following Ramirez, or simply wait for the Eleventh Circuit to decide the pending petition for rehearing en banc, the Eleventh Circuit panel vacated its prior decision sua sponte, and issued a replacement. In it, the majority recognizes that Ramirez was “in some tension with our holding here,” and “looms large,” but nonetheless concludes that the original opinion was right, finding Preferred’s alleged statutory violation was “sufficiently analogous” to the common law tort of public disclosure of private facts. The majority reasoned that a statutory harm did not need to have an “exact duplicate” of the common law tort, and drew a distinction 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.”
In a blistering dissent, Judge Tjoflat said that majority’s analysis “goes off the rails,” ignoring that Ramirez requires a plaintiff to allege sufficient facts to find a common law analogue, and that Preferred’s communication to Compumail was not “public” and did not satisfy the first element of the tort of public disclosure of private facts—publicity of private information. Without public disclosure, Judge Tjoflat said, Hunstein cannot adequately satisfy the two other elements—that it would be highly offensive to a reasonable person, and that it is not of legitimate public concern.
While the Eleventh Circuit panel succeeded in providing more food for thought with its new decision, Ramirez, and the sharp dissent in the replacement decision, simply highlights the need for en banc review, particularly appropriate here in light of the industry disrupting implications of the decision, and the wave of consumer actions that will continue while debt collectors decide whether wholesale changes are needed to mitigate risk in an already litigation saturated business.
