The epic journey of a crucial 11th Circuit debt collection case

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(Reuters) – It was a long and strange journey through the 11th United States Court of Appeals for Hunstein v. Preferred Collection & Management Services Inc, a Fair Debt Collection Practices Act case that illustrates the challenge for appellate courts to enforce the U.S. Supreme Court ruling. constitutional quality criterion.

Wednesday, the 11th Circuit noted that he had voted to examine the case en banc. The court order came just weeks after a Panel decision of October 28 this enabled the plaintiff, Richard Hunstein, to pursue allegations that the debt collector violated the FDCPA by sharing sensitive personal information about him with the external vendor who sends out the Preferred follow-up letters. The 11th Circuit en banc didn’t even wait for Preferred lawyers at Kaufman Dolowich & Voluck to request a new hearing.

This Oct. 28 opinion – which was overturned in Wednesday’s en banc order – has its own unusual story. Justices Adelberto Jordan, Kevin Newsom and Gerald Tjoflat first heard the Hunstein case last March. They issued a unanimous decision a month later, ruling that under the 2016 Supreme Court decision in Spokeo, Inc vs. Robins, Hunstein had standing to bring an Article III action because his claim amounted to a common law action for invasion of privacy (more on this later).

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The panel’s decision on April 21 was a shock not only to debt collectors, but to the entire financial services industry, which relies on contractors to communicate with consumers. Amicus briefs stacked in the 11th Circuit in support of Preferred rehearing request.

Instead of hearing the case again, the original three-judge panel delivered the October 28 opinion, spontaneously addressing Preferred’s petition arguments and amicus briefs – as well as the court’s stricter rules. Supreme Court to evade the decision of the judges of June 25 in TransUnion LLC v. Ramirez.

In the revised notice, Newsom and Jordan insisted that TransUnion had not altered their original finding that Hunstein had standing under Article III. But Tjoflat strongly disagreed, arguing that the majority had focused on secondary considerations in TransUnion instead of the Supreme Court’s focus on “the history and judgment of Congress.”

Presumably, it was Tjoflat’s dissent that prompted the 11th Circuit to decide to hear the case as a bench. Senior lawyer for the debt collector, Richard Perr de Kaufman Dolowich, has said he expects the appeals court to issue a later order spelling out the issues it wants the parties to submit for bench consideration . Hunstein’s lawyer Thomas Bonan of Seraph Legal did not answer my question.

It seems likely that the key question in the en banc case will be whether Hunstein’s claims of a violation of federal law prohibiting abusive debt collection practices align closely with the common law tort of infringement. to privacy. (There is no doubt that Hunstein did not raise adequate allegations of concrete injury or imminent risk of injury.)

Lawyers for the plaintiffs have claimed that Preferred broke debt collection law by providing information to mail provider CompuMail about Hunstein’s debt owed to Johns Hopkins All Children’s Hospital for his son’s medical treatment. According to Hunstein, the transmission of sensitive information about his son’s medical care was an inappropriate public disclosure of private facts.

The Supreme Court’s TransUnion case, which also arose out of an alleged privacy breach, actually addressed the issue of whether a company that shares information with an external vendor has “posted” that information, although in a footnote. Citing an unpublished 11th Circuit ruling, the judges questioned the theory that disclosure to a seller amounts to an actionable publication under tort law.

The now vacant Oct. 28 majority acknowledged that TransUnion’s footnote contradicted Hunstein’s claims. But Jordan and Newsom said it was not clear from the Hunstein case file whether CompuMail employees read his son’s medical issues after Preferred sent the data to the mail provider.

Newsom and Jordan stated that under the TransUnion and 11th Circuit precedent, “a plaintiff need only show that their alleged harm is of the same nature as the harm addressed by a common law cause of action, and not that it is of the same degree “. So even though Preferred’s disclosure of Hunstein’s sensitive personal information was limited to CompuMail employees only, the majority said the disclosure was similar in nature, if not in degree, to the publication that triggers the breach of privacy. private life.

Tjoflat’s dissent said the reasoning was completely wrong: “Communicating a fact to a small group of people is not advertising,” he wrote. And without showing Preferred “released” their information, Tjoflat said, Hunstein cannot claim an invasion of his privacy.

The majority’s emphasis on “gender, not degree”, he said, was “lip service” to an “ancillary” point of the Supreme Court’s decision. .

Preferred lawyer Perr, who entered the case after the 11th Circuit debt collector’s initial loss, said in the company’s petition to rehear this first ruling that CompuMail generates dunning letters electronically, without that no real person reads the information in the mailings. Perr also pointed out – as did Tjoflat in his dissent in the Oct. 28 decision – that in the 1977 statute, Congress expressly permitted debt collectors to release information to telegraph operators – an old-fashioned version of salespeople. couriers who send collection notices. .

As I mentioned, the Hunstein case has extremely far-reaching consequences for debt collectors, who Perr says are now facing a tsunami of lawsuits based on their use of outside email services. The 11th Circuit majority recognized these concerns in the Oct. 28 ruling, which said the court ruling could force debt collectors to spend a lot of money providing services in-house. The majority said they were nonetheless obliged to follow their interpretation of the law, regardless of the consequences.

Now let’s see what the rest of the 11th Circuit shoals think of this interpretation.

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