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Hunstein Rehearing Filed by Agency Based on No Harm No Foul

  • Written by Steel Rose

On April 21, 2021, the Eleventh Circuit Court of Appeals issued its decision in Richard Hunstein v. Preferred Collection and Management Services, Inc., and potentially created a new claim under the Fair Debt Collection Practices Act (FDCPA) – ruling that a debt collector's sharing of information with a vendor is a violation of that statute, specifically of 15 U.S.C. §1692c(b). The debt collector has now moved for rehearing en banc of the Court's decision, arguing that the ruling is contrary to both the U.S. Supreme Court's 2016 ruling in Spokeo, Inc. v. Robins, and multiple prior decisions of the Eleventh Circuit.

The underlying facts are simple. A creditor referred a medical debt to a debt collector. The debt collector used a third-party mail vendor to send a dunning letter to the debtor. In doing so, certain information was conveyed, including (1) the debtor's status as a debtor, (2) the balance of the debt, (3) the entity to which the debt was owed, (4) that the debt concerned medical treatment for the debtor's son, and (5) the name of his son. The debtor sued, and the district court dismissed the suit. The debtor appealed.

As an initial matter, the Eleventh Circuit examined standing under Spokeo, Inc. v. Robins. In examining the facts, the Court found that the debtor, Richard Hunstein, could not establish standing through either tangible harm or a risk of real harm. Nevertheless, the Eleventh Circuit found that a concrete injury existed sufficient to provide Article III standing, due to the invasion of Hunstein's privacy. The Court found that FDCPA plaintiffs are not limited to those individuals with actual damages, particularly where the statutory language addresses the very harm alleged by the debtor in the instant case.

Preferred, the debt collector, has now sought en banc review of the Court's decision, requesting to have the full Eleventh Circuit consider the issues presented to avoid what it argues is an intra-circuit split. In its petition for rehearing en banc, filed on May 25, 2021, Preferred asserts three main points in support of its overarching argument that the Court erred in finding that Hunstein had Article III standing to bring this claim: (1) the Court's decision deviated from established Eleventh Circuit precedent; (2) Preferred's conduct does not constitute "public" disclosure; and (3) the electronic transmission of the data to Preferred's mail vendor is not a harm that Congress has identified.

Preferred outlines each of its primary arguments in turn. It argues that Spokeo confirmed that Article III standing requires a concrete injury, and that on three separate occasions, the Eleventh Circuit determined that a statutory injury alone did not give rise to a concrete injury sufficient to confer standing. In Nicklaw v. CitiMortgage, the Court reinforced the common law tradition of "no harm, no foul." In Trichell v. Midland Credit Management, Inc., the Court found that the "serious harms" to which the FDCPA was directed were a "far cry from whatever injury may suffer from receiving in the mail a misleading communication that fails to mislead." Finally, in Muransky v. Godiva Chocolatier, Inc., the Eleventh Circuit sitting en banc vacated a district court's order, finding that the plaintiff in that case had no Article III standing because he had suffered no harm; the Court went on to state that it interpreted "concrete" to mean "real" in measuring an injury necessary for establishing Article III standing. Indeed, the Hunstein decision is contrary to a number of other decisions on Article III standing that were favorable to defendants and could mark a shift in how the Eleventh Circuit views the issue. Preferred notes that in reaching its decision in the instant case, the Court did not analyze whether Hunstein's injury was particularized or personal, and in fact, explicitly expressed doubt that the harm occurred or even would likely occur. To read more click here.