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Financial Services Law Insights and Observations

11th Circuit’s new opinion says plaintiff still has standing to sue in outsourced debt collection letter action

Courts Eleventh Circuit Appellate Debt Collection Third-Party Disclosures Vendor Hunstein Privacy/Cyber Risk & Data Security


On October 28, the U.S. Court of Appeals for the Eleventh Circuit issued a split opinion in Hunstein v. Preferred Collection & Management Services, vacating its April 21 decision but still finding that the plaintiff had standing to sue. As previously covered by InfoBytes, last April the 11th Circuit reviewed the district court’s dismissal of plaintiff’s claims that the disclosure of medical debt to a mail vendor violated the FDCPA’s third-party disclosure provisions. The 11th Circuit originally held that transmitting a consumer’s private data to a commercial mail vendor to generate debt collection letters violates Section 1692c(b) of the FDCPA because it is considered transmitting a consumer’s private data “in connection with the collection of any debt.” At the time, the appellate court determined that communicating debt-related personal information with the third-party mail vendor is a concrete injury under Article III. Even though the plaintiff did not allege a tangible injury, the appellate court held, in a matter of first impression, that under the circumstances, the plaintiff alleged a communication “in connection with the collection of any debt” within the meaning of § 1692c(b). 

In its most recent opinion, the majority wrote that it was vacating its prior opinion “[u]pon consideration of the petition for rehearing, the amicus curiae briefs submitted in support of that petition, and the Supreme Court’s intervening decision in TransUnion LLC v. Ramirez.” The appellate court first re-examined whether the plaintiff had standing to sue. Among other things, the majority held that while the plaintiff cannot demonstrate “a risk of real harm,” he was able to show standing “through an intangible injury resulting from a statutory violation.” Further, the majority determined that TransUnion reaffirmed its conclusion that the plaintiff “alleged a harm that bears a close relationship to a harm that has traditionally been recognized in American courts.” (In TransUnion, the Court concluded, among other things, that “[i]n looking to whether a plaintiff’s asserted harm has a ‘close relationship’ to a harm traditionally recognized as providing a basis for a lawsuit in American courts, we do not require an exact duplicate.”) The majority further concluded that Congress’s judgment also favors the plaintiff because Congress indicated that violations of § 1692c(b) constitute a concrete injury.

The appellate court next considered the merits of the case, with the majority concluding that the plaintiff adequately stated a claim that the transmittal of personal debt-related information to the vendor constituted a communication within the meaning of § 1692c(b)’s phrase “in communication with the collection of the debt.”

Judge Tjoflat dissented, arguing that the April decision was issued before TransUnion, and following the Supreme Court’s reasoning, the plaintiff did not have standing because he did not suffer a concrete injury, and that there is an important difference between a plaintiff’s statutory cause of action to sue over a violation of federal law and “a plaintiff’s suffering concrete harm because of the defendant’s violation of federal law.” Judge Tjoflat further added that a “simple transmission of information along a chain that involves one extra link because a company uses a mail vendor to send out the letters about debt is not a harm at which Congress was aiming.”