Several courts across the United States review claims filed against debt collectors for alleged violations of Section 1692c(b) of the Fair Debt Collection Practices Act (“FDCPA” or the “Act”) and come to contradictory conclusions. The Eleventh Circuit granted a rehearing and issued a newly revised opinion on October 28, 2021. Huntstein v. Preferred Collection & Mgmt. Services, Inc.19-14434, 2021 WL 4998980 (11th Cir. 28 Oct. 2021).
About three weeks later (November 17e) the acting judges of the Eleventh Circuit voted to rehear the case en banc (meaning all judges will consider the case instead of just the panel of three), so they rescinded the notice dated October 28, 2021. Huntstein v. Preferred Collection & Mgmt. Services, Inc.19-14434 (11th Cir. November 17, 2021).
Even though the October 2021 revised opinion has been formally overruled, this article will discuss that opinion, including the extensive dissent written by Judge Tjoflat that will likely influence the Court’s decision when it reconsiders the case en banc. . We will also discuss another case from the Northern (Federal) District of Illinois (Eastern Division) that refused to follow the Revised Version (October 2021) hunstein opinion. Quaglia vs. NS193, LLC, Case No. 21C3252 (ND Ill. October 12, 20221). Once the Eleventh Circuit renders its en banc opinion on hunstein we’ll do a follow-up article discussing any relevant changes.
For your information or reminder, Section 1692c(b) (entitled “Communication with Third Parties”) of the FDCPA reads as follows:
Except as provided in Section 1692b of this Title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or to the extent reasonably necessary to effect judicial remedy after judgment, a debt the collector cannot communicate, within the framework of the collection of a debt, with a person other than the consumer, his lawyer, a consumer reporting agency if otherwise authorized by law, the creditor, the creditor’s lawyer or the debt collector’s lawyer.
15 USC § 1692c(b). The problem in both hunstein and Quaglia was whether the debtor in each case had standing to bring its claims in federal court. This is a determinative question that must be answered in the affirmative for a federal court to consider the case on its merits. Whether a claimant has standing under Article III is a very complex matter, the details of which are too advanced for the purposes of this article. In addition to other requirements (and simplifying the matter somewhat), a party may establish standing under Article III by showing that the claimant has suffered factual harm. A prejudice is in fact defined as “”an attack on a legally protected interest” which is both “concrete and particular” and “actual or imminent, and not conjectural or hypothetical””.
At a time hunstein and Quaglia the “concrete sub-element” was implicated because of the intangible nature of harm resulting from violations of Section 1692c(b). The issue raised by both courts was whether “concrete harm” arises when a debt collector violates section 1692c(b) by sharing the debtor’s private information with a third-party provider for the purpose of performing a administrative such as sending a letter. To answer this question, both courts looked to history and the judgment of Congress. This is where the similarities between hunstein and Quaglia end.
In hunstein, the three-judge panel assessed the historical element explaining that if the “alleged harm” was closely related to the “harm traditionally recognized as the basis of a claim in US courts”, then history favored a finding that the violation of § 1692c(b) constituted factual harm. As it did in its previous opinion, the Court found that the privacy breaches provided “a valid basis for tort suits in US courts” and that such suits were “sufficiently analogous” to the request of § 1692c(b) to make the injury resulting from a violation of law, although intangible, an injury in fact. Also, more conclusively, the Court found that Congress had identified invasion of privacy in the text of the statute as one of the harms against which § 1692 was intended to prevent, so that the Congressional judgment also favored a conclusion for Article III. The Court found that the debtor had standing under Article III and that the lower court’s removal based on lack of standing was improper.
In particular, Judge Tjoflat, one of the three judges of the hunstein panel, wrote an eight-page dissent (the original hunstein unanimous opinion) in which he explains that he “changed [his] the spirit” from the original hunstein opinion based on the opinion of the Supreme Court of the United States in TransUnion LLC vs. Ramirez. Judge Tjoflat explained “the Court’s ongoing analysis [in Hunstein] sweeps much wider than Trans Union would allow.” Similar to cases § 1692, the Court in Trans Union also dealt with non-material damage resulting from breaches of law in the context of standing under Article III. In Trans Union a class of debtors sued TransUnion (a consumer reporting agency) for its alleged failure to “use reasonable procedures to ensure the accuracy of [the debtors’] credit records…” in violation of Section 1681e(b) of the Fair Credit Reporting Act.
In its analysis of standing under Article III, the Trans Union The Court considered whether the inclusion of inaccurate information in a debtor’s credit report – without dissemination to a third party – constituted in itself concrete harm. The Court held that this was not the case since the analogous cause of action – defamation – required publication of the inaccurate information. The Court distinguished between debtors whose inaccurate credit reports were released “to third-party companies” and debtors whose inaccurate credit reports “were never released”. The Court explained: “The mere presence of an inaccuracy in an internal credit file, if not disclosed to a third party, causes no material harm.” The Court also rejected the debtors’ contention that “TransUnion ‘published’ the [debtors’] information internally… to TransUnion employees and suppliers who printed and mailed the mailings that class members received.
Although the Court noted that this argument had been dropped since it had not been raised for the first time in the lower court, it explained that such an argument “circumvents a fundamental requirement of an ordinary defamation action – publication – and does not have a “sufficiently close relationship” to the traditional tort of defamation to qualify for standing under Article III.” Of course, dissenting Judge Tjoflat found that this part of the Trans Union instructive opinion in hunstein where the only publication of debtor information was for a seller. To the dismay and disappointment of Judge Tjoflat, the majority hunstein identified the Trans Union The Court’s findings in this regard were non-binding dicta and declined to follow them. That being said, the Eleventh Circuit may come to a different conclusion when it rehearses the case en banc.
Contrary to hunsteinin Quagliathe Northern District of Illinois (agreeing with a New York court) relied on and cited the Trans Union dicta agreeing that the “mail provider theory” was an “unnecessary” argument since neither “intra-company disclosures” nor “print provider disclosures” have historically been recognized as “publications that may give rise to an action”. The Northern District also clarified, “…The need for the FDCPA arose due to collection abuse…” and was implemented to “…prevent collection agents from using truly offensive to collect a debt”. The Court declined to extend the FDCPA’s purpose to prohibit debt collectors from hiring “mail service providers to perform ministerial functions…especially when much of the process is presumably automated from our days”. These findings coincided with Justice Tjoflat’s dissent in which he explained that “the FDCPA was not intended to eliminate debt collection practices. This meant eliminating offensive debt collection practices.
The Eleventh Circuit’s decision to rescind its October 28, 2021 opinion and rehear the case en banc demonstrates the importance of this issue. Article III in the context of violations of section 1692c(b) has been the subject of much litigation, but not at the appellate level, where it would have precedential value, i. would be binding on other courts. Until a precedent decision is made, we are sure to see litigation continue on this topic, particularly if the Eleventh Circuit stands by its earlier ruling in favor of Article III. We will continue to update you on important developments.