The Court of Appeals for the Eleventh Circuit issued yesterday its ruling in Hunstein v. Preferred Collection & Management Services. The court dismissed the case because the plaintiff lacked standing to sue in federal court. “Because Hunstein has alleged only a legal infraction — a ‘bare procedural violation’ — and not a concrete harm, we lack jurisdiction to consider his claim,” the Appeals Court wrote in its decision. The ruling, issued by 8 of the 12 judges brings an end to the case that has been at the forefront of the debt collection industry for the past year and a half. “What harm did this alleged violation cause?” the Court asked in its opinion. “Hunstein’s complaint does not say. Even now, he points to nothing tangible like financial loss or physical injury. Instead, he says that by sending the information about his debt to the mail vendor, Preferred Collection committed an act similar to the tort of public disclosure. The problem with this comparison is evident from the start: the disclosure alleged here lacks the fundamental element of publicity. And without publicity, there is no invasion of privacy — which means no harm, at least not one that is at all similar to that suffered after a public disclosure.”
The Courts decision relied on the Supreme Court ruling in TransUnion v. Ramirez, the Eleventh Circuit stressed that the injury the plaintiff needed to have suffered had to be “real” for him to have standing.
Four judges, including Judge Kevin Newsom, who authored one of the three opinions that the Eleventh Circuit has issued on the case, wrote a dissenting opinion arguing all the reasons why the plaintiff has suffered a concrete injury and has standing to sue. “Hunstein alleges that his privacy was compromised when his intensely private information was disclosed to a group of strangers,” Judge Newsom wrote in his dissent. “That’s the same sort of harm that common-law invasion-of-privacy torts — and in particular, public disclosure of private facts — aim to remedy. To be sure, just as the disclosure that Hunstein alleged might have been less extensive than that typically associated with a common-law invasion-of-privacy claim, the harm that Hunstein experienced may have been less severe. But those, again, are differences in degree, not kind.”
In this case, the plaintiff incurred a medical debt that was placed with the defendant for collection. The defendant electronically transmitted information about the plaintiff, including his status as a debtor, the exact balance of the debt, the entity to whom the debt was owed, that the debt concerned his son’s medical treatment, and his son’s name to a third-party company that specializes in printing and mailing letters. That information was added to a collection letter and sent to the plaintiff. The plaintiff sued, alleging that the disclosure of the information to the letter vendor violated the third-party disclosure provisions of the FDCPA. A District Court judge disagreed and dismissed the suit, which was appealed to the Eleventh Circuit. Thousands of lawsuits have been filed making similar allegations as the ones in this case, and cases have proceeded across the country as everyone waited to see how the Eleventh Circuit would rule after holding an en banc rehearing earlier this year.
As a result of yesterday’s ruling collectors should be able to resume the practice of supplying information regarding a debt to vendors who provide mail and other contact efforts. The previous ruling by the lower court had created a serious conflict for the debt collectors and using third party vendors to contact debtors. This decision returned the industry back to its original premise of using outsourcers to make debt collection contacts. The plaintiff has the option to appeal the decision to the Supreme Court or could file the case in Florida State Court.
A copy of the courts decision can be read and reviewed by clicking here.