Hunstein v. Preferred Collection and Management Services Inc.

FAIR DEBT COLLECTION PRACTICES ACT
Hunstein v. Preferred Collection & Management Service Inc.
Date: Jan. 18, 2022

Issue: Does a plaintiff have Article III standing to sue a debt collector for violating the Fair Debt Collection Practices Act by transmitting private information to a third-party mail vendor?

Case Summary: ABA and a group of trades (Amici) filed an amicus brief urging the full Eleventh Circuit (en banc) to reverse a panel decision ruling Hunstein demonstrated a concrete injury for Article III standing by alleging Preferred transmitted his private information to a third-party mail vendor in violation of the FDCPA. 

Hunstein incurred a debt to a hospital for his son’s medical treatment. The hospital assigned the debt to Preferred Collections & Management Services, a debt collector, that in turn hired a California-based commercial mail vendor to handle the collection. Preferred transmitted the following information about the plaintiff to the mail vendor: (1) his status as a debtor; (2) the exact balance of his debt; (3) the entity to which he owed the debt; (4) the debt concerned his son’s medical treatment; and (5) his son’s name. The mail vendor used the information to generate and send a dunning letter (notice of overdue payment) to plaintiff.

Hunstein sued Preferred alleging FDCPA violations, which the district court dismissed for failure to state a claim. However, a three-judge panel in the Eleventh Circuit reversed in Huntstein I. The panel ruled Hunstein alleged a concrete FDCPA injury to satisfy Article III standing, and Preferred’s transmittal of Hunstein’s personal information to its vendor constituted a prohibited third-party communication “in connection with the collection of any debt” under FDCPA Section 1692c(b). The Eleventh Circuit reasoned the transmittal “bore a relationship or association to its collection of [plaintiff’s] debt.” The Eleventh Circuit concluded Hunstein alleged a communication “in connection with the collection of any debt as that phrase is commonly understood.”

Following the Supreme Court’s decision in TransUnion, the same Eleventh Circuit panel reconsidered its first unanimous ruling. In a 2-1 decision, the panel upheld its prior ruling. First, on standing, the majority determined that the plaintiff had Article III standing because he suffered “an intangible injury resulting from a statutory violation.” Second, on the merits, the majority concluded the plaintiff sufficiently alleged a claim for an unauthorized disclosure of debt under FDCPA Section 1692c(b). However, on November 17, 2021, the Eleventh Circuit agreed to hear the case en banc. 

Amici filed an amicus brief advancing three arguments. First, the brief urged the full Eleventh Circuit to dismiss the appeal for lack of Article III standing under TransUnion. Amici explained Hunstein brought the lawsuit challenging a private disclosure of information from Preferred to its vendor hired to prepare a dunning letter. Amici asserted Hunstein suffered no sort of harm analogous to the common law torts of public disclosure of private facts. In effect, the brief concluded Hunstein did not suffer an injury in fact and thus the Eleventh Circuit should dismiss the appeal. 

Second, the brief argued if the Eleventh Circuit reaches the merits, the Court should reject Hunstein’s expansive interpretation of Section 1692c(b) as prohibiting all communications by a debt collector “with reference to” or “concern[ing]” a debt. The brief explained Hunstein’s interpretation contravenes the congressional intent behind the FDCPA, a contextual reading of the statute, and years of common law addressing principles of agency.

Third, the brief argued Hunstein’s reading of Section 1692c(b) contravenes the First Amendment. According to Amici, Section 1692c(b) is a content-based speech restriction, because it restricts speech based on the content of the message. As explained by Amici, “a debt collector may communicate with a mailing and printing vendor about any number of subjects. It may discuss church, politics, family life, or college football—but, under Hunstein’s interpretation, it may not broach any subject falling under the broad category of communications ‘with reference to’ or ‘concern[ing]’ a debt.” 

Further, the brief argued Hunstein’s interpretation of Section 1692c(b) fails strict scrutiny
review. When applying strict scrutiny, courts examine whether the law is “narrowly tailored to serve compelling state interests.” Amici explained Congress enacted the FDCPA to “eliminate abusive debt collection practices by debt collectors.” But Congress did not seek wholesale restrictions on the debt collection industry, recognizing the majority of “independent debt collectors perform a valuable service.” For these reasons, Amici concluded Section 1692c(b) is not narrowly tailored and fails strict scrutiny. 

Bottom Line: The Eleventh Circuit scheduled oral argument (in person) for Feb. 22, 2022. 

Download the amicus brief to read the full text.