Re-examination of the “injury in fact” with Hunstein II

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This article originally appeared in the January 2022 edition of DS News magazine, online now.

Recently the three-judge panel of the Eleventh Circuit issued a new opinion in Hunstein v. Preferred Collection and Management Services, drafted as Hunstein II, and overturned its earlier April 2021 ruling by a 2: 1 vote. While the industry remained cautiously optimistic that the court would be swayed by the recent SCOTUS decision in TransUnion v. Ramirez, the court ultimately decided to uphold its original ruling. In addition, the Court went to great lengths to demonstrate that its position is consistent with that of TransUnion.

As readers will recall, the subject-matter of the appeal was the first branch of standing under Article III, “prejudice in fact”. The plaintiff’s injury was that the defendant’s debt collector violated the consumer’s privacy rights when he provided information to a third-party mail seller regarding a debt owed by the plaintiff for the medical treatment of his son. In the context of the FDCPA, the eleventh circuit considers that the following elements must be present to satisfy the aspect of the prejudice in fact: a legally protected interest, the concreteness, the particularization and the imminence.

The Court chose to start with the “concrete” aspect: the concrete nature of the damage was indicated as follows: (1) tangible damage, that is to say financial loss, physical damage and emotional distress; (2) a “risk of actual harm”; or (3) in the absence of (1) or (2), the plaintiff can demonstrate what the Court calls “intangible but nonetheless tangible damage” which may have resulted from a violation of the law.

Applying Ramirez, the Court held that (1) § 1692c (b) maintains a long recognized relationship with the “common tort of public disclosure of private facts” as sufficient to formulate a claim, and (2) “The Congress ruling indicates that violations of §1692c (b) constitute tangible harm. The Court then reiterated its earlier ruling, without material change, that the claimant had properly made an FDCPA claim.

Having concluded that there was sufficient evidence of concrete harm, the Court turned its attention to whether, in order to overcome the motion to dismiss, the impugned act constituted a violation of the FDCPA. The Court concluded that because (1) the defendant was a debt collector and (2) the communication between the defendant and the seller was a communication relating to the collection of a debt, a breach of the FDCPA was sufficiently alleged and that the case must survive the Motion to dismiss.

As the dust settles, there is no shortage of speculation about the impact Hunstein II will have on our industry. Many commentators have sought to allay fears that Hunstein II could bring about an end to outsourcing (at least in the Eleventh Circuit). They remind us that the court’s decision, which will be reviewed, was linked to a motion to dismiss and that the plaintiff has a long way to go and a lot to prove to prevail over their lawsuit.

Moreover, recent events show that the debate is far from over. On November 17, the Eleventh Circuit Court of Appeal voted to overturn the Hunstein II decision of October 28, 2021 and have the case reheard in the bench. As the saying goes, only time will tell.

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