FDCPA UPDATE – Hunstein v. Preferred Collection

11th Circuit Court of Appeal Vacates Prior Decisions and Sets Up En Banc Rehearing

GUEST EDITORIAL

November 30, 2021 – On November 17, 2021, the 11th Circuit Court of Appeal issued an Order to rehear Hunstein v. Preferred Collection en banc (meaning the entire court – 12 active judges – will rehear the case instead of the usual 3-judge panel). The Court also ordered that the prior 3-judge panel decisions issued in April 2021 (3-0 decision in favor of Plaintiff) and October 2021 (2-1 decision in favor of Plaintiff) were VACATED. This means the prior Hunstein decisions are no longer good law.

Interestingly, the Court issued a memorandum on November 23, 2021 directing that the parties’ attorneys focus their briefs only on whether Plaintiff Hunstein has Article III standing to bring the lawsuit. It is possible that by focusing only on whether Hunstein has alleged a “concrete injury” the Court may not necessarily be looking at whether the defendant’s use of a third-party mail vendor qualifies as a violation of the FDCPA.

Previously in April 2021 and October 2021, the Court had reached the conclusion that the Defendant (Preferred Collection) had violated the FDCPA (15 USC 1692c(b)) by using a third party mail vendor to send out demand letters on defaulted accounts. Specifically, the 11th Circuit Court reversed a district court ruling and held that when a debt collector provides a third-party letter vendor with personal account information relating to the collection of a debt, it rises to the level of an impermissible communication with a third party to which there is no exception if there is no consumer consent. In other words, a violation of the FDCPA. The prior appellate decisions had also found that Hunstein had alleged sufficient facts to support a finding of Article III standing.

For purposes of the rehearing, the Court also directed Preferred Collection and Hunstein to serve and file their briefs by December 23, 2021 and January 18, 2022. An en banc reply brief must be filed by February 1, 2022 and oral argument will be conducted during the week of February 21, 2022.

The Court also appears to want oral arguments to be brief by only allowing for 20 (twenty) minutes per side. Given the limited scope and time allowed for the rehearing, the 11th Circuit may be looking to hear argument relating to footnote 6 of the US Supreme Court’s decision in Transunion v. Ramirez.

In that footnote, the US Supreme Court appeared to severely undercut Hunstein’s FDCPA claims by noting that standing may be difficult to achieve under Article III of the US Constitution. These new developments have yet again shaken up the debt collections industry and it appears that the Hunstein case is far from over. Regardless of how the case is ultimately decided by the 11th Circuit in 2022, the case may still end up before the US Supreme Court and further extend the saga into 2023. Stay tuned.