On May 25th, Preferred Collection and Management Services, Inc., defendant in the tumultuous decision in the matter of Hunstein v. Preferred Collection & Mgmt. Services., Inc., filed its petition for a rehearing en banc. Preferred is asking that the 11th Circuit grant a “panel rehearing or, rehearing en banc, of the panel’s decision rendered on April 21st. At stake is a continuous avalanche of class action lawsuits from coast to coast.
On April 21, 2021, the U.S. Court of Appeals for the Eleventh Circuit issued a decision on Hunstein v. Preferred Collection and Management Services, Inc., which on first impression, finds that a debt collector’s transmittal of a consumer’s personal information to its letter vendor constituted a prohibited third-party communication “in connection with the collection of any debt” within the meaning of section 1692c(b) of the Fair Debt Collection Practices Act (“FDCPA”). This ruling has broad ramifications for the collections and accounts receivable management industries and opened the door for over one-hundred lawsuits in it’s wake.
Richard J. Perr, ACA International Board Member and attorney for Preferred Collection and Management Services, Inc., wrote in the opening statement of counsel; “the panel’s decision is contrary to the following decisions of the Supreme Court of the United States and the precedents of this circuit and that consideration by the full court is necessary to secure and maintain uniformity of decisions in this court”.
Perr, along with co-managing partner of Kaufman Dolowich & Voluck, LLP, and Robert Vigh of Solomon, Vigh & Springer are arguing that the court’s initial April opinion departed from U.S. Supreme Court and 11th Circuit precedent on the issue of Article III standing and specifically on whether an alleged statutory violation of 15 U.S.C. Section 1692c(b) constitutes a “concrete injury.”
The petition goes on to argue that the panel’s analogy to the common-law tort of “public disclosure of private facts” failed to make a “close connection” between the harms that Congress sought to prevent with the enactment of 1692c(b), the harms that the plaintiff alleged (or didn’t allege), and harms that have traditionally been regarded as a primary basis for lawsuits in American courts.
The defendants petition alleges that “[t]he panel did not examine whether Plaintiff’s specific allegations were the type that bore any relationship to a harm protected at common law. If it had, as mandated by [existing Supreme Court and Eleventh Circuit precedent], the panel could not possibly have determined that the alleged violative conduct was the type that is ‘traditionally’ protected [under common law].”
In addition to the previous arguments, the petition also makes note that the Colorado Supreme Court has previously maintained that the use of letter vendors by collection agencies poses no harm to consumers, citing Flood v. Mercantile Adjustment Bureau.
The petition goes as far as using the Consumer Financial Protection Bureau’s (CFPB) amendments to Regulation F, and other CFPB resources and actions, demonstrate that a debt collector’s use of a letter vendor is not a per se violation of the FDCPA’s prohibition on third-party disclosures.
With the petition filed, the deadline for amicus briefs against the ruling will be June 1st, and it is expected that there will be several. ACA International has been working with a broad spectrum of affected stakeholders in coordination of their amicus efforts and has retained renowned appellate attorney Shay Dvoretzky of Skadden Arps as the ACA’s amicus counsel.
No deadline for a response to the petition is known, nor when a hearing would be conducted if granted. In the meanwhile, the class action lawsuits blossoming as the result of this decision continue to pile up and now number well in excess of 120.
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