THE PANEL WON’T BUDGE: Eleventh Circuit Panel Reaffirms Hunstein Post-Ramirez Over Fierce Dissent– Pages-Long Footnotes Required to Defend Position

Let me start with this, because it makes me feel better:

This is like saying that sugar cookie batter is the same thing as chocolate chip cookie batter because sugar cookie batter would be chocolate chip cookie batter if you added chocolate chips.

Now, that’s a nice line to find in a dissent.

But all we can enjoy from a new ruling out today are the one liners, the zingers, and the back-and-forth sparring between a relentlessly-straightforward dissent and a wearisome–but ultimately binding–amended panel decision in Hunstien handed down today.

Read it here: Hunstein (Amended)

Setting the stage, the Eleventh Circuit issued one of the biggest FDCPA cases in history earlier this year, holding that supplying debtor information to a mail vendor violated the FDCPA prohibitions on “communicating” information about a debt to third parties.

The ruling created massive practical problems–very few debt collectors have back office mail functions in-house–and sparked a slew of oddball tactics (like granting third-party mailers attorneys-in-fact designations) to try to avoid the impact of Hunstein.

As I wrote at the time, the Hunstein ruling rested on extremely shaky ground from an Article III perspective, an observation that seemed entirely confirmed when the Supreme Court handed down Ramirez just a few weeks later. (Indeed, courts were quick to note the seemingly irreconcilable tension between Ramirez and Hunstein just as I had predicted.)

But if all the world seems to now see the critical central fallacy underlying the Hunstein ruling, the Huntein panel itself refuses to acknowledge it.

In a remarkable ruling out today, the Eleventh Circuit has vacated its previous ruling and replaced it with a much longer opinion holding strong on its core findings. Specifically:

  1. A violation of the “no sharing debtor information data” causes actionable Article III harm, even in the context of data passed to a mail vendor; and
  2. Giving debtor information to a vendor constitutes an illegal act under the FDCPA.

With Ramirez looming large over the analysis–and an absolutely devastating dissent to contend with–the amended opinion is ever-defensive and self protective. Pages of footnotes–literally footnotes that consume entire pages–are supplied to rebut the points made by the dissent and the opinion attempts to skew Ramirez as supporting the Hunstein panel’s standing analysis.

On that subject, the Eleventh Circuit gives us a new Article III mantra: “Kind not degree.”

In assessing whether the violation of a statute gives rise to actionable intangible harm the question is one of whether the protected interested is of the same “kind” that is typically protected at common law. Not whether the “degree” of harm is the same.

So, for instance, sharing sterile debtor information with a mail vendor causes the same “kind” of intangible harm as sharing salacious rumors in a tabloid magazine. That the “degree” of harm caused by the two acts varies is irrelevant to the standing analysis.

Except, it isn’t. The Eleventh Circuit has already held that Article III standing is a “qualitative” inquiry–meaning that the degree of harm is certainly at issue. (And it is also far from clear to me that disclosing data to a vendor for private use causes the same “kind” of harm that you might suffer from the wildly public disclosure of something deeply personal and private.)

But in Hunstein (Amended) the panel spends pages convincing the reader–and perhaps itself– that Ramirez really does compel the result. After all the Supreme Court sharply observed that statutes don’t have to perfectly match common law claims to create Article III harm (which is true.) But it is also true that the Supreme Court drew a tight cord around the match that must exist.

And the funnest part is that the Supreme Court’s “the match has to be pretty close” footnote literally deals with the tort setting similar to that which animates Hunstein (Amended)— defamation.

Backing up, the Supreme Court literally rejected a theory that “private disclosure” of information can cause Article III harm because it “circumvents a fundamental requirement of an ordinary defamation claim—publication—and does not bear a sufficiently ‘close relationship’ to the traditional defamation tort to qualify for Article III.”

But the Hunstein (Amended) panel is unconvinced. Recognizing that the debtor’s information could have been supplied more broadly than necessary to the vendor’s employees, the Court cannot definitively say that the Plaintiff lacks standing in the context of a motion to dismiss.

And that may be the most important piece of Hunstein (Amended). The idea that something more than the mere disclosure of data to a vendor is needed to afford Article III standing, after all.

The dissent, however, perfectly synthesizes Ramirez and its impact. No, Ramirez does not require a precise match, but it does require some match between a statute and the underlying common law theory–that’s what the Supreme Court’s FN6 and the attendant defamation discussion is all about.

Zooming in on the “public disclosure” tort that animates the Hunstein (Amended) panel’s decision the dissent points out that disclosure to a few people is not “publicity.” But “publicity” is require to make out a “public disclosure claim. So, just like with a defamation lacking publication, Article III cannot abide a showing of harm in a “public disclosure” setting that does not yield actual “publicity.”


Of course the Hunstein (Amended) panel pointed out that the Defendant admitted the debt information had been “communicated” but, as the dissent points out, that does not mean it was communicated far and wide. And that some communication is necessary to both public and private disclosure is as germane as sugar cookie mix serving as the base for both regular and chocolate cookies (love that line!)

In the end, the Hunstein (Amended) dissent gets it:

I start with the premise that the FDCPA did not mean to eliminate debt collection practices. It meant to eliminate abusive debt collection practices. And that difference should animate how we view standing in this case.

Here here.

Sorry for the glum news folks. That said, this amended ruling is very likely to lead to an en banc review. Hang in there.


1 Comment

Leave a Reply