Appeals Court Dismisses Hunstein for Lack of Standing

The Court of Appeals for the Eleventh Circuit issued its long-awaited ruling in Hunstein v. Preferred Collection & Management Services today, dismissing the case because the plaintiff lacked standing to sue in federal court.

A copy of the ruling can be accessed by clicking here.

“Because Hunstein has alleged only a legal infraction — a ‘bare procedural violation’ — and not a concrete harm, we lack jurisdiction to consider his claim,” the Appeals Court wrote.

The ruling, issued by eight of the 12 judges sitting on the Eleventh Circuit, brings an end to the case that has rocked the accounts receivable management industry since it issued its first ruling in the case more than 18 months ago.

Relying heavily on the Supreme Court ruling in TransUnion v. Ramirez, the Eleventh Circuit stressed that the injury the plaintiff needed to have suffered had to be “real” for him to have standing.

“What harm did this alleged violation cause?” the Court asked in its opinion. “Hunstein’s complaint does not say. Even now, he points to nothing tangible like financial loss or physical injury. Instead, he says that by sending the information about his debt to the mail vendor, Preferred Collection committed an act similar to the tort of public disclosure. The problem with this comparison is evident from the start: the disclosure alleged here lacks the fundamental element of publicity. And without publicity, there is no invasion of privacy — which means no harm, at least not one that is at all similar to that suffered after a public disclosure.”

It is worth noting that the ruling was not unanimous. Four judges, including Judge Kevin Newsom, who authored one of the three opinions that the Eleventh Circuit has issued on the case, wrote a dissenting opinion arguing all the reasons why the plaintiff has suffered a concrete injury and has standing to sue.

“Hunstein alleges that his privacy was compromised when his intensely private information was disclosed to a group of strangers,” Judge Newsom wrote in his dissent. “That’s the same sort of harm that common-law invasion-of-privacy torts — and in particular, public disclosure of private facts — aim to remedy. To be sure, just as the disclosure that Hunstein alleged might have been less extensive than that typically associated with a common-law invasion-of-privacy claim, the harm that Hunstein experienced may have been less severe. But those, again, are differences in degree, not kind.”

In this case, the plaintiff incurred a medical debt that was placed with the defendant for collection. The defendant electronically transmitted information about the plaintiff, including his status as a debtor, the exact balance of the debt, the entity to whom the debt was owed, that the debt concerned his son’s medical treatment, and his son’s name to a third-party company that specializes in printing and mailing letters. That information was added to a collection letter and sent to the plaintiff.

The plaintiff sued, alleging that the disclosure of the information to the letter vendor violated the third-party disclosure provisions of the FDCPA. A District Court judge disagreed and dismissed the suit, which was appealed to the Eleventh Circuit.

Thousands of lawsuits have been filed making similar allegations as the ones in this case, and cases have proceeded across the country as everyone waited to see how the Eleventh Circuit would rule after holding an en banc rehearing earlier this year.

It remains to be seen what happens from here. The plaintiff could appeal the ruling to the Supreme Court or he could refile in state court in Florida, which has a different threshold for standing.

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