Yesterday, the 11th Circuit Court of appeals issued a substitute opinion in Hunstein vs. Preferred Collection & Management Services, Inc , 994 F.3d 1341 (11th Cir. 2021), which now stands in place of the original opinion. Although the substitute opinion does not change the holding of the case, it now includes a scathing dissent, which may pave the road for the defense of copycat cases across the country.

On April 21, 2021, when the original opinion holding that (a) the consumer had standing to bring the action; and (b) transmitting data to a mail vendor is an unauthorized third-party disclosure, all three of the judges on the panel (Newsom, Jordan, and Tjoflat) were united in that decision. In yesterday’s substitute opinion, Judge Tjoflat issued a dissent that makes it clear he no longer agrees with the majority’s holding; the tension between the majority opinion and the dissent was palpable throughout all 65 pages of the opinion.

What happened since April that Judge Tjoflat Changed his Mind?


Two significant events occurred after the original Hunstein opinion was issued:

  • The debt collector, Preferred Collection and Management Services (Preferred), retained new counsel and moved for a rehearing En Banc. In support of that motion, interested parties filed over twenty Amicus Briefs, including one from the Consumer Relations Consortium. (Editors Note: the original decision came from a 3-judge panel. An En Banc Motion is a request to have all judges in the Circuit hear the issues, not just the original panel of three. Amicus Briefs are briefs filed by those who are not parties to the lawsuit but have an interest in the outcome.)
  •  On June 28, 2021, The Supreme Court of the United States decided TransUnion v. Ramirez, 594 U.S. ____ (2021), which held, “no concrete harm, no standing,” while providing guidance regarding what constitutes a concrete harm.

In his dissenting opinion, Judge Tjoflat explained that he had been swayed because the original opinion “Sweeps much more broadly than TransUnion would allow.”  Further, the dissent cited several amicus briefs, including the brief filed by the Consumer Relations Consortium, concluding that Mr. Hunstein suffered no additional harm beyond the statutory violation.  

Regarding the substitute opinion, Brit Suttell, an Attorney with Barron & Newburger, P.C. and Legal Advisory Board member who co-authored the Consumer Relations Consortium’s amicus brief, stated,

“The industry effort to sway the 11th Circuit gained traction with at least one judge (the dissenter) who clearly familiarized himself with all the amicus briefs (including CRC’s – see footnote 13 of the dissent).  It’s too bad the rest of the panel was unpersuaded.  The industry needs to be prepared to continue to fight these claims as it is clear they are not going away.”         

Along those same lines, Jessica Klander, Shareholder with Bassford Remele, and Legal Advisory Board member who co-authored the Consumer Relations Consortium’s amicus brief had this to say regarding the opinion,

“At first glance, this new opinion looks disappointing because two of the judges refused to budge on their initial determination and even appear to double-down.  But upon further consideration, this new opinion contains a positive development with the addition of a dissenting opinion. Clearly, the petition and amici briefs changed one judge’s mind. The dissenting opinion is well reasoned and adopts many of the industry arguments, including those from the CRC’s brief. Hopefully, the dissent will provide fuel to get this overturned in the future. In the meantime, the dissent provides additional support for industry members currently defending against these claims - particularly in jurisdictions other than the 11th Circuit.”

Key Takeaways From the Dissent:

In his dissent, Judge Tjoflat provided several arguments to support his position that the majority's opinion was incorrect, including: 

  • Transunion stands for the proposition that analyzing a case for an intangible harm sufficient for Article III standing is individualized for every plaintiff. Just because some Plaintiff’s injuries will have a common-law analogue does not mean other plaintiffs who allege a violation of the same statute will automatically have standing.  (see this article for a short primer on Article III standing)
  •  The majority held that Mr. Hunstein’s alleged harm was analogous to the tort of public disclosure of private facts. This particular tort requires 1) publicity of private information, 2) that would be highly offensive to a reasonable person, and 3) that is not of legitimate public concern.  Judge Tjoflat opines that the majority opinion’s finding is incorrect because:

a.   “Publicity” means the matter is made public by communicating it to the public at large or to so many persons that it is substantially sure to become public knowledge, neither of which was alleged in the Hunstein complaint. The only entity to which the information was conveyed was the letter vendor.

b.   The majority opinion stated that the publicity prong was satisfied because "publicity" entails communication and Preferred’s counsel’s admitted the transmission of data was a communication. Judge Tjoflat called the majority’s reasoning “baffling,”  and went on to say, “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.”  

c.   The majority opinion’s lack of any analysis regarding the other two prongs of the requirements for a public disclosure of private facts claim (offensive to a reasonable person and not of legitimate pulis concern) “signals the sheer misfit between sending debt collection notices through a mail vendor and the tort itself.”  He then cited examples where disclosures regarding debt were deemed not offensive and said trying to apply the third prong is “nonsensical because the public does not know anything about Hunstein’s debt. Only the mail vendor has been given access to Hunstein’s information." 

  • Congress seemed to explicitly envision the role of intermediaries, like mail vendors, in the statutory scheme. Specifically, Judge Tjoflat pointed out the verbiage in the Fair Det Collections Practices Act (FDCPA) where debt collectors are authorized to use telegrams, and states the majority “has yet to explain how a mailing vending company is any different from a telegram company.”
  • If Congress had been trying to eliminate mail vendors, it has not been clear to the Bureau of Consumer Financial Protection (CFPB). Under Regulation F (Reg F), the new rules go into effect on November 30, 2021, expressly contemplate the use of mail vendors.
  • Hunstein suffered no harm beyond the statutory violation.
  • If the case were to reach an analysis on the merits of the claim, there is a strong argument that the mail vendor is a “medium” under the FDCPA, not a person. As such, Preferred was not communicating with the mail vendor when it sent the information, just like a debt collector is not communicating with a telegram company when it sends a telegram to a debtor. (Editors Note: the Hunstein case was reviewed on a motion to dismiss. At this stage in litigation, a court must accept all allegations in the complaint as true, and the parties are not permitted to argue the merits of the case or present evidence.)

The complete opinion can be found here

InsideARM Perspective:

Since April, we’ve already seen courts outside the 11th Circuit rule that Transunion dictates that Hunstein copycat case consumers lack standing. As noted by Brit Suttell and Jessica Klander, while it is disappointing that two of the three judges held firm on their original holding, the dissent should be a valuable tool for those defending copycat cases. In addition to providing legal arguments regarding standing, the dissent’s inclusion of the arguments raised in the amicus briefs provides a basis for debt collectors to raise those issues in their defense of copycat cases, and perhaps by using this dissent as a roadmap, we will see more dismissals.

Another takeaway from this decision, particularly as the effective date of Reg F is right around the corner, is the importance of choosing the correct counsel for the defense of FDCPA matters. This means engaging actual FDCPA defense attorneys, not collections attorneys who dabble in defense or attorneys who merely advertise that they deal in “creditors rights” but have no track record. As shown by Hunstein, the fallout from bad decisions can affect the entire ARM industry in significant ways. Genuine FDPCA defense attorneys are not hard to find.

The above statement is not theoretical: in the substitute opinion, the majority once again relied on Preferred’s original counsel’s admission that transmitting data to a mail vendor was a “communication” as defined in the FDCPA. The only person who seems to think this admission was correct is the person who made it; not a single FDCPA defense expert has agreed with this contention. The admission certainly backed this case into an unpleasant corner since the original opinion seemed to hinge on it. 

Additionally, in support of its holding that the Transunion decision does not require the Hunstein case to be dismissed for lack of standing, the majority cited the case of  Lupia v. Mericredit Inc. (Case #20-1294, 10th Cir). Lupia was a bad case from the beginning. A debt collector attempted to argue a bona fide error defense while simultaneously admitting on the record that it did not have policies or procedures. After losing in the district court, despite having no fundamental basis for a bona fide error defense, the case was inexplicably appealed to the 10th Circuit. Since the Lupia opinion was issued after Transunion came out, the opinion included a section on standing, which did not favor the ARM industry. As noted when the decision came out, no good can come from appealing a bad case, and we see the results here. Was Lupia the crux for the majority’s decision in the Hunstein substitute opinion? No. However, it certainly provided fuel for the fire.

This issue is important to mention at this juncture because the effective date of Reg F is right around the corner. The ARM industry expects a flurry of lawsuits in the initial months following the effective date. If debt collectors do not choose their defense counsel wisely, there is a very real possibility that we will see bad decisions regarding Reg F, which must be followed by the rest of the industry.

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