Last week, the Eleventh Circuit Court of Appeals vacated its opinion in Hunstein vs. Preferred Collection & Management Services, Inc. The Court also advised in their order vacating the opinion that the Court would rehear the matter en banc (en banc means the full panel of 11th Circuit Judges will hear the matter).

Today, the Court issued a Memorandum which sets the date for the en banc hearing (the week of February 21, 2022), as well as the dates by which briefs must be submitted. The Court also instructed counsel to focus their briefs on one issue: Does Mr. Hunstein have Article III standing to bring this lawsuit?

A Brief History of Hunstein:

The Hunstein Opinion created shockwaves throughout the ARM industry in April 2021 when the Eleventh Circuit held that transmitting data to a mail vendor is an unauthorized third-party disclosure.  In May 2021, the debt collector defendant, Preferred Collection & Management Services, Inc (Preferred), filed a petition for rehearing en banc. In late May and June 2021, 17 parties with an interest in the outcome, including the Consumer Relations Consortium, filed amicus briefs to ensure all the legal issues surrounding the case were presented to the Eleventh Circuit. 

Later in June 2021, the Supreme Court issued its order in TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2204 (2021).  Preferred immediately filed a notice of supplemental authority arguing that the Transunion opinion supported Preferred's request for rehearing en banc.  In October 2021, the three-judge panel which issued the April 2021 Hunstein opinion issued a substitute opinion to take the place of its original opinion.

Legal Advisory Board Comments:

Jessica Klander: The 11th Circuit has limited its consideration for the upcoming en banc rehearing on the sole issue of Article III standing.  This is the easiest route for the Court to dismiss the lawsuit without getting into the substance of claims.  The good news here is that the original Hunstein order has been vacated so if this Court determines that the plaintiff lacks standing and dismisses the lawsuit, then Hunstein claims filed in federal courts have a strong basis for dismissal due to lack of standing. Unfortunately, however, a dismissal here for lack of standing means the claim is still viable in state court so this may not be the end of the road for Hunstein copy-cat cases filed in state courts.  

Brit Suttell: I was hoping that the Court would take a broader look at the underlying FDCPA implications of the original holding rather than limiting the review to Article III standing.

Brit and Jessica filed an amicus brief on behalf of the CRC, which argued in part that the CFPB has authorized the use of mail vendors since Regulation F (Reg F) specifically discusses letter vendors as part of the collections ecosystem. This argument made it directly into footnote 13 of the dissent in the October 2021 substitute Hunstein opinion.

Note: The Legal Advisory Board (LAB), is an exclusive membership group of outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the Consumer Relations Consortium (CRC). Throughout the year, the LAB serves as a legal resource to the CRC and iA Innovation Council membership and assists in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.

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