On April 21, 2021 the United States Court of Appeals for the Eleventh Circuit issued an opinion in Hunstein v. Preferred Collection and Management Services, Inc. in Case Number 19-14434. The full opinion can be found here.
The appeal addresses a question of first impression under the Fair Debt Collection Practices Act (FDCPA), which essentially asks: does a communication between a debt collector and its vendor qualify as “in connection with the collection of any debt?” The Eleventh Circuit held it does, thus significantly broadening the reach of FDCPA claims.
Hunstein incurred a debt to John Hopkins All Children’s Hospital arising out of his son’s medical treatment. The hospital then assigned its claim to Preferred Collections and Management Services, Inc. (Preferred) for collections. In turn, Preferred engaged Compumail as its commercial mail vendor. In doing so, Preferred transmitted to Compumail certain information regarding Hunstein including 1) his status as a debtor, 2) exact balance of his debt, 3) the entity to which he owed the debt, 4) that the debt concerned his son’s medical treatment and 5) his son’s name. Compumail then used that information to generate and send a demand letter to Hunstein.
The FDCPA was enacted to help prevent debtors from overreaching and threatening communications. For instance, a debt collector calling your boss, friends, neighbors and even family repeatedly to bully you into paying their debt. To state a claim under X 1692c(b), a plaintiff must show that in relation to a consumer debt that a debt collector communicated with someone other than the consumer in connection with the collection of that debt. The parties here conceded that this was in fact a consumer debt, Preferred qualified as a debt collector and that Hunstein was a consumer. Therefore, the only issue at hand was whether Preferred’s communication to its mail vendor Compumail was “in connection with the collection of a debt.”
The Court began with the plain meaning of the phrase “in connection with” to mean “in a relationship or associated with” to answer the question in the affirmative. The Court then rejected each of Preferred’s three responses. First, they deny reading into the phrase a demand for payment – otherwise it would render Congress’ enumerated exceptions as redundant. Second, the Court rejects Preferred’s argument for a holistic, seven-factor balancing test (borrowed from a Sixth Circuit unpublished opinion in Goodson v. Bank of Am., N.A., 600 Fed. Appx. 422 (6th Cir. 2015) examining a different section in the FDCPA) because there is a discernibly ordinary meaning that obviates the need for factors. Third, and perhaps the argument that came closest, is that Preferred urged the Court to examine what the “industry practice is”. Debt collectors as a whole rely on mail carriers, as well as a plethora of other vendors, in operation. The Court ends its analysis by admitting the practical implication to its ruling is that it “runs the risk of upsetting the status quo in the debt-collection industry.” Therefore the opinion may require debt collectors (at least in the near term) to in-source a number of functions possibly at a great cost. But, the Court notes that “if Congress thinks that we’ve misread 1692c(b) – or even that we’ve properly read it but that it should be amended – it can say so.”
If you, or someone you know, is dealing with FDCPA issues please have them contact the Jennis Morse Etlinger firm as soon as possible to discuss at 813-229-2800 or firstname.lastname@example.org.
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