Just before noon today, the Eleventh Circuit Court of appeals issued an order (Order) vacating its opinion in Hunstein vs. Preferred Collection & Management Services, Inc, 994 F.3d 1341 (11th Cir. 2021), which means Hunstein is no longer good law.  

The Order also states that the 11th Circuit will rehear the matter en banc (en banc means the full panel of 11th Circuit Judges will hear the matter).  The rehearing date has not been set yet. 

Brief History:

The Hunstein Opinion created shockwaves throughout the ARM industry in April 2021 when the Eleventh Circuit held 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. 

While the substitute opinion did not change the holding, it included a scathing dissent that included language taken directly from several amicus briefs, including the brief filed by Jessica Klander of Bassford Remele and Brit Suttell of Barron & Newburger, P.C. on behalf of the Consumer Relations Consortium. Their brief 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.

Brit Suttell stated that today's developments are "an interesting turn of events and should get the attention of everyone in the industry.  We still need to understand what exactly the Court is going to want to be briefed – are they going to take a closer look at the standing argument or the underlying substantive argument regarding § 1692c(b)?"

insideARM Perspective:

This is big news for the ARM industry. The Hunstein opinion has done little for consumer protection while creating a windfall for consumer attorneys. While we have no way of knowing how the Eleventh Circuit will decide after rehearing the matter, courts outside the Eleventh Circuit have already suggested that that the Transunion decision calls Hunstein's viability into question.  We will continue to provide updates as they unfold.

Next Article: TCN Launches Online Regulation F Guide for ...