Scolding plaintiff’s attorneys who “manipulate” the FDCPA for their own personal gain, U.S. District Judge Gary R. Brown on July 23 issued an opinion in a consolidated matter dismissing multiple complaints alleging debt collectors violated the FDCPA by transmitting consumer information to letter vendors engaged to print or send dunning letters.
The dismissed claims were premised upon the recent decision from the U.S. Court of Appeals for the Eleventh Circuit in Hunstein v. Preferred Collection and Management Services, Inc.
In In re FDCPA Mailing Vendor Cases, Judge Brown cites the actual purpose of the Fair Debt Collection Practices Act, long forgotten by the plaintiff’s bar, which is to “eliminate abusive debt collection practices by debt collectors” and even highlighted a few early cases where such abusive practices occurred such as calling a consumer suffering from mental instabilities 9,500 times over 11 months and making threats of false arrests.
Then he lamented the “legions of FDCPA cases that have little to do with the purpose of the statute” that inundate the Eastern District of New York.
Like many judges before him who raised “serious concern that this lawsuit reflects an attempt by plaintiff and/or his attorney to manipulate the law for an improper purpose” and who lamented the “cottage industry of plaintiffs’ lawyers filing suits over fantasy harms the statute was never intended to prevent” the Court noted that many judges had to adopt FDCPA-specific procedures to deal with the crush of cases in the district.
Until now that is.
Analyzing the Supreme Court’s recent decision in TransUnion LLC v. Ramirez in connection with the Hunstein letter vendor cases, the Court concluded that none of the plaintiffs had standing because none of them sufficiently alleged a concrete and particularized injury-of-fact sufficient to satisfy Article III standing.
It must also be noted that the Court was skeptical that Hunstein complaints were valid in the Second Circuit to begin with noting that Hunstein was not even binding on the courts.
In any event, after TransUnion there could be no doubt.
First, the Court noted that TransUnion itself likely disposes of Hunstein cases with its reasoning that “many American courts did not traditionally recognize intra-company disclosures as actionable publications for purposes of the tort of defamation” and rejection of the argument that TransUnion had “published” the class members’ information internally to employees within TransUnion.
Next, given TransUnion’s holding that “future risk of harm, standing alone, cannot qualify as a concrete harm,” the speculative nature of the Hunstein claims could not support Article III standing.
Finally, the Court reasoned that the complaints as pleaded could not plausibly demonstrate injury-in-fact under traditional defamation or intentional infliction of emotional distress theories because “simply mailing a collection letter, even if erroneous, is a far cry from ‘extreme and outrageous conduct.’”
After disposing of the Hunstein claims, the Court went on to address another popular theory that “the debts in question were not, in fact owed, and therefore constitute actionable deceptive practices.” But since neither of those plaintiffs alleged any actual injury from receiving the purportedly false notice, the Court held that “informational violations of the statute, without alleging any harm” do not confer standing.
The dismissals were without prejudice of course and plaintiffs have the ability to file amended complaints properly alleging some actual injury-in-fact. Or they are free to file in New York State court and take their chances there.