Consumer Financial Services Litigation

Key Points:

• For a claim to survive in federal court, a plaintiff must have standing.
• For there to be standing, there must be “concrete harm”/injury-in-fact, causation and redressability.
• An intangible harm resulting from a statutory violation, with nothing more, requires comparison to a civil wrong for which courts traditionally impose liability, and, to survive, the violation of the statute must not be missing an element “essential to liability” under the comparator tort.

For a claim to survive in federal court, a plaintiff must have standing. For there to be standing, there must be “concrete harm”/injury-in-fact, causation and redressability. A statutory violation brings into question the concrete harm/injury-in-fact requirement. Many cases, especially in the Fair Debt Collection Practices Act (FDCPA) and Telephone Consumer Protection Act (TCPA) arena, have grappled with whether a statutory violation alone, with no further action or harm, constitutes concrete harm necessary for standing and for a lawsuit to survive.

In September 2022, in Hunstein v. Preferred Collection & Mgmt. Services, Inc., 48 F. 4^th 1236 (11^th Cir. 2022), the Eleventh Circuit Court of Appeals concluded that any statutory violation must be likened to the elements of a traditional common-law tort to assess whether concrete harm exists. In other words, an intangible harm resulting from a statutory violation, with nothing more, requires comparison to a civil wrong for which courts traditionally impose liability to survive.

However, the comparison of a statutory violation to a tort, for standing purposes, does not need to be exact. The important part in comparing the statutory violation to a tort is that the violation of the statute must not be missing an element “essential to liability” under the comparator tort.

In Hunstein, the plaintiff alleged that a creditor sent his unpaid medical bill information to a mail vendor, which then sent him a letter on behalf of the creditor reminding him of the debt. The district court dismissed Hunstein’s action for failure to state a claim. He appealed, and a three-judge panel of the 11^th Circuit twice concluded, before and after the Supreme Court’s TransUnion decision, that the plaintiff had standing and reversed the district court’s dismissal. The en banc court then vacated the panel’s opinion to reconsider Hunstein’s standing.

In examining his complaint, Hunstein did not allege any concrete injury whatsoever. However, after the complaint was filed, Hunstein’s attorneys argued he experienced concrete injury analogous to the common-law tort of public disclosure. The majority opinion examined each element of a public disclosure tort to ascertain whether concrete harm existed in this case sufficient to survive dismissal. Ultimately, the appellate court decided that because the disclosure was not public in nature, a necessary element for the tort was missing. Without this element, the claim of concrete harm failed, and the complaint was remanded to the Middle District of Florida for dismissal without prejudice.

The lengthy dissent, written by Judge Kevin Newsom and joined by three other Judges, takes issue with the element-by-element approach used by the majority. The dissent states that it is wholly improper to use this approach in analyzing whether a plaintiff has standing to bring a claim under the FDCPA. Finally, the dissent accuses the majority of jumping to a conclusion, over-simplifying the standing issue and not dedicating sufficient effort to analyzing the complexities of standing.

In the future, defense counsel should be aware of and be on the lookout for statutory violation cases where the plaintiff, in alleging standing, links the alleged violation to some form of common-law tort. In so doing, whether the elements of the common-law tort are met to the degree necessary under the current law in this Circuit to implicate standing must be analyzed and evaluated before filing a response. Accordingly, we recommend practitioners monitor how the Hunstein decision is applied in future statutory violation cases.