Illinois Federal Court Dismisses Plaintiffs’ Attempt to Escape Federal Court Jurisdiction Over Cases Alleging FDCPA Violations Based on Hunstein | Ballard Spahr srl
In two cases in which plaintiffs alleged debt-collecting defendants violated the FDCPA by sharing information about their debts with third-party vendors used to prepare collection letters, an Illinois federal district court dismissed the claims. attempts by plaintiffs to refer their cases to state court. on the basis of lack of standing under Article III. The decisions are at odds with recent decisions of the Federal Court in New York.
In making their FDCPA claims, the claimants relied on the Eleventh Circuit’s decision in Hunstein v. Preferred Collection and Management Services that the transmission of debt information by a debt collector to their letter provider could violate the FDCPA limits in section 1692c (b) on communications with third parties. Originally filed in Illinois state court, the plaintiffs’ lawsuits were referred by the defendants to federal court. Both plaintiffs filed motions to transfer their cases to state court due to their lack of standing under Article III. In response, debt collectors argued that consumers had qualified to appear in federal court.
In Keller location services c. Northstar and Thomas v. Unifin, Inc., the collectors argued that the plaintiffs alleged intangible but tangible harm because their claims alleged that they had suffered an invasion of privacy. To make this argument, the debt collectors also relied on Hunstein, in which the Eleventh Circuit concluded that the alleged violation of Article 1692c (b) of the FDCPA was closely related to the harm resulting from the tort of invasion of privacy, in particular the private disclosure of private facts . The Eleventh Circuit held that a violation of Section 1692c (b) of the FDCPA gives rise to concrete factual prejudice to the quality of Article III.
Based on Hunstein and the Seventh Circuit precedent, the district court agreed with the debt collectors and found that the plaintiffs had standing under Article III to bring their FDCPA claims. As a result, the district court rejected both referral requests.
In July 2021, a federal district court in New York has dismissed six class actions Hunstein “Copies” for lack of standing under Article III. In dismissing the cases, the district court concluded that the plaintiffs’ speculative allegations of potential harm resulting from the disclosure of information by the mail vendors used by the debt collection defendants could not support the standing of article III.