Why You Should Wait to File a Motion for Summary Judgment in a “Hunstein” Claim – The Lessons of Khimmat

Author: Andrew Schwartz

Anyone who defends debt collectors is well aware of the Hunstein line of cases in the 11th Circuit. In the modified (Hunstein 1 and Hunstein 2, and, at-the-moment vacated Hunstein 2, pending en banc review) the 11th Circuit determined that the use of a letter vendor by a debt collector to print and mail collection letters to consumer could be deemed prohibited communication in violation of Section 1692c(b) of the Fair Debt Collection Practices Act (“FDCPA”).1 The 11th Circuit decisions seemingly ignored the intent and purpose of Section 1692c – to prevent embarrassment to a consumer through communications to friends, family members and employers. As a result, “Hunstein” lawsuits spread like dandelions.

However, until Khimmat v. Weltman, Weinberg and Reis Co., LPA, Civ. No. 2:21-CV-02944-JDW, 2022 WL 356561, at *1 (E.D. Pa. Feb. 7, 2022) no court has addressed the material claims in Hunstein (beyond dicta critical of Hunstein).

In the context of a motion for judgment on the pleadings, the Honorable Joshua D. Wolson in the United States District Court for the Eastern District of Pennsylvania, discerned that a debt collector’s use of a letter vendor could be a violation of 1692c(b) of the FDCPA.2

The decision examines whether the process of sending of consumer data to a letter vendor for the purposes of printing, folding and mailing a letter is a communication in connection with the collection of any debt with any person. The Court held that the transfer of data was a communication and that this communication was in connection with the collection of a debt. Finally, the Court left open whether the communication was to a person (i.e., whether the letter vendor perceives the content of the “communication” – whether a human read the information provided by the debt collector) and left this issue for further development of the record and summary judgment.

The Court addresses the FTC and CFPB’s indirect approval of the use of letter vendors by debt collectors. The conclusion of the Court seems correct in that the FTC and CFPB have not expanded on their general acknowledgment of the use of letter vendors to the conclusion that the use of such vendor comports with the FDCPA. It is this part of the decision that truly begs the question of when the CFPB is going take on the task of promulgating directives as to the lawful use of letter vendors. These directives are long overdue and should have been addressed in Regulation F. One can only hope that the CFPB addresses this issue with no further delay.

While this decision is unhelpful, it has some exceptional flaws. Most glaringly, when faced with the permissible use of telegram companies by a debt collector versus the use of a letter vendor, the court draws the incongruous conclusion that telegram companies are wire-based, regulated utilities and, as such, the transfer of data from a debt collector to a telegram company is different than that transfer of the same data via computer to a letter vendor. In reality, this is a distinction with no difference.

1 Hunstein is premised on a motion to dismiss standard, not a summary judgment standard.
2 Again, under the motion to dismiss standard.

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