Nov. 8, 2023 – A credit card company disclosed information about a debtor to a mail vendor, but that action did not give the debtor standing to sue the credit card company in federal court, the U.S. Court of Appeals for the Seventh Circuit has ruled.

In Nabozny v. Optio Solutions LLC, 22-1202 (Oct. 23, 2023), a three-judge panel for the Seventh Circuit Court of Appeals held that the debtor-plaintiff suffered no concrete harm because the debtor’s information was not made public.

Dunning Letter Sparks Lawsuit

In July 2020, Optio Solutions LLC (Optio) sent Mary Nabozny a letter trying to collect on a credit card debt.

The letter was printed and mailed by RevSpring, Inc., (RevSpring) a third-party mail vendor hired by Optio.

Nabozny responded to the letter by filing a lawsuit in the U.S. District Court for the Western District of Wisconsin.

Nabozny alleged that by using a third-party vendor to contact her, Optio violated section 1692(c)(b) of the Fair Debt Collection Practices Act (FDCPA).

That section prohibits debt collectors from communicating with anyone but the debtor when attempting to collect a debt.

Dismissed for Lack of Standing

Optio argued that Nabozny lacked standing to sue because she’d suffered no injury.

Nabozny argued the U.S. Court of Appeals for the Eleventh Circuit had recently held in Hunstein v. Preferred Collection and Mgmt. Servs., Inc. 994 F.3d 1341 (11th Cir. April 21, 2021) that a plaintiff in a situation identical to hers had standing to sue under section 1692(c)(b) of the FDCPA.

The district court concluded that Nabozny lacked standing and dismissed her lawsuit.

Nabozny appealed.

Eleventh Circuit Decision

After the parties filed their briefs with the U.S. Court of Appeals for the Seventh Circuit, the Eleventh Circuit Court of Appeals heard Hunstein en banc, and held that sharing a debtor’s information with a third-party mail vendor did not cause harm sufficient to give rise to standing under the FDCPA.

Writing for the three-judge panel, Chief Judge Diane Sykes agreed with the en banc Hunstein decision.

Sykes explained that under Article III, Section 2 of the U.S. Constitution, the federal judicial power was limited to addressing cases and controversies, and a plaintiff must have a “personal stake” in the outcome of a lawsuit to have standing to sue.

Judge Sykes concluded that Nabozny hadn’t met her burden to show that she’d suffered an actual and concrete injury by Optio’s disclosure of her data to RevSpring.

Sykes acknowledged that a harm need not be tangible to amount to an actual and concrete injury.

But she pointed out that, under U.S. Supreme Court caselaw, only an intangible harm closely related to a harm traditionally recognized as forming the basis for a lawsuit in American courts constitutes an actual and concrete injury sufficient to confer standing.

Invasion of Privacy?

Nabozny argued that Optio’s disclosure of data to RevSpring was akin to the common law tort of invasion of privacy. The disclosure robbed her of the ability to control her personal financial information, Nabozny argued.

But Judge Sykes reasoned that the Eleventh Circuit had turned down the same argument in its en banc Hunstein decision. She also noted that the U.S. Court of Appeals for the Tenth Circuit had handed down a FDCPA decision with a similar result.

“It would take a strong reason for us to create a circuit split, and we decline to do so here,” Sykes wrote.

Private vs. Public

Judge Sykes reasoned that among the four torts traditionally grouped under the name invasion of privacy, only the tort of publicity applied given another person’s private life was potentially implicated by Optio’s disclosure of Nabozny’s data.

But Nabozny failed to allege that Optio had disclosed her private information to the public, Sykes pointed out.

“Nothing in the complaint suggest any manner of public disclosure or even that anyone at RevSpring read or appreciated her information,” Judge Sykes wrote. “Indeed, the final recipient of the information was Nabozny herself.”

Sykes also noted that according to the Restatement of Torts, private information can remain non-public even if disclosed to many persons.

She pointed to an example from the Restatement cited by the Eleventh Circuit in Hunstein – a trade secret disclosed to thousands of new employees after a corporate merger remained private information.

Kind vs. Degree

Nabozny argued that Hunstein conflicted with Seventh Circuit caselaw, Gadelhak v. AT&T Services, Inc., 390 F.3d 458 (7th Cir. 2020).

In Gadelhak, the Seventh Circuit held that a court assessing the strength of an analogy between a plaintiff’s alleged common law harm must search for a close relationship in kind, rather degree.

But Sykes wrote that Nabozny’s reliance on Gadelhak didn’t save her claim because allegations of publicity were missing from Nabozny’s complaint.

“[H]er injury from the alleged section 1692(c)(b) violation – if one exists at all – is different in kind from that which common law has recognized as actionable.”

Biometric Info Different

Nabozny also cited a Fox v. Dakota Integrated Systems, LLC, 980 F.3d 1146 (7th Cir. 2020) and Cothron v. White Castle Systems, Inc., 20 F.4th 1156 (7th Cir. 2021),

cases in which the Seventh Circuit held that biometric identifiers were immutable such that their unlawful collection or retention invaded the private domain, “much like an act of trespass.”

But information about one’s debt, Judge Sykes wrote, “‘is far less identifying’ … so the harm from its disclosure is not comparable.”

Separation of Powers

Sykes also noted that in holding that an injury in law is not an injury in fact for purposes of determining whether a plaintiff has standing to sue for violation of a federal statute, the U.S. Supreme Court was mindful of the separation of powers.

“‘A regime where Congress could freely authorize unharmed plaintiffs to sue defendants who violate a federal law not only would violate Article III but also would infringe on the Executive Branch’s Article II authority,’” Judge Sykes wrote, quoting TransUnion LLC v. Ramirez, ___ U.S. ___ 141, S. Ct. 2190, 210 L.E.2d 568 (2021).