Trial Practice and Procedure
| Publication year | 2022 |
Trial Practice and Procedure
John O'Shea Sullivan
Leesa M. Guarnotta
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The 2021 Survey period yielded decisions involving issues of first impression relating to federal trial practice and procedure in the United States Court of Appeals for the Eleventh Circuit. This Article analyzes recent trial practice developments in the Eleventh Circuit, including significant rulings in the areas of consumer debt collections, removal, jurisdiction and abstention, arbitration, and sanctions.1
In a potentially dangerous ruling that the Eleventh Circuit acknowledged "runs the risk of upsetting the status quo in the debt-collection industry[,]"2 the court held that a debt collector's transmittal of a consumer's personal information to its "dunning vendor" constituted a communication that violates section 1692c(b)3 of the Fair Debt Collection Practices Act (FDCPA).4 The facts in Hunstein v. Preferred Collection are common and routine in the consumer debt collection industry: a debt collector electronically sent data about a consumer's debt, including his name, outstanding balance, the fact that
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the debt arose from his son's medical treatment, and his son's name, to the debt collector's own third-party vendor hired to create and mail a dunning letter to the consumer.5 When the consumer sued alleging violations of provisions of the FDCPA that prohibit debt collectors from communicating consumers' personal information to third parties "in connection with the collection of any debt,"6 the United States District Court for the Middle District of Florida rejected this reading of the FDCPA and dismissed the case.7
On appeal, the Eleventh Circuit had to consider, as a threshold matter, whether a violation of section 1692c(b) of the FDCPA gives rise to a concrete injury in fact under Article III,8 and on the merits, whether the debt collector's communications with its vendor was "in connection with the collection of any debt."9 The court decided both questions in the affirmative, reversed the dismissal of the case, and remanded to the district court.10
After finding that Hunstein alleged facts to constitute a concrete injury, the court had to decide whether the debt collector's communications with its own vendor constituted a communication "in connection with the collection of any debt."11 The FDCPA generally prohibits a debt collector's communications, in connection with the collection of any debt, with anyone other than the consumer, with several exceptions.12 The debt collector in this case, Preferred Collection, sent Hunstein's personal information to Preferred Collection's dunning vendor, Compumail. The parties agreed that Preferred Collection was a debt collector, that Hunstein was a consumer, and that the transmittal of Hunstein's personal information to Compumail constituted a "communication" under the FDCPA.13 Thus, the sole question for the court was whether the communication with Compumail was "in connection with the collection of any debt"
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such that it violated section 1692c(b).14 Hunstein focused on the plain meaning of the phrase to argue it was. Preferred Collection argued that the court should adopt a factor-based analysis that shows that the communication with Compumail was not in connection with the collection of any debt.15
After quickly finding under the plain meaning of the words that Preferred Collection's communications with Compumail were made "in connection with the collection of any debt," the court turned to Preferred Collection's arguments based on various factors and case law construing various other provisions of the FDCPA.16 Preferred Collection's first argument was that "in connection with the collection of any debt" entailed a demand for payment, based on the court's interpretation of the same phrase in section 1692e17 of the FDCPA in other cases.18 The court rejected this reasoning based on a review of the exceptions in section 1692c(b), most of which the court found would never involve a demand for payment,19 and the court's finding that Preferred Collection's reading would render another portion of section 1692c(b) meaningless.20 The court found that by requiring a demand for payment, the phrase "in connection with the collection of any debt" would instead mean "to collect any debt."21 While communications under section 1692e might always involve demands for payment, since that statute applies to communications received by debtors from debt collectors, the broader situation addressed by section 1692c(b) does not always involve communications to the debtor.22
The court then discussed Preferred Collection's argument that the Eleventh Circuit should adopt the multifactor balancing test23 that was discussed by the United States Court of Appeals for the Sixth Circuit in
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an unpublished opinion in Goodson v. Bank of America, N.A.24 The Goodson case involved an analysis of section 1692e, not section 1692c(b), and announced seven factors to take into account in analyzing the "in connection with the collection of any debt" language in section 1692e, as follows:
(1) the nature of the relationship of the parties; (2) whether the communication expressly demanded payment or stated a balance due; (3) whether it was sent in response to an inquiry or request by the debtor; (4) whether the statements were part of a strategy to make payment more likely; (5) whether the communication was from a debt collector; (6) whether it stated that it was an attempt to collect a debt; and (7) whether it threatened consequences should the debtor fail to pay.25
The court declined to adopt the balancing test in Goodson for two reasons.26 First, Goodson was decided under section 1692e which the court already distinguished from any analysis under section 1692c(b), and which it found the Goodson test illustrates.27 Second, the court found that the phrase "in connection with the collection of any debt" in the context of section 1692c(b) "has a discernible ordinary meaning that obviates the need for resort to extratextual 'factors.'"28 The court held that "[p]arties to FDCPA-governed transactions . . . are entitled to guidance about the scope of permissible activity. They are likelier to get it even from broadly framed statutory language than from a judge-made gestalt."29
The decision in Hunstein has been met with alarm and protest in the financial services industry. As the court noted, the opinion suddenly turns the routine practices of debt collectors in the ordinary course of business for years into a violation of federal law requiring substantial changes in the way they do business, and at great cost, for a benefit to the consumer that the court admits would not amount to much.30 The opinion was vacated and the case remains in the Eleventh Circuit on an en banc rehearing, where the docket reflects multiple amici curiae
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briefs and oral argument held on February 22, 2022.31 The court's decision may very well be modified in 2022, but for now, debt collectors engaged in activities in the Eleventh Circuit must be cautious not to violate the FDCPA by sharing consumer information with their vendors.32
It is a longstanding principle that all courts must always ensure that they have subject matter jurisdiction.33 In 2021, the Eleventh Circuit narrowed the scope of cases with subject matter jurisdiction under the Administrative Procedures Act (APA)34 and on the basis of abstention under the Declaratory Judgments Act35 and Burford abstention. The court also limited the scope of some cases that might have otherwise been remanded after removal.
A. Limits on Subject Matter Jurisdiction Under the APA
In Hakki v. Secretary, Department of Veterans Affairs,36 the Eleventh Circuit held that under the APA and the Veterans' Benefits Act (VBA),37 federal courts lack subject matter jurisdiction to review the decisions of the Department of Veterans Affairs (VA) to terminate employees.38
After more than twenty years as a VA urologist, plaintiff Said I. Hakki (Dr. Hakki) made several requests for leave without pay to allow him to assist the Department of Defense in developing government and healthcare systems in Iraq as a part of the Iraqi Red Crescent.39 In Dr. Hakki's fifth year of leave, the VA learned that Dr. Hakki was no longer
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assisting in Iraq and notified him that he was expected to return to work. Dr. Hakki was twice granted extensions in response to his grievances that claimed he needed to remain in Iraq to refute false criminal charges. But the VA denied Dr. Hakki's third grievance, which was on the same grounds, because there was no "certainty regarding the date of [Dr. Hakki's] return" or VA interest as required by the VA handbook.40
On the last day of his approved leave, Dr. Hakki responded that his grievance provided a return date of July 1, 2009 and filed a union grievance challenging the denial.41 Dr. Hakki did not appear at the VA and was considered absent without leave (AWOL), which continued when the VA denied Dr. Hakki's union grievance. The union requested arbitration of the grievance denial. Although the VA proposed a settlement, Dr. Hakki rejected it and filed an unfair labor practice charge with the Federal Labor Relations Authority, which did not issue a complaint. Dr. Hakki also filed a new request for leave, to which the VA did not respond.42
Dr. Hakki did not return to the VA during his challenges, so the VA proposed discharge for being AWOL for twenty-six weeks.43 Dr. Hakki challenged the proposal with the appointed Human Resources advisor, who recommended upholding the discharge because of the frequency of Dr. Hakki's absences without leave. Dr. Hakki challenged this decision to the Veterans Integrated Service Networks Region 18 Network Director, who recommended denial to the VA...
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