Trial Practice and Procedure

• Publication year: 2023

Trial Practice and Procedure

John O'Shea Sullivan

Leesa M. Guarnotta

Grace B. Callanan

[Page 1499]

Trial Practice and Procedure John O'Shea Sullivan^* Leesa M. Guarnotta^** Grace B. Callanan^***

I. Introduction

The 2022 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.¹ This Article analyzes recent trial practice developments in the Eleventh circuit, including significant rulings in the areas of consumer debt collections, arbitration, copyrights, Federal Rule of Civil Procedure 54,² and a rule change regarding party disclosures.

II. Important Fair Debt Collection Practices Act Case Becomes More Important Precedent on Article III Standing

In last year's Survey, we discussed the "potentially dangerous ruling" that the United States Court of Appeals for the Eleventh Circuit acknowledged "runs the risk of upsetting the status quo in the

[Page 1500]

debt-collection industry."³ At the time of the deadline for last year's Article, the Eleventh Circuit had vacated its "potentially dangerous" opinion in the original Hunstein v. Preferred Collection & Management Services, Inc.⁴ and issued a new opinion, which reached the same conclusion,⁵ but ordered a rehearing en banc days later.⁶ The en banc opinion, issued in September 2022, decided only the Article III standing issue, but did not address the substantive Fair Debt Collection Practices Act (FDCPA)⁷ issues that were a large part of the original, "potentially dangerous" Hunstein I opinion.⁸

The background facts are discussed in more detail in last year's Article,⁹ but by way of summary, a consumer, Hunstein, received a "dunning" or demand letter about a past due medical bill he incurred for his son's medical treatment.¹⁰ The complaint alleged the debt collector (Preferred Collection) had electronically sent data about Hunstein's debt, including his name, outstanding balance, the fact that the debt arose from his son's medical treatment, and his son's name, to the debt collector's third-party vendor (Compumail) hired to create and mail the demand letter to the consumer.¹¹ When the consumer sued alleging the violation of the provision of the FDCPA that prohibits debt collectors from communicating consumers' personal information to third parties "in connection with the collection of any debt," the United States District Court for the Middle District of Florida rejected the consumer's reading of the FDCPA and dismissed the case.¹²

In the first of three opinions from the Eleventh Circuit, the appellate court reversed the district court and held a debt collector's transmittal of a consumer's personal information to its "dunning vendor" constituted a

[Page 1501]

communication that violates section 1692c(b)¹³ of the FDCPA.¹⁴ The court, sua sponte, ordered a rehearing and reissued its opinion of the three-judge panel, again reversing the district court's dismissal, this time analyzing TransUnion LLC v. Ramirez,¹⁵ an opinion newly-issued by the Supreme Court of the United States.¹⁶ With considerable disagreement among the judges of the Eleventh Circuit panel, the court voted to hear the case en banc. The ensuing third opinion in this case from the Eleventh Circuit changed direction from the first two panel opinions and affirmed the district court's dismissal, holding, in a spirited and passionate opinion from the majority, concurrence, and dissent, that Hunstein lacked standing under Article III of the United States Constitution.¹⁷

What started as a controversial FDCPA opinion that threatened to change the way debt collectors regularly do business ended as an important precedent for all plaintiffs suing in the Eleventh Circuit for statutory violations. The en banc majority opinion held that Hunstein lacked standing to sue because, even though he alleged a violation of the FDCPA, he did not allege a "concrete harm" arising from the alleged violation.¹⁸ The majority characterized the analysis for Hunstein's case as "an exercise in simplicity," even though it took three appellate reviews, oral arguments, and dozens of pages of rulings, concurrences, and dissents to finally reach this conclusion.¹⁹

The core of the legal debate between the majority and dissent was how to determine whether allegations of the violation of a federal statute give rise to a concrete injury necessary to meet the constitutional minimum of standing.²⁰ The opinion summed up the question as follows: "Many of these cases spring from an allegation that a party has violated a federal statute—but not every statutory wrong causes an injury capable of supporting standing."²¹ The court stated that "an injury in law is not an injury in fact,"²² and only an alleged harm that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical"

[Page 1502]

is sufficient to show "a case or controversy rather than, say, a strong and abiding interest in an issue, or a desire to obtain attorney's fees."²³

The majority opinion determined that the best method of determining whether an alleged statutory violation has created a concrete injury sufficient for standing is to ask "whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts."²⁴ The court, relying heavily on the Supreme Court opinions in Spokeo, Inc. v. Robins²⁵ and TransUnion, LLC, and the Eleventh Circuits own opinion in Muransky v. Godiva Chocolatier, Inc.,²⁶ discussed this approach as one where a party could show the harm caused by a statutory violation has a "close relationship" to a common law tort.²⁷ The court announced that the reason to consider traditional torts is because of the harm-to-harm comparison that it engenders and elucidates.²⁸

Hunstein's complaint did not allege what harm he suffered from the alleged sending of his information to a mail vendor which used the information to create and send the demand letter to Hunstein, nor did Hunstein argue on appeal that he suffered any tangible injury such as financial loss or personal injury.²⁹ Instead, Hunstein likened the statutory violation of sharing his information with the mail vendor to the tort of public disclosure.³⁰ After a lengthy and detailed discussion of the tort of public disclosure and a comparison of it to the alleged violation of the FDCPA at bar, the court held that the FDCPA violation caused no concrete injury because, unlike public disclosure, the FDCPA violation did not result in a publication of Hunstein's information.³¹ In other words, while the court recognized that only a person "who gives publicity to a matter concerning the private life of another" is liable for public disclosure, the alleged FDCPA violation did not result in any publicity about Hunstein's private information to the public.³² The court concluded that with the differences between Hunstein's facts and the traditional tort of public disclosure, including primarily that there was no public

[Page 1503]

dissemination of any of Hunstein's information, he could not have suffered any concrete harm and therefore lacked standing.³³

The series of three Hunstein opinions within one calendar year reveals sharp disagreements among the judges on the Eleventh Circuit. The dissent in the final opinion accused the majority of intentionally ignoring some of the complexities of the issues to reach a result, rather than properly analyzing the law.³⁴ The dissent's primary criticism of the majority opinion was what the dissent characterized as the majority's strict adoption of comparison to traditional tort claims approach, which the dissent stated requires "exact duplication" under the majority's opinion, when "close enough" should be adequate, especially at the pleadings stage.³⁵ The dissent promoted, instead, a "kind-degree" framework, which it contended the majority side-stepped by refusing to engage it.³⁶ The dissent closed by accusing the majority opinion of adopting the "very 'exact duplicate'" standard for determining standing to sue for statutory violations, which the dissent claims is on the minority side of a 7-1 circuit split.³⁷

III. Secured Lenders in Florida Beware: Your UCC-1 Financing Statement Must Perfectly Name the Debtor or Your Lien is Not Perfected

In a case governed by Florida state law, albeit interpreting a uniform statute adopted throughout the United States Court of Appeals for the Eleventh Circuit, the court held that a secured lender had not properly perfected its security interest in the debtor's personal property because the financing statement filed to perfect the lien was "seriously misleading."³⁸ The discrete issue in 1944 Beach Boulevard, LLC v. Live

[Page 1504]

Oak Banking Co.³⁹ arose in a bankruptcy case from a priority dispute between the debtor's secured lender (Live Oak) and the bankruptcy trustee acting as a "hypothetical lien creditor"⁴⁰ to avoid Live Oak's security interest.⁴¹ The issue was whether Live Oak's financing statement filed to perfect its lien was properly perfected when it named the borrower/debtor as " 1944 Beach Blvd., LLC" instead of its legal name, " 1944 Beach Boulevard, LLC."⁴²

The issue presented should have been answered by the secured transactions portion of the Uniform Commercial Code as adopted in Florida.⁴³ But the Eleventh Circuit panel needed to certify certain questions of Florida law to the Supreme Court of Florida.⁴⁴ In considering the federal court's certified questions, the Supreme Court of Florida determined a different threshold issue was dispositive but not certified by the Eleventh Circuit: "Is the filing office's use of a 'standard search logic' necessary to trigger the safe harbor protection of section 679.5061(3) [of the Florida Statutes]?"⁴⁵ To understand this "threshold issue" and the meaning of "standard search logic" and what the safe harbor was, a quick refresher on the UCC rules for...