Keystone Credit Beats FCRA Lawsuit Over Disclosures to Vendor

A lower court properly dismissed a debtor’s proposed class action alleging Keystone Credit Services LLC violated the Fair Credit Reporting Act when it disclosed the debtor’s personal information to its dunning letter printing and mailing service, a divided US appeals court ruled.

Plaintiff Paulette Barclift failed to show that she suffered a concrete injury sufficiently comparable to a harm traditionally recognized as a basis for lawsuits in American courts, a requirement for Article III standing, the US Court of Appeals for the Third Circuit said Friday.

Barclift argued that her injury from the publication of her information to the vendor was comparable to the traditional common law tort of public disclosure of private information, but her allegations lacked the essential element of disclosure to the public, Judge Arianna J. Freeman said for the court.

“When the communication of personal information only occurs between a debt collector and an intermediary tasked with contacting the consumer, the consumer has not suffered the kind of privacy harm traditionally associated with public disclosure,” she said.

Printing Vendor

Barclift filed the lawsuit in October 2021 after receiving a debt-collection letter from Keystone regarding her outstanding debt for medical services. The letter was printed by RevSpring, Keystone’s printing and mailing vendor.

Barclift alleged that Keystone provided RevSpring her name, address, debt balance, and other information without her consent in violation of the FCRA, which prohibits debt collectors from communicating with third parties regarding the collection of a debt without the consumer’s consent.

She argued on appeal that she had sufficiently alleged concrete injury from Keystone’s disclosure of her information to RevSpring to establish standing to sue, but Freeman disagreed.

Under the Supreme Court’s 2020 ruling in TransUnion v. Ramirez, plaintiffs seeking relief for intangible harms arising from statutory violations must establish standing by showing that their harms are “of the same character” as those at stake in traditional causes of action, the judge said.

The harm Barclift alleged she suffered, embarrassment and distress from publication of her sensitive information to a vendor, wasn’t of the same character as the humiliation arising from the widespread publication of sensitive information, Freeman said.

Julio M. Fuentes joined in Freeman’s opinion.

Unauthorized Disclosure

Dissenting, Judge Paul B. Matey took aim at the limitations on standing in US courts that have emerged in recent decades, arguing that the original understanding of Article III held that injury in law to a private right was enough to create a “case or controversy” that could be brought before a federal court.

He also argued that the majority wrongly concluded that Barclift didn’t have standing even under the restricted view of standing embodied in the TransUnion ruling.

Unauthorized disclosure of private information to a third party is the harm address by the tort of public disclosure of private information, he said.

The majority held that the disclosure to an intermediary wasn’t publication and therefore wasn’t actionable, but the Supreme Court reasoned in TransUnion that the key question was whether the intermediary read the information rather than just processed it, Matey said.

Accepting Barclift’s factual allegation as true that Keystone communicated her information to RevSpring, she “has done enough to show that she has standing,” he said.

Greenwald Davidson Radbil PLLC and Landes Law LLC represent Barclift. Lewis Brisbois Bisgaard & Smith LLP represents Keystone Credit.

The case is Barclift v. Keystone Credit Servs. LLC, 3d Cir., No. 22-1925, 2/16/24.