Monday, March 25, 2019
Owner of Loans Might Be Liable for TCPA Violations
Judge Nelson, Writing for Majority, Sees Triable Issue as to Whether Creditor Ratified Conduct on Part of Debt Collectors; Judge Bybee Dissents
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals decided Friday, in a 2-1 decision, that the owner of student loans might be liable for tactics of its debt collectors which contravene the Telephone Consumer Protection Act.
The majority’s opinion, by Judge Dorothy Nelson, reverses a grant of summary judgment to defendant United Student Aids Funds, Inc. (“USA Funds”). Judge William A. Fletcher joined in her opinion and Judge Jay S. Bybee dissented.
USA Funds engaged the services of Navient Solutions, Inc., in seeking unpaid sums from plaintiff Shyriaa Henderson. Navient, in turn, utilized debt collectors whose efforts to collect from Henderson included persistent phone calls utilizing automated dialing.
Under a section of the Telephone Consumer Protection Act (“TCPA”), it is unlawful “to make any call (other than...with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice...to any telephone number assigned to a...cellular telephone service.”
“Debt collectors that auto dialed Henderson on a phone number she did not provide in connection with her student loan would be liable under this section. For USA Funds to be liable under this section, Henderson must show that there is an agency relationship between USA Funds and these liable debt collectors.”
Nelson rejected Henderson’s contention that a 2008 order of the Federal Communications Commission renders a creditor per se vicariously liable for conduct of debt collectors. A 2013 order, she said, clarifies that ordinary common law agency principles should be applied.
Summary Judgment Barred
Summary judgment was precluded, Nelson said, because there were triable issues of fact as to whether such a relationship existed based on ratification by USA Funds of the debt collectors’ conduct.
There was a basis to suspect that USA Funds had actual knowledge of the debt collectors’ practices, Nelson said, which “is consistent with several of USA Funds’ audit findings and its general understanding of the debt collection industry.” She wrote:
“Here, there is evidence that USA Funds communicated consent to the debt collectors through acquiescence in their calling practices that allegedly violated the TCPA. In other words, a reasonable jury could find that USA Funds ratified the debt collectors’ calling practices by remaining silent and continuing to accept the benefits of the collectors tortious conduct despite knowing what the collectors were doing or, at the very least, knowing of facts that would have led a reasonable person to investigate further.”
“Henderson alleges that debt collectors used skip-tracing to obtain a phone number she did not provide and then repeatedly autodialed her on that number. She argues that USA Funds is liable for these violations because it (1) ratified the debt collectors’ TCPA violations or (2) gave the debt collectors implied actual authority to violate the TCPA. The majority addressed the first question alone: I am going to address both.”
The judge referred to the deposition of a USA Funds employee, Kevin Tharp. He said:
“Tharp explained that USA Funds has no contractual relationship with the debt collectors and no authority to hire, fire, or discipline them. What USA Funds did when it learned of potential violations was ‘recommend collective action’ to Navient.”
Bybee went on to say:
“[U]nder the majority’s theory of ratification, if a debt guarantor like USA Funds knows that there are violations ‘in the debt collection industry,’…it is liable for the debt collectors’ actions, even if USA Fluids has taken collective action. That is not a theory of ratification—it is strict liability, and nothing in the TCPA authorizes such a broad theory.”
Proceeding to address Henderson’s assertion that USA Funds gave implied actual authority to debt collectors to violate the TCPA, he said:
“Henderson’s speculative assertions are insufficient to create a genuine issue of material fact that the debt collectors reasonably believed that USA Funds approved of their TCPA violations— particularly when the only evidence in the record is that Navient would withhold payment or cease working with the debt collectors if TCPA violations occurred.”
The case is Henderson v. United Student Aid Funds, 17-55373.
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