June 20, 2016

Semantics!  Sometimes it boils down to just one word.  Such was the focus of the very first Opinion to come from the newly appointed Justice Neil Gorsuch in the case Henson v. Santander.  After a dense grammatical discussion of the word “owed” in the context of the Fair Debt Collection Practices Act (“FDCPA”), Justice Gorsuch affirmed the decisions of the District court and the Fourth Circuit Court of Appeals concluding that defendant, Santander, does not qualify as a debt collector under the definition of the FDCPA.

Besides the petitioners’ creative account of past vs. present participles and how that can affect the intended meaning of the FDCPA, Justice Gorsuch’s Opinion looks at a few other angles in attempt to answer the ultimate question: Who qualifies as a “debt collector?”

One of the qualifying factors in the FDCPA’s definition of a debt collector is a business whose “principal purpose of which is the collection of any debt.”  While Santander sometimes purchases defaulted debts for the purpose of collecting, the “principal purpose” of their business is actually in loan originating – giving out loans – not debt collection. 

Further, under the FDCPA Santander is not considered a third party debt-collector either since they are attempting to collect on a debt for their own gain; they are not employed by the original debt owner.

The petitioners did make some creative arguments.  For example, the FDCPA exempts a business collecting on a debt that was not in default at the time it was obtained from its definition of debt-collector.  As such, the petitioners attempted to argue that since Santander is in the practice of purchasing debts that are in default, they must be a debt-collector...since they are not, not a debt-collector.  Justice Gorsuch refuted this line of reasoning as well:

“For while the statute surely excludes from the debt collector definition certain persons who acquire a debt before default, it doesn’t necessarily follow that the definition must include anyone who regularly collects debts acquired after default.”

Zooming out and attempting to shift the focus of the debate to the big-picture, the petitioners asserted that “Congress passed the Act in large measure to add new incentives for independent debt collectors to treat consumers well”.  They went on to add that when the FDCPA was passed in 1977, Congress could not have imagined the multi-billion dollar industry that debt-collection has become. 

The Court was not persuaded by this argument.  Justice Gorsuch closed his first Opinion by reminding the American people:

“And while it is of course our job to apply faithfully the law Congress has written, it is never our job to rewrite a constitutionally valid statutory text under the banner of speculation about what Congress might have done had it faced a question that, on everyone’s account, it never faced.” 



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