In his first opinion, Justice Gorsuch yesterday delivered the Supreme Court's unanimous decision in Henson v. Santander Consumer USA Inc., No. 16-349. Resolving a circuit split, the Supreme Court ruled that the purchaser of a portfolio of consumer debts, including accounts in default, which thereafter engages in collection activity on the delinquent accounts, is not a "debt collector" as defined by the Fair Debt Collection Practices Act (the "FDCPA").

In Henson, Santander purchased a portfolio of automobile loans from CitiFinancial Auto, which included defaulted loans. Santander thereafter began to collect on the loans. Henson, along with three other consumers who also had defaulted on their loans prior to Santander's purchase, sued Santander for alleged violations of the FDCPA.

In response, Santander moved to dismiss the complaint on the grounds that, as the purchaser of the defaulted debts, it did not fall within the definition of a "debt collector," defined under the FDCPA as anyone who "regularly collects or attempts to collect ... debts owed or due ... another." 15 U.S.C. § 1692a(6). The district court granted the motion and dismissed the action, finding that because Santander owned the debts, it was collecting on its own behalf and not collecting debts owed to another. The Fourth Circuit affirmed and the Supreme Court granted certiorari.

As expected, Justice Gorsuch's analysis relies upon a detailed review and strict interpretation of the statutory text, reasoning that "[a]ll that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for 'another.' And given that, it would seem a debt purchaser like Santander may indeed collect debts for its own account without triggering the statutory definition in dispute, just as the Fourth Circuit explained." Relying on the text of the statute, the decision rejects various arguments with respect to the definition of "debt collector," including observing that Congress' use of the word "owed" does not indicate that the definition includes persons collecting on a debt previously owed to a prior lender.

Reiterating his emphasis on clear language and grammar, Justice Gorsuch noted that petitioners' argument did not "follow even as a matter of good grammar, let alone ordinary meaning. Past participles like 'owed' are routinely used as adjectives to describe the present state of a thing[.]" In addition, the decision rejects petitioners' argument that by acquiring debts that were already defaulted, Santander meets the definition of a "debt collector." While in Henson only a small portion of the debts were delinquent, the breadth of the Court's opinion suggests the result would be the same even if all the accounts purchased by Santander were in default.

Finally, the Court refused to consider Congress' intent regarding whether the purchaser of a defaulted debt should be treated like a "debt collector," in response to petitioners' citation to the FDCPA's objective of curbing debt collection abuse. The Court reemphasized that "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."

Notably, the Court did not address whether Santander could be deemed a "debt collector" in the following circumstances: (1) in addition to collecting on debts it purchased, it also acts as a third party collection agent for debts owed to others; or (2) if it meets an alternative definition of "debt collector," if it engages "in any business the principal purpose of which is the collection of any debts." Instead, the Court stated that these issues were not properly before it because they were not addressed within the petition for certiorari.

This decision is not surprising to those who followed the oral argument, but offers insight into Justice Gorsuch's future Supreme Court jurisprudence as well as reassurance to those expecting him to apply an approach fundamentally similar to Justice Scalia. Although a single opinion cannot be used to draw conclusions with assurance, Justice Gorsuch's reliance on strict statutory interpretation strongly suggests that he will not readily wade into the waters of Congressional intent or policy considerations beyond those reflected in a statute's plain language. More broadly, as also reflected in its recent opinion in Midland Funding, the Supreme Court has indicated it will reject attempts to broaden the scope of the FDCPA.

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