Henson v. Santander Consumer USA Inc. (16-349)

argument 16-349

Henson v. Santander Consumer USA Inc.

Supreme Court of the United States 1h 0m 5 speakers 8 chapters transcribed 6 days ago official recording ↗

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What is the Fair Debt Collection Practices Act and how does it define a debt collector?

John G. Roberts 0:00

We'll hear argument next in case sixteen three hundred and forty nine, Henson versus Santander Consumer USA Incorporated. Mr

Paul D. Clement 0:07

Russell. Mr Chief Justice, and may it please the court. The Fair Debt Collection Practices Act applies to debt collectors. Debt collectors defined in the Act as most relevant here to include individuals who regularly collect debts owed or due another. When respondent Santander was originally hired to collect petitioners' defaulted car loans, there's no question that it was collecting a debt owed or due to another under anyone's interpretation of that term. The question in this case is whether that changed when Santander purchased an assignment of that debt. The Fourth Circuit held that it did wrongly. based on its interpretation of the key phrase ode or do another, which is used twice in the definition of debt collector, once in the principal definition and again in the clause F exceptions.

Paul D. Clement 0:51

The problem with that interpretation is that it cannot be squared with the use of the same phrase in the clause F exceptions, particularly with respect to clause F four. And I with the cult indulgence, I would like to walk through that uh exception. And it's found on page four A of the appendix to the blue brief. As I mentioned, this is an exception for somebody who otherwise qualifies as a debt collector under the main definition. There's somebody who is collecting a debt owed or do another. And that same requirement is repeated at the beginning of clause F. There has to be somebody uh any person collecting or attempting to collect a debt, owed or due or asserted to be owed or due, another, and then it says to the extent such activity meets one of four qualifications.

Paul D. Clement 1:32

And the the one I want to focus on is the fourth. And that applies to somebody who is engaged in activity concerning a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor. I think the parties agree with the FTC's interpretation of this that this is applying to a situation in which a company like a car dealership has gotten a commercial loan from a bank and put up as collateral the debts that it's owed by its customers, say car loans. The only circumstance in which that kind of entity is ever going to be collecting on a consumer debt, which is required at the beginning of clause F, is if they've either foreclosed on the collateral, in which case under the UCC they will send a notice to the the consumers saying, We have been assigned this debt, start sending the the debt to us, and if the consumer asks for it they have to send proof of the assignment.

Paul D. Clement 2:19

or if the assignment was given to them at the outset as part of the secured credit transaction. The problem for respondents is that in either case, the bank is only ever going to be doing exactly what a debt purchaser does, which is collecting from the consumers a debt that has been assigned to it. and keeping it on its own account. Respondents' only answer to this is to say that this no no, this is a provision that is addressed at the bank that is simply holding the debts as collateral. But that can't be right, because at the very beginning of F four or of F, uh Congress made clear that the exception only applies to somebody who is actually collecting or attempting to collect a debt, and somebody who is simply holding a collateral.

Paul D. Clement 2:58

is not collecting or attempting to collect the consumer debts. As a consequence, adopting a respondents' interpretation that somebody who is collecting on its own account through an assignment, as a debt purchaser does, as the commercial creditor does, in the scenario we've just described. On their view, they are not collecting a debt owed or do another. And as a consequence, they cannot be uh the person to whom Congress is referring in subsection F four. It is an exception that not only is completely surplusage in a null set, uh it's an exception that renders itself surplusage. The beginning of the the the requirement uh makes it impossible to satisfy the the second set of requirements in F at the bottom of F four.