and Submitted October 22, 2019 Honolulu, Hawaii
from the United States District Court for the District of
Hawaii No. 1:15-cv-00242-KSC Kevin S. Chang, Magistrate
S. Floyd (argued) and George C. Harris, Morrison &
Foerster LLP, San Francisco, California, for
A. Gunderman (argued), ECMC Shared Services Comp., LLC,
Minneapolis, Minnesota; Theodore D. C. Young, Cades Schutte
LLP, Honolulu, Hawaii; for Defendant-Appellee.
Before: Susan P. Graber, Milan D. Smith, Jr., and Paul J.
Watford, Circuit Judges.
panel affirmed the district court's summary judgment in
favor of the defendant on claims under the Fair Debt
Collection Practices Act and the Due Process Clause.
a nonprofit guaranty agency, caused an offset against
plaintiff's Social Security benefits, to recover on a
judgment it had obtained by assignment after plaintiff
defaulted on his student loans. Under the Higher Education
Act, student loans are guaranteed by guaranty agencies, which
receive guarantees from the United States.
panel held that, under the FDCPA's definition of a debt
collector, defendant regularly collected or attempted to
collect debts asserted to be owed or due another. Defendant
was not collecting a debt for its own account, but rather was
collecting a debt for the United States. Nonetheless,
defendant fulfilled the criteria of the fiduciary exception
because it had a broader fiduciary role with respect to
plaintiff's debt than merely collecting the debt, and its
collection activity was incidental to its fiduciary
obligation to the Department of Education. Accordingly,
defendant was not a debt collector under the FDCPA.
without deciding that defendant was a state actor, the panel
held that defendant did not violate plaintiff's
procedural due process rights because it provided plaintiff
with notice of the debt, of defendant's intention to seek
a Treasury offset against plaintiff's Social Security
benefits, and of the means by which plaintiff could respond.
GRABER, CIRCUIT JUDGE:
Education Management Credit Corporation caused an offset
against Plaintiff Charles Lima's Social Security
benefits, to recover on a judgment obtained after Plaintiff
defaulted on his student loans. Plaintiff filed a civil
action alleging, among other things, violations of the Fair
Debt Collection Practices Act and the Fifth Amendment's
Due Process Clause. The district court granted summary
judgment to Defendant. We affirm.
Higher Education Act of 1965 ("Act") established
the Federal Family Education Loan Program ("Loan
Program"), which the Department of Education
("DOE") administers. Rowe v. Educ. Credit Mgmt.
Corp., 559 F.3d 1028, 1030 (9th Cir. 2009). Under the
Act, lenders provide loans to students or their parents to
help finance higher education. Typically, those loans are
guaranteed by guaranty agencies, which are "[s]tate or
private nonprofit organization[s]" that have agreements
with the Secretary of Education to administer the Loan
Program. 34 C.F.R. §§ 682.200, 682.401(a). Those
agencies, in turn, receive guarantees from the United States.
Guaranty agencies, therefore, operate as intermediaries
between the student-loan lender and the United States.
Rowe, 559 F.3d at 1030.
borrower defaults on a student loan, the lender must try to
obtain repayment from the borrower. If the lender is
unsuccessful, it can file a claim with the guaranty agency
and be repaid the outstanding balance of the loan. In that
situation, the guaranty agency is assigned the loan from the
lender. The guaranty agency, in turn, is repaid by the DOE in
exchange for undertaking "due diligence" activities
to attempt to collect the debt from the borrower.
Id. Those "due diligence" activities
include "locating the defaulting borrower, offsetting
federal and state tax refunds . . ., initiating
administrative garnishment proceedings . . ., and filing suit
against the borrower." Id. (citing 34 C.F.R.
obtained three student loans, totaling $8, 500, in the 1970s.
The New York State Higher Education Services Corporation
("New York Corporation") acted as guarantor for
those loans under the Act. Plaintiff defaulted on the loans
in 1980. In 1991, New York Corporation obtained a judgment
against Plaintiff for approximately $14, 000, representing
both principal and interest.
is a nonprofit guaranty agency under the Act. In 2008, the
DOE and Defendant agreed that Defendant would take assignment
of certain Loan Program accounts in which ...