This is a class action against debt collectors for violation of the Telephone Consumer Protection Act.  The lender hired a loan servicing company.  It hired debt collectors.  The lender said “We didn’t make any improper calls!  Our agents did.”  Very nice summary of agency law.

“Henderson advances two agency principles that she believes makes USA Funds liable for the debt collectors’ TCPA violations—ratification and implied actual authority.”

My summary of the case.

Henderson v. United Student Aid Funds, Inc., 918 F.3d 1068 (9th Cir. March 2019)

Issue:   Did the court err in granting summary judgment here on the issue of whether the lender here was liable for the conduct of its agents?

Holding:   Yes.  “[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.”

Appeal from district court, Southern District California

Judge Dorothy Nelson, dissent by Jay Bybee

“After experiencing some financial difficulty, [Plaintiff Henderson] stopped paying back her [student] loans.  Then, five different debt collection companies started calling her about the money she had not paid back.  Henderson received prerecorded messages many times in short intervals on a phone number she neither provided in connection with her student loans nor consented to be called on.  Henderson contends this pattern shows that the companies were combining the use of skip tracers and auto dialers.”  She filed a class action against the owner of the student loans for violation of the Telephone Consumer Protection Act.  The lender filed a motion for summary judgment saying that the servicer was Navient and Navient hired debt collectors who made the phone calls.  Therefore it argued that it did not violate the TCPA.  “Henderson argues that under an FCC order, USA Funds is per se vicariously liable for the debt collectors’ TCPA violations.  [Also] that USA Funds is similarly liable under the federal common law agency principles of ratification and implied actual authority.  Henderson’s theory of liability is that USA Funds has a principal-agent relationship with the debt collectors and that a court may hold it liable for their TCPA violations.”  The district court granted summary judgment for USA Student loans.

The 9th Circuit reversed.  “Under the TCPA, it is unlawful to ‘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.’ 47 U.S.C. § 227(b)(1)(A)(iii).”  The 9th Circuit agreed that there is no per se liability.  But they reversed saying that whether there is an agency relationship is “based on an assessment of the facts of the relationship and not based on how the parties define their relationship.”  Therefore summary judgment was no appropriate.

The dissent stated that there was insufficient evidence offered by Henderson at the MSJ stage to support a finding that there were material issues of fact as to authority to be litigated.  “I can’t get to either proposition from the evidence Henderson has mustered.”