Supreme Court Unanimously Backs Debt Collector in Gorsuch Opinion

  • High court opinion discusses ‘good grammar,’ parts of speech
  • Opinion is Gorsuch’s first since joining high court in April

Judge Neil Gorsuch is sworn in as a U.S. Supreme Court associate justice in the Rose Garden at the White House in Washington on April 10, 2017.

The U.S. Supreme Court limited a federal law that protects consumers from overaggressive debt collectors, as Justice Neil Gorsuch wrote his first majority opinion.

Writing for a unanimous court, Gorsuch said the Fair Debt Collection Practices Act doesn’t authorize lawsuits against companies that buy defaulted loans from another lender. The ruling is a victory for a Santander Consumer USA Holdings Inc. unit, blocking claims by people who defaulted on their auto loans.

In an 11-page opinion Monday laced with references to parts of speech and proper grammar, Gorsuch said the only fair reading of the 1977 statute was that Santander didn’t qualify as a debt collector. The measure defines a debt collector as an entity that collects debts "owed or due another."

"By its plain terms this language seems to focus our attention on third party collection agents working for a debt owner -- not on a debt owner seeking to collect debts for itself," Gorsuch wrote. 

The borrowers, who were seeking to press a class-action case, argued that the word "owed" was in the past tense, meaning the provision covered any debt previously owed to another entity.

That reasoning "doesn’t follow even as a matter of good grammar, let alone ordinary meaning," Gorsuch wrote. "Past participles like ‘owed’ are routinely used as adjectives to describe the present state of a thing -- so, for example, burnt toast is inedible, a fallen branch blocks the path, and (equally) a debt owed to a current owner may be collected by him or her."

During his Senate confirmation hearing, Gorsuch cast himself as a judge who focused heavily on the text of federal statutes. New justices traditionally are assigned a unanimous ruling for their first opinion, when possible.

The FDCPA prohibits abusive and deceptive conduct by debt collectors, limiting how they may contact debtors and what they may say.

The case is Henson v. Santander Consumer USA, 16-349.

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