District Court (Cal.) Explains Why Creditor Can Not Be Brought Under FDCPA for Hiring Third Party Debt Collector

In Miranda v. Field Asset Services, 124047 (S.D.Cal. 2013), Judge Curiel found that an FDCPA Plaintiff could not bring a creditor under the FDCPA for hiring a third party debt collector.  

Plaintiff alternatively argues that OneWest is vicariously liable for FAS’s alleged debt collection activities. Plaintiff relies on Fox v. Citicorp and Schutz v. Arrow Fin. Services, both of which support the theory that a debt collector may be held vicariously liable under the FDCPA for the companies or attorneys they hire. OneWest did not directly respond to this allegation. ¶  In Schutz v. Arrow Fin. Services, LLC the court noted that “a company meeting the definition of a ‘debt collector’ may be held vicariously liable for the actions of a second company acting on its behalf.” 465 F.Supp.2d 872, 875–76 (N.D.Ill.2006) (citing Pollice v. National Tax Funding, L.P., 225 F.3d 379 (3rd Cir.2000)). The court in Fox v. Citicorp Credit Services, Inc. found that Congress removed an “all-purpose attorney exemption” from the FDCPA, in part, to ensure debt collectors are not shielded from liability whenever violations are carried out by their attorneys. 15 F.3d 1507, 1516 (9th Cir.1994). Thus, for vicarious liability to apply, the vicariously liable party must itself be a “debt collector” as defined by the Act. ¶  Indeed, courts have uniformly ruled against a theory for vicarious liability under the FDCPA when the underlying client is not a debt collector. See, e.g., Wadlington v. Credit Acceptance Corpr., 76 F.3d 103 (6th Cir.1996) (finding that the liability for a debt collector should not be vicariously imposed on the assignee who was not a debt collector under the FDCPA); Havens–Tobias v. Eagle, 127 F.Supp.2d 889, 898 (S.D.Ohio 2001) (finding no legal basis for liability under the FDCPA for anyone other than a “debt collector” within the meaning of the Act); Oei v. N. Star Capital Acquisitions, 486 F.Supp.2d 1089, 1097 (C.D.Cal.2006) (“Vicarious liability under the [ FDCPA] has similarly been restricted to principals who themselves are statutory ‘debt collectors.’ ”). ¶  As discussed above, Plaintiff has failed to allege facts sufficient to demonstrate OneWest qualifies as “debt collector” under the FDCPA. One West, therefore, cannot be vicariously liable for the acts of FAS. ¶  In sum, Plaintiff’s FDCPA and Rosenthal Act claims rest on the theory that OneWest is either a debt collector by definition or vicariously liable for the actions of a debt collector. Because Plaintiff has failed to allege facts to support either theory of “debt collector” liability, Plaintiff’s FDCPA and Rosenthal Act claims fail as a matter of law.