In Gold v. Midland Credit Management, Inc., — F.Supp.3d —-, 2015 WL 1037700 (N.D.Cal. 2015), Judge Freeman granted summary judgment to a credit buyer and it’s debt collection agency, and struck Plaintiff’s expert on credit reporting to the extent he attempted to opine on debt collection issues.  Judge Freeman found expert Evan Hendricks unqualified to testify about debt collection issues.

Defendants are correct, however, in pointing out that this case does not involve credit reporting or consumer fraud; it concerns statements made in a debt collection letter, and whether those statements violate the FDCPA. Def.’s Mot. to Strike 4–6. The Court finds that Mr. Hendricks lacks the requisite qualifications to reliably opine on the latter.  Moreover, Federal Rule of Civil Procedure 26(a)(2)(B) requires an expert witness to set forth in his written report, among other things, the foundation for his opinions. See Fed. R. Civ. P. 26(a)(2)(B)(i)-(ii); Phillips v. Netblue, Inc., No. C–05–4401 SC, 2007 WL 528722, at *1 (N.D.Cal. Feb. 13, 2007). The portion of the Hendricks Report concerning the Letter contains much in the way of conclusory assertions as to the Letter’s misleading nature and Defendants’ intent to mislead and little in the way of explanation or factual bases for those conclusions. For example, in the last paragraph of the section titled “Brief Background on How Credit Reporting System,” Mr. Hendricks states that “HSBC does not furnish data regarding debts that are part of Defendant Midland’s portfolio.” Hendricks Report at 2. The foundation for this statement, if any, is not disclosed in the report, and Plaintiff’s counsel acknowledged this defect at the January 8 hearing.  ¶  Finally, the Court agrees with Defendants that Mr. Hendricks’s opinions concerning the falsity of the Letter and Brochure impermissibly encompass the ultimate legal issue question in this case. Although Plaintiff’s argument that there is a distinction between factual falsity and liability under the FDCPA is well taken, see Pl.’s Opp. to Mot. to Strike 9, there are no factual disputes on which Mr. Hendricks could reliably opine. Defendants concede that “they were not able to alter anything HSBC was reporting [ ] about Gold’s account.” Def.’s Reply to Mot. to Strike 2, ECF 103. Defendants thus acknowledge that if the Letter and Brochure suggest that Defendants could affect HSBC’s reporting to credit agencies, that suggestion would be false. As discussed below, the question of whether the communications could be read to so suggest is a question that this Court resolves as a matter of law. Thus, to the extent that Mr. Hendricks offers opinions concerning the misleading nature of the Letter and Brochure, they are irrelevant, either because the facts are not in dispute or because they are legal conclusions. As such, the Court GRANTS IN PART Defendants’ Motion to Strike with respect to: all sections of the Hendricks Report before the section titled “Brief Background on How Credit Reporting System”; the last paragraph in the “Brief Background” section; the first, third, and fifth through seventh paragraphs of the section titled “Defendant Midland Knew/Should Have Known of its Falsehoods”; and all paragraphs in the sections titled “Midland’s Representations on Improving Plaintiff’s Credit Were Misleading” and “Midland’s Misrepresentations Designed to Exploit Consumer Awareness of Importance of Good Credit.” These afore-mentioned sections are STRICKEN.

The District Court found that the debt buyer was not a debt collector because it only held, but did not collect, on debts.  Nor could it be vicariously liable for its debt collector’s activities.

For purposes of this motion, the parties do not dispute that Midland Funding purchased the defaulted accounts from HSBC and referred those accounts to MCM for collection pursuant to an intercompany servicing agreement. Decl. of Tomio Narita Exh. A (Deposition of Angelique Ross, hereinafter “Ross Dep.”) at 18:21–21:22; 35:10–37:2; 38:6–39:20, ECF 81–3;  see also Ross Decl. ¶ 3. It is furthermore undisputed that MCM is responsible for collecting on the accounts and furnishing information to consumer reporting agencies on Midland Funding’s behalf. Ross Decl. ¶ 7; Ross Dep. 25:16–26:6.  The only dispute is whether this legal arrangement between the two entities means that Midland Funding can be held liable for MCM’s debt collection activities. That is a legal question that the Court resolves in Midland Funding’s favor. ¶  . . . Critical to both definitions of the term is the notion that a debt collector is one who directly or indirectly engages in collection activity.  Midland Funding argues that it has no em-ployees and therefore cannot be a business whose principal purpose is the collection of debts via inter-state commerce or the mails. Midland Funding Mot. 4. Moreover, Midland Funding further argues that it “engaged in no direct or indirect efforts to collect on [Plaintiff’s] account.” Id. at 1. Analogizing its situation to Scally v. Hilco Receivables, LLC, 392 F.Supp.2d 1036 (N.D.Ill.2005), Midland Funding argues that its debt buying business does not meet either definition of a debt collector under the FDCPA (and, by extension, the Rosenthal Act) and that there is no basis for holding Midland Funding vicariously liable for the alleged misdeeds of MCM. Id. at 4–6. Midland Funding further contends that should there be a triable issue of fact on its status as a debt collector, this Court should not permit the plaintiff class to recover statutory damages from both Midland Funding and MCM.    There is no evidence to suggest that Midland Funding’s business is debt collection. Rather, Plaintiff would have the Court fill in the gap with an inference that because Midland Funding is in the business of acquiring defaulted debts, it must therefore be in the business of collecting on those debts. See id. (arguing that Midland Funding does not acquire defaulted consumer accounts “simply to have and admire” and that the fact that Midland Funding does not have any employees is “merely a quirk of the corporate structure of Defendants’ parent company”). ¶ . . .Whether Midland Funding is a “debt collector” because it “indirectly” collects debts within the meaning of § 1692a(6) is a distinct and separate question from whether Midland Funding can be held vicariously liable for MCM’s alleged misconduct. The former is a question of primary liability while the latter concerns secondary liability for the actions of an agent.  On the first question, Midland Funding’s status as a “debt collector” requires an examination of the relationship between it and MCM. . . .The undisputed facts establish that Midland Funding merely holds debts and engages MCM to collect on those debts. Plaintiff identifies no evidence suggesting that Midland Funding directs or otherwise participates in MCM’s collection activities or that Midland Funding ever communicated with consumer debtors directly. . . Rendering all inferences in Plaintiff’s favor, there is nothing in the record to suggest that Midland Funding does anything other than hold the defaulted accounts and refer them to MCM for collection. There being no genuine dispute of material fact that Midland Funding does not directly or indirectly collect the debts that it holds, Midland Funding is entitled to summary judgment that it is not a debt collector within the meaning of the FDCPA.Midland Funding’s vicarious liability for MCM’s misconduct requires a finding that MCM acted as an agent of Midland Funding. However, the majority of courts to have considered the issue have determined that a principal must be a debt collector in order to be held vicariously liable for the debt collection activities of another. See Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 405 (3d Cir.2000) (“an entity that is itself a ‘debt collector’—and hence subject to the FDCPA—should bear the burden of monitoring the activities of those it enlists to collect debts on its be-half”); Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir.1996) (“[w]e do not think it would accord with the intent of Congress, as manifested in the terms of the Act, for a company that is not a debt collector to be held vicariously liable”); Miranda v. Field Asset Servs., No. 3:11–CV–1514–GPC–JMA, 2013 WL 124047, at *4 (S.D.Cal. Jan. 9, 2013); Plumb v. Barclays Bank Delaware, No. CV–11–3090–RMP, 2012 WL 2046506, at *4 (E.D.Wash. June 5, 2012) (“even vicarious liability under the FDCPA has been restricted to principals who themselves are statutory ‘debt col-lectors’ ”); Oei v. N. Star Capital Acquisitions, LLC, 486 F.Supp.2d 1089, 1097 (C.D.Cal.2006); see also Rich v. BAC Home Loans Servicing LP, No. CV–11–00511–PHX–SRB, 2013 WL 10104612, at *5 (D.Ariz. Dec. 13, 2013) (rejecting aiding and abetting liability under the FDCPA because it “expressly imposes liability only for the violations of a ‘debt collector’ ”); but see Huy Thanh Vo v. Nelson & Kennard, 931 F.Supp.2d 1080, 1090 (E.D.Cal.2013) (rejecting Oei and Pollice to hold that “non-‘debt collector’ creditors” can be “vicariously liable for their attorneys’ actions” under the FDCPA). The Court is persuaded by the weight of opinion restricting FDCPA liability—whether primary or secondary—to entities that fit the statutory definition of “debt collector” set forth in § 1692a(6). Because Midland Funding does not fit such definition, it cannot be held vicariously liable for MCM’s collection activities.

The District Court found that MCM’s statement regarding the positive impact of payment on a credit report was not a threat to take action that could not be taken.

MCM contends that the Letter and Brochure properly informed debtors of the beneficial effect that paying off their debts would have on their credit scores. MCM Mot. 12. . . .Given the paucity of argument on this point, and Plaintiff’s concession that the Letter does not threaten a bad outcome, the Court finds that the holding of Wade v. Regional Credit Association, 87 F.3d 1098 (9th Cir.1996), controls in this case: “the [Letter] was not a ‘threat to take action that could not legally be taken’ in violation of Section 1692e(5).” Id. at 1100. “The body of the notice was informational,” and “[t]he least sophisticated debtor would construe the [Letter] as a prudential reminder, not as a threat to take action.” Id. The Court accordingly GRANTS MCM’s Motion for Summary Judgment with respect to liability under 15 U.S.C. § 1692e(5).