In CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, v. CRAIG MANSETH, et al., Defendants. Additional Party Names: Darren Turco, Jacob Adamo, JTM Cap. Mgmt., LLC, UHG I LLC, UHG II LLC, UHG, LLC, United Debt Holding LLC, No. 22-CV-29-LJV, 2023 WL 5400235, at *8–9 (W.D.N.Y. Aug. 22, 2023), Judge Vilardo allowed the CFPB to proceed over objections from some defendants that they were not “covered persons” under the CFPA.

As an initial matter, the defendants argue that they are not covered by the CFPA. That is, the defendants maintain that only the third-party debt collectors actually collected debts and that UDH, JTM, and UHG, as well as the individual defendants, therefore are not “covered persons” or “related persons” under the CFPA. See, e.g., Docket Item 30-1 at 13; Docket Item 41 at 8-12. In Consumer Financial Protection Bureau v. National Collegiate Master Student Loan Trust, 575 F. Supp. 3d 505 (D. Del. 2021) (Bibas, J.), United States Court of Appeals Judge Stephanos Bibas, sitting by designation, considered a similar question—whether a company “engage[s] in an activity,” and therefore could be covered by the CFPA, when “[it] contracts with a third party to do that activity on [its] behalf.” Id. at 509 (internal quotation marks omitted). And for reasons similar to those given by Judge Bibas, the Court concludes that the answer to that question is yes. Like Judge Bibas, see id., this Court will start with the text. Under the CFPA, a “covered person” is “any person that engages in offering or providing a consumer financial product or service” and “any affiliate of [that person] if such affiliate acts as a service provider to such person.”7 12 U.S.C. § 5481(6). The CFPA provides a list of “[f]inancial product[s] or service[s],” such as “extending credit and servicing loans, including acquiring, purchasing, selling, brokering, or other extensions of credit (other than solely extending commercial credit to a person who originates consumer credit transactions)” and “collecting debt related to any consumer financial product or service.” Id. § 5481(15)(A)(i), (15)(A)(x). Combining those definitions, a “covered person” therefore includes “any person that engages in offering or providing…collecting debt related to any consumer financial product or service.”8 Id. § 5481(6), (15)(A)(x). As Judge Bibas noted, an entity can “engage in” an activity even if another entity acts on the first entity’s behalf: “ ‘Engage’ means ‘to embark in any business’ or to ‘enter upon or employ oneself in an action,’ ” which is “broad enough to encompass actions taken on a person’s behalf by another.” Nat’l Collegiate Master Student Loan Tr., 575 F. Supp. 3d at 509 (quoting Engage, Oxford English Dictionary (2d ed. 2000)). It would strain ordinary understanding to say that a company is not engaged in collecting debt when it purchases defaulted debt, places that debt with other companies for collection, and then receives some of the money recovered by those debt collectors. See, e.g., Docket Item 16 at ¶¶ 127-33. If that company does not “engage in” collecting debt, the Court would be hard-pressed to describe what exactly the company does engage in.  And nothing in the text of the CFPA supports the defendants’ narrow reading. The defendants argue that because the Supreme Court has rejected the “series-qualifier principle”9 when interpreting other statutes, the phrase “engages in” modifies only “offering or providing,” not the entire list of “[f]inancial product[s] or service[s]” that is enumerated in 12 U.S.C. § 5481(15)(A). See Docket Item 41 at 9 (citing Lockhart v. United States, 577 U.S. 347, 352 (2016)). It is unclear what interpretive weight the defendants place on that rule of construction or why that rule even applies here. There is no “series” in the provision at issue; rather, the provision defines “covered person” as one who “engages in offering or providing a consumer financial product or service” enumerated elsewhere in the statute. See 12 U.S.C. § 5481(6), (15)(A). So even if, as the defendants argue, “engages in” modifies only “offering or providing” a product or service, see Docket Item 41 at 9, that would be of no moment since the products and services to which that definition applies are listed not in a series following the modifier, but in another provision entirely.
Moreover, it is unclear how exactly this Court should interpret the statute even under the defendants’ preferred reading: They do not explain what, if any, difference there is between engaging in collecting debt and engaging in “offering or providing” collecting debt. In sum, even if the “series-qualifier principle” somehow applied here, it would not support the defendants’ reading of the statute. For those reasons, UDH, JTM, and UHG are “covered persons” under the CFPA. And because the text of the CFPA shows that UHG, UDH, and JTM are covered persons, the Court need not address the legislative history.10 See, e.g., NLRB v. SW Gen., Inc., 580 U.S. 288, 305 (2017) (noting that when “[t]he text is clear,” a court “need not consider [ ] extra-textual evidence”).  Finally, because UDH, JTM, and UHG are “covered persons,” the individual defendants are “related persons.” Under the CFPA, a “related person” includes “any director, officer, or employee charged with managerial responsibility for” a covered person. 12 U.S.C. § 5481(25)(A). Because the CFPB alleges that Adamo, Manseth, and Turco are officers with managerial responsibility over three “covered persons”— namely, UDH, JTM, or UHG—the individual defendants are “related persons” under the CFPA and therefore are treated as “covered person[s] for all purposes of any provision of Federal consumer financial law.” See id. § 5481(25).

Judge Vilardo rejected the Defendants’ argument that the FDPCA’s 1-year statute of limitations for FDCPA claims applied to the CFPB’s enforcement action, instead applying a 3-year statute of limitations.

JTM first argues that the FDCPA claim, and the CFPA claim based on the FDCPA violation, are time barred.17 Docket Item 31-1 at 42-43. JTM cites the one-year statute of limitations under 15 U.S.C. § 1692k(d) and argues that “[d]irect and derivative claims under the FDCPA are both subject to a one-year statute of limitations.” Id. at 42. The CFPB, on the other hand, maintains that section 1692k(d) applies only to private civil actions under the FDCPA and that the CFPA’s general three-year statute of limitations instead applies. See Docket Item 37 at 53-55. This Court agrees with the CFPB.  Section 1692k of the FDCPA, entitled “Civil liability,” provides that “any debt collector who fails to comply with any provision of [the FDCPA] with respect to any person is liable to such person” for actual and statutory damages. 15 U.S.C. § 1692k(a). That section of the FDCPA also provides a statute of limitations for such violations: “An action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.” Id. § 1692k(d). The “Administrative enforcement” section of the FDCPA, on the other hand, provides that the CFPB may enforce “compliance with any requirements imposed under this subchapter.” Id. § 1692l(b)(6). That section does not include an explicit statute of limitations. Few courts have addressed whether FDCPA claims brought by the CFPB are governed by the one-year statute of limitations under section 1692k or some other limitations period. See, e.g., CFPB v. Frederick J. Hanna & Assocs., P.C., 114 F. Supp. 3d 1342, 1379 (N.D. Ga. 2015) (noting that “a survey of case law across the country has revealed little that is helpful to resolving the [FDCPA] statute of limitations question here”). But the few courts that have examined that question have favored the CFPB’s interpretation. For example, in Consumer Financial Protection Bureau v. Ocwen Financial Corp., 2019 WL 13203853 (S.D. Fla. Sept. 5, 2019), the court reasoned that the CFPA’s three-year statute of limitations applied to the CFPB’s FDCPA-based claims because, among other reasons, section 1692k “makes no reference to any governmental plaintiff and arguably applies only to private causes of action.” Id. at *25-26. In Consumer Financial Protection Bureau v. Weltman, Weinberg & Reis Co., 2017 WL 4348916 (N.D. Ohio Sept. 29, 2017), the court declined to decide the question either way but found the government’s argument for a three-year limitations period “persuasive” because the government is “not a ‘consumer’ for purposes of the FDCPA and[ ]…the one-year statute of limitations applicable to FDCPA claims brought by consumers [is] inapplicable.” Id. at *7-8. And in Bureau of Consumer Financial Protection vs. Citizens Bank, N.A., 504 F. Supp. 3d 39 (D.R.I. 2017), the court applied a three-year limitations period to the CFPB’s enforcement action under a similar statutory scheme, the Truth in Lending Act (“TILA”). See id. at 46-49 (finding section 1692l of the FDCPA to be “nearly identical” to the language of the TILA and applying the three-year limitations period of the CFPA).  This Court finds the reasoning of those opinions persuasive here, particularly because the text of the FDCPA does not clearly favor the defendants’ interpretation. Section 1692k provides that a “debt collector who fails to comply with any provision of [the FDCPA] with respect to any person is liable to such person,” 15 U.S.C. § 1692k(a) (emphasis added), and sets a one-year statute of limitations for those actions, 15 U.S.C. § 1692k(d). The word “person” is not defined in the FDCPA’s “Definitions” section, see id. § 1692a, but that section explicitly defines “Bureau” to mean “the Bureau of Consumer Financial Protection.” Id. § 1692a(1). And while 15 U.S.C. § 1692k does not specifically mention the “Bureau,” 15 U.S.C. § 1692l does. See 15 U.S.C. § 1692l(b)(6). So for this Court to conclude that the limitations period in section 1692k(d) applies to the CFPB as well as to private parties, it would have to infer that section 1692k should be read to include the word “Bureau” even though that word does not appear in that section but does in the very next one.  At the very least, 15 U.S.C. § 1692k(d) therefore is ambiguous about whether the one-year limitations period applies to federal agencies bringing enforcement actions under 15 U.S.C. § 1692l. And “when the [government] elects to subject itself to a statute of limitations, the [government] is given the benefit of the doubt if the scope of the statute is ambiguous.” BP Am. Prod. Co. v. Burton, 549 U.S. 84, 96 (2006). Because it is at best unclear whether 15 U.S.C. § 1692k(d) applies to federal agencies, the CFPB’s FDCPA claim, and its CFPA claim rooted in the alleged FDCPA violations, are governed by the three-year statute of limitations in 12 U.S.C. § 5564(g)(1). And for much the same reason that the CFPB’s claims under the CFPA are not time barred, see supra at 39-41, the CFPB’s FDCPA and derivative FDCPA claims are not time barred based on the face of the amended complaint. Nothing in the amended complaint pleads when the CFPB received consumer complaints, let alone when it discovered—or even should have discovered—the alleged FDCPA violations here. Because JTM’s statute of limitations defense to the CFPB’s FDCPA-based claims does not “appear[ ] on the face of the complaint,” see Conn. Gen. Life Ins. Co., 988 F.3d at 131-32, its motion to dismiss based on timeliness is denied.