Henderson v. United Student Aid Funds, Inc.

Henderson v. United Student Aid Funds, Inc.

Opinion

 [*1070]  D.W. NELSON, Circuit Judge:

OVERVIEW

Shyriaa Henderson appeals the district's order granting summary judgment in favor of Defendant-Appellee United Student Aids Funds, Inc. (USA Funds). The district court incorrectly held that a reasonable jury could not hold USA Funds vicariously liable for the debt collectors' alleged Telephone Consumer Protection Act (TCPA) violations. Accordingly, we REVERSE and REMAND.

BACKGROUND

Henderson applied for and received a loan to attend university through the Federal Family Education Loan Program (FFELP). After experiencing [**2]  some financial difficulty, she stopped paying back her 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.

Navient Solutions, Inc., a servicer of student loans, hired these debt collectors to collect on unpaid loans on behalf of USA Funds, which owned Henderson's loans. USA Funds operates under a government program by which it guarantees student loans made by private lenders and then takes ownership of those loans if a student-borrower defaults.

Although USA Funds owns billions of dollars in student loan debt, it does not interact with the borrowers directly once they stop paying back their loans. Instead, it hires companies, like Navient, to service its loans, including debt collection. In turn, Navient hires debt collectors to collect on defaulted loans. The debt collectors handle many aspects of collecting and repayment, including making [**3]  calls to borrowers, setting up payment plans, granting temporary delays, and accepting loan payments.

While USA Funds did not have a contractual relationship with the debt collectors or any day-to-day dealings with them, USA Funds had access to Navient's daily, weekly, and monthly reports tracking the debt collectors' performance. Similarly, USA Funds could, and did, review debt  [*1071]  collectors' calling notes when it had "an issue" with a debt collector's calling practices. USA Funds also regularly reviewed Navient's operations and performance, including its regulatory compliance, or lack thereof. Though USA Funds' service agreement with Navient did not give USA Funds the ability to fire debt collectors, USA Funds could ask Navient to replace underperforming collectors and could have fired Navient if it did not comply.

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