Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-18-35923/USCOURTS-ca9-18-35923-0/pdf.json

Parties Involved:
DNF Associates, LLC
Appellee
M.N.S. & Associates, LLC

Jillian McAdory
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JILLIAN MCADORY,

Plaintiff-Appellant,

v.

M.N.S. & ASSOCIATES, LLC,

foreign limited liability company,

Defendant,

and

DNF ASSOCIATES, LLC, foreign

limited liability company,

Defendant-Appellee.

No. 18-35923

D.C. No.

3:17-cv-00777-HZ

OPINION

Appeal from the United States District Court

for the District of Oregon

Marco A. Hernandez, District Judge, Presiding

Argued and Submitted October 24, 2019

Portland, Oregon

Filed March 9, 2020

Before: Jerome Farris, Carlos T. Bea, and

Morgan Christen, Circuit Judges.

Opinion by Judge Christen;

Dissent by Judge Bea

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2 MCADORY V. DNF ASSOCIATES

SUMMARY*

Fair Debt Collection Practices Act

Reversing the district court’s dismissal of an action under

the Fair Debt Collection Practices Act and remanding, the

panel held that a business that bought and profited from

consumer debts, but outsourced direct collection activities,

qualified as a “debt collector” subject to the requirements of

the Act.

Joining the Third Circuit, the panel held that an entity that

otherwise meets the “principal purpose” definition of debt

collector under 15 U.S.C. § 1692(a)(6) (defining debt

collector as “any business the principal purpose of which is

the collection of any debts”) cannot avoid liability under the

FDCPA merely by hiring a third party to perform its debt

collection activities.

Dissenting, Judge Bea wrote that the complaint failed to

allege that defendant acted directly in any way to violate

plaintiff’s rights under the FDCPA; plaintiff did not

adequately allege that defendant’s “principal purpose” was

the “collection of any debts;” and the word “collection” must,

in context, describe the action of collecting.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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MCADORY V. DNF ASSOCIATES 3

COUNSEL

Adam R. Pulver (argued) and Scott L. Nelson, Public Citizen

Litigation Group, Washington, D.C.; Kelly D. Jones,

Portland, Oregon; Nadia Dahab, Stolle Berne, Portland,

Oregon; for Plaintiff-Appellant.

Brendan H. Little (argued), Lippes Mathias Wexler Friedman

LLP, Buffalo, New York, for Defendant-Appellee.

OPINION

CHRISTEN, Circuit Judge:

This appeal requires us to consider whether a business

that buys and profits from consumer debts, but outsources

direct collection activities, qualifies as a “debt collector” for

purposes of the Fair Debt Collection Practices Act (FDCPA),

15 U.S.C § 1692 et seq. Plaintiff McAdory’s complaint

alleged that DNF Associates, LLC qualified under the

statute’s first definition: “any business the principal purpose

of which is the collection of any debts.” 15 U.S.C.

§ 1692a(6). The complaint did not allege that DNF interacted

directly with consumers. The district court granted DNF’s

motion to dismiss, concluding that the operative complaint

failed to state a claim against DNF because debt buyers that

do not directly interact with consumers to collect debts do not

qualify as debt collectors.

We have jurisdiction pursuant to 28 U.S.C. § 1291, and

we reverse the district court’s judgment. We join the Third

Circuit in concluding that an entity that otherwise meets the

“principal purpose” definition of debt collector cannot avoid

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4 MCADORY V. DNF ASSOCIATES

liability under the FDCPA merely by hiring a third party to

perform its debt collection activities. Barbato v. Greystone

All., LLC, 916 F.3d 260, 261 (3d Cir.), cert. denied sub nom.,

Crown Asset Mgmt. LLC v. Barbato, 140 S. Ct. 245 (2019).

I. Background

The operative complaint alleged that Jillian McAdory

owed a debt to Kay Jewelers, and that DNF purchased the

debt after McAdory stopped making timely payments. The

complaint also alleged that McAdory first learned of DNF

when she received a letter sent by First Choice Assets

informing her that she owed a debt to DNF, and that

McAdory took no action in response to the letter because she

did not recognize DNF. McAdory averred that four months

later, she received a voicemail message from an unidentified

caller that referred to “asset verification” and an expedited

“process for enforcement review.” According to the

complaint, McAdory returned the call and spoke with

someone who identified himself as an MNS agent, implied

that he was a lawyer, and indicated that McAdory would be

sued for the unpaid debt. McAdory agreed to pay the debt

during a subsequent telephone call with the same MNS agent. 

The agent emailed a document to McAdory that

memorialized the agreement the same day. Finally, the

complaint alleged that contrary to the terms of the parties’

agreement, MNS prematurely withdrew funds before an

authorized payment date.

McAdory alleged that DNF and MNS committed eight

separate violations of the FDCPA relating to MNS’s

telephonic message and withdrawal of funds. The complaint

alleged that DNF violated the FDCPA by using “false,

deceptive, or misleading representation or means in

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MCADORY V. DNF ASSOCIATES 5

connection with the collection of any debt,” 15 U.S.C.

§ 1692e, and “unfair or unconscionable means to collect or

attempt to collect any debt,” id. § 1692f. The complaint did

not allege that First Choice Assets violated the FDCPA or

name First Choice as a defendant.

The operative complaint alleged that DNF is a debt

collector because its principal purpose is “the collection of

defaulted consumer debts that it purchases for pennies on the

dollar,” from which it “derives the vast majority of its

income.” It also alleged that DNF contracted with a network

of other debt collectors that directly contacted consumers in

DNF’s name and at its direction. According to the complaint,

DNF set the “parameters of the terms and amounts of the

payments made by the debtors.” The complaint did not allege

that DNF directly contacted McAdory about her debt. 

Instead, McAdory claimed that DNF was vicariously and

jointly liable for MNS’s violations.

DNF moved to dismiss McAdory’s operative complaint,

arguing that a debt buyer that outsources collection activities

to third-party contractors does not meet the FDCPA’s

definition of a “debt collector.” The motion further argued

that because DNF was not a debt collector, it could not be

vicariously liable for MNS’s alleged FDCPA violations.

The district court granted DNF’smotion to dismiss, ruling

that McAdory’s complaint failed to state a claim against DNF

because “[d]ebt purchasing companies like DNF who have no

interactions with debtors and merely contract with third

parties to collect on the debts they have purchased simply do

not have the principal purpose of collecting debts.” The court

concluded there was little to suggest that Congress considered

these companies when it drafted the FDCPA, and because the

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6 MCADORY V. DNF ASSOCIATES

FDCPA’ssubstantive provisions govern interactions between

consumers and debt collectors, the court reasoned that

Congress intended the statute to apply only to those who

directly interact with consumers.

The district court acknowledged that a debt purchasing

company “may be a debt collector in the literal sense that it

purchases debt for the purpose of making money by hiring a

third party to collect on that debt.” But the court reasoned

that “[t]he fact that a business benefits from the collection of

debt by an entirely separate third party does not necessarily

make the principal purpose of that business the collection of

those debts.”

McAdory moved for leave to file a second amended

complaint, seeking to add supplemental allegations that DNF

filed collection lawsuits against consumers and was licensed

as a debt collection agency in multiple states. The district

court construed McAdory’s filing as a motion for

reconsideration and denied it. The court also clarified that it

had dismissed DNF from the lawsuit with prejudice.

McAdory obtained an entry of default against MNS,

which had not responded to her complaint, and moved for

entry of a separate final judgment as to DNF pursuant to

Federal Rule of Civil Procedure 54(b). The district court

granted the motion, and allowed McAdory to seek review of

its order granting DNF’s motion to dismiss. The court

observed that the issue was “a close one with courts around

the country issuing conflicting decisions.” McAdory timely

appealed, and the parties agree that the question presented is

whether a business must have direct interaction with

consumers to qualify as a debt collector pursuant to the

FDCPA.

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MCADORY V. DNF ASSOCIATES 7

II. Standard of Review

We review de novo the district court’s order granting a

motion to dismiss for failure to state a claim. Syed v. M-I,

LLC, 853 F.3d 492, 499 (9th Cir. 2017). We accept the

complaint’s well-pleaded allegations as true and construe all

inferences in the light most favorable to the nonmoving party. 

Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1207 (9th

Cir. 2013).

III. Discussion

In 1977, Congress enacted the FDCPA “to eliminate

abusive debt collection practices by debt collectors, to insure

that those debt collectors who refrain from using abusive debt

collection practices are not competitively disadvantaged, and

to promote consistent State action to protect consumers

against debt collection abuses.” 15 U.S.C. § 1692(e). 

Concerned that unfair debt collection tactics contribute to

personal bankruptcies, family instability, job loss, and

privacy intrusions, id. § 1692(a), Congress imposed

affirmative requirements on debt collectors and prohibited

certain debt collection practices, Rotkiske v. Klemm, 140 S.

Ct. 355, 357 (2019). Because the statute is broadly remedial,

we liberally construe the FDCPA in favor of consumers. See

Hernandez v. Williams, Zinman & Parham PC, 829 F.3d

1068, 1078–79 (9th Cir. 2016).

The FDCPA applies to debt collectors, which the statute

defines in two alternative ways: (1) “any person who uses any

instrumentality of interstate commerce or the mails in any

business the principal purpose of which is the collection of

any debts,” or (2) “[any person] who regularly collects or

attempts to collect, directly or indirectly, debts owed or due

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8 MCADORY V. DNF ASSOCIATES

or asserted to be owed or due another.”115 U.S.C.

§ 1692a(6); see also Schlegel, 720 F.3d at 1208. We refer to

the first definition as the “principal purpose” prong (those

engaged in “any business the principal purpose of which is

the collection of any debts”), and we refer to the second

definition as the “regularly collects” prong (those “who

regularly collect[] . . . debts owed or due another”). 

15 U.S.C. § 1692a. McAdory’s operative complaint alleged

that DNF qualified as a debt collector under the principal

purpose prong.

McAdory argues the district court erred by ruling that the

FDCPA’s principal purpose prong—its first definition of

“debt collector”—requires direct interaction with consumers. 

We begin by examining the plain meaning of the statutory

text. See Jimenez v. Quarterman, 555 U.S. 113, 118 (2009)

(observing that the plain language is the starting point of

statutory construction); Seldovia Native Ass’n v. Lujan,

904 F.2d 1335, 1341 (9th Cir. 1990) (noting that courts

determine plain meaning by looking to the language and

design of the statute as a whole).

The parties agree that the FDCPA uses the phrase

“principal purpose” to refer to a business’s most important

goal or objective. See Barbato, 916 F.3d at 267. 

Determining a business’s principal purpose thus involves

comparing and prioritizing its objectives, not analyzing the

means employed to achieve them. Accordingly, the relevant

question in assessing a business’s principal purpose is

whether debt collection is incidental to the business’s

1

 The statute also provides other definitions of “debt collector,” and

various exceptions to the statutory definitions, none of which are pertinent

to this appeal. See 15 U.S.C. § 1692a(6).

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MCADORY V. DNF ASSOCIATES 9

objectives or whether it is the business’s dominant, or

principal, objective. By contrast, the FDCPA’s second

definition of “debt collector” depends upon a person’s regular

activities—i.e., whether the person “regularly collects . . .

debts.” 15 U.S.C. § 1692a(6).

The Third Circuit recentlyexamined the principal purpose

prong in Barbato v. Greystone Alliance, LLC, 916 F.3d 260

(3d Cir. 2019). There, the defendant argued it was not a debt

collector because it took no collection action towards

consumers, and because its principal purpose “was not the

collection of debt but, rather, its acquisition.” 916 F.3d

at 263. Barbato was an appeal from a summary judgment

ruling, and the record reflected that the defendant’s “only

business [was] the purchasing of debts for the purpose of

collecting on those debts, and . . . without the collection of

those debts, [the defendant] would cease to exist.” Id. at 268. 

The Third Circuit affirmed the trial court’s ruling that the

defendant qualified as a debt collector under the principal

purpose prong, id. at 261, 263, because “[t]he existence of a

middleman does not change the essential nature—the

‘principal purpose’—of [the defendant’s] business.” Id.

at 268.

DNF makes the same argument here, asserting that its

principal purpose is not collecting debt, but “buying debt for

investment purposes” to “profit on its investment.” McAdory

objects that DNF raises this argument for the first time on

appeal. McAdory argues that merely acquiring consumer

debt cannot truly be DNF’s principal purpose, because if its

only goal or objective were to acquire debt, it would soon go

out of business. McAdory maintains that “the only conduct

DNF undertakes to ‘profit’ off the debts it buys is to hire

others to collect it.” Although McAdory’s point is wellCase: 18-35923, 03/09/2020, ID: 11621943, DktEntry: 27-1, Page 9 of 36
10 MCADORY V. DNF ASSOCIATES

taken, it is nonetheless premature because DNF’s argument

about its principal purpose highlights a factual dispute. At

the 12(b)(6) stage, we accept as true all well-pleaded factual

allegations in the complaint and construe them in the light

most favorable to McAdory. Schlegel, 720 F.3d at 1207. 

Here, the complaint alleged that DNF’s principal purpose was

to buy consumer debts in order to collect on them, and that

this is how DNF generated most or all of its income. Because

McAdory’s complaint sufficiently alleged that DNF’s

principal purpose was to collect debt, we need not consider

DNF’s newly raised fact-based argument about its principal

purpose. See, e.g., Dahlia v. Rodriguez, 735 F.3d 1060, 1076

(9th Cir. 2013) (“Because the district court granted a Rule

12(b)(6) motion to dismiss, our task is not to resolve any

factual dispute, but merely to determine whether [the

plaintiff’s] allegations” state a plausible claim.). A claim has

facial plausibility when a plaintiff “pleads factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009).2

DNF urges us to focus on the first prong’s use of the word

“collection,” which DNF defines as “the act or process of

collection.” Relying on this definition, DNF reads the first

prong of § 1692a(6) to require that a business’s principal

purpose must be the act of collecting debts in order to qualify

as a “debt collector.” But DNF acknowledges that

2 The dissent also argues that the complaint’s “principal purpose”

allegations are conclusory. We disagree. The complaint alleged that DNF

acquires consumer debt for the purpose of collecting on it, from which it

“derive[s] large profits” and “the vast majority of its income.” By parsing

the difference between “income” and “profit,” the dissent departs fromour

role at the 12(b)(6) stage. See Schlegel, 720 F.3d at 1207.

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MCADORY V. DNF ASSOCIATES 11

“collection” is also defined as “that which is collected.” See

Barbato, 916 F.3d at 267.

In Barbato, the Third Circuit considered whether the

principal purpose prong requires direct interaction with

consumers, and rejected that interpretation. Id. The Third

Circuit concluded that the word “collection” shifts the focus

“from the act of collecting to what is collected, namely, the

acquired debts.” Id. at 267 (emphasis in original). The Third

Circuit reasoned:

In contrast to the [second prong’s] “regularly

collects” definition, where Congress explicitly

used the verb “to collect” in describing the

actions of those it intended the definition to

cover, in the “principal purpose” definition,

Congress used the noun “collection” and did

not specify who must do the collecting or to

whom the debt must be owed. Thus, by its

terms, the “principal purpose” definition

sweeps more broadly than the “regularly

collects” definition . . . .

Id. at 267–68 (internal citations omitted). It was critical to

the Third Circuit’s rationale that “the ‘regularly collects’

definition employs a verb and the ‘principal purpose’

definition employs a noun.” Id. at 267. We find this analysis

of the statutory text persuasive and decline to read a direct

interaction requirement into the principal purpose prong

based on the phrase “the collection of any debts.” Further,

DNF’s interpretation of the principal purpose prong would

largely collapse the two alternative definitions of debt

collector, contrary to the rule that “we presume differences in

language like this convey differences in meaning.” Henson

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12 MCADORY V. DNF ASSOCIATES

v. Santander Consumer USA Inc., 137 S. Ct. 1718, 1723

(2017); see also Schlegel, 720 F.3d at 1209 (declining to

adopt an interpretation of the principal purpose prong that

would render superfluous the “regularly collects” prong).

Because the Third Circuit reasoned in Barbato that the

first prong uses “collection” as a noun and the second prong

uses “collects” as a verb, our dissenting colleague substitutes

“stockpile” and “assortment” in prong one and treats

“collection” as something to be gathered together for the sake

of keeping it—like rare coins or antiques. Unsurprisingly, the

dissent decides that this reading makes no sense. We agree

that it would not, but the Third Circuit did not adopt

“stockpile” or “assortment.” Barbato merely recognized that

the phrase “collection of any debts” in prong one describes

the type of business Congress sought to regulate—i.e., one

with a principal purpose of debt collection. In contrast, in

prong two Congress used “collects” as a verb and defined

debt collectors by the activities they regularly engage in.

Shifting away from § 1692a(6)’s text, DNF also argues

that the FDCPA’s other provisions support the district court’s

conclusion that Congress intended the principal purpose

prong to apply only to those who have direct contact with

consumers. In support of this argument, DNF points to the

FDCPA’s limitations on ways debt collectors may interact

with consumers. See, e.g., 15 U.S.C. § 1692c (regulating

communications with consumers); § 1692d (prohibiting

harassing or abusive conduct); § 1692e (prohibiting false,

deceptive or misleading representations). We agree that

many of the FDCPA’s specific restrictions pertain to direct

interactions with consumers, but the question we must answer

is not whether the FDCPA regulates interaction with

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MCADORY V. DNF ASSOCIATES 13

consumers, which it clearly does, but which actors are subject

to the statute’s restrictions.

The fact that the FDCPA includes limits on direct

collection activities does not require the conclusion that

Congress intended to regulate only those entities that directly

interact with consumers. First, the text of the principal

purpose prong contains no such limitation, see § 1692a(6),

and as Barbato explained, “‘[c]ollection’ by its very

definition may be indirect, and that is the type of collection in

which [the defendant] engages: it buys consumer debt and

hires debt collectors to collect on it.” 916 F.3d at 268. 

Second, the specific provisions DNF relies upon must be read

in conjunction with other parts of the statute, which make

plain that Congress recognized that some debt collectors do

not directly interact with consumers. We know this because

the “regularly collects” prong expressly applies to businesses

that “directly or indirectly” collect debt. § 1692a(6)

(emphasis added).

DNF also argues that legislative history reveals that

Congress did not anticipate the emergence of the debt-buying

industry when it enacted the FDCPA in 1977, and thus it

could not have intended to regulate entities like DNF. We are

not persuaded. First, the FDCPA’s text is sufficiently clear

that we need not resort to legislative history. See Barbato,

916 F.3d at 269; Scott v. Jones, 964 F.2d 314, 317 (4th Cir.

1992); see also Mohamad v. Palestinian Auth., 566 U.S. 449,

458 (2012). Second, to the extent we do consult legislative

history, our interpretation of the principal purpose prong is

consistent with Congress’s desire to regulate debt collectors

who “are likely to have no future contact with the consumer

and often are [therefore] unconcerned with the consumer’s

opinion of them,” rather than entities with ongoing customer

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14 MCADORY V. DNF ASSOCIATES

relationships that are generally “restrained by the desire to

protect their good will when collecting past due accounts.” 

S. Rep. No. 95–382, at *2, U.S. Code Cong. & Admin. News

1977, pp. 1695, 1696. Put differently, debt buyers profiting

from debt collection lack market incentives that deter the sort

of abusive debt collection practices Congress was motivated

to regulate. As Barbato observed, “[u]nlike a traditional

creditor, such as a bank or a retail outlet that has its own

incentive to cultivate good will among its customers and for

which debt collection is one of perhaps many parts of its

business, an independent debt collector . . . has only one need

for consumers: for them to pay their debts.” 916 F.3d

at 268–69.3

The Third Circuit recently observed, “[n]o longer do

creditors simply hire debt collectors to serve their named role;

rather, with increased frequency creditors sell debt to

purchasers, who may again resell the debt, hire outside debt

collectors to undertake collection efforts, or attempt to collect

on their own.” Tepper v. Amos Fin., LLC, 898 F.3d 364, 366

(3d Cir. 2018) (citing Federal Trade Commission, The

Structure and Practices of the Debt Buying Industry 1

(2013)). We agree that the debt collection industry has

3 DNF’s description of debt collectors that do not own the debts they

collect underscores this concern. According to DNF, “[i]f a debt collector

does not collect on the debt, he is no worse off than he was before any

attempt was made.” By contrast, DNF observes a “debt buyer will have

lost on that investment” if there is no collection. This view suggests that

debt buyers like DNF who profit from the collection of debts they own

face greater financial pressure to cut corners compared with those

agencies that regularly collect debts due another. DNF’s argument here

also underscores our conclusion that DNF’s principal purpose is not

merely debt acquisition, but is instead the acquisition of debt for the

purpose of collecting on it.

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MCADORY V. DNF ASSOCIATES 15

evolved since Congress passed the FDCPA, but these

changes do not support the statutory interpretation DNF urges

us to adopt. A primary purpose of the FDCPA was to protect

consumers from abusive debt collection practices by debt

collectors, 15 U.S.C. § 1692(e), and given the emergence of

entities that purchase debt and subcontract regular collection

activities, this purpose would be entirely circumvented if the

Act’s restrictions did not apply to entities like DNF. As we

recently observed, Congress did not intend to ban debt

collection; it intended to eliminate abusive, deceptive, and

unfair collection practices. Stimpson v. Midland Credit

Mgmt., Inc., 944 F.3d 1190, 1195 (9th Cir. 2019). Our

interpretation of the principal purpose prong furthers the

statute’s purpose and puts DNF and other similar debt buyers

on level footing with other debt collectors regulated by the

FDCPA. See § 1692(e).

DNF also suggests that McAdory’s position conflicts with

the Supreme Court’s decision in Henson. But in Henson, the

Court interpreted the “regularly collects” prong and

altogether declined to address the “principal purpose” prong.

4

137 S. Ct. at 1721; see also Barbato, 916 F.3d at 266. 

Henson does not change the outcome here.

Finally, DNF argues that it cannot be a debt collector if it

also meets the definition for “creditor.” This argument

erroneously assumes that the FDCPA uses these two terms in

mutually exclusive ways. We have already rejected a per se

rule that those who meet the FDCPA’s definition of creditor

cannot be debt collectors. Schlegel, 720 F.3d at 1208 n.2. 

4 Henson is further distinguishable because the defendant in that case

asserted that its primary business was originating loans, not purchasing

defaulted consumer debt. See 137 S. Ct. at 1725.

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16 MCADORY V. DNF ASSOCIATES

And in Henson, the Supreme Court declined to adopt the

view that the FDCPA “treats everyone who attempts to

collect a debt as either a ‘debt collector’ or a ‘creditor,’ but

not both.” Henson, 137 S. Ct. at 1724; see also Barbato,

916 F.3d at 266.

Contrary to the dissent’s suggestion, we do not direct the

district court on remand to discard the application of familiar

principles of agency law when it addresses vicarious liability. 

Nor do we suggest that one businessperson may be liable for

another just because they are in the same business. The

circumstances under which an entity can be a “debt collector”

logically precedes consideration of whether and when a debt

collector can be held vicariously liable for the actions of

another debt collector. On remand, the existing body of case

law will govern the requirements of vicarious liability, and

this opinion does nothing to alter that regime. See, e.g.,Clark

v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162,

1173 (9th Cir. 2006) (holding that “general principles of

agency . . . form the basis of vicarious liability under the

FDCPA”). Before our panel, McAdory’s counsel expressly

waived the argument that a non-debt collector can be held

vicariously liable under the FDPCA. But McAdory’s counsel

went on to clarify that if DNF is found to be a debt collector,

the next step—not yet reached by the trial court—will be to

decide whether DNF is vicariously liable according to agency

principles. McAdory recognizes, and we reiterate, that

vicarious liability may be addressed on remand. We conclude

that McAdory sufficiently alleged that DNF’s principal

purpose is the collection of debts as defined by the principal

purpose prong of § 1692a(6). The complaint alleged that

DNF lacks any other business purpose besides debt

collection. These allegations are sufficient to allege that DNF

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MCADORY V. DNF ASSOCIATES 17

is a debt collector under the FDCPA, regardless of whether

DNF outsources debt collection activities to a third party.

We reverse the district court’s order granting DNF’s

motion to dismiss and remand to the district court for further

proceedings.

REVERSED AND REMANDED.

BEA, Circuit Judge, dissenting:

I respectfully dissent from the majority opinion for three

reasons.

I.

The first reason is based on the operative complaint’s

undisputed utter lack of any allegations that DNF acted

directly in any way to violate appellant McAdory’s rights

under the FDCPA. As a matter of substantive law, then, DNF

can be held liable only for the acts of co-defendant MNS on

a theory of vicarious liability. But the problem is, the

FDCPA does not contain any textual basis for vicarious

liability of one “debt collector” for the acts of another “debt

collector,” even were DNF validly to be classified as a “debt

collector.” The notion that vicarious liability somehow

attaches to one “debt collector” account the actions of another

“debt collector” arises from the unexplained conclusion that

such seems “a fair result.” Pollice v. Nat’l Tax Funding, L.P.,

225 F.3d 379, 405 (3d Cir. 2000) (stating that its finding of

vicariously liability “is a fair result because an entity that is

itself a ‘debt collector’—and hence subject to the

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18 MCADORY V. DNF ASSOCIATES

FDCPA—should bear the burden of monitoring the activities

of those it enlists to collect debts on its behalf.”). Why one

businessman should be liable for the acts of another

businessman in the same business just because they are in the

same business is a mystery to me. If each is a “debt

collector,” each is subject to the duties owed by a debt

collector to consumers. But why is there vicarious liability

for another business’s acts absent facts which establish

common law respondeat superior? Pollice offered no

reasoning as to what considerations enter into the court’s

conclusion of a “fair result,” or what is the basis for the court

determining that it was empowered to decide based on what

it thought was a “fair result.”

I am mindful, however, that Congress is thought to

legislate on a background of settled legal principles, such as

the common-law doctrine of respondeat superior,which does

provide the basis for vicarious liability. Meyer v. Holley,

537 U.S. 280, 285 (2003). It would be a relatively simple

case for us to find plaintiff’s allegations sufficient to state a

claim for vicarious liability. After all, plaintiff does allege

that DNF exercised control over the actions of the “physical

debt collectors” such as MNS in such detail that reasonable

jurors could find DNF actually controlled alleged “debt

collector” MNS’s acts toward McAdory, and that DNF

should be liable for the legal effects of such acts. This should

result in a reversal of the summary judgment in favor of DNF

because the District Court failed to recognize that the

complaint sufficiently alleged vicarious liability.

But we cannot do so here because Plaintiff-Appellant

McAdory has expressly eschewed the argument that DNF

could be vicariously liable for MNS’s conduct without DNF

qualifying as a “debt collector” under the FDCPA when

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MCADORY V. DNF ASSOCIATES 19

specifically questioned on this point at oral argument.1 We

cannot consider arguments expressly waived. See, e.g., In re

Rodeo Canon Dev. Corp., 392 F. App’x 576, 579 (9th Cir.

2010). Because Plaintiff-Appellant McAdory submits that

her case must rise or fall on whether DNF qualifies as a “debt

collector” for the purposes of the FDCPA, I would hold that

DNF does not so qualify and affirm the district court’s grant

of summary judgment in favor of DNF for the reasons

explained below.

I believe the Majority is incorrect in holding both that

DNF must qualify as a “debt collector” under the FDCPA

before it can be held liable for MNS’s conduct, and that DNF

does so qualify. However, unlike the Third Circuit in Pollice,

the Majority has thankfully affirmed that common law

principles of respondeat superior will apply on remand, in

1

 The exchange at oral argument was as follows:

Judge Bea: You’re not taking the position that

regardless whether DNF was a ‘debt collector’ . . . it

should be liable [on a theory of] vicarious liability

because it controlled the actions of MNS, which were

allegedly a violation of . . . the federal act.

Counsel for Appellant: Correct, we are arguing that, if

DNF is found to be a ‘debt collector,’ it can be

held—and then you would move on to the next

question, which is look at the agency principles, and

determine whether there is vicarious liability.

Judge Bea: But it can’t be held, according to the

Appellant, unless it is a ‘debt collector.’

Counsel for Appellant: Correct, that was the question.

Judge Bea: Thank you.

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20 MCADORY V. DNF ASSOCIATES

light of its holding that DNF is a “debt collector” under the

FDCPA.

II.

The second and third reasons for my dissent have to do

with statutory interpretation. I do not think that DNF is a

“debt collector” who owes FDCPA statutory duties to

McAdory, because McAdory has not adequately alleged that

MNS’s (2) “principal purpose” is (3) the “collection of any

debts.”

True, the opening sentence of the charging allegations of

the complaint state: “The principle [sic] purpose of DNF is

the collection of defaulted consumer debts . . . .” But that

allegation is simply the recitation of the statutory description

of a “debt collector,” the classically inadequate allegation

invalidated by Iqbal and Twombly.

2 No specific factual

allegations follow that hollow conclusory allegation to make

the description of DNF as a “debt collector” adequate. Given

that the operative complaint does not allege that DNF has any

direct interactions with consumers, the only remaining

question is whether its other factual, not conclusory,

allegations allow us to conclude that such debt collection is

nonetheless DNF’s “principal purpose.”

2 Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009) (holding that “the

tenet that a court must accept as true all of the allegations contained in a

complaint is inapplicable to legal conclusions. Threadbare recitals of the

elements of a cause of action, supported by mere conclusory statements,

do not suffice.”) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007)).

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MCADORY V. DNF ASSOCIATES 21

The operative complaint alleges that DNF “derive[s]large

profits” from “defaulted consumer debts that it purchases for

pennies on the dollar.” Accepted as true for the purposes of

DNF’s 12(b)(6) motion, this allegation does not establish that

DNF’s principal purpose is the collection of debt. First, if

anything, the allegation establishes that debt collection is not

the only component of DNF’s business. The other integral

part, as alleged by McAdory, is the acquisition of that debt at

a discounted price (“for pennies on the dollar”). Second, this

allegation is not surprising, as the principal purpose of nearly

every firm in a market-based economic system is to make a

profit by buying low and selling high. But the fact that a

firm’s profits are large—whether they are derived from

purchasing discounted debt, collecting on that debt, or

otherwise—says nothing about how important they are

relative to other potential profit-making activities in the firm. 

In other words, just because DNF derives a lot of profit from

the discounted debt it purchases, it does not tell us whether or

not DNF derives a lot more profit from other, unrelated

activities. McAdory alleges no facts which allow us to

conclude what portion of DNF’s profits derive from debt

collection. Hence, it tells us nothing of DNF’s single

“principal purpose.”

Further, McAdory alleges that “DNF actively participates

in, directs, and derives the vast majority of its income from a

large national debt collection network of which it is the head

of.” DNF contracts with third-party debt collectors around

the country, according to McAdory, and supplies them with

the debtors’ personal information and parameters of

collection. But none of these facts are sufficient to make out

a claim that DNF has the “principal purpose” of debt

collection, either. DNF’s “income” is obviously different

from its profit, and thus income, by itself, cannot tell us much

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22 MCADORY V. DNF ASSOCIATES

about the activity’s importance to DNF. For aught that

appears in the allegations of the complaint, the “vast

majority” of DNF’s profit could very well come from other

activities having nothing to do with debt collection, even

when we accept as true that the “vast majority” of its income

is so produced. For all we know, maybe the “physical debt

collectors” described in the operative complaint take such a

large cut of any collected payments that the profits DNF

derives from such activities are relatively unimportant to its

overall business. In fact, that is exactly what the operative

complaint suggests: that DNF “derive[s] [its] large profits”

from debts that it has “purchase[d] for pennies on the

dollar”—and perhaps has sold to others at a markup—and not

from debts it has collected.

Thus, the Majority is at least half right: if DNF did not

have some way of monetizing the debt it acquired, it would

soon go out of business. Maj. Op. at 9. But in being half

right, it is also half wrong: based on the allegations as they

appear in the operative complaint, DNF would also go out of

business if it could no longer acquire such debts at a price

well below face value. According to the operative complaint,

the factual allegations of which we must accept as true, both

activities are integral to DNF’s business. And the operative

complaint contains no allegations or other inferences that

would allow us to conclude which, if either, of these two

activities qualifies as DNF’s “principal purpose.”

The bottom line, then, is that the allegations of the

complaint do not sufficiently make out a claim that debt

collection—even indirect debt collection—is the “most

important” goal or aim of DNF. According to the complaint,

the actual collection of debts is no more important to the

production of profit than is the earlier purchase of the debt at

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MCADORY V. DNF ASSOCIATES 23

a price lower than the amount collected. One cannot expect

“large profits” if debt is bought dear and collected dear, or

worse, collected cheap.

At best, the two acts—the purchase and the collection of

debt—are both described in the complaint as the principal

purposes of DNF. But the FDCPA describes a “debt

collector” as one who has “the principal purpose” of the

“collection of any debts”—not one who has as “a principal

purpose” such collection. Thus, even were the Majority

opinion’s reading of “collection of any debts” correct, it

would be only half right, but also half wrong. Section

1692a(6) does not describe as a “debt collector” a person one

of whose principal purposes is the collection of any debts. It

is an all or nothing description. Clearly, for a profit

motivated business, DNF does not qualify as a “debt

collector” under the “principal purpose” prong of Sec.

1692a(6).

III.

A.

The third reason why Section 1692a(6) does not apply to

DNF is that the word “collection” in the phrase “the

collection of any debts” must, in context, describe the action

of collecting, and not a collection of a set of items (such as

debts). In its interpretation of the statute, the Majority

followed the only other Court of Appeals to have decided the

issue. Barbato v. Greystone All., LLC, 916 F.3d 260, 261 (3d

Cir.), cert. denied sub nom. Crown Asset Mgmt. LLC v.

Barbato, 140 S. Ct. 245 (2019). The Barbato Court’s

interpretation of the statutory text, which the Majority

adopted, relies heavily on a flawed grammatical analysis. In

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24 MCADORY V. DNF ASSOCIATES

interpreting the phrase, “any business the principal purpose

of which is the collection of any debts,” 15 U.S.C.

§ 1692a(6), the Third Circuit reasoned:

While it is true that “collection” can be

defined as “the act or process of collecting,”

it can also be defined as “that which is

collected.” Collection, Random House

Dictionary of the English Language 290

(1973). So defined, the focus shifts from the

act of collecting to what is collected, namely,

the acquired debts. As long as a business’s

raison d’être is obtaining payment on the

debts that it acquires, it is a debt collector.

Who actually obtains the payment or how

they do so is of no moment.

916 F.3d at 267. While I agree that the word “collection” can

be validly defined as “that which is collected” in certain

contexts, this definition makes absolutely no sense here.

These interpretive errors are only compounded with the

Third Circuit’s distinctions based on the statutory words’

parts of speech. The Majority notes approvingly that “[i]t

was critical to the Third Circuit’s rationale that ‘the

“regularly collects” definition employs a verb and the

“principal purpose” definition employs a noun.’” Maj. Op.

at 11 (citing Barbato, 916 F.3d at 267). And it is on this basis

that the Majority rejects DNF’s proposed definition, “the act

or process of collecting.” Id. at 10.

Because this simple grammatical error has now toppled

two United States Courts of Appeals, I am afraid I must go

back to basics. The mere fact that a word appears in the form

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MCADORY V. DNF ASSOCIATES 25

of a noun instead of the form of a verb does not mean that it

cannot refer to action. “Action,”

3

in fact, is a noun. So are

the words in DNF’s proposed definition of collection, the

“act”4or the “process”5of collection. And so are thousands

of other words that refer to actions, like “arrival,”6

“dismissal,”7“launch,”8 “release,”9 and “use.”10

So yes, Congress used the form of a noun in the “principal

purpose” prong of the FDCPA’s definition, and the form of

a verb in the “regularly collects” prong. But how do we get

3 Action, Merriam-Webster Dictionary, https://www.merriamwebster.com/dictionary/action.

4

“[N]oun. [T]he doing of a thing.” Act. Merriam-Webster

Dictionary, https://www.merriam-webster.com/dictionary/act.

5

“[N]oun. [A] series of actions or operations conducing to an end.” 

Process, Merriam-Webster Dictionary, https://www.merriamwebster.com/dictionary/process.

6

“[N]oun. [T]he act of arriving.” Arrival, Merriam-Webster

Dictionary, https://www.merriam-webster.com/dictionary/arrival.

7

“[N]oun. [T]he act of dismissing.” Dismissal, Merriam-Webster

Dictionary, https://www.merriam-webster.com/dictionary/dismissal.

8

“[N]oun. [A]n act or instance of launching.” Launch, MerriamWebsterDictionary, https://www.merriam-webster.com/dictionary/launch.

9

“[N]oun. [T]he act or an instance of liberating or freeing (as from

restraint).” Release, Merriam-Webster Dictionary, https://www.merriamwebster.com/dictionary/release.

10

“[N]oun. [T]he act or practice of employing something.” 

Use, Merriam-Webster Dictionary, https://www.merriamwebster.com/dictionary/use.

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26 MCADORY V. DNF ASSOCIATES

from this unremarkable fact to the conclusion that the word

“collection” cannot refer to an action?11 Neither the Barbato

Court nor the Majority provide an explanation. But it appears

to me to amount to no more than a simple misunderstanding

of the way words work: that because verbs typically convey

“actions” and nouns typically convey “things,” there can be

no mixing between such categories.12 But surely we are

expected to rise above such a rudimentary (and incorrect)

understanding of grammar when we are interpreting a

statutory text.

Put differently, acknowledging that “collection” is a noun

(rather than a verb) does not end the inquiry, because the

noun “collection” has many different definitions—some of

which refer to things and some of which refer to actions.

13

We all agree that the noun “collection,” depending on the

context, can mean “that which is collected,” or “the act or

process of collecting.” But both Barbato and the Majority

have opted for the former definition of the noun “collection”

without explaining why it should be preferred over the latter,

other than by pointing out that the separate, second “regularly

11 For what it’s worth, even the definition of the word “noun”

contradicts this conclusion: A noun is “any member of a class of words

that typically . . . refer to an entity, quality, state, action or concept.” 

Noun, Merriam-Webster Dictionary, https://www.merriamwebster.com/dictionary/noun (emphasis added).

12 Perhaps this is what is implied in the Barbato Court’s assertion that,

“it is, after all, a verb that requires action.” 916 F.3d at 268.

13

See, e.g., Collection, Merriam-Webster Dictionary,

https://www.merriam-webster.com/dictionary/collection (defining

“collection” as “[N]oun. [T]he act or process of collecting[;] something

collected[;] GROUP, AGGREGATE[;] a set of apparel designed for sale

usually in a particular season.”

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MCADORY V. DNF ASSOCIATES 27

collects” prong of the statute employs a verb rather than a

noun. As explained, this offers no insight into which

definition of the noun “collection” should be understood in

section 1692a(6). Since both of these definitions can be valid

definitions of the noun “collection” in certain contexts, our

task is to evaluate what each of them would mean.

Let me begin with the Third Circuit’s definition, adopted

by the Majority. For ease of reference to this definition of

“collection”—“what is collected”—one might use the

synonyms “assortment” and “stockpile.”14 Obviously, these

synonyms are not mentioned in Barbato or the Majority

opinion, but I employ them here to demonstrate what their

adopted definition of “collection” would mean: When

“collection” means “what is collected,” it refers to the things

that are collected. Barbato, 916 F.3d at 267 (stating that this

definition causes “the focus [to] shift[] from the act of

collecting to what is collected.”) (emphasis added).

What would a business look like if its primary purpose

were “what is collected” instead of “the act of collecting”—in

other words, for a business’s purpose to be collected things?

Of course, a business’s primary objective might be to obtain

a “collection” or “assortment” of coins, of paintings, or of

vintage automobiles. But unless one charges for viewing

such collection, the “collection” itself—or, as the Majority

would have it, the things that are collected—would not

constitute much of a “business” as described by Section

1692a(6). And, of course, one can even have—and maybe

DNF does have—a “collection” or “stockpile” of debts. This

is what is described by the Third Circuit’s and the Majority’s

14

See, e.g., Collection, Merriam-Webster Thesaurus,

https://www.merriam-webster.com/thesaurus/collection.

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28 MCADORY V. DNF ASSOCIATES

definition: When the word “collection” means “that which is

collected,” it refers not to an act but to a thing (or a group of

things). In other words, according to the Majority’s reading

of the statute, DNF’s principal purpose in its business is: To

maintain a debt “collection.” If this sounds absurd, that’s

because it is.15

But are we really expected to believe that this is the type

of debt “collection” to which Congress was referring in the

“principal purpose” prong? For, what could it even mean, as

the Majority joins the Third Circuit in holding, that DNF’s

“principal purpose” is a group of things—“that which is

collected,” or “[the debt] which is collected (or, as I have

said, an “assortment” or a “[stockpile] of any debts”)?

15 U.S.C. § 1692a(6). Both the Majority and the Barbato

Court acknowledge that a business that acquires “a collection

of . . . debts” without realizing their payment (or otherwise

monetizing them) would soon go out of business. Maj. Op.

at 9; 916 F.3d at 268. So why do they both insist that the

statute seeks to encompass these nonexistent business

models?

Further, a debt “collection” in this sense (describing

“what is collected”) is not the purpose (or business model)

that either the Majority or the Barbato Court ultimately

attribute to the purported “debt collector.” See Maj. Op. at 13

(citing approvingly to Barbato, 916 F.3d at 268, that

“indirect” collection “is the type of collection in which [the

defendant] engages: it buys consumer debt and hires debt

collectors to collect on it.”). Indeed, in the midst of its

15 Such a “collection” of debts might make sense for a governmental

or charitable organization whose principal purpose was the forgiveness of

debt, but not for a business which intends the debts be paid.

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MCADORY V. DNF ASSOCIATES 29

statutory interpretation, the Barbato Court reasons (and the

Majority quotes approvingly) that “Congress used the noun

‘collection’ and did not specifywho must do the collecting or

to whom the debt must be owed.” Id. at 267 (emphasis

added); Maj. Op. at 11. Put differently, even while espousing

the significance of Congress’s employment of “collection” as

a noun, the Barbato Court acknowledges that it is of course

the act of collecting (used there in the present participle form

of a verb) that the FDCPA’s “principal purpose” prong seeks

to capture. Thus, according to both Barbato and the

Majority, the only proper definition of the noun “collection”

in section 1692a(6) is as an action (as opposed to a thing). 

And thus in both prongs, it is ultimately a business’s action or

activity that brings the purported debt collectors into the

realm of the statute.

That is why it makes much more sense in this context to

adopt the definition that DNF urges for “collection,” which is

“the act or process of collection.” Then the statute reads,

rather straightforwardly, that a “debt collector” is “any

business the principal purpose of which is the [‘the act or

process of collecti[ng]’] of any debts.” Focusing on the act

or process of collecting, rather than on “what is

collected”—DNF’s debt “collection”—also functions to

exclude certain businesses from the “principal purpose”

definition, businesses which are obviously outside the

intended scope of the statute. For example, is there any doubt

that a fixed-income investor who exclusively buys and holds

corporate and municipal bonds to maturity has the “raison

d’être [of] obtaining payment on the debts that it acquires,”

Barbato, 916 F.3d at 267, and is—I think all would

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30 MCADORY V. DNF ASSOCIATES

agree—not a “debt collector” under either definition of the

FDCPA?16

The interpretation that “collection” be defined as an “act”

or “process” does not create a “direct interaction”

requirement, as stated by the district court below and rejected

by the Majority. Rather, this is simply the requirement that

the statute itself imposes: That the purported debt collector

have as its principal purpose an act or process that can be

fairly described as “collection,” as put forth in section

1692a(6). McAdory has simply not alleged that DNF

engages in any such acts or processes. So how can it be said

that DNF—a business which, according to the allegations of

the complaint, never performs the act or process of

collecting—has the principal purpose of “the collection of

any debts”?

B.

Because a noun can denote an action, I have no trouble

accepting the most straightforward definition of the noun

“collection”: a “debt collector” is “any business the principal

purpose of which is [the act or process of collecting] any

debts.” I fully acknowledge that this interpretation means

that both prongs of the “debt collector” definition of section

1692a(6) devote some focus to a person’s actions or activity. 

16 Or, if it is fairly implied that Barbato’s language was limited only

to defaulted consumer debts, consider the business model suggested later

in that decision, one who “buy[s] debt for the purpose of reselling it to

unrelated parties at a profit.” 916 F.3d at 268. One can still say that its

“raison d’être is obtaining payment” on that debt, yet under the Majority’s

reasoning none of the FDCPA’s prohibitions would apply to its business

activities, for it obtains payment on the debt from the buyer of the debt,

not the debtor.

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MCADORY V. DNF ASSOCIATES 31

Contrary to the Majority’s assertion, though, this

interpretation does not render either prong of the statute

superfluous, for the actors under the two prongs are described

quite differently. The Majority’s contrary assertion ignores

the substantial differences that exist between what qualifies

a “debt collector” under the first prong and what so qualifies

under the second prong.

Under the second, “regularly collects” prong, a business

does not qualify as a debt collector unless it is collecting

debts “for another”—that is, debts that it does not own. Such

a business cannot be a debt collector unless it also collects

another’s debts “regularly,” meaning that even if collection

of debts owned by others is its exclusive line of business,

collection activity that is merely occasional will disqualify it

from the definition. And finally, the statute expressly

provides that such collection activity may be done “directly

or indirectly.”

To the contrary, under the first, “principal purpose”

prong, which the Majority opinion would apply to DNF, a

business can qualify as a debt collector even if it is collecting

on debts that it owns. Such a business can be a debt collector

even if it collects on debts only occasionally or irregularly, so

long as such collection remains its most important goal or

aim (or, as the statute puts it, its “principal purpose”).17 And

finally, what is particularly relevant for DNF: unlike the

“regularly collects” prong, the debt “collection” that amounts

17 Such a “debt collector” need not have bought the debt for “pennies

on the dollar,” as is alleged DNF did. The firm could buy the debt for no

money up front but solely on the basis of returning a percentage of the

amount actually recovered on the debt. Such a business would have only

one “principal purpose”: the collection of debt.

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32 MCADORY V. DNF ASSOCIATES

to the business’s “principal purpose” must be made directly

against the debtor, since “directly or “indirectly” is a

requirement of the second prong but not of the first prong.

18

Of course, the Majority is correct that the “principal

purpose” prong contains no express requirement that

qualifying debt “collection” must be made directly against

consumer debtors. But on what basis does the Majority

conclude that “[c]ollection’ by its very definition may be

indirect,” such that an express requirement would be

necessary? Maj. Op. at 13 (citing Barbato, 916 F.3d at 268). 

Congress obviously does not agree: If this were true, why

does the “regularly collects” prong clarify that qualifying

debt collection may be done “directly or indirectly”?

§ 1692a(6). The Majority’s reasoning renders this

clarification completely superfluous. Given that we must

“presume differences in language like this convey differences

in meaning,” Henson v. Santander Consumer USA Inc.,

137 S. Ct. 1718, 1723 (2017), I cannot follow the Majority in

ignoring this absence of this clarification in the “principal

purpose” prong, so as to conclude that “indirect” actions

towards consumers can qualify as “collection” from

consumers.

This becomes even more apparent when we acknowledge

that “[t]he [FDCPA]regulatesinteractions between consumer

debtors and debt collectors.” Jerman v. Carlisle, McNellie,

Rini, Kramer &Ulrich LPA, 559 U.S. 573, 577 (2010) (citing

section 1692a(5) and the “regularly collects” prong of section

1692a(6)). With this in mind, we ought to expect an express

statement from Congress when the FDCPA’s restrictions

apply to a business that merely collects debts “indirectly”—

18 Scalia & Garner, op. cit. at 174–179.

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MCADORY V. DNF ASSOCIATES 33

that is, without any direct collection from the consumer

debtor. And this is exactly what we find in the “regularly

collects” prong, and exactly what is absent in the “principal

purpose” prong at issue here. As such, it is not my

interpretation but rather that of the Majority which would

render the word “indirectly” in the second prong of the

definition superfluous.

IV.

In conclusion, I reiterate my initial reason for dissenting. 

In my opinion, the above discussion as to the proper way to

interpret the first prong’s definition of “debt collector” in

section 1692a(6) is entirely unnecessary in this case. If the

Majority believes that DNF may be liable for MNS’s

violations of the FDCPA, it need not distort the statute with

erroneous grammatical distinctions in order to so hold. Case

law that is binding on this Court already provides an available

path.

McAdory alleged not that DNF made any direct contact

with her, or that any of DNF’s actions violated the FDCPA in

any way. Instead, she alleged that DNF should be held

vicariously liable for MNS’s direct violations. While the

Ninth Circuit has “recognized vicarious liability under the

FDCPA,” Clark v. Capital Credit & Collection Servs., Inc.,

460 F.3d 1162, 1173 (9th Cir. 2006) (citing Fox v. Citicorp

Credit Servs., Inc., 15 F.3d 1507, 1516 (9th Cir. 1994)), it has

never addressed the question whether a person must also be

a “debt collector” subject to the FDCPA to be vicariously

liable for the actions of another person, who, like DNF, is

indeed a “debt collector.”

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34 MCADORY V. DNF ASSOCIATES

Below, at the motion to dismiss stage, both parties argued

under Fox, Clark, and out-of-circuit case law that DNF could

be vicariously liable for MNS’s actions under the FDCPA

only if DNF itself meets the definition of “debt collector”

under section 1692a(6).19 Despite Clark’s clear statement

that “general principals of agency . . . form the basis of

vicarious liability under the FDCPA,” the district court

accepted the parties’ premise—that a principal could not be

vicariouslyliable for its agent’s FDCPA violations unless that

principal was itself a “debt collector” under the FDCPA—and

considered its conclusion that DNF was not a “debt collector”

to end the inquiry. We have never held that the question

whether a business is a “debt collector” under the FDCPA

“logically precedes consideration of whether and when a debt

collector can be held vicariously liable for the actions of

another debt collector.” Maj. Op. at 16. And neither the

FDCPA nor our governing case law require such a

conclusion.

19 See, e.g., Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108

(6thCir. 1996) (declining to hold a non-“debt collector” vicariously liable

for its attorney’s violations of the FDCPA); Pollice, 225 F.3d at 405

(citing Fox and Wadlington and stating that its finding of vicariously

liability “is a fair result because 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 behalf.”);

Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 325 (7th Cir.

2016) (stating that the “key question, according to the Third Circuit in

Pollice, is whether the defendant whom the plaintiff seeks to hold

vicariously liable is itself a debt collector,” because the FDCPA

“require[s] a debt collector who is independently obliged to comply with

the Act to monitor the actions of those it enlists to collect debts on its

behalf. On the other hand, a company that is not a debt collector would

not ordinarily be subject to liability under the Act at all.”).

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MCADORY V. DNF ASSOCIATES 35

The Supreme Court has stated, when evaluating a claim

of vicarious liability under a different statutory scheme, that

“when Congress creates a tort action, it legislates against a

legal background of ordinary tort-related vicarious liability

rules and consequently intends its legislation to incorporate

those rules.” Meyer, 537 U.S. at 285. The Court continued:

It is well established that traditional vicarious

liability rules ordinarily make principals or

employers vicariously liable for acts of their

agents or employees in the scope of their

authority or employment. Burlington

Industries, Inc. v. Ellerth, 524 U.S. 742, 756,

118 S.Ct. 2257, 141 L.Ed.2d 633 (1998) (“An

employer may be liable for both negligent and

intentional torts committed by an employee

within the scope of his or her employment”);

New Orleans, M., & C.R. Co. v. Hanning,

15 Wall. 649, 657, 21 L.Ed. 220 (1873) (“The

principal is liable for the acts and negligence

of the agent in the course of his employment,

although he did not authorize or did not know

of the acts complained of”).

Id. at 285–86 (holding that under traditional principles of

vicarious liability, a corporation is the principal of its

employees/agents, and thus corporate owners and officers are

not liable for the unlawful acts of an employee simply on the

basis that the owner or officer controlled (or had the right to

control) the actions of that employee).

McAdory expressly abandoned this argument when

arguing before this Court, so I will not address the adequacy

of the allegations in the operative complaint. Instead, I am

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36 MCADORY V. DNF ASSOCIATES

content to conclude as follows: While the operative complaint

did not sufficiently allege that DNF is a “debt collector”

under the FDCPA, longstanding case law that is binding on

this Court holds that such a status is not necessary for DNF to

be held vicariously liable for MNS’s alleged actions. But

because this argument was expressly abandoned, I would

hold that the district court’s grant of DNF’s motion to dismiss

should be affirmed.

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