FOR PUBLICATION

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

C HAR L E S S T E P HA

N L I M A , Plaintiff-Appellant ,

v.

U N I T E D S T A T E S D E P A

R T ME N T O F E D U C AT I ON , Defendant ,

and

E D U C A T I ON

AL C R E D I T M A N A GE ME N T C O R P O R A T I ON , D efendant-Appellee

. No. 17-16299

D.C. No. 1:15-cv-00242-KSC

OPINION

Appeal from

the United States District Court for the District of Hawaii Kevin S. Chang, Magistrate Judge, Presiding Argued and Subm itted October 22, 2019

Honolulu, Hawaii

Filed Decem

ber 18, 2019
Before: Susan P. Graber, Milan D. Sm ith, Jr., and Paul J. W atford, Circuit Judges. Opinion by Judge GraberL I M A V

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SUMMARY *

Debt Collection

The panel affirm ed the district court’s summ ary judgm ent in favor of the defendant o n clai ms un d er the Fair Debt Collection Practices Act and the Due Process Clause.
Defendant, a nonprofit guaranty agency, caused an offset against plaintiff’s Social Security benefits, to re c o v e r on a judgm ent i t h ad obtained by assignm ent after plaintiff defaulted on his student loans. Under the Higher Education Act, student loans are guaranteed by guaranty ag encies, which receive guarantees from the United States.

The panel held that, under th e FDCPA’s definition of a debt collector, defendant regularly collected or attempted to collect debts asserted to b e owed or due another. Defendant
was n ot collecting a debt for its o wn account, but rather was collecting a d ebt for the Un i ted States. Nonetheless, defendant fulfilled th e criteria of the fiduciary exception because it had a broader fidu c i ary role with respect to plaintiff’s d ebt than m erely collecting the de b t , and its collection activity was incidental to its fiduciary obligation to the Departm ent of Educ a t i o n

. Accordingly, defendant was not a debt collector under the FDCPA.

Assum ing without deciding that defendant was a st a te actor, the panel held that defendant did not violate plaintiff’s procedural due process rig ht s because it provided plaintiff

* This summ ary constitutes no part of the opinion of the court. It h as been prepared by court staff for the convenience of the reader.L I M A V

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with notice of th e d ebt, of defendant’s intention to seek a Treasury offset against plaintiff’s S oci a l Security benefits, and of the m eans by which plaintiff could respond.

C OUNSEL

Am ani S. Floyd (argued) and George C. Harris, Morrison & Fo e rster LLP, San Francisco, California, for PlaintiffAppellant.
Troy A. Gunderm an (argued), ECMC Shared Services Com p., LLC, Minneapolis, Minnesota; Theodore D. C. Young, Cades Schutte LLP, H onolulu, H awaii; for Defendant-Appellee.

OPINION GRABER, Circuit Judge:

Defendant Education Managem ent Credit Cor p o ration caused an offset ag ainst Plaintiff Charles Lim a’s Social Security benefits, to recover on a judg m e n t obtained after Plaintiff defaulted on his student loans. Plaintiff filed a civil action alleging, am ong o ther things, v iolations of the Fair Debt Collection Practices Ac t an d the Fifth Am endm ent’s Due Process Clause. The district court g ranted summ ary judgm ent to Defendant. W e affirm

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BACKGROUND

A. Statutory Framework

T h e H igher Education A ct of 1 965 (“Act”) establish ed th e Federal Fam ily Education Loan Program (“Loan Program ”), which the D epartm ent of Education ( “ DOE”) adm inisters. Rowe v. Educ. Credit Mgmt. Corp. , 5 59 F .3d 1028, 1030 (9th Cir. 2009). Under the Act, lenders provide loans to students
or their parents to help finance higher education. Typically, those loans are guaranteed by guara n ty a g encies, which are “[s]tate or private nonprofit o rganization[s]” that have agreem ents with the Secretary of Education to adm inister the Loan Program

. 34 C.F.R. §§ 682.200, 682.401(a). Those agencies, in turn, receive guarantees from the United States. Gu aranty agencies, therefore, o perate as interm ediari e s between the student-loan lender and the United States. R o we , 559 F.3d at 1030.

If a borrower defaul t s on a student loan, the lender m ust try to obtain r e p a y m e nt from the borrower. If the lender is unsuccessful, it can file a claim with the guaranty agency and be repaid the o u tstanding balance o f the loan. In that situation, the guaranty agency is assigned th e loan from the lender. The guaranty agency, in turn, is repaid by the DOE in
ex ch an g e f

o r un d ertaki n g “d

u e d ilig e n c e” activities to attem p t t o c o llect the debt from the borrower. Id. Those “du e dil i g ence” activities include “locating the defaulting borrower, o ffsetting federal and state tax refunds

. . ., initiating adm inistrative garnishm ent p roceedings

. . ., and filing suit against the borrower.” Id. (c i t i ng 34 C.F.R. § 682.410(b)(6)(i)–(iv)).L I M A V

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B. Factual Background

Plaintiff obtained three student loans, totaling $8,500, in the 1970s. The New York State Higher Educa t ion Services C o rp o ratio n (“N ew Y o rk C o rp o r ation”) acted as guaran to r f o r those loans under the Act. Plaintiff d efaulted on the loans in 1980. In 1991, New York Corporation obtained a judgm ent against Plain tif

f f o r a p p ro x im ately $ 1 4 , 0 0 0 , rep resen tin g both principal and interest.

Defendant is a nonprofit guaranty agency under the Act. In 2 0 08, the DOE and De fendant agreed that Defendant would take assignm ent of certain Loan Programaccounts in which judgm ents h a d been obtained by other guaranty agencies.

Pursuant to that agreem ent, New York Corporation assigned its judgm ent against Plaintiff to Defendant in 2009. Through that assignm ent, Defendant assum ed all right, title, and interest in the jud g m ent, and Defendant becam e o bligated to satisfy any guarant y responsibilities rem aining on the underlying debt. In August 2009, De fe ndant notified Plaintiff, b y ma i l, that the DOE h eld a claim against him , which it intended to collect by h aving the United St a tes Departm ent o f the Treasury (“Treasury”) offset “all paym ent stream s authorized by law,” incl u d ing his Social Security benefits. Plaintiff did not respond.

In August 2012, T reasu ry began offsetting Plaintiff’s Social Security benefits by about $200 p er mo nth. Plaintiff then contacted Defendant and asserted that he d id not receive the 2 009 letter and that the debt already had b e e n s a tisfied. Between August 2012 and June 2015, Treasury garnishedL I M A V

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. 6 approxim ately $6,900 from Plaintiff’s Social Sec urity benefits.

In 2015, Plaintiff filed this action against Defendant. 1 A s relevant h ere, Plaintiff claim ed violations of the Fa i r Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692; the Fifth Am endm ent’s Due Process Clause; and state law. The district court granted summ ary judgm ent to Defendant on all fed e ral claim s. The court held that D efendant is not subject t o the FDCPA because Defendant is n ot a “debt collector.” The court then held that Defendant is not subject to the Due Process Clause because Defendant is not a state a c t o r. Finally, the district court declined to exercise supplem ental jurisdic ti on o ver the state-law claim s. Plaintiff tim ely appealed.

STANDARDS OF REVIEW

W e review de novo the district court’s grant of summ ary judgm ent, and we m ay affirm on any ground supported by the record. Chemehuevi Indian T ribe v. Newsom , 919 F.3d 1148, 1150–51 (9th C ir. 2019). W e review for abuse of discretion the district court’s d e cision to decline supplem ental jurisdiction. Oliver v. R a lphs Grocery Co. , 654 F.3d 903, 911 (9th Cir. 2011).

1 Plaintiff also nam ed the D O E a s a defendant, but t he parties dism issed the DOE by stipulation.L I M A V

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DISCUSSION

A. Fair Debt Collection Practices Act 2

The FDCPA “authorizes private civil actions against debt collecto r s who engage in certain prohibited practices.” Rotkiske v. Klemm , No. 1 8-328, slip o p

. a t 1 ( U.S. Dec. 10, 2019). P laintiff seeks statutory dam ages under § 1692k(a) o f the FDCPA. T o o btain dam ages, Plaintiff first m ust establish that Defendant is a “debt collector.” As relevant here, the FDCPA d e fi n es a “debt collector” as “any person

. . . who regularly collects or attem pts to collect, directly or indirectly, debts owed or d

ue o r asserted to b e owed or due another.” 15 U.S.C. § 1692a(6). Defendant asserts that it is not a d ebt collector under that definition. Defendan t also argues that,
eve n i f it m eets that statutory definition, it is not a debt collector because it fulfills the cr i t e ri a of the fiduciary exception, § 1692a(6)(F).

W e h o ld that Defendant “regularly collects or attem pts to collect” debt s “ asserted to be o wed or due another.” Nonetheless, we affirm the district court’s grant of summ ary judgm ent becau s e Defendant’s collection activities were “incidental to a bona fide fiduciary obliga t i on.” 15 U.S.C. § 1692a(6)(F)(i).

1. Defendant “regularly” attempts to collect debts “owed” to another.

In He nson v. Santander Consumer USA Inc. , 1 37 S. Ct. 1718 (2017), the Suprem e Court held th a t a defendant who

2 The relevant provisions of the FDCPA are i ncluded in Appendix A.L I M A V

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. 8 purchased a defaulted loan and sought to collect the debt was not a “debt collector.” The Court explained that, when applying the “regularly collects” definition of “debt col l ec t or , ” “[a]ll that m atters is whether the target o f the lawsuit regularly seeks to collect debts for its own account o r d oes so for ‘another.’” Id. at 1721. Because th e He n s o n defendant “purchased d efaulted debt for its own account,” the Court held that the defendant was not a “debt collector.” Id. at 1724 (em

phasis added).

Whether a lender in Defendant’s pos i t i on is seeking to collect a debt for its “own account” is a question o f first i mpression in our circuit. To answer that question, Henson requires us to focus on who ultim ately would re c e i ve the paym ents on the debt being collected. See, e.g. , Infante v. La w Of fice o f Joseph Onwuteaka, P.C. , 735 F. App’x 83 9 , 842–43 (5th C ir. 2018) (p er curiam ) (unpublished) (holding that, because a lim ited liability corporation has a distinct legal identity, a lawyer wh o wa s collecting debt on behalf of an LLC that he owned was a deb t co l l e ctor); 3 Bank of N .Y. Mellon Tr. Co. N.A. v. Henderson , 862 F.3d 29, 34 (D.C. Cir. 2017) (h ol d i n g that a bank was not a debt collector because the debt was owed to the bank).
Here, Plaintiff’s debt is owed, or asserted to be owed, to the Uni t e d S tates. The m onies obtained from Plaintiff’s Social Security benefits through Treasury offset belong to the Trea s ury , not to Defendant. Instead, the m oney m oves b etween federal agencies, and Defendant is notified of th e transfers only for record-keeping purpos e s

. And, even if

3 Federal Ru l e o f Appellate Procedure 3 2.1(a) and United States Court of Appeals for the Fifth Circ u it Rule o f Appellate Procedure 28.7 perm it the citation of unpublished judicial decisions.L I M A V

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Plaintiff had p a i d the debt, or part of it, the m oney would constitute p roperty of the United States and would end up in
an account owned and controlled by the Unit e d States. 20 U.S.C. § 1072(g)(1); 34 C .F.R. § 682.410(a)(1). Though Defendant possesses all right, title, and inter e s t in the judgm ent against Plaintiff, Defendant w as not collecting a debt for its “own account.” Instead, D efendant was collecting a debt for the United States.

The record evidences th at D ef e ndant “regularly” attem

pts to collect debts owed, or asserted to be owed, to the United States. Under the applicable agreem ent, Defendan t was obligate d t o receive accounts like Plaintiff’s for a one-year period, and Defendant r ec eived a long list of such accounts. See Garrett v. Derbes , 110 F.3d 3 17, 3 18 (5th Cir. 1997) (per curiam ) (holding that “a pe r son who, during a single ninem onth period, attem

p ts to collect debts owed another by 639 different individuals ‘regularly’ attem pts to collect debts owed another, and thus is a ‘debt collector’ under § 1692a(6)”).

2. Defendant’s collection activity is incidental to a bona fide fiduciary obligation.

The FDCPA exem

pts from the definition of debt collector

“ a n y person collecting or attem pting to collect any debt

. . . owed or due another to the extent such activity

. . . is incidental to a bona fide fid u c i ary obligation .” 15 U.S.C. § 1692a(6)(F) (em

phasis added). For the fiduciary exception to apply, D efendant m

ust have a “fiduciary obligation” and Defendant’s collection activity mu s t b e “incidental to” that fiduciary obligation. R owe , 559 F.3d at 103 2

. Pl aintiff
con c e d e s, and we agree, that Defendant owes a fiduciary obligation to the DOE.L I M A V

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The “incidental to” requirem ent prevents fiduciaries “whose sole or prim ary function is to collect a debt on behalf of the entity to whom the fiduciary obligation is owed” from escaping FDCPA coverage. Id. at 1 034. Acc or d i n g ly, to qualify for the fiduciary exception, Defendant’s c ollection activity “m

ust not be ‘central to’ [ its] fiduciary relationship.” Id.

In Rowe , we reversed the dism issa l of a com plaint for failure to state a claim under the FDCPA. The plaintiff claim ed that the defendant guaranty agency’s “ sole function
was to take assignm ent of the loan from [another agency] and to act as a c ollection agent.” Id. at 1035 (em phasis added). W e held that, because the only role alleged to have been played by the guaranty agen c y wa s to collect the debt, the fiduciary exception did not apply. W e d istinguished between that alleged collection-only activit y a n d cases in which an agency guarantees a loan and then attem pts to collect on the loan, h olding that the form er type of collection activity “is not ‘incidental to’ [the defendant]’s fiduciary duty to the D OE.” Id.

This case differs from Rowe b ecause Defendant h ad a broader role than m erely collecting a d ebt. Wh en Defendant t ook the assignm ent o f Plaintiff’s judgm ent accou n t , Defendant took on all outstanding guaranty obligations. For
exam p le, Defendant is obligated to release its judgm e n t aga inst Plaintiff if Plaintiff’s debt is consolidated, rehabilitated, or repaid. Defendant a l s o is obligated to
m aintain records, report to the National Stu d ent Loan Database System , and properly adm inister its operating fund. Those obligations are not illusory, even if Defendant has not had to perform som e o f them

. A fiduciary relationship is not characterized only b y what activity has happened to date.L I M A V

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Fi du ci a ry re l a t i o n s h i p s n aturally include r e as o n ab l y foreseeable responsibilities that m ay ar i s e in the f uture. 4 DOE’s regulations place Defendant on s t andby should such fiduciary activities becom e n ecessary. Accordingly, we conclude that Defendant had a broader fiduciary role with respect to Plaintiff’s debt than m erely col le c t i ng the debt. Therefore, Defendant’s collectio n activ i ty w as “in cid ental to” its fiduciary obligation to the DOE.

B. Due Process

Plaintiff alleges that Defendant vi olated his procedural due process rights by “arbitrarily and m aliciou sly ” g arnishing his b enefits. Plaintiff seeks a declaratory judgm ent, injunctive relief, and dam ages.

To obtain declarative and injunctive relief, 5 Plaintiff m ust establish: (1) that he suffered a “constitutional deprivation” that was “caused by the e x e r cise of som e right or privilege created by the Sta te or by a rule of conduct im posed by the [S]tate or by a person for whom the State is responsible,” and (2) that “the p arty charged with the deprivation [is] a person

4 By way of analogy, lawyers owe v arious fiduciary duties that m ay be d orm ant during their representation of clients. For exam ple, lawyers
m ust i nform their clients of settlem ent o ffers. If an opposing party never ten d e rs a settlem ent offer, a lawyer cannot apprise the client of an o ffer. Yet, even if t

he lawyer has not r eceived a settlem ent offer, the lawyer h as a present fiduciary obligation to the client.

5 Plaintiff ca nnot recover dam ages because Defendant is a private corporation, and actions under Bivens v. Six Unknown Named Agents of Federal Bureau o

f Narcotics , 403 U.S. 3 88 (1971), cannot proceed against private entities. Corr. Servs. Corp. v. Malesko , 534 U.S. 6 1, 66, 7 4 (2001).L I M A V

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who may fa i rly be said to b e a state actor.” Lugar v. Edmondson Oi l Co. , 457 U .S. 922, 937 (1982). H ere, Plaintiff challenges only the district court’s conclusion that Defendant is not a state actor.

Assum ing, without deciding, that Defendant is a state actor, we affirm the summ ary judgm ent in Defendant’s favor because Defendant did not violate Plaintiff’s due pro c e ss rights. Defendant provided Plaintiff with notice of the debt, of Defendant’s intention to seek a Tr e a s ury offset against Plaintiff’s Social Security benefits, and the m eans b y wh ich Plainti ff could respond. See United States v. Alisal Water Co r p. , 431 F.3d 643, 657 (9th Cir. 2005) (“At its core, d ue process requires that a party have adequate n otice and opportunity to be heard.”). T h e notice was sent to the proper address and was, therefore, “reasonably calculated” to ensure that Plaintiff received it. Poursin a v

. U.S. C itizenship & Immigration Servs. , 936 F.3d 868, 8 7 6 (9th Cir. 2 019) (quoting Farhoud v. INS, 1 22 F .3d 794, 796 (9th Cir. 1997);

see also Mullane v. Cent. Hanover Bank & Trust Co. , 339 U.S. 306, 318 ( 1 950) (“[W ]ithin the lim its of practicability notice m u st be such as is reasonably ca l culated to reach interested p a rties.”). And Defendant’s m isstatem ent, that Plaintiff’s debt arose from a single loan worth $8,500 rather than three loans totaling $8,500, d o es not violate due process. See Bank o

f A merica, NT & SA v. PENGWIN , 175 F

. 3d 1109, 1119 (9th Cir

. 1999) (holding that a f oreclosure notice that stated the wrong lo c a tion of a v essel and that failed to
m ention fishing rights did not violate d u e process b ecause the notice was n onetheless “reasonably calcu l ated” to apprise interested parties of the action and afford them an opportunity to object).L I M A V

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C. Supplemental jurisdiction

Because no federal claim s rem ain, the d i s t r ict court did not abuse its discretion by declining to exercise supplem ental jurisdiction over Plaintiff’s state-law claim

. See Whalen v. McMullen , 907 F.3d 1139, 1153 (9th Cir. 2018) (holding that the district court did not abuse its discretion when it declined to exercise supplem enta l jurisdiction over a state-law claim when the plaintiff’ s only federal claim was dism issed on summ ary judgm ent).

AFFIRMED.L I M A V

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APPENDIX A

Relevant provisions of the FDCPA. 15 U.S.C. § 1692a(6):

The term “debt collector” m eans a n y p erson wh o uses any instrum entality of interstat e comm erce or the m ails in any busine s s the principal purpose o f which is the collection o f any debts, or who regularly c ollects o r attem p ts to collect, directly or indirectly, debts owed or due or asserted t o b e o wed o r due another. Notwithstanding the exclusion provided by clause (F) of the last sentence o f this paragraph, the term includes any creditor who, in the p rocess of collecting hi s own d e b t s , uses any nam e o ther than his own wh i ch would indicate that a third person is collecting or attem

pting to collect such debts. For the purpose of section 1692f(6) of this title, such term also includes any person who
u s e s a n y i n s t ru me nt a l i ty o f i nt e r s t a t e comm erc e or the m ails in any business the principal purpose of which is the enforcem ent of security interests. The term does not include-- (A) any officer o r e mp loyee of a creditor while, in the n a me of the creditor, collecting debts for such creditor;L I M A V

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. 15 (B) any person while acting a s a debt collector fo r another person, both o f whom are related by comm on ownership
or affiliated by corporate control, if the person acting as a debt collec tor does so only for perso n s to whom it is so related
or affiliated and if the p r incipal business of such person is not the col l e c tion o f debts; (C) any officer or em

ployee of the United States or a n y S tate to the extent that collectin g or attem

p ting to collect any debt is in the perform a n c e of his official duties; (D) an y p erson while serving o r att em pting to serve legal process on any other person in co n n ection with the judicial enforcem ent of any debt; (E) any nonprofit organ i z a tion which, at the request of consum ers, perform s b o na fide consum er credit counseling and assists consum ers in the liquidation o f their debts by receiving paym ents from such consum ers and distri buting such
am ounts to creditors; and (F) any person collecting or attem pting to collect any d ebt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a b ona fide fiduciary obligation or a bona fide escrowL I M A V

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arrangem ent; (ii) c o n cerns a debt which

was o riginated by such person; (iii )
concerns a debt which was not in default at the tim e it was obtained by such p erson; or (iv) conce rns a debt obtained by such person as a secured party in a comm ercial credit transaction involving the creditor. 15 U.S.C. § 1692k(a):
Except as otherwise provided by this section, any debt collect o r who fails to com ply with any p rovision of this subchapter with respect to any person is liable to such p erson in an am ount equal to the sum of-- (1) any actual dam age sustain e d by such person as a result of such failure; ( 2 ) ( A) in the case o f any action by an individual, such additional dam ages as the
cou rt m ay allow, but not exceeding $1,000; or
( B) in the case of a class action, (i) su c h
am ount for each n am ed plaintiff as could be recovered under subparagraph (A), and (ii) such am ount as the court m ay allow for all other cla ss m em bers, without regard to a m inimum individual recovery, not to exceed the lesser o f $ 5 00,000 or 1 per centum of the net worth of the debt collector; andL I M A V

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. 17 (3) in the case of any successful action to enforce the foregoing liability, the costs o f the action, together with a rea sonable attorney’s fee as determ ined by the court. On a finding by the court that an action under this section was brought in bad faith
a nd for the p urpose of harassm ent, the court m ay award to the defendant attorne y ’ s fees reasonable in relation to the work expended and costs.