Court Opinion

ID: 3064527
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:25:19.605261+00
Date Added: 2024-06-11T11:49:40.410202
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JEFFREY A. ROWE,                           
               Plaintiff-Appellant,
                                                  No. 07-35046
                v.
EDUCATIONAL CREDIT MANAGEMENT                      D.C. No.
                                                 CV-06-01131-HO
CORPORATION, a foreign non-profit
                                                     OPINION
Minnesota corporation,
              Defendant-Appellee.
                                           
         Appeal from the United States District Court
                  for the District of Oregon
         Michael R. Hogan, District Judge, Presiding

                  Argued and Submitted
            November 20, 2008—Portland, Oregon

                       Filed March 18, 2009

    Before: William A. Fletcher and Raymond C. Fisher,
   Circuit Judges, and Charles R. Breyer,* District Judge.

             Opinion by Judge William A. Fletcher

  *The Honorable Charles R. Breyer, United States District Judge for the
Northern District of California, sitting by designation.

                                 3535
          ROWE v. EDUCATIONAL CREDIT MANAGEMENT           3539

                         COUNSEL

Terrance J. Slominski, Slominski & Associates, Tigard, Ore-
gon, for the appellant.

Stephen T. Tweet, Albert & Twett LLP, Salem, Oregon, Cur-
tis P. Zaun, Education Credit Management, St. Paul, Minne-
sota, for the appellee.

Teal Luthy Miller, U.S. Department of Justice, Washington,
D.C., for the amicus curiae.

                         OPINION

W. FLETCHER, Circuit Judge:

  Plaintiff Jeffrey Rowe brought suit in federal district court
against Educational Credit Management Corporation
3540      ROWE v. EDUCATIONAL CREDIT MANAGEMENT
(“ECMC”), alleging violations of the federal Fair Debt Col-
lection Practices Act (“FDCPA”) and of Oregon state law.
The court dismissed plaintiff’s federal claims for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6)
on the ground that defendant’s collection activity was “inci-
dental to a bona fide fiduciary obligation” and therefore not
subject to the FDCPA, 15 U.S.C. § 1692a(6)(F)(i), and dis-
missed without prejudice Rowe’s state law claims under 28
U.S.C. § 1367(c). We reverse and remand.

                      I.   Background

   According to the complaint, Rowe borrowed $2,500 from
Jackson County Federal Savings and Loan pursuant to a stu-
dent loan agreement. The loan was guaranteed by the Oregon
State Scholarship Commission (“OSSC”). After graduation,
Rowe defaulted on the loan. The OSSC then “turned over and
assigned this account to [ECMC] for collection.” ECMC
sought collection of Rowe’s defaulted loan by administra-
tively garnishing Rowe’s wages. According to the complaint,
Rowe repaid his loan in full on July 18, 2005, but ECMC con-
tinued to garnish his wages through November 9 of that year.

   Rowe sued ECMC in federal district court, alleging viola-
tions of the FDCPA, 15 U.S.C. §§ 1692e(2), 1692e(5),
1692f(1), 1692f(6), the Oregon Unfair Debt Collection Prac-
tices Act (“OUDCPA”), Or. Rev. Stat. § 646.639, and Oregon
law of conversion. ECMC moved to dismiss Rowe’s FDCPA
claim under Rule 12(b)(6) for failure to state a claim. ECMC
contended that its collection activity was not covered by the
FDCPA because it was “incidental to a bona fide fiduciary
obligation.” 15 U.S.C. § 1692a(6)(F)(i). In the alternative,
ECMC contended that its collection activity was not covered
because it “concern[ed] a debt which was originated by”
ECMC. Id. § 1692a(6)(F)(ii).

  The district court granted ECMC’s motion to dismiss, hold-
ing that ECMC was a “guaranty agency” under the federal
            ROWE v. EDUCATIONAL CREDIT MANAGEMENT                  3541
Higher Education Act, and that its collection activities were
“incidental to a bona fide fiduciary obligation” within the
meaning of the FDCPA. The court did not reach ECMC’s
other contention. The court dismissed the state law claims
without prejudice under 28 U.S.C. § 1367(c). Rowe timely
appealed.

                     II.   Standard of Review

   We review de novo a district court’s grant of a Rule
12(b)(6) motion to dismiss. Knievel v. ESPN, 393 F.3d 1068,
1072 (9th Cir. 2005). “[W]e accept all factual allegations in
the complaint as true and construe the pleadings in the light
most favorable to the nonmoving party.” Id.

                           III.   Discussion

            A.    Legal Backdrop of FDCPA Claims

   [1] Congress passed the Higher Education Act of 1965
(“HEA”), 20 U.S.C. § 1071, et seq., to “ ‘keep the college
door open to all students of ability,’ regardless of socioeco-
nomic background.” Pelfrey v. Educ. Credit Mgmt. Corp., 71
F. Supp. 2d 1161, 1162-63 (N.D. Ala. 1999); see 20 U.S.C.
§ 1070(a). Among other things, the HEA established the Fed-
eral Family Education Loan Program (“FFELP”),1 adminis-
tered by the Department of Education (“DOE”). See 20
U.S.C. § 1071. The DOE has promulgated regulations to
implement the FFELP. See College Loan Corp. v. SLM Corp.,
396 F.3d 588, 590 (4th Cir. 2005); 20 U.S.C. § 1082(a)(1).

   [2] “Under the HEA, eligible lenders make guaranteed
loans on favorable terms to students or parents to help finance
student education. The loans are typically guaranteed by guar-
anty agencies” and are ultimately reinsured by the DOE. Pel-
  1
   Prior to 1992, FFELP was typically referred to as the Guaranty Student
Loan Program. Pelfrey, 71 F. Supp. 2d at 1163 n.1.
3542      ROWE v. EDUCATIONAL CREDIT MANAGEMENT
frey, 71 F. Supp. 2d at 1163. A “guaranty agency” is defined
in the FFELP regulations as “[a] state or private nonprofit
organization that has an agreement with the Secretary under
which it will administer a loan guarantee program under the
[Higher Education] Act.” 34 C.F.R. § 682.200; see also id.
§ 682.401(a) (“In order to participate in the FFEL programs,
a guaranty agency shall enter into a basic agreement with the
Secretary.”). “In essence [a guaranty agency] is an intermedi-
ary between the United States and the lender of the student
loan. The United States is the loan guarantor of last resort.
[The guaranty agency] assists the United States in performing
that function.” Great Lakes Higher Educ. Corp. v. Cavazos,
911 F.2d 10, 15 (7th Cir. 1990).

   [3] One of the functions assigned to lenders and guaranty
agencies under FFELP regulations is collection on defaulted
student loans. When a borrower defaults on a loan, the lender
is required to engage in a series of “due diligence” activities
to try to get the borrower to repay the loan. 34 C.F.R.
§ 682.411. If the lender is unable to collect the debt despite
complying with its due diligence requirements, the lender
files a claim with the guaranty agency. Id. § 682.412(e)(2).
The guaranty agency acts as a guarantor, paying the lender the
unpaid balance of the defaulted loan. The guaranty agency is
then assigned the loan by the lender. Id. § 682.410(b)(5)
(vi)(A). In turn, guaranty agencies have various agreements
with the DOE.

   [4] Depending on the precise agreement between a guar-
anty agency and the DOE, the agency can recover from the
DOE 80 to 100 percent of its losses resulting from a defaulted
loan, provided that the guaranty agency engages in “due dili-
gence” in seeking to recover on the defaulted loan. 20 U.S.C.
§ 1078(c); 34 C.F.R. § 682.410. A guaranty agency’s due dili-
gence requirements include locating the defaulting borrower,
offsetting federal and state tax refunds against money owed
by the borrower, initiating administrative garnishment pro-
ceedings against the borrower, and filing suit against the bor-
           ROWE v. EDUCATIONAL CREDIT MANAGEMENT              3543
rower. 34 C.F.R. § 682.410(b)(6)(i)-(iv). Within 45 days of
paying the default claim of a lender, a guaranty agency must
notify the defaulting borrower that “if he or she does not
make repayment arrangements acceptable to the agency, the
agency will promptly initiate procedures to collect the debt.”
Id. § 682.410(b)(6)(v). The agency must notify the borrower
of the various measures the agency may take “at the discretion
of the agency,” including offset of a tax refund, administrative
garnishment and civil suit. Id.

   [5] The FDCPA, 15 U.S.C. § 1692 et seq., was enacted “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 disad-
vantaged, and to promote consistent State action to protect
consumers against debt collection abuses.” 15 U.S.C.
§ 1692(e). The FDCPA regulates the collection of “debts” by
“debt collectors” by regulating the number and type of con-
tacts a debt collector may make with the debtor. The require-
ments imposed on a “guaranty agency” under the HEA and on
a “debt collector” under the FDCPA are not entirely consis-
tent.

              B.   Analysis of FDCPA Claims

   The question before us is whether ECMC is a “debt collec-
tor” within the meaning of the FDCPA.

  [6] The FDCPA defines “debt collector” as:

    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
    who regularly collects or attempts to collect, directly
    or indirectly, debts owed or due or asserted to be
    owed or due another.

15 U.S.C. § 1692a(6). The FDCPA provides for a number of
exceptions from the term “debt collector.” Among them are:
3544       ROWE v. EDUCATIONAL CREDIT MANAGEMENT
    (C) any officer or employee of the United States or
    any State to the extent that collecting or attempting
    to collect any debt is in the performance of his offi-
    cial duties; . . .

    (F) any person collecting or attempting to collect any
    debt owed or due or asserted to be owed or due
    another to the extent such activity (i) is incidental to
    a bona fide fiduciary obligation or a bona fide
    escrow arrangement; [or] (ii) concerns a debt which
    was originated by such person[.]

15 U.S.C. §§ 1692a(6)(C), (F)(i)-(ii). Further, a “creditor” is
not a “debt collector” under the FDCPA. 15 U.S.C.
§ 1692a(6)(A); Montgomery v. Huntington Bank, 346 F.3d
693, 698-99 (6th Cir. 2003).

    ECMC contends that it is a guaranty agency under the
HEA. Based on this conclusion it argues on three grounds that
it is not a “debt collector” and that its collection activities are
therefore not subject to the FDCPA. First, ECMC argues that
its collection activity is “incidental to a bona fide fiduciary
obligation.” 15 U.S.C. § 1692a(6)(F)(i). The district court
held for ECMC on this ground. Second, ECMC argues that its
collection activity “concerns a debt which was originated by”
ECMC. Id. § 1692a(6)(F)(ii). ECMC made this contention in
the district court, but the court did not reach that issue. Third,
ECMC argues that it is a “creditor” rather than a debt collec-
tor. Id. §§ 1692a(4), 1692a(6)(A). ECMC makes this conten-
tion for the first time in this court. The United States has
submitted an amicus brief in this court in support of ECMC
arguing only the first two grounds. For the reasons that fol-
low, based on the allegations in the complaint, we disagree
with the district court’s conclusion that ECMC was not cov-
ered by the FDCPA because its collection activity was “inci-
dental to a bona fide fiduciary obligation.” We do not reach
ECMC’s second and third arguments and remand to the dis-
trict court.
          ROWE v. EDUCATIONAL CREDIT MANAGEMENT               3545
   Rowe makes essentially two arguments. First, Rowe argues
that in Brannan v. United States Aid Funds, Inc., 94 F.3d
1260, 1263 (9th Cir. 1996), we held categorically that collec-
tion activities of guaranty agencies under the HEA are subject
to the FDCPA. The precise question before us in Brannan
was whether a guaranty agency was exempt from the FDCPA
under the “government actor” exception to the definition of
“debt collector.” 15 U.S.C. § 1692a(6)(C). We held that it was
not exempt under this exception. In so holding, we wrote:

    We hold that USA Funds is subject to the FDCPA.
    The FDCPA proscribes abusive collection practices
    by “any person . . . who regularly collects or
    attempts to collect, directly or indirectly, debts owed
    or due or asserted to be owed or due another.” . . .
    The FDCPA does not provide an exemption for
    guaranty agencies that acquire a student loan after
    default in order to pursue its collection.

Brannan, 94 F.3d at 1262 (emphasis added).

   [7] Rowe relies on the italicized sentence to argue that in
Brannan we reached beyond the “government actor” excep-
tion to the definition of “debt collector” in the FDCPA, and
that we held that none of the exceptions to the definition
applies to a guaranty agency under the HEA. We do not read
this single sentence in Brannan as deciding questions not then
before us. We conclude that Brannan should be read as decid-
ing only that the “government actor” exception does not apply
to a guaranty agency.

   Second, Rowe argues, independent of our holding in Bran-
nan, that the FDCPA’s exception for collection activities “in-
cidental to a bona fide fiduciary obligation” does not apply to
ECMC’s activities in this case. Construing the allegations in
Rowe’s complaint in accordance with Federal Rule of Civil
Procedure 8(a), we agree with Rowe.
3546       ROWE v. EDUCATIONAL CREDIT MANAGEMENT
   [8] There is no dispute in this case that, at least generally
speaking, ECMC is a guaranty agency. In a memorandum
opposing ECMC’s motion to dismiss in the district court,
Rowe conceded that “ECMC is a guaranty agency that
acquired Plaintiff’s loan after it was in default and pursued
collection activities on it[.]” “Memoranda of points and
authorities as well as briefs and oral arguments . . . are not
considered matters outside the pleadings.” Concordia v.
Bendekovic, 693 F.2d 1073, 1075 (11th Cir. 1982) (quoting 5
Wright & Miller, Federal Practice & Procedure § 1366
(1969)). But the question is not whether, generally speaking,
ECMC is a guaranty agency. Rather, the question is whether,
in this particular case, ECMC was acting as a guaranty agency
under the HEA or merely as a collection agent.

   [9] Two requirements must be satisfied for an entity to
come within the exception to the FDCPA for collection activi-
ties “incidental to a bona fide fiduciary obligation.” 15 U.S.C.
§ 1692a(6)(F)(i). First, the entity must have a “fiduciary obli-
gation.” Second, the entity’s collection activity must be “inci-
dental to” its “fiduciary obligation.”

   [10] “The starting point for our interpretation of a statute is
always its plain language.” Tahara v. Matson Terminals, Inc.,
511 F.3d 950, 953 (9th Cir. 2007) (internal quotation marks
omitted). To determine plain language we consider “the lan-
guage itself, the specific context in which that language is
used, and the broader context of the statute as a whole.” Rob-
inson v. Shell Oil Co., 519 U.S. 337, 341 (1997). Neither “fi-
duciary obligation” nor “incidental to” is defined in the
FDCPA.

           1.   “Fiduciary Obligation” to the DOE

   [11] The first requirement is that an entity must have a “fi-
duciary obligation.” Black’s Law Dictionary defines a “fidu-
ciary” as “[o]ne who must exercise a high standard of care in
            ROWE v. EDUCATIONAL CREDIT MANAGEMENT                3547
managing another’s money or property.” Black’s Law Dictio-
nary (8th ed. 2004). It defines “fiduciary duty” as:

      A duty of utmost good faith, trust, confidence, and
      candor owed by a fiduciary (such as a lawyer or cor-
      porate officer) to the beneficiary (such as a lawyer’s
      client or a shareholder); a duty to act with the highest
      degree of honesty and loyalty toward another person
      and in the best interests of the other person (such as
      the duty that one partner owes to another).

Id.

   ECMC argues that a guaranty agency owes a fiduciary obli-
gation to the DOE because it is acting in the interest of the
DOE in administering the FFELP. We agree. The nature of
the relationship between a guaranty agency and the DOE is
evidenced by the detailed regulations promulgated by the
DOE. We have previously noted the highly regulated nature
of guaranty agencies, stating that “guaranty agencies are
essentially the creatures of regulatory agreements and federal
regulations.” Student Loan Fund of Idaho, Inc. v. U.S. Dep’t
of Educ., 272 F.3d 1155, 1162 (9th Cir. 2001). See also
Games v. Cavazos, 737 F. Supp. 1368, 1383-84 (D. Del.
1990) (describing the “highly regulated” relationship between
a guaranty agency and the DOE).

   [12] If a guaranty agency’s due diligence results in the
recovery of funds from a defaulting borrower, the Secretary
of Education is entitled to approximately 77 percent of the
recovered funds. 20 U.S.C. § 1078(c)(6). The guaranty
agency is required to place recovered loan proceeds in its
reserve fund and to hold those proceeds on behalf of the Sec-
retary. Student Loan Fund of Idaho, Inc., 272 F.3d at 1158
(“[M]oney collected on defaulted loans . . . [is] to be included
in the ‘reserve fund[.]’ ”); 34 C.F.R. § 682.410(a)(1)(vii)
(“The guaranty agency shall credit to the reserve fund . . .
3548       ROWE v. EDUCATIONAL CREDIT MANAGEMENT
Funds collected by the guaranty agency on FFEL Program
loans on which a claim has been paid[.]”); id. § 682.419(b)(3).

   [13] The HEA provides that assets in the reserve accounts
of guaranty agencies are “property of the United States” and
can only be used by guaranty agencies to pay program
expenses and liabilities. 20 U.S.C. § 1072(g)(1); see also 34
C.F.R. § 682.410(a)(7) (“If the guaranty agency has any claim
against any other party to recover funds or other assets for the
reserve fund, the claim is the property of the United States.”).
We have previously held that the entirety of a guaranty agen-
cy’s reserve fund, including not only funds originated from
the federal government but also funds from private sources,
is the property of the United States. Student Loan Fund of
Idaho, Inc., 272 F.3d at 1166-69. Because the reserve funds
are the property of the United States, the HEA grants the Sec-
retary broad power to regulate the use of the funds. 20 U.S.C.
§ 1082. Under the FFELP regulations, the Secretary can order
a guaranty agency to transfer money in the fund in various
ways, including to the government or to another guaranty
agency, in order to support the administration of the FFELP.
34 C.F.R. § 682.410.

   [14] FFELP regulations describe the relationship between
a guaranty agency and the DOE as a fiduciary relationship.
See id. § 682.410(a)(11)(iii) (referring to the guaranty agency
as “the fiduciary under its agreements with the Secretary”); id.
§ 682.410(a)(5) (“The guaranty agency shall exercise the
level of care required of a fiduciary charged with the duty of
investing the money of others when it invests the assets of the
reserve fund[.]”); id. § 682.419(a) (explaining that the funds
in the federal fund are property of the United States and that
the “guaranty agency must exercise the level of care required
of a fiduciary charged with the duty of protecting, investing,
and administering the money of others”).

  [15] The Secretary of Education has repeatedly stated that
guaranty agencies owe a fiduciary duty to the DOE. See Fed.
           ROWE v. EDUCATIONAL CREDIT MANAGEMENT            3549
Family Educ. Loan Program, 61 Fed. Reg. 49,382, 49,382
(Sep. 19, 1996) (“In light of its role in the program and its
responsibility for holding and protecting Federal funds, the
guaranty agency’s role is best characterized as that of a trustee
holding money for the benefit of another. . . . Under these cir-
cumstances, a guaranty agency is responsible for acting as a
fiduciary responsive for protecting the interests of the Depart-
ment and taxpayers in the reserve funds.”); id. (stating that
guaranty agencies are “trustees for the Federal Government
and are expected to comply with fiduciary standards”); Fed.
Family Educ. Loan Program, 61 Fed. Reg. 60,426, 60,427
(Nov. 27, 1996) (“In the case of guaranty agencies, the Secre-
tary (who provides the funds used to maintain the reserve
funds and reserve fund assets) is the beneficiary and is enti-
tled to issue appropriate rules to protect the Federal Govern-
ment’s interests in those funds and assets by prohibiting
inappropriate uses and protecting against conflicts of inter-
est.”).

   [16] Other courts have held that the relationship between a
guaranty agency and the DOE is that of a fiduciary to a bene-
ficiary. See, e.g., Ohio Student Loan Comm’n v. Cavazos, 900
F.2d 894, 899 (6th Cir. 1990) (“The [guaranty agency] is a
public entity that is not interested in making any sort of profit
in its administration of the [loan program]. Instead, it has cho-
sen to join with the federal government to administer the [loan
program][.]”); Great Lakes Higher Educ. Corp. v. Cavazos,
911 F.2d 10, 14-15 (7th Cir. 1990); Educ. Assistance Corp. v.
Cavazos, 902 F.2d 617, 627 (8th Cir. 1990). Every court that
has addressed whether a guaranty agency owes a fiduciary
obligation to the DOE has held that it does. See, e.g., Pelfrey,
71 F. Supp. 2d at 1179-80; Montgomery v. Educ. Credit
Mgmt. Corp., 238 B.R. 806, 809-10 (D. Minn. 1999); Davis
v. United Student Aid Funds, Inc., 45 F. Supp. 2d 1104, 1109
(D. Kan. 1998); Kirk v. Ed Fund, No. 06-4205, 2007 WL
2226046, *4 (W.D. Mo. Aug. 1, 2007).
3550         ROWE v. EDUCATIONAL CREDIT MANAGEMENT
  [17] We now join these courts in holding that guaranty
agencies act as fiduciaries of the DOE when they operate
under the FFELP.

       2.   Collection Activities “Incidental to” Fiduciary
                           Obligation

   [18] The second requirement is that an entity’s collection
activities be “incidental to” its fiduciary obligation. 15 U.S.C.
§ 1692a(6)(F)(i). The “incidental to” requirement means that
the collection activity must not be “central to” the fiduciary
relationship. See Wilson v. Draper & Goldberg, 443 F.3d 373,
377 (4th Cir. 2006). The function of this requirement is to
exclude fiduciaries whose sole or primary function is to col-
lect a debt on behalf of the entity to whom the fiduciary obli-
gation is owed. Thus, the requirement excludes lawyers or
trustees acting solely or primarily to collect debts owed to
their clients or beneficiaries. For example, in Wilson, the
Fourth Circuit held that a law firm that was hired solely for
the purpose of foreclosure was not acting pursuant to a
responsibility that was “incidental to” its fiduciary obligation
to its client. Id. Rather, the foreclosure was “central to” its
obligation. Therefore, the “incidental to a bona fide fiduciary
obligation” exception to the definition of “debt collector” did
not apply. Id.

   [19] Generally speaking, the collection of defaulted debts
by a guaranty agency is “incidental to” its primary function.
A central part of a guaranty agency’s administrative function
is — as the name suggests — guaranteeing student loans
made by other entities. See Skerry v. Mass. Higher Educ.
Assistance Corp., 73 F. Supp. 2d 47, 55 (D. Mass. 1999)
(describing guaranteeing loans as the primary function of a
guaranty agency). “The primary business purpose of [a guar-
anty agency] is administration of the Guaranteed Student
Loan Program. While [a guaranty agency] regularly sends
these [collection] notices, such activity is incidental to its pri-
             ROWE v. EDUCATIONAL CREDIT MANAGEMENT                     3551
mary function of administering the federal GSL Program.”
Games, 737 F. Supp. at 1389.

   [20] If this were a case in which ECMC had guaranteed the
loan to Rowe, and had then undertaken to collect on the loan
after default, its collection activities would have been “inci-
dental to” its fiduciary duties to the DOE within the meaning
of the FDCPA. However, this does not appear to be such a
case. Rowe’s complaint alleges that OSSC rather than ECMC
was the guarantor of his loan. According to the complaint,
ECMC’s sole function was to take assignment of the loan
from OSSC and to act as a collection agent. Such collection
activity is not “incidental to” ECMC’s fiduciary duty to the
DOE.

   [21] In a 1990 “Notice of Interpretation,” the Secretary of
Education was careful to distinguish between the activities of
guaranty agencies and third parties collecting on defaulted
loans on behalf of guaranty agencies. The Notice stated: “A
great deal of the collection activities on GSL [guaranteed stu-
dent loan] programs is performed for guarantee agencies by
third party collection contractors. . . . [T]he secretary took
particular note of the existence of Federal law that regulated
the conduct of these third party collectors of defaulted student
loans. These debt collectors were subject to the Fair Debt Col-
lection Practices Act (FDCPA) . . . prior to the promulgation
of these GSL regulations, and . . . they remain subject to the
FDCPA.” Stafford Loan, 55 Fed. Reg. 40,121, 40,121 (Oct.
1, 1990) (emphasis added).2 Though the Notice dealt specifi-
  2
    We note that in Brannan we appear to have misread this Notice by the
Secretary. In support of our broad statement that guaranty agencies are
covered by the FDCPA, we wrote, “The Secretary of Education has also
explicitly stated that [guaranteed student loan] third party collectors and
their collection activity ‘remain subject to the FDCPA.’ ” Brannan, 94
F.3d at 1262, citing Stafford Loan, 55 Fed. Reg. at 40,121. As the govern-
ment points out in its brief to us, the Secretary’s statement that collection
activity “remain[s] subject to the FDCPA” is limited to activity of third
party collectors working for guaranty agencies.
3552      ROWE v. EDUCATIONAL CREDIT MANAGEMENT
cally with third parties collecting debts on behalf of guaranty
agencies, we cannot distinguish such activity from that of a
guaranty agency collecting a debt as a third party on behalf
of a loan guarantor such as OSSC.

   It is, of course, possible that ECMC may turn out to have
had a broader role in this case than merely acting as a collec-
tor of the debt guaranteed by OSSC. But for purposes of a
motion to dismiss under Rule 12(b)(6), we take at face value
the allegation in the complaint. Assuming for present pur-
poses that ECMC’s only role in this case was to collect the
loan assigned to it by OSSC after Rowe’s default, we hold
that ECMC’s collection activity was not “incidental to a bona
fide fiduciary activity” within the meaning of the FDCPA. 15
U.S.C. § 1692a(6)(F)(i).

                   IV.   State Law Claims

   [22] After dismissing Rowe’s federal FDCPA claims under
Rule 12(b)(6), the district court dismissed his Oregon state
law claims without prejudice under 28 U.S.C. § 1367(c).
Because we reinstate the FDCPA claims, the premise for the
district court’s dismissal of the state law claims is now gone.
We leave it to the district court on remand to deal with these
claims as appropriate in light of future developments in the
case.

                         Conclusion

   We hold that while a “guaranty agency” owes a fiduciary
obligation to the DOE under the HEA, the collection activity
alleged in this case was not “incidental to” that obligation
within the meaning of the FDCPA because the defendant
acted solely as a collection agent. We reverse the decision of
the district court and remand.

  REVERSED AND REMANDED.