Debt Collection Activity Alone Does Not a Debt Collector Make, According to Northern District of Illinois

To paraphrase the FDCPA, a business satisfies the definition of “debt collector” if its primary purpose is the collection of debts or if it regularly collects debts owed to another.  While Henson v. Santander USA, Inc., 582 U.S. ___ (2017), already provided thorough analysis of the “regular collection of debt” prong of this definition, the U.S. Supreme Court intentionally declined to comment on the “primary purpose” prong. 

In a case decided earlier this week, that second prong is put to the test. Skinner v. LVNV Funding, LLC, 2018 WL 319320 (N.D. Ill. Jan. 8, 2018) does not unequivocally state what satisfies the “primary purpose” prong, but it does provide clear guidance about what does not.

You can read the Skinner decision here. 

Background 

Plaintiff, represented by attorney Celetha Chatman of Community Lawyers Group, Ltd., brought a claim under the FDCPA and the Illinois Collection Agency Act (“ICAA”), alleging that her credit report contained an incorrect account balance. Plaintiff filed a motion for summary judgment accompanied by a motion for the court to take judicial notice of a court docket listing hundreds of debt collection suits filed by LVNV Funding. LVNV Funding filed a cross-summary judgment motion in response, claiming that Plaintiff failed to meet her burden of proof to show that LVNV Funding meets the definition of debt collector. 

The Decision 

Judge Marvin E. Aspen granted Plaintiff’s motion for judicial notice of the court docket but otherwise sided with LVNV Funding. Summary judgment was entered for LVNV Funding based on Plaintiff’s procedural deficiencies alone, thus not needing to evaluate the merits of any alleged FDCPA or ICAA violation.  

Judge Aspen agreed with LVNV Funding that Plaintiff failed to meet her burden to show that LVNV Funding is a debt collector per the FDCPA. Since Henson v. Santander already concluded that debt buyers such as LVNV Funding do not fall under the “regular collection of debt” prong of the definition, the Skinner decision focused on the “primary purpose” prong.  

According to the decision, merely showing that an entity engages in the collection of debt is insufficient to show that this is the primary purpose of the business. Judge Aspen stated that without knowing the full extent of LVNV Funding’s business, it is impossible to determine what percentage of the business is dedicated to debt collection, and thus impossible to determine if the “primary purpose” of LVNV Funding’s business is debt collection. Judicial notice of the hundreds of collection suits filed by LVNV Funding does not satisfy this deficiency. 

After discarding the FDCPA claim, Judge Aspen similarly discards Plaintiff’s ICAA claim.  The decision finds that Plaintiff incorrectly filed a private cause of action under section 9(a), which only provides for a cause of action for Illinois’ Department of Financial and Professional Regulations. Plaintiff argued that an Illinois Court of Appeals decision supports her position. However, Judge Aspen noted that this decision is merely persuasive but does not bind the court since the Illinois Supreme Court is silent on the issue. 

Based on reasoning above, Judge Aspen denied Plaintiff’s motion for summary judgment and granted LVNV’s motion for summary judgment, effectively resolving the case in LVNV’s favor.