Dorrian v. LVNV Funding, LLC
94 N.E.3d 370
Mass.2018Background
- LVNV Funding, LLC (LVNV) buys defaulted consumer debts, has no employees or direct contact with debtors, and contracts Resurgent (a licensed debt collector) to service and collect those debts.
- Plaintiffs Dorrian and Newton sued LVNV alleging it operated as an unlicensed "debt collector" in violation of G. L. c. 93, § 24A, and sought class certification; judge certified class and awarded summary judgment for plaintiffs on the MDCPA claim.
- The Superior Court found LVNV required a Massachusetts debt-collector license; LVNV appealed challenging class certification, remedy, and the agency interpretation.
- The Division of Banks has long issued advisory opinions treating "passive debt buyers" (investors who do not directly collect) as not subject to the MDCPA licensing requirement when licensed collectors or attorneys perform collection.
- The Supreme Judicial Court reviewed statutory interpretation de novo, considered the FDCPA legislative history and agency deference, and examined whether LVNV falls within either statutory definition of "debt collector."
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LVNV is a "debt collector" under the MDCPA's first definition (business whose principal purpose is debt collection) | LVNV's revenue depends on collecting debts it owns; thus its principal purpose is collection and it must be licensed | LVNV is a passive debt buyer that does not itself collect or contact debtors; collection is performed by licensed third parties | LVNV is not a debt collector under the first definition; statute ambiguous and agency interpretation excluding passive debt buyers is reasonable and persuasive |
| Whether LVNV is a "debt collector" under the MDCPA's second definition (regularly collects debts "owed or due another") | Plaintiffs: LVNV effectively collects via lawsuits and large-scale litigation activity | LVNV: it collects on debts it owns, not debts owed to another, so the second definition does not apply | LVNV is not a debt collector under the second definition (entity collecting its own debts excluded) |
| Whether the Division of Banks' advisory opinions excusing passive debt buyers from licensure are controlling | Plaintiffs: statutory text controls; agency should not override licensing requirement | LVNV: division's long-standing, expert interpretation is reasonable and should be afforded deference | Court defers to the division: its interpretation is reasonable and resolves statutory ambiguity in favor of passive debt buyers |
| Remedy and class issues | Plaintiffs: class certification and judgment vacating unlicensed activity appropriate | LVNV: class representatives not proper; remedy should be at most voidable; court should defer to division | Court did not reach all procedural arguments because dispositive ruling that LVNV is not a debt collector vacated the judgment and remanded for further proceedings consistent with that holding |
Key Cases Cited
- Henson v. Santander Consumer USA, 137 S. Ct. 1718 (2017) (Supreme Court held a debt buyer collecting debts it owns is not a "debt collector" under the FDCPA's second definition)
- Pilalas v. Cadle Co., 695 F.3d 12 (1st Cir. 2012) (noted state division interpretation excluding passive debt buyers aligns with statute's aims)
- Kiribati Seafood Co. v. Dechert, LLP, 478 Mass. 111 (2017) (summary judgment review standard; cited for de novo review principle)