Keith Davidson v. Capital One Bank (USA), N.A., 2015 U.S. App. LEXIS 14714

Background

Davidson had a credit-card account originally sued by HSBC; after a settlement and default judgment for $500, HSBC retained the debt.
Capital One purchased approximately $28 billion of HSBC credit-card accounts (including Davidson’s), with over $1 billion shown as delinquent/default at acquisition.
Capital One later sued Davidson in state court asserting a larger delinquent balance and attached an affidavit of acquisition; Davidson alleged the affidavit was robo-signed and the complaint misrepresented the debt amount.
Davidson sued Capital One in federal court under the FDCPA, alleging violations of §1692e for false or deceptive representations, and sought to proceed as a class action.
Capital One moved to dismiss under Rule 12(b)(6), arguing it was not a “debt collector” under 15 U.S.C. §1692a(6) because it was collecting debts owed to itself (not debts owed to another) and debt collection is not its principal purpose.
The district court dismissed; the Eleventh Circuit affirmed, holding that under the FDCPA’s plain text Capital One was not a “debt collector” as alleged.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an entity that acquires defaulted consumer debt from another qualifies as a “debt collector” under §1692a(6)	Davidson: purchasers who regularly acquire defaulted debts and then attempt collection are "debt collectors," regardless of whether the purchaser now owns the debt	Capital One: §1692a(6) requires either (1) principal-purpose debt-collection business or (2) regularly collecting debts owed to another; purchasers collecting debts they own do not meet either prong	Held: Purchasers who collect debts owed to themselves are not "debt collectors" under §1692a(6) merely because the debts were in default when acquired; one of the two statutory prongs must be met.
Effect of exclusion §1692a(6)(F)(iii) (debts not in default at acquisition) on defining "debt collector"	Davidson: the exclusion implies the converse — debts in default at acquisition make the purchaser a debt collector	Capital One: (and court) the exclusion is just that — an exclusion; it does not expand the definition into a trapdoor that converts purchasers into debt collectors	Held: §1692a(6)(F)(iii) is an exclusion and does not rewrite the definition; it cannot be used to import an "originally owed to another" meaning into the statute.
Whether the amended complaint plausibly alleged Capital One’s status under the "principal purpose" prong	Davidson relied on allegations that Capital One regularly acquires and attempts to collect defaulted debts	Capital One: complaint lacks factual allegations that debt collection is Capital One’s principal business purpose	Held: Allegations permitted inference that some collection occurs but did not plausibly allege that collection is Capital One’s principal business purpose; first prong not met.
Whether allegations that Capital One regularly acquired defaulted debts suffice to show it "regularly collects . . . debts owed or due another"	Davidson: regular acquisition and collection of debts originally owed to others shows regular collection activity tied to others’ debts	Capital One: its collections are on debts owed to Capital One (after purchase), not owed to another	Held: The statutory phrase "owed or due another" means collecting for someone else; allegations showed Capital One was collecting debts owed to itself, so the second prong was not met.

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausible claim requirement)
United States v. Ron Pair Enters., Inc., 489 U.S. 235 (plain-meaning interpretation of statutes)
CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d 1217 (interpretation of "any" and statutory language)
Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379 (distinguishing creditors from debt collectors under FDCPA)
Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355 (treatment of debt status at acquisition)