Neil Silver had obtained federally funded student loans. The loans were serviced by the Pennsylvania Higher Education Assistance Agency (PHEAA).

Silver claims that in January 2014, in an effort to collect on student debt, PHEAA used an automated telephone dialing system (ATDS) to auto-dial him on his cell phone regarding debts he did not owe.  Silver also claimed that these calls were made without his consent, and therefore violated the Telephone Consumer Protection Act (TCPA).

In February 2014, Silver filed a putative class action lawsuit against PHEAA in the United States District Court for the Northern District of California (Silver v. Pennsylvania Higher Education Assistance Agency, Case No. 14-cv-0652) seeking to represent all of those called via an ATDS over the preceding four years.

In November of 2015, more than a year after Silver filed his lawsuit, the United States Congress passed the Omnibus Budget Reconciliation Act of 2016. That statute amended the TCPA to provide an exemption for calls made solely to collect a debt owed to or guaranteed by the United States. insideARM wrote about that amendment on November 15, 2015.

On December 2, 2015, approximately one month after Congress amended the TCPA, PHEAA filed a motion for summary judgment. Among the arguments raised in that motion, PHEAA argued that the new law barred Silver’s claim.

In his response to the motion, Silver disagreed with PHEAA, arguing that would be an unfair retroactive application of a statute.

In an Order dated March 31, 2016, the Honorable Phyllis J. Hamilton rejected Silver’s argument and granted summary judgment in favor of PHEAA.

Judge Hamilton outlined PHEAA’s arguments:

  1. The TCPA was recently amended to exempt phone calls related to the collection of federally funded student loan accounts,
  2. Plaintiff consented to the telephone calls at issue, and
  3. The calls at issue were not placed using an automated telephone dialing system or an artificial or prerecorded voice, as required by the statute.

Judge Hamilton never addressed the last two arguments. She ruled that the TCPA amendment did apply to PHEAA and the loans in question, and, more importantly, that the amendment should be applied retroactively.

Judge Hamilton wrote,

“Accordingly, the court finds that the TCPA amendment does indeed exempt the calls allegedly placed by defendant, and as a result, defendant’s motion for summary judgment is GRANTED. Because the retroactivity issue is dispositive, the court need not reach the other two issues raised in defendant’s motion.”

insideARM Perspective

The Silver case is important to the entire ARM industry for a number of reasons.  Any positive decision in a TCPA case is a good decision and should be reviewed. However, the case is especially important to that segment of the ARM industry that collects on federal government-backed student loans.

The Silver Order is likely to be used as precedential authority in any TCPA case filed against a United States-backed, student loan collector, even if the calls at issue were made before the statute passed.

Second, even though Congress directed the Federal Communications Commission to issue regulations regarding the new statute, the new regulations have not yet been finalized. (On March 14, 2016 insideARM wrote about draft rules being circulated by FCC Chairman Wheeler, but complete versions of  drafts have not yet been made public.) From this case, attorneys could argue that the statute applies now even though the FCC regulations have not yet issued.

Finally, it should be noted that the plaintiff, Mr. Silver, did not have a very good two weeks in the United States District Court for the Northern District of California. When researching this case insideARM came across a second case and a second Summary Judgment Order, this one dated April 8, 2016.

The second case involved Fair Debt Collection Practices Act (FDCPA) claims. That case also named PHEAA as the defendant. The case, (Silver v. Pennsylvania Higher Education Assistance Agency, Case No. 14-cv-4317) was also decided by Judge Hamilton.

In that Order Granting Summary Judgment in favor of PHEAA Judge Hamilton determined that the evidence showed that PHEAA was not a “debt collector” within the meaning of the FDCPA since the debt involved was “not in default at the time it was obtained” by PHEAA. Judge Hamilton determined that Silver had not raised a “triable issue of fact” on the issue and that plaintiff’s own testimony enabled the court to determine that PHEAA was not a “debt collector” within the meaning of the statute.


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