Judges Beverly B. Martin (left) and William Pryor Jr. of the U.S. Court of Appeals for the Eleventh Circuit. (Photos: John Disney/ALM and Diego M. Radzinschi/ALM)

An opinion affirming that one of the nation's leading federal student loan guaranty agencies isn't liable for aggressive tactics it employed over a nonexistent debt has ignited the second textualist split this week at the U.S. Court of Appeals for the Eleventh Circuit.

The ruling published Friday and written by Judge William Pryor Jr. of the U.S. Court of Appeals for the Eleventh Circuit provoked a strong dissent from fellow Judge Beverly Martin of the U.S. Court of Appeals for the Eleventh Circuit. Martin chastised Pryor and Judge Gregory Katsas of the U.S. Court of Appeals for the D.C. Circuit, who joined with Pryor in affirming dismissal of the case, arguing that their findings could "only be achieved by a grammatically incoherent reading" of the statute.

Pryor took issue with Martin's critique in his majority opinion, writing, "Our dissenting colleague is wrong."

Katsas was appointed by President Donald Trump in 2017. Pryor, a George W. Bush appointee, has twice been on Trump's short list for the U.S. Supreme Court. Martin was appointed by President Barack Obama.

Judge Gregory Katsas of the U.S. Court of Appeals for the District of Columbia Circuit. (Photo: Diego M. Radzinschi/ALM)

On Monday, Judge Elizabeth "Lisa" Branch of the U.S. Court of Appeals for the Eleventh Circuit, a Trump appointee, wrote a textualist dissent challenging colleague Charles Wilson's majority opinion affirming the right of the Alabama State Conference of the NAACP to sue the state of Alabama under Title 2 of the 1965 Voting Rights Act.

The textualist philosophy purports to interpret the law based on their wording alone, stripped of any attempt to consider the purpose or legislative intent of the statute at issue.

Friday's ruling stemmed from a pro se case against the Pennsylvania Higher Education Assistance Agency brought by a part-time student after it garnished her wages over four student loans she said she didn't owe. After plaintiff Hope Darisaw appealed the dismissal of her case by U.S. District Senior Judge Dudley Bowen of the Southern District of Georgia, and the Eleventh Circuit granted oral argument in the appeal. Martin signed an order appointing attorney Frederick Hall of Kellogg, Hansen, Todd, Figel & Frederick in Washington, D.C., as pro bono counsel.

Darrisaw claimed the Pennsylvania Higher Education Assistance Agency notified her by letter in April 2016 that it had purchased four defaulted student loans in her name and that she was required to immediately pay the agency $18,812. Darrisaw eventually contacted the agency and was informed it had no record of any outstanding debt in her name. But in July 2016, the agency sent a garnishment order to Darrisaw's employer demanding 15% of her pay and threatened to sue if the employer didn't comply.

Darrisaw sued, contending the agency had made misleading representations and was engaging in fraudulent business practices in violation of the Fair Debt Collection Practices Act. Agency lawyers countered that it was not a debt collector because of existing loan guaranty contracts with the U.S. Department of Education that required it to collect unpaid loans from borrowers on the government' behalf. Bowen agreed and dismissed the case.

The agency is represented by a team of attorneys from Alston & Bird in Atlanta.

Pryor sided with Bowen, finding that the federal Fair Debt Collection Practices Act "makes clear" that anyone who attempts to collect a debt as part of a "bona fide fiduciary obligation" to a third party is exempt from legal limitations placed on debt collectors.

"Congress easily could have written the act to impose liability on persons who attempt to collect nonexistent debts pursuant to a fiduciary obligation," Pryor wrote. "Congress could have narrowed the exception to the definition of 'debt collector' to cover only persons attempting to collect debts 'owed or due' another—that is, it could have omitted the phrase 'asserted to be owed or due' from the exception. But Congress made a different choice."

In her dissent, Martin countered that although the Pennsylvania agency and others like it are exempt from federal fair debt collection laws when they are attempting to collect a federal student loan debt, that exemption does not extend to nonexistent debts.

Martin challenged the majority's finding that a loan guaranty agency is exempt from limitations placed on debt collectors whenever it "acts in good faith to collect a debt."

"The majority says a plaintiff bringing an [Fair Debt Collection Practices] claim against a [student loan] guaranty agency must specifically plead that the agency acted in 'bad faith,'" Martin wrote. "The words 'bad faith' do not appear in the statute, so imposing the obligation on Ms. Darrisaw to specifically plead bad faith would have required her to be able to see into the future to anticipate the interpretation of the statute given by the majority opinion here."