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FDCPA Class Action Defense Cases-Taylor v. Quall: California Federal Court Partially Grants Defense Motions To Strike And For Summary Judgment In Class Action Alleging FDCPA (Fair Debt Collection Practices Act) Violations

Federal Fair Debt Collection Practices Act (FDCPA) does not Authorize Injunctive Relief Against Debt Collectors, FDCPA One-Year Statute of Limitations Begins to Run no later than Date Debt Collector Files Suit Against Debtor, and Debt Collector need only Establish that Notice Required by § 1692g was Sent, not Received, California Federal Court

Plaintiff filed a putative class action against debt collector and its attorneys in California state court for alleged violations of the Fair Debt Collection Practices Act (FDCPA) and California’s equivalent statute known as the Rosenthal Fair Debt Collection Practices Act (California’s FDCPA). Defense attorneys removed the class action to federal court and moved to dismiss the California state-law claims arguing that they were barred by California’s litigation privilege; the district court agreed with the defense and dismissed those portions of the class action complaint. Taylor v. Quall, 471 F.Supp.2d 1053, 1056-57 (C.D. Cal. 2007). Defense attorneys then filed a motion to strike certain portions of the class action complaint, as well as a motion for summary judgment. Id., at 1055-56. The district court granted these motions in part, and granted the request of plaintiff’s lawyer for additional time to conduct discovery as to the FDCPA § 1692e claim in the class action complaint.

The class action arose from the following facts: a Plaintiff obtained a credit card from Citibank but stopped making payments on the card in early 2002. Citibank transferred the debt to defendant Unifund CCR Partners, and Unifund retained California attorney Matthew Quall to collect the debt. Taylor, at 1056. Quall sent plaintiff a collection letter in May 2005, and filed suit against plaintiff in June 2005; that lawsuit eventually settled, and Quall filed a request for dismissal without prejudice. Id. Plaintiff’s class action complaint was filed in July 2006 (mistakenly identified as 2005 in the court order), the claims of which the district court summarized at page 1056: “Plaintiff asserts that Quall (1) failed to provide the proper notice of debt required by 15 U.S.C. § 1692g when he began his collection efforts; (2) made false or misleading representations while negotiating the settlement in violation of § 1692e; (3) failed to fulfill the FDCPA’s standard for “meaningful” attorney involvement; and (4) violated the FDCPA by filing the Unifund Action without complying with California statutes governing suits brought on behalf of entities with fictitious business names.”

Defense attorneys moved to strike portions of the class action complaint on the basis of the one-year statute of limitations governing FDCPA claims, and moved to strike the prayer for injunctive relief from the class action complaint on the basis that the FDCPA does not authorize such relief. Taylor, at 1058. The court granted the motion, explaining: (1) that the statute of limitations began to run no later than June 2005, when Unifund filed suit against plaintiff, id., at 1059 (citing Naas v. Stolman, 130 F.3d 892. 893 (9th Cir. 1997); and (2) “that [injunctive] relief is not available under the FDCPA,” id. (citing Weiss v. Regal Collections, 385 F.3d 337, 341 (3d Cir. 2004).

Defense attorneys also moved for summary judgment with respect to the balance of plaintiff’s FDCPA claims. Taylor, at 1059. As to plaintiff’s § 1692e claim, defense attorneys relied on the bona fide error defense set forth in § 1692k(c), which provides: “A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” Quall testified that he intended to dismiss Unifund’s complaint against plaintiff with prejudice, and that he also erred in referring to a satisfaction of judgment during settlement negotiations with plaintiff. Taylor, at 1057-58. Plaintiff’s lawyer requested a continuance under Rule 56(f) on the grounds that he needed to take two depositions and to review court files in other debt collection actions filed by Quall on behalf of Unifund. Id., at 1058. Finding good cause, the court granted plaintiff’s request. Id.

With respect to plaintiff’s § 1692g claim, the defense argued that the requisite notice was provided even though plaintiff denied receiving Quall’s letter of May 2005. Taylor, at 1060-61. Plaintiff did not deny that the May 2005 letter satisfied FDCPA § 1692g; rather, he argued that the letter must not have been sent because he allegedly never received. Id., at 1061 n.6. The court disagreed. Not only did Quall’s deposition testimony and business records support a finding that the May 2005 letter in fact had been sent, id., at 1061, but Ninth Circuit authority holds that the notice required by § 1692g need only be sent by the debt collector, not received by the debtor, id. (citing Mahon v. Credit Bureau of Placer County, Inc., 171 F.3d 1197, 1201 (9th Cir. 1999).

The district court also rejected plaintiff’s claims that defendants were liable under the FDCPA because Quall was not “meaningfully” involved in the debt collection lawsuit filed against plaintiff, Taylor, at 1061-62, and that defendants violated the FDCPA by filing the debt collection lawsuit against him without first having registered Unifund’s fictitious business name with the state of California, id., at 1062. We do not discuss those portions of the opinion here.

NOTE: We previously summarized the district court’s order granting the motion to dismiss based on the litigation privilege. That entry may be found here.

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