In Bartell v. National Collegiate Student Loan Trust 2005-3, 2015 WL 1907337 (N.D. Cal. 2015), Judge Seeborg found that an FDCPA plaintiff stated a claim against the debt collectors.
On September 19, 2013, Bartell received a telephone voice message including neither the caller’s identity nor a clear indication of the caller’s purpose. Upon tracing the number, she discovered the call came from P & F, a professional corporation that brings civil debt collection suits. Bartell returned the call the next day and informed P & F that, as a disabled veteran whose income consists solely of disability benefits, she should not be subject to debt collection efforts. That November, NCT, a statutory trust engaged in debt collection services that acts chiefly through its subservicer, NCO, filed a complaint in the Superior Court for San Francisco County against Bartell. The complaint, Bartell avers, falsely alleges that she had failed to repay to NCT, per a written agreement between them, a student loan taken out on August 29, 2005, and seeks $43,479.05 in damages plus litigation costs.1 The complaint lists Kahn, an attorney in P & F’s employ, as NCT’s counsel. It does not identify an original creditor other than NCT, but rather refers to NCT as both the party with whom Bartell entered into the loan agreement and as the assignee of rights under the agreement. While the complaint identifies San Francisco County as the proper forum for suit as it is the defendant’s current county of residence, NCT’s sole attempt to provide Bartell with service of process took place at her former residence in Berkeley, where she last lived in 2009–not San Francisco–and involved no good-faith or systematic effort to find her current address. Service of process failed when the current resident of the Berkeley address informed the process server that Bartell no longer lived there and refused to accept service on Bartell’s behalf. NCT nevertheless filed a proof of service with the superior court. Bartell therefore only learned of the action after NCT moved for entry of default against her in mid-February 2014. She then successfully moved the superior court to quash NCT’s service of summons. Having commenced this action on September 18, 2014, Bartell maintains that she never contracted with NCT, and the debt NCT claims she owes is “nonexistent.” FAC ¶¶ 26, 39. She believes a creditor whose identity is unknown to her, and is not revealed in the state court complaint, at some point transferred the purported loan to NCT. On NCT’s behalf, NCO subsequently engaged P & F to collect on the debt. Accordingly, defendants “misrepresented the character, amount and legal status” of the “alleged debt,” and employed “unfair or unconscionable means,” “misleading representations,” and “unfair and abusive practices” to collect on it, in violation of the FDCPA and RFDCPA. FAC ¶¶ 32, 34, 70. In response to an earlier motion to dismiss, Bartell filed both a response and the FAC. Defendants were then ordered to direct any responsive pleadings to the FAC, resulting in the present motion brought by NCT and NCO.
The District Court found that the FDCPA prohibition against the use of unfair practices to collect a debt did not require a “communication”, just the “use” of an “unfair” practice, and there was no reason why debt collectors already subject to the FDCPA could not be vicariously liable for their debt collection attorneys’ actions.
NCT and NCO maintain that because NCO is not a named party to the state court action and engaged in no “actual and direct ‘communication’ ” with Bartell, it cannot be held liable for any of the harm Bartell allegedly suffered. See Mot. to Dismiss, p. 7. Under the FDCPA, however, communication is defined as “the conveying of information regarding a debt directly or indirectly to any person through any medium.” 15 U.S.C. 1692a(2). Moreover, many of the FDCPA provisions Bartell avers defendants violated do not require “communication” at all; section 1692e(10), for example, proscribes merely the “use of any false representation or deceptive means ” to attempt debt collection. Nowhere is it apparent that direct communication is an element of this provision, and NCO and NCT offer no authority showing otherwise. Nor do they demonstrate why NCO may not be held vicariously liable for actions taken by P & F. See Fox v. Citicorp Credit Services, Inc., 15 F.3d 1507, 1516 (9th Cir.1994) (attributing the actions of an attorney to the client on whose behalf they were taken); Newman v. Checkrite California, Inc., 912 F.Supp. 1354, 1371 (E.D.Cal.1995) (imputing vicarious liability for conduct violating the FDCPA according to agency theory). A favorable reading of Bartell’s complaint does not, therefore, preclude NCO’s liability on the grounds NCT and NCO advance.
The District Court rejected the Defendant’s claim of immunity under California’s litigation privilege. NCO and NCT contend that because Bartell’s claim under the Rosenthal Act arises only from communications made in furtherance of a judicial proceeding, it is barred by California’s litigation privilege. Section 47(b) of the California Civil Code indeed provides in relevant part that “[a] privileged publication or broadcast is one made … [i]n any … judicial proceeding….” Cal. Civ.Code § 47(b); see Rusheen v. Cohen, 37 Cal.4th 1048, 1057 (2006) (interpreting the privilege to apply to any communication made in a judicial or quasi-judicial proceeding by litigants or other authorized participants to achieve the objects of the litigation and that bears some logical connection to the action). The California Court of Appeal has recognized that the privilege cannot be applied to shield violators of the RFDCPA from culpability, for to do so when the two conflict “would effectively vitiate the Rosenthal Act and render the protections it affords meaningless.” Komarova v. National Credit Acceptance, Inc., 175 Cal.App. 4th 324, 338 (2009). [fn 4: NCO and NCT rely on a minority line of district court cases concluding otherwise. See e.g., Boon v. Professional Collection Consultants, 978 F.Supp.2d 1157 (S.D.Cal.2013); Reyes v. Kenosian & Miele, LLP, 525 F.Supp.2d 1158 (N.D.Cal.2007). A significant majority of federal district courts have, however, followed Komarova’s logic, especially in light of the fact that the RFDCPA is a “remedial statute” that ought to be interpreted broadly “in order to effectuate its purpose.” See Holmes v. Electronic Document Processing, Inc., 966 F.Supp.2d. 925, 937 (N.D.Cal.2013) (aggregating cases); see also Heintz v. Jenkins, 514 U.S. 291, 297 (1995) (holding that the FDCPA may apply to attorneys acting to collect debts, even in the litigation context).]