In Rose v. Asset Acceptance, 2012 WL 603263 (2012), the California First District Court of Appeal affirmed in an unpublished decision a denial of class certification of a claim filed under the Rosenthal Act. The facts arose from a debt collector’s suit against a debtor arising from her telephone bill purportedly beyond the statute of limitations. The trial court rejected the argument that the federal two-year statute of limitations under the Federal Communications Act (FCA), 47 U.S.C. section 415(a) (Section 415(a))—not a state four-year statute of limitations under Code of Civil Procedure section 337—applied to telephone bill debts. Because the Plaintiff could not prove the number of debtors who had been sued outside the 4-year statute of limitations, numerosity was not met. The facts were as follows:
On May 30, 2007, Asset filed a complaint against Rose, alleging she became indebted to SBC in the amount of $2,198.67 “within the last four years” and had promised to pay that amount to SBC “for goods, wares and merchandise sold and delivered to [her] and for which [she] promised to pay….” Asset alleged it had purchased Rose’s account from SBC and that as current owner of the account, was entitled to collect $2,198.67 plus interest from Rose. ¶ Rose filed a second amended class action cross-complaint against Asset alleging it was engaged in a “business practice of purchasing debts referred to as ‘zombie debt’ and attempting to collect them” throughout California. The debts were “so old that they f[e]ll well beyond any pertinent statute of limitations under which they [could] be pursued, or [we]re so poorly documented that their authenticity [could not] be proven.” She alleged Asset attempted to collect on such debts by, among other things, “filing complaints in court, but failing to document the origination of the debt and typically tak[ing] defaults against the purported debtors on these debts.” Rose alleged as to her case that she did not know how the debt originated because she had not opened or become a subject of collection upon any SBC accounts in many years. She suspected it was a debt she disputed over seven years before, or was not her debt at all. Rose brought the action on her own behalf and on behalf of all persons similarly situated—”California consumers who within the last four years were subject to attempts to collect by Cross–Defendants on accounts that have been manipulated to make them appear to be collectable when they were not and whose authenticity is otherwise insufficiently supportable by evidence.” ¶ Under her first cause of action for violation of the Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act), Rose alleged Asset “manipulat[ed] accounts and account numbers … as an artifice to collect a debt,” attempted to collect debts that were past the statute of limitations, and filed complaints after the statute of limitations had passed. Under her second cause of action for breach of contract and breach of the covenant of good faith and fair dealing, Rose alleged Asset altered account numbers or failed to properly track accounts so that the ages of the ac-counts or the disputes relating to those accounts were inaccurate. Under her third cause of action for unfair business practices, she alleged Asset’s conduct constituted unfair competition “in that [respondent] unlawfully, and in a deceptive manner, … violated [the Act]….” . . . ¶ Asset filed a motion for judgment on the pleadings, which the trial court granted in part. The court ruled that Rose “may proceed with the claims under the Rosenthal Fair Debt Collection Practices Act, the contractual duty of good faith and fair dealing, and the UCL.” Asset then filed a motion for summary judgment or summary adjudication. The court granted summary adjudication as to some allegations in the first cause of action relating to violations of the Rosenthal Act. It found Rose had presented no evidence in support of her claim that Asset manipulated the account dates to make its claim appear timely when in fact it was not. It found, however, that Rose was allowed to proceed on her allegation that Asset attempted to collect debts that were past the statute of limitations and filed complaints in court after the statute of limitations had passed. The court granted the motion for summary adjudication as to the entire second cause of action for breach of contract or breach of the duty of good faith and fair dealing. It found, as it did as to the first cause of action, that Rose had not presented any evidence in support of her claim that Asset or its predecessor had “manipulated the contractual accounts and account numbers or failed to track the accounts properly.” The court granted the motion for summary adjudication as to the allegations in her third cause of action for unfair business practices that were based on manipulation of data and breach of contract. It denied the motion as to her allegations that were based on Asset’s act of filing lawsuits that were barred by the statute of limitations. ¶ Rose filed a motion for class certification on December 23, 2009. The trial court denied the motion, finding that because a four year statute of limitations applied to the debts that were at issue, and Rose had presented no evidence of the number of debtors Asset had sued beyond the expiration of the four-year statute, she had not established her burden of establishing numerosity. The court also ruled that a class was ascertainable if the court redefined the class; that common legal issues existed; that Rose was a typical class member; that Rose and her counsel were adequate; and that a class action was not a superior method of resolving Rose’s claims. Both parties appealed.
The Court of Appeal rejected the argument that the trial court improperly made merits-related rulings at the class certification stage, and affirmed the trial court’s denial of class certification.
Similarly, here, the trial court did not rule on the merits of Rose’s case and did not require her to prove her claims against Asset as a prerequisite to class certification; rather, it expressly allowed her action to proceed, albeit on an individual basis. The court did decide an issue related to the merits of Rose’s claims when it determined what statute of limitations applies to telephone bill debts. Resolving that threshold question was necessary, however, in order to determine whether the class was “sufficiently numerous [and] ascertainable.” ( Fireside Bank v. Superior Court,supra, 40 Cal.4th at p. 1089.) FN1 Because the issue of whether Asset violated the Rosenthal Act or engaged in unfair business practices by filing time-barred lawsuits was “enmeshed with” class action requirements, the court had the authority to address the statute of limitations issue in ruling on Rose’s motion for class certification. [FN1. As noted, the trial court determined that because Rose had presented no evidence regarding the number of debtors Asset had sued beyond the limitations period in violation of the Rosenthal Act or the Unfair Competition Law, she had not established her burden of establishing numerosity.] Rose contends the order denying class certification should nevertheless be reversed because a federal two-year statute of limitations under the Federal Communications Act (FCA), 47 U.S.C. section 415(a) (Section 415(a))—not a state four-year statute of limitations under Code of Civil Procedure section 337—applies to telephone bill debts.FN2 We conclude the trial court correctly determined that Asset’s claims were governed by the four-year state statute of limitations.