In Kuschner v. Nationwide Credit, Inc. 2009 WL 1531574 (E.D.Cal. 2009), Judge Karlton ruled on whether a debt collector could assert a counter-claim against an FDCPA plaintiff due to the Plaintiff’s surreptitious recording of telephone calls between the Plaintiff and the debt collector.  The Court had ruled that the debt collector should be allowed leave to file the counter-claim, and then sanctioned the Plaintiff when the Plaintiff refused to withdraw a subsequent F.R.C.P. 12(b)(6) Motion making essentially, the same arguments the Plaintiff made in opposing the debt collector’s motion for leave to amend.  Judge Karlton explained:


On February 26, 2009, defendant filed a motion seeking leave to file a supplemental pleading asserting a counterclaim. The proposed counterclaim alleged that plaintiff had recorded one or more phone calls between plaintiff and defendant without defendant’s consent. These recordings allegedly violated Cal. Pen.Code §§ 632 and 632.7, sections for which the Penal Code provides a private right of action at § 637.2. Plaintiff opposed this motion on the ground that any such counterclaim would be futile. In so doing, plaintiff argued that his recording was permitted by Cal. Pen.Code section 633.5. This section provides that “Nothing in Section … 632 … or 632.7 prohibits one party to a confidential communication to a confidential communication from recording the communication for the purpose of obtaining evidence reasonably believed to relate to the commission by another party to the communication for … a violation of Section 653m.” Section 653m, in turn, makes it unlawful to telephone another with the intent to annoy or harass, including by making repeated calls. Plaintiff argued that defendant’s alleged conduct violated section 653m, rendering it lawful for plaintiff to record the calls.    This court rejected plaintiff’s argument and granted defendant’s motion.


Judge Karlton previously had held that resolution of Plaintiff’s defense to the debt collector’s claim would turn on the Plaintiff’s state of mind, which could not be resolved on the pleadings:


The court determines whether the counterclaim would be futile upon application of the Rule 12(b)(6) standard, …. Here, plaintiff has not shown that standard to have been met.” Id. at 9 (citing Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir.1988)). This was because “the liability exception of Penal Code section 633.5 only applies where the person making the recording “reasonably believed” that defendant’s conduct violated that section. Thus, both the question of what plaintiff actually believed at the time of recording the calls and whether that belief was reasonable would need to be resolved in order for plaintiff to be exempted from liability. Although plaintiff has submitted a declaration stating his actual belief, see Pl.’s Decl. ¶ 5, resolution of this issue plainly cannot be done on the pleadings. It requires the types of credibility determinations and weighing of evidence quintessentially performed by a fact-finder.   (See Kuschner v. Nationwide Credit, Inc. 2009 WL 873530 (E.D.Cal. 2009))


Accordingly, the Court held that


Although plaintiff’s motion was both frivolous and legally unreasonable, nothing indicates that plaintiff’s counsel’s state of mind was either “reckless” or otherwise in bad faith.     Accordingly, an Order to Show Cause is appropriate as to why sanctions should not issue under Fed.R.Civ.P. 11, but no such order is not appropriate as to 28 U.S.C. § 1927 or this court’s inherent power.