District Court (Cal.) Applies Iqbal/Twombly to FDCPA Affirmative Defenses; Says What Defenses Are Available

In Perez v. Gordon & Wong Law Group, P.C., 2012 WL 1029425 (N.D.Cal. 2012), Judge Koh applied Iqbal/Twombly to a debt collector’s affirmative defenses, and addressed what affirmative defenses are available to an FDCPA/Rosenthal Act claim.

Next, the parties dispute the scope of defenses available to Defendants under the FDCPA. Plaintiff argues that all of Defendants’ affirmative defenses, except for the second and third affirmative defenses, necessarily fail as a matter of law because Defendants are limited to asserting only those defenses explicitly set forth in the FDCPA itself. MTS at 6. The FDCPA expressly identifies three defenses: (1) failure to comply with a one-year statute of limitations; (2) good faith reliance on an advisory opinion of the Consumer Financial Protection Bureau; and (3) bona fide error. See 15 U.S.C. § 1692k(c)-(e) (2010).FN7 Plaintiff argues that, under the doctrine of expressio unius est exclusio alterius, Congress’ enumeration of these three affirmative defenses in the FDCPA manifests Congress’ intent to exclude all others. MTS Reply at 4. ¶First, the Court notes that nothing in the FDCPA expressly limits available defenses to those listed in the statute, and so the plain language indicates that there is no such limitation. See 15 U.S .C. §§ 1692, et seq.; Clark v. Capital Credit and Collection Servs. Inc., 460 F.3d 1162, 1168 (9th Cir.2006) (“[W]here the statute’s language is plain, the sole function of the courts is to enforce it according to its terms … for courts must presume that a legislature says in a statute what it means and means in a statute what it says there.”) (citation omitted)). As the Ninth Circuit has long held, “however helpful rules of construction may be, the courts will construe the details of an act in conformity with its dominating general purpose, will read text in the light of context[,] and will interpret the text so far as the meaning of the words fairly permits so as to carry out in particular cases the generally expressed legislative policy.” Clark, 460 F.3d at 1169 (internal quotation marks, citations, and alterations omitted); see also Longview Fibre Co. v. Rasmussen, 980 F.2d 1307, 1313 (9th Cir.1992) (holding that expressio unius “is a rule of interpretation, not a rule of law. The maxim is ‘a product of logic and common sense,’ properly applied only when it makes sense as a matter of legislative purpose.” (citation omitted)).¶Second, the Ninth Circuit has already recognized the availability in a FDCPA case of at least one common law affirmative defense—waiver—not expressly enumerated in § 1692k(c)-(e). See Clark, 460 F.3d at 1169–70. Moreover, in doing so, the Ninth Circuit considered and rejected an expressio unius statutory interpretation argument in the context of interpreting a different provision of the FDCPA. See id. (holding that a waiver defense may be pled in an FDCPA action, even though the plain language of the FDCPA does not “contemplate” a waiver exception). In Clark, the Ninth Circuit interpreted the scope of § 1692c(c), which includes three explicit circumstances under which a debt collector subject to a cease communication directive may lawfully contact the consumer. Clark, 460 F.3d at 1169. The question presented was whether such a debt collector may contact the consumer at the consumer’s request, even though “the plain language of § 1692c(c) [does not] contemplate waiver.” Id. The Ninth Circuit concluded that, “absent some affirmative indication of Congress’ intent to preclude waiver,” a consumer could waive certain protections under the FDCPA without undermining the general purpose and policy of the statute. Id. at 1170; see id. at 1169–70 (explaining that “Congress enacted the FDCPA to protect consumers from ‘improper conduct’ and illegitimate collection practices ‘without imposing unnecessary restrictions on ethical debt collectors.’ “ (quoting S.Rep. No. 95–382, at 1 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1696, 1698–99)).¶Plaintiff argues that Clark is inapposite because Plaintiff here has not brought a claim under § 1692c(c). MTS Reply at 5. While Plaintiff may ultimately be correct that Defendants’ waiver defense is insufficiently pled, the merits of Defendants’ particular defenses are irrelevant for purposes of evaluating Plaintiff’s preliminary argument that the FDCPA precludes a defendant from even attempting to assert a non-enumerated defense. Plaintiff cannot deny that had he pled a claim under § 1692c(c), Defendants could assert waiver as a defense, even though waiver is not one of the three defenses enumerated in § 1692k(c)-(e). In short, the Court is not persuaded by Plaintiff’s argument that § 1692k(c)-(e) constitutes an exhaustive list of available affirmative defenses in a case brought under the FDCPA.¶Of course, the Court in no way suggests that every conceivable defense may be asserted appropriately in an FDCPA action. But where a non-enumerated defense is consistent with both the statute’s plain language and its stated policy goals, the Court declines to strike such a defense as a matter of law. Nothing in the language of the FDCPA limits defenses to those described in § 1692k, and the Ninth Circuit has already recognized at least one FDCPA defense (waiver) not explicitly described in the statute. The Court concludes that the universe of appropriate defenses available to a defendant in an FDCPA case is not limited to those expressly enumerated in § 1692k. The Court therefore will not strike affirmative defenses (1) and (4)-(15) on this basis.

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In their Answer, Defendants assert fifteen affirmative defenses. The majority of these defenses appear to be boilerplate assertions, and Plaintiff urges that they all be dismissed as insufficiently pled, legally insufficient, immaterial, or not an affirmative defense. Because the Court’s ruling on Defendants’ motion for summary judgment based on res judicata renders moot Plaintiff’s motion to strike Defendants’ thirteenth affirmative defense (res judicata), the Court will not strike the thirteenth affirmative defense. The Court has reviewed the remaining fourteen affirmative defenses and reaches the following conclusions.¶First, Plaintiff argues that all of Defendants’ affirmative defenses should be stricken as insufficiently pled under the Iqbal/Twombly plausibility standard. The Court agrees with Plaintiff that none of the affirmative defenses are pled with sufficient particularity to give Plaintiff fair notice of the grounds for the asserted defense. As discussed above, while the Rule 8 pleading standard does not require extensive, detailed factual allegations, bare statements reciting mere legal conclusions are insufficient. See Iqbal, 129 S.Ct. at 1949; Wyshak, 607 F.2d at 827. Defendants’ listing of affirmative defenses consists of just that. Each of the fifteen affirmative defenses recites a legal conclusion but fails to “point to the existence of some identifiable fact that if applicable to [Plaintiff] would make the affirmative defense plausible on its face.” Barnes, 718 F.Supp.2d at 1172. For example, Defendants’ third affirmative defense, “bona fide error,” reads in its entirety: “To the extent that any violation of law occurred, which Defendants expressly deny, said violation was not intentional and resulted from a bona fide error notwithstanding the maintenance by Defendants of procedures reasonably adapted to avoid any such error.” Answer at 8. Defendants fail to identify in their Answer any actual procedures reasonably employed to prevent the alleged FDCPA and RFDCPA violations. Defendants’ fourth affirmative defense, “unclean hands,” is equally deficient. It states, in its entirety: “The allegations in the Complaint and relief requested are on information and belief barred in whole or in part by the doctrine of unclean hands.” Id. Defendants do not point to any conduct on Plaintiff’s part that would provide grounds for an unclean hands defense. Another illustrative example is the tenth affirmative defense, “supervening cause,” which reads in its entirety: “The causes of action in the Complaint are barred, in whole or in part, to the extent that any injury or loss sustained was caused by intervening or supervening events over which Defendants have or have no control.” Answer at 10. Defendants fail to allege any actual intervening or supervening events on which they base their affirmative defense. All of the af-firmative defenses are similarly deficient. Without these basic factual allegations, Plaintiff cannot ascertain the grounds for Defendants’ various affirmative defenses and is thus deprived of fair notice. See, e.g., Qarbon.com, 315 F.Supp.2d at 1049–50 (striking affirmative defenses that set forth only general allegations and failed to provide a factual basis for the defense); G & G Closed Circuit Events, LLC v. Nguyen, No. 10–CV–05718, 2011 WL 6293922, at *2 (N.D.Cal. Dec.15, 2011) (Davila, J.) (striking affirmative defenses, including failure to mitigate damages, because defendant failed to identify what damages could have been mitigated by the plaintiff or how she “failed to do so”); G & G Closed Circuit Events, LLC v. Nguyen, No. 10–CV–00168, 2010 WL 3749284, at *2 (N.D.Cal. Sept. 23, 2010) (Koh, J.) (striking affirmative defenses—such as unclean hands, res judicata, collateral estoppel, and superseding events—for failure to provide “basic information” necessary for fair notice to plaintiff); CTF Dev., 2009 WL 3517617, at *7 (“[S]imply stating that a claim fails due to plaintiff’s ‘unclean hands’ is not sufficient to notify the plaintiff what behavior has allegedly given them ‘unclean hands.’ ”) (emphasis in original).¶Accordingly, the remaining fourteen affirmative defenses are insufficiently pled,FN9 and Plaintiff’s motion to strike is GRANTED as to affirmative defenses one through twelve, fourteen, and fifteen.