In Robles v. Ally Bank, 2013 WL 28773 (S.D.Cal. 2013), Judge Battaglia found, in an FDCPA harassment case, that a cross-complaint for the debt was permissive and that there was supplemental jurisdiction to hear it.  Judge Battaglia, however, declined to exercise that jurisdiction.

Although the Ninth Circuit has not specifically addressed “whether a counterclaim for the underlying debt in an FDCPA action is compulsory or permissive, most, if not all of the district courts within the Ninth Circuit … have determined that such a counter-claim is permissive.” Marlin v. Chase Cardmember Servs., 2009 WL 1405196, * 3 (E.D.Cal. May 19, 2009). See, e.g., Randall v. Nelson & Kennard, No. CV–09–387–PHX–LOA, 2009 WL 2710141 at *4 (D.Ariz. Aug.25, 2009); Avery v. First Resolution Mgmt. Corp., No. 06–1812–HA, 2007 WL 1560653 (D.Or. May 25, 2007), aff’d 561 F.3d 998 (9th Cir.2009); Barcena v. Tam Fin. Corp., EP07–CA–0020–KC, 2007 WL 1452587 (W.D.Tex. May 8, 2007); Sparrow v. Mazda Am. Credit, 385 F.Supp.2d 1063, 1069 (E.D.Cal.2005); Campos v. W. Dental Servs., Inc., 404 F.Supp.2d 1164, 1168–69 (N.D.Cal.2005). The reasoning behind this was best stated by the Eighth Circuit in Peterson v. United Accounts, Inc., wherein the court held that: While the debt claim and the FDCPA counter-claim raised here may, in a technical sense, arise from the same loan transaction, the two claims bear no logical relation to one another. Although there is some overlap of issues raised in both cases as a result of the defenses raised in the state action, the suit on the debt brought in state court is not logi-cally related to the federal action initiated to enforce federal policy regulating the practices for the collection of such debts. 638 F.2d at 1137. Based on this persuasive reasoning, the Court finds Defendant’s counterclaims and third-party claims are permissive rather than compulsory. As such, whether or not Plaintiff’s suit under the FDCPA is subject to Defendant’s affirmative defenses, such as unclean hands and offset, does not require either party prove the existence of the Installment Contract, nor the validity of the underlying debt. See also 15 U.S.C. § 1692; Wilson v. Discover Bank, No. 12–CV–5209–RBL, 2012 WL 1899539 *2 (W.D.Wash. May 24, 2012) (acknowledging that the FDCPA does not require proof that the underlying debt is valid). Accordingly, the Court finds Defendant’s counter-claims and third-party claims are permissive rather than compulsory.

The Court found supplemental jurisdiction.

Here, both claims are related to a single debt allegedly owed by Plaintiff to Defendant. Based on this reasoning, numerous courts in the Ninth Circuit have held that supplemental jurisdiction exists over a de-fendant’s counterclaim related to the debt underlying a plaintiff’s FDCPA claim. See, e.g., Marlin, 2009 WL 1405196; Campos v. W. Dental Servs., Inc., 404 F.Supp.2d 1164, 1169 (N.D.Cal.2005); Sparrow, 385 F.Supp.2d at 1070 (“[b]ecause Defendant’s counter-claims bear a logical and factual relationship to Plaintiff’s claims in that they are related to a single debt incurred by Plaintiff, supplemental jurisdiction exists over Defendant’s counterclaims under § 1367(a)”). Moreover, the Court rejects Plaintiff’s argument that the Court should dismiss Defendant’s counterclaim and third-party claims because there is no independ-ent basis for federal jurisdiction. The Court has sup-plemental jurisdiction over Defendant’s claims. Campos, F.Supp.2d at 1169 (“there will be some permis-sive counterclaims over which the court has supplemental jurisdiction and some it does not. The reason is that the standard for supplemental jurisdiction is broader than the standard for a counterclaim to be compulsory.”) (citing Fed. R. Civ.P. 13(a) and 28 U.S.C. § 1367(a)). Accordingly, supplemental jurisdiction exists over Defendant’s counterclaims and third-party claims.

The Court declined, however, to exercise supplemental jurisdiction.

The applicable subsection here is § 1367(c)(4). As many district courts in the Ninth Circuit have noted, because the major purpose of the FDCPA is to protect individuals from unfair debt collection practices—regardless of whether the plaintiff actually owes the debt—exercising supplemental jurisdiction over counterclaims brought by debt collector defendants, based on the underlying debt, might have a chilling effect on plaintiffs who otherwise might and should bring suits under the FDCPA. See e.g., Randall v. Nelson & Lennard, 2009 WL 2710141 *6 (D.Ariz. Aug.26, 2009) (declining to exercise supplemental jurisdiction even though the amount of plaintiff’s debt was relatively small ($4,124.00), and as the defendant correctly pointed out, hearing the additional claims would promote judicial economy, efficiency, and fairness). Moreover, exercising sup-plemental jurisdiction over Defendant’s claims would involve this Court in questions of no federal signifi-cance. Thus, given the remedial nature of the FDCPA, the broad public policy the FDCPA serves, and the fact that federal courts are courts of limited jurisdiction, federal courts should be weary to be-come immersed in state law debt collection and breach of contract actions. See Sparrow, 385 F.Supp.2d at 1071. Finally, accepting jurisdiction over Defendant’s claim will increase both the complexity and length of time necessary to resolve Plain-tiff’s FDCPA claim. Although Defendant’s counter-claim and third-party claim is not novel—a breach of contract cause of action—involving this Court in state law claims/disputes stretches the Court’s already limited resources. Leatherwood v. Universal Business Service Co., 115 F.R.D. 48, 50 (W.D.N.Y.1987). Finally, Defendant argues that declining jurisdic-tion over the counterclaims and third-party claims would be inefficient and raises the risk of potential inconsistent judgments. These arguments are without merit. Plaintiff’s FDCPA claims are distinct from the counterclaims and third-party claims, both in terms of the issues presented and the evidence required. Moreover, the Campos court rejected identical argu-ments when it declined to exercise supplemental jurisdiction over a counterclaim for the underlying debt in an FDCPA action. Campos, 404 F.Supp.2d at 1170. Accordingly, the Court finds strong public policy reasons exist to prevent the exercise of supple-mental jurisdiction over Defendant’s counterclaims and third-party claims.