Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-02971/USCOURTS-casd-3_16-cv-02971-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1692 Fair Debt Collection Act

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

FELIPE MAGALLON, 

Plaintiff,

v. 

VITAL RECOVERY SERVICES, LLC., 

Defendant.

 Case No.: 16cv02971 JAH - BLM 

ORDER GRANTING PLAINTIFF’S 

MOTION FOR CLASS 

CERTIFICATION [Doc. No. 16] and 

GRANTING PLAINTIFF’S MOTION 

FOR LEAVE TO FILE A FIRST 

AMENDED COMPLAINT 

[Doc. No. 17] 

 Pending before the Court is Plaintiff’s Motion for Class Certification and Plaintiff’s 

Motion for Leave to File a First Amended Complaint (“FAC”). Both motions are fully 

briefed by the parties. For the reasons discussed below, the Court GRANTS Plaintiff’s 

motion for class certification and GRANTS Plaintiff’s motion for leave to file a FAC. 

BACKGOUND

 On December 7, 2017, Plaintiff Felipe Magallon, filed a complaint asserting 

violations of the Fair Debt Collection Practices Act (“FDCPA”) and the Rosenthal Fair 

Debt Collection Practices Act (“Rosenthal FDCPA”) and naming Vital Recovery Services, 

LLC as defendant. Plaintiff alleges he received a collection notice from Defendant on 

April 14, 2016, attempting to collect a debt in the amount of $23,450.21, but the notice did 

not state the debt was accruing interest, the interest rate at which it is accruing interest or 

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the portion of the debt that is principal and interest although Defendant was charging daily 

accruing interest on the debt. Complaint ¶ 18. Defendant filed an answer on January 23, 

2017. On March 3, 2017, the Honorable Barbara L. Major, United States Magistrate 

Judge, issued a scheduling order setting deadlines for filing a motion for a protective order, 

a motion to join parties or amend pleadings and a motion for class certification. Remaining 

deadlines will be set following this Court’s order on the motion for class certification. On 

July 11, 2017, Plaintiff filed a motion to amend the deadline for filing a motion for leave 

to amend. Judge Major granted the unopposed motion for good cause shown. Plaintiff 

filed the pending motion for class certification on July 14, 2017, and motion for leave to 

file a FAC on July 17, 2017. Defendant filed separate oppositions to the motions and 

Plaintiff filed separate replies. Plaintiff also filed an objection to a declaration filed by 

Defendant in support of its opposition to the motion for class certification. 

 Finding the motions suitable for adjudication without oral argument, the Court took 

both under submissions. 

DISCUSSION

I. Motion for Class Certification

 Plaintiff seeks to certify the following classes: 

CLASS A 

All persons located in the State of California to whom Defendant sent, within one year 

before the date of this complaint and in connection with the collection of a consumer debt, 

an initial written communication that is substantially similar or materially identical to 

Defendant’s April 4, 2016 Validation Notice which was not returned undelivered by the 

United States Postal Service, in which Defendant failed to clearly state the amount of the 

debt in violation of 15 U.S.C. section 1692g(a)(1). 

CLASS B 

All persons located in the State of California to whom Defendant sent, within one year 

before the date of this complaint and in connection with the collection of a consumer debt, 

an initial written communication that is substantially similar or materially identical to 

Defendant’s April 4, 2016 Validation Notice which was not returned undelivered by the 

United States Postal Service, in which Defendant failed to disclose that the debt was subject 

to daily accruing interest rendering the Validation Notice deceptive, confusing, and 

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misleading in violation of 15 U.S.C. sections 1692e, 1692e(2)(A), and 1692e(10). 

A. Legal Standard

 Whether to grant class certification is within the discretion of the court. 

Montgomery v. Rumsfeld, 572 F.2d 250, 255 (9th Cir. 1978). A cause of action may 

proceed as a class action if a plaintiff meets the threshold requirements of Rule 23(a) of the 

Federal Rules of Civil Procedure: numerosity, commonality, typicality, and adequacy of 

representation. FED.R.CIV.P. 23(a). In addition, a party seeking class certification must 

meet one of the three criteria listed in Rule 23(b). 

 Courts should certify a class only if they are “satisfied, after a rigorous analysis,” 

that Rule 23 prerequisites have been met. General Telephone Co. Of Southwest v. Falcon, 

457 U.S. 147, 161 (1982). “Frequently that ‘rigorous analysis’ will entail some overlap 

with the merits of the plaintiff’s underlying claim,” which “cannot be helped.” Wal–Mart 

Inc. v. Dukes, 564 U.S. 338, 351 (2011). However, examination of the merits is limited 

to determining whether certification is proper and “not to determine whether class members 

could actually prevail on the merits of their claims.” Ellis v. Costco Wholesale Corp., 657 

F.3d 970, 983 n. 8 (9th Cir. 2011) (citation omitted). 

B. Analysis 

 Plaintiff contends the proposed classes meet the criteria of Rules 23(a) and 23(b)(2) 

and (3). 

 Defendant argues Plaintiff fails to meet the numerosity, commonality, predominance 

and superiority to support class certification because the entire class is potentially subject 

to arbitration.

1. Arbitration

 Defendant maintains it sent 1,175 letters similar to that sent to Plaintiff which all 

related to LendingClub Corporation accounts. Defendant further maintains a borrower 

agreement and loan agreement which applies to Plaintiff’s LendingClub account provides 

for arbitration and contains a class action waiver. Defendant argues the arbitration clauses 

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likely apply to the conduct at issue and prevents Plaintiff from meeting the requirements 

for class certification. 

 Plaintiff argues no valid agreement to arbitrate exists in this case. He contends there 

is no signed agreement to arbitrate with Defendant, so his and the putative class claims are 

not subject to arbitration. He contends Defendant cannot use the arbitration clauses in the 

unsigned membership agreement and loan agreement because Defendant was never a part 

of those agreements. Additionally, he argues the arbitration clause in both agreements are 

inapplicable because Defendants fail to demonstrate the agreements were in existence at 

the time the FDCPA violation occurred. Even if they existed, the language is very limited 

and defines which claims are subject to arbitration between the consumer, LendingClub 

and/or WebBank. 

 “The right to compel arbitration stems from a contractual right and that right “may 

not be invoked by one who is not a party to the agreement and does not otherwise possess 

the right to compel arbitration.” Britton v. Co-op Banking Grp., 4 F.3d 742, 744 (9th Cir. 

1993). Generally, only parties to an agreement may enforce an agreement to arbitrate. 

However, there are exceptions, including, third party beneficiaries, agents and assignees. 

Comedy club, Inc. v. Improv West Associates, 553 F.3d 1277, 1287 (9th Cir. 2009). 

 Defendant submits copies of documents entitled “Borrower Membership 

Agreement” and “Loan Agreement” which Jonathan Hegwood, Defendant’s Chief 

Compliance Officer, attests are applicable to Plaintiff’s LendingClub account. Plaintiff 

objects to Hegwood’s declaration for lack of personal knowledge and foundation and as 

conclusory, speculative and hearsay. He argues there are no facts showing Hegwood can 

attest that Plaintiff was presented with the agreements, Plaintiff accepted the agreements 

or whether the agreements existed at the time of Plaintiff’s contract with LendingClub. 

Further, Plaintiff contends Hegwood provides no evidentiary facts supporting his statement 

that the agreements were in existences at the time Plaintiff or any class member entered 

into a contract with LendingClub or that they entered into these agreements. He also 

contends the statements and exhibits are hearsay not subject to an exception. 

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 Upon review of the documents, it appears they are unsigned and undated agreements 

between individuals who agree to borrow and repay money, and LendingClub and 

WebBank. Hegwood, is not an employee of LendingClub or WebBank. His position as a 

records custodian for Defendant Vital does not, alone, provide him knowledge of the 

pertinent facts surrounding Plaintiff’s or any class member’s participation in the 

agreements or the applicability of the agreements to their accounts. He provides no factual 

support for his statement that the agreements would apply to accounts assigned by 

LendingClub to Defendant Vital. The Court sustains Plaintiff’s objection. Because there 

is no evidence, beyond the objectionable statements by Hegwood, to demonstrate these 

agreements are applicable to Plaintiff or any member of the class, the Court will not 

consider the contents of the agreement, including the arbitration clauses.1

2. Rule 23(a) 

a. Numerosity

 Rule 23 requires that the class be “so numerous that joinder of all members is 

impracticable.” FED.R.CIV.P. 23(a)(1). Plaintiff contends the approximate size of the 

proposed class is 1,175 and therefore, the numerosity requirement is easily met. 

 Defendant argues Plaintiff does not meet the numerosity requirement because the 

entire class is subject to the arbitration clauses of the borrower and loan agreements. 

Because Defendant fails to demonstrate the claims are subject to arbitration, this argument 

fails. The Court finds Plaintiff meets this requirement. 

// 

// 

                                               

1

 Even if the Court considered the agreements, they do not support Defendant’s contention 

that the claims are subject to arbitration. Defendant is not a signatory to the agreement and 

there is no language to indicate Defendant is a third party beneficiary entitled to enforce 

the arbitration clause nor does Defendant demonstrate it is an assignee of the contract. In 

addition, there is no evidence offered to demonstrate Plaintiff or class members agreed to 

their terms. 

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b. Commonality

 Questions of law or fact must be common to the class. See FED.R.CIV.P. 23(a)(2). 

This requires the plaintiffs’ claims be dependent on a common contention which is capable 

of class-wide resolution “in one stroke.” Dukes, 564 U.S. at 350. 

 Plaintiff maintains the questions of fact and law are exclusively common in this case. 

Specifically, Plaintiff maintains the core questions are: What did the Validation Notice 

say? and; Whether the Validation Notice violates the FDCPA and Rosenthal FDCPA. 

Plaintiff maintains all members received the same allegedly defective notice from 

Defendant, and contends the legal question of whether or not the collection notice violates 

the FDCPA and Rosenthal FDCPA are determinable, for example, via a motion for 

summary judgment. 

 Defendant argues the class lacks commonality because the entire class is subject to 

arbitration. Because Defendant fails to demonstrate the claims are subject to arbitration, 

this argument fails. 

 The Court finds Plaintiff meets this requirement. 

c. Typicality

 Typicality under subsection Rule 23 requires that “the claims or defenses of the 

representative parties are typical of the claims or defenses of the class.” FED.R.CIV.P. 

23(a)(3). 

 Plaintiff argues each of the class members were sent a collection letter which was 

identical or substantially identical to the Validation Notice he claims violates the FDCPA 

and the Rosenthal FDCPA. He contends typicality is inherent in the class definition 

because each class member was subject to the same violations of the FDCPA and Rosenthal 

FDCPA as Plaintiff. 

 Because Plaintiff alleges each class member received the same letter he received 

which he alleges violated the FDCPA and the Rosenthal FDCPA, the Court finds Plaintiff 

meets this requirement. 

// 

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d. Adequacy 

 To ensure due process requirements are met, “absent class members must be 

afforded adequate representation before entry of a judgment which binds them.” Hanlon 

v. Chysler Corp, 150 F.3d 1011, 1020 (9th Cir. 1998). There are two criteria used to 

evaluate whether this requirement is met: 1) does the named class representatives and their 

counsel have any conflicts of interest with other class members; and 2) will the named 

representatives and their counsel prosecute the action vigorously on behalf of the class. Id. 

Plaintiff argues there is no evidence that Plaintiff and his attorneys have a conflict 

of interest with other class members. He further argues he received the same allegedly 

defective collection notice as the 1,175 proposed class members. Plaintiff also maintains 

he and the class members, seek statutory damages as well as equitable relief as a result of 

Defendant’s alleged violation of the FDCPA and Rosenthal FDCPA. He argues there is 

no potential conflict of interest because he and the class members have identical claims. 

Plaintiff further maintains both he and his attorneys are capable of and have vigorously 

prosecuted this action. Additionally, Plaintiff maintains he understands his responsibilities 

as a class representative and is willing to represent the class at trial, and he is represented 

by experience counsel. 

 In opposition, Defendant argues counsel’s delay in seeking to amend to add 

Defendant’s corporate parent demonstrates proposed class counsel is not adequate. 

Plaintiff contends Defendant’s argument has no merit because Judge Major granted his 

request to extend the deadline to file a motion for leave to amend and counsel’s request for 

an extension was due to ongoing investigation of the case, specifically, the outcome of 

Defendant’s deposition which took place after the original deadline for leave to amend. He 

further contends the deposition was rescheduled at Defendant’s request. 

 The Court finds Plaintiff’s counsel’s request to extend the deadline to move for leave 

to amend by two months to permit ongoing investigation following Defendant’s 

rescheduled deposition does not demonstrate counsel is inadequate. Furthermore, 

counsels’ declarations demonstrate experience in litigating cases in federal and state court, 

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including class action and consumer law actions. Mashiri Decl. ¶¶ 7, 8; Jami Decl. ¶¶ 7, 

8, 9, Pla’s Exhs. 5 and 6 (Doc. Nos. 16-7, 16-8). Additionally, Plaintiff shows his claims 

are identical to the class and there are no potential conflicts of interest present. As such, 

the Court finds Plaintiff meets this requirement. 

3. Rule 23(b)

 Plaintiff argues the class meets the requirements of Rule 23(b)(2) and (3). 

a. Rule 23(b)(2)

 Rule 23(b)(2) requires a plaintiff to establish that the defendant “has acted or refused 

to act on grounds that apply generally to the class, so that final injunctive relief or 

corresponding declaratory relief is appropriate respecting the class as a whole.”

FED.R.CIV.P. 23(b)(2) A party may meet the requirements of Rule 23(b)(2) if “class 

members complain of a pattern or practice that is generally applicable to the class as a 

whole.” Rodriguez v. Hayes, 591 F.3d 1105, 1125 (9th Cir. 2010). Rule 23(b)(2) does 

not authorize class certification “when each individual class member would be entitled to 

a different injunction or declaratory judgment against the defendant.” Dukes, 564 U.S. at 

360. Additionally, “class certification under Rule 23(b)(2) is appropriate only where the 

primary relief sought is declaratory or injunctive.” Ellis, 657 F.3d at 986. 

 Plaintiff argues Defendant acted identically with respect to all class members by 

sending nearly identical collection letters to each of them, and further argues the purpose 

for sending the letters was identical for all. He maintains the request for declaratory relief 

seeks a declaration that Defendant’s validation notice is illegal and in violation of the 

FDCPA and the Rosenthal FDCPA. Plaintiff also contends any argument by Defendant 

that certification under Rule 23(b)(2) is improper because the FDCPA does not expressly 

provide for injunctive relief are without merit, because the FDCPA does not restrict a 

district court’s jurisdiction in equity and the well-established rule of law is that, absent the 

clearest command to the contrary, federal courts retain their equitable power to issue 

injunctions in suits over which they have jurisdiction. 

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 Defendant contends Plaintiff’s primary claim is for money and, therefore, it cannot 

be certificated under Rule 23(b)(2) which requires the primary claim be for injunctive or 

declaratory relief. Defendant also contends Plaintiff lacks standing to pursue a claim for 

injunctive or declaratory relief under the FDCPA, because neither injunctive relief nor 

declaratory relief is included in the list of available remedies in section 1692k of the 

FDCPA. Additionally, Defendant argues a Rule 23(b)(2) class is improper because 

injunctive or declaratory relief will not benefit Plaintiff or the purported members of the 

class, because they cannot demonstrate a probability of future injury. 

 The allegations of the complaint demonstrate Plaintiff seeks relief based upon 

Defendant’s conduct to the proposed class members in sending nearly identical letters. 

Accordingly, the declaratory and injunctive relief sought is the same for the class as a 

whole. However, Plaintiff seeks statutory damages in addition to declaratory and 

injunctive relief. Plaintiff does not respond to the argument that his claim is primarily for 

monetary relief. In his motion, he cites to cases in which courts certified a class under Rule 

23(b)(2) or a hybrid where the plaintiffs received a standardized letter and sought 

declaratory relief and statutory damages. However, these cases pre-date Dukes which 

indicated claims for monetary relief which were not incidental to declaratory or injunctive 

claims are not proper for certification under Rule 23(b)(2). The Court finds certification 

under Rule 23(b)(2) is not appropriate. 

b. Rule 23(b)(3)

Pursuant to Rule 23(b)(3) a party may maintain a class action if the court finds that 

the questions of law or fact common to the members of the class predominate over any 

questions affecting only individual members, and that a class action is superior to other 

available methods for the fair and efficient adjudication of the controversy. 

i. Predominance 

 The predominance inquiry presumes the existence of common issues of fact or law 

have been established pursuant to commonality requirement of Rule 23(a)(2). Hanlon, 150 

F.3d at 1022. However, meeting the commonality requirement is insufficient to fulfill the 

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predominance requirement. Id. “When common questions present a significant aspect of 

the case and they can be resolved for all members of the class in a single adjudication, there 

is clear justification for handling the dispute on a representative rather than an individual 

basis.” Id. 

 Plaintiff contends the primary and predominating question here is whether the 

undisputed content of the collection letter sent by Defendant, objectively, violates the 

FDCPA and the Rosenthal FDCPA. He further contends, if he prevails, the remaining 

individual issues will be ministerial. 

 Defendant argues Plaintiff cannot establish predominance because there is no 

evidence that the debt was incurred for a personal, family or household purpose. Defendant 

maintains each plaintiff must satisfy the threshold issue that the money being collected is 

a “debt” as defined by the FDCPA to prevail, by showing the debt was incurred for a 

personal, family or household purpose. Defendant argues Plaintiff presents no evidence 

that the debt of other class members was incurred for a personal, family or household 

purpose. As such, he argues, Plaintiff fails to meet his burden and class certification is 

improper. 

 Plaintiff contends he provided evidence that the debt was for personal, family or 

household purposes and argues Defendant fails to provide any evidence to the contrary. 

He further argues it is Defendant’s burden to provide evidence showing certain class 

members are not subject to the FDCPA because their debts are non-consumer debts. 

Plaintiff maintains he is bringing the case on behalf of putative class members whose debts 

are subject to the FDCPA and Defendant identified the class members. As such, it is up to 

Defendant to identify which class members would not be subject to this case. 

 At issue in this case is whether the collection letter sent to the class members violated 

the FDCPA and the Rosenthal FDCPA. In light of Defendant’s records identifying those 

who they sent the letters in question, and the class definition describing members as those 

whom received the letter “in connection with the collection of a consumer debt”, the Court 

finds identifying class members by determining whether the debt was a consumer debt is 

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ministerial in nature easily determined by a single yes or no question. This determination 

does not predominate over the primary question of whether the letter violated the FDCPA 

and the Rosenthal FDCPA. As such, the Court finds common issues predominate over 

individual issues. 

ii. Superiority

 In addition to finding predominance, a court must also find “that a class action is 

superior to other available methods for fairly and efficiently adjudicating the controversy.”

FED.R.CIV.P. 23(b)(3). A class action may be superior if “class-wide litigation of common 

issues will reduce litigation costs and promote greater efficiency” and “if no realistic 

alternative exists.” Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234-35 (9th Cir. 

1996). 

 Plaintiff contends class treatment is superior to individual treatment because 

Congress itself saw the value in class certifications under the FDCPA by specifically 

providing for and contemplating class action relief; courts have found that consumers are 

most likely unaware of their rights under the FDCPA making class treatment the only 

method of recovery; the size of any individual damage claims under the FDCPA is typically 

small and provide little drive to control litigation; and judicial economy favors deciding 

the letter issue for all recipients rather than fielding thousands of additional lawsuits about 

the same content. Plaintiff further contends numerous district courts within California have 

concluded that FDCPA cases involving letter violations easily satisfies the superiority 

element. 

 Defendant argues determining whether or not each putative class member used the 

funds from LendingClub for personal, family or household purposes would overwhelm this 

litigation. 

 As discussed above, the inquiry into the nature of the debt is minor and ministerial 

in nature and would not predominate over the common issues, much less overwhelm the 

litigation. The Court finds class action is superior in the case involving over one thousand 

recipients receiving the same collection letter from Defendant.

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c. Hybrid

 Because the court finds certification under Rule 23(b)(2) is not appropriate, 

Plaintiff’s request for a hybrid class under Rules 23(b)(2) and 23(b)(3) is denied. 

II. Motion for Leave to File A FAC

 Plaintiff seek leave to file a FAC to add an additional defendant, Vital Solutions Inc. 

A. Legal Standard

 The filing of an amended complaint or counterclaim after a responsive pleading has 

been filed may be allowed by leave of court. FED.R.CIV.P. 15(a). Granting leave to amend 

rests in the sound discretion of the trial court. International Association of Machinists & 

Aerospace Workers v. Republic Airlines, 761 F.2d 1386, 1390 (9th Cir. 1985). This 

discretion must be guided by the strong federal policy favoring the disposition of cases on 

the merits. DCD Programs Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). Because 

Rule 15(a) favors a liberal policy, the nonmoving party bears the burden of demonstrating 

why leave to amend should not be granted. Genetech, Inc. v. Abbott Laboratories, 127 

F.R.D. 529 (N.D. Cal. 1989). 

 Even though leave to amend is generally granted freely, it is not granted 

automatically. See Zivkovic v. Southern Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 

2002). Four factors are considered when a court determines whether to allow amendment 

of a pleading. These are prejudice to the opposing party, undue delay, bad faith, and 

futility. See DCD Programs, 833 F.2d at 186; see also Foman v. Davis, 371 U.S. 178, 182 

(1962). These factors are not equally weighted; the possibility of delay alone, for instance, 

cannot justify denial of leave to amend. See DCD Programs, 833 F.2d at 186; Morongo 

Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). The single most 

important factor is whether prejudice would result to the nonmovant as a consequence of 

the amendment. William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 

F.2d 1014, 1053 (9th Cir. 1981). 

// 

// 

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B. Analysis

 Plaintiff contends he has acted in good faith and without undue delay in that he filed 

the instant motion for leave to amend diligently after Defendant’s deposition was taken and 

within the time-frame indicated by Judge Major’s amended scheduling order. Plaintiff 

maintains his attorneys were able to gather enough details to substantiate a joint liability 

theory of the parent company Vital Solutions Inc. (“VSI) and now seek to amend to add 

VSI as a defendant. Plaintiff contends no undue prejudice will result to Defendant because 

the proposed FAC simply adds an additional defendant and does not amend any of the 

causes of action. Additionally, he maintains Defendant has not engaged in discovery to 

date, so Defendants will have a full and fair opportunity to participate in discovery and face 

no imminent discovery cutoff or trial deadlines if the FAC is amended as requested. 

Plaintiff also contends the amendment is not futile. 

 In opposition, Defendant argues Plaintiff cannot justify his undue delay in seeking 

to amend. Defendant maintains Plaintiff was made aware of the relationship between 

Defendant and VSI in a Certificate of Interested Parties Defendant filed on January 24, 

2017. Defendant further maintains it provided Plaintiff its responses to Plaintiff’s First Set 

of Interrogatories, Requests for Admission and Requests for Production on April 10, 2017, 

which included documents that clearly and conspicuously listed VSI on each page. 

Furthermore, Defendant contends it served supplemental responses on May 5, 2017, which 

included Compliance Manuals and Operations/Operations Support Manuals providing 

Plaintiff notice of the existence of VSI. As such, Defendant argues, Plaintiff had sufficient 

time to amend its pleadings to add VSI earlier in the litigation. 

 Defendant further argues granting Plaintiff’s motion to amend will prejudice both 

Defendant and VSI because VSI may be required to travel to California for a deposition 

and there will be a dramatic increase in discovery costs. Additionally, Defendant argues 

amendment is futile because the allegations fall short of establishing an alter ego theory. 

 In reply, Plaintiff argues, even assuming he knew of the existence of VSI, his 

proposed amendment requires more than the knowledge of its existence. He maintains it 

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requires research to substantiate the new theory of liability, and the deposition, taken on 

June 16, 2017, was essential in gathering and corroborating evidentiary support to 

substantiate the new theory of liability. 

 Plaintiff further argues Defendant’s claim of increased discovery costs is not 

“dramatic” as claimed by Defendant as it is an inherent costs of litigation regardless of the 

addition of VSI. Additionally, Plaintiff contends the issue regarding an additional 

deposition is moot because he does not anticipate taking the deposition of VSI. Plaintiff 

also argues Defendant is wrong to assume that his allegations are not supported by factual 

evidence as the information supporting the allegations consists of testimony and documents 

derived from Defendant’s deposition. He maintains the proposed FAC sufficiently alleges 

facts to support a joint liability theory, and contends Defendant is challenging the pleadings 

which is premature and improper on a motion for leave to amend. Further, Plaintiff 

contends he alleges joint liability under an agency theory not alter ego as asserted by 

Defendant. 

 The Court finds no bad faith or undue delay. While Plaintiff was aware of VSI 

existence earlier in the litigation, he demonstrates that discovery, including the deposition, 

was required to gather sufficient information to determine whether the relationship between 

Defendant and VSI gave rise to joint liability against VSI. The month between the June 

16, 2017 deposition and the July 17, 2017 filing of the motion is not unreasonable. 

Additionally, the Court finds no undue prejudice. The request to amend was filed relatively 

early in the proceedings. To date, Defendant has filed an answer, the parties participated 

in an Early Neutral Evaluation conference and Plaintiff filed the motions addressed in this 

order. There are no discovery deadlines set. 

 The Court also finds amendment is not futile. “[A] proposed amendment is futile 

only if no set of facts can be proved under the amendment to the pleadings that would 

constitute a valid and sufficient claim or defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 

209, 214 (9th Cir. 1988). This Court finds Plaintiffs present a colorable claim against Vital 

Solutions. Additionally, challenges to the sufficiency of the allegations are more 

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appropriately addressed in a motion to dismiss. Accordingly, Plaintiff’s motion for leave 

to amend is granted. 

CONCLUSION AND ORDER

 Based on the foregoing, IT IS HEREBY ORDERD: 

 1. Plaintiff’s motion for class certification is GRANTED; 

 2. The Classes shall consist of: 

CLASS A 

All persons located in the State of California to whom Defendant sent, within one 

year before the date of this complaint and in connection with the collection of a 

consumer debt, an initial written communication that is substantially similar or 

materially identical to Defendant’s April 4, 2016 Validation Notice which was not 

returned undelivered by the United States Postal Service, in which Defendant failed 

to clearly state the amount of the debt in violation of 15 U.S.C. section 1692g(a)(1). 

CLASS B 

All persons located in the State of California to whom Defendant sent, within one 

year before the date of this complaint and in connection with the collection of a 

consumer debt, an initial written communication that is substantially similar or 

materially identical to Defendant’s April 4, 2016 Validation Notice which was not 

returned undelivered by the United States Postal Servic e, in which Defendant failed 

to disclose that the debt was subject to daily accruing interest rendering the 

Validation Notice deceptive, confusing, and 

misleading in violation of 15 U.S.C. sections 1692e, 1692e(2)(A), and 1692e(10). 

 3. Plaintiff’s motion for leave to file a First Amended Complaint is GRANTED. 

Plaintiff shall file the FAC attached to his motion on or before March 29, 2017, 

 DATED: March 14, 2018 

 

 _________________________________ 

 JOHN A. HOUSTON 

 United States District Judge 

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