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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LORI KEMPLY, et al.,

Plaintiffs,

v.

CASHCALL, INC.,

Defendant.

Case No. 08-cv-03174-MEJ 

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

INTRODUCTION

In this certified class action, the Court previously found that Defendant CashCall, Inc. 

(“CashCall”) violated the Electronic Funds Transfer Act (“EFTA”), 15 U.S.C. § 1693k(1),1 when 

it conditioned its extension of credit on borrowers‟ repayment by means of preauthorized 

electronic funds transfers (“EFTs”). Order re: Mots. for Summ. J. (“MSJ Order”) at 16-17, Dkt. 

No. 220. In doing so, the Court also found that CashCall violated California‟s Unfair Competition 

Law (“UCL”), Business and Professions Code section 17200,2by engaging in an unlawful 

business practice. Id. at 17. This Order decides what relief class members are entitled to as a 

result of CashCall‟s violations. For the reasons set forth in this Order, the Court finds CashCall 

must pay a statutory penalty of $500,000 for its EFTA violation; however, Plaintiffs3otherwise 

 

1 Under the EFTA, “[n]o person may . . . condition the extension of credit to a consumer on such 

consumer‟s repayment by means of preauthorized electronic fund transfers.” 15 U.S.C. § 

1693k(1).

2 Under the UCL, “unfair competition” includes “any unlawful, unfair or fraudulent business act or 

practice[.]” Cal. Bus. & Prof. Code § 17200. Accordingly, courts often refer to the “three prongs” 

of the UCL.

3

The Court interchangeably refers to Plaintiffs and the class. There is only one class 

representative for the “Conditioning Class” (defined below): Plaintiff Lori Kemply. 

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failed to show they are entitled to actual damages under the EFTA. Additionally, as Plaintiffs 

failed to prove that Class Representative Lori Kemply has standing to pursue a representative 

action under the UCL, the Court may not award restitution to the class under the UCL.

PROCEDURAL HISTORY

Plaintiffs commenced this action in July 2008, alleging among other things, violations of 

the EFTA and the UCL based on CashCall‟s practice of conditioning the extension of credit on 

repayment by preauthorized EFTs. Compl. ¶¶ 38-48, Dkt. No. 1-2. Plaintiffs filed the operative 

Fourth Amendment Complaint in February 2010, continuing to allege that CashCall‟s 

conditioning practices violated the EFTA and UCL. Fourth Am. Compl. ¶¶ 41-53, 95-98, Dkt. 

No. 54. 

On November 15, 2011, the Court granted Plaintiffs class certification as to the 

“Conditioning Class” (Class Cert. Order, Dkt. No. 100), which was later limited to “[a]ll 

individuals who, while residing in California, borrowed money from CashCall, Inc. for personal, 

family, or household use on or after March 13, 2006 through July 10, 2011 and were charged an 

NSF fee.” Order Approving Class Notice Plan, Dkt. No. 130.4 The “Class Period” is thus 

between March 13, 2006 through July 10, 2011. Notice was sent out to class members on August 

31, 2012 via email and again on October 3, 2012 for those class members who only had mailing 

addresses or whose email notices came back as undeliverable. Status Report re: Clarification of 

the Record at 3, Dkt. No. 308 (citing Declaration of Jeffrey Gyomber ¶¶ 9-10, Dkt. No. 308-1); 

see also March 3, 2013 Status Report at 1, Dkt. No. 136. The Court additionally ordered 

supplemental notice to be sent to an additional 13,541 Conditioning Class members who were 

improperly excluded from the original class list. Order re: Suppl. Notice, Dkt. No. 144. 

Supplemental notice was sent via email to those class members on August 9, 2013, and again on 

September 6, 2013 to those class members who only had mailing addresses or whose email notices 

came back as undeliverable. Gyomber Decl. ¶¶ 13-19; Exs. A-D (respectively, copies of the 

Email Notice, Postcard Notice, Long-Form Notice, and Exclusion Request Form). As indicated, 

 

4

The Court recently issued an order confirming this class definition under Federal Rule of Civil 

Procedure 23. See Dkt. No. 311. 

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the Court granted summary judgment in favor of Plaintiffs as to their EFTA and UCL claims on 

July 14, 2014. MSJ Order at 16-17, 36. 

The Court held a bench trial on September 8-9, 2015 on the issue of whether Plaintiffs are 

entitled to statutory and/or actual damages under the EFTA and/or restitution under the UCL. See 

Sept. 8, 2015 Trial Transcript (“Sept. 8 Tr.”), Dkt. No. 296; Sept. 9, 2015 Trial Transcript (“Sept. 

9 Tr.”), Dkt. No. 298; Undisputed Facts (“UF”) No. 7, Dkt. No. 281 (submitted as part of the Joint 

Pretrial Statement). During trial, Plaintiffs called two adverse witnesses: (1) CashCall Chief 

Executive Officer Delbert Meeks and (2) CashCall Principal Architect Ethan Post. Sept. 8 Tr. 

44:4-5; 112:23-24. CashCall also called two witnesses: (1) former CashCall employee Sean 

Bennett and (2) Dr. Bruce Carlin, a consumer finance expert. Sept. 9 Tr. 181:24-25; 182:9; 

251:24-25. Following trial, the Court granted the parties leave to file post-trial briefs and 

proposed findings of fact and conclusions of law, which they did. Def.‟s Post-Trial Br., Dkt. No. 

301; Def.‟s Proposed Findings of Facts & Conclusions of Law (“Def.‟s F&C”), Dkt. No. 302; Pls.‟ 

Post-Trial Br., Dkt. No. 304; Pls.‟ Proposed Findings of Facts & Conclusions of Law (“Pls.‟ 

F&C”), Dkt. No. 303. 

Having carefully considered the testimony at trial, the trial exhibits, the parties‟ written 

arguments, and the relevant legal authority, the Court renders the following Findings of Fact and 

Conclusions of Law pursuant to Federal Rule of Civil Procedure 52(a)(1).5

FINDINGS OF FACT

A. CashCall’s Business

1. CashCall is a California corporation licensed under the California Finance Lenders 

Law, Cal. Fin. Code §§ 2200 et seq. UF No. 28. 

2. CashCall is engaged in the business of making unsecured personal loans to 

consumers who typically do not qualify for traditional bank lending due to poor credit histories. 

Sept. 8 Tr. 46:12-25. 

 

5

“In an action tried on the facts without a jury . . . , the court must find the facts specially and state 

its conclusions of law separately. The findings and conclusions may be stated on the record after 

the close of the evidence or may appear in an opinion or a memorandum of decision filed by the 

court.” Fed. R. Civ. P. 52(a)(1).

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3. CashCall borrowers typically have low credit scores and have had other past credit 

difficulties—such as bankruptcies, foreclosures and defaults on consumer loans—which make 

these borrowers higher credit risks. Plaintiffs‟ Trial Exhibit (“Pls.‟ Ex.”) 11 at 6 (CashCall‟s 

Answer to Interrog. No. 14), Dkt. No. 300-1 (list of Plaintiffs‟ Admitted Trial Exhibits6).

4. CashCall‟s unsecured personal loans leave it vulnerable to borrower default. Pls.‟ 

Ex. 11 at 6.

5. CashCall processes thousands of monthly loan installment payments for collection 

every month. Sept. 8 Tr. 63:11-21.

6. One percent of CashCall‟s net worth exceeds $500,000 for purposes of 15 U.S.C. § 

1693m. UF No. 27.

B. CashCall’s Conditioning Violation 

7. During the Class Period, CashCall required borrowers to sign a four-page 

promissory note as part of its loan application process. Def.‟s F&C ¶ 4; Pls.‟ F&C ¶ 5; see Pls.‟ 

Ex. 1 (CashCall Promissory Note and Disclosure Statement).

8. The promissory note contained an Electronic Funds Authorization and Disclosure 

(“EFT Authorization”) that allowed CashCall to automatically withdraw loan payments directly 

from borrowers‟ bank accounts through preauthorized automatic electronic fund transfers. Pls.‟ 

Ex. 1; UF No. 3. CashCall also refers to EFTs as “Automatic clearinghouse payment, ACH 

payment.” Pls.‟ Ex. 4 (CashCall Loan Servicing Department: Policies & Procedures).

9. CashCall‟s online loan application required borrowers to check a box to indicate 

their consent to the EFT Authorization. Sept. 8 Tr. 59:10-12. A copy of this EFT authorization is 

included below (excerpted from Pls.‟ Ex. 1; see also Declaration of Ethan Post, Dkt. No. 162).

//

//

//

 

6

The parties‟ original exhibits are on file with the Clerk of Court. 

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10. If the borrower failed to check the box consenting to the EFT Authorization, a 

warning message would instruct the borrower to check the box before continuing. Sept. 8 Tr. 

118:13-119:8. 

11. CashCall CEO Delbert Meeks testified that borrowers could not obtain a loan from 

CashCall without signing the EFT Authorization. Id. 89:20-23; UF No. 3. 

12. The promissory note stated that borrowers would be charged (1) a nonsufficient 

funds (“NSF”) fee if any payments failed due to insufficient funds in their bank account and (2) a 

fee for late payments. UF No. 4; Pls.‟ Ex. 1; Def.‟s F&C ¶ 5; Pls.‟ F&C ¶ 12.

13. The EFT Authorization also stated “I understand that I can cancel this authorization 

at any time (including prior to my first payment due date) by sending written notification to 

CashCall.” Pls.‟ Ex. 1 (excerpt above); Defendant‟s Trial Exhibits (“Def.‟s Ex.”) AP, Dkt. No. 

300-2 (list of Defendant‟s Admitted Trial Exhibits). 

14. Dr. Bruce Carlin, a consumer finance expert, testified that the EFT Authorization 

clearly disclosed that the borrower was authorizing CashCall to make electronic withdrawals and 

could cancel the authorization at any time, and that CashCall would charge the borrower a fee if a 

payment was returned for nonsufficient funds. Sept. 9 Tr. 265:2-266:6. 

15. CashCall made a total of 155,147 consumer loans to 135,176 California borrowers 

during the Class Period. Def.‟s Ex. AN; UF No. 8; Pls.‟ F&C ¶ 47; Def.‟s F&C ¶ 37. 

C. Borrowers’ Post-Funding Interactions with CashCall 

16. CashCall made a “welcome call” to each borrower after their loans were approved 

and funded. Pls.‟ Ex. 3 at DEF 0281 (CashCall New-Hire Training Manual); Sept. 9 Tr. 186:23-

187:6; 192:9-21. 

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17. During the welcome call, CashCall reviewed the amount of the first payment with 

the borrower and informed him or her that the payment would be drafted via EFT. Pls.‟ Ex. 4 at 

16-17; Sept. 9 Tr. 196:17-21. 

18. Borrowers could also change the scheduled date of the EFT payment during the 

welcome call. Pls.‟ Ex. 4 at 16-17; Sept. 9 Tr. 192:22-24. 

19. Dr. Carlin listened to recordings of welcome calls and opined that CashCall clearly 

disclosed information regarding EFTs during these calls to borrowers. Sept. 9 Tr. 266:21-25. 

20. Several days prior to a borrower‟s scheduled EFT payment, CashCall emailed that 

borrower to remind him or her of the date and the amount of the upcoming EFT. Pls.‟ Ex. 4 at 42; 

Def.‟s Exs. G, M, X (reminder notices); Sept. 9 Tr. 196:7-21. 

D. Nonsufficient Fund Fees 

21. CashCall imposed a $15 NSF fee each time a payment was returned for insufficient 

funds. Sept. 8 Tr. 116:18-19; see also UF No. 5. 

22. Former CashCall employee Mark Bennett testified that CashCall did not impose an 

NSF fee if a borrower had enough money in his or her account to cover the amount of a payment. 

Sept. 9 Tr. 248:9-11. 

23. CashCall accepted other forms of payment other than EFT, including personal 

check, certified check, MoneyGram, money order, credit card, and in-person cash payments. Pls.‟ 

Ex. 4 at 84-87; Sept. 9 Tr. 184:24-185:13. 

24. CashCall imposed an NSF fee for all forms of payment that were returned for 

insufficient funds. Sept. 8 Tr. 116:4-17.

25. CashCall sent borrowers whose payments were returned due to insufficient funds 

an automated “NSF Notice,” informing them that they would be assessed a $15 NSF fee. Pls.‟ Ex. 

4 at 42.

26. CashCall treated all forms of payment equally and did not impose a penalty on 

borrowers who used other forms of payment rather than EFT. Sept. 8 Tr. 131:17-25; Sept. 9 Tr. 

186:1-3. 

27. Meeks testified that CashCall‟s $15 NSF fee is approximately the same amount the 

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banks charge CashCall when CashCall attempts to withdraw a payment from a borrower with 

insufficient funds. Sept. 8 Tr. 102:5-14. 

28. Meeks testified that CashCall did not profit from the $15 NSF fee. Id. 102:2-3. 

29. The Conditioning Class, defined as “[a]ll individuals who, while residing in 

California, borrowed money from CashCall, Inc. for personal, family, or household use on or after 

March 13, 2006 through July 10, 2011 and were charged an NSF fee” (see Dkt. Nos. 130, 311), 

consists of 93,183 borrowers who took out 96,588 loans during the Class Period. UF Nos. 9-10.

30. As of December 31, 2014, a total of 56,817 class members paid $2,373,458.53 in 

NSF fees due to “unsuccessful automatic EFT payments,” i.e., a payment that was refused by the 

borrower‟s bank because there were insufficient funds in the account to cover the payment or the 

account was closed. UF Nos. 12, 14. 

31. As of December 31, 2014, class members paid $2,128,654.65 in NSF fees due to 

unsuccessful automatic EFTs before cancelling the original EFT Authorization. UF No. 16. 

32. CashCall charged class members NSF fees about 142,000 times. Sept. 8 Tr. 142:3-

7. 

33. NSF fees remain outstanding and uncollected for 37,343 of the class loans charged 

with such a fee. Id. 138:3-14. 

34. A total of 39,194 class member loans did not incur an NSF fee during the first six 

months. Id. 173:13-17. 

35. A total of 19,277 loans in the class did not incur an NSF fee during the first year.

Id.; UF No. 26. 

E. Borrowers’ Relationship with EFT Payment Method 

36. Dr. Carlin opined that borrowers benefited from EFT payments, which allowed 

borrowers to conveniently make payments, helped them remember to make payments, and helped 

them avoid late penalties. Sept. 9 Tr. 256:11; 262:4-263:7; 281:6-10.

37. He testified that in his opinion, 70% to 80% of class members would have elected 

to use EFT payments over other forms of payments, and then clarified that it was his best estimate 

that north of 80% of people would have chosen to participate in EFT. Id. 267:22-277:9.

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38. Dr. Carlin testified that a study by the Federal Reserve Bank of Boston regarding 

the use of EFTs revealed that 81% of people were using some sort of electronic means of making 

payments. Id. 262:4-9. 

39. When CashCall removed the mandatory EFT Authorization from its promissory 

notes in November 2011, almost 98% of “CashCall borrowers” elected to pay by EFT as opposed 

to another method of payment. Sept. 8 Tr. 168:15-169:15. But this evidence only appears to

consider the borrowers to whom CashCall ultimately made loans, excluding people to whom 

CashCall chose not to loan money. See id.

40. Certain CashCall borrowers testified (by deposition) that they preferred EFT 

payment and found it easier to use than some other methods of payment. See Def.‟s Discovery 

Excerpts,7 Deposition of Johnny Cook 16:11-17; id., Deposition of Arthur Vardanyan 23:7-13.

41. Another CashCall borrower testified she “normally” preferred to “pay her own 

bills” and “[h]aving something automatically withdrawn is normally not [her] method of 

operation.” Pls.‟ Discovery Excerpts, Deposition of Tonye Niweigha, 67:25-68:16. 

42. Meeks and Bennett testified that borrowers could cancel the EFT Authorization at 

any point after their loans were funded by contacting CashCall in writing or over the telephone or 

by informing their banks that the EFT was no longer authorized. Sept. 8 Tr. 89:24- 90:10; Sept. 9 

Tr. 200:6-8.

43. Non-delinquent borrowers could make a written or verbal request to change the 

date of their scheduled EFT payments. Id. 193:7-194:6. 

44. CashCall‟s Policies and Procedures for its Loan Servicing Department state that 

“Customer Service Representatives play a key role in maintaining and/or returning customers to 

active, timely ACH status.” Pls.‟ Ex. 4 at 19. 

45. It further states “Representatives shall make every attempt to convince customers to 

maintain active ACH payment status. Representatives shall probe to identify the reason the

customer wants to change or cancel ACH status, then provide logical reasons why it would be in 

 

7

The parties provided Discovery Excerpts to be considered as part of the trial record. See Pretrial 

Statement, Ex. C (“Joint List of Discovery Responses”), Dkt. No. 281. Def.‟s Discovery Excerpts 

are listed in Exhibit C on pages 3-4; Pls.‟ Discovery Excerpts are listed on pages 1-2.

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the customer‟s best interests to maintain ACH status.” Id.

46. Dr. Carlin testified that “status quo” bias exists when consumers remain in a certain 

default option and remain in that option because it is considered to be the path of least resistance. 

Sept. 9 Tr. 303:13-17; 304:23-306:24. 

47. Dr. Carlin explained status quo bias occurs when “people choose . . . not to act 

because of inertia.” Id. 304:23-305:6. He explained that, for instance, a person who enrolls in a 

three-month free trial for a magazine subscription but fails to cancel the subscription at the end of 

the trial period may be operating under status quo bias. Id. 305:13-22. 

48. Dr. Carlin testified that status quo bias did not exist among class members. Id.

307:1-308:17. 

49. 43,699 class members changed the scheduled date of their EFT payments. UF No. 

18; Def.‟s Ex. AM (chart reflecting number of loans during class period). 

50. Dr. Carlin opined that the fact that 47% of class members changed the scheduled 

date of their EFT payments indicates class members understood they were making electronic 

payments and were actively involved. Sept. 9 Tr. 268:20-23. 

51. As of December 31, 2014, 15,719 class members cancelled their EFT 

Authorizations for 15,795 loans. UF No. 17; Sept. 9 Tr. 302:11-14. 

52. Dr. Carlin opined that the fact that 16% of class members cancelled their EFT 

Authorizations indicates the class members knew they could opt out of EFT payments. Sept. 9 Tr. 

268:13-16. 

F. Class Representative: Lori Kemply8

53. On May 24, 2006, Class Representative Lori Kemply (formerly Lori Saysourivong) 

took out a CashCall loan for $2,525.00. UF No. 1.

54. From July through December 2006, Kemply made EFT loan payments without 

incurring NSF fees. Def.‟s Exs. AL (Timeline of Kemply‟s Loan), AR (chart of Kemply‟s fees 

before and after cancelling EFT Authorization)

 

8 Although formerly there was another class representative in this action, Plaintiff Eduardo De La 

Torre, he is unable to represent the Conditioning Class as he took out a CashCall loan on February 

16, 2006, which is outside the Class Period as defined in the class definition. See UF No. 7.

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55. Between 2007 and 2010, Kemply incurred six NSF fees totaling $90.00. UF No. 5; 

Pls.‟ F&C ¶ 16; Def.‟s F&C ¶ 28. 

56. Kemply cancelled her EFT Authorization in January 2007. Def.‟s Ex. C 

(Cancellation Request); Pls.‟ F&C ¶ 72; Def.‟s F&C ¶ 29. 

57. Kemply did not incur NSF fees during the time she was off EFTs, but she did incur 

late fees. Pls.‟ F&C 74; Def.‟s F&C ¶ 30; Def.‟s Exs. AL, AR.

58. Kemply reinstated her EFT Authorization in June 2008. Def.‟s F&C ¶ 31; Def.‟s 

Exs. E, AL. 

59. Kemply incurred NSF fees after reinstating her EFT Authorization. Def.‟s Ex. AL; 

UF No. 5. 

60. Kemply also changed the date of her EFT payment. Def.‟s Exs. F, AL. 

G. Benefits to CashCall

61. CashCall incurs fewer collection costs with EFT payments, compared to manual 

payments such as personal checks. Sept. 8 Tr. 63:3-65:14. 

62. CashCall prefers EFT payments, as it is a “paperless” online lender and sought to 

reduce its costs. Id. 61:1-3, 62:24-63:10; Def.‟s F&C ¶ 6; Pls.‟ F&C ¶¶ 39-40. 

63. CashCall advertised to investors about its initial borrower enrollment in EFTs and 

its retention of borrowers in EFTs. Sept. 8 Tr. 71:3-7, 74:18-75:3; Pls.‟ Ex. 5 at 11 (CashCall 

Company Overview presentation); Pls.‟ Ex. 6 at 40 (Deutsche Bank “pitch book” for potential 

CashCall investors).

64. CashCall believed such statistics would be an attractive feature for CashCall‟s 

investors. Sept. 8 Tr. 71:8-10.

65. In 2006 and 2007, CashCall sought to raise money from Deutsche Bank Securities 

to fund new loans. Id. 71:21-25, 72:1-2. 

66. Deutsche Bank Securities prepared a “pitch book” for potential investors which 

emphasized that CashCall borrowers were started on EFT payments, that 77% of borrowers 

remained on EFT payments after 6 months, and that 68% remained on EFT payments after 12 

months. Id. 72:3-8, 74:18-24; Pls.‟ Ex. 6 (pitch book). 

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67. In 2006 and 2007, CashCall raised $800 million through Deutsche Bank. Sept. 8 

Tr. 71:24-25, 72:1-2. 

REQUEST FOR JUDICIAL NOTICE

The Court previously took judicial notice of the legislative history of Title 15, United 

States Code section 1693 through 1693r, the Electronic Fund Transfer Act by the United States 

House of Representatives Bill No. 14279 of 1978 [H.R. 14279], enacted by Congress as Public 

Law 95-630, on October 27, 1978, 92 United States Statutes 3641. MSJ Order at 12. CashCall 

seeks to make that legislative history part of the trial record. Def.‟s Req. for Judicial Notice 

(“RJN”), Dkt. No. 289. As “[l]egislative history is properly a subject of judicial notice[,]” the 

Court will take judicial notice of the legislative history of the EFTA pursuant to Federal Rule of 

Evidence 201(b). Anderson v. Holder, 673 F.3d 1089, 1094 n.1 (9th Cir. 2012); Territory of 

Alaska v. Am. Can Co., 358 U.S. 224, 226-27 (1959) (taking judicial notice of legislative history). 

CONCLUSIONS OF LAW

The following section addresses (1) Plaintiffs‟ claims for relief under the EFTA, 

specifically whether CashCall must pay actual damages and/or a statutory penalty; and (2) whether 

Plaintiffs may obtain restitution under the UCL. 

A. Background of the EFTA 

In 1978 when Congress enacted the EFTA, “[e]lectronic banking [was] a new way by 

means of computer technology to pay for goods and services instead of paying by cash, checks or 

credit card.” 124 Cong. Rec. 25,731 (1978), RJN, Dkt. No. 289-4 at 1. Congress accordingly 

recognized at the time that “[m]ost consumers are not aware of the risks they run in using EFT 

services.” Id. Congress thus enacted the EFTA “to provide a basic framework establishing the 

rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer 

systems” with the “primary objective of . . . the provision of individual consumer rights.” 15 

U.S.C. § 1963(b). The Congressional Record indicates that, through the EFTA, Congress sought 

to balance protecting consumers while at the same time “allow[ing] the orderly development of 

EFT systems for the benefit of our banking system.” 124 Cong. Rec. 25,735, RJN, Dkt. No. 289-4 

at 5. Members of Congress anticipated that “[o]nce the rules implementing EFT became a fixed 

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matter, consumers would be less reluctant to use EFT because their rights would be protected” and 

“[f]inancial institutions would have the benefit of knowing what the law is before investing in the 

expensive technology of EFT.” 124 Cong. Rec. 25,734, RJN, Dkt. No. 289-4 at 4. 

One objective of the EFTA is to “insure that consumers are not forced to use EFT.” 124 

Cong. Rec. 25,733, RJN, Dkt. No. 289-4 at 3. Under section 1693k, “no person may condition the 

extension of credit to a consumer on such consumer‟s repayment by means of preauthorized 

electronic fund transfers.” 15 U.S.C. § 1693k(1). With this provision, Congress sought to protect 

consumers‟ ability to choose their payment method by prohibiting persons from conditioning the 

extension of credit on EFT payments. See 124 Cong. Rec. 25,735, RJN, Dkt. No. 289-4 at 5 (“As 

with any technology, many consumers will choose not to change but to cling to their traditional 

method of payment. [Section 1693k(1) is] designed to insure that consumers have this right.”). In 

other words, consumers should “use electronic fund services only out of voluntary choice, not by 

force.” H.R. Rep. No. 95-1315, at 12 (1978), RJN, Dkt. No. 289-4 at 22. The Committee on 

Banking, Finance and Urban Affairs feared that, absent a prohibition against the compulsory use 

of EFT, “institutions, creditors, or the Government might resort to a variety of ploys to coerce 

consumers to use electronic fund transfer services” which “is not the way a free market should 

develop a service.” Id. Rather, “[i]f electronic fund transfers offer a cost efficient and convenient 

service, consumers will seek it out.” Id. This would “assure that EFT develops in an environment 

of free choice for the consumer.” H.R. Rep. No. 95-1273, at 14 (1978); Dkt. No. 289-7 at 54. 

Consequently, the EFTA ensures that consumers only automatically pay their bills if they opt in to 

doing so. Okocha v. HSBC Bank USA, N.A., 2010 WL 5122614, at *2 (S.D.N.Y. Dec. 14, 2010)

(authored by Judge Marilyn Patel of the Northern District of California, sitting by designation) 

(citing 15 U.S.C. §§ 1693e(a); 1693k(1)).

While some provisions of the EFTA have been heavily litigated9since its enactment, 

 

9

For instance, there have been a number of lawsuits alleging violations of 15 U.S.C. 

§ 1693b(d)(3), which concerns fee disclosures at automated teller machines (“ATMs”). See, e.g., 

Clemmer v. Key Bank Nat’l Ass’n, 539 F.3d 349, 353-55 (6th Cir. 2008) (interpreting notice 

requirement of 15 U.S.C. § 1693b(d)); Singer v. EIntelligence, Inc., 55 F. Supp. 3d 1043, 1049-53 

(N.D. Ill. 2014) (determining who was an ATM operator for purposes of 15 U.S.C. § 1693b(d) and 

considering bona fide error defense); Cohen v. Capitol One, N.A., 921 F. Supp. 2d 107, 110-11 

(S.D.N.Y. 2013) (finding, after bench trial, defendant established affirmative defense of bona fide 

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courts have rarely dealt with cases involving the conditioning of loans on EFT payments. Where 

courts have addressed section 1693k, they have done so before or without analyzing damages. 

See, e.g., Klopfenstein v. Fifth Third Bank, 2015 WL 1468382, at *4-5 (S.D. Ohio March 30, 

2015) (considering claim brought under 15 U.S.C. § 1693k(1) in motion to dismiss); Pinkett v. 

First Citizens Bank, 2010 WL 1910520, at *6-7 (N.D. Ill. May 10, 2010) (same); McCready v. 

eBay, Inc., 2005 WL 6082528, at *5-7 (C.D. Ill. Feb. 4, 2005) (same); Mitchem v. GFG Loan, 

Inc., 2000 WL 294119, at *7-9 (N.D. Ill. Mar. 17, 2000) (same); Mitchem v. Paycheck Advance 

Express, Inc., 2000 WL 419993, at *1 (N.D. Ill. Apr. 14, 2000) (same); F.T.C. v. Payday Fin. 

LLC, 989 F. Supp. 2d 799, 811-13 (D.S.D. 2013) (considering claim brought under 15 U.S.C. § 

1693k(1) in motion for summary judgment); Small v. BOKF, N.A., 2014 WL 3906257, at *4-5 (D. 

Col. Aug. 7, 2014) (same); Okocha, 2010 WL 5122614, at *1-3 (granting judgment as a matter of 

law to the defendant for section 1693k claim). Only one court seems to have addressed both 

liability under section 1693k and assessed damages, but that court based its damages award on 

state laws rather than the EFTA‟s damages provision, section 1693m. See CashCall, Inc. v. 

Morrisey, 2014 WL 2404300, at *4-5 (W. Va. May 30, 2014) (unpublished op.), cert. denied sub 

nom. CashCall, Inc. v. Morrissey, 135 S. Ct. 2050 (2015). Thus, to this Court‟s knowledge, it will 

be the first court in the 37 years since the EFTA‟s enactment to apply the EFTA‟s civil damages 

provision, section 1693m, for a violation of section 1693k.

B. Relief Available Under the EFTA

Section 1693m of the EFTA provides for both actual damages and a statutory penalty. 15 

U.S.C. § 1693m(a)(1)-(2). The amount of the statutory penalty varies depending on whether the 

case is an “individual action” or a “class action.” 15 U.S.C. § 1693m(a)(2). Accordingly, in the 

class action context, the EFTA provides in relevant part:

[A]ny person who fails to comply with any provision of this 

subchapter with respect to any consumer . . . is liable to such 

consumer in an amount equal to the sum of--

(1) any actual damage sustained by such consumer as a result of 

such failure;

(2)(A) . . . .

(B) in the case of a class action, such amount as the court may 

 

error to claim asserted under 15 U.S.C. § 1693b(d)). 

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allow, except that (i) as to each member of the class no minimum 

recovery shall be applicable, and (ii) the total recovery under this 

subparagraph in any class action or series of class actions arising out 

of the same failure to comply by the same person shall not be more 

than the lesser of $500,000 or 1 per centum of the net worth of the 

defendant[.]

15 U.S.C. § 1693m(a). Plaintiffs seek both actual damages and the full statutory penalty. 

1. Actual Damages

The EFTA makes any person who fails to comply with the Act liable for “actual damage 

sustained by [a] consumer as a result of such failure.” 15 U.S.C. § 1693m(a)(1). Though the 

EFTA does not define “actual damages,” they are generally “„[a]n amount awarded to a 

complainant to compensate for a proven injury or loss; damages that repay actual losses.‟” Vallies 

v. Sky Bank, 591 F.3d 152, 157 (3d Cir. 2009) (quoting Black‟s Law Dictionary 445 (9th ed. 

2009); alterations in original). Plaintiffs seek actual damages in the form of the NSF fees 

“CashCall charged and collected from class members based on preauthorized EFTs from loan 

inception until such time as the borrower may have cancelled electronic payment authorization.” 

Pls.‟ F&C at 1. As of December 31, 2014, class members paid $2,128,654.65 in NSF fees due to 

unsuccessful automatic EFTs before cancelling their original EFT Authorizations. UF No. 16. 

“When the law grants persons the right to compensation for injury from wrongful conduct, 

there must be some demonstrated connection, some link, between the injury sustained and the 

wrong alleged.” Univ. of Tex. Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517, 2522 (2013). The EFTA 

does not explicitly define what it means by “as a result of” to assess causation for actual damages, 

and neither the Ninth Circuit nor any other Court of Appeals has weighed in on how to apply 

section 1693m for a violation of section 1693k. Understandably, one of Plaintiffs‟ and CashCall‟s 

primary disputes concerns which causation standard applies to determine if Plaintiffs‟ NSF fees 

were caused “as a result of” CashCall‟s conditioning its loans on EFT payments. Plaintiffs argue 

the conditioning is not required to be the sole and exclusive cause of class members‟ harm. Pls.‟ 

Trial Br. at 11, Dkt. No. 285. Instead, Plaintiffs contend the Court should apply the “substantial 

factor” standard, such that the conditioning need only be “a significant factor in, not the sole cause 

of, [class members‟] loss.” Id. at 9. CashCall argues Plaintiffs must prove class members 

detrimentally relied on CashCall‟s loans and “could have obtained other loans that would not have 

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resulted in any NSF fees.” Def.‟s Post-Trial Br. at 10.10 

While, as noted, no court has considered how to apply section 1693m for a violation of 

section 1693k, in interpreting section 1693e(a) as it applies to section 1693m, the Ninth Circuit 

noted that “a plaintiff must show that the claimed actual damages were „as a result of‟ the 

violation, that is, he must show a causal connection between the EFTA violation and the claimed 

actual damages.” Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1026 (9th Cir. 2011), abrogated 

on other grounds as recognized in Green v. Fed. Exp. Corp., 614 F. App‟x 905, 906 (9th Cir. 

2015). According to the Ninth Circuit, “[t]hat would at least require the establishment of „a 

substantial nexus between the injury‟ and the statutory violation.” Id. (quoting Valladolid v. Pac. 

Operations Offshore, LLP, 604 F.3d 1126, 1139 (9th Cir. 2010) (“We do not [] find that Congress 

intended to enact a simple „but for‟ test in covering injuries that occur „as the result of‟” a 

violation of the Outer Continental Shelf Lands Act[;]” rather, “[t]o meet the [substantial nexus] 

standard, the claimant must show that the work performed directly furthers outer continental shelf 

operations and is in the regular course of such operations.”) and citing Brown v. Gardner, 513 

U.S. 115, 119 (1994) (“as a result of” language in 38 U.S.C. § 1151 imposes a “causal 

 

10 CashCall urges the Court to utilize the detrimental reliance standard based on cases interpreting 

the EFTA‟s notice provisions. See Def.‟s Trial Br. at 4, Dkt. No. 282. Courts considering the 

EFTA‟s notice provisions have often borrowed from case law interpreting the Truth in Lending 

Act (“TILA”), 15 U.S.C. §§ 1601-1667f, to hold that, in order to recover actual damages in cases 

concerning the EFTA‟s disclosure and notice provisions, plaintiffs must establish detrimental 

reliance. See, e.g., Voeks v. Pilot Travel Centers, 560 F. Supp. 2d 718, 722 (E.D. Wis. 2008) 

(plaintiff sued ATM operator under section 1693b of the EFTA for imposing a fee on ATM 

consumers without providing an accurate notice on its ATM screen); Brown v. Bank of Am., N.A., 

457 F. Supp. 2d 82, 85-90 (D. Mass. 2006) (challenging adequacy of fee notices posted on ATMs 

under section 1693b of the EFTA); Vallies, 591 F.3d at 161 (“actual damages for violations of 

EFTA‟s „notice‟ provisions, 15 U.S.C. § 1693b(d)(3)(B), which are analogous to violations of 

TILA disclosure provisions, require a showing of detrimental reliance.”).

But to do so in this context would be “irrational.” See Lyon v. Chase Bank USA, N.A., 656 F.3d 

877, 887 (9th Cir. 2011). As the Ninth Circuit noted in Lyon, a case concerning the Fair Credit 

Billing Act (“FCBA”), 15 U.S.C. §§ 1666-1666j (an addition to TILA), in some cases “there are 

simply no disclosure[s] or conduct . . . that [a plaintiff] could have relied upon.” Id. (finding 

detrimental reliance standard inappropriate where the defendant-creditor violated the FCBA by 

failing to either “make appropriate corrections in the account of the obligor” or “send a written 

explanation or clarification to the obligor” after being timely notified of a billing dispute). Like 

Lyon, there are no facts in this case that support the “detrimental reliance” standard as being the 

appropriate causation standard. Simply put, there were no notices, disclosures, or conduct that 

class members could have relied on. Accordingly, the Court finds the detrimental reliance 

standard inappropriate in analyzing potential damages for violations of section 1693k. 

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connection”)). 

The Ninth Circuit did not elaborate much about how to apply the “substantial nexus” test 

for an EFTA violation. In Stearns, the district court found that the defendant had violated the 

EFTA when it failed to follow the requirements of section 1693e(a), which requires that “[a]

preauthorized electronic fund transfer from a consumer‟s account may be authorized by the 

consumer only in writing, and a copy of such authorization shall be provided to the consumer 

when made.” Stearns, 655 F.3d at 1026 (citing 15 U.S.C. § 1693e(a)). But under the substantial 

nexus test, the Ninth Circuit explained that “[f]or example, if a plaintiff fully intended to purchase 

merchandise or a service and to use a debit card, but the merchant or other seller obtained the

transfer from the plaintiff‟s account without first obtaining a proper authorization, the plaintiff 

will, most likely, find it difficult or impossible to show actual damages measured by the amount 

removed from his account.” Id. at 1026-27. “Logically, he would be hard pressed to show that 

the removal was caused by the authorization failure.” Id. at 1027. Stearns thus indicates that 

under the “substantial nexus” test, where a plaintiff would likely have made the same decision that 

would have caused their same sought after “damages,” that plaintiff will likely find it difficult to 

prove he or she is entitled to actual damages. 

Albeit in a different context and interpreting a different statute, the Supreme Court 

affirmed the Ninth Circuit‟s “substantial nexus” test for assessing damages under the Outer 

Continental Shelf Lands Act, which extends the federal workers‟ compensation scheme 

established in the Longshore and Harbor Workers‟ Compensation Act, 33 U.S.C. § 901 et seq., to 

injuries “occurring as the result of operations conducted on the outer Continental Shelf” for the 

purpose of extracting natural resources from the shelf. 43 U.S.C. § 1333(b). In affirming, the 

Supreme Court explained that “[w]e understand the Ninth Circuit‟s [substantial nexus] test to 

require the injured employee to establish a significant causal link between the injury that he 

suffered and his employer‟s on-[outer continental shelf] operations conducted for the purpose of 

extracting natural resources from the [outer continental shelf].” Pac. Operators Offshore, LLP v. 

Valladolid, 132 S. Ct. 680, 691 (2012). The Supreme Court thus indicated that a plaintiff 

attempting to prove a “substantial nexus” between the violation and their injury must show more 

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than “but-for” causation, because mere “but-for” causation would extend liability too far when 

taken to its logical conclusion; rather, courts should only focus on injuries that have a significant 

causal link with the defendant‟s conduct. Id. at 690-91. 

The cases applying the “substantial nexus” test suggest that, at a minimum, if a plaintiff 

cannot prove “but-for” causation, he or she will consequently be unable to prove causation under 

the “substantial nexus” test. Applying the “but-for” causation standard to statutes using the 

language “as result of” is also consistent with much of the Supreme Court‟s recent analyses of 

other federal statutes considering language such as “results from,” “as a result of,” “because of,” 

and “based on.” Indeed, “[w]here there is no textual or contextual indication to the contrary, 

courts regularly read phrases like „results from‟ to require but-for causality.” Burrage v. United 

States, ___ U.S. ___, 134 S. Ct. 881, 888 (2014)); Nassar, 133 S. Ct. at 2528 (finding that under 

the ordinary meaning of the word “because,” Title VII retaliation claims “require proof that the 

desire to retaliate was the but-for cause of the challenged employment action.” (citation omitted)); 

Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 176 (2009) (relying on dictionary definitions of 

“because of” to hold that “[t]o establish a disparate-treatment claim under the plain language of

the [Age Discrimination in Employment Act] . . . a plaintiff must prove that age was [a] „but for‟ 

cause of the employer‟s adverse decision.”); Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 

639, 653-54 (2008) (in an action under the Racketeer Influenced and Corrupt Organizations Act, 

recognizing that the phrase, “by reason of,” requires at least a showing of “but for” causation); 

Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 63-64 n.14 (2007) (in an action under the Fair Credit 

Reporting Act, observing that “[i]n common talk, the phrase „based on‟ indicates a but-for causal 

relationship and thus a necessary logical condition” and that the statutory phrase, “based on,” has 

the same meaning as the phrase, “because of” (internal quotations omitted)). Thus, before the 

Court can award damages, it must at least find that CashCall‟s conditioning violation was the 

“but-for” cause of the NSF fees Plaintiffs seek as damages.

The Supreme Court provided a useful example of “but for” causation:

Consider a baseball game in which the visiting team‟s leadoff batter 

hits a home run in the top of the first inning. If the visiting team 

goes on to win by a score of 1 to 0, every person competent in the 

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English language and familiar with the American pastime would 

agree that the victory resulted from the home run. This is so because 

it is natural to say that one event is the outcome or consequence of 

another when the former would not have occurred but for the latter. 

It is beside the point that the victory also resulted from a host of 

other necessary causes, such as skillful pitching, the coach‟s 

decision to put the leadoff batter in the lineup, and the league‟s 

decision to schedule the game. By contrast, it makes little sense to 

say that an event resulted from or was the outcome of some earlier 

action if the action merely played a nonessential contributing role in 

producing the event. If the visiting team wound up winning 5 to 2 

rather than 1 to 0, one would be surprised to read in the sports page 

that the victory resulted from the leadoff batter‟s early, nondispositive home run.

Burrage, 134 S. Ct. at 888 (emphasis in original). For the non-sports fan, the Court also provided 

this example: “if poison is administered to a man debilitated by multiple diseases, it is a but-for 

cause of his death even if those diseases played a part in his demise, so long as, without the 

incremental effect of the poison, he would have lived.” Id.; see also id. at 890 (noting that even in 

cases that apply “substantial factor” causation, “no case has been found where the defendant‟s act 

could be called a substantial factor when the event would have occurred without it.”).

11

 The 

question to be resolved in this case is therefore whether without CashCall‟s conditioning violation, 

class members would have not incurred NSF fees; in other words “whether CashCall would have 

collected NSF fees from Class Members had CashCall had not conditioned the funding of their 

loans on EFT authorization.” de la Torre v. CashCall, Inc., 56 F. Supp. 3d 1073, 1092 (N.D. 

Cal.), on reconsideration on other ground, 56 F. Supp. 3d 1105 (N.D. Cal. 2014).

As indicated from the examples above, “[b]ut-for causation is a hypothetical construct.” 

Price Waterhouse v. Hopkins, 490 U.S. 228, 240 (1989) (plurality opinion). As one commentator 

explained, “[i]n a rigorous philosophical sense we can never know the answer to the but-for 

question, because it asks about a state of affairs that never existed: the defendant has engaged in 

 

11 As these examples reflect, CashCall confuses the nature of “but-for” causation when it argues 

“but-for” causation requires the damages to be inevitable. Specifically, CashCall points out that 

out of the 155,000 loans that it conditioned on EFT preauthorization nearly 60,000 borrowers 

never incurred NSF fees, and therefore, it argues that conditioning did not cause the NSF fees for 

class members. Def.‟s Trial Br. at 9 (“This data confirms that NSF fees were not the inevitable 

result of signing the EFT authorization, since 40% of all loans during the Class period never 

incurred a single NSF fee.” (emphasis added)). While this fact may show that NSF fees are not 

the inevitable result of CashCall‟s conditioning, it does not mean CashCall‟s initial conditioning 

did not cause Plaintiffs‟ NSF fees. For instance, in the baseball example, one homerun at the 

beginning of the game does not mean that victory is inevitable in every instance, but it may mean 

that in one particular game, such a homerun will be the dispositive “but-for” cause of victory.

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bad behavior, and the but-for test asks what would have happened had the defendant‟s behavior 

been different enough to be acceptable.” David W. Robertson, The Common Sense of Cause in 

Fact, 75 Tex. L. Rev. 1765, 1768 (1997). But-for causation is thus “a factual inquiry, which 

requires a fact-finder to assess the likelihood of a counterfactual: Would X still have happened if 

Y had not.” Linde v. Arab Bank, PLC, 97 F. Supp. 3d 287, 324 (E.D.N.Y. 2015). Another 

commentator addressed the complexities in analyzing “but-for” causation is certain situations:

At times th[e “but-for”] determination is made so automatically that 

the cause issue is little more than a bit of formalism in the trial. But 

at other times the same test demands the impossible. It challenges 

the imagination of the trier to probe into a purely fanciful and 

unknowable state of affairs. He is invited to make an estimate 

concerning facts that concededly never existed. The very uncertainty 

as to what might have happened opens the door wide for conjecture. 

But when conjecture is demanded it can be given a direction that is 

consistent with the policy considerations that underlie the 

controversy. 

Wex S. Malone, Ruminations on Cause-in-Fact, 9 Stan. L. Rev. 60, 67 (1956) (emphasis in 

original). The difficult issue here is attempting to understand how class members would have 

behaved without CashCall‟s conditioning violation.

To deal with the cases where “but-for” causation presents certain added complexities, one 

commentator suggests framing the “but-for” analysis as follows: 

Properly framing the but-for issue in a lawsuit is a significantly 

complex mental operation involving four essential steps. First, one 

must identify the injury or injuries for which redress is sought. . . . 

Second, one must identify the defendant‟s wrongful conduct. The 

third step is the trickiest. It involves using the imagination to create 

a counterfactual hypothesis. One creates a mental picture of a 

situation identical to the actual facts of the case in all respects save 

one: the defendant‟s wrongful conduct is now “corrected” to the 

minimal extent necessary to make it conform to the law‟s 

requirements. . . . The fourth step asks the key question whether the 

injuries that the plaintiff suffered would probably still have occurred 

had the defendant behaved correctly in the sense indicated. . . . The 

fifth and final step is answering the question. 

Robertson, supra at pp. 1770-71. 

While this is a useful framework for determining whether but-for causation is present, it 

does not suggest who bears or should bear the burden of proof in such situations. Indeed, in some 

cases, “once the plaintiff has established that the tortious aspect of a certain defendant‟s conduct 

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contributed to the injury, many courts shift the burden to the defendant to establish that []the 

injury would have occurred anyway as a result of independent nontortious conditions[.]” Richard 

W. Wright, Causation in Tort Law, 73 Cal. L. Rev. 1735, 1798-99 (1985); see, e.g., Haft v. Lone 

Palm Hotel, 3 Cal. 3d 756, 769 (1970) (“Upon defendants‟ failure to provide lifeguard services, 

the burden shifted to them to prove that their violation was not a proximate cause of the deaths; in 

the absence of such proof, defendants‟ causation of such death is established as a matter of law.”). 

A Supreme Court plurality opinion adopted such a test in Price Waterhouse v. Hopkins, holding 

that the former “because of” provision of 42 U.S.C. § 2000e-2(a) allowed a showing that 

discrimination was a “motivating” or “substantial” factor to shift the burden of persuasion to the 

employer. 490 U.S. at 228; see 42 U.S.C. § 2000e-2(m) (removing “because of” standing and 

replacing it with “motivating factor”). 

But regardless of which party properly holds the burden in this case, having considered the 

four steps articulated above for determining “but-for” causation, the Court finds it lacks the 

necessary evidence to find that class members would not have incurred NSF fees without 

CashCall‟s conditioning violation—and consequently, the causal connection between CashCall‟s 

violation and class members‟ NSF fees is too frayed to establish damages. 

As to the first step in determining “but-for” causation, the injuries for which Plaintiffs seek 

redress are the NSF fees class members incurred when CashCall made EFT debits from class 

members‟ accounts. See Pls.‟ F&C at 1. As to the second step, CashCall‟s wrongful conduct is 

conditioning its extension of credit on borrowers‟ repayment by means of preauthorized electronic 

funds transfers. MSJ Order at 16-17. The third step, then, requires the Court to consider an 

alternative reality where CashCall never conditioned the extension of credit based on class 

members preauthorizing payment by EFT. In the Court‟s opinion, at minimum, this alternative 

reality would have given borrowers the opportunity to elect to use EFT payments or not, and 

CashCall‟s decision to extend credit to those borrowers would not be based on whether those 

borrowers chose the EFT payment method. Finally, the fourth step in the “but-for” analysis 

requires the Court to answer the key question of whether the NSF fees class members suffered 

would probably still have occurred had CashCall behaved correctly as just explained. 

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Before answering this question, the Court first acknowledges that Plaintiffs put forward 

evidence that certainly shows some causal connection between CashCall‟s requirement that 

borrowers agree to EFT payments and NSF fees. The only way CashCall is able to charge NSF 

fees is if, on payment, borrowers do not have sufficient funds in their account to cover the 

payment. Thus there are two necessary steps before CashCall can charge an NSF fee: (1) a 

payment must be made from an outside account, i.e., a check sent to CashCall or CashCall‟s EFT 

withdrawal from a customer‟s account; and (2) there must be sufficient funds in that outside 

account to cover the payment. Through its conditioning violation, CashCall took away borrowers‟ 

choice about how and if to make their payments because it forced borrowers to agree to automatic 

EFT payments before it would fund their loans. In doing so, CashCall took control over the first 

step in incurring an NSF fee, i.e., if, how, and when the payment would be issued. The fact that 

consumers could later change their method of payment does not change the result that CashCall‟s 

initial conditioning made it more likely that consumers would use EFT payment. If it did not, why 

would CashCall have required EFT payment to begin with? Logically, CashCall knew that 

requiring borrowers to sign up for EFT would make it more likely they would remain using EFT 

payments.12 As to the second step, there is no dispute that borrowers enrolled in EFT payment 

were more likely to incur NSF fees than if they used other methods of payment. Indeed, CashCall 

itself provided this chart reflecting that fact:

//

//

 

12 And CashCall had significant incentive to do so. Even though CashCall‟s CEO testified 

CashCall did not profit as a result of NSF fees, Plaintiffs presented several reasons why CashCall 

had incentive to keep borrowers on EFT payments. First, and most innocuously, CashCall prefers 

EFT payments as it seeks to be “paperless” online lender. Sept. 8 Tr. 61:1-3, 62:24-63:10. 

Second, CashCall incurs fewer collection costs with EFT payments, compared to manual 

payments such as personal checks. Id. 63:3-65:14. Third, CashCall sought to raise money from 

Deutsche Bank Securities to fund new loans and it advertised to investors about its initial borrower 

enrollment in EFTs and its retention of borrowers in EFTs. Id. 71:3-7; 71:21-25; 72:1-2; 74:18-

75:3; Pls.‟ Ex. 5 at 11 (CashCall Company Overview presentation); Pls.‟ Ex. 6 at 40 (Deutsche 

Bank pitch book for potential CashCall investors). CashCall believed such statistics would be an 

attractive feature for CashCall‟s investors. Sept. 8 Tr. 71:8-10. And by all accounts it was: 

Deutsche Bank‟s “pitch book” for potential investors emphasized that CashCall borrowers were 

started on EFT payments, that 77% of borrowers remained on EFT payments after 6 months, and 

that 68% remained on EFT payments after 12 months. Id. 72:3-8, 74:18-24; Pls.‟ Ex. 6. 

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Def.‟s Ex. AO. As such, the fact that through its conditioning CashCall took control over its 

borrower‟s method of payment, which made it more likely that borrowers would use that method 

of payment, made it in turn more likely that borrowers would incur and pay CashCall NSF fees.

Yet under the “but-for” causation standard, it appears Plaintiffs must prove more. Turning 

back to the fourth step in the “but-for” analysis, the Court must address whether class members

would probably still have suffered the NSF fees had CashCall behaved lawfully. See also 

Burrage, 134 S. Ct. at 887-88 (asking would the harm “not have occurred in the absence of—that 

is, but for—the defendant‟s conduct.” (quoting Nassar, 133 S. Ct. at 2525 (some internal marks 

omitted))). While acknowledging the fundamentally tenuous nature of trying to determine how 

class members would have behaved in this alternate reality, the Court must nonetheless answer the 

question of whether class members would probably still have suffered the NSF fees in the 

affirmative.13 As discussed below, CashCall put forward substantial evidence to demonstrate that 

 

13 Justice Stephen Breyer explained some of the difficulty in applying the “but-for” causation 

analysis to questions involving how people make decisions. He noted that “[i]t is one thing to 

require a typical tort plaintiff to show „but-for‟ causation” because “[i]n that context, reasonably 

objective scientific or commonsense theories of physical causation make the concept of „but-for‟

causation comparatively easy to understand and relatively easy to apply.” Gross, 557 U.S. at 190

(Breyer, J., dissenting). “But it is an entirely different matter to determine a „but-for‟ relation 

when we consider, not physical forces, but the mind-related characterizations that constitute 

motive.” Id. Although Justice Breyer was referring to the motives of a defendant in an 

employment discrimination case, his general recognition of the difficulty of assessing “mindCase 3:08-cv-03174-TSH Document 312 Filed 03/16/16 Page 22 of 38
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borrowers would have likely selected EFT payment and incurred NSF fees regardless of 

CashCall‟s violation. Plaintiffs failed to undermine that evidence, and without more, the Court 

cannot find CashCall‟s conditioning violation was the “but-for” cause of their NSF fees. 

First, CashCall presented evidence that consumers prefer the EFT payment method, and if 

given the choice, likely would have selected EFT payment on their own. Dr. Carlin testified about 

his experience and research into consumer behavior and confirmed that consumers generally 

prefer EFT payments. Sept. 9 Tr. 256:11; 262:4-263:7. He explained that EFT payment is 

convenient for consumers and helps them to avoid forgetting to pay their bills and to also avoid 

having to pay late fees. Id. 262:4-263:7; 281:6-10. He testified that in his opinion 70% to 80% of 

class members would have elected to use EFT payments over other forms of payments, and then 

clarified that it was his best estimate that north of 80% of people would have chosen to participate 

in EFT. Id. 267:22-277:9. He noted that a study by the Federal Reserve Bank of Boston regarding 

the use of EFTs confirmed that 81% of people were using some sort of electronic means of 

making payments. Id. 262:4-9. CashCall further supported this fact by demonstrating that after it 

removed the mandatory EFT Authorization from its promissory notes in November 2011, almost 

98% of “CashCall borrowers” elected to pay by EFT as opposed to another method of payment. 

Def.‟s F&C ¶¶ 65-68. While the Court does not rely on this evidence too heavily as it appears to 

only consider the borrowers to whom CashCall ultimately made loans—in other words, it excludes 

people to whom CashCall did not want to loan money, see Sept. 8 Tr. 168:15-169:15; Sept. 9 Tr. 

343:20-22; 344:6-8—it nonetheless is supported by the other evidence above indicating that 

borrowers mostly preferred to make payments through EFTs. 

Second, CashCall provided testimony from borrowers stating that they preferred EFT 

payment and found it easier to use than some other methods of payment. See Cook Dep. 16:11-

17; Vardanyan Dep. 23:7-13. Class Representative Kemply‟s own experience shows that after she 

cancelled her EFT payment method she incurred several late fees and then elected to go back on 

EFT payments. Def.‟s Exs. AL (Timeline of Kemply‟s Loan), AR (chart of Kemply‟s fees before 

and after cancelling EFT Authorization). The testimony and experiences of these borrowers 

 

related” choices in the context of “but-for” causation is apropos in this case as well. 

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reflect that there are good reasons why such borrowers might elect EFT payment and prefer it.

Third, CashCall put forth evidence that consumers stayed with EFT payments despite 

having the opportunity to cancel those payments and even after incurring NSF fees. CashCall 

provided evidence that borrowers could change their method of payment from EFT to another of 

CashCall‟s other accepted payment method at any time, including prior to their first loan payment. 

See Pls.‟ Ex. 1 (promissory note with EFT Authorization, stating “I understand that I can cancel 

this authorization at any time (including prior to my first payment due date) by sending written 

notification to CashCall.”). In other words, if borrowers wanted to pay by another method of 

payment, they could have changed their method of payment off EFT payment. Dr. Carlin‟s 

testimony suggests that borrowers more likely than not understood that they could change their 

method of payment, testifying that the loan terms in the EFT Authorization were clear. Sept. 9 Tr. 

264:2-265:21 (stating in part that in Dr. Carlin‟s experience, the promissory note “clearly says that

. . . you are authorizing CashCall to withdraw money electronically. When it‟s going to happen. 

And it clearly says that you have the -- the right to cancel this at any time, even prior to the first 

payment you ever make.”). Even after incurring NSF fees, class members still elected to stay on 

EFT. Dr. Carlin created the following chart to show that 83.9% of all class members14 elected to 

continue using EFT payments and never opted-out of the EFT payments:

//

//

//

//

//

//

//

 

14 This statistic conflicts with the one presented in the Deutsche Bank Securities‟ “pitch book” for 

potential investors which emphasized that CashCall borrowers were started on EFT payments, that 

77% of borrowers remained on EFT payments after 6 months, and that 68% remained on EFT 

payments after 12 months. Sept. 8 Tr. 72:3-8, 74:18-24; Pls.‟ Ex. 6 (pitch book). Nonetheless, it 

is consistent with the finding that a high number of class members continued to use EFT 

payments.

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Dr. Carlin‟s Expert Report, Ex. 9 (attached to Joint Pretrial Statement). The fact that so many 

class members remained on EFT payment for so long without deciding to quit this mode of 

payment, despite the ability to do so and even after incurring NSF fees, indicates class members 

likely preferred to be on EFT payment rather than another method of payment.15 In other words, 

 

15 Plaintiffs attempted to rebut this evidence by arguing that “status quo bias” kept consumers 

from changing their payment system. Pls.‟ F&C ¶¶ 62, 136, 140. Dr. Carlin explained status quo 

bias occurs when “people choose . . . not to act because of inertia.” Sept. 9 Tr. 304:23-305:6. He 

explained that, for instance, a person who enrolls in a three-month free trial for a magazine 

subscription but fails to cancel the subscription at the end of the trial period may be operating 

under status quo bias. Id. 305:13-22. Plaintiffs‟ theory is that class members operating under 

status quo bias would not take the steps to cancel their EFT Authorizations even if they had the 

option to do so and would instead continue to allow the preauthorized automatic EFT payments. 

The problem is Plaintiffs provided no evidence showing that class members suffered from status 

quo bias or that this bias was responsible for keeping them enrolled in EFT payments. Dr. Carlin 

was the only expert in this case, and he opined status quo bias did not exist. Id. 307:1-308:17. 

Plaintiffs did not call their own expert to challenge Dr. Carlin‟s opinion about whether and how 

status quo bias operated on these class members. See id. 305:23-306:5 (testifying that class 

members “didn‟t exhibit inertia”). Nor did they call on class members to testify in support of such 

a theory. While Plaintiffs‟ argument certainly raises some specter of doubt as to whether class 

members suffered from status quo bias, the problem is that is all it is—an argument. (Cont.)

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they probably would have still chosen EFT payments regardless of CashCall‟s initial conditioning. 

Plaintiffs did not counter CashCall‟s evidence with any showing that class members would 

not have chosen EFT payment had CashCall given them the choice, with one single exception: 

they provided an excerpt of the deposition of Tonye Niweigha, who testified she “normally” 

preferred to “pay her own bills” and “[h]aving something automatically withdrawn is normally not 

[her] method of operation.” Niweigha Dep. 67:25-68:16. But even Ms. Niweigha does not say 

she would not have selected EFT in this instance if given a choice. Plaintiffs provided no other 

evidence showing class members would not have selected EFT payments on their own. 

Ultimately, CashCall has presented persuasive evidence that consumers would have chosen 

payment by EFT regardless of its violation. As there is no indication that any other facts in this 

case would have changed had CashCall not conditioned borrowers loans on EFT payment, the 

result then is that class members would likely still have incurred NSF fees. Plaintiffs‟ failure to 

meet the “but-for” causation standard likewise means that the “substantial nexus” standard is not 

met. See Stearns, 655 F.3d at 1026. Accordingly, the Court is unable to award actual damages 

under 15 U.S.C. § 1693m(a)(1). 

2. Statutory Damages

The Court may award statutory damages even if it does not award actual damages. 

“Congress expressly created a statutory damages scheme that intended to compensate individuals 

for actual or potential damages resulting from . . . violations, without requiring individuals to 

prove actual harm.” Stearns, 655 F.3d at 1026 (quotation omitted)); see also Clemmer, 539 F.3d 

at 353 (“The EFTA . . . is a remedial statute accorded „a broad, liberal construction in favor of the 

consumer.‟” (quoting Begala v. PNC Bank, Ohio, Nat’l Ass’n, 163 F.3d 948, 950 (6th Cir. 1998)). 

 

The Court does not have evidence before it to suggest that Dr. Carlin‟s opinion and testimony is 

incorrect. CashCall provided uncontroverted evidence that 43,699 class members—approximately 

45 percent of the Class—changed the date of their scheduled EFT payments and that 15,719 class 

members—approximately 16 percent of the Class—cancelled their EFT authorizations. See UF 

Nos. 17, 18. Class Representative Kemply herself changed the date of her EFT payment and 

cancelled her EFT Authorization. Def.‟s Ex. AL. If status quo bias were an influence, it would 

seem that class members would be more likely to remain with the default settings and not change 

them, but the Court does not have the evidence to say that is the case here. Even if the Court 

disregarded Dr. Carlin‟s opinion about status quo basis entirely, it simply does not have the 

evidence before it to find that status quo bias existed among these class members. 

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“Statutory damages are meant to compensate victims when actual loss is hard to prove.” Stearns, 

655 F.3d at 1026 (quotation omitted); see also Def.‟s Trial Br. at 5 n.3 (“The difficulty of proving 

actual damages is why Congress also authorized statutory damages.” (citations omitted)).

In a class action lawsuit, the EFTA authorizes the recovery of damages in the amount of 

either the “lesser of $500,000 or 1 per centum of the net worth of the defendant.” 15 U.S.C. § 

1693m(a)(2)(B). To determine the amount of the award, courts consider, “among other relevant 

factors,” the following: “the frequency and persistence of noncompliance, the nature of such 

noncompliance, the resources of the defendant, the number of persons adversely affected, and the 

extent to which the noncompliance was intentional.” 15 U.S.C. § 1693m(b)(2). 

The parties agree that 1% of CashCall‟s net worth exceeds $500,000 for purposes of 15 

U.S.C. § 1693m. UF No. 27. Plaintiffs thus seek the maximum amount of $500,000 in statutory 

damages as permitted by the EFTA. Pls.‟ F&C at 1. CashCall argues Plaintiffs failed to show its 

actions warrant an award any statutory damages whatsoever. Def.‟s Post-Trial Br. at 8-10. 

As previously noted, courts have not examined the EFTA‟s civil damages provision as it 

relates to section 1693k, but a handful of courts have applied section 1693m to other EFTA 

provisions. Where they have done so, however, these courts have generally assessed a statutory 

penalty without a detailed analysis of the factors in section 1693m(b). See, e.g., Archbold v. 

Tristate ATM, Inc., 2012 WL 3887167, at *5-6 (E.D.N.Y. Sept. 7, 2012) (noting section 

1693m(b)(1) factors but recommending minimum statutory damages on grounds that “plaintiffs 

sought out and used defendants‟ ATMs because they wanted to file EFTA lawsuits and collect 

statutory damages.”); Kinder v. Dearborn Fed. Sav. Bank, 2013 WL 879301, at *2 (E.D. Mich. 

Mar. 8, 2013) (never explicitly discussing the nature of the noncompliance). 

Thus, in the absence of guiding authority interpreting the application of the section 

1693m(b) factors, the Court looks to how other courts interpret these factors to determine whether 

Plaintiffs‟ evidence supports a statutory penalty. See Gross, 557 U.S. at 175-76 (in conducting 

statutory interpretation, courts may look to other statutes for assistance but “must be careful not to 

apply rules applicable under one statute to a different statute without careful and critical 

examination.” (quotation omitted)). The civil damages provision of the Fair Debt Collection 

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Practices Act (“FDCPA”) requires courts to consider factors that are virtually identical to those in 

the EFTA.16 15 U.S.C. § 1692k. Accordingly, the Court looks for guidance from cases 

interpreting the FDCPA. 

a. Frequency and Persistence of Noncompliance

In considering whether a defendant‟s noncompliance is frequent and persistent, courts 

generally look to whether there is a repeated pattern of conduct in violation of the statute. See, 

e.g., Riveria v. MAB Collections, Inc., 682 F. Supp. 174, 179 (W.D.N.Y. 1988) (awarding full 

amount of statutory damages where the violative clause in question appeared on every debt 

collection letter sent out by the defendant as these were computer generated forms); Patton v. 

Prober & Raphael, 2012 WL 294537, at *6 (N.D. Cal. 2012) (“In light of the lack of factual 

allegations suggestive of repeated egregious conduct, the Court finds that Plaintiff is entitled to 

$500 in statutory damages for Defendant‟s violations of the FDCPA . . . .”); Zimmerman v. 

Portfolio Assocs., LLC, 2013 WL 1245552 (S.D.N.Y. 2013) (“Although „a single violation of the 

FDCPA is sufficient to impose liability‟ . . . courts . . . have found that a smaller award is 

appropriate where there is no repeated pattern of intentional abuse or where the violation was 

technical” (quotations and some internal marks omitted)); Johnson v. CFS II, Inc., 2013 WL 

1809081, at *10 (N.D. Cal. Apr. 28, 2013) (lowering the statutory penalty amount where plaintiff 

“present[ed] no evidence . . . indicating that [the defendant] persistently sends out deficient debt 

collection notices.”).

The Court finds CashCall‟s noncompliance with the statute was frequent and persistent, as 

CashCall violated section 1693k numerous times over the Class Period. CashCall conditioned all 

93,183 class members‟ loans on EFT, for a total of 96,588 loans. UF Nos. 9-10. And the Class 

only represents those borrowers who incurred an NSF fee: CashCall made a total of 155,147 

consumer loans to 135,176 borrowers during the Class Period spanning over five years, and 

CashCall conditioned each of those loans on borrowers‟ agreement to pay their loans by EFT. UF 

 

16 In awarding statutory damages in a class action under the FDCPA, courts consider, “the 

frequency and persistence of noncompliance by the debt collector, the nature of such 

noncompliance, the resources of the debt collector, the number of persons adversely affected, and 

the extent to which the debt collector‟s noncompliance was intentional.” 15 U.S.C. § 1692k. 

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No. 8. These numbers demonstrate CashCall frequently and persistently violated the EFTA.

CashCall also changed its promissory note four times between 2004 and 2008, each time retaining 

the requirement that borrowers sign the EFT Authorization as a condition of obtaining the loan. 

Pls.‟ F&C ¶¶ 50-51. That CashCall continued to condition its loans on preauthorized automatic 

EFT payments even after revising its promissory note is indicative of its persistence. Accordingly, 

the Court finds this factor weighs in favor of awarding statutory damages. 

b. Nature of Noncompliance

In considering the nature of noncompliance with the FDCPA, courts in the Ninth Circuit 

have generally looked to (1) the effect of the defendant‟s violation on the plaintiff and (2) whether 

the violation was trivial or technical in nature. See Neves v. Kraft, 2014 WL 2154107, at *3 (N.D. 

Cal. May 22, 2014) (considering nature of noncompliance and finding that sending one document 

was “less severe than other FDCPA cases” and “much less likely to intimidate or frighten a debtor 

than receiving a phone call at one‟s house or place of employment.”); Meszaros v. United 

Collection Corp., 1996 WL 346872, at *1 (N.D. Cal. June 14, 1996) (declining to award 

maximum statutory penalty where “[p]laintiff d[id] not . . . allege that the nature of this 

noncompliance was threatening or harassing.”); accord Obenauf v. Frontier Fin. Grp., Inc., 785 F. 

Supp. 2d 1188, 1202 (D.N.M. 2011) (“[T]he [c]ourt finds little for support awarding more than 

nominal damages, because it does not believe that the natural consequence of [the defendant‟s 

telephone calls [was] to harass, oppress, or abuse [the plaintiff.]” (quotations omitted)); see also

Hernandez v. Guglielmo, 977 F. Supp. 2d 1054, 1057 (D. Nev. 2013) (rejecting defendant‟s 

argument that “the nature of the noncompliance was „highly technical‟”); Jerman v. Carlisle, 

McNellie, Rini, Kramer & Ulrich, 2011 WL 1434679, at *6 (N.D. Ohio Apr. 14, 2011) 

(considering whether “the nature of noncompliance was trivial, technical, and harmless”). 

CashCall‟s loan application required borrowers to check a box to indicate their consent to 

repay their loan via EFT. Pls.‟ F&C ¶ 9. The EFT Authorization stated, “I hereby authorize 

CashCall to withdraw my scheduled loan payment from my checking account.” Def.‟s Ex. AP. If 

a borrower did not check the box, a “warning message would pop up instructing the borrower to 

check the box[].” Pls.‟ F&C ¶ 9. If potential borrowers did not agree to EFT payments, CashCall 

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did not fund their loans. Sept. 8 Tr. 89:20-23; UF No. 3. In doing so, CashCall denied borrowers 

the choice of using payment methods other than EFT. 

At trial, CashCall argued “[t]he violation in question was a highly technical one[,]” noting 

that consumers could change their method of payment off of EFT after obtaining their loans. 

Def.‟s F&C ¶ 97. But as discussed above, the purpose of section 1693k of the EFTA is to ensure 

that consumers have the choice of whether or not to use EFT in order to obtain a loan. While it 

may be true that borrowers could have cancelled their EFT authorizations after CashCall funded 

their loans, the post hoc justification does not mitigate Congress‟ concern about the initial 

conditioning of credit on pre-authorized EFT payments. See 15 U.S.C. § 1693k(1) (“no person 

may condition the extension of credit to a consumer on such consumer‟s repayment by means of 

preauthorized electronic fund transfers.”). Even if borrowers were likely to select EFT payments 

regardless of CashCall‟s violation, CashCall still did not give potential borrowers the right to 

make that choice at the time it extended credit to them. In light of the importance Congress put on 

consumers‟ right to choose their method of payment, the Court finds CashCall‟s conditioning 

violation more than technical or trivial in nature and one that confronts the very issue Congress 

designed the EFTA to prevent. Accordingly, this factor weighs in favor a statutory penalty award.

c. CashCall’s Resources 

The third factor calls on the Court to consider CashCall‟s resources. At the end of 2014, 

CashCall‟s net worth was approximately $71 million. Sept. 8 Tr. 82:23-24; Def.‟s Post-Trial Br. 

8. The $500,000 maximum statutory penalty represents 0.7% of CashCall‟s net worth. As such, 

CashCall has the resources to satisfy even the maximum statutory penalty. 

d. Number of Persons Adversely Affected

Within the context of the FDCPA, courts have noted “[i]f the term „the number of persons 

adversely affected‟ is to have meaning, it must be something in addition to the „frequency and 

persistence of noncompliance.‟ Otherwise, the term would be superfluous and contradict the 

familiar statutory canon that the interpretation should give meaning to all components of a 

statute.” Hernandez, 977 F. Supp. 2d at 1056 (quotation omitted). The Court thus considers the 

numbers of persons adversely affected. 

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As noted above, section 1693k protects consumers‟ freedom to choose their methods of 

payment. During the Class Period, CashCall conditioned 155,147 loans on preauthorized 

automatic EFT payments, which affected at least 135,176 borrowers. UF No. 8. Unknown 

individuals may have been affected as well; for instance, those who were unable to obtain a loan 

because they did not have a bank account from which to withdraw EFTs. Though CashCall did 

not charge an NSF fee to all borrowers who were subject to the conditioning, and while not every 

borrower charged an NSF fee paid it, the conditioning adversely affected those borrowers by 

depriving them of the choice of whether or not to pay their loan by EFT at the time they sought 

their loans. Accordingly, the Court finds this factor weighs in favor of a statutory penalty. 

e. Extent to which Noncompliance was Intentional 

The fifth and final factor considers whether the defendant‟s noncompliance was 

intentional. Although this factor is somewhat self-explanatory, importantly courts have found 

intent where a defendant “circumvents the purpose” of a law. See, e.g., Riveria, 682 F. Supp. at

179 (“While the facts demonstrate that MAB was aware of the law . . . , it is obvious to the court 

that MAB was intentionally circumventing the purpose of the Act by „hiding‟ the notice on the 

reverse of its form.”); cf. Johnson, 2013 WL 1809081, at *10 (reducing statutory damages award 

where there was no evidence indicating the defendant sent out deficient debt collection notices in 

an attempt to intentionally circumvent the purpose of the FDCPA).

Plaintiffs argue CashCall intentionally conditioned loans on preauthorized EFT payments 

to use the number of borrowers enrolled in EFT payments as a selling point to its investors. Pls.‟ 

F&C ¶ 43. Plaintiffs point to the fact that “CashCall advertised its high percentage of borrower 

participation in its preauthorized EFT program to investors as a leading „bulletpoint‟ feature of 

CashCall‟s loan servicing capability[.]” Id.; see Sept. 8 Tr. 71:3-7, 74:18-75:3; Pls.‟ Ex. 5 at 11; 

Pls.‟s Ex. 6 at 40. CashCall meanwhile maintains that its violation of the EFTA was 

unintentional. At trial, Meeks testified that CashCall‟s counsel and other banks including 

Deutsche Bank and National Bank reviewed CashCall‟s loan process and did not have any

concerns about CashCall‟s process of requiring borrowers to enroll in EFT payments. Sept. 8 Tr. 

97:3-16, 100:11-101:8. CashCall further relies on a California state court‟s ruling in May 2008 

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that CashCall‟s practice of conditioning loans on EFT payments while allowing borrowers to 

cancel that authorization was not a violation of the EFTA. Def.‟s Post-Trial Br. at 8; see Meeks v. 

Cashcall, Inc., Case No. BC 367894, Superior Court of California, County of Los Angeles, May 6, 

2008, Ruling on Demurrer.17 

The Court is unconvinced by CashCall‟s arguments. Meeks testified that during the Class 

period, CashCall emphasized to potential investors that CashCall started borrowers on EFT 

payments. Sept. 8 Tr. 74:15-20. CashCall also highlighted to investors not only its high borrower 

participation in EFT payments, but also the fact that 77% of borrowers remained on EFT 

payments after six months and 68% remained after twelve months. Sept. 8 Tr. 74:21-75:3. These 

statistics were part of CashCall‟s efforts to secure money from investors, including an $800 

million investment from Deutsche Bank. Sept. 8 Tr. 71:24-72:2. The fact that CashCall used its 

EFT enrollment as a selling point to investors suggests CashCall intentionally conditioned its 

loans on EFT payments to increase its marketability. Additionally, the fact that outside counsel 

and other financial institutions, in their review of CashCall‟s loan practices, were not concerned 

about the conditioning violation is not demonstrative of CashCall‟s lack of intent so as to relieve it 

of liability. See Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 581 

(2010) (“We have long recognized the common maxim, familiar to all minds, that ignorance of the 

law will not excuse any person, either civilly or criminally.” (quotation omitted)). Additionally, 

CashCall did not submit18 any documentation or the actual testimony of the other attorneys who 

considered its promissory note, and therefore, the Court cannot assess the potential nuances of 

those attorneys‟ determinations and beliefs and how they may have impacted CashCall. In any 

case, given the importance CashCall placed on borrower enrollment in EFT payments, the 

evidence weighs in favor of finding CashCall intentionally violated the EFTA by conditioning 

loans on EFT payments. Accordingly, this factor supports an award of statutory damages. 

f. Summary

Having weighed the five required factors, the Court finds Plaintiffs are entitled to an award 

 

17 The Court previously took judicial notice of this ruling. MSJ Order at 12. 

18 It appears Plaintiffs did not request this information either.

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of statutory damages under 15 U.S.C. § 1693m(a)(2)(B) in the maximum amount of $500,000. 

C. Restitution Under the UCL

Plaintiffs also seek restitution under California‟s UCL, Business & Professions Code 

section 17203, in the form of the NSF fees CashCall collected and the cancellation of NSF fees 

charged but not collected. Joint Pretrial Statement at 2. 

The UCL limits the remedies available for UCL violations to restitution and injunctive 

relief. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1152 (2003). Section 

17203 of the UCL provides in pertinent part:

Any person who engages, has engaged, or proposes to engage in 

unfair competition may be enjoined in any court of competent 

jurisdiction. The court may make such orders or judgments, . . . as 

may be necessary to prevent the use or employment by any person 

of any practice which constitutes unfair competition, as defined in 

this chapter, or as may be necessary to restore to any person in 

interest any money or property, real or personal, which may have 

been acquired by means of such unfair competition. . . . .

Cal. Bus. & Prof. Code § 17203. “Restitution under . . . section 17203 is confined to restoration of 

any interest in „money or property, real or personal, which may have been acquired by means of 

such unfair competition.‟” In re Tobacco Cases II, 240 Cal. App. 4th 779, 795 (2015) (quotations

omitted; emphasis in original). 

The “which may have been acquired standard” is “substantially less stringent than a 

reliance or „but for‟ causation test.” Sevidal v. Target Corp., 189 Cal. App. 4th 905, 924 (2010). 

The UCL “requires only that the plaintiff must once have had an ownership interest in the money 

or property acquired by the defendant through unlawful means.” Shersher v. Superior Court, 154 

Cal. App. 4th 1491, 1500 (2007) (emphasis added). California Courts have “repeatedly and 

consistently [held] that relief under the UCL is available without individualized proof of

deception, reliance and injury[.]” In re Tobacco II Cases, 46 Cal. 4th 298, 320 (2009); see also 

Def.‟s Post-Trial Br. at 14 (“Under the UCL[], CashCall would be required to restore money that 

„may have been acquired‟ from Class members by reason of the violation.”). 

It was not out of range for Plaintiffs to prove that they were entitled to restitution under the 

UCL given the permissive causation standard and the findings above that CashCall‟s conditioning 

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made it likely borrowers would incur NSF fees. See Def.‟s Ex. AO (CashCall‟s chart 

demonstrating borrowers enrolled on EFT were more likely to incur NSF fees than those who 

were not). CashCall took control over its borrowers‟ method of payment, making it likely 

borrowers would use that method of payment, and in turn making it likely that borrowers would 

incur and pay CashCall NSF fees. The problem is CashCall challenges Class Representative 

Kemply‟s standing to assert a UCL violation, noting that “a UCL claim may only be pursued „by a 

person who has suffered injury in fact and has lost money or property as a result of the unfair 

competition[.]‟” Def.‟s Post-Trial Br. at 13-14 (citing Cal. Bus. & Prof. Code § 17204 and In re 

Tobacco II Cases, 46 Cal. 4th at 326-28). CashCall asserts “Kemply lacks standing because there 

is no causal link between her NSF fees and CashCall‟s opt-out EFT authorization.” Id. at 14. 

“For a lawsuit properly to be allowed to continue, standing must exist at all times until 

judgment is entered and not just on the date the complaint is filed.” Californians For Disability 

Rights v. Mervyn’s, LLC, 39 Cal. 4th 223, 232-33 (2006) (“[C]ontentions based on a lack of 

standing involve jurisdictional challenges and may be raised at any time in the proceeding.”). 

Since the passage of Proposition 64 in 2004, a private individual has standing to bring a UCL 

action only if she “has suffered injury in fact and has lost money or property as a result of the 

unfair competition.” Cal. Bus. & Prof. Code § 17204. Proposition 64 was directed to stop the 

abuse of the UCL “by unscrupulous lawyers who exploited the generous standing requirement of 

the UCL to file „shakedown‟ suits to extort money from small businesses.” In re Tobacco II 

Cases, 46 Cal. 4th at 316 (explaining that “the voters determined [the UCL] had been „misused by 

some private attorneys who‟ „[f]ile frivolous lawsuits as a means of generating attorney‟s fees 

without creating a corresponding public benefit,‟ „[f]ile lawsuits where no client has been injured 

in fact,‟ „[f]ile lawsuits for clients who have not used the defendant‟s product or service, viewed 

the defendant's advertising, or had any other business dealing with the defendant,‟ and „[f]ile 

lawsuits on behalf of the general public without any accountability to the public and without 

adequate court supervision.‟” (quoting Prop. 64, § 1, subd. (b)(1)-(4))). Consequently, to now 

have standing under the UCL a plaintiff must show she has (1) suffered injury in fact; (2) lost 

money or property; and (3) show that she lost that money “as a result of” the UCL violation. The 

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standing requirement for the class representative—“any person who has suffered injury in fact and 

has lost money or property as a result of the unfair competition”—is thus more stringent than the 

requirement with respect to those entitled to restitution—“to restore to any person in interest any 

money or property, real or personal, which may have been acquired” by means of the unfair 

practice. See In re Tobacco II Cases, 46 Cal. 4th at 320 (emphasis in original).

“[E]ach element [of standing] must be supported in the same way as any other matter on 

which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required 

at the successive stages of the litigation.” Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 327

(2011) (alterations in original; citation omitted). “At trial, [the plaintiff] will, of course, have the 

burden to prove by a preponderance of the evidence that he has standing under Business and 

Professions Code section 17204 to prosecute the UCL cause of action on behalf of the class 

members in this case.” Troyk v. Farmers Grp., Inc., 171 Cal. App. 4th 1305, 1351 (2009) 

(citations omitted).

Although section 17204 does not expressly define “injury in fact” for purposes of standing, 

Proposition 64 states: “The people of the State of California find and declare that . . . [i]t is the 

intent of the California voters in enacting this act to prohibit private attorneys from filing lawsuits 

for unfair competition where they have no client who has been injured in fact under the standing 

requirements of the United States Constitution.” Id. at 1346 (quotation omitted; emphasis in 

original). “In so doing, the voters presumably intended to incorporate into Business and 

Professions Code section 17204 the definition of „injury in fact‟ as required for standing to bring 

actions in federal courts under article III of the United States Constitution.” Id. Federal standing 

requires proof of three elements: (1) an injury in fact; (2) causation; and (3) likelihood that the 

injury will be redressed by a favorable decision. However, Proposition 64 expressly incorporates 

into Business and Professions Code section 17204 only the first element (i.e., an “injury in fact”) 

for federal court standing. The United States Supreme Court has described an “injury in fact” for 

federal court standing purposes as “an invasion of a legally protected interest which is (a) concrete 

and particularized . . . and (b) „actual or imminent, not „conjectural‟ or „hypothetical[.]‟” Lujan v. 

Defs. of Wildlife, 504 U.S. 555, 560 (1992) (citations omitted). Lujan explained that “[b]y 

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particularized, we mean that the injury must affect the plaintiff in a personal and individual way.” 

Id. at 560 n.1. Alternatively stated, “the „injury in fact‟ test requires more than an injury to a 

cognizable interest. It requires that the party seeking review be himself among the injured.‟” Id. at 

563 (quotation omitted). 

As to section 17204‟s “lost money or property” requirement, “[t]he plain import of this is 

that a plaintiff now must demonstrate some form of economic injury.” Kwikset Corp., 51 Cal. 4th 

at 323. At the same time, “[a]n injury to a tangible property interest, such as money, generally 

satisfies the „injury in fact‟ element for standing.” Troyk, 171 Cal. App. 4th at 1346. 

Finally, Proposition 64 requires that a plaintiff‟s economic injury come “as a result of” the 

unfair competition or a violation of the false advertising law. Cal. Bus. & Prof. Code § 17204.

“The phrase „as a result of‟ in its plain and ordinary sense means „caused by‟ and requires a 

showing of a causal connection or reliance on the alleged misrepresentation.” Kwikset Corp., 51 

Cal. 4th at 310 (citation omitted). In the context of UCL claims brought under the statute‟s 

“unlawful” prong, California courts have interpreted the UCL‟s standing requirement as follows: 

When a UCL action is based on an unlawful business practice, as 

here, a party may not premise its standing to sue upon injury caused 

by a defendant‟s lawful activity simply because the lawful activity 

has some connection to an unlawful practice that does not otherwise 

affect the party. In short, there must be a causal connection between 

the harm suffered and the unlawful business activity. That causal 

connection is broken when a complaining party would suffer the 

same harm whether or not a defendant complied with the law. Here, 

the lack of causation is illustrated by the fact the tenants would 

suffer the same injury regardless of whether the owners complied 

with or violated the Subdivided Lands Act.

Daro v. Superior Court, 151 Cal. App. 4th 1079, 1099 (2007) (emphasis added), as modified on 

denial of reh’g (July 3, 2007). This example thus considers the counterfactual situation from the 

one presented, i.e., whether a plaintiff would have suffered the same harm if the defendant had 

acted lawfully.

As the Court explained above in analyzing causation under the EFTA, CashCall has 

provided substantial evidence that class members such as Class Representative Kemply more 

likely than not would have selected EFT payment regardless of CashCall‟s conditioning violation. 

Plaintiffs did not challenge this evidence either as to the class or specifically for Kemply. They 

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could have done this by providing evidence that Kemply would have elected to use another form 

of payment other than EFT if CashCall had given her the choice. See, e.g., Samuel Issacharoff, 

Class Actions and State Authority, 44 Loy. U. Chi. L.J. 369, 381 (2012) (“The best evidence of []

detrimental reliance is the testimony of the purchaser herself (even if it is prone to be self-serving 

after the fact), especially in omission cases where the individual claim of reliance constitutes a 

counterfactual about what would have happened under untested circumstances.”); Kwikset Corp., 

51 Cal. 4th at 341 (Chin, J., dissenting) (criticizing the majority‟s holding, because under it, “a 

consumer may satisfy the UCL‟s new standing requirements merely by alleging that “he or she 

would not have bought the product but for the misrepresentation.”); Troyk, 171 Cal. App. 4th at

1349 (“Troyk could have adequately alleged causation for UCL standing purposes by alleging in 

his complaint that he would not have paid, or not agreed to pay, the monthly service charges even 

had those charges been properly disclosed as premium in the insurance policy”). 

But regardless of what Plaintiffs could have done, CashCall ultimately provided substantial 

evidence that borrowers prefer to use EFT, which is persuasive evidence that Kemply likely would 

have selected EFT and that in turn, she likely would have incurred NSF fees regardless of 

CashCall‟s EFTA violation. See discussion supra pp. 23-26. Without evidence from Plaintiffs to 

show otherwise, under these circumstances the Court cannot find that Class Representative 

Kemply may pursue this claim on behalf of the class.19 Without a class representative who has 

standing to maintain this claim, the Court does not have jurisdiction to be able to award relief to 

the Conditioning Class under the UCL. See Medrazo v. Honda of N. Hollywood, 205 Cal. App. 

4th 1, 11 (2012), as modified on denial of reh’g (Apr. 16, 2012) (plaintiff must establish standing

throughout trial to bring a representative action under the UCL).

//

//

//

 

19 As previously noted, Plaintiff Eduardo De La Torre is not a class representative to the 

Conditioning Class as his claims fall outside the Class Period as defined in the class definition. 

See UF No. 7. In any event, Plaintiffs provided very little evidence about De La Torre‟s 

experience with CashCall and no evidence to establish that he “lost money or property as a result 

of” CashCall‟s conditioning violation. 

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CONCLUSION

Based on the above findings, the Court makes the following conclusions:

1. Plaintiffs are not entitled to actual damages pursuant to 15 U.S.C. § 

1693m(a)(1);

2. Plaintiffs are entitled to statutory damages pursuant to 15 U.S.C. § 

1693m(a)(2)(B) in the amount of $500,000; and

3. Plaintiffs are not entitled to restitution under California‟s Unfair Competition 

Law, Cal. Bus. & Prof. Code §§ 17200 et seq.

The parties shall meet and confer, and by May 2, 2016, they shall file with the Court a 

notice plan to inform class members about the results of the trial and to distribute the statutory 

penalty award. The notice plan should include copies of the proposed notice form(s), the proposed 

schedule for distributing notice and amounts from the statutory penalty, and the parties‟ proposals

about what to do with any unclaimed funds. The Court will not consider any claims process for 

distributing the funds, i.e., no process by which class members would submit claims and then be 

paid. The notice plan must include a method of direct disbursement to class members. 

Any matters concerning attorney‟s fees or other costs will not be addressed until after the 

notice plan is determined.

IT IS SO ORDERED.

Dated: March 16, 2016

______________________________________

MARIA-ELENA JAMES

United States Magistrate Judge

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