F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

P A T R I C I A A R E L L A N O , Plaintiff-Appellant
,

v

.
C L A R K C O U N T Y C O L L E C T I O N S E R V I C E , L L C; B O R

G L A W G R O U P , L L C, Defendants-Appellees. N o. 16-15467

D.C. No. 2:15-cv-01424- J AD-NJ K

OPI NI ON

A ppeal from the United States District Court for the District of Nevada J ennifer A. Dorsey , District J udg e, Presiding

Arg ued and Submitted J une 5, 2017 Pasadena, California

F iled November 17, 2017

B efore: Sidney

R. Thomas, Chief J udg e, Stephen Reinhardt, Circuit J u dg e, and Edward R. Korman, *

District J udg e.
Opinion by

Chief J udg e Thomas

* T h e Ho n o rab le Ed w ard R

. Ko rm an , Un i ted States District J u d g e f or th e Eastern District o f

New Yo rk , sittin g b y

d esig n atio n

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SUMMARY * *

F air Debt Collection P ractices Act

The panel reversed the district court’s d ismissal of an action broug ht ag ainst a d e b t c o l lector under the F air Debt Collection Practices Act.

The p anel h eld that a debt c ollector cannot avoid liability under the F DCPA by obtaining the debtor’s lawsuit throug h

a state c ourt writ of ex ecution. The panel concluded that such

a procedure frustrates the A ct’s purpose and is thus conflictpreempted. The p a n e l remanded the case for f urther proceeding s.

COUNSEL
Deepak Gupta (arg

ued), Richard J

. Rub i n , and N eil K

. Sawhney
, Gupta W essler PL L C, W ashing ton, D.C.; Keren E. Gesund, Gesund & Pailet L L C
, L as V eg as, N evada; for Plaintiff-Appellant.

Patrick J

. Reilly (arg

u ed), Holland & Hart L L P, L a s V e g as, Nevada, for Defendants-Appellees.

** T h is su m m ary co n stitu

t es n o p art o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.A R E L L A N O V

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OP INION

THOMAS, Chief J udg e :

Can a debt collector avoid liability under the F ederal F air Debt Collection Practices Act by o b t aining the debtor’s lawsuit throug h a writ of ex e cution? We conclude that such

a procedure frustrates the Act’s p urpose and i s thus preempted.

I

Patricia Arellano was overdue on a small amount o f medical debt—$371.89 to b e precis e. A private collection ag ency , Clark County Collection Services, sent h er a l e tter about it. I ncluded with the letter w as a summons a n d s tate justice c ourt complaint seeking collection of the debt. The complaint itself stated that Arellano co uld “ [ d] ispute the validity of this debt” within 30 day s, but that failing to do so would result in a pres umption of validity

. However, separately
, in small print, the summons i n d i cated that to de fe n d t he lawsuit, Arellano must file a formal written response with the court within 20 day s.

Arellano d id not file a response, and the collection ag ency obtained a d efault judg ment ag a inst her in justice court for $793.39. The debt had doub l e d in the intervening month because it now included c osts, pre-judg ment int erest, a nd attorney fees.

Subsequently
, Arell an o filed suit ag ainst the collection ag ency and its law firm under t h e Fair Debt Collection P r actices Act ( “F DCPA” or “the A ct”), 15 U.S.C. § 16 9 2 et seq

. She claimed that they ha d e n ga ged in misleadingA R E L L A N O V

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practices under 15 U.S.C. § 1692e(1) by s t a t i n g that the debtor could dispute the d ebt within 30 day s of receipt, when the actual summons required the filing of an answer in court within 20 d ay s. She f

u r t h er alleg ed that Clark County Collection Services’ name impermissibly implied affiliation with the Clark County g overnment, violating 1 5 U .S.C. § 1692e(1).

T he collection ag ency countered with a bold g a m b i t

. Armed with its default judg ment, it requested the justice court to issue a writ of ex ecution ag ainst Arellano in the amount o f $826.72, a

n increased amount re f

l e cting a dditional costs. L ike most states, Nevada allows courts to authoriz e a sheriff to levy on the property of a judgm e n t debtor to satisfy a judg ment. Butwinick v

. Hepner , 291 P.3d 119, 121 (Nev. 2012). W ith some e x ceptions n ot relevant here, the property subject t o a writ of ex ecution in Nevada includes a “ rig h t to bring an action to r ecover a debt, money , or thing .” Gallegos

v. M alco Enters. of Nev. , 255 P.3d 128 7 , 1289 (Nev. 2 011) (quoting B lack’s L a

w Dictionary

1617, 275 (9th ed. 2009)).

Thus, the collection a g ency ’s strateg y in seeking the writ

was not to obtain personal p r o perty to satisfy the judg ment, but to acquire the rig hts to A relleno’s F DCPA lawsuit ag ainst the ag ency

so it could have it dismissed.

The justice court g ranted the writ, which directed the Cl a r k County Sheriff “to satisfy this judg ment with interest and costs as provided b y law, out of the personal property o f the judg ment deb t o r

. ” T he writ described the targ eted prope r ty a s all “claims for relief, causes of action, thing s in action, and choses in action in any lawsuit pending in Nevada including
, the rig hts of Patricia Arellano, in the civil action” pending ag ainst the collection ag ency and its lawy ers.A R E L L A N O V

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T h e reafter, pursuant to the writ of ex ecution, the sherif f sold Arellano’s lawsuit in an auction sale on the Clark County courthouse steps. Clark County Collection Services bou ght the claims ag ainst itself for $250.

After buy i n g A rellano’s lawsuit, the collection ag ency moved in federal district court to dismiss the lawsuit, arg uing that Arellano “ no long er possesse[ d] any r i gh t s of action in this c ase, and no long er possesse[ d ] any standing t o s u e.” The district court dismissed Arellano’s cause of action.

I I

State law can be p r ee mpted in three circumstances pursuant to the Supremacy Clause, U.S. Const., Art. VI , cl. 2. English v. Gen. Elec. Co.
, 496 U.S. 723, 78 (1990). Only the third circumstance is relevant here: “state law is pre-empted to the ex tent that it actually conflicts with federal law.” Id. at 79. This conflict occurs when “the ope r a tion o f state law ‘stands as an obstacle to the accompli shment and ex e cution of the f ull purposes and o bjectives of Cong ress,’” I n re Cybernetic Servs., Inc. , 252 F .3d 1039, 1 0 4 5 –46 (9th Cir. 2 0 01) ( q uoting Kewanee Oil Co. v. Bicron Corp.
, 416 U

. S

. 470, 479 ( 1974)), o r w hen it “interferes with the methods b y which the federal s t a tute was desig ned to r each [ its] g oal,” Int’l Paper Co. v. Ou e l l e tte , 497 U .S. 481, 494 (1987). I n other words, state law is p r e e mpted when “under the circumstances of the particular c ase,” it stands as an obstacle to Cong ressional purpose “—whether that ‘obstacle’ g oes b y the n ame of ‘conflicting ; contrary to; repug nance; difference; irreconcilability ; inconsistency ; violation; curta ilment; interference,’ o r the like.” G eier v. Am. Honda Motor Co.
, 529 U.S. 861, 873 (2000) (alterations omitted) (quoting H ines v. Davidowitz , 312 U.S. 52, 67 (1941)).A R E L L A N O V

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F ederalism requires that we a s s u m e federal law was not intended to supersede the states’ historic p o l i c e powers “unless that was the clear and manifest purpose of Cong ress.” CTS Corp. v

. W

aldburger
, 134 S. Ct. 2175, 2188 ( 2 0 1 4 ). Althoug h we read even ex press preemption p rov i s i ons narrowly
, a state cannot avoid compliance with a federal reg ime “merely by rely ing u p o n a c onnection to an area o f traditional state reg ulation.” W os v. E.M

. A

. , 5 68 U.S. 627, 1400 (2013). 1

A

“[ T] he purpose of Cong ress is the u ltimate touchstone in every pre-emption case.” Altria Grp., Inc. v. Good
, 555 U.S. 70, 76 ( 2 0 0 8) (citing Medtronic, Inc. v. Lohr
, 518 U.S. 470, 485 (1996)). “The F DCPA was enacted as a broad remedial statute d esig ned to ‘eliminate ab u s i v e debt collection practices by debt collectors, to insu r e t hat those d ebt collectors who refrain from using abusive debt collection practices are not competitively disadvantag ed, a n d t o promote consistent State action to p rotect consu m e r s ag ainst d ebt collection abuses.’” Gonzales v. Arrow F i n

. S ervs., LLC
,

1 In Bo g g s v. Bo g gs , 5 20 U.S. 8 3 3 (1 9 9 7 ), t h e Su p rem e Co u rt

an aly zed th e in terse c t i o n o f th e Em plo y ee Retirem en t In co m e Secu rity A ct o f 1 9 7 4 (“ ERISA ”) an d L o u isian a’ s co m m u n ity p ro p erty l aw

. T h at

case i llu strates b o th th e p o ten tial f o r n arro w p r e e m

p t i on as w ell as th e p rim acy o f f

ed eral law ev en i n areas o f t rad itio n al state reg u latio n

. Sim p ly f in d in g a co n f

lict b etw een th e t

w o leg al reg im es w as su f

f icien t to

reso l v e th e case in f

av o r o f p reem

p t io n

. Id

. at 8 4 1

. B u t, o f co u rse, p reem p tio n o n ly ap p lied in s o f

ar as th e co m

m u n ity p ro p erty law elev ated

a d escen d an t’ s p ro p erty in terest ov er an ERISA p lan p articip an t’ s in terest in a w ay th at w as in co n g ru o u s w ith Co n g r e s s ’s in ten tio n to p reserv e th e
eco n o m ic secu rity o f a su rv iv in g sp o u s e. S

ee id

. at 8 4 3

– 4 4. In th e sam e
w ay , p reem

p t io n i n th is case ap p lies o n ly to Nev ad a’ s claim ex ecu t io n law in so f ar as it p erm its d eb t co llecto rs to ex ecu te o n FDCP A claim s.A R E L L A N O V

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660 F .3d 1055, 1060 (9th Cir. 2 011) (quoting 15 U .S.C. § 1692(e)). T h e Act’s purpose is “ to protect vulnerable a nd unsophisticated debtors from abuse, harassment, a nd deceptive debt collection practices.” Guerrero v. R JM Acquisitions, LLC
, 499 F .3d 926, 938 (9th Cir. 2007) (citing S. Rep. 95–389, at 2
, 4 (1977), as reprinted in 1977 U.S.C.C.A.N. 1695, 1 696, 1699). And the “F DCPA protects all c onsumers, t h e gu l l ible as well as the shrewd

. . . the ig norant, the u nthinking a nd the c r edulous.” Clark v. Capital Credit & Collection Servs., Inc. , 460 F .3d 1162, 1 1 7 1 (9th Cir. 2006) ( quoting Clomon v. Jacks o n , 988 F .2d 1314, 1318–19 (2d Cir. 1993)).

I n order to achieve these g oals, the Act r eg u lates communication between debt c o llectors and debtors, 15 U.S.C. § § 1692b, c, g , and creates a federal cause o f action for debtors under 15 U.S.C. § 1 692k. D ebt collectors may be subject to civil liability for eng ag ing in h arassment o r abuse, 15 U

. S.C. § 1 692d, making false or misleading representations o f various sorts, 1 5 U. S

. C

. §§ 1692e, j, o r eng ag ing in unfair practices while attempting to collect debt, 15 U.S.C. § 16 9 2 f. The F DCPA a lso includes an ex press preemption and saving s clause:

T h i s subchapter does not annul, alter, or affect
, or e x empt any person subject to the provisions of this subchapter from comply ing with the laws of any State with respect to debt collection practices, ex cept to the e x t ent that those laws are inconsistent with any provision of this subchapter, a

nd then only to the ex tent of the inconsistency

. F or purposes of this section, a State law i s not inconsistent with this subchapter if t h e protection such lawA R E L L A N O V

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a ffords any consumer is g reater than t h e protection provided by

this subchapter.

15 U.S.C. § 1692n.

To enf o r ce the F DCPA, Cong ress chose “a private att o r n ey g eneral approach.” Camacho v. Bridgeport Fin., Inc. , 523 F

. 3d 973, 9 78 (9th Cir. 2008) (c i t i n g T olentino v

. Friedman
, 46 F .3d 6 4 5 , 651 ( 7th Cir. 1995)); see also Graziano v. Harrison , 950 F .2d 107, 113 (3d Cir. 1 991) (noting that it was “ Cong ress’s intent that the A ct should be enfo r c e d by debtors acting as private attorney s g e neral.”). “Prevailing plain t i f

fs

. . . a re entitled to actual d amag es, statutory damag es, and attorney ’s f ees and costs.” G onzales
, 660 F .3d at 1061 (citing 15 U.S.C. § 1692k(a)).

B

The collection ag ency a r gues that b ecause the F DCPA does not speak directly to the e x ecution of cla i m s , there can be no federal preemption. T his arg u ment denies the ex istence of conflict preemption. “And con flict preemption

. . . turns

on the identification o f ‘actual conflict, ’ and not on an
ex p ress statement o f pre-emptive intent.” Geier
, 529 U.S. at 884. I ndeed, “the Court has n ever before required a specific, form al ag e ncy statement identify ing conflict in order to conclude that such a conflict in fact ex ists.” Id.

W h ere the Act “itself does not speak directly to the issue, the Court must be g uided b y the g oals and policies of the A ct in d etermining whether it in fact pre-empts an action based on the law of an affected State.” Int’l Pape r Co.
, 479 U.S. at 493. J ust as in International Paper C o

. , t he federal law in question directly reg u lates the substantive law at issue (debtA R E L L A N O V

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c ollection practices) and specifically empowers debtors t o bring suit ag ainst debt collectors. 15 U.S.C. § 1692i; see I nt’l Paper Co.
, 479 U.S. at 4 9 5 (holding that Vermont nuisance law was preempted to the ex tent that it conflicted with water pollution standards set fo r t h in the Clean W ater A ct). A nd while the A ct itself n eed n ot “speak directly to the i s sue,” Int’l Paper Co.
, 479 U.S. at 493, the F DCPA does ex pressly preempt s t a te laws “to the ex tent that those laws a re inconsistent with any provision of this subchapter, and then only to the ex tent of the inconsistency ,” 15 U.S.C. § 1692n.

I n addition to eva d i ng liability a nd preventing Arellano from pursuing her potential federal claims, t he collection ag ency has literally used the ex ecution mechanism to collect debt from Arellano, and a rg ues tha t s h e “has r eceived the benefit of [ the $250] reduction in her judg ment.” B ut a d ebt collect o r c annot be allowed to use state law strateg ically to

ex e c ute on a debtor’s F DCPA claims aga i nst it under the g uise of leg itimate debt collection. Thoug h the F DCPA does preserve debt collectors’ rig hts to collect what they are owed, the Act does not “authoriz e the bringi ng of leg al actions b y debt collectors.” See 15 U.S.C. § 1692i(b). Debt collectors cannot evade the restrictions of the A ct b y forcing a debtor’s claims to be auctioned, acquiring the claims, and dismissing them. To allow otherwise would thwart enforcement o f the F DCPA and undermine its purpose. See 15 U .S.C. §§ 1692k, l.

C
Resolving this case does not require any additional o r supplemental rule b ey ond the tex t o f the Act. A state remedy

o f e x e cution cannot be used for the purpose of avoiding the impact of federal law. T herefore, we reverse the districtA R E L L A N O V

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court, and remand for proceed ing s consistent with this opinion, hol d ing that federal law preempts a private party ’s

use of state ex ecution procedures to acquire and destro y a debtor’s F DCPA claims ag ainst it. We n eed not, and do not, reach any other issue urg ed by

the parties.

REVERSED AND REMANDED.