FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOHNNY GONZALES, on behalf of 

himself and all others similarly No. 10-55379

situated, D.C. No.

Plaintiff-Appellee,  3:05-cv-00171-JAHv. RBB

ARROW FINANCIAL SERVICES, LLC, OPINION

Defendant-Appellant. 

Appeal from the United States District Court

for the Southern District of California

John A. Houston, District Judge, Presiding

Argued and Submitted

June 6, 2011—Pasadena, California

Filed September 23, 2011

Before: Betty B. Fletcher and N. Randy Smith, Circuit

Judges, and James S. Gwin, District Court Judge.*

Opinion by Judge B. Fletcher;

Dissent by Judge N.R. Smith

*The Honorable James S. Gwin, District Judge for the U.S. District

Court for Northern Ohio, Cleveland, sitting by designation. 

18107
COUNSEL

David M. Schultz, Joel David Bertocchi, and Jennifer W.

Weller, Hinshaw & Culbertson, LLP, Chicago, Illinois, for

the defendant-appellant.

Elizabeth J. Arleo, Arleo Law Firm, Ramona, California,

Owen Randolph Bragg and Craig M. Shapiro, Horwitz, Horwitz & Associates, Chicago, Illinois, Shaun Khojayan, Beverly Hills, California, and Richard John Rubin, Santa Fe, New

Mexico, for the plaintiff-appellee.

OPINION

B. FLETCHER:

Appellant Arrow Financial Services (“Arrow”) appeals the

district court’s decision, on summary judgment, that letters

sent by Arrow to nearly 40,000 California residents constituted “false, deceptive, or misleading representation[s] . . . in

connection with the collection of any debt” in violation of the

18110 GONZALES v. ARROW FINANCIAL SERVICES
federal Fair Debt Collection Practices Act (“FDCPA”), 15

U.S.C. § 1692e. It also appeals a jury’s award, after trial, of

statutory damages under both the FDCPA and California’s

Rosenthal Fair Debt Collection Practices Act (“Rosenthal

Act”), California Civil Code § 1788 et seq. Arrow contends

that the Rosenthal Act does not permit class actions, and that

permitting class plaintiffs to recover statutory damages under

both the FDCPA and Rosenthal Act violates the FDCPA. We

have jurisdiction under 28 U.S.C. § 1291. We disagree with

Arrow’s contentions and affirm the district court.

I.

Arrow Financial Services is a debt buyer and collector. It

purchases consumer debts that have been written off by the

original creditor. Most debt buyers acquire the debts for a

fraction of the balance, but then attempt to collect the entire

debt.1 In 2002, Arrow purchased a portfolio of debts owed to

health clubs. All of these debts were more than seven years

old; accordingly, pursuant to the Fair Credit Reporting Act,

15 U.S.C. § 1681c(a)(4), none of these debts could be

reported to a credit reporting agency. They were, to use industry parlance, “obsolete.” Fed. Trade Comm’n v. Gill, 265 F.3d

944, 948 (9th Cir. 2001) (citing 15 U.S.C. § 1681c(a)). As a

general practice, Arrow does not report obsolete debts. In

2004, Arrow attempted to collect on this portfolio of debts by

sending substantially identical letters to nearly 40,000 California residents. One of those residents was Johnny Gonzales,

the named plaintiff in this action. The letter informed Mr.

1See Robert M. Hunt, Collecting Consumer Debt in America, FED. RES.

BANK OF PA BUS. REV. 15 (2007) (estimating that the average price for

purchase of an obsolete debt at $0.045 per dollar), available at

http://www.philadelphiafed.org/research-and-data/publications/businessreview/2007/q2/hunt_collecting-consumer-debt.pdf; see also Adam J.

Levitin, Hydraulic Regulation: Regulating Credit Markets Upstream, 26

YALE J. REG. 143, 192 (2009) (noting the sizeable growth in the debt buying industry). 

GONZALES v. ARROW FINANCIAL SERVICES 18111
Gonzales that he owed a “PAST DUE BALANCE” to “Holiday Spa of Calif”. It stated:

Dear JONNY [sic] GONZALES,

At this time we are willing to settle your past due

account for 50% of the full balance and accept this

amount as settlement of the referenced account. The

settlement amount must be made in one payment and

received by our office on or before May 28 2004. 

*** Settlement Amount $276.48 You Save $276.49

***

Upon receipt of the settlement amount and clearance

of funds, and if we are reporting the account, the

appropriate credit bureaus will be notified that this

account has been settled. Please mark the appropriate box below.

1. [ ] Enclosed find payment for the

above-stated settlement amount. By

depositing this payment in the sum

of $276.48, you have accepted this

as settlement. When my funds clear,

and if you are reporting the

account, you will notify the appropriate credit bureaus of this settlement.

. . . .

Should you have any questions, please feel free to

contact me . . . .

Important notice required by law: This agency is

engaged in the collection of debts. This communica18112 GONZALES v. ARROW FINANCIAL SERVICES
tion is an attempt to collect a debt and any information obtained will be used for that purpose.

Finally, in bold letters, the letter instructed Gonzales to

“Please see reverse side for important information.” The “important information” was the following: “NOTICE TO CALIFORNIA RESIDENTS: As required by law, you are hereby

notified that a negative credit report reflecting on your credit

record may be submitted to a credit reporting agency if you

fail to fulfill the terms of your credit obligations.” Id. at 90.

All in all, the letter refers to credit bureaus three times. It

twice states that if Arrow is reporting the debt, it will notify

credit bureaus once the settlement funds clear, and also provides a notice that if a consumer fails to fulfill his credit obligations, negative information may be submitted to a credit

reporting agency.

On receipt of the letter, Gonzales conducted an independent

investigation and determined that Arrow could not legally

report the debt to any credit bureau. On January 28, 2005,

Gonzales filed suit on behalf of himself and a putative class,

claiming violations of the FDCPA and the Rosenthal Act,

because the letter would likely cause recipients to believe that

their failure to pay the debts would result in negative credit

reports. The district court certified a class to include 39,727

similarly situated Californians, and designated Gonzales as

the class representative. On June 8, 2007, the district court

granted summary judgment to Gonzales on the issue of liability under the FDCPA and the Rosenthal Act.

The district court then held a jury trial to determine the

amount of damages. The court instructed the jury that class

members could receive separate statutory damages pursuant

to the FDCPA and the Rosenthal Act claims. The jury

awarded Gonzales $250 on the FDCPA claim and an additional $250 on the Rosenthal Act claim. It awarded the class

members $112,500 on the FDCPA claim and $112,500 on the

GONZALES v. ARROW FINANCIAL SERVICES 18113
Rosenthal Act claim. The total damages awarded were

$225,500.

II.

We review the district court’s grant of summary judgment

de novo. Travelers Cas. & Sur. Co. of Am. v. Brenneke, 551

F.3d 1132, 1135 (9th Cir. 2009). Summary judgment is appropriate where “there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56. We review questions of law, including the district court’s interpretations of the FDCPA and the

Rosenthal Act, de novo. Donohue v. Quick Collect, Inc., 592

F.3d 1027, 1030 (9th Cir. 2010).

III.

The FDCPA was enacted as a broad remedial statute

designed to “eliminate abusive debt collection practices by

debt collectors, to insure that those debt collectors who refrain

from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action

to protect consumers against debt collection abuses.” 15

U.S.C. § 1692(e). The FDCPA comprehensively regulates the

conduct of debt collectors, imposing affirmative obligations

and broadly prohibiting abusive practices. See, e.g., 15 U.S.C.

§§ 1692b (governing the acquisition of location information),

1692e (prohibiting misleading or deceptive practices). The

FDCPA does not ordinarily require proof of intentional violation, and is a strict liability statute. See McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 948 (9th

Cir. 2011). Though the Federal Trade Commission (“FTC”)

is empowered to enforce the FDCPA, 15 U.S.C. § 1692l,

Congress encouraged private enforcement by permitting

aggrieved individuals to bring suit as private attorneys general. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 978 (9th

Cir. 2008). Prevailing plaintiffs, including class members, are

18114 GONZALES v. ARROW FINANCIAL SERVICES
entitled to actual damages, statutory damages, and attorney’s

fees and costs. 15 U.S.C. § 1692k(a).

As relevant here, section 1692e of the FDCPA broadly prohibits the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.”

The Act includes a non-exhaustive list of examples of proscribed conduct, including:

(5) The threat to take any action that cannot legally

be taken or that is not intended to be taken.

. . . . 

(10) The use of any false representation or deceptive

means to collect or attempt to collect any debt or to

obtain information concerning a consumer.

15 U.S.C. § 1692e. 

“Whether conduct violates [§ 1692e] . . . requires an objective analysis that takes into account whether the ‘least sophisticated debtor would likely be misled by a communication.’ ”

Donohue, 592 F.3d at 1030 (quoting Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 934 (9th Cir. 2007)); see also

Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222, 1227 (9th

Cir. 1988).2 In this circuit, a debt collector’s liability under

2The “least sophisticated debtor” or “least sophisticated consumer” standard is employed by the majority of the circuits. See Chaudhry v. Gallerizzo, 174 F.3d 394, 408 (4th Cir. 1999); Campuzano-Burgos v. Midland

Credit Mgmt. Inc., 550 F.3d 294, 298 (3d Cir. 2008); Hartman v. Great

Seneca Fin. Corp., 569 F.3d 606, 611-12 (6th Cir. 2009), cert. denied, 130

S. Ct. 1688 (2010); Gonzalez v. Kay, 577 F.3d 600, 607 (5th Cir. 2009),

cert. denied, 130 S. Ct. 1505 (2010); Ellis v. Solomon & Solomon P.C.,

591 F.3d 130, 132 (2d Cir. 2010), cert denied 130 S. Ct. 333 (2010);

LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1193 (11th Cir. 2010).

The Seventh Circuit employs an “unsophisticated debtor” standard,

which appears to differ from the majority test only in semantics. See ChuGONZALES v. ARROW FINANCIAL SERVICES 18115
§ 1692e of the FDCPA is an issue of law.3

 Terran v. Kaplan,

109 F.3d 1428, 1432 (9th Cir. 1997).

The “least sophisticated debtor” standard is “lower than

simply examining whether particular language would deceive

or mislead a reasonable debtor.” Id. (internal quotation marks

omitted). The standard is “designed to protect consumers of

below average sophistication or intelligence,” or those who

are “uninformed or naive,” particularly when those individuals are targeted by debt collectors. Duffy v. Landberg, 215

F.3d 871, 874-75 (8th Cir. 2000) (internal quotation marks

omitted); accord Evory v. RJM Acquisitions Funding L.L.C.,

505 F.3d 769, 774 (7th Cir. 2007) (cautioning that “if the debt

collector has targeted a particularly vulnerable group,” “the

benchmark for deciding whether the communication is deceptive would be the competence of the substantial bottom fraction of that group”). At the same time, the standard

“preserv[es] a quotient of reasonableness and presum[es] a

basic level of understanding and willingness to read with

care.” Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir.

2008) (internal quotation marks omitted). The FDCPA does

not subject debt collectors to liability for “bizarre,” “idiosyncratic,” or “peculiar” misinterpretations. See id.; Strand v.

Diversified Collection Serv. Inc., 380 F.3d 316, 318 (8th Cir.

2004).

way v. Nat’l Action Fin. Serv. Inc., 362 F.3d 944, 948-49 (7th Cir. 2004)

(noting that the least-sophisticated consumer is the “single most unsophisticated consumer who exists” and arguing that the “more precise benchmark” is the understanding of the “unsophisticated debtor”) (citations and

quotations omitted); Peters v. Gen. Serv. Bureau, Inc., 277 F.3d 1051,

1055 (8th Cir. 2002) (describing both tests). 

3Because liability under § 1692e is an issue of law, Arrow’s argument

that this court should remand for a jury trial on liability necessarily fails.

We recognize that in other circuits, whether a communication is likely to

mislead the least-sophisticated debtor is an issue of fact. See, e.g., Walker

v. Nat’l Recovery, Inc., 200 F.3d 500, 503 (7th Cir. 1999); Gonzalez, 577

F.3d at 607. 

18116 GONZALES v. ARROW FINANCIAL SERVICES
We reject Arrow’s arguments that its letters do not violate

the FDCPA4 and hold that, under the least sophisticated

debtor standard, the letters are misleading and impliedly

threaten to take action that cannot be legally taken.

A. Section 1692e(10)

[1] Section 1692e(10), which prohibits “[t]he use of any

false representation or deceptive means to collect . . . any

debt,” has been referred to as a “catchall” provision, and can

be violated in any number of novel ways. Rosenau, 539 F.3d

at 224. Nevertheless, it is well established that “[a] debt collection letter is deceptive where it can be reasonably read to

have two or more different meanings, one of which is inaccurate.” Brown v. Card Serv. Ctr., 464 F.3d 450, 455 (3d Cir.

2006) (internal quotation omitted); accord Kistner v. Law

Offices of Michael P. Margelefsy, LLC, 518 F.3d 433, 441

(6th Cir. 2008); Russell v. Equifax A.R.S., 74 F.3d 30, 34-35

(2d Cir. 1996).

Arrow wisely concedes that it had no intention of reporting

the health club debts to a credit bureau and was legally prohibited from so doing. It argues, though, that because the letters employ conditional language (“if we are reporting the

account”), it is wholly unreasonable to infer that Arrow could

or would report the account. We disagree. At the outset, we

emphasize that a literally true statement can still be misleading. See, e.g., Brown, 464 F.3d at 455; Avila v. Rubin, 84

F.3d. 222, 226-27 (7th Cir. 1996). Arrow is also correct that

faced with ambiguous language, an unusually savvy consumer

(such as Gonzales) would seek clarification of whether his

4Arrow does not appeal the district court’s determination that the letters

violate the Rosenthal Act. Accordingly, we need not decide whether the

Rosenthal Act’s protections are fully co-extensive with the FDCPA. See

CAL. CIV. CODE § 1788.17 (incorporating by reference the prohibitions in

15 U.S.C. § 1692e) (West 2009); CAL. CIV. CODE § 1788.13(f) (West

2009) (prohibiting the false representation that information concerning a

debt is about to be reported to a consumer reporting agency). 

GONZALES v. ARROW FINANCIAL SERVICES 18117
debt could be reported. We are not, however, to read the language from the perspective of a savvy consumer, and consumers are under no obligation to seek explanation of confusing

or misleading language in debt collection letters. Fields v.

Wilbur Law Firm, P.C., 383 F.3d 562, 566 (7th Cir. 2004). 

[2] To the least sophisticated debtor, the phrase “if we are

reporting the account, the appropriate credit bureaus will be

notified that this account has been settled” suggests two possibilities. It suggests the possibility that Arrow was not reporting the debt to a credit reporting agency, and would

accordingly make no further report in the event of settlement.

But the phrase also suggests that, under some set of circumstances applicable to the recipient, Arrow could and would

report the account.5 Absent any possibility that Arrow could

report the accounts, there would be no reason for Arrow to

assert its intention to make a positive report in the event of

payment. Only the first reading is actually correct, but the second reading is far from “bizarre” or “idiosyncratic”—it is

eminently reasonable. As there is no circumstance under

which Arrow could legally report an obsolete debt to a credit

bureau, the implication that Arrow could make a positive

report in the event of payment is misleading.

[3] The misleading nature of the “if we are reporting the

debt” clause is compounded by the fact that Arrow did nothing to clarify when it could report a debt. Where the law

places affirmative limits on a debt collector’s actions, the debt

5Cf. Ruth v. Triumph P’ships, 577 F.3d 790, 801-02 (7th Cir. 2009)

(holding that a notice claiming a right to collect and/or share information

about the debtor “to the extent permitted by law” was misleading because

there are no circumstances under which the law actually permits dissemination of a debtor’s information); Bentley v. Great Lakes Collection

Bureau, 6 F.3d 60, 61-63 (2d Cir. 1993) (holding that letters stating “were

our client to retain legal counsel in your area, and it was determined that

suit should be filed against you, it could result in a judgment” conveys the

erroneous impression that the debt collector had the authority to decide to

institute legal action). 

18118 GONZALES v. ARROW FINANCIAL SERVICES
collector that “goes perilously close to an area of proscribed

conduct takes the risk” that it will be liable under the FDCPA

for misleading consumers. Swanson, 869 F.3d at 1228. When

language in a debt collection letter can reasonably be interpreted to imply that the debt collector will take action it has

no intention or ability to undertake, the debt collector that

fails to clarify that ambiguity does so at its peril. See Evory,

505 F.3d at 778-79 (noting that debt collectors could protect

the unsophisticated consumer against falsely believing a settlement offer is time-sensitive and non-renewable by including clarifying language to the effect of: “We are not obligated

to renew this offer.”); cf. Greco v. Trauner, Cohen & Thomas,

L.L.P., 412 F.3d 360, 364-65 (2d Cir. 2005) (reiterating that

“a letter sent on law firm letterhead, standing alone” represents that an attorney has been meaningfully involved in the

collection process, but holding that impression was cured by

a “clear disclaimer explaining the limited extent of [the attorneys’] involvement in the collection of [the recipient’s]

debt”). 

[4] Conditional language, particularly in the absence of

any language clarifying or explaining the conditions, does not

insulate a debt collector from liability. Cf. LeBlanc, 601 F.3d

at 1196 (rejecting a debt collector’s reliance on the use of

conditional language “in an effort to safeguard the letter from

being construed as ‘threatening’ ”). We decline to adopt

Arrow’s “hyper-literal” approach, which would permit it to

“undermine the consumer protection goals of the statute”

through a “flimsy disguise” of conditional language. Nat’l

Fin. Serv., 98 F.3d at 137-138. The phrase “if we are reporting the account, the appropriate credit bureaus will be notified

that this account has been settled” is misleading, and violates

15 U.S.C. § 1692e(10). Cf. Brown, 464 F.3d at 455.

B. Section 1692e(5)

[5] We turn next to the question of whether the letters also

GONZALES v. ARROW FINANCIAL SERVICES 18119
violate section e(5).6

 Section 1692e(5) prohibits a debt collector from making a “threat to take any action that cannot

legally be taken or that is not intended to be taken.” 15 U.S.C.

§ 1692e(5). Whether Arrow’s letters could be construed by

the least sophisticated debtor as threatening to report obsolete

debt (when Arrow had no ability or intention to do so) presents a closer question. The letters are not overtly threatening.

Nevertheless, a threat need not be express: it can be implied.

[6] We are persuaded that Arrow’s letters, read as a whole,

would be interpreted by the least sophisticated debtor as

threatening to report (or continue to report) obsolete debts.

Arrow argues that the letters promise only to make a “positive” report indicating full payment of the debt once payment

cleared, and thus could not reasonably be read to imply a

threat to make a “negative” report in the event of nonpayment. This argument fails. Setting aside the fact that Arrow

could not legally make any report on these obsolete debts,7

Arrow could only make a “positive” report if it had already

placed, or would shortly place, a report of the obsolete debt

in the debtor’s file. Such a report would be “negative”— it

would show that the debt was delinquent and unpaid. Indeed,

6We address each provision separately because, while a violation of section e(5) is a per se violation of section e(10), the reverse is not true. A

“threat” to take legal action that a debt collector has no intention (or ability) to take is necessarily deceptive or misleading, but not all deceptive or

misleading statements constitute threats actionable under section e(5). See

Ruth, 577 F.3d at 802 (recognizing that a statement which violates e(5)

also violates e(10)); Brown, 464 F.3d at 455 (expressing no opinion about

whether a letter constitutes a threat under § 1692e(5) but holding that the

letter could be a deceptive or misleading communication in violation of

§ 1692e(10)). 

We also note that Gonzales need not establish a violation of each provision of the FDCPA cited. Violation of a single provision is sufficient to

establish liability. Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993).

7We emphasize that the least sophisticated consumer would be unaware

of this fact, given that the letters misleadingly imply that Arrow has the

ability to report the obsolete debts to credit bureaus. 

18120 GONZALES v. ARROW FINANCIAL SERVICES
Arrow specifically informed consumers in one of its letters

that a “negative credit report reflecting on your credit record

may be submitted to a credit reporting agency if you fail to

fulfill the terms of your credit obligations.” 

[7] Logically, if Arrow failed to make a “positive” report

indicating that the debt was satisfied, the “negative” report

would remain on the debtor’s record. In other words, the failure to make a positive report on an existing debt is the functional equivalent of a negative report. The least sophisticated

debtor could conclude that, unless he paid the settlement

amount or the full amount of the debt, Arrow would place a

negative record in his credit report, or would decline to

remove the negative record already in place. This reading is

not bizarre or idiosyncratic. Accordingly, we hold that Arrow

violated 15 U.S.C. § 1692e(5). We affirm the district court’s

grant of partial summary judgment for Gonzales on the

FDCPA claim.

IV.

Arrow also contends that the district court erred in instructing the jury that it could make separate awards of statutory

damages under both the FDCPA and Rosenthal Act. It argues

that the Rosenthal Act does not permit class actions. It also

contends, in the alternative, that permitting class recovery

under the FDCPA and the Rosenthal Act contradicts the spirit

of the FDCPA. Arrow is wrong on both counts.

A. Class Actions Under the Rosenthal Act

[8] As originally enacted, the Rosenthal Act did not permit

class actions. Rather, it provided that “any debt collector who

willfully and knowingly violates this title with respect to any

debtor shall . . . be liable to the debtor only in an individual

action . . . for a penalty . . . not [ ] less than one hundred dollars ($100) nor greater than one thousand dollars ($1,000).

CAL. CIV. CODE § 1788.30(b). In 1999, however, the CaliforGONZALES v. ARROW FINANCIAL SERVICES 18121
nia legislature amended the Rosenthal Act to permit class

actions.

The 1999 amendment states:

Notwithstanding any other provision of this title,

every debt collector collecting or attempting to collect a consumer debt shall comply with the provisions of Sections 1692b to 1692j, inclusive, of, and

shall be subject to the remedies in Section 1692k of,

Title 15 of the United States Code. 

CAL. CIV. CODE § 1788.17 (emphasis added). Section 1692k

of the FDCPA provides for class recovery of (1) actual damages up to $1,000 and (2) statutory damages not to exceed the

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

debt collector. 15 U.S.C. § 1692k(a)(2).

By use of the phrase “notwithstanding any other provision,”

8

the 1999 amendment unambiguously supercedes any provision of the Rosenthal Act inconsistent with the referenced

provisions of the FDCPA, including those subjecting debt collectors to class actions. The 1999 amendment did not delete

the “individual action” provision, but by permitting class

actions, it nullified the provision’s effect. Further, the legislative history contains ample evidence that the 1999 amendment

was intended to permit class actions. The Bill Analysis pre8California courts have routinely concluded that the phrase “notwithstanding any other provision” plainly and unambiguously supercedes contrary provisions. See, e.g., People v. Palacios, 161 P.3d 519, 523-24 (Cal.

2007) (the phrase “notwithstanding any other provision” is “broad,”

“plain,” and “means what it says”); People ex rel. Lockyer v. Fremont

Gen. Corp., 89 Cal. App. 4th 1260, 1266 (2001) (stating that legislative

intent in adopting the term “notwithstanding any other provision” was

“plain.”); People v. Hutchins 90 Cal. App. 4th 1308, 1313 (2001) (the language operates “clearly and unambiguously”); People v. Navarro, 126

Cal. App. 3d 785, 793 (1981) (calling the phrase an “absolutely plain,

clear mandate”). 

18122 GONZALES v. ARROW FINANCIAL SERVICES
pared by the California Senate Judiciary Committee stated

that existing law “does not provide for class actions” and that

“absent the threat of a class action, there is no incentive to

abort an illegal continuing course of conduct.” S. JUDICIARY

COMM., REPORT ON A.B. 969 at 2, 4 (Cal. 1999-2000).9 It

explained that the 1999 amendments “would provide that violators shall be subject to the remedies in [the FDCPA, including] . . . [a]ll actual damages and an amount not to exceed the

lesser of up to $500,000 or 1 percent of the net worth penalty

together with costs of suit and attorney’s fees to the prevailing

plaintiff(s) for class actions.” Id. at 2-3 (emphasis added).

Similarly, the Bill Analysis prepared by the Assembly Committee on Banking and Finance notes that the bill “subjects

debt collectors to the remedies of actual damages and up to

$1,000 for an individual and/or for violation affecting a class

composed of numerous debtors.” ASS. COMM. ON BANKING AND

FINANCE, REPORT ON A.B. 969, at 1-2 (Cal. 1999-2000)

(emphasis added).10

[9] Every court to have considered the issue has held that

class actions may proceed under the amendment to the Rosenthal Act, notwithstanding the contradictory “individual

action” language in § 1788.30. See Palmer v. Stassinos, 233

F.R.D. 546, 548 (N.D. Cal. 2006); Abels v. JBC Legal Grp,

P.C., 227 F.R.D. 541, 548 (N.D. Cal 2005); Edstrom v. All

Servs. & Processing, No. C04-1514 BZ, 2005 WL 645920, at

*4 (N.D. Cal. Feb. 22, 2005); McDonald v. Bonded Collectors, LLC, 233 F.R.D. 576, 577 (S.D. Cal. 2005). In addition,

although not expressly considering the issue, this court and at

least two California courts have entertained class actions

9

 Available at http://www.leginfo.ca.gov. Select the 1999-2000 legislative session in the drop-down list, and type “AB 969” to search. On the

results page, select the “Papan” bill. Then, under the heading “Analyses,”

click the link to “Senate Committee.” 

10 Available at http://www.leginfo.ca.gov. Select the 1999-2000 legislative session in the drop-down list, and type “AB 969” to search. On the

results page, select the “Papan” bill. Then, under the heading “Analyses,”

click the link to “Assembly Committee.” 

GONZALES v. ARROW FINANCIAL SERVICES 18123
brought under the Rosenthal Act. See Irwin v. Mascott, 370

F.3d 924, 927-28 (9th Cir. 2004); Fireside Bank v. Super. Ct.,

155 P.3d 268, 271 (Cal. 2007); Asset Acceptance, LLC v.

Hansen, 2d Civ. No. B208548, 2009 WL 840047 (Cal. Ct.

App. Apr. 1, 2009). In light of the clear statutory language,

unequivocal legislative history, and the unanimous agreement

of the courts, we hold that the Rosenthal Act permits class

actions.

B. Cumulative Recovery under the FDCPA and the

Rosenthal Act

Arrow argues, in the alternative, that plaintiffs are precluded from recovering statutory damages under both the

FDCPA and the Rosenthal Act. Its argument contravenes the

plain language of both acts, and ignores the many courts that

have permitted simultaneous recovery under both acts.11

[10] Federal law preempts state law in three circumstances:

Congress can define explicitly the extent to which its

enactments pre-empt state law . . . . Second, in the

absence of explicit statutory language, state law is

pre-empted where it regulates conduct in a field that

Congress intended the Federal Government to

11See, e.g., Costa v. Nat’l Action Fin. Serv, 634 F. Supp. 2d 1069, 1077

(E.D. Cal. 2007); Panahiasl v. Gurney, No. 04-04479 JF, 2007 WL

738642 (N.D. Cal. Mar. 8, 2007); Adams v. CIR Law Offices, LLP, No.

07-cv1041-IEG(LSP), 2007 WL 2481550 (S.D. Cal. Aug. 29, 2007); cf.

Alkan v. Citimortgage, 336 F. Supp. 2d 1061, 1065 (N.D. Cal. 2004)

(holding the 1999 amendment to the Rosenthal Act was not preempted by

the FDCPA). But see Mejia v. Marauder Corp., No. C06-00520 HRL,

2007 WL 806486, (N.D. Cal. Mar. 15, 2007) (doubting whether additional

damages were available under the Rosenthal Act but denying the award

because it was not warranted under the circumstances). Most of these

cases involve individual plaintiffs, rather than classes, but that difference

is not dispositive to the overall preemption analysis. 

18124 GONZALES v. ARROW FINANCIAL SERVICES
occupy exclusively. . . . Finally, state law is preempted to the extent that it actually conflicts with

federal law.

English v. Gen. Elec. Co., 496 U.S. 72, 79-80 (1990) (citations omitted). The FDCPA states explicitly:

This subchapter does not annul, alter, or affect, or

exempt any person subject to the provisions of this

subchapter from complying with the laws of any

State with respect to debt collection practices, except

to the extent that those laws are inconsistent with

any provision of this subchapter, and then only to the

extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this subchapter if the protection such law affords any

consumer is greater than the protection provided by

this subchapter. 

15 U.S.C. § 1692n. This language, coupled with the FDCPA’s

express purpose to “promote consistent State action,” 15

U.S.C. § 1692(e), establishes that Congress did not intend the

FDCPA to preempt consistent state consumer protection laws.12

Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996) (“the purpose of Congress is the ultimate touchstone in every pre12In addition, the legislative history strongly indicates that Congress

intended to subject debt collectors to liability under both federal and state

law. The Senate Report on the FDCPA, prepared by the Committee on

Banking, Housing, and Urban Affairs, states that the Committee “believes

that this law ought not to foreclose the States from enacting or enforcing

their own laws regarding debt collection.” S. REP. 95-382 at 6 (1977). The

Committee recognized that “States with substantially similar laws may be

exempted from the act’s requirements (but not its remedies) by applying

to the Federal Trade Commission.” Id. (emphasis added); see also 15

U.S.C. § 1692o (permitting the FTC to exempt debt collectors from the

obligations of the FDCPA when operating in states which have substantially similar laws). This implies that, even if a state law and the FDCPA

punish identical behavior in identical ways, debt collectors should be subject to liability under both. 

GONZALES v. ARROW FINANCIAL SERVICES 18125
emption case”) (internal quotation marks, alteration, and citation omitted). Statutory damages under the FDCPA are

intended to “deter violations by imposing a cost on the defendant even if his misconduct imposed no cost on the plaintiff.”

Crabill v. Trans Union, L.L.C., 259 F.3d 662, 666 (7th Cir.

2001). State laws permitting plaintiffs to recover additional

statutory damages increase deterrence, thus affording greater

protections to consumers and operating consistently with the

FDCPA. See 15 U.S.C. § 1692n. Accordingly, we presume

that the FDCPA permits plaintiffs to recover additional damages under state law.

[11] Similarly, the Rosenthal Act does not limit recovery

simply because it is also available under federal law. The

Rosenthal Act specifically provides that its remedies are

intended to be “cumulative and . . . in addition to any other

. . . remedies under any other provision of law.”

13 CAL. CIV.

CODE § 1788.32.14 In an analogous case, the Eleventh Circuit

13The dissent argues that the California legislature “replaced” this provision when it incorporated the FDCPA’s remedies provision. Dissent at

18132. Incorporation by reference adds statutory text to the existing statute. See Don v. Pfister, 155 P. 60, 61 (Cal. 1916); In re Burke, 212 P. 193,

193 (Cal. 1923). It does not necessarily repeal or “replace” already existing statutory text. The dissent’s position rests on the supposition that by

including the term “notwithstanding any other provision,” the California

legislature intended to repeal all of the Rosenthal Act’s remedies provisions, whether or not those provisions are inconsistent with the text incorporated from the FDCPA. This position finds no support in California law.

Rather, only contradictory law is superceded by the term, “notwithstanding any other provision.” See Bd. of Supervisors v. Super. Ct., 23 Cal.

App. 4th 830, 841 (1994) (finding that a statute prefaced by “notwithstanding any other provision of law” “must prevail over directly contradictory provisions in other statutes”). The California legislature’s

incorporation of section 1692k did not supercede the Rosenthal Act’s

cumulative remedies provision because it is not contradictory to section

1692k. Although there is a potential inconsistency in cases where a cumulative award exceeds the FDCPA’s damages limit, that issue is not presented here. 

14Arrow cites several cases prohibiting “duplicative recovery” under the

FDCPA and state consumer protection statutes. Those cases are easily distinguishable, as each of them involves a state statute that expressly prohibits cumulative recovery. See, e.g., Piper v. Portnoff Law Assoc., 216

F.R.D. 325, 328 (E.D. Pa. 2003) (citing 73 Pa. Cons. Stat. § 2270.5(c)).

18126 GONZALES v. ARROW FINANCIAL SERVICES
held that a Florida consumer protection statute, which stated

that its remedies were “cumulative,” “contemplated dual

enforcement—that an out of state debt collector could quite

possibly be subject to the sanctions and enforcement provisions of both of the various states or the FDCPA.” LeBlanc,

601 F.3d at 1192 (internal quotation marks omitted). 

Arrow argues that, notwithstanding the language of the

FDCPA and the Rosenthal Act, permitting plaintiffs to

recover under both statutes would (1) run afoul of the “general proposition that a plaintiff may not receive multiple

awards for the same item of damage” and (2) contravene the

FDCPA’s implied limit on double recovery.

We readily dispense of the first argument, because the

authority cited by Arrow for the proposition that “as a general

rule, a plaintiff may not receive multiple awards for the same

item of damage” is distinguishable. The general rule is that

plaintiffs may not recover for the same loss in both contract

and in tort. See, e.g., Ambassador Hotel Co. v. Wei-Chuan

Invest., 189 F.3d 1017, 1032 (9th Cir. 1999). These common

law principles are wholly inapplicable to the statutory damage

provisions of the FDCPA and Rosenthal Act. Statutory damages under both provisions are not tied in any way to actual

losses suffered by the plaintiff. See 15 U.S.C. 1692k(b); CAL.

CIV. CODE § 1788.17. Moreover, we cannot reject the statutory text in order to imply common law limitations, particularly “where, as here, the statute’s language is plain, [and] the

sole function of the courts is to enforce it according to its

terms.” Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 229-30

(4th Cir. 2007) (rejecting the district court’s attempt to graft

principles of common law witness immunity onto attorney

communications under the FDCPA) (quoting United States v.

Ron Pair Enters., 489 U.S. 235, 241 (1989)).

[12] We also reject Arrow’s argument that recovery under

state and federal law contravenes the FDCPA’s implied ban

on cumulative recovery. Simply put, there is nothing in the

GONZALES v. ARROW FINANCIAL SERVICES 18127
FDCPA from which to imply a per se prohibition on class

recovery under both state and federal law. The only limit on

class recovery under the FDCPA is that statutory damages for

the class cannot exceed the lesser of $500,000 or 1 per centum

of the net worth of the debt collector. 15 U.S.C. § 1692k. This

limit is intended to ensure that “punishment [is] meted out

according to a business’s ability to absorb the penalty.” Sanders v. Jackson, 209 F.3d 998, 1002 (7th Cir. 2000).15 Those

concerns are not at issue in this case. Here, the total damages

awarded were $225,500: significantly less than the statutory

limit. In this case, permitting recovery under the Rosenthal

Act and the FDCPA is not inconsistent with section 1692k of

the FDCPA.16

V.

In adopting the FDCPA, Congress emphasized that

“[m]eans other than misrepresentation and other abusive debt

collection practices are available for the effective collection of

debts.” 15 U.S.C. § 1692(b). We hold that letters, which misleadingly implied that Arrow had the ability to report obsolete

debts to credit bureaus, and impliedly threatened to make such

reports, violated sections 1692e(5) and e(10) of the FDCPA.

We recognize that the FDCPA does not pre-empt consistent

15The dissent characterizes the FDCPA’s “protective cap on statutory

damages” as a limit on “double” or “duplicative” statutory damages

awards. See e.g., Dissent at 18129, 18132. We agree that the FDCPA

places a monetary limit on statutory damages. A monetary limit, however,

is not the same thing as a prohibition on “duplicative awards” under complementary state and federal statutes. The FDCPA limits the total amount

of damages a defendant may be required to pay; it does not bar recovery

of damages under multiple statutes so long as the total award is below the

monetary limit. The total damages award in this case is well below the

FDCPA’s monetary limit of $500,000 or one percent of the debt collector’s net worth. 

16We express no opinion on whether the FDCPA might preempt in part

(as inconsistent with § 1692k(a)(2)(c)) class recovery under federal and

state law when the total statutory damages exceed $500,000 or one percent

of the debt collector’s net worth. 

18128 GONZALES v. ARROW FINANCIAL SERVICES
state action, including cumulative recovery of statutory damages under state law. The Rosenthal Act’s remedies are cumulative, and available even when the FDCPA affords relief. In

light of these holdings, we AFFIRM the district court.

N.R. SMITH, Circuit Judge, dissenting in section IV of the

majority opinion

I must dissent from the majority opinion, because plaintiffs

cannot obtain a double statutory damages recovery under the

Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.

§ 1692 et seq. The plaintiffs in this case cannot receive duplicative statutory damages awards under California law,

because the California legislature adopted identical provisions

of the FDCPA when it amended California’s Rosenthal Fair

Debt Collection Practices Act (Rosenthal Act), Cal. Civ. Code

§ 1788 et seq. Additionally, construing adopted FDCPA remedy provisions to provide duplicative awards must invite preemption, because such awards will undermine the statute’s

protective cap on statutory damages.

The California legislature replaced substantial portions of

the Rosenthal Act with the FDCPA to harmonize California

and federal debt collection practices law. See California Bill

Analysis, Senate Judiciary Committee, A.B. 969, 1999-2000

Regular Session, July 15, 1999, p. 5, available at

ftp://leginfo.public.ca.gov/pub/ 99-00/bill/asm/ab_0951-1000/

ab_969_cfa_ 19990708_133036_sen_comm.html (last visited

Aug. 5, 2011). California Civil Code § 1788.17, which

amended the Rosenthal Act, provides: 

Notwithstanding any other provision of this title,

every debt collector collecting or attempting to collect a consumer debt shall comply with the provisions of Sections 1692b to 1692j, inclusive, of, and

shall be subject to the remedies in Section 1692k of,

GONZALES v. ARROW FINANCIAL SERVICES 18129
Title 15 of the United States Code. However, subsection (11) of Section 1692e and Section 1692g shall

not apply to any person specified in paragraphs (A)

and (B) of subsection (6) of Section 1692a of Title

15 of the United States Code or that person’s principal. The references to federal codes in this section

refer to those codes as they read January 1, 2001.

Cal. Civ. Code § 1788.17. 

The prefatory language “[n]otwithstanding any other provision of this title” indicates the California legislature intended

to replace any provision of the Rosenthal Act that touched

upon subject matter adopted from the FDCPA—including, in

particular, the remedy provisions in § 1692k. See People v.

Palacios, 161 P.3d 519, 524 (Cal. 2007) (“[T]he broad and

unambiguous scope of ‘[n]otwithstanding any other provision

of law’ overrides the application, if any, of [contradictory

law].”); cf. United States v. Novak, 476 F.3d 1041, 1052 (9th

Cir. 2007) (en banc) (“We have recognized that including a

‘notwithstanding any other law’ provision is a method—akin

to an express reference to the superseded statute—by which

Congress can demonstrate that it intended to partially repeal

an Act.”) (internal quotation marks, alterations, and citation

omitted). Section 1788.17 does not merely “supercede[ ] any

provision . . . inconsistent with the referenced provisions of

the FDCPA.” Maj. Op. at 18122. Rather, § 1788.17 speaks in

broad and unqualified terms. It contains “no specific language

or exceptions to suggest the plain meaning of the phrase ‘notwithstanding any other provision of [this title]’ may be

ignored. The clause means what it says.” Watkins v. Cnt. of

Alameda, 98 Cal. Rptr. 3d 847, 866 (Ct. App. 2009). 

To be sure, although § 1788.17 explains at length which

sections of the FDCPA will become operative under California law, it identifies no section of the Rosenthal Act that will

remain in effect. If the California legislature intended anything other than a wholesale replacement of the operative stat18130 GONZALES v. ARROW FINANCIAL SERVICES
utory text, it could have said so. Instead, it prefaced the

amendment to the Rosenthal Act with the precedent-charged

language “[n]otwithstanding any other provision of this title.”

Therefore, giving effect to § 1788.17’s “plain” and “unqualified” meaning, the adopted remedy provisions of the FDCPA

must operate independent of any formerly operative remedy

provisions in the Rosenthal Act. 

Given this interpretive backdrop, these plaintiffs cannot

obtain a double statutory damages award under mirror provisions of the FDCPA. Certainly nothing in the text of the statute authorizes such a recovery. See Mejia v. Marauder Corp.,

2007 WL 806486, at *11-12 (N.D. Cal. Mar. 15, 2007)

(declining to award duplicative statutory damages under the

FDCPA and Rosenthal Act). The amended Rosenthal Act provides that debt collectors “shall be subject to the remedies in

Section 1692k [of the FDCPA].” Cal. Civ. Code § 1788.17.

Section 1692k, in turn, provides that individual plaintiffs may

recover statutory damages up to $1,000 and class plaintiffs

may recover statutory damages up to 1 per centum of a defendant’s net worth. 15 U.S.C. § 1692k(a)(2). The Fifth and Seventh Circuits recognize that caps on statutory damages—like

that in § 1692k of the FDCPA—are protective measures

designed to strike a reasonable balance between punishing the

deceptive debt collector and preventing catastrophic damage

awards. As the Seventh Circuit observed:

The key aspect of this net worth provision is not its

punitive nature, . . . but a recognition that an award

of statutory punitive damages may exceed a company’s ability to pay and thereby force it into bankruptcy. . . . Thus, we agree with the Fifth Circuit that

the primary purpose of the net worth provision is a

protective one. It ensures that defendants are not

forced to liquidate their companies in order to satisfy

an award of punitive damages.

Sanders v. Jackson, 209 F.3d 998, 1002 (7th Cir. 2000)

(emphasis added) (citing Boggs v. Alto Trailer Sales, Inc., 511

GONZALES v. ARROW FINANCIAL SERVICES 18131
F.2d 114, 118 (5th Cir. 1975) (holding that an identical provision in Truth In Lending Act was designed to protect businesses from catastrophic damage awards)). 

The majority’s notion that the FDCPA can be read to allow

duplicative statutory damages awards simply cannot be reconciled with the statute’s carefully designed protective cap on

non-compensatory damages. The Rosenthal Act’s original

directive that “remedies provided herein are intended to be

cumulative and in addition to any other procedures, rights, or

remedies” does not change this result. The California legislature replaced the Rosenthal Act’s remedy provisions with

those of a statute that cannot reasonably be read to provide for

duplicative statutory (as distinct from compensatory) damages. The majority concedes that the FDCPA bars recovery of

damages under multiple statutes above the monetary limit.

Maj. Op. at 18128 n.15. Thus, the Rosenthal Act’s cumulative

remedies provision is contrary to and inconsistent with the

FDCPA limit on statutory damages because double statutory

damages may exceed the FDCPA limit. Contra Maj. Op. at

18126 n.13. Otherwise, we have to rewrite the Rosenthal

Act’s cumulative provision to make it conditional. See Cal.

Civ. Code § 1788.32.

The FDCPA’s implied limit on duplicative statutory damage awards must operate with equal force under California

law as an incorporated provision of the Rosenthal Act,

because when language is “obviously transplanted from

another legal source, whether the common law or other legislation, it brings the old soil with it.” Lambert v. Blodgett, 393

F.3d 943, 966-67 (9th Cir. 2004) (quoting Felix Frankfurter,

Some Reflections on the Reading of Statutes, 47 Colum. L.

Rev. 527, 537 (1947)) (internal quotation marks omitted).

This is precisely why the majority opinion concludes that

plaintiffs may proceed as a class under the adopted provisions

of the FDCPA, notwithstanding the Rosenthal Act’s former

prohibition on class recovery. See Maj. Op. section IV.A. It

would be inconsistent to hold that adopted provisions of the

18132 GONZALES v. ARROW FINANCIAL SERVICES
FDCPA control in one instance and not in another. If the class

action provisions of the FDCPA trump the old Rosenthal Act,

so too must the FDCPA’s implied prohibition on duplicative

statutory damages awards. 

Further, such an award, if possible, must be preempted,

because allowing double statutory damage awards under mirror provisions of the FDCPA will undermine Congress’s careful design to shield errant debt collectors from crushing

statutory damages awards.1 As the majority indicates, “Congress can define explicitly the extent to which its enactments

preempt state law. Preemption fundamentally is a question of

congressional intent, and when Congress has made its intent

known through explicit statutory language, the courts’ task is

an easy one.” English v. Gen. Elec. Co., 496 U.S. 72, 78-79

(1990) (internal citations omitted). Congress explained that

the FDCPA “does not annul, alter, or affect, or exempt any

person subject to the provisions of this subchapter from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are

inconsistent with any provision of this subchapter, and then

only to the extent of the inconsistency.” 15 U.S.C. § 1692n

(emphasis added). Therefore, even if the amended Rosenthal

Act could be read to permit duplicative statutory damages

awards under identical provisions of the FDCPA, the very real

prospect of undermining Congress’s cap on statutory damages

creates an “inconsistenc[y] with [a] provision of” the FDCPA

meriting preemption. Id. Because I see no way to square the

district court’s duplicative damage awards with the FDCPA,

I must respectfully dissent. 

1Although the damages award in this case would not exceed the FDCPA

cap, one can easily imagine another plaintiff class exceeding the cap

where the numerosity of the class or severity of the claims exceed those

in the present case. 

GONZALES v. ARROW FINANCIAL SERVICES 18133