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United States District Court 

Northern District of California 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

JUAN QUINTANILLA VASQUEZ, 

GABRIELA PERDOMO ORTIZ, and 

VICTOR HUGO CATALAN MOLINA, 

individually and on behalf of 

all others similarly situated, 

Plaintiffs, 

v. 

LIBRE BY NEXUS, INC., 

Defendant. 

No. 17-cv-00755-CW 

ORDER ON MOTION TO COMPEL, 

MOTION TO DISMISS, AND MOTION 

FOR SANCTIONS 

(Dkt Nos. 34, 35, 65) 

Before the Court are three motions. Defendant Libre by 

Nexus, Inc. brings a motion to compel arbitration, a motion to 

dismiss, and a motion for sanctions pursuant to Federal Rule of 

Civil Procedure 11. Plaintiffs Juan Quintanilla Vasquez, 

Gabriela Perdomo Ortiz, and Victor Hugo Catalan Molina oppose 

these motions. On August 14, 2018, the parties appeared for a 

hearing. Having considered the papers and the arguments of 

counsel, the Court DENIES the motion to compel arbitration, 

GRANTS the motion to dismiss in part, and DENIES the motion for 

sanctions. 

BACKGROUND 

Libre by Nexus, Inc. (LBN) is a Virginia corporation with 

its principal place of business in Verona, Virginia. Docket No. 

28 (Second Amended Complaint (SAC)) ¶ 14. LBN provides services 

to families seeking the release of their family members from 

immigrant detention. See id. ¶ 3, Declaration of David Dow See 

III (Dow See Decl.) ¶ 1. 

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Vasquez and Ortiz are from Honduras. SAC ¶¶ 71, 88. 

Molinas is from Mexico. Id. ¶ 106. All three crossed the 

Mexico-United States border to seek asylum because they were 

targets for violence in their home countries. Id. ¶¶ 71, 88, 

106. They were each detained by United States Immigration and 

Customs Enforcement (ICE). Id. ¶¶ 72, 89, 107. While they were 

detained, their spouses contacted LBN to assist with their 

release. Id. ¶¶ 75, 92, 110. 

Vasquez crossed the border on December 1, 2015 and was 

detained in Texas. Id. ¶ 72. The bond for his release was set 

at $10,000. Id. ¶ 73. LBN helped arrange for his release on 

February 10, 2016. Id. ¶ 75; Dow See Decl. ¶¶ 2-3. On that same 

day, an LBN representative picked him up, dined with him, gave 

him a cell phone to call his family, and drove him approximately 

five hours to LBN’s offices in San Antonio, Texas. Dow See Decl. 

¶ 4. At the LBN office, later that same day, the LBN 

representative presented Vasquez with disclosures and agreements 

written in English and discussed some portions of the agreements 

with him in Spanish. Id. ¶ 5; SAC ¶ 78. He then signed the 

agreements. Id. 

Ortiz crossed the border on April 2, 2015 and was detained 

in Texas. Id. ¶ 89. Her bond was set at $20,000. Id. ¶ 90. On 

June 2, 2015, her spouse contacted LBN, which helped arrange for 

issuance of a bond for $20,000 by Statewide Bonding Company the 

following day. Id. ¶ 92; Dow See Decl. ¶ 8. Upon her release, 

an LBN representative also picked her up, dined with her, gave 

her a cell phone, and drove her approximately five hours to LBN’s 

offices in San Antonio. Dow See Decl. ¶ 9. On June 4, 2015, the 

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LBN representative presented Ortiz with disclosures and 

agreements written in English and discussed some portions of the 

agreements with her in Spanish. Id. at ¶ 10. She then signed 

the agreements. Id. 

On December 18, 2015, Molina crossed the border and was 

detained in San Diego, California. SAC ¶ 107. His bond was set 

at $10,000. Id. ¶ 108. On February 9, 2016, Molina’s spouse 

contacted LBN about his release. Id. ¶ 110; Dow See Decl. ¶ 12. 

LBN arranged for a bond to be posted two days later, on February 

11, 2016. Id. ¶ 13. When Molina was released on February 11, 

2016, an LBN representative picked him up, gave him a cell phone, 

and drove him about thirty minutes to LBN’s office in San Diego. 

Id. ¶ 14. Later that same day, the LBN representative presented 

Molina with disclosures and agreements written in English and 

discussed portions of the agreements with him in Spanish. Id. 

¶¶ 15-16. He then signed the agreements. Id. 

All three Plaintiffs signed a GPS Monitoring and Disclosure 

Statement (GPS Monitoring Agreement), whereby they agreed to wear 

a GPS electronic tracking device on their ankles. Dow See Decl., 

Ex. B (Vasquez agreements), Ex. D (Ortiz agreements), and Ex. F 

(Molina agreements). The GPS Monitoring Agreement contained the 

following arbitration provision: 

IN THIS ARBITRATION CLAUSE, “YOU” REFERS TO THE 

RESPONDENT. EITHER NEXUS PROGRAMS OR RESPONDENT MAY 

CHOOSE TO HAVE ANY DISPUTE BETWEEN THEM DECIDED BY 

ARBITRATION AND NOT IN COURT OR BY JURY TRIAL. IF A 

DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO 

PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER 

ON ANY CLASS CLAIM YOU MAY HAVE AGAINST NEXUS 

PROGRAMS, INCLUDING ANY RIGHT TO CLASS ARBITRATION OR 

ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS. 

DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE 

GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER

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RIGHTS THAT BUYER WOULD HAVE MAY NOT BE AVAILABLE IN 

ARBITRATION. 

Any claim or dispute, whether in contract, tort, 

statute or otherwise (including the interpretation and 

scope of this Paragraph/Clause, and the arbitrability 

of the claim or dispute), between Respondent and Nexus 

Programs or its/their employees, agents, successors or 

assigns, which arise out of or relate to this Agreement 

or any resulting transaction or relationship (including 

any such relationship with third parties who do not 

sign this Agreement) shall, at the election of 

Respondent or Nexus, be resolved by neutral, binding, 

arbitration and not by a court action. Any claim or 

dispute is to be arbitrated by a single arbitrator on 

an individual basis and not as a class action. 

Respondent expressly waives any right Respondent may 

have to arbitrate a class action. Respondent may 

choose any one of the following arbitration 

organizations and its applicable rules: the American 

Arbitration Association, 335 Madison Ave., Floor 10, 

New York, NY 10017-4605 (www.adr.org) or JAMS, 1920 

Main St., Ste. 300, Irvine, CA 92614 (www.jamsadr.com). 

Respondent may get a copy of the rules of these 

organizations by contacting the arbitration 

organization or visiting its website.

The sole Spanish document provided to Plaintiffs contains 

only five key points. SAC ¶ 29, Ex. A. It does not list the 

$420 monthly rental payment or the arbitration clause. See id. 

On February 15, 2017, Plaintiffs filed a putative class 

action on behalf of themselves and a class of similarly situated 

individuals. Docket No. 1 (Complaint). On June 9, 2017, 

Plaintiffs amended their complaint. SAC. Plaintiffs allege that 

LBN preys on Spanish-speaking migrant detainees’ vulnerability 

and limited understanding of English “to foist crushing financial 

terms and GPS shackles” on them “in exchange for its ‘service’ of 

arranging for a third party to post [their] bonds.” SAC ¶¶ 1-3. 

LBN advertises in English and gives detainees lengthy Englishlanguage disclosures and agreements to sign, despite knowing that 

almost all detainees speak Spanish and cannot speak English. Id. 

¶ 4. LBN provides detainees with a one-page “key facts” sheet in 

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Spanish, which provides only five points and omits crucial 

information about fees and dispute resolution. Id. ¶¶ 26-27, 29. 

LBN also intimidates detainees by creating the false impression 

that it is associated with ICE and can order the detention of 

immigrants. Id. ¶¶ 30-31, 40. LBN charges exorbitant fees 

relative to other bond companies and misrepresents the amount and 

nature of the fees. Id. ¶¶ 5, 23-24, 32-34. For example, LBN 

requires clients to wear a GPS ankle bracelet, which it leases to 

clients for an $880 activation fee plus $420 a month until the 

bond is cancelled. Id. ¶¶ 23-24, 32-33. These fees do not go 

towards repayment of the clients’ debt and are disproportionate 

to the actual cost of the bracelet. Id. ¶¶ 58-68. The fees 

compensate LBN excessively for arranging immigration bonds with 

third parties. Id. LBN also makes numerous other 

misrepresentations and charges other hidden fees. See, e.g., id. 

¶¶ 41, 45-61. Plaintiffs brought claims under the (1) “unfair,” 

“fraudulent,” and “unlawful” prongs of the California Unfair 

Competition Law (UCL), Business & Professions Code §§ 17200 and 

17500, et seq.; (2) the California Consumers’ Legal Remedies Act 

(CLRA), California Civil Code §§ 1750, et seq.; (3) the 

California Translation Act (CTA), California Civil Code § 1632; 

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

§§ 1692-1692(p); and (5) the Rosenthal Fair Debt Collection 

Practices Act (RFDCPA), California Civil Code §§ 1788-1788.32. 

DISCUSSION 

I. Motion to compel arbitration 

A. Legal standard 

The Federal Arbitration Act (FAA) provides that any 

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agreement within its scope “shall be valid, irrevocable, and 

enforceable, save upon such grounds as exist at law or in equity 

for the revocation of any contract.” 9 U.S.C. § 2. The FAA 

represents a “liberal federal policy favoring arbitration 

agreement, notwithstanding any state substantive or procedural 

policies to the contrary.” Moses H. Cone Mem’l Hosp. v. Mercury 

Constr. Corp., 460 U.S. 1, 24 (1983). A party to a valid 

arbitration agreement may petition a federal district court “for 

an order directing that such arbitration proceed in the manner 

provided for in such agreement.” 9 U.S.C. § 4. In considering a 

motion to compel arbitration, a court should consider “whether a 

valid arbitration agreement exists” and “whether the agreement 

encompasses the dispute at issue.” Lifescan, Inc. v. Premier 

Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). If 

so, the court should enforce the agreement. Id. 

B. Discussion 

LBN moves to compel arbitration of Plaintiffs’ claims 

pursuant to the arbitration clause in the GPS Monitoring 

Agreement. LBN contends that the arbitration clause is a valid 

arbitration agreement that encompasses the dispute at issue. 

Plaintiffs disagree. They first assert that the arbitration 

clause is invalid because there was no mutual assent and that it 

is unenforceable under McGill v. Citibank, N.A., 2 Cal. 5th 945 

(2017), and the CTA. Plaintiffs then assert that the arbitration 

clause does not cover their asserted claims. 

1. Fraud in the execution 

Plaintiffs contend that the motion to compel arbitration 

cannot be granted because there was fraud in the execution of the 

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arbitration clause. If there is fraud in the execution of the 

agreement, such that “the promisor is deceived as to the nature 

of his act,” then “mutual assent is lacking” and the contract is 

void. Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th 394, 

415 (1996). This theory can apply to void arbitration clauses. 

Id. at 415-16. To succeed on this theory, Plaintiffs must show: 

(1) misrepresentation and (2) reasonable reliance on that 

misrepresentation. Id. at 419–20; Ramos v. Westlake Servs. LLC, 

242 Cal. App. 4th 674, 688–89 (2015). 

 Two cases are instructive. In Rosenthal, the court 

considered whether an investment agreement’s arbitration clause 

could be enforced against several individuals who spoke and 

understood very little English. Rosenthal, 14 Cal. 4th at 427. 

The investment company representative purported to translate the 

English-language agreement orally, but did not mention the 

agreement’s arbitration clause. Id. The court held that the 

individuals reasonably relied on the representative’s statements 

given their previous relationship with the company, their limited 

ability to understand English, and the representations that the 

oral translation was accurate. Id. at 427-28. The court 

concluded that this was enough to show fraudulent inducement. 

Id. 

 Similarly, in Ramos, the court considered whether a car 

purchase contract’s arbitration clause could be enforced against 

a plaintiff whose primary language was Spanish, not English. 

Ramos, 242 Cal. App. 4th at 686-87. The plaintiff and the car 

company’s representative negotiated the contract in Spanish. Id. 

The representative then provided the plaintiff “with what 

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purported to be a translation of the English language contract he 

was about to sign.” Id. at 687. The representative did not 

advise the plaintiff of the contract’s arbitration clause. Id. 

The court held that the plaintiff reasonably relied on the 

Spanish translation, which did not disclose the arbitration 

clause, in signing the agreement. Id. The court concluded that 

there was fraud in the execution of the arbitration clause, which 

could not be enforced to compel arbitration. Id. at 688. 

Here, Plaintiffs have sufficiently shown that LBN 

fraudulently concealed the arbitration clause. The parties agree 

that LBN did not provide Plaintiffs with a written Spanish 

version of the arbitration clause. The “key facts” sheet does 

not mention the arbitration clause. See SAC, Ex. A. Instead, 

LBN contends that it translated the entire contract (including 

the arbitration clause) into Spanish orally. But Plaintiffs each 

testified that LBN representatives did not translate or explain 

the arbitration clause. Persinger Decl., Ex. A (Vasquez Depo.) 

at 67, 69-70, 114-115; Ex. B (Molina Depo.) at 49-50, 53-55, 58, 

107; Ex. C (Ortiz Depo.) at 75, 79-83, 131. And LBN’s own 

evidence shows that it is unlikely that its representatives 

translated the arbitration clause into Spanish for Plaintiffs. 

David Dow See, the LBN representative who oversees the verbal 

translation process, testified that he could not recall whether 

representatives translated the arbitration clause for potential 

clients. Persinger Decl., Ex. D (Dow See Depo.) at 49:1-51:6. 

He could not even say what Spanish word would be used to 

translate the term “arbitration.” Id. at 51:6-14. He also 

testified that there was no policy or manual that tells 

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representatives how to translate “arbitration” from Spanish to 

English. Id. at 51:15-21. Accordingly, it is likely that LBN 

representatives did not disclose the arbitration clause to 

Plaintiffs during the sign-up process. 

Plaintiffs only speak and read Spanish and are not 

proficient in English. SAC ¶¶ 78, 87, 95, 105, 112, 123. LBN 

representatives purported to translate the English-language 

contract into Spanish orally. Thus, Plaintiffs reasonably relied 

on LBN’s oral representations and “key facts” sheet as accurate 

translations of the English-language agreements. Ramos, 242 Cal. 

App. 4th at 690 (finding fraudulent inducement where defendant 

presented plaintiff with what purported to be a Spanish 

translation of an English translation, which in fact “completely 

omitted the arbitration agreement” defendant later sought to 

enforce). Moreover, Plaintiffs were asylum-seekers who depended 

on LBN for lodging and transportation. They also testified that, 

based on LBN’s representations, and the fact that LBN had already 

collected thousands of dollars from their relatives, they thought 

the agreement was already a done deal. Vasquez Depo. at 51; 

Molina Depo. at 35-36; Ortiz Depo. at 34, 49, 79, 121, 136. 

Under the circumstances, Plaintiffs reasonably relied on LBN’s 

representations. Rosenthal, 14 Cal. 4th at 428 (holding that if 

true, plaintiffs’ allegations of a prior relationship with 

defendant, their limited ability to understand English, and 

defendant’s representations that its oral representations 

accurately reflected the terms of the agreement were sufficient 

to show fraudulent inducement). LBN therefore fraudulently 

induced Plaintiffs to sign the arbitration clause, which is void 

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and cannot be enforced. 

2. McGill 

Plaintiffs also argue that the arbitration clause is 

unenforceable under McGill. In McGill, the California Supreme 

Court held that an arbitration provision “is invalid and 

unenforceable under state law insofar as it purports to waive” a 

plaintiff’s right to seek “public injunctive relief.” McGill, 2 

Cal. 5th at 961. This arises from California Civil Code section 

3513, a generally applicable contractual defense which provides 

that “a law established for a public reason cannot be contravened 

by a private agreement.” Id. (quotations omitted). There, 

McGill brought claims under the UCL, false advertising law, and 

the CLRA targeting Citibank’s advertising and marketing 

practices. Id. at 956-57. Citibank sought to enforce its 

arbitration agreement against McGill’s claims, which required 

arbitration of all claims on an individual basis and prohibited 

class actions. Id. at 952. The court ruled that the arbitration 

agreement would prevent McGill from requesting public injunctive 

relief in any forum, which would “seriously compromise the public 

purposes the statutes were intended to serve.” Id. at 961. 

Accordingly, the arbitration agreement could not be enforced. 

Id. 

Here, the GPS Monitoring Agreement’s arbitration clause 

requires individual arbitration of all claims, so long as a party 

requests it, as LBN seeks to do. The arbitration clause further 

states that any right to arbitrate a class action is “expressly 

waived.” As in McGill, the arbitration agreement purports to 

waive Plaintiffs’ right to request public injunctive relief. 

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Enforcing such an agreement would “seriously compromise the 

public purposes” of the UCL, CLRA, and other statutes. 

Accordingly, the arbitration clause cannot be enforced. 

 LBN responds that McGill does not apply because this case 

affects only a few thousand detainees crossing the border and 

thus does not seek public injunctive relief. But the number of 

detainees is not determinative. Instead, the Court looks at the 

nature of the relief sought. The McGill court distinguished 

between “private injunctive relief,” or “relief that primarily 

resolves a private dispute between the parties and rectifies 

individual wrongs,” from “public injunctive relief,” or “relief 

that by and large benefits the general public.” Id. at 955 

(internal citations and punctuation omitted). Here, Plaintiffs 

seek an “order enjoining LBN from continuing to violate the UCL, 

CLRA, California Translation Act, FDCPA, and RFDCPA.” FAC at 28. 

Plaintiffs’ complaint targets false and misleading statements in 

LBN’s marketing materials, disclosures, and contracts, among 

other things. See, e.g., SAC ¶¶ 32 (describing 

misrepresentations in disclosures and contracts); 35 (describing 

misleading information on LBN’s website). The proposed 

injunction will not benefit the named Plaintiffs directly, 

“because the plaintiff has already been injured, allegedly, by 

such practices and is aware of them.” Id. Rather, the proposed 

injunction is intended to benefit members of the public who are 

exposed to LBN’s false and deceptive business practices. See id. 

at 957 (holding that claims seeking to enjoin Citibank’s “unfair, 

deceptive, and misleading advertising, and material omissions” 

requested public injunctive relief). Plaintiffs’ proposed 

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injunction therefore falls squarely into the definition of public 

injunctive relief provided by McGill. 

3. Other arguments 

Plaintiffs also contend that the arbitration clause cannot 

be enforced because of the CTA and that the scope of the 

arbitration clause does not cover their claims. Because the 

Court has already determined that the arbitration clause is void 

and unenforceable, it need not reach these arguments. 

In sum, because the GPS Monitoring Agreement’s arbitration 

clause is void because of fraudulent inducement and unenforceable 

under McGill, LBN’s motion to compel arbitration must be denied. 

II. Motion to dismiss 

A. Legal standard 

A complaint must contain a “short and plain statement of the 

claim showing that the pleader is entitled to relief.” Fed. R. 

Civ. P. 8(a). The plaintiff must proffer “enough facts to state 

a claim to relief that is plausible on its face.” Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 570 (2007)). On a motion under Rule 

12(b)(6) for failure to state a claim, dismissal is appropriate 

only when the complaint does not give the defendant fair notice 

of a legally cognizable claim and the grounds on which it rests. 

Twombly, 550 U.S. at 555. A claim is facially plausible “when 

the plaintiff pleads factual content that allows the court to 

draw the reasonable inference that the defendant is liable for 

the misconduct alleged.” Iqbal, 556 U.S. at 678. 

In considering whether the complaint is sufficient to state 

a claim, the court will take all material allegations as true and 

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construe them in the light most favorable to the plaintiff. 

Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 

1061 (9th Cir. 2008). The court’s review is limited to the face 

of the complaint, materials incorporated into the complaint by 

reference, and facts of which the court may take judicial notice. 

Id. at 1061. However, the court need not accept legal 

conclusions, including threadbare “recitals of the elements of a 

cause of action, supported by mere conclusory statements.” 

Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). 

B. Discussion 

LBN moves for dismissal pursuant to Federal Rule of Civil 

Procedure 12(b)(6) on two counts: the FDCPA claim (Count VI) and 

the CTA claim (Count V). 

1. FDCPA claim 

LBN asserts that Plaintiffs’ FDCPA claim cannot be sustained 

because it is not a debt collector under the FDCPA. The FDCPA 

applies to debt collectors, which it defines as either: “any 

person who uses any instrumentality of interstate commerce or the 

mails in any business the principal purpose of which is the 

collection of any debts, or who regularly collects or attempts to 

collect, directly or indirectly, debts owed or due or asserted to 

be owed or due another.” 15 U.S.C. § 1692a(6). LBN asserts that 

debt collection is not its principal purpose and it does not 

collect debts that are owed or due another. 

The SAC makes clear that LBN’s business model is to collect 

fees to indemnify a third-party bond company. See, e.g., SAC 

¶ 171 (“LBN’s Lease Agreements serve as a loan or extension of 

credit for the percentage of bail paid by a third-party bail 

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bondsmen.”); ¶ 65 (“the fees represent a hidden indemnification 

fee that LBN charges for indemnifying immigration bail bonds it 

procures for third parties.”). Construing Plaintiffs’ 

allegations in the light most favorable to them, a portion of the 

collected fees could go to third-party bond companies. This 

would mean that LBN collects debts on behalf of another, the 

third-party bond companies. Thus, Plaintiffs have stated a claim 

under the FDCPA. If LBN contends that it does not pass along any 

fees to third parties, then that is a matter for summary judgment 

after discovery. 

In their reply brief, LBN appears to argue that Plaintiffs 

fail to allege other elements of the FDCPA. Because these 

arguments were not raised in the opening brief, they are waived. 

2. CTA claim 

LBN contends that Plaintiffs’ CTA claim must be dismissed. 

The CTA provides: 

(b)Any person engaged in a trade or business who 

negotiates primarily in Spanish, Chinese, Tagalog, 

Vietnamese, or Korean, orally or in writing, in the 

course of entering into any of the following, shall 

deliver to the other party to the contract or agreement 

and prior to the execution thereof, a translation of 

the contract or agreement in the language in which the 

contract or agreement was negotiated, that includes a 

translation of every term and condition in that 

contract or agreement: 

. . . 

(2) A loan or extension of credit secured other than by 

real property, or unsecured, for use primarily for 

personal, family, or household purposes. 

If a business fails to comply with this section, the 

consumer “may rescind the contract or agreement.” Cal. Civ. Code 

§ 1632(k). LBN asserts that the CTA claim is time-barred. The 

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statute of limitations for this claim is one year. See Cal. Code 

Civ. Proc. § 340(a) (“An action upon a statute for a penalty or 

forfeiture, if the action is given to an individual, or to an 

individual and the state, except if the statute imposing it 

prescribes a different limitation.”). See also Legrama v. 

Fremont Inv. & Loan, No. C 10-02945 MEJ, 2010 WL 5071600, at *11 

(N.D. Cal. Dec. 7, 2010); Delino v. Platinum Comm. Bank, 628 F. 

Supp. 2d 1226, 1234 (S.D. Cal. 2009). 

LBN contends that Plaintiffs’ suit is barred because 

Plaintiffs all signed their contracts with LBN more than one year 

before the filing date of this case, February 15, 2017. Vasquez 

signed on February 10, 2016. Molina signed on February 11, 2016. 

Ortiz signed on June 4, 2015. 

Plaintiffs respond that the statute of limitations should 

equitably be tolled, especially with respect to Vasquez and 

Molina, who missed the deadline for filing suit by less than five 

days. Plaintiffs argue that equitable tolling would “soften the 

harsh impact of technical rules which might otherwise prevent a 

good faith litigant from having a day in court.” Daviton v. 

Columbia/HCA Healthcare Corp., 241 F.3d 1131, 1137 (9th Cir. 

2001). Plaintiffs misunderstand the doctrine of equitable 

tolling, however. This doctrine applies where these elements are 

present: the defendant received timely notice of the plaintiff’s 

claims, the defendant will not be prejudiced, and the plaintiff 

engaged in good faith and reasonable conduct, for example, by 

seeking another remedy. Id. at 1137. The doctrine does not 

apply simply because Plaintiffs missed the deadline by only a few 

days. 

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Plaintiffs do, however, make another argument for equitable 

tolling. They contend that the doctrine should apply because LBN 

fraudulently concealed Plaintiffs’ claims. A “statute of 

limitations may be tolled if the defendant fraudulently concealed 

the existence of a cause of action in such a way that the 

plaintiff, acting as a reasonable person, did not know of its 

existence.” In re Animation Workers Antitrust Litig., 123 F. 

Supp. 3d 1175, 1194 (N.D. Cal. 2015). The plaintiff bears the 

burden of pleading and proving fraudulent concealment, which 

requires that: “(1) the defendant took affirmative acts to 

mislead the plaintiff; (2) the plaintiff did not have actual or 

constructive knowledge of the facts giving rise to its claim; and 

(3) the plaintiff acted diligently in trying to uncover the facts 

giving rise to its claim.” Id. (internal quotation marks 

omitted). Here, Plaintiffs allege that LBN deceived Plaintiffs 

by giving them English-language disclosures and agreements while 

providing a limited and misleading oral translation and “key 

facts” sheet in Spanish. Plaintiffs allege that this disguised 

the facts giving rise to their claims. The complaint does not, 

however, allege the other two prongs of fraudulent concealment, 

i.e., that Plaintiffs did not have actual or constructive 

knowledge of the facts giving rise to their claims and that they 

acted diligently to try to uncover the facts giving rise to their 

claims. For example, Plaintiffs do not allege that they did not 

know that the “key facts” sheet was not an accurate translation 

of the agreements and that they sought an English translation 

once they knew or had reason to know of this fact. Accordingly, 

the Court dismisses the CTA with leave to amend to add such 

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allegations, if Plaintiffs can truthfully do so. 

III. Motion for sanctions 

A. Legal standard 

Rule 11 provides that by “presenting to the court a 

pleading, written motion, or other paper . . . an attorney or 

unrepresented party certifies that to the best of the person’s 

knowledge, information, and belief, formed after an inquiry 

reasonable under the circumstances,” it is not being presented 

for “improper purpose, such as to harass, cause unnecessary 

delay, or needlessly increase the cost of litigation,” and that 

the legal and factual allegations are not frivolous and have a 

proper basis. The movant must comply with the safe harbor 

requirements of Rule 11(c)(2), which requires that the motion 

must first be served and must not be filed “if the challenged 

paper, claim, defense, contention, or denial is withdrawn or 

appropriately corrected within 21 days after service or within 

another time the court sets.” 

B. Discussion 

LBN brings a motion for Rule 11 sanctions against Plaintiffs 

and their attorneys. LBN’s Rule 11 motion relies on the same 

grounds as its motion to dismiss: that Plaintiffs’ FDCPA and CTA 

claims are barred as a matter of law and lack evidentiary 

support. LBN served its Rule 11 motion on Plaintiffs on June 26, 

2017, satisfying the safe harbor requirement of Rule 11(c)(2). 

As discussed above, Plaintiffs’ FDCPA claim survives Rule 

12(b)(6) scrutiny. Thus, the FDCPA claim is not frivolous and 

has proper legal and factual basis. LBN’s motion is denied with 

respect to this claim. 

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As for the CTA claim, Plaintiffs could still allege facts 

showing fraudulent concealment, which would support equitable 

tolling of the statute of limitations. In any event, the Court 

finds that Plaintiffs’ allegations in support of this claim are 

not so frivolous as to merit an award of Rule 11 sanctions. 

LBN’s motion is therefore denied with respect to this claim as 

well. 

CONCLUSION 

LBN’s motion to compel arbitration (Docket No. 35) is 

DENIED. LBN’s motion to dismiss (Docket No. 34) is DENIED with 

respect to the FDCPA claim and GRANTED with respect to the CTA 

claim. Plaintiffs shall have twenty-one days to amend their CTA 

claim. LBN’s motion for sanctions (Docket No. 65) is DENIED. 

IT IS SO ORDERED. 

Dated: August 20, 2018 

CLAUDIA WILKEN 

United States District Judge 

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