Source: http://updates.mwbllp.com/2019/07/fyi-cal-app-ct-1st-dist-holds-rosenthal.html
Timestamp: 2019-12-12 07:10:46
Document Index: 152670418

Matched Legal Cases: ['§ 1812', '§ 1812', '§ 1812', '§ 1788', '§ 1788', '§ 1812', '§ 1788', '§ 1788']

Financial Services Law Developments: FYI: Cal App Ct (1st Dist) Holds Rosenthal Act Allows Class Actions, Cure Provisions Apply to Debtor Notices
In an unreported opinion, the Court of Appeal for the First District of California recently held that a debt collector that violated the minimum type-size requirement for collection letters under Cal. Civil Code § 1812.701(b) may utilize the procedure for curing violations under California's Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) to correct its violations.
In so ruling, the Court also held that Rosenthal Act violations may be brought as class actions under a 1999 amendment essentially incorporating the federal Fair Debt Collection Practices Act's provisions into the Rosenthal Act.
The consumer received a debt collection letter from the debt collector that did not provide certain statutorily required language in the proper type-size. The consumer filed a complaint on behalf of a putative class alleging violation of Cal. Civil Code § 1812.701(b). As you may recall, a violation of section 1812.701(b) is "considered a violation of the Rosenthal Fair Debt Collection Practices Act". Cal. Civil Code § 1812.702
Nine days after it was served with the consumer's complaint, the debt collector sent a revised collection letter that contained the required language in the same type-size as that which was used to inform her of her debt.
The debt collector argued that it cured the alleged violation within the 15-day period prescribed by Cal. Civil Code § 1788.30(d) for a curable Rosenthal Act violation. The debt collector moved for summary judgment on the consumer's individual claim.
The trial court found that the "cure" provision under section 1788.30(d) applied to the debt collector's section 1812.701(b) violation, and granted the debt collector's motion for summary judgment and dismissed the entire putative class action.
As you may recall, debt collection practices in California are governed by federal law and by California's Rosenthal Fair Debt Collection Practices Act, Cal. Civil Code § 1788, et seq.
Originally the Rosenthal Act did not permit class actions. In 1999, the Legislature passed Assembly Bill No. 969, adding Cal. Civil Code B' 1788.17 to the Rosenthal Act, which provides in relevant part: "[n]otwithstanding 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 [the FDCPA]."
As relevant in this case, "[t]he type-size used in the disclosure shall be at least the same type-size as that used to inform the debtor of his or her specific debt, but is not required to be larger than 12-point type." Cal. Civil Code § 1812.701(b).
The cure provision in the Rosenthal Act states: "[a] debt collector shall have no civil liability under this title if, within 15 days either after discovering a violation which is able to be cured, or after the receipt of a written notice of such violation, the debt collector notifies the debtor of the violation, and makes whatever adjustments or corrections are necessary to cure the violation with respect to the debtor." Cal. Civil Code § 1788.30(d).
The Appellate Court disagreed. Finding no express repeal language in Civil Code § 1788.18, the Appellate Court explained that an implied repeal will be found "only when there is no rational basis for harmonizing the two potentially conflicting statutes." Garcia v. McCutchen (1997) 16 Cal.4th 469, 477. The Appellate Court observed that the Ninth Circuit Court of Appeals addressed this very issue in Afewerki v. Anaya Law Grp. (9th Cir. 2017) 868 F.3d 771, and held that section 1788.17 did not remove or impliedly repeal section 1788.30b's defense for cured violations.
The Appellate Court noted that while section 1788.17 applied "[n]otwithstanding any other provision" of the Rosenthal Act, the mere incorporation of certain provisions from the FDCPA -- none of which says anything about curing violations -- did not render sections 1788.17 and 1788.30(d) so inconsistent that the two cannot operate concurrently.
The consumer also argued that the type-size violation cannot be cured under section 1788.30(d) because the statute requires compliance in the debt collector's first written communication to the consumer.
Alternatively, the consumer argued that the cure provision did not apply to the debt collector's section 1812.701(b) violation.
Thus, the Appellate Court found no error in the trial court's application of section 1788.30, and its determination that the debt collector's violation could be cured in a writing sent after the first written communication with the debtor.
Next, the Appellate Court turned to the consumer's argument that the trial court erred by dismissing the entire putative class action after granting summary judgment on her individual claim.
To resolve this issue, the Appellate Court began by considering whether the language "individual action" in section 1788.30 barred a class action based on alleged violations of section 1812.701(b).
As you may recall, the remedies provision of the Rosenthal Act state that "[a]ny debt collector who violates this title with respect to any debtor shall be liable to that debtor only in an individual action, and his liability therein to that debtor shall be in an amount equal to the sum of any actual damages sustained by the debtor as a result of the violation." Cal. Civil Code B' 1788.30(a).
However, in the Appellate Court's view, section 1788.17 may be reasonably read to incorporate the class action remedies of the FDCPA into the Rosenthal Act, "[n]otwithstanding any other provision" of the Rosenthal Act, such as the individual action provisions in section 1788.30.b
The Appellate Court observed that several federal courts faced with this questions have concluded that "class actions may proceed under the amendment to the Rosenthal Act." Gonzales v. Arrow Fin. Servs., LLC (9th Cir. 2011) 660 F.3d 1055, 1066 (collecting cases).
In the Appellate Court's view, the debt collector voluntarily gave special treatment to the named plaintiff only, resulting in the elimination of her standing to maintain a putative class action.
Accordingly, the Appellate Court reversed the trial court's judgment and remanded for further proceedings.