Court Opinion

ID: 9910923
Source: CourtListenerOpinion
Date Created: 2023-12-18 20:02:15.973301+00
Date Added: 2024-06-11T12:55:00.359732
License: Public Domain

Filed 12/18/23 Moten v. Transworld Systems CA4/2

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
 California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
                                     or ordered published for purposes of rule 8.1115.

           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO

 JASMINE MOTEN,

          Plaintiff and Appellant,                                       E078871

 v.                                                                      (Super.Ct.No. CVRI2104511)

 TRANSWORLD SYSTEMS, INC.,                                               OPINION

          Defendant and Respondent.

         APPEAL from the Superior Court of Riverside County. Sunshine S. Sykes, Judge.

Reversed.

         Jubilee Legal, Daniel Abraham; Law Office of Monica Hartsock and Monica

Hartsock for Plaintiff and Appellant.

         Rob Bonta, Attorney General, Nicklas A. Akers, Assistant Attorney General,

Michele Van Gelderen and Daniel M.B. Nadal, Deputy Attorney Generals as Amicus

Curiae on behalf of Plaintiff and Appellant.

         Sessions, Israel & Shartle, Justin H. Homes and James K. Schultz for Defendant

and Respondent.

                                                             1
      Plaintiff and appellant Jasmine Moten appeals the grant of the anti-SLAPP motion

filed by defendant and respondent Transworld Systems, Inc. (Transworld). In 2007,

Moten took out a student loan from Union Federal Savings Bank to finance her college

education. The loan was transferred to the National Collegiate Funding, LLC (Trusts)

and was then assigned to a specific loan trust, National Collegiate Student Loan Trust

2007-3 (NCSLT 2007-3). When Moten defaulted on her payments, Transworld, a debt

collection company, became the post-default servicer of the loan. Transworld hired

counsel to file a debt collection action on behalf of NCSLT 2007-3 in Riverside Superior

Court against Moten to recover the debt. That matter is still pending.

      Plaintiff filed this putative class action against Transworld claiming that it did not

have a valid legal claim based on its manufacturing documents to prove ownership of the

loan by NCSLT 2007-3. Plaintiff alleged that such deceptive practices were violations of

the Robbins-Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.;

hereafter, the Rosenthal Act) and the Federal Fair Debt Collection Practices Act (Federal

Act); and violated Unfair Competition, Unlawful Business Acts and Practices (UCL) and

Business and Professions Code section 17200. Transworld filed its special motion to

strike pursuant to Code of Civil Procedure section 425.16 (anti-SLAPP Motion). The

trial court granted the anti-SLAPP motion finding that Moten’s complaint arose from

Transworld’s exercise of free speech and petitioning rights, protected activity under Code

of Civil Procedure section 425.16, and that Moten failed to demonstrate a probability of

prevailing on her complaint because her claims were barred by the litigation privilege of

Civil Code section 47, subdivision (b).

                                             2
       Moten contends on appeal that the trial court erred by determining that (1) the debt

collection practices of Transworld were protected activity under the anti-SLAPP laws;

and (2) her complaint should not have been dismissed based on the trial court erroneously

concluding that her Rosenthal Act and UCL claims were barred by the litigation

privilege, and that she had failed to demonstrate a probability of prevailing on the merits.

                     FACTUAL AND PROCEDURAL HISTORY

       A.     ORIGINAL COMPLAINT

       Moten filed her class action complaint on October 4, 2021 (Complaint). She

alleged Transworld was a third-party debt collector for NCSLT 2007-3. Transworld was

a California corporation that was doing business in Riverside County. Moten identified

the class as all California residents who had been pursued indirectly or directly by

Transworld consumer debt collections in California courts since September 30, 2018, on

behalf of the Trusts and the NCSLT 2007-3.

       Moten provided a history of the origination of student loans and the sale of those

loans. Moten alleged that Transworld had worked with “affiliates” and “business

partners” to attempt to collect consumer debts. These affiliates and business partners

included the Trusts. She alleged the Trusts, Transworld and NCSLT 2007-3 had no legal

right to enforce the debts and did not have the authority to try to collect the debts by

filing lawsuits.

       Moten alleged that First Marblehead Corporation acquired student loans from

various banks, which had originated the loans and intended to sell them to various trusts

that were to hold the loans. The loans were identified in the purchase and sale agreement

                                              3
between First Marblehead Corporation and Trusts. The identification of the loans was to

be accomplished through documents titled “Schedules” attached to the purchase and sell

agreement. Moten alleged that the Schedules had been lost. Moten alleged that First

Marblehead Corporation failed to properly account for the loans and those who purchased

the loans “were aware that records identifying ownership and proof of assignment were

legally deceptive” but chose to proceed. These purchasers then collected the debt on the

student loans without “sufficient records.” Transworld became involved several years

after the Trusts were set up and its employees had no personal knowledge of the

transactions involving the assignments of the loans to the Trusts.

       Moten alleged Transworld replaced the Schedules with “Substitute Rosters, “

which Transworld claimed were the actual Schedules. Transworld filed several lawsuits

in California courts relying on these Substitute Rosters to prove ownership of the loans.

       Moten also provided that the Consumer Financial Protection Bureau (CFPB)

investigated Transworld. Attached to the Complaint was a “Consent Order” issued by the

CFPB on September 15, 2017.1 Transworld was found to have committed several

offenses between November 1, 2014, and April 25, 2016, on behalf of the Trusts by filing

“tens of thousands of collections lawsuits against borrowers.” Transworld had consented

       1 On September 26, 2022, Moten filed a request for judicial notice. We will
partially grant the request for judicial notice to the extent the information was attached to
the Complaint. This includes only item No. 1, which is the Consent Order. The request
to judicially notice lower court filings and rulings in out-of-state cases are not relevant to
this appeal and Moten admits were not presented to the trial court.

                                              4
to the order being issued but did not admit to any of the findings of facts or conclusions

of law.

          The Consent Order provided that Transworld operated as the sub-servicer for the

Trusts. Law firms hired by Transworld had initiated 37,689 debt collection lawsuits in

courts throughout the United States on behalf of the Trusts. With those lawsuits,

Transworld employees signed affidavits that were used by the law firms that Transworld

hired in the debt collection proceedings. Affiants swore that they had personal

knowledge of the assignment of the loans and could testify regarding their personal

knowledge of the loans. Further, many of the affiants claimed to have reviewed the chain

of title records but they, in fact, reviewed them online through another agency. The

CFPB found these employees had no personal knowledge of the record of the chain of

title possessed by Transworld. Employees continued to sign these affidavits with no

personal knowledge of the records.

          Further, in these lawsuits filed between 2014 and 2016, documentation of the

complete chain of title to show the debt was owned by the NCSLT was lacking. The

Consent Order provided that Transworld was to take action to remedy the lawsuits and

was not to initiate any collections lawsuits unless they had the documentation necessary

to prove that the Trusts owned the debt, including a complete chain of assignment.

Employees of Transworld were not to provide any false affidavits.

          Transworld supported the suit against Moten, National Collegiate Student Loan

Trust 2007-3 v. Jasmine Moten, Riverside Superior Court, case No. 2003940 (Lawsuit),

by hiring attorneys and providing documentation. The Lawsuit was based on a loan that

                                              5
Moten took out in July 2007 with Union Federal Savings Bank to borrow $24,000 to

cover her college education. The finance charge was $91,761.60 making the total cost of

the 12-year loan to be $115,761.60. Moten admitted making some payments to NCSLT

2007-3 unaware they could not provide proper documentation of ownership, but she fell

behind on the payments. Upon default, the loan was transferred to Transworld to collect

on the debt. The last payment that Moten made on the loan was on January 23, 2017.

The NCSLT 2007-3 trust filed the Lawsuit on September 30, 2020, seeking $59,170.44.

       Plaintiff alleged that Transworld and NCSLT 2007-3 had no legal standing to file

the lawsuit as they could not provide proper documentation by way of the original

Schedules transferring the loans. Moten referred to out-of-state cases involving

Transworld and testimony by Transworld employees that they lacked all the

documentation and that employees had no knowledge of the origin of the loans nor

personal knowledge of the transfer of the loans.

       Moten’s first cause of action was for a violation of the Rosenthal Act. Transworld

was a debt collector within the meaning of Civil Code section 1788.2, subdivision (c).

Transworld violated the Rosenthal Act in “various ways” including Civil Code section

1788.13, subdivision (i), which prohibits the use of false representations concerning the

nature of services or business being rendered by the debt collector.

       The second cause of action was under the UCL. Transworld violated the UCL by

engaging in the “above stated and prohibited unlawful, unfair, fraudulent, deceptive,

untrue, and misleading acts and practices as part of its direct and indirect collection and

attempted collection of debts that have previously been adjudicated.” Moten referred to

                                              6
Civil Code section 1788.17 and 15 U.S.C. 1692 (e)(2). Moten alleged she suffered injury

because she had to pay money to defend herself in the court action brought by

Transworld. Moten alleged that Transworld’s actions were fraudulent.

       The third cause of action was for declaratory relief. Transworld should be barred

from filing these actions in courts based on insufficient evidence of owning these debts.

Moten also alleged that Transworld was already found to have insufficient evidence of

the chain of title of these loans purported to be owned by NCSLT 2007-3 in a final court

case and because of its agreement with the CFPB.

       In her prayer for relief, she requested that the trial court certify the class and

appoint her class representative. She requested declaratory and injunctive relief. Moten

sought an award of statutory penalties, damages and other relief based on her individual

claims. She also sought an award of attorney’s fees and costs.

       Transworld filed a demurrer on December 22, 2021. Transworld alleged that on

September 30, 2020, NCSLT 2007-3 filed the Lawsuit against Moten for breach of

contract. The Lawsuit pertained to a student loan taken out by Moten, which she

defaulted on, and there was an amount due and owing to NCSLT 2007-3. Transworld

alleged that NCSLT 2007-3 was the assignee of the loan. The case was still pending.

       Transworld argued that the Complaint was barred by the litigation privilege of

Civil Code section 47, subdivision (b)(2). In addition, Transworld argued that Moten had

failed to state a cause of action for a violation of the Rosenthal Act. Plaintiff had alleged

that Transworld violated the Rosenthal Act by making false representations. It was not

enough to allege that NCSLT 2007-3 had no evidence to support that she owed them a

                                               7
debt. She could not prove that they were harassing, oppressive, abusive, false, or

deceptive in their debt collection actions and lawsuit. Further, her UCL claim failed as

she failed to allege that Transworld committed any unlawful, unfair or fraudulent

business practice against her. Finally, her declaratory relief claim was barred by the four-

year statute of limitations. Her last payment was on January 23, 2017; she had until

October 4, 2021, to file her complaint.

       Moten filed opposition to the demurrer. She argued that Transworld was not a

party to the litigation; the Lawsuit involved the NCSLT 2007-3 and not Transworld.

Transworld was not protected by the litigation privilege. Further, the gravamen of

Moten’s case was the creation by Transworld of the replacement Substitute Rosters that

she alleged were fraudulent. These fraudulent Substitute Rosters were then used by other

parties to further debt collection and litigation. Moten also provided that her allegation

that the use of the Substitute Rosters violated the Rosenthal Act in “various ways,”

including Civil Code section 1788.17, which incorporates the Federal Act. She

sufficiently alleged a violation of 15 U.S.C. 1692e, which provides, “ ‘a debt collector

may not use any false, deceptive, or misleading representations or means in connection

with the collection of any debt.” She attached copies of declarations from Transworld

employees from a federal action, insisting that Transworld did not comply with the

Consent Order after it was issued. Transworld filed a reply to the opposition to the

demurrer.

                                             8
       B.     ANTI-SLAPP MOTION

       On the same day that Transworld filed the demurrer, it filed the anti-SLAPP

Motion. Transworld argued that Moten’s causes of action arose from Transworld’s

protected activity and she could not prevail. Transworld argued that Moten generally

alleged in her Complaint that Transworld’s actions violated the Rosenthal Act and UCL

by participating and filing the Lawsuit. These actions were protected activity under Code

of Civil Procedure section 425.16, subdivision (e).

       Transworld also argued that Moten could not demonstrate a probability of

prevailing in order to defeat the anti-SLAPP motion. Moten’s only evidence in support

of her Complaint was subject to the litigation privilege under Civil Code section 47,

subdivision (b)(2). Transworld argued, as it had in the demurrer, that the sole claim of

the violation of the Rosenthal Act was the filing of the Lawsuit, which clearly was

subject to the litigation privilege. The UCL claim also failed. Moten failed to allege that

Transworld committed any unlawful, unfair or fraudulent business practice that impacted

her directly in order for her to prevail on the merits of her claim. She had received a fee

waiver and had not paid to defend herself. Transworld also contended that any

declaratory relief was time-barred.

       Moten filed opposition to the anti-SLAPP motion. Moten insisted that the

gravamen of the Complaint was that Transworld manipulated evidence and engaged in

unfair and deceptive creation of records and that evidence was used by NCSLT 2007-3 to

file lawsuits in an attempt to collect her loan and other loans taken out by members of the

class. Moten provided that in order to prevail on a debt collection action, the entity that

                                              9
attempted to collect the debt must show that it owns the right to collect the debt and a

“true and accurate accounting of the amount owed.” Moten insists that Transworld lost

the Schedules, which showed the transfer and balance of debts from the originator of the

loans. Moten alleged that Transworld “elected to improvise and manufacture ‘evidence’

in the form of ‘Schedules’ to give the appearance the NCSLT had actually . . . acquired

the debts.”

       Moten further provided that the CFPB had investigated the practices of

Transworld, which resulted in a Consent Order. She insisted the Consent Order stated

that Transworld falsely attested it had personal knowledge of the account records and

consumer’s debt, and personal knowledge of the chain of assignments establishing

ownership of the loans. It further provided, “In addition, since November 2014, Law

Firms hired by Respondent filed hundreds of debt Collections Lawsuits without the

documentation to prove Trust ownership of the loans.”

       Moten contended that none of the allegations against Transworld arose from

protected activity. The allegations against Transworld involved the manipulation of

evidence even prior to the lawsuits filed by the NCSLT 2007-3. Transworld was not a

party or counsel in any of the collection lawsuits. Code of Civil Procedure section

425.16 did not apply to third parties; only NCSLT 2007-3 engaged in protected activity.

Further, the trial court should reject the anti-SLAPP as it was being used as a “sword” by

Transworld to protect its deceptive business practices. Moten also claimed that she had a

probability of prevailing. Moten could show that Transworld had manufactured the

Substitute Rosters in order to prove her Rosenthal Act and UCL claims. Making false or

                                             10
misleading representations violated the Rosenthal Act. The litigation privilege did not

apply. Further, the litigation privilege did not apply to Transworld as a third party to the

litigation.

       Transworld filed a reply to the opposition to the anti-SLAPP motion. Transworld

alleged that NCSLT 2007-3 attached to its complaint the loan taken out by Moten, along

with assignment documentation showing it was assigned to NCSLT 2007-3 on September

20, 2007. Moten alleged in the Complaint that “the dispute between Plaintiff and

Transworld arose when Plaintiff was sued in Riverside Court on September 30, 2021

under a collection action based off of Transworld’s false and deceptively created

Schedules.” Transworld claimed that the gravamen of Moten’s Complaint was based on

the fact that she was sued. Transworld insisted that the Complaint was based on it

providing supporting loan documentation to assist in the filing of NCSLT 2007-3’s

lawsuit. Transworld argued that the claims in the Complaint “arose” from the filing of

the Lawsuit and were subject to dismissal based on the anti-SLAPP motion. Moten’s

claims would not exist independent of the Lawsuit.

       Transworld also argued that Moten had not provided any evidence that showed the

probability of prevailing in her lawsuit. The claims were barred by the litigation

privilege. Further, the evidence presented in support of the Complaint was hearsay,

suffered from a lack of foundation, and contained improper opinions and conclusions. As

for the Consent Order, Transworld did not admit to any facts or liability. Transworld

made no admission of wrongdoing. Further, declarations by employees of Transworld

                                             11
provided by Moten showed that there were no errors or missing documents; they only

referred to inadequate training by Transworld.

        C.    RULING ON THE ANTI-SLAPP MOTION

        The trial court’s ruling on the anti-SLAPP motion was filed on February 24, 2022.

Neither party requested oral argument. The trial court granted the anti-SLAPP motion

finding only that (1) Transworld met its burden of establishing that the Complaint arose

from its exercise of free speech or petitioning rights as defined in Code of Civil

Procedure section 425.16, subdivision (e); and (2) Moten failed to demonstrate a

probability of prevailing as her causes of action were barred by the litigation privilege of

Civil Code section 47, subdivision (b). The demurrer to the Complaint was deemed

moot.

                                       DISCUSSION

        Moten insists the trial court erred by granting Transworld’s anti-SLAPP Motion

because the causes of action brought pursuant to the Rosenthal Act and the UCL claims,

were an exception to the anti-SLAPP statutes because Transworld was engaged in illegal

activity and Transworld’s conduct underlying Moten’s claim involved a broad “swath” of

debt collection activity that is not protected activity.2 Moten also claims that she showed

a probability of prevailing as the trial court erred by finding that the litigation privilege

applied to the case. Finally, she argues that the public interest exception of Code of Civil

        2 Moten appears to have abandoned her claim that Transworld was not entitled to
protection under Code of Civil Procedure section 425.16 because it was a third party to
the litigation.

                                              12
Procedure section 425.17 exempts her Complaint from the anti-SLAPP statutes.

Transworld responds that the act of filing and prosecuting a civil case falls squarely

within the categories of the anti-SLAPP statutes. Moten’s Complaint “leaves no doubt”

that her entire dispute with Transworld relates to actions taken in support of the debt

collection action, which is protected activity. Moreover, Moten failed to meet her burden

of showing a probability of prevailing or that she met the public interest exception under

Code of Civil Procedure section 425.17.

       A.     ANTI-SLAPP LAW AND ROSENTHAL ACT

       “A SLAPP suit—a strategic lawsuit against public participation—seeks to chill

rights to free speech or petition by dragging the speaker or petitioner through the

litigation process, without genuine expectation of success in the suit. The Legislature

enacted [Code of Civil Procedure] section 425.16 to provide a summary disposition

procedure for SLAPP claims. Toward this end, [Code of Civil Procedure] section 425.16

authorizes courts, upon motion by anyone who claims to be the target of a SLAPP suit, to

probe the basis for any cause of action allegedly arising from protected communicative

activities, and to strike it if the claimant cannot show minimal merit.” (Area 51

Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581, 591-592.)

       Code of Civil Procedure section 425.16, subdivision (b)(1), provides: “A cause of

action against a person arising from any act of that person in furtherance of the person’s

right of petition or free speech under the United States Constitution or the California

Constitution in connection with a public issue shall be subject to a special motion to

strike, unless the court determines that the plaintiff has established that there is a

                                              13
probability that the plaintiff will prevail on the claim.” Code of Civil Procedure section

425.16, subdivision (e), provides that any written or oral statement made before a judicial

proceeding is protected activity. “ ‘Only a cause of action that satisfies both prongs of

the anti-SLAPP statute—i.e., that arises from protected speech or petitioning and lacks

even minimal merit—is a SLAPP, subject to being stricken under the statute.’ ” (Oasis

West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)

       “On appeal, we examine without deference an order granting an anti-SLAPP

motion to strike. [Citation.] In doing so, we conduct ‘an independent review of the

entire record.’ ” (Young v. Midland Funding LLC (2023) 91 Cal.App.5th 63, 79.)

       “ ‘The Rosenthal Act was enacted “to prohibit debt collectors from engaging in

unfair or deceptive acts or practices in the collection of consumer debts.” [Citation.] The

Rosenthal Act is “ ‘a remedial statute [that] should be interpreted broadly in order to

effectuate its purpose.’ ” [Citation.] It was enacted in 1977, the same year that its federal

counterpart, [the Federal Act] . . . was enacted. [Citation.] In addition to its other

requirements and prohibitions, the Rosenthal Act generally requires debt collectors to

comply with the provisions of the [Federal Act]” (Young v. Midland Funding LLC,

supra, 91 Cal.App.5th 63, 77.) “ ‘[A] violation of the [Federal Act] is per se a violation

of the Rosenthal Act.’ ” (Id. at p. 89.)

       B.     PROTECTED ACTIVITY

       Moten first claims that the anti-SLAPP statutes do not protect illegal activity.

Transworld was engaged in illegal activity by creating the Substitute Rosters and

representing that they were the original Schedules. She relies on Flatley v. Mauro (2006)

                                             14
39 Cal.4th 299, which holds, “where a defendant brings a motion to strike under section

425.16 based on a claim that the plaintiff’s action arises from activity by the defendant in

furtherance of the defendant’s exercise of protected speech or petition rights, but either

the defendant concedes, or the evidence conclusively establishes, that the assertedly

protected speech or petition activity was illegal as a matter of law, the defendant is

precluded from using the anti-SLAPP statute to strike the plaintiff’s action.” (Id. at p.

320, italics added.) The circumstances in which the protected activity may be found

illegal as a matter of law are narrow; only when the defendant concedes the claim arose

from illegal activity or it was conclusively established. (Id. at pp. 316-317.)

       Moten claims she proved that Transworld engaged in illegal activity based on the

allegations in the Complaint and the CFPB Consent Order.3 She insists that the

Substitute Rosters were fraudulent and were not the original Schedules despite being

represented as such. However, these allegations do not conclusively establish illegal

activity. The CFPB found that Transworld supported numerous debt collection actions

filed by the NLSCT between 2014 and 2016 with improper affidavits and lacked the

proper documentation to prove ownership of the debt. In agreeing with the Consent

Order, Transworld did not admit any of the facts or legal conclusions. Transworld was

not to file any further lawsuits without obtaining the appropriate documentation.

Transworld contests that the Substitute Rosters are fraudulent. Further, the Consent

       3 Moten also refers to additional evidence in the request for judicial notice, which
was not presented to the trial court. We do not consider this evidence for the first time on
appeal.

                                             15
Order does not refer to Substitute Rosters that were attached to the Lawsuit filed in 2022.

There was no “conclusively established” evidence before the trial court that Transworld

was engaged in illegal activity by providing the Substitute Rosters used in the Lawsuit.

This differs from Flatley, as the evidence in that case was “uncontroverted.” (Flatley v.

Mauro, supra, 39 Cal.4th at pp. 328-329.) Although the Consent Order does refer to a

lack of documentation provided by Transworld in prior cases, it is not conclusive

evidence that the Substitute Rosters here are fraudulent. At this stage in the proceedings,

although Moten alleges the Substitute Rosters are fraudulent, there was no conclusive

evidence of illegal activity.

       Moten also contends that the allegations in the Complaint were based on the

allegation that Transworld provided manufactured documents in the Lawsuit to prove that

NCSLT 2007-3 owned the loan taken out by Moten, which is independent of the Lawsuit.

Moten argues that her claims would exist regardless of the Lawsuit. However, in this

case, the Complaint was filed based on the litigation. The Substitute Rosters were not

produced, according to the allegations in the Complaint, until the Lawsuit was filed and

Moten’s Complaint only alleges that her claims arise from the Lawsuit. Based on the

facts of this case, the Substitute Rosters were part of the litigation and were protected

activity under Code of Civil Procedure section 425.16, subdivision (e).

       C.     PROBABILITY OF PREVAILING

       Moten insists the trial court erred by finding that her Rosenthal Act and UCL

claims were barred by the litigation privilege of Civil Code section 47. The Attorney

General of the State of California has filed an amicus brief contending that the litigation

                                             16
privilege does not apply to consumer Rosenthal Act debt collection litigation.4 Relying

on Komarova v. National Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324, 337

(Komarova) and People v. Persolve, LLC. (2013) 218 Cal.App.4th 1267, 1277, the

Attorney General contends that debt collection violations are an exception to the

litigation privilege. The Attorney General argues it is essential that consumers be able to

protect themselves from unfair debt collection practices. If the litigation privilege were

to apply, the Rosenthal Act would be significantly impacted or wholly inoperable. We

conclude the litigation privilege does not apply to Moten’s claims.

       “ ‘ “The anti-SLAPP statute does not insulate defendants from any liability for

claims arising from the protected rights of petition or speech. It only provides a

procedure for weeding out, at an early stage, meritless claims arising from protected

activity.” ’ ” (Muddy Waters, LLC v. Superior Court (2021) 62 Cal.App.5th 905, 916.)

In an anti-SLAPP case, in order to avoid dismissal, a plaintiff has the burden “[t]o

establish a probability of prevailing.” (Soukup v. Law Offices of Herbert Hafif (2006) 39

Cal.4th 260, 291.) “[T]he plaintiff ‘must demonstrate that the complaint is both legally

sufficient and supported by a sufficient prima facie showing of facts to sustain a

favorable judgment if the evidence submitted by the plaintiff is credited.’ ” (Ibid.)

“ ‘[C]laims with the requisite minimal merit may proceed.’ ” (Baral v. Schnitt (2016) 1

Cal.5th 376, 385.)

       4 The Attorney General does not express an opinion as to whether the anti-SLAPP
Motion should have been granted. It only argues that the litigation privilege does not
apply to Rosenthal Act violations.

                                             17
       “Communications in judicial proceedings are privileged under section 47,

subdivision (b)(2). ‘[T]he privilege applies to any communication (1) made in judicial or

quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to

achieve the objects of the litigation; and (4) that have some connection or logical relation

to the action.’ ” (Komarova, supra, 175 Cal.App.4th at p. 336.)

       In Komarova, the court rejected that the litigation privilege applied to the

Rosenthal Act claims. In that case, the debt collector’s conduct consisted primarily of

making threatening phone calls to the plaintiff, both before and after the debt collector

filed an arbitration claim, and it commenced judicial proceedings without proper service

of process. These were the alleged violations of the Rosenthal Act. (Komarova, supra,

175 Cal.App.4th at 331-336.) The court held that the debt collector could not argue that

the threatening phone calls were tied to the filing of the arbitration claim, which was

protected by the litigation privilege, and evade the Rosenthal Act’s prohibitions against

calling without disclosing an identity, frequent calling amounting to harassment, and

communications with an employer. (Id. at pp. 338-340.) It found, “We must . . . be

mindful of the ease with which the [Rosenthal] Act could be circumvented if the

litigation privilege applied. In that event, unfair debt collection practices could be

immunized merely by filing suit on the debt. . . . [W]e conclude that the [Rosenthal] Act

would be significantly inoperable if it did not prevail over the privilege, where, as here,

the two conflict.” (Id. at p. 340.)

       In Oei v. N. Star Capital Acquisitions, LLC (C.D.Cal.2006) 486 F.Supp.2d 1089,

the plaintiffs alleged multiple instances of harassing communications and conduct

                                             18
occurring prior to the debt collection action being filed. The plaintiffs filed their own

action raising violations of the Rosenthal Act. The defendant contended that the causes

of action should be dismissed as they were protected under the litigation privilege. (Id. at

p. 1092, 1098.) The court found that applying the litigation privilege to immunize this

conduct would “vitiate the Rosenthal Act and render the protections it affords

meaningless.” (Id. at p. 1100.)

       In People v. Persolve, supra, 218 Cal.App.4th 1267, the People filed an action

under the unfair competition law (Bus. & Prof. Code, § 17200), based on

communications that allegedly violated specific provisions of the Rosenthal Act and the

Federal Act. The appellate court found that the action was not barred by the litigation

privilege. (Persolve, at pp. 1275-1277.) “Applying the privilege to unlawful practices

based on specific violations of the [Rosenthal] Act and the Federal Act would effectively

render the protections afforded by those acts meaningless. . . . Civil statutes for the

protection of the public should be interpreted broadly in favor of their protective purpose.

Accordingly, the People’s unfair competition law claims that are based on conduct that is

specifically prohibited by the [Rosenthal] Act and/or the Federal Act are not barred by

the litigation privilege.” (Id. at pp. 1276-1277.)

       Here, Moten contended that the Substitute Rosters attached to the complaint in the

Lawsuit were created by Transworld and were fraudulent. They were to be used to show

the chain of assignment of Moten’s loans. This was a violation of the Rosenthal Act—

that debt collectors are barred from using any false, deceptive or misleading

representations in connection with the collection of any debt. (15 U.S.C., § 1692e; Civ.

                                              19
Code, §§ 1788.13, subd. (i), 1788.17.) To bar, at the pleading stage, Moten’s allegations

that Transworld fabricated evidence in order to collect on the debt would undermine the

gravamen of the Rosenthal Act.

       Transworld relies on Boon v. Professional Collection Consultants (S.D. Cal.

2013) 978 F.Supp.2d 1157, and Lopez Reyes v. Kenosian & Miele, LLP (N.D. Cal. 2007)

525 F.Supp.2d 1158, to argue that Komarova should be viewed narrowly. In those cases,

the courts found that the only causes of action were limited to filings in state court, and

therefore, clearly fell within the litigation privilege.

       In Lopez, the court found, “The only allegedly wrongful debt collection practices

in the present case occurred entirely in the context of the filing of a state court complaint

to recover a debt. The [Rosenthal Act] does not explicitly regulate the content of

complaints or other pleadings that are transmitted in connection with an actual legal

proceeding and only prohibits the use of the courts as a means to collect a debt in a few

specific ways, none of which are at issue here.” (Lopez Reyes v. Kenosian & Miele, LLP,

supra, 525 F.Supp.2d at p. 1164.) In Boon, which was decided after Komarova, the court

interpreted Komarova narrowly by finding that Komarova depended on the fact that the

plaintiff alleged, in addition to the state court action, that the debt collector made

threatening phone calls to the plaintiff. Since the plaintiff in Boon only alleged that the

filing of the state court action violated the statute of limitations, the litigation privilege

did not apply. It stated that there must be proof of other attempts to collect on the debt

other than the filing of the state court action. (Boon v. Professional Collection

Consultants, supra, 978 F. Supp. 2d at p. 1161.)

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       Initially, this court is not bound by federal district court decisions. (Choate v.

County of Orange (2000) 86 Cal.App.4th 312, 327-328.) Moreover, we do not view

Komarova so narrowly. Another court has interpreted Komarova more broadly to decline

to apply the litigation privilege to most debt collection legal actions involving violations

of the Rosenthal Act. (See Minser v. Collect Access, LLC (2023) 92 Cal.App.5th 781,

791-792.) We follow Komarova and find that the trial court erred by finding the

litigation privilege applied.

       Moreover, as stated, Moten alleged more than just the filing of the Lawsuit that

violated the Rosenthal Act. Rather, her claim was based on a violation of the Rosenthal

Act because Transworld falsely represented that the Substitute Rosters provided to prove

ownership of the debt were the original documents showing the NCSLT 2007-3 was the

owner of the loan. Assuming Moten’s allegations are true that these documents were

fraudulent, this violated the Rosenthal Act by using false or deceptive means to collect or

attempt to collect the debt. Conceivably, the Substitute Rosters could have been shown

to Moten prior to the filing of the lawsuit to prove that she owed the money to NCSLT

2007-3. Assuming the phone calls made in Komarova occurred only during the

arbitration, the court certainly would not have found differently. Both were violations of

the Rosenthal Act regardless of when the violation occurred. The trial court erred by

finding that the litigation privilege applied to Moten’s claims.

       Transworld also argues that Moten could not show a probability of prevailing

because her Rosenthal Act, Declaratory Relief, and UCL claims will fail on their merits.

It is apparent from the brief written ruling from the trial court that it only considered the

                                              21
litigation privilege in considering the probability that Moten would prevail on her claims.

Remand is necessary in order for the trial court to consider whether, without applying the

litigation privilege, and considering the evidence presented, Moten would prevail on her

claims. (See Hunter v. CBS Broadcasting, Inc. (2013) 221 Cal.App.4th 1510, 1527

[“[T]he more prudent course is to remand the matter to the trial court to determine in the

first instance whether [the plaintiff] demonstrated a reasonable probability of prevailing

on the merits of his causes of action”].) We will reverse the order granting the anti-

SLAPP Motion and direct the trial court to consider the matter on its merits.

       D.     PUBLIC INTEREST EXCEPTION TO CODE OF CIVIL PROCEDURE

              SECTION 425.17

       Moten further claims that the public interest exception to Code of Civil Procedure

section 425.17 exempts her claims from the anti-SLAPP Motion.

       Code of Civil Procedure section 425.17, provides in pertinent part as follows:

“(a) The Legislature finds and declares that there has been a disturbing abuse of Section

425.16, the California Anti-SLAPP Law, which has undermined the exercise of the

constitutional rights of freedom of speech and petition for the redress of grievances,

contrary to the purpose and intent of Section 425.16. The Legislature finds and declares

that it is in the public interest to encourage continued participation in matters of public

significance, and that this participation should not be chilled through abuse of the judicial

process or Section 425.16. [¶] (b) Section 425.16 does not apply to any action brought

solely in the public interest or on behalf of the general public if all of the following

conditions exist: [¶] (1) The plaintiff does not seek any relief greater than or different

                                              22
from the relief sought for the general public or a class of which the plaintiff is a member.

A claim for attorney’s fees, costs, or penalties does not constitute greater or different

relief for purposes of this subdivision. [¶] (2) The action, if successful, would enforce an

important right affecting the public interest, and would confer a significant benefit,

whether pecuniary or nonpecuniary, on the general public or a large class of persons. [¶]

(3) Private enforcement is necessary and places a disproportionate financial burden on the

plaintiff in relation to the plaintiff's stake in the matter.”

       Moten argued in her opposition to the anti-SLAPP Motion that she was bringing

her Complaint both on her own behalf and in the public interest. Transworld notes that

Moten seeks her own damages in the case and cannot make a claim under the public

interest exception of Code of Civil Procedure section 425.17. It does not appear the trial

court considered the public interest exception. Since we are returning the matter to the

trial court for it to consider whether Moten has a probability of prevailing on her causes

of action, it should also consider the public interest exception.

                                        DISPOSITION

       The trial court’s order granting Transworld’s anti-SLAPP Motion is reversed. The

trial court is directed to determine whether Moten met her burden of demonstrating a

probability of prevailing on the merits of her claims and to consider the public interest

                                                23
exception of Code of Civil Procedure section 425.17. As the prevailing party, Moten is

awarded her costs on appeal.

      NOT TO BE PUBLISHED IN OFFICIAL REPORTS

                                                      MILLER
                                                                                         J.

We concur:

RAMIREZ
                               P. J.

FIELDS
                                  J.

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