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Date: 05-27-2019
Case Style:
Lisa Arlene Timlick v. National Enterprise Systems, Inc.
Case Number: A154235
Judge: Fujisaki, J.
Court: California Court of Appeals First Appellate District, Division Three on appeal from the Superior Court, County of Lake
Plaintiff's Attorney: Frederick W. Schwinn
Defendant's Attorney: Mark Ewell Ellis and Anthony Paul Valenti
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In this appeal from the dismissal of a putative consumer class action, we are
presented with two main questions. First, can a debt collector that violates the minimum
type-size requirement for consumer collection letters under Civil Code sections 1812.700
to 1812.7021 utilize the procedure for curing violations under the Rosenthal Fair Debt
Collection Practices Act (Rosenthal Act; § 1788 et seq.) to correct its violation? Second,
after the trial court in this case found there was no triable issue of material fact that the
defendant debt collector timely cured the type-size violation as to the named plaintiff, did
the court err by dismissing the entire putative class action?
Our answer to each of the foregoing questions is yes. The Rosenthal Act’s cure
provision set forth in section 1788.30, subdivision (d) (hereafter section 1788.30(d)), is
available to debt collectors to correct curable violations of the Consumer Collection
1 Unless otherwise indicated, all further statutory references are to the Civil Code.
For purposes of this opinion, we will refer to sections 1812.700 to 1812.702 collectively
as the Consumer Collection Notice law.
2
Notice law. However, the trial court erred by dismissing the entire putative class action,
as this allowed the debt collector to unilaterally “pick off” the named plaintiff and avoid
class action litigation. Accordingly, we reverse the judgment and remand for further
proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
The operative class action complaint filed by Lisa Arlene Timlick alleges as
follows. After defaulting on a loan, Timlick received a collection letter dated January 13,
2016, from third-party debt collector National Enterprise Systems, Inc. (NES). This was
the first written communication from NES to Timlick regarding the subject debt. The
letter did not comply with section 1812.701, subdivision (b) (hereafter section
1812.701(b)) of the Consumer Collection Notice law because certain statutorily-required
language was not in a type-size that was at least the same as used to inform Timlick of
the debt, or 12-point type. Timlick pleaded a single cause of action against NES for
violation of section 1812.701(b) and sought to recover statutory damages, costs, and
attorney’s fees. She also sought to represent a class of persons in California who
received an initial written communication from NES in an attempt to collect on a
consumer debt during the one-year period prior to the complaint’s filing date.
NES moved for summary judgment on the basis that it cured the alleged violation
within the 15-day period prescribed by section 1788.30(d) for correcting curable
Rosenthal Act violations. NES submitted evidence that on January 13, 2017, nine days
after it was served with Timlick’s complaint, NES sent a letter to Timlick, in care of her
counsel of record, enclosing a revised collection letter which set forth the required
language in the same type-size as that which was used to inform her of her specific debt.
In opposition to the motion, Timlick did not dispute NES’s evidence or material
facts. Rather, she argued section 1788.30(d) should not apply for various reasons: (1) it
was implicitly repealed by a subsequently-enacted statute; (2) it applied only to violations
under a different title of the Civil Code that did not contain the statute violated by NES;
(3) NES’s violation was not capable of being cured within the meaning of section
3
1788.30(d); and (4) NES’s revised collection letter did not provide redress to the putative
class but merely served to eliminate Timlick’s standing to act as named plaintiff.
The trial court found that section 1788.30(d) applied to NES’s section 1812.701(b)
violation, and that NES timely cured the violation by sending the revised collection letter.
The trial court granted NES’s motion for summary judgment and dismissed the complaint
with prejudice. Timlick timely appealed.
DISCUSSION
“On appeal after a motion for summary judgment has been granted, we review the
record de novo, considering all the evidence set forth in the moving and opposition
papers except that to which objections have been made and sustained.” (Guz v. Bechtel
National, Inc. (2000) 24 Cal.4th 317, 334.) We also conduct independent review of the
trial court’s determination of questions of law. (Stratton v. First Nat. Life Ins. Co. (1989)
210 Cal.App.3d 1071, 1083.)
Timlick argues section 1788.30(d) and its cure provision were repealed when the
Legislature enacted section 1788.17 to harmonize the Rosenthal Act with the federal Fair
Debt Collection Practices Act (FDCPA; 15 U.S.C. § 1692 et seq.). Alternatively,
Timlick argues that the cure provision applies only to violations under the title in which it
is codified (title 1.6C) and that it has no application to NES’s section 1812.701(b)
violation, which falls under a different title (title 2.97). In any case, Timlick contends,
NES’s type-size violation is not one that is capable of being cured within the meaning of
section 1788.30(d) because that statute necessarily requires compliance in the debt
collector’s first written communication to the consumer debtor.
2
As for the trial court’s decision to dismiss the entire putative class action after
granting summary judgment on Timlick’s individual claim, Timlick argues this was error
under the so-called “pick off exception,” which is an exception to the general rule that a
2 Timlick also argues NES did not satisfy section 1788.30(d), because it sent the
notice of violation and revised collection letter to Timlick’s attorney, not the “debtor” as
required by the statute. We conclude Timlick forfeited this argument by not raising it
below.
4
named plaintiff in a class action must be a member of the class she seeks to represent.
(La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 875 (La Sala).) Timlick
argues that under this exception, she did not automatically lose her standing to represent
the class, and that the trial court should have given her the opportunity to amend her
complaint, or redefine the class, or find a new class representative.
A. The Law Governing Debt Collection Practices
We begin our discussion with an overview of the relevant law.
Debt collection practices in California are governed by state and federal law.
California’s Rosenthal Act is codified at title 1.6C (commencing with section 1788) of
part 4 of division 3 of the Civil Code. The FDCPA is codified at 15 United States Code
section 1692 et seq. Both the Rosenthal Act and the FDCPA were enacted in 1977.
(Davidson v. Seterus, Inc. (2018) 21 Cal.App.5th 283, 295.)
Section 1788.30 of the Rosenthal Act provides for actual damages to injured
debtors (§ 1788.30, subd. (a)), penalties against debt collectors for willful and knowing
violations (id., subd. (b)), and costs and reasonable attorney’s fees to the prevailing party
in a Rosenthal Act suit (id., subd. (c)). Subdivision (d) of section 1788.30, which
contains the cure provision at issue, provides: “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.”
As originally enacted, the Rosenthal Act did not permit class actions. (Accord,
Gonzales v. Arrow Fin. Servs., LLC (9th Cir. 2011) 660 F.3d 1055, 1065 (Gonzalez).)
Indeed, to this day, section 1788.30 of the Rosenthal Act states that violators are liable to
debtors “only in an individual action” or “in an individual capacity only.” (§ 1788.30,
subds. (a), (b), (f), added by Stats. 1977, ch. 907, § 1.)
In 1999, however, the Legislature passed Assembly Bill No. 969, which added
section 1788.17 to the Rosenthal Act. (Stats. 1999, ch. 319, § 2.) Section 1788.17
provides in relevant part: “Notwithstanding any other provision of this title, every debt
5
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.”3
Section 1692k of the FDCPA specifically provides for both individual and class
action remedies. It states in relevant part: “[A]ny debt collector who fails to comply
with any provision of this title [15 U.S.C. § 1692 et seq.] with respect to any person is
liable to such person in an amount equal to the sum of—[¶] (1) any actual damage
sustained by such person as a result of such failure; [¶] (2) (A) in the case of any action
by an individual, such additional damages as the court may allow, but not exceeding
$1,000; or [¶] (B) in the case of a class action, (i) such amount for each named plaintiff as
could be recovered under subparagraph (A), and (ii) such amount as the court may allow
for all other class members, without regard to a minimum individual recovery, 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)(1), (2)(B).)
Then in 2003, the Legislature enacted the Consumer Collection Notice law,
codified at title 2.97 of part 4 of division 3 of the Civil Code (§§ 1812.700–1812.702,
added by Stats. 2003, ch. 259, § 1 (Sen. Bill No. 1022)). Under section 1812.700,
subdivision (a), third-party debt collectors subject to the FDCPA must, in their first
written notice to debtors, provide a “description of debtor rights” under state and federal
3 We briefly summarize the federal provisions incorporated by reference in section
1788.17. Sections 1692b and 1692c of the FDCPA regulate how debt collectors
communicate with third persons and the debtor, respectively. Sections 1692d, 1692e, and
1692f of the FDCPA prohibit harassment, abuse, and the use of false, deceptive, or
misleading representations and unfair or unconscionable means in the collection of a
debt. Section 1692g of the FDCPA governs the validation of debts and the content of the
written notice that a debt collector must give to the debtor. Section 1692h of the FDCPA
dictates how a single payment from a debtor with multiple debts must be applied.
Section 1692i of the FDCPA is a venue provision. Section 1692j of the FDCPA prohibits
the design, compilation, and furnishing of deceptive forms in the collection of the debt.
6
law.4
If the third-party debt collector later discovers that the debtor does not speak
English and uses another language to communicate verbally in follow-up contacts, a
supplemental written notice in that language must be sent to the debtor within five
working days. (§ 1812.700, subd. (c).) And 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.”
(§ 1812.701(b).) Section 1812.702 explicitly states that “[a]ny violation of this act shall
be considered a violation of the Rosenthal Fair Debt Collection Practices Act (Title 1.6C
(commencing with Section 1788)).”
B. Civil Code Section 1788.30(d)
We first address Timlick’s argument that the enactment of section 1788.17—
which requires debt collectors to comply with listed provisions of the FDCPA and
subjects them to the remedies in section 1692k of that federal act—effectuated a repeal of
section 1788.30(d) and its cure provision. Our first step in this analysis “ ‘is to scrutinize
the actual words of the statute[s], giving them a plain and commonsense meaning.’ ”
(Garcia v. McCutchen (1997) 16 Cal.4th 469, 476 (Garcia).) Because section 1788.18
contains no express repeal language, the issue is whether it accomplishes a repeal by
implication. “ ‘[A]ll presumptions are against a repeal by implication,’ ” and an implied
repeal will be found “ ‘only when there is no rational basis for harmonizing the two
potentially conflicting statutes [citation], and the statutes are “irreconcilable, clearly
repugnant, and so inconsistent that the two cannot have concurrent operation.” ’ ” (Id. at
pp. 476–477.)
As both parties recognize, the Ninth Circuit Court of Appeals addressed this very
issue in Afewerki v. Anaya Law Group (9th Cir. 2017) 868 F.3d 771 (Afewerki), holding
that section 1788.17 did not remove or delete section 1788.30’s defense for cured
4
In the required description, the debt collector must disclose that it may not contact
the debtor before 8 a.m. or after 9 p.m., subject the debtor to harassing threats, obscene
language, and false or misleading statements, call the debtor at work if the collector has
reason to know personal calls are not permitted, or tell another person other than the
debtor’s attorney or spouse about the debt. (§ 1812.700, subd. (a).)
7
violations. In so holding, the court relied on the unambiguous language of section
1788.17, which “makes debt collectors ‘subject to the remedies in Section 1692k’ but
says nothing about defenses,” such as the cured violation defense provided in section
1788.30(d). (Afewerki, at p. 778 italics added.) The court then recalled a previous
decision in which it concluded that section 1788.17 did not delete section 1788.30(d),
even though it “nullified” some of section 1788.30’s limitations on remedies to the extent
such limitations did not apply to the remedies described in section 1692k of the FDCPA.
(Id. at p. 779, identifying Gonzales, supra, 660 F.3d at p. 1065.)
We generally agree with Afewerki that nothing in the text of section 1788.17
indicates a legislative intent to repeal section 1788.30(d).5
Although section 1788.17
applies “[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—does not render sections 1788.17 and 1788.30(d) “ ‘ “so inconsistent
that the two cannot have concurrent operation.” ’ ” (Garcia, supra, 16 Cal.4th at
pp. 476–477.) The Legislature could rationally have intended to broaden the remedies
available to debtors in Rosenthal Act suits while also maintaining the ability of debt
collectors to promptly correct curable violations.
We also find nothing in the legislative history of section 1788.17 indicating an
intent to repeal section 1788.30(d). According to an analysis of the Senate Rules
Committee, section 1788.17’s underlying purposes were to: adopt sections 1692b
through 1692j of the FDCPA; exclude certain officers or employees from the
5 We express no opinion on Afewerki’s additional holding that a debt collector who
corrected prior incorrect statements regarding the principal due and the applicable interest
rate was entitled to summary judgment based on section 1788.30(d). (Afewerki, supra,
868 F.3d at pp. 777–779.) It appears the only argument raised by the debtor on this issue
was that section 1788.17 was eliminated by section 1788.30(d). We note that in other
contexts, misrepresentations regarding the principal due and the applicable interest rate
may constitute violations that are not “able to be cured” within the meaning of section
1788.30(d). (See Romero v. Dep’t Stores Nat’l Bank (9th Cir. 2018) 725 Fed. Appx. 537,
539–540 (Romero) [section 1788.30(d) does not apply if creditor cannot undo the harm to
a debtor].)
8
requirements relating to initial disclosures and validation of debts; specify that the
available remedies include actual damages and up to a $1,000 penalty for individual
violations, and actual damages and up to $500,000 or one percent of net worth penalty
together with costs of suit and attorney’s fees to the prevailing plaintiffs for class actions;
and drop the name “Robbins” from the statutory title. (Senate Rules Com., Off. of Sen.
Floor Analyses, 3d reading of analysis of Assem. Bill No. 969 (1999-2000 Reg. Sess.)
Jul. 15, 1999, pp. 1-2.) There is no mention of repealing section 1788.30(d) in the
legislative history.
Timlick seeks to buttress her position by highlighting certain statements in the
legislative history raising concerns that debt collectors lack incentive to comply with the
law given their ability to cure violations. (Senate Rules Com., Off. of Sen. Floor
Analyses, 3d reading of analysis of Assem. Bill No. 969, supra, p. 4 [“The area of current
law which is of most concern to the proponents of this legislation is the ability for
violators to escape liability if they cure the impact of their illegal practice. . . . If any
practice is complained of, all a company must do is stop calling, writing, harassing that
person, and they are safe from punishment.”].) But these statements fall far short of
evincing an express intent to repeal section 1788.30(d). (Garcia, supra, 16 Cal.4th at
p. 477.) As we discuss below, the Legislature’s response to the lack-of-incentive
problem was to expand the remedies available to debtors to include class action remedies,
not to do away with the cure provision altogether.
The notion of repeal is further undermined by comments of the Senate Rules
Committee in its 2003 analysis of Senate Bill No. 1022—the bill that enacted the
Consumer Collection Notice law. “This bill requires that the notice be printed in at least
the same size font as the debt information, but need not be larger than 12-point type and
declares any violation of this act as a violation of the Rosenthal Fair Debt Collection
Practices Act, which generally allows for a 15-day correction period.” (Sen. Rules
Com., Off. of Sen. Floor Analyses, Unfinished Business Analysis of Sen. Bill No. 1022
(2003-2004 Reg. Sess.), Jul. 17, 2003, p. 2, italics added.) The Assembly similarly stated
in its analysis that “[f]ailure to provide the notice can be punished by existing state law,
9
which provides for a 15-day correction period.” (Assem. Floor Analysis, Sen. Bill
No. 1022, (2003-2004 Reg. Sess.), Jul. 17, 2003, p. 2, italics added.) While, strictly
speaking, the legislative history of the Consumer Collection Notice law has no bearing in
discerning the legislative intent of section 1788.17, these statements cannot reasonably be
reconciled with Timlick’s assertion that the 1999 enactment of section 1788.17 repealed
section 1788.30(d).
Timlick also contends that NES’s violation of section 1812.701 was not “a
violation which is able to be cured” within the meaning of section 1788.30(d). We
disagree. The aforementioned statements in the floor analyses of Senate Bill No. 1022
demonstrate that a violation of the type-size requirement was intended to be a Rosenthal
Act violation subject to the 15-day correction period. It necessarily follows that the
violation is “able to be cured” despite the correction being made in a writing subsequent
to the first written communication to the debtor.
6
Finally, we reject Timlick’s contention that section 1788.30(d) does not apply to a
violation of a statutory provision contained in title 2.97. True, the cure provision pertains
to liability under “this title” (title 1.6C). But title 2.97 makes clear that a violation of
section 1812.701(b)’s type-size requirement “shall be considered a violation of the
[Rosenthal Act] (Title 1.6C).” (§ 1812.702.)
In sum, we conclude the cure provision of section 1788.30(d) was available to
NES to cure its violation of section 1812.701(b)’s type-size requirement.
C. The Pick Off Exception in Putative Class Actions
We now turn to Timlick’s argument that the trial court erred in dismissing the
entire putative class action because it allowed NES to pick her off as the named plaintiff
in order to avoid a class action.
6 This assumes the violation has not caused other harms which cannot be undone by
the debt collector’s prompt issuance of a corrected letter. (See Romero, supra,
725 Fed. Appx. at pp. 539–540.) Here, Timlick did not allege or submit evidence that
she suffered any such harm from NES’s type-size violation.
10
1. Class Actions Under the Rosenthal Act
As a threshold matter, NES argues we need not reach the pick off issue because
section 1788.30 contains “individual action” language that, as a matter of law, bars
Timlick’s efforts to bring a class action based on alleged violations of section
1812.701(b).
7
Resolving this contention is a matter of statutory construction, subject to
our independent review.
To reiterate, the Rosenthal Act, as originally enacted in 1977, did not allow class
actions. Even now, section 1788.30 of the act states that violators are liable to debtors
“only in an individual action” or “in an individual capacity only.” (§ 1788.30, subds. (a),
(b), (f).) In 1999, however, section 1788.17 was added to the Rosenthal Act, providing in
pertinent part: “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.” As already mentioned in part A., ante,
section 1692k of the FDCPA specifically provides for both individual and class action
remedies.
Our first step in this analysis “ ‘is to scrutinize the actual words of the statute[s],
giving them a plain and commonsense meaning.’ ” (Garcia, supra, 16 Cal.4th at p. 476.)
When a statute employs the phrase “[n]otwithstanding any other provision of law,” it is
generally acknowledged that its “broad and unambiguous scope” operates to override[]
the application, if any, of [contradictory law].” (People v. Palacios (2007) 41 Cal.4th
720, 729.) Thus, 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 act, such as the individual action provisions in section 1788.30. Indeed, several
federal courts faced with this very question have concluded that “class actions may
7 Timlick argues NES should not be permitted to raise this argument for the first
time on appeal, but we have discretion to consider new arguments on appeal raising pure
questions of law. (Sheller v. Superior Court (2008) 158 Cal.App.4th 1697, 1709.) We
see no due process concerns given that Timlick had (and took) the opportunity to fully
address this issue on the merits in her reply brief on appeal.
11
proceed under the amendment to the Rosenthal Act, notwithstanding the contradictory
‘individual action’ language in § 1788.30.” (Gonzales, supra, 660 F.3d at p. 1066, citing
Palmer v. Stassinos (N.D. Cal. 2006) 233 F.R.D. 546, 548; McDonald v. Bonded
Collectors, LLC (S.D. Cal. 2005) 233 F.R.D. 576, 577; Abels v. JBC Legal Grp, P.C.
(N.D. Cal. 2005) 227 F.R.D. 541, 548; see Afewerki, supra, 868 F.3d at p. 779 [§ 1788.17
nullified § 1788.30’s limitations on remedies to the extent they did not apply to remedies
in § 1692k of the FDCPA].)
NES concedes that section 1788.17 allows for class action remedies in some
Rosenthal Act suits, but argues they are limited to claims alleging violations of the
FDCPA. According to NES, the plain language of section 1788.17 is clear and
unambiguous that the Legislature intended section 1788.17 to act as an enabling statute
for California plaintiffs to enforce FDCPA violations. NES reasons that section 1788.17
incorporates all of section 1692k of the FDCPA into the Rosenthal Act, and section
1692k of the FDCPA establishes civil liability only for a debt collector who “fails to
comply with any provision of this title [15 USCS § 1692 et seq.].” (15 U.S.C.
§ 1692k(a), italics added.) In NES’s view, the incorporation of this liability language
limits the availability of class action remedies to state lawsuits alleging “fail[ure] to
comply with” provisions of the FDCPA and does not extend such remedies to violations
of the Rosenthal Act that lack a federal counterpart.
We conclude the statutory language of section 1788.17 does not purport to limit
the incorporated FDCPA remedies to FDCPA violations. Section 1788.17 broadly states
that, “[n]otwithstanding any other provision” of the Rosenthal Act, “every debt collector
collecting or attempting to collect a consumer debt . . . shall be subject to the remedies in
Section 1692k.” It does not say or otherwise imply that debt collectors are subject to the
remedies in section 1692k of the FDCPA only if they violate the provisions of sections
1692b to 1692j. Nor does the statutory language make any distinction among the types of
claims for which class action remedies would be available in state Rosenthal Act suits.
And contrary to NES’s contention, section 1788.17 does not incorporate the entirety of
section 1692k of the FDCPA into the Rosenthal Act. Had the Legislature intended that
12
result, it could logically have drafted section 1788.17 to state that debt collectors are
subject to sections 1692b to 1692k of the FDCPA, or that collectors shall be subject to
section 1692k. Instead, section 1788.17 focuses on “the remedies in Section 1692k” of
the FDCPA and subjects every debt collector collecting or attempting to collect a
consumer debt to those remedies. Read thusly, section 1788.17 does not incorporate the
liability language for violators of “this title” in section 1692k(a) of the FDCPA as a
limitation on the availability of class action remedies in Rosenthal Act suits.
Assuming—generously—that NES’s alternative reading of section 1788.17 finds
reasonable support in the statutory language, we turn to the legislative history to facilitate
our interpretive analysis. (California Building Industry Association v. State Water
Resources Control Board (2018) 4 Cal.5th 1032, 1041.) In their analyses of Assembly
Bill No. 969, the Senate Rules Committee and Assembly Committee on Banking and
Finance noted that under then-existing law, class actions were unavailable for unfair debt
collection activities and the lack of a class action remedy was a key reason why debt
collectors lacked incentive to comply with the law. (Sen. Rules Com., Off. of Sen. Floor
Analyses, 3d reading analysis of Assem. Bill No. 969, supra, pp. 2, 6; Assem. Com. on
Banking and Finance, 3d reading analysis of Assem. Bill No. 969 (1999-2000 Reg. Sess.)
May 18, 1999, p. 2.) The Senate Rules Committee and Senate Judiciary Committee
elaborated: “In the event a group of persons is affected, the culprit can still escape
liability for all harm caused to consumers, unless each and every consumer brings a
complaint. This is highly unlikely, a fact those engaged in improper debt collection
practices can bank on.” (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading of
analysis of Assem. Bill No. 969, supra, at p. 4; Sen. Jud. Com., Assem. Bill No. 969
(1999-2000 Reg. Sess.) as amended May 18, 1999, p. 5.) Thus, the bill’s author proposed
adoption of section 1788.17 because, “absent the threat of a class action, there is no
incentive to abort an illegal continuing course of conduct.’ ” (Sen. Rules Com., Off. of
Sen. Floor Analyses, 3d reading of analysis of Assem. Bill No. 969, supra, p. 6; Sen. Jud.
Com., Assem. Bill No. 969, supra, p. 4.) The Senate Rules Committee and Senate
Judiciary Committee went on to note another significant reason to adopt section 1788.17.
13
As their analyses observed, the Attorney General’s Office sponsored the bill “ ‘to
harmonize state and federal law by applying federal debt collection standards and
remedies to all parties defined as debt collectors under California law.” (Sen. Rules
Com., Off. of Sen. Floor Analyses, 3d reading of analysis of Assem. Bill No. 969, supra,
p. 7; Sen. Jud. Com., Assem. Bill No. 969, supra, p. 4.)
Fairly read, the legislative history highlights the Legislature’s concern that debt
collectors lacked the incentive to preemptively comply with the debt collection laws,
particularly as to large groups of consumers, because the debt collectors could simply
“bank” on the unlikelihood that many would complain, and then cure any violations for
the few who did. (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of
Assem. Bill No. 969, supra, p. 4.) Thus, we may reasonably infer section 1788.17 was
intended to deter debt collectors from such belated and partial compliance with the law
(ibid.), as well as to provide “ ‘consistent federal and state standards [that] would
facilitate compliance and enforcement and provide a level playing field for all engaged in
debt collection activity.’ ” (Id. at p. 5.)
NES offers no rationale as to why these purposes would apply only to FDCPA
violations and not to Rosenthal Act violations lacking a federal counterpart. Clearly, the
lack-of-incentive problems that spurred the enactment of section 1788.17 would also
apply to the requirements of the Consumer Collection Notice law, as debt collectors,
particularly ones with large consumer bases, would still lack the incentive to
preemptively comply as to all consumers knowing they can correct violations
individually as complaints are made. And NES’s parsed interpretation of section 1788.17
would not further the Legislature’s desire for consistent federal and state standards, but
would instead make the availability of class action remedies contingent on a legal
determination as to whether a federal counterpart exists for the alleged violation.8
8
It may not always be the case that a type-size violation under California law will
lack a federal counterpart. California debt collectors must comply not only with the
Consumer Collection Notice law, but also with section 1692g of the FDCPA.
(§ 1788.17.) While the FDCPA does not incorporate the content requirements of section
14
In light of the statutory language, the legislative history, and the weight of
persuasive authorities that have considered this issue, we conclude Timlick was permitted
to bring a putative class action for her claim under section 1812.701(b).
2. Applicability of the Pick Off Exception
Finally, we address whether the pick off exception applies in the circumstances of
this case. A typical pick off situation arises “ ‘when, prior to class certification, a
defendant in a proposed class action gives the named plaintiff the entirety of the relief
claimed by that individual. The defendant then attempts to obtain dismissal of the action,
on the basis that the named plaintiff can no longer pursue a class action, as the named
plaintiff is no longer a member of the class the plaintiff sought to represent. . . . [T]he
defendant seeks to avoid exposure to the class action by “picking off” the named
plaintiff, sometimes by picking off named plaintiffs serially.’ ” (Wallace v. GEICO
General Ins. Co. (2010) 183 Cal.App.4th 1390, 1398–1399 (Wallace).)
Under these circumstances, “ ‘the involuntary receipt of relief does not, of itself,
prevent the class plaintiff from continuing as a class representative.’ ” (Wallace, supra,
183 Cal.App.4th at p. 1399.) Rather, the trial court must consider whether the named
plaintiff can continue to fairly represent the class in light of the individual relief offered
by the defendant, an evaluation that in most cases may be performed in the context of a
ruling on a motion for class certification. (Id. at pp. 1399–1400, relying on La Sala,
supra, 5 Cal.3d at p. 872.) If the named plaintiff cannot do so, the court should allow an
opportunity to amend the complaint to redefine the class or to add additional
representatives, and if amendment fails, the court should not dismiss the action without
giving notice of the dismissal to the members of the putative class. (La Sala, at p. 874.)
1812.700 (Khosroabadi v. N. Shore Agency (S.D. Cal. 2006) 439 F.Supp.2d 1118, 1124–
1125) or mandate a particular type-size for initial communications to debtors, the typesize
must still be large enough to be easily read and sufficiently prominent to be noticed
by the least sophisticated debtor. (Swanson v. Southern Or. Credit Serv. (9th Cir. 1988)
869 F.2d 1222, 1225.) Thus, in some cases, a debt collector’s initial communication to a
debtor may violate both section 1812.701(b) of the Consumer Collection Notice law and
section 1692g of the FDCPA.
15
“The policy concerns underlying the ‘pick off’ exception are the desire to avoid
‘revolving door’ litigation, whereby the defendant uses a tactic to avoid a class action, to
the detriment of putative class members who cannot afford to initiate or join litigation,
and inviting a waste of judicial resources.” (Schoshinski v. City of Los Angeles (2017)
9 Cal.App.5th 780, 801–802 (Schoshinski).) When such a tactic is condoned, “only
members of the class who can afford to initiate or join litigation will obtain redress; relief
for even a portion of the class would compel innumerable appearances by individual
plaintiffs” and impose burdens upon those plaintiffs and the court. (La Sala, supra,
5 Cal.3d at p. 873.) Because class actions are intended to avoid these burdens, a
defendant should not be permitted to pick off the named plaintiff by granting relief that is
withheld from the rest of the putative class. Otherwise, such defendants will always be
able to defeat a class action and “deprive other members of the class of the benefits of the
litigation and any notice of opportunity to enter into it.” (Ibid.)
NES argues it did not pick off the named plaintiff within the meaning of these
authorities, but rather, it substantively prevailed on the merits of Timlick’s individual
claim based upon the cure defense provided by section 1788.30(d). On this score, the
critical issues are whether the defendant’s actions are voluntary and relief is provided to
the plaintiff alone. (Schoshinski, supra, 9 Cal.App.5th at p. 804.) Here, NES’s victory
was only made possible by its voluntary correction of the type-size violation. NES did
not prevail against Timlick in the sense that her allegations were disproven or shown to
be meritless. On the contrary, her allegation that NES violated section 1812.701(b)’s
type-size requirement was implicitly conceded. Moreover, NES does not argue or point
to any evidence in the record that it corrected the alleged violations as to the rest of the
putative class. Therefore, just as in a typical pick off scenario, NES voluntarily gave
special treatment to the named plaintiff only, resulting in the elimination of her standing
to maintain a putative class action. (Schoshinski, supra, 9 Cal.App.5th at p. 804.)
Finally, the policy concerns underlying the pick off exception are implicated here.
The effect of the trial court’s dismissal of the action is that putative class members who
do not have the financial means to initiate or join the litigation will not obtain any
16
redress. And any relief for the putative class members would require multiple individual
suits, resulting in the kind of revolving door litigation that wastes judicial resources. (La
Sala, supra, 5 Cal.3d at p. 873.)
For these reasons, we conclude the pick off exception applies to the circumstances
of this case. Accordingly, the trial court erred in dismissing the entire putative class
action without first affording Timlick the opportunity to amend her complaint, redefine
the putative class, or locate a suitable class representative, and without giving notice to
the putative class. (La Sala, supra, 5 Cal.3d at p. 872.)
Outcome: The judgment is reversed and remanded for further proceedings consistent with
this opinion.
Plaintiff's Experts:
Defendant's Experts:
Comments: