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Gerber v. Citigroup

January 28, 2009

JOSEPH E. GERBER, AN INDIVIDUAL, PLAINTIFF,
v.
CITIGROUP, INC., ETC., ET AL., DEFENDANTS.



FINDINGS AND RECOMMENDATIONS

Plaintiff is proceeding pro se*fn1 with a complaint alleging, inter alia, violation of the Truth in Lending Act and Fair Debt Collection Practices Act ("FDCPA"), and was referred to the undersigned pursuant to Local Rule 72-302(c)(21). Pursuant to the findings and recommendations issued February 28, 2008, and adopted by the district court on March 21, 2008, plaintiff's state law claims are governed by California law. (February 28, 2008 Findings and Recommendations at 3.)

Three motions came on regularly for hearing June 5, 2008: Defendant Harris & Zide's (H&Z*fn2 ) motion to dismiss and motion to strike certain claims, and motion for Fed. R. Civ. P. 11 sanctions (Docket No. 107), Defendants United Collections Bureau and Tamara Henry's motion to dismiss for failure to state a claim (Docket No. 109)(hereafter "UCB"); and Plaintiff's motion to strike material in Citibank's answer and to dismiss Citibank's counterclaim (Docket no. 115). Plaintiff appeared in propria persona. Julia Strickland, Marcos Sasso, A.R. Kachadoorian appeared on behalf of defendants Citibank (South Dakota) and Citigroup Inc. Mark E. Ellis, Theresa M. LaVoie and June Coleman appeared on behalf of defendants United Collection Bureau, Inc. and Tamara Henry. Vincent Scott Green appeared on behalf of defendants Harris & Zide, Flint Zide, Arthur W. Swachman and Robert Lee. Upon review of the motions and the documents in support and opposition, upon hearing the arguments of plaintiff and defense counsel and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:

Plaintiff alleges defendants engaged in behavior proscribed by the FDCPA and the Rosenthal Act.*fn3 (First Amended Complaint, passim.) Plaintiff alleges, inter alia, that defendants "kept a state court collection lawsuit secret from plaintiff and his attorney for nearly a year while supposedly communicating in good faith as to an alleged debt." (Opp'n. at 12.) Plaintiff claims defendants did this "so they could commit aggressive and egregious violations of fair debt collection laws while retaining a hidden 'hole card' for privilege and immunity defenses against any federal fair debt collection action or related tort claim." (Id.)

All moving defendants contend they are protected from plaintiff's second claim (FDCPA) by the Noerr-Pennington doctrine because their acts were taken pre- and during state court litigation to obtain plaintiff's payment on his credit card account. Defendants contend all of plaintiff's state pendant claims: claims seven (Rosenthal Fair Debt Collection Practices Act Violations), fifteen (Intentional Infliction of Emotional Distress), sixteen (Negligent Infliction of Emotional Distress), and seventeen (California's Unfair Business Practices Act), are barred under California Civil Code § 47(b) litigation privilege because they were undertaken in their efforts to collect payment on a debt owed.*fn4

In considering a motion to dismiss, the court must accept as true the allegations of the complaint in question. See Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 740 (1976). The court must also construe the pleading in the light most favorable to the party opposing the motion and resolve all doubts in the pleader's favor. See Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). Moreover, pro se pleadings are held to a less stringent standard than those drafted by lawyers. See Haines v. Kerner, 404 U.S. 519, 520 (1972). A motion to dismiss for failure to state a claim should not be granted unless it appears beyond doubt that plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Palmer v. Roosevelt Lake Log Owners Ass'n, 651 F.2d 1289, 1294 (9th Cir. 1981).

Generally, in the context of a motion to dismiss, review is limited to the contents in the complaint. Allarcom Pay Television, Ltd. v. General Instrument Corp., 69 F.3d 381, 385 (9th Cir.1995). When matters outside the pleading are presented to and accepted by the court, the motion to dismiss is converted into one for summary judgment. However, matters properly presented to the court, such as those attached to the complaint and incorporated within its allegations, may be considered as part of the motion to dismiss. See Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir.1989). Where a plaintiff fails to attach to the complaint documents referred to therein, and upon which the complaint is premised, a defendant may attach to the motion to dismiss such documents in order to show that they do not support the plaintiff's claim. See Pacific Gateway Exchange, 169 F.Supp.2d at 1164; Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994) (overruled on other grounds). Thus, the district court may consider the full texts of documents that the complaint only quotes in part. See In re Stac Electronics Sec. Lit., 89 F.3d 1399, 1405 n.4 (1996), cert denied, 520 U.S. 1103, 117 S.Ct. 1105 (1997). This rule precludes plaintiffs "from surviving a Rule 12(b)(6) motion by deliberately omitting references to documents upon which their claims are based." Parrino v. FHP, Inc., 146 F.3d 699, 705 (9th Cir.1998). Thus, a court may consider certain materials--documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice--without converting the motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Records from the state court are subject to judicial notice. Miles v. State of California, 320 F.3d 986, 987 n.1 (9th Cir. 2003); Fed. R. Evid. 201(d).

The purpose of the FDCPA is to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

15 U.S.C. § 1692(e). The FDCPA was designed to protect consumers who have been victimized by unscrupulous debt collectors, regardless of whether valid debt actually exists. Baker v. G.C. Services Corp., 677 F.2d 775 (9th Cir. 1982).

In the Ninth Circuit, a violation of the FDCPA is measured by the objective standard of "least sophisticated debtor." For example, if defendant's letter and telephone call are likely to deceive or mislead a hypothetical 'least sophisticated debtor,' defendants have violated Section 1692e. Wade v. Regional Credit Ass'n, 87 F.3d 1098, 1100 (9th Cir.1996).

Claims are thus viewed from the "perspective of a consumer whose circumstances make [ ] him relatively more susceptible to harassment, oppression, or abuse" than the average consumer. Hosseinzadeh v. M.R.S. Assocs., Inc., 387 F.Supp.2d 1104, 1110 (C.D.Cal.2005). The Court, not the jury, determines whether a collection letter violates the Act by applying this "least sophisticated debtor" standard. Hapin v. Arrow Financial Servs., 428 F.Supp.2d 1057, 1060 (N.D.Cal.2006); Swanson v. Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1225-26 (9th Cir.1988); Terran v. Kaplan, 109 F.3d 1428, 1432 (9th Cir.1997); see also Baker v. Citibank (South Dakota) N.A., 13 F.Supp.2d 1037, 1041 (S.D.Cal.1988).

The least sophisticated debtor "standard is lower than simply examining whether particular language would deceive or mislead a reasonable debtor." Terran, 109 F.3d at 1431. "The FDCPA is a strict liability statute." Irwin v. Mascott, 112 F.Supp.2d 937, 963 (N.D.Cal.2000). Therefore, a plaintiff need not prove a defendant knew their debt collection practices were illegal or that a defendant had the intent to violate the law. Id. In addition, the FDCPA is a remedial statute and, thus, it must be construed liberally in favor of the debtor. Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1175-76 (9th Cir.2006). Under the FDCPA, a debt collector is prohibited from making false or misleading statements in connection with the collection of any debt. See 15 U.S.C. § 1692e. Threats to take action that a debt collector may not legally take, or does not intend to take are actionable under the statute. 15 U.S.C. § 1692e(5). The FDCPA also prohibits debt collectors from making false representations or using deceptive means to collect a debt. 15 U.S.C. § 1692e(10).

Gonzales v. Arrow Financial Services, LLC, 489 F.Supp.2d 1140, 1146-47 (S.D. Cal. 2007).

The Noerr-Pennington doctrine derives from the First Amendment's guarantee of "the right of the people . . . to petition the Government for a redress of grievances." U.S. Const. amend. I. Under the Noerr-Pennington doctrine, those who petition any department of the government for redress are generally immune from statutory liability for their petitioning conduct. Empress LLC v. City & County of S.F., 419 F.3d 1052, 1056 (9th Cir. 2005) (citing Manistee Town Ctr. v. City of Glendale, 227 F.3d 1090, 1092 (9th Cir. 2000)).

The Court of Appeals for the Ninth Circuit has concluded that "the Noerr-Pennington doctrine stands for a generic rule of statutory construction, applicable to any statutory interpretation that could implicate the rights protected by the Petition Clause." Sosa v. DirecTV, Inc., 437 F.3d 923, 937 (9th Cir.2006)(Noerr-Pennington immunity extends to actions seeking to impose RICO liability); see also White v. Lee, 227 F.3d 1214, 1231 (9th Cir.2000) (holding that because it "is based on and implements the First Amendment right to petition," the Noerr-Pennington doctrine is not limited to the antitrust context, but "applies equally in all contexts"). "Under the Noerr- Pennington rule of statutory construction, we must construe federal statutes so as to avoid burdening conduct that implicates the protections afforded by the Petition Clause unless the statute clearly provides otherwise." Sosa, 437 F.3d at 937. Moreover, "the law of this circuit establishes that communications between private parties are sufficiently within the protection of the Petition Clause to trigger the Noerr-Pennington doctrine, so long as they are sufficiently related to petitioning activity." Id.

Other circuits have adopted the expansive view of Noerr-Pennington doctrine immunity. DirecTV v. Milliman, 2003 WL 23892683 (E.D. Mich. 2003), citing Coastal States Mktg v. Hunt, 694 F.2d 1358, 1367 (5th Cir. 1983).*fn5 In DirecTV, the court found that NoerrPennington immunity applied broadly, even though the defendant was alleged to have employed deceptive and unethical terms as alleged here. Id. at 8, citing Santanta Prods. v. Bobrick Washroom Equip., Inc., 249 F.Supp.2d 463 (M.D. Pa. 2003), affirmed, 401 F.3d 123 (3rd Cir. 2005), cert. denied, 126 S.Ct. 734 (2005). However, none of these applications were in the FDCPA context.

In addition, the Ninth Circuit has not specifically found that the Noerr-Pennington doctrine applies to FDCPA cases. At least one district court has found that it does not apply to FDCPA cases. Irwin v. Mascott, 112 F.Supp.2d 937 (N.D.Cal. 2000) (Debt collector's attorneys were not immune from civil liability under the FDCPA and the California Unfair Business Practices Act by virtue of their participation in administrative or judicial proceedings). But see Johnson v. JP Morgan Chase Bank DBA Chase Manhattan, et al., 536 F.Supp.2d 1207 (E.D. Cal. 2008).*fn6

Courts in the Sixth Circuit have also found that the Noerr-Pennington doctrine is not applicable to FDCPA claims even if the debt collectors at issue were attorneys. For example, Todd v. Weltman, Weinberg & Reis Co., L.P.A., 434 F.3d 432 (6th Cir. 2006)(law firm not entitled to absolute immunity in FDCPA case); Ison v. Javitch, Block & Rathbone, 2007 WL 2769674 (S.D.Ohio 2007).*fn7

But, most importantly, the United States Supreme Court has held that the FDCPA "applies to attorneys who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." Heintz v. Jenkins, 514 U.S. 291, 299 (1995).

This court is unpersuaded that the Noerr-Pennington doctrine bars actions under the FDCPA. Rather, this court finds persuasive the reasoning of Sial v. Unifund CCR Partners, 2008 WL 4079281, *3-5 (S.D.Cal. Aug.28, 2008), in which the court held that the doctrine did not bar an FDCPA claim. The Sial court relied on the Supreme Court's decision in Heintz, which held that litigating attorneys were "debt collectors" under the FDCPA. Although Heintz did not directly address the instant question, the holding of Heintz strongly suggests that the Noerr-Pennington doctrine does not apply to FDCPA actions.

Here, plaintiff alleges multiple instances of harassing communications and conduct.*fn8 To find defendants immunized by the Noerr-Pennington doctrine would eviscerate the Fair Debt Collection Practices Act. Debt collectors should not be able to employ tactics forbidden by the FDCPA simply because they also ...


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