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Yvonne Agnes Scott v. Federal Bond and Collection Service

January 19, 2011

YVONNE AGNES SCOTT,
PLAINTIFF,
v.
FEDERAL BOND AND COLLECTION SERVICE, INC., D/B/A FBCS, INC., A PENNSYLVANIA CORPORATION; JOSEPH NEARY, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; AND OSIRIS HOLDINGS, LLC, A MARYLAND LIMITED LIABILITY CORPORATION,
DEFENDANTS.



The opinion of the court was delivered by: Lucy H. Koh United States District Judge

ORDER DENYING MOTION TO DISMISS; GRANTING IN PART AND DENYING IN PART MOTION TO STRIKE

United States District Court For the Northern District of California

Currently before the Court are Defendants' motion to dismiss the action pursuant to Federal Rule 12(b)(1) on grounds that the action is now moot, and Plaintiff's motion to strike affirmative 21 defenses contained in the Answer of Defendant Osiris Holdings, LLC. Pursuant to Civil Local 22 Rule 7-1(b), the Court finds that this motion is appropriate for determination without oral 23 argument. Having considered the submissions of the parties and the relevant law, the Court 24 DENIES Defendants' motion to dismiss without prejudice, and GRANTS in part and DENIES in 25 part Plaintiff's motion to strike. Accordingly, the hearing on the parties' motions is VACATED.

However, the Court will hold the Case Management Conference as scheduled on January 20, 2011.

I.Background

Complaint ("FAC") ¶ 12. Plaintiff alleges, on information and belief, that the debt was first sold, 5 assigned, or otherwise transferred to Defendant Osiris Holdings, LLC ("Osiris"), and then 6 consigned, placed, or otherwise transferred to Defendants Federal Bond and Collection Service, 7

This action arises out of Defendants' attempt to collect a debt allegedly owed by Plaintiff Yvonne Agnes Scott on a consumer credit account issued by Continental Bank. First Amended Inc. ("FBCS") and Joseph Neary ("Neary"). FAC ¶¶ 13-14. In an attempt to collect the alleged 8 debt from Plaintiff, Defendants sent Plaintiff a collection letter dated August 27, 2009. The 9 collection letter reads, in relevant part:

This is an attempt to collect a debt and any information obtained will be used for that purpose. This is a communication from a debt collector. Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid. If you notify this office within 30 days from receiving this notice, this office will: obtain verification of the debt or obtain a copy of a judgment [sic] and mail you a copy of such judgment of or verification. If you request this office within days after receiving this notice, the office will provide you the name and address of the original creditor, if different from the current creditor.

FAC, Ex. 1.17

letter violated the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., 19 by (1) misrepresenting Plaintiff's right to obtain a copy of the debt verification or judgment against 20 her, in violation of 15 U.S.C. §§ 1692e, 1692e(10); (2) misrepresenting Plaintiff's right to obtain 21 the name and address of the original creditor, if different from the current creditor, in violation of Plaintiff notifies Defendants in writing that the debt, or any portion thereof, is disputed, Defendants 24 would obtain verification of the debt and mail Plaintiff a copy, in violation of 15 U.S.C. 25

Plaintiff's written request, Defendants would provide Plaintiff with the name and address of the 27 original creditor, if different from the current creditor, in violation of 15 U.S.C. § 1692g(a)(5).

Plaintiff's FAC contains three claims for relief. First, Plaintiff alleges that the collection 5 U.S.C. §§ 1692e, 1692e(10); (3) failing to send a written notice containing a statement that if § 1692g(a)(4); and (4) failing to send Plaintiff a written notice containing a statement that upon FAC ¶ 28. Second, for the same reasons, Plaintiff alleges that the collection letter violated Section 1788.17 of California's Rosenthal Fair Debt Collection Practices Act ("RFDCPA" or "Rosenthal § 1788.17; FAC ¶ 38. Third, Plaintiff claims that Defendants violated California Civil Code § 1812.700(a) by failing to include the required "Consumer Collection Notice" in their first written 6 notice to Plaintiff. FAC ¶ 51. Plaintiff seeks statutory damages, attorney's fees, and costs, as well 7 as a declaration that Defendants' collection letter violated the federal and California Fair Debt Defendants now move to dismiss the entire action pursuant to Rule 12(b)(1) on grounds that Plaintiff's refusal to accept a Rule 68 settlement offer of her maximum recovery renders the action moot. Plaintiff, in turn, moves to strike affirmative defenses from Defendant Osiris's Answer.

Act"), which requires debt collectors to comply with 15 U.S.C. §§ 1692b -- 1692j. Cal. Civ. Code Collection Practices Acts. FAC ¶ 1; FAC at p. 11-12. Plaintiff does not claim actual damages.

II.Motion to Dismiss for Lack of Subject Matter Jurisdiction Federal courts lack subject matter jurisdiction to hear claims that are moot. See In re Burrell, 415 F.3d 994, 998 (9th Cir. 2005) ("If the controversy is moot, both the trial and appellate 16 courts lack subject matter jurisdiction and the concomitant 'power to declare the law' by deciding 17 the claims on the merits.") (citation omitted). Article III of the federal Constitution limits federal 18 court jurisdiction to "actual, ongoing cases or controversies." Wolfson v. Brammer, 616 F.3d 1045, 1053 (9th Cir. 2010) (quoting Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477 (1990)). A case may 20 become moot after it is filed if "the issues presented are no longer 'live' or the parties lack a legally 21 cognizable interest in the outcome." Wolfson, 616 F.3d at 1053 (quoting Porter v. Jones, 319 F.3d 483, 489 (9th Cir. 2003)). Although normally the party asserting jurisdiction has the burden of 23 establishing that subject matter jurisdiction is proper, Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994), where mootness is concerned, the Ninth Circuit has stated that the party asserting 25 mootness has the "heavy burden of establishing that no effective relief remains for the court to 26 provide." Chang v. United States, 327 F.3d 911, 918-19 (9th Cir. 2003); see also GATX/Airlog Co. v. United States District Court, 192 F.3d 1304, 1306 (9th Cir. 1999); In Re Pintlar Corp., 124 F.3d 1310, 1312 (9th Cir. 1997).

A.Legal Standard

B.Discussion

On December 14, 2010, Defendants made Plaintiff an offer of judgment pursuant to Federal Rule 68*fn1 in which Defendants agreed to collectively pay Plaintiff a total of $2,001.00 plus 6 reasonable attorney's fees and costs incurred through the date of the offer, in an amount either 7 agreed to by the parties or determined by the Court. Def.'s Mot. to Dismiss, Ex. A, ECF No. 34.

Plaintiff did not accept Defendants' Rule 68 offer. Defendants contend that the offer represented 9 one dollar more than the maximum that Plaintiff could recover in this action -- that is, $1,000 in 10 statutory damages under the FDCPA, $1,000 in statutory damages under the Rosenthal Act, and 11 reasonable attorney's fees and costs. *fn2 Defendants argue that because Plaintiff has been offered, and rejected, her maximum possible recovery, she lacks any further personal stake or interest in the 13 outcome of the action, and the case should therefore be dismissed as moot.
In support of their 12(b)(1) motion, Defendants rely on two cases from the Eastern District of New York, in which the court agreed that a plaintiff's rejection of a Rule 68 offer of $1,000 in 16 statutory damages under the FDCPA and reasonable costs and fees incurred to the date of the offer 17 rendered the action moot. See Greif v. Wilson, Elser, Moskowitz, Edelman & Dicker LLP, 258 F. Supp. 2d 157, 159-61 (E.D.N.Y. 2003) (granting motion to compel plaintiff to accept Rule 68 offer 19 of $1,000 plus reasonable fees and costs incurred to the date of the offer and granting motion to 20 dismiss the action as moot); Ambalu v. Rosenblatt, 194 F.R.D. 451, 453 (E.D.N.Y. 2000) (same).

These courts reasoned that once a plaintiff had been offered all she "could hope to recover" through the litigation, the plaintiff no longer has a legally cognizable stake in the action, and the 2 case must be dismissed for lack of subject matter jurisdiction. Greif, 258 F. Supp. 2d at 159-60;

Ambalu, 194 F.R.D. at 453. Similarly, the Seventh Circuit has held that "[o]nce the defendant 4 offers to satisfy the plaintiff's entire demand, there is no dispute over which to litigate, and a 5 plaintiff who refuses to acknowledge this loses outright, under Fed.R.Civ.P. 12(b)(1), because he 6 has no remaining stake." Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991); see also Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1015 (7th Cir. 1999). The Ninth Circuit 8 appears to have approved this reasoning in a recent memorandum decision affirming the dismissal 9 of FDCPA and Rosenthal Act ...


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