United States District Court, N.D. California, San Francisco Division
REFERRAL FOR REASSIGNMENT WITH RECOMMENDATION TO GRANT MOTION FOR DEFAULT JUDGMENT
Re: Dkt. No. 24
NATHANAEL M. COUSINS, Magistrate Judge.
Plaintiffs Kevin and Elaine Young move for entry of default judgment against defendants Herbert Davis and Law Offices of Herbert Davis, under Federal Rule of Civil Procedure 55(b)(2) for allegedly violating the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), Cal. Civ. Code § 1788 et seq.  Defendants have not filed an opposition to plaintiffs' motion and did not appear at the hearing on the motion. This matter will be reassigned to a District Court Judge because defendants have not consented to Magistrate Judge jurisdiction under 28 U.S.C. § 636(c). The Court RECOMMENDS that the District Court GRANT plaintiffs' motion and enter default judgment against defendants.
According to plaintiffs' complaint, plaintiffs incurred financial obligations that were primarily for personal, family or household purposes. Dkt. No. 1 ¶ 20. Plaintiffs allege that these financial obligations constituted debt and/or consumer debt under the FDCPA and RFDCPA. Id. ¶ 19. Plaintiffs became concerned that certain debts owed by them were becoming unreasonably burdensome and sought to find a solution so that they could continue to make reasonable payments. Id. ¶ 21.
Plaintiffs allege that they attended a seminar where defendants represented that they could resolve plaintiffs' debt problems through a company called Performance Debt Resolution, which is now out of business. Id. ¶ 22. Plaintiffs allege that defendants were part of a for profit organization that performed consumer credit counseling and assisted consumers with liquidating their debts by receiving money from consumers and then distributing it to creditors. Id. ¶¶ 25-27. Further, plaintiffs allege that defendants' program required plaintiffs to agree to make automatic monthly payments to defendants as soon as plaintiffs were accepted into the program. Id. ¶ 23. According to the complaint, defendants' program was designed in a manner that defendants charged and received money for the performance of a service before such service was fully performed. Id. ¶ 24. Plaintiffs allege that they paid money to defendants prior to any services being performed by defendants. Id. Defendants failed to perform the agreed services within six months following the date plaintiffs signed a contract for these services. Id. ¶ 29. Defendants allegedly made false statements to plaintiffs that their debts had been resolved, but subsequently plaintiffs were sued by a creditor who obtained a judgment against them. Id. ¶ 31.
Based on these facts, plaintiffs allege that defendants are debt collectors under the FDCPA and RFDCPA. Id. ¶¶ 25-27. Plaintiffs further allege that defendants violated the FDCPA by failing to provide required disclosures ( Id. ¶¶ 35, 43), by receiving money for the performance of a service before such service is fully performed ( Id. ¶ 37), by not meeting the requirement of a written and dated contract, ( Id. ¶ 39), and by using unconscionable means to collect a debt ( Id. ¶ 42). Additionally, plaintiffs allege that defendants violated the RFDCPA by charging and receiving money for the performance of a service before such service is fully performed ( Id. ¶¶ 28, 30), failing to provide written notifications to plaintiffs ( Id. ¶¶ 32, 43), and by using unconscionable means to collect a debt ( Id. ¶ 42). Plaintiffs' complaint seeks actual and statutory damages, attorneys' fees, and costs under the FDCPA and the RFDCPA. Id. at 13.
On plaintiffs' request for entry of default, the clerk entered default as to each defendant on August 2, 2013. Dkt. No. 17. Plaintiffs then filed the pending motion for default judgment seeking $12, 118.50 in actual damages, $2, 000 in statutory damages, $3, 815 in attorneys' fees, and $499 in costs. Dkt. No. 38 ¶ 7. The Court held a hearing on November 6, 2013, and defendants did not appear. Dkt. No. 41.
II. LEGAL STANDARD
Default may be entered against a party who fails to plead or otherwise defend an action and against whom a judgment for affirmative relief is sought. Fed.R.Civ.P. 55(a). After entry of default, the Court has discretion to grant default judgment on the merits of the case. Fed.R.Civ.P. 55(b); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In deciding whether to grant default judgment, the Court considers the following factors: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). The factual allegations of the complaint, except those concerning damages, are deemed admitted by the non-responding parties. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977).
When presented with a motion for default judgment, the Court has "an affirmative duty to look into its jurisdiction over both the subject matter and the parties." In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Here, the Court has subject matter jurisdiction over this action under 28 U.S.C § 1331 because the complaint alleges violations of the FDCPA. See 15 U.S.C. § 1692; Dkt. No. 1 ¶ 5. This Court has supplemental jurisdiction over the related state law claim under the RFDCPA. See 28 U.S.C. § 1367; Cal. Civ. Code § 1788. Furthermore, the Court finds that there is personal jurisdiction over defendants. The complaint alleges that defendants conduct business within California. Dkt. No. 1 ¶¶ 12, 13; See Panavision v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998).
B. Adequacy of Service of Process
Additionally, the Court must assess the adequacy of service of process on the party against whom default is requested. Bank of the West v. RMA Lumber Inc., No. 07-cv-06469 JSW (EMC), 2008 WL 2474650, at *2 (N.D. Cal. June 17, 2008). Federal law permits service of the summons and the complaint by "following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." Fed.R.Civ.P. 4(e)(1). California Code of Civil Procedure § 415.20(b), which provides for substituted service on individuals, states: "[i]f a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served... a summons may be served by leaving a copy of the summons and complaint at the person's dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address ...." Cal. Civ. Proc. Code § 415.20(b) (emphasis added). Similarly California Code of Civil Procedure § 415.20(a), which applies to entities, provides for service on a defendant by "leaving a copy of the summons and complaint during usual office hours in his or her office or, if no ...