Ellis Law Group


Rosenthal FDCPA: 2006 in Review

Last year, we wrote about the California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal FDCPA”), Civil Code sections 1788, et seq.--how it has evolved since its initial enactment, how it has been interpreted by the courts, and its defenses.  We predicted that Rosenthal FDCPA claims would become increasingly prevalent, and indeed we see Rosenthal FDCPA claims pled in almost every case in which we defend debt collectors or their clients.  And with the increase in Rosenthal FDCPA claims, a few more court decisions have been published over the last year interpreting the Rosenthal FDCPA.  This article will review some of the issues that we see evolving in our defense of collectors. 


As a brief review, the Rosenthal FDCPA was enacted at approximately the same time as its federal counterpart, the FDCPA.  The Rosenthal FDCPA contains many of the same collection agency obligations as the FDCPA.

As originally enacted, the Rosenthal FDCPA did not permit the plaintiff to pursue a class action, unlike the FDCPA.  (Compare Civ. Code § 1788.30(a) with 15 U.S.C. § 1692k(a).)  And like the FDCPA when it was originally enacted, the Rosenthal FDCPA ostensibly excludes attorneys from its definition of debt collector.  (See Civ. Code § 1788.2(c).)  The FDCPA was amended in 1986, to include attorneys in its definition of debt collectors.  Nonetheless, the Rosenthal FDCPA has maintained its attorney exclusion.


The Rosenthal FDCPA has been amended from time to time. The most recent amendment, adding section 1788.17, has greatly impacted the litigation front, and may be the greatest reason why we see more Rosenthal FDCPA claims made by plaintiffs.  Section 1788.17 was added to the Rosenthal FDCPA to incorporate “the remedies” under the FDCPA and most of the FDCPA obligations.  While Civil Code section 1788.17 does not explicitly incorporate 15 U.S.C. § 1692k, the damages provisions of the FDCPA, as noted above, section 1788.17 does state that the FDCPA’s remedies are to be incorporated.

As noted last year, there are a few provisions of the FDCPA that create obligations that differ from those obligations under the Rosenthal FDCPA.  By way of example, the federal FDCPA provides that a collection lawsuit shall be venued where the consumer signed the contract upon which the suit is based or where the consumer resides at the commencement of the action.  (15 U.S.C. § 1692i(a(1)-(2).)  The Rosenthal FDCPA, however, provides that collection litigation shall be prosecuted where the debtor incurred the debt, or where the debtor resides at the commencement of the action.  (Civ. Code § 1788.15(b).)  In a situation with a credit card debt where the debtor signed his or her application in San Francisco County, and then moved to Santa Clara County and purchased something with the credit card, it is unclear whether the debtor could be sued in San Francisco County or Santa Clara County without violating the FDCPA or the Rosenthal FDCPA.   And there are other examples of potential conflicts between the two statutory schemes.  (Compare Civ. Code § 1788.11(b) (requiring disclosure of name and potentially agency’s name on a telephone message) with 15 U.S.C. § 1692b (prohibiting disclosure to third parties, ostensibly including telephone messages, that the communication relates to a debt or the identity of the agency unless expressly requested).)

Courts have not as yet addressed these differences.  We believe that the strongest argument for purposes of clarifying these conflicting obligations is that the FDCPA preempts the Rosenthal FDCPA to the extent that the FDCPA is inconsistent with the Rosenthal FDCPA.  (See 15 U.S.C. § 1692n.)  The FDCPA provides: “A State law is not inconsistent with this subchapter if the protection such law affords any consumer is greater than the protection provided by this subchapter.” (Id.; see also Pirouzian v. SLM Corp.  (S.D. Cal. 2005) 396 F.Supp.2d 1124, 1131 (finding the state collection laws preempted by the Higher Education Act.)  “Accordingly, only state laws which make it impossible to comply with both state and federal law, such as where state law requires conduct prohibited by federal law, are preempted.  (Joseph v. J.J. MacIntyre Companies, L.L.C.  (N.D. Cal. 2002) 238 F.Supp.2d 1158, 1170.) 

For instance, with respect to the FDCPA and the Rosenthal FDCPA venue provisions described above, the Rosenthal FDCPA’s expansion on the venue for filing a collection lawsuit does not provide greater protection for the debtor, and filing in the other additional venue option would violate the FDCPA.  Therefore, the venue provisions of the Rosenthal FDCPA should be preempted (Martinez v. Albuquerque Collection Services, Inc. (D.N.M. 1994) 867 F.Supp. 1495, 1501; Zartman v. Shapiro & Meinhold (Colo. App. 1990) 811 P.2d 409, 413 (state venue provisions preempted by FDCPA).)

However, it is important to recognize the scope of any such preemption.  The definition of “debt collector” under the Rosenthal FDCPA is in some ways broader than the definition of “debt collector” under the FDCPA, and includes creditors, which is not included in the FDCPA definition of “debt collector.”  (Civ. Code § 1788.2.)  Thus, while the FDCPA may preempt certain aspects of the Rosenthal FDCPA, the obligations that are preempted may not be preempted for creditors, who do not fall within the ambit of the FDCPA.  (Alkan v. Citimortgage, Inc. (N.D. Cal. 2004) 336 F.Supp.2d 1061, 1065 (discussing whether the FDCPA preempts the Rosenthal FDCPA because the Rosenthal FDCPA has a more expansive definition of “debt collector,” and concluding that “nothing indicates that Congress intended to preempt the [Rosenthal FDCPA] or to completely occupy the field of debt collection”); see also Hood v. Santa Barbara Bank & Trust (2006) 143 Cal.App.4th 526, 545 (Rosenthal FDCPA was not preempted by the FDCPA when the alleged wrongdoing constitutes a violation under either statutory scheme).)  


Probably more problematic for California collectors is the incorporation of the FDCPA’s “remedies” into the Rosenthal FDCPA.  This has led to mischievous results.  For example, as discussed in last year’s article, despite the clear prohibition against class actions found in the plain language of the Rosenthal FDCPA (Civ. Code § 1788.30(a) (“Any debt collector … shall be liable to that debtor only in an individual amount … .”) (emphasis added)), the plaintiff’s bar now has successfully argued that the “class action remedy” afforded under the FDCPA (15 U.S.C. § 1692k(a)) is also available under the Rosenthal FDCPA because this remedy has been incorporated into the Rosenthal FDCPA by the addition of section 1788.17.  (See Abels v. JBC Legal Group (N.D. Cal. 2005) 227 F.R.D. 541, 548; McDonald v. Bonded Collectors, LLC (S.D. Cal. 2005) 2005 WL 2008202.)

Plaintiffs argue, however, that the “incorporation” of the FDCPA’S remedies into the Rosenthal FDCPA does not stop there.  Attorneys for debtors now are asserting an entitlement to not only the class remedies under the FDCPA – statutory damages of 1% of net worth for the class (15 U.S.C. § 1692k(a)(2)(B)) - but also an additional entitlement under the Rosenthal FDCPA of 1% of net worth for the class (Civ. Code § 1788.17) – for a total of 2% of net worth as statutory damages to the class!  Some plaintiff’s counsel have even argued that since the remedies under the FDCPA are incorporated into the Rosenthal FDCPA, plaintiffs are entitled to treble damages:  one set of statutory damages under the FDCPA, one set of statutory damages under the Rosenthal FDCPA, and one final set of statutory damages, the statutory damages deemed incorporated from the FDCPA.  In other words, the value of a Rosenthal FDCPA claim is the value before the addition of section 1788.17 plus the value after the FDCPA remedies have been incorporated.   

This issue has not been litigated in, much less decided by, the courts.  And since an additional 1% of net worth is typically not a large dollar figure for most collection agencies, it is likely that this issue will not be litigated for some time, if ever. 

There are arguments to be made that neither a class not an individual should be entitled to what amounts to “double dipping” or a double recovery (or a triple recovery).  The law abhors duplicative recoveries, and a plaintiff who is injured by a defendant's misconduct is, for the most part, entitled to be made whole, not enriched. Furthermore, such a recovery of duplicative actual damages is impermissible. See Wright v. Litton Loan Servicing LP (E.D. Penn. 2006) 2006 WL 891030, at *4 (precluding a plaintiff from recovering actual damages multiple times under the RESPA, the FDCPA, and two other state statutes because it “would represent a duplication of recoveries”).)  Arguably, the analysis should be the same for statutory damages under the Rosenthal FDCPA and FDCPA.  Moreover, the policies underlying the statutory damages provisions support such a conclusion.  The FDCPA’s statutory damages were specifically limited to strike a balance between penalizing the abusive debt collector while not overburdening legitimate efforts to collect outstanding debts.  (Thomas v. Pierce, Hamilton, & Stern, Inc. (N.D. Ga. 1997) 967 F.Supp. 507, 510-11 (“The Senate Report on the FDCPA reflects an interest by Congress ‘to protect consumers from a host of unfair, harassing and deceptive debt collection practices without imposing unnecessary restrictions on ethical debt collectors,’ including ‘nuisance suits.’”); see also 15 U.S.C. § 1692(e).) 

To allow two statutory damage awards, one under California’s Rosenthal FDCPA and one under the FDCPA, would be an impermissible double recovery criticized in cases like Wright.  No court should permit a plaintiff to recover actual damages twice, once under a federal statute and once under a parallel state statute.  The analysis should be no different with respect to the statutory damages, which are akin to punitive damages that the legislature chose to limit to a specific amount.  (Troensegaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d at p. 227 (“‘A defendant has a due process right to be protected against unlimited multiple punishment for the same act.’”); accord De Anza Santa Cruz Mobile Estates Homeowners Assn. v. De Anza Santa Cruz Mobile Estates (2001) 94 Cal.App.4th 890, 912.)  To allow a plaintiff to recover two statutory damage awards would permit an end-run around the $1,000 cap.  “If unlimited punitive damages were allowed ... , a statutory damage award of $1,000 would be rendered superfluous and vestigial because an aggrieved consumer could simply ‘end-around” the $1,000 limit ... by seeking unlimited punitive damages.” (Thomas, supra, 967 F.Supp. at 511-12.)  Duplicating the statutory damages is merely another way of rendering the limit on the statutory damage superfluous and vestigial.

Moreover, the limitation on FDCPA statutory damages is meant to strike a balance, as referenced above..  “The reasonable conclusion is that Congress decided that the $1,000 statutory award [and the 1% class statutory award] for reprehensible conduct represents a balance between the competing interests of the two and presents a reasonable deterrent against overzealous debt collectors.”  (Thomas, supra, 967 F.Supp. at 510; see also Sanders v. Jackson (8th Cir. 2000) 209 F.3d 998, 1002 (“Thus, by making the extent of the penalty directly proportional to a percentage of the defendant’s net worth, Congress hoped that punishment might be meted out according to a business’s ability to absorb the penalty.”) (emphasis added).)  This balance is arguably upset if California’s Rosenthal FDCPA can be used to double (or triple) a collector’s liability exposure for damages.  If the creation of this imbalance by the Rosenthal FDCPA’s can be characterized as an inconsistency, then the federal FDCPA would preempt these double statutory damages.  (See 15 U.S.C. § 1692n.) 

However, the FDCPA expressly states that a state law which provides greater protection is not inconsistent.  (Id.)  In other words, if larger statutory damages could be considered “greater” protection, then it is not clear that a preemption argument would be successful to prevent this practice.  Moreover, the Rosenthal FDCPA also contains a provision indicating that its remedies are not exclusive, but “are intended to be cumulative and are in addition to any other procedures, rights, or remedies under any other provision of law.”  (Civ. Code § 1788.32.) Given this express language in both statutory schemes, it may be difficult to persuade a court to limit statutory damage recoveries to one or the other.  Furthermore, in light of the intent expressed in the legislative history, we believe it will be difficult to argue that the California legislature did not intend to provide debtors with a “double recovery,” by combining or “stacking” the damages available under the FDCPA with those under the Rosenthal FDCPA.  That being said, we believe strongly that a court will not allow for a triple recovery.


Another creative ploy used by plaintiff’s attorneys is to claim that a violation of the Rosenthal FDCPA, by itself, constitutes a violation of the FDCPA.  For example, the California Consumer Collection Notice Act was enacted in 2003 and sets forth further notice obligations for California debt collectors, separate and apart from the Rosenthal FDCPA.  (Civ. Code §§ 1812.700, et seq.)  Violation of the California Consumer Collection Notice Act is considered a violation of the Rosenthal FDCPA.  (Civ. Code § 1812.702.)  Plaintiffs have argued that a violation of this additional state notice requirement constitutes a violation of the FDCPA.  However, courts have rejected this argument.  In one case last year, Luna v. Alliance One Receivables Management, Inc. (N.D. Cal. 2006) 2006 WL 357823, the Court reasoned:

Both of Luna's claims arise from Alliance's omission of the notice required under Section 1812.700 of the Rosenthal Act. … The FDCPA does not require debt collectors to send the notice the Rosenthal Act requires. While violations of the FDCPA may constitute an automatic violation of state law, the reverse is not true; that is, the violation of state law is not an automatic violation of the FDCPA. See Wade v. Reg'l Credit Ass'n, 87 F.3d 1098, 1100 (9th Cir.1996) (holding that debt collection practices in violation of a state law are not per se violations of the FDCPA); see also Carlson v. First Revenue Assurance, 359 F.3d 1015, 1018 (8th Cir.2004) (“The FDCPA was designed to provide basic, overarching rules for debt collection activities; it was not meant to convert every violation of a state debt collection law into a federal violation. Only those collection activities that use any false, deceptive, or misleading representation or means ... will constitute FDCPA violations.” (citations and internal quotations omitted)). As Alliance suggests, “Congress did not elect to import all of the requirements of the various state debt collection laws into the [FDCPA], and nothing in the FDCPA creates a cause of action based on a violation of state law.”

Id. at *4 (emphasis added); accord Khosroabadi v. North Shore Agency (S.D. Cal. 2006) 439 F.Supp.2d 1118, 1124-25.)

Another California federal court was similarly not persuaded by plaintiff’s argument that a Rosenthal FDCPA violation in and of itself constitutes a violation of the FDCPA:

 Because the failure to provide a notice required by state law does not automatically trigger a violation of the federal FDCPA, Plaintiff's attempt to bootstrap the absence of notice required by state law into a violation of the federal FDCPA by characterizing the absence of notice as unfair, deceptive, or misleading is also unpersuasive.

(Johnson v. Phillips & Cohen Associates, Ltd. (N.D. Cal. 2006) 2006 WL 2355340, *3.)

Judging from these recent cases, it appears clear that plaintiffs will not be successful in their attempts to expand FDCPA liability for violation of the Rosenthal FDCPA.


As collection attorneys are well aware, the Rosenthal FDCPA expressly excludes attorneys from its coverage.  (Civ. Code § 1788.2(c).)  The reason for such an exclusion may be found in Business & Professions Code section 6077.5, which provides that collection attorneys must abide by the obligations set forth in the Rosenthal FDCPA, or face disciplinary action.  As discussed in last year’s article, at least one federal court has concluded that the attorney exclusion does not operate to exclude law firms as well.  (Abels v. JBC Legal Group, P.C. (N.D. Cal. 2005) 227 F.R.D. 541, 548.)

However, the question still remains whether the attorney exclusion applies to attorneys who are not practicing law, but who are “debt collectors” in every other sense of the phrase as defined under the Rosenthal FDCPA.  The Rosenthal FDCPA specifically excludes lawyers:  “The term ‘debt collector’ … does not include an attorney or counselor at law.”  (Civ. Code § 1788.2(c) (emphasis added).)  Although some plaintiff’s counsel have argued that this exception only applies in relation to debts an attorney would collect on behalf of another, such limitation is not found within the language of the Rosenthal FDCPA.  (Civ. Code § 1788.2(c).) 

Furthermore, an analysis of the definitional section also leads to the conclusion that an attorney, whether collecting debts on his own behalf or the behalf of others, does not fall within the definition of a Rosenthal FDCPA “debt collector.”  The Rosenthal FDCPA exclusion for attorneys is found in the section of the Rosenthal FDCPA which defines debt collectors to include those that collect debts on behalf of others or on behalf of themselves.  (See Civ. Code § 1788.2(c).)  Since this definitional section initially defines the scope of collection activity to include both collection activity on behalf of oneself and on behalf of another, there is no basis to conclude that the scope of the attorney exclusion should be somehow limited or narrowed to a subset of the all inclusive definition of collection activity.  And finally, it is clear both from the inclusion of both types of collection activities in the Rosenthal FDCPA that the California Legislature understood how to create such a limitation, and chose not to. 

And it is important to remember that attorneys are bound by ethical requirements to abide by laws, even those without a nexus to the practice of law.  (See In re Hickey (1990) 50 Cal.3d 571, 581 (attorney disciplined for violating the law, including concealed weapon charge and domestic violence charge, even though the violation had absolutely no nexus to his practice of law).)  Therefore, attorneys in all walks of life, including debt collectors, have an incentive to abide by the laws of California.  This is, in all likelihood, why attorneys - without limitation - were excluded from the obligations of the Rosenthal FDCPA – because attorneys have other incentives to ensure that they conduct themselves properly when collecting consumer debts on behalf of others and on behalf of themselves.  Civil Code section 1788.2(c) is not ambiguous but very clear in its plain and simple exclusion of attorneys – without limitations.  Courts should resist any request to participate in judicial legislating to read limitations that do not exist into the section 1788.2(c) exclusion for attorneys.  (Unzueta v. Ocean View School Dist. (1992) 6 Cal.App.4th 1689, 1700 (“[C]ourt should exercise judicial restraint, stay its hand, and refrain from rewriting a statute to find an intent not expressed by the Legislature.”).)

Nonetheless, and despite express language to the contrary, some courts have rejected such an argument because it would be illogical to exclude one group (attorneys) solely due to their occupation.  Regardless of whether it is illogical or not, that is just what the Legislature did according to the statute’s express language.  Courts should give great weight to the express language to reach the conclusion that when the statute says that it is excluding attorneys, and means what it says – without some artificially constructed limitation.        


During this past year, FDCPA defense attorneys and their debt collector clients saw an increase in the number of cases which included a Rosenthal FDCPA claim.  As many of the FDCPA cases are merely statutory damages cases, the value of these cases has now doubled in the eyes of the plaintiff’s bar.  As the stake in a case increases through the addition of causes of action, debt collectors and their litigation counsel will need to look at new and creative arguments to ward off those created by plaintiff’s counsel.  One such argument is whether we can limit recovery of statutory damages to one debt collection statutory scheme.  Other areas that should be addressed by courts include the attorney exclusion and preemption. 

Also, debt collectors should be aware that the remedies and/or the obligations under the Rosenthal FDCPA have been incorporated into several statutory schemes.  (See, e.g., Bus. & Prof. Code § 7507.4 (repossessors); Fam. Code §§ 5614-5615 (private child support collectors); Fin. Code § 23036 (Deferred Deposit Transaction Law).)  This is not meant to be an all inclusive list, nor is it meant to be a complete list.  Arguably, these statutes increase the already broad reach of the Rosenthal FDCPA.  Presumably the individuals subject to those limitations would not fall within the ambit of the Rosenthal FDCPA, but nevertheless are subjected to the obligations or remedies or both.  However, it is not inconceivable that a debt collector could fall within the purview of the FDCPA, the Rosenthal FDCPA, and one of these other statutory schemes, providing the basis for an argument for treble statutory damages.  And at some point, someone should ask the Court to clarify just how many sets of punitive and statutory damages can be charged against a debt collector.

The above article and all articles in this website are not intended to be legal advice. Readers should consult an attorney to determine how the law applies to their particular circumstances. Also, please understand that the law constantly evolves and changes. Certain of the decisions and legal propositions quoted in the above article may be out of date or superseded.

Return To Top