Ellis Law Group


Tales From The Front Line:
2009 In Review – The Rosenthal FDCPA

As we have done in the preceding four years, this article provides an annual update on trends seen in litigating Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) claims.  Over the past four years, the addition of an RFDCPA claim has gone from obscurity to regularity. In 2005, there were only about six cases that interpreted the Rosenthal FDCPA since its inception in 1977. In 2008, there were about 35.  And with the explosion of FDCPA cases in 2009, there were over 100 cases published in some fashion throughout the year that referenced and interpreted the Rosenthal FDCPA.

As the economy has worsened, debt collectors have seen the number of accounts referred increase. As the number of accounts increase, more and more debtors are guided by Internet websites toting the benefits of FDCPA litigation. The number of lawsuits in 2009 doubled this year. For that reason, debt collectors have to be aware of how courts are addressing RFDCPA claims … on the frontline.

Does the Complaint State Sufficient Allegations?

As one might expect, a recurring theme in most of the cases which addressed the RFDCPA was the sufficiency of the allegations, especially since the United States Supreme Court recently issued opinions regarding how to determine if the pleadings are sufficient. While Federal Rule of Civil Procedure 8, which sets forth the standard for allegations in a complaint, does not demand detailed factual allegations, “it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” (Ashcroft v. Iqbal (2009) 129 S.Ct. 1937, 1949.) “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” (Id.; Larkin v. Select Portfolio Servicing, Inc. (E.D. Cal. 2009) 2009 WL 3416137, *4.)

Based on this standard, Courts analyzed the sufficiency of allegations in many cases this year. For instance, one plaintiff alleged that “Defendants violated the Rosenthal Act … by engaging in conduct the natural consequence of which is to harass, oppress, and abuse persons … .” The plaintiff alleged further that Defendant used “unfair or unconscionable means” and used “deceptive means.” The plaintiff also alleged that “Plaintiff [had] not received any communication regarding the loan modification or work out plan.” The Court concluded that such statements were insufficient and did not even suggest that Defendant engaged in unlawful debt collection practices. Plaintiff did not allege even one fact concerning the frequency, timing, or methods of Defendant's debt collection practices. Simply put, these allegations were too conclusory and too underdeveloped. (Larkin, supra, 2009 WL 3416137 at *3.)

Other courts found the following allegations insufficient to state a claim at the pleading stage:

  • Defendants threatened to collect on a debt not owed; made false reports to credit reporting agencies; falsely stated the amount of a debt; included amounts not permitted by law or contract; and used unfair and unconscionable means.  (Keen v. American Home Mortg. Servicing, Inc. (E.D. Cal. 2009) 664 F.Supp.2d 1086, 1094-96.)

  • Plaintiff exhausted administrative remedies, including written disputes with the creditors and credit reporting agencies; never paid late; and made prior requests that Defendant remove derogatory credit information, to no avail.  The Court found these allegations did not provide factual enhancement to make Plaintiff's right to relief rise above a speculative level.  (Wilsenach v. Capital One Bank USA (S.D. Cal. 2009) 2009 WL 2515704, *1-2.)

  • Defendant “continued its collection efforts of a disputed debt,” “demanded payment of false amounts,” “threatened action prohibited by law,” included amounts not permitted by law or contract, and “us[ed] unfair and unconscionable means.” The Court held that “these labels and conclusions, without further substantiation, fail to state a claim under the RFDCPA.” (Horton v. California Credit Corp. (S.D. Cal. 2009) 2009 WL 2488031, *12.)Plaintiff told the collection agency not to call him at work.  This allegation did not support a claimed violation of the RFDCPA because the request represented his own desires rather than the employer’s prohibition against phone calls.  (Castellanos v. JPMorgan Chase & Co. (S.D. Cal. 2009) 2009 WL 1833981, *8.)

  • Courts were not consistent in their decisions in 2009 regarding the sufficiency of allegations.  For instance, an allegation that a defendant threatened to “mak[e] false reports to credit reporting agencies” was sufficient to meet the pleading standard for an RFDCPA claim in one case, even if it was not sufficient in the Keen case above.  As another example, contrary to the Horton case above, Plaintiff’s allegation that the defendant threatened to “include[e] amounts that are not permitted by law or contract” was sufficient.  (See Champlaie v. BAC Home Loans Servicing, LP (E.D. Cal. 2009) 2009 WL 3429622, *18.) 

Allegations that were sufficient to state a claim at the pleading stage included the following:

  • “Defendant repeatedly contacted Plaintiff attempting to collect the debt.” (Lal v. American Home Mortg. Servicing, Inc. (E.D. Cal. 2009) 2009 WL 3126450, *3.) 

  • Defendant constantly and continuously called, called from blocked numbers and failed to state that the call was from a debt collector, threatened to garnish Plaintiff's wages, threatened to take Plaintiff's home, and failed to send a debt validation letter.  Even though the plaintiff did not detail the contents of each communication, the dates of the communications, the number of calls, or the identity (if known) of the caller, the allegations were sufficient to state a claim.  (Renteria v. Nationwide Credit, Inc. (S.D. Cal. 2009) 2009 WL 2754988, *2.) 

  • Plaintiff told the collector that the collector was not authorized to call Plaintiff at her workplace, and the collector did so anyway; threatening to sue; and telling the debtor that a written validation could not be sent.  (Robinson v. Managed Accounts Receivables Corp. (C.D. Cal. 2009) 654 F.Supp.2d 1051, 1057-58.)

  • Plaintiffs received phone calls from the collection agency multiple times each day, aggressively demanding payments, including yelling and threats; contacted third parties, including family members, friends and employers. (O'Donovan v. CashCall, Inc. (N.D. Cal. 2009) 2009 WL 1833990, *6.)

These types of allegations satisfy “the general requirements of Rule 8, in that [they] identif[ied] the circumstances, occurrences and events of the challenged conduct.”   (See Champlaie v. BAC Home Loans Servicing, LP (E.D. Cal. 2009) 2009 WL 3429622, *18.)

However, if the plaintiff alleges that the defendant threatened to make false statements or made false statements, such claims are subject to a heightened standard under Federal Rule of Civil Procedure 9, according to some courts.  In one case, Plaintiffs satisfied these heightened requirements by alleging that misrepresentations occurred in the monthly statements sent to the plaintiff, which were allegedly false by stating overly high balances and monthly payments.  (See Champlaie, supra,2009 WL 3429622, at *18.)

Reviewing the cases in their aggregate, although there are times that a complaint can be successfully attacked for insufficient allegations, many times the allegations are sufficient.  The sufficiency of the allegations does not automatically provide a basis for liability because at this early stage of the case, a court must assume that the allegations are true.  And even if the court finds the allegations are insufficient, plaintiffs are generally given an opportunity to plead additional allegations to meet the sufficiency standard.  But sometimes, getting additional information regarding the basis for the debtor’s lawsuit is helpful.

Civil Code Section 47(b) Litigation Privilege

Last year, the most litigated Rosenthal FDCPA issue was the litigation privilege.  California’s litigation privilege, codified at Civil Code section 47(b), acts as a bar to liability for any communication related to a judicial proceeding.  (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057, 1061, 1065.)

In 2009, the California Appellate Court addressed the application of the 47(b) litigation privilege to Rosenthal claims.  (Komarova v. National Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324. In Komarova, the plaintiff was not the person who owed the debt, but had a remarkably similar name, and the debt collection agency continued to attempt to collect the debt from her after she said she was not the debtor.  She also claimed that the defendant debt collection agency called her without disclosing its identity; made unreasonably frequent, harassing communications; communicated with the plaintiff's employer; and brought judicial proceedings without effecting service of process on the plaintiff.  The Appellate Court held that these activities were not protected by the section 47(b) privilege. (Id. at 337343.)

The Komarova Court noted that “application of the [section 47(b)] privilege would negate plaintiff's Rosenthal Act claims.” The Court also noted that “[t]he [section 47(b) ] privilege will inevitably conflict” many of the claims alleged.  (Id. at 339.) Thus, the Court concluded that “‘the litigation privilege and the Rosenthal Act cannot be reconciled in the context of this case.’” ( Id. at 339.)  Noting “that the Legislature specifically prohibited certain litigation related activity when it passed the Rosenthal Act in 1977,” the Court concluded that the Legislature was “presumably aware of the extant broad litigation privilege in section 47.” (Id. at pp. 339-40.)

This is a single California appellate court, and the California Supreme Court has consistently interpreted the 47(b) privilege broadly.  Nonetheless, trial courts must follow appellate decisions, and the Komarova decision will lessen the ability to use the 47(b) privilege as a defense to RFDCPA claims.

Can a Pleading Operate as an Initial Communication
Under the RFDCPA?

Under the FDCPA, pursuant to a 2006 amendment, a complaint is not considered an initial communication for purposes of providing the notices required under section 1692g(a).  (15 U.S.C. § 1692g(d).)  However, the RFDCPA incorporates the requirements of the FDCPA, including the obligation to send an initial validation notice, as the requirements existed on January 1, 2001, prior to the amendment.  (Civ. Code § 1788.17.)

In Velazquez v. Arrow Financial Servs. LLC (S.D. Cal. 2009) 2009 WL 2780372, plaintiff argued that in 2001, a pleading could be considered an initial communication, triggering a validation notice.  Defendant argued that the 2006 amendment was a clarification of the law, and thus before 2006, pleadings were not initial communications.  The Court noted that the federal Circuit Courts were divided in 2001 as to whether a pleading was an initial communication.  Ultimately, the federal court returned the state law claim to state court, leaving the issue undecided.  This same question also arises with the California Civil Code section 1812.700 notice requirements.  (Id. at *4.) 

This is an important issue that must be addressed through modifications in procedure and potential legislative activity.

Failure to Warn Debt Is Time Barred

In Asset Acceptance, LLC v. Hanson (2009) 2009 WL 840047, plaintiff alleged that Asset Acceptance acted unconscionably when it sought to have debtors make a payment on a time-barred debt or affirm the debt writing, thereby reviving the statute of limitations and making the debt judicially enforceable.  Plaintiff argued that Asset Acceptance must provide a warning that the debt was not judicially enforceable, as is expressly required by the RFDCPA when an affirmation is sought by a person who filed bankruptcy.  (Civ. Code § 1788.14(a).)  The Court did not decide this issue, but this case could shed light on new legal theories the plaintiff’s bar might explore. 

Statutory Damages Awarded in Default Judgments

Another trend in the 2009 cases was an increase in the number of opinions addressing default judgments.  If a defendant does not respond in a timely fashion to a lawsuit, a default judgment may be obtained through a motion.  These decisions can provide an opportunity to see how courts analyze the magnitude of statutory damages, emotional distress damages, and even attorneys’ fees.  However, since the motion is generally unopposed, the Court may not conduct an indepth analysis. 

In a case where Plaintiff alleged that defendant disclosed the existence of plaintiff's debt to her father, defendant misrepresented that he was a law enforcement officer, and defendant repeatedly called plaintiff's cousin and parents, the Court awarded the full $1,000, providing little insight.  (Dabu v. Becks Creek Industry (N.D. Cal. 2009) 2009 WL 5178263, *3; see also Basinger-Lopez v. Tracy Paul & Assocs. (N.D. Cal. 2009) 2009 WL 1948832, *5 (awarding $1,000 statutory damages for making repeated threats to sue; making abusive accusations; threatening to disclose the debt to family, neighbors and the employer; contacting debtor after being expressly instructed not to; and failing to provide Plaintiff with any of statutorily mandated notices); Harrington v. Creditors Specialty Service, Inc. (E.D. Cal. 2009) 2009 WL 1992206, *2 (awarding $1000 statutory damages for threatening to file a lawsuit and garnish wages without intent to do so and using a false business name, and misrepresenting that an individual was an attorney); Robertson v. Richard J. Boudreau & Assocs., LLC (N.D. Cal. 2009) 2009 WL 5108479, *4 (awarding $1,000 statutory damages for 3 letters sent on legal letterhead without meaningful involvement and overshadowing validation notice by stating that defendant would determine validity of dispute).)

Quantifying Emotional Distress Damages

Again in the context of default proceedings, courts addressed the standards for and quantified emotional distress damages.  In Hartung v. J.D. Byrider, Inc. (E.D. Cal. 2009) 2009 WL 1876690,the Court used California’s intentional infliction of emotional distress standard, as is commonly used in the Eastern District, to determine whether to award emotional distress damages.

When considering whether a Plaintiff has suffered severe emotional distress, courts have noted that ‘complete emotional tranquility is seldom attainable in this world, and some degree of transient and trivial emotional distress is a part of the price of living among people. The law intervenes only where the distress inflicted is so severe that no reasonable man could be expected to endure it. The intensity and duration of the distress are factors to be considered in determining its severity. It appears therefore, that in this context, severe emotional distress means, emotional distress of such substantial quantity or enduring quality that no reasonable man in a civilized society should be expected to endure it.’ (Id. at *7 (omitting footnotes and citations).)

“Such injury may include all highly mental reactions such as fright, horror, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment, worry and nausea.”  (Id.)  But, the Court noted, “there is no requirement under California law that a Plaintiff provide corroborating evidence in order to establish a claim for emotional distress. However, a damages award cannot be based solely on conjecture or speculation. There must be competent proof of emotional distress suffered by the Plaintiff. Testimony of the plaintiff alone will suffice.” (Id. at *8.) Against this legal framework, the Court found that Plaintiff's testimony supported an award of emotional distress damages:

Defendant engaged in extreme and outrageous conduct including abusing his position of authority as a debt collector to harass, lie and intimidate Plaintiff. He contact[ed] her repeatedly, took pictures of her, obtained personal information about her and her friends, and fraudulently added himself to Plaintiff's T-Mobile account. It is clear that given the nature and the duration of distress experienced by Plaintiff that she suffered severe emotional distress as a result of Defendant's actions. The severity of her distress is evidenced by her need to take additional prescribed and over the counter medications, as well as the need to consult her psychiatrist about the incident. She experienced panic attacks which exacerbated her asthma, suffered from increased migraine headaches, had difficulty sleeping, and would cry uncontrollably. This incident set Plaintiff's treatment for post-traumatic stress and anxiety disorders back and it has taken Plaintiff several months to return to her prior level of functioning. The distress Plaintiff experienced exceeds that which any reasonable person in a civilized society should endure. (Id.)

Plaintiff sought $50,000 in emotional distress damages, citing cases that awarded between $50,000 and $300,000.  The Court noted that these cases are on the high end of the spectrum, and most awards are between $1,000 and $5,000. Although the actions of the collection agency were egregious, the Court awarded $25,000 because of the limited period of time involved. (Id. at *9-10.)
In other cases, an award of emotional distress damages was rejected because of insufficient evidence.  In Basinger-Lopez v. Tracy Paul & Associates (N.D. Cal. 2009) 2009 WL 1948832, the Court noted that plaintiff sought $10,000 in emotional distress damages, offering a conclusory statement in her declaration that “Defendant's actions caused [her] to suffer damages, including emotional distress, embarrassment, humiliation, invasion of privacy, harassment, stress and anxiety, sleeplessness, and medical issues.” While Plaintiff's declaration shows that she understandably suffered general anxiety resulting from Defendant's conduct, the law requires a more specific and substantial showing before emotional damages may be awarded,” emphasizing the necessity for such a standard when the context is a motion for default judgment.  (Id. at *4.)
In Bolton v. Pentagroup Financial Servs., LLC (E.D. Cal. 2009) 2009 WL 734038, Plaintiff claimed that he suffered headaches and sleeplessness and felt rage as a result of the defendant's threat to disclose his debt to his commander. Though he took an over-the-counter pain reliever, he did not seek medical attention or take any prescription medication in response to the distress. The Court held that that “[p]laintiff's anxiety is similar to that of the plaintiffs in other debt collection cases in which the courts found no severe emotional distress as a matter of law.” (Id.at *11.)  The Court refused to award emotional distress damages here as well.

Attorneys’ Fees

As noted above, default judgments are useful to determine what attorneys’ fees a court believes is appropriate for filing a complaint and preparing a motion for default judgment.  This information is useful in terms of evaluating early settlement offers.  Of course, since these are typically uncontested motions, the fee amounts are probably at least slightly inflated.  Nonetheless, these awards can provide some insight as to the appropriate magnitude of fees when negotiating a settlement early on.  For instance, in Harrington v. Creditors Specialty Service, Inc. (E.D. Cal. 2009) 2009 WL 1992206, *2, Todd Friedman sought fees in the amount of $3,029.00, and costs of $400.00, which the Court awarded. And in Dabu v. Becks Creek Industry (N.D. Cal. 2009) 2009 WL 5178263, *3, Krohn & Moss, under the guidance of Nick Bontrager, was awarded $2,950 in attorneys' fees and $400 in costs for a default judgment.


There are simply too many issues raised in the legal decisions decided in 2009 to discuss all of them here.  But a few should be touched on briefly.

The RFDCPA sets forth obligations for collecting debts that arise from credit transactions.  (See Cal. Civil Code § 1788.2(e)-(f).) A court held that a homeowners association’s regular assessments for ongoing maintenance and general services did not constitute a “consumer credit transaction.”  (Durham v. Continental Cent. Credit (S.D. Cal. 2009) 2009 WL 3416114, *7.)  The Court held that homeowners do not acquire services on credit from the homeowners association for such assessments.

Over half the cases decided this year addressed application of the RFDCPA to mortgages.  The courts repeatedly held that a mortgage is not a debt within the gambit of the RFDCPA and foreclosure was not a collection activity covered under the RFDCPA.  (See, e.g., Fuentes v. Deutsche Bank (S.D. Cal. 2009) 2009 WL 1971610.)  Courts have also held that non-judicial foreclosures are not within the scope of the RFDCPA.  (See Swanson v. EMC Mortg. Corp. (E.D. Cal. 2009) 2009 WL 3627925, *4.)  However, credit reporting of late payments does not have a sufficient nexus to the foreclosure activity to take it outside the scope of the RFDCPA.  (Yulaeva v. Greenpoint Mortg. Funding, Inc. (E.D. Cal. 2009) 2009 WL 2880393, *10.)


And as the economy continues to be tough, we anticipate that more debtors will turn to fighting collection activity with lawsuits and RFDCPA claims.  We continue to believe that those suits will be most prevalent in cases involving collection litigation involving debt buyers, especially cross-complaints. And there will be more lawsuits arising from telephone conversations, with inherent emotional distress claims.  Tracking the development of RFDCPA case law prepares you to manage the risk of claims and to address claims as they occur … here, on the frontlines.


1. Attorneys talk about opinions that are “published” in an official reporter, as these cases are more authoritative.  Often, judges will not “publish” their opinions, but electronic research companies “publish” these cases electronically.  These cases are less authoritative, and in some instances, cannot be cited in court.  Other courts, even in the same jurisdiction, are not forced to follow the analysis in these un-published, unofficial cases.  “Published” in this article means that the opinion was either officially published or published electronically.  Electronically published, unofficial cases are cited like this:  2008 WL 123456.

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.

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