Rose v. Asset Acceptance
Filed 2/24/12 Rose v. Asset Acceptance CA1/3
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
THREE
FREIDA
ROSE,
Cross-Complainant and Appellant,
v.
ASSET
ACCEPTANCE, LLC,
Cross-Defendant and Respondent.
A129025
(Alameda
County
Super. Ct.
No. WG 07328408)
Debt
collector Asset Acceptance, LLC, (Asset) sued appellant Freida Rose (Rose) for
money she allegedly owed to “Pacific Bell Tel/[doing business as] SBC” (SBC)
for telephone service. Rose countersued,
claiming the telephone bills were not hers and that a
amounts owed to SBC. She sought to
certify a class of all California
consumers that Asset had pursued to recover debts on telephone bills that were
“so poorly documented that their authenticity [could not] be proven” and/or
were “so old that they f[e]ll well beyond any pertinent statute of limitations
under which they [could] be pursued . . . .” On appeal, Rose challenges the trial court’s
order denying her motion for class certification and contends the court: (1) improperly decided a merits issue on
the class certification motion, specifically, which statute of limitations
applies to telephone bill debts; and (2) erred in ruling that a four-year
state statute of limitations applies to such debts. We reject the contentions and affirm.
Factual and Procedural Background
On
May 30, 2007, Asset filed a complaint against Rose, alleging she became
indebted to SBC in the amount of $2,198.67 “within the last four years” and had
promised to pay that amount to SBC “for goods, wares and merchandise sold and
delivered to [her] and for which [she] promised to pay
. . . .” Asset alleged it
had purchased Rose’s account from SBC and that as current owner of the account,
was entitled to collect $2,198.67 plus interest from Rose.
Rose
filed a second amended class action cross-complaint against Asset alleging it
was engaged in a “business practice of purchasing debts referred to as ‘zombie
debt’ and attempting to collect them” throughout California. The debts were “so old that they f[e]ll well beyond
any pertinent statute of limitations under which they [could] be pursued, or
[we]re so poorly documented that their authenticity [could not] be
proven.” She alleged Asset attempted to
collect on such debts by, among other things, “filing complaints in court, but
failing to document the origination of the debt and typically tak[ing] defaults
against the purported debtors on these debts.”
Rose alleged as to her case that she did not know how the debt
originated because she had not opened or become a subject of collection upon
any SBC accounts in many years. She
suspected it was a debt she disputed over seven years before, or was not her
debt at all. Rose brought the action on
her own behalf and on behalf of all persons similarly situated—“California
consumers who within the last four years were subject to attempts to collect by
Cross-Defendants on accounts that have been manipulated to make them appear to
be collectable when they were not and whose authenticity is otherwise
insufficiently supportable by evidence.”
Under
her first cause of action for violation of the Rosenthal Fair Debt Collection
Practices Act (the Rosenthal Act), Rose alleged Asset “manipulat[ed] accounts
and account numbers . . . as an artifice to collect a debt,”
attempted to collect debts that were past the statute of limitations, and filed
complaints after the statute of limitations had passed. Under her second cause of action for breach
of contract and breach of the covenant of good faith and fair dealing, Rose
alleged Asset altered account numbers or failed to properly track accounts so
that the ages of the accounts or the disputes relating to those accounts were
inaccurate. Under her third cause of
action for unfair business practices, she alleged Asset’s conduct constituted
unfair competition “in that [respondent] unlawfully, and in a deceptive manner,
. . . violated [the Act] . . . .”
Under
her fourth cause of action for violation of the California Consumer Legal
Remedies Act (CLRA), Rose alleged Asset engaged in unfair, deceptive and
unconscionable practices by representing that:
(1) “goods or services have sponsorship, approval, characteristics,
ingredients, uses, benefits, or quantities, which they do not have”; (2) “goods
or services are of a particular standard, quality, or grade, if they are of
another”; and (3) “a transaction confers or involves right, remedies, or
obligations which it does not have or involve, or which are prohibited by law
. . . when it manipulat[ed] accounts and account numbers to make them
appear to be amenable to collection efforts when they [were] not.” Under her fifth cause of action, abuse of
process, Rose alleged Asset commenced lawsuits “fully knowing it ha[d] no right
to bring such proceedings, as the time period for filing such suits ha[d]
pas[sed].”
Asset
filed a motion for judgment on the pleadings, which the trial court granted in
part. The court ruled that Rose “may
proceed with the claims under the Rosenthal Fair Debt Collection Practices Act,
the contractual duty of good faith and fair dealing, and the UCL.” Asset then filed a motion for summary
judgment or summary adjudication. The
court granted summary adjudication as to some allegations in the first cause of
action relating to violations of the Rosenthal Act. It found Rose had presented no evidence in
support of her claim that Asset manipulated the account dates to make its claim
appear timely when in fact it was not.
It found, however, that Rose was allowed to proceed on her allegation
that Asset attempted to collect debts that were past the statute of limitations
and filed complaints in court after the statute of limitations had passed. The court granted the motion for summary
adjudication as to the entire second cause of action for breach of contract or
breach of the duty of good faith and fair dealing. It found, as it did as to the first cause of
action, that Rose had not presented any evidence in support of her claim that
Asset or its predecessor had “manipulated the contractual accounts and account
numbers or failed to track the accounts properly.” The court granted the motion for summary
adjudication as to the allegations in her third cause of action for unfair
business practices that were based on manipulation of data and
that were based on Asset’s act of filing lawsuits that were barred by the
statute of limitations.
Rose
filed a motion for class certification on December 23, 2009. The trial court denied the motion, finding
that because a four year statute of limitations applied to the debts that were
at issue, and Rose had presented no evidence of the number of debtors Asset had
sued beyond the expiration of the four-year statute, she had not established her
burden of establishing numerosity. The
court also ruled that a class was ascertainable if the court redefined the
class; that common legal issues existed; that Rose was a typical class member;
that Rose and her counsel were adequate; and that a class action was not a
superior method of resolving Rose’s claims.
Both parties appealed.
Class
certification is governed by Code of Civil Procedure section 382, which
provides in part: “[W]hen the question
is one of a common or general interest, of many persons, or when the parties
are numerous, and it is impracticable to bring them all before the court, one
or more may sue . . . for the benefit of all.” “Class certification requires proof (1) of
a sufficiently numerous, ascertainable class, (2) of a well-defined
community of interest, and (3) that certification will provide substantial
benefits to litigants and the courts, i.e., that proceeding as a class is
superior to other methods. [Citations.] In turn, the ‘community of interest
requirement embodies three factors:
(1) predominant common questions of law or fact; (2) class
representatives with claims or defenses typical of the class; and
(3) class representatives who can adequately represent the class.’ [Citation.]”
(Fireside Bank v. Superior Court (2007)
40 Cal.4th 1069, 1089.)
“The
decision to certify a class rests squarely within the discretion of the trial
court, and we afford that decision great deference on appeal, reversing only
for a manifest abuse of discretion:
‘Because trial courts are ideally situated to evaluate the efficiencies
and practicalities of permitting group action, they are afforded great
discretion in granting or denying certification.’ [Citation.]
A certification order generally will not be disturbed unless (1) it
is unsupported by substantial evidence, (2) it rests on improper criteria,
or (3) it rests on erroneous legal assumptions.” (Id.
at p. 1089.) “ ‘ “Any
valid pertinent reason stated will be sufficient to uphold the
order.” ’ [Citations.]” (Sav-On
Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326-327.)
Rose
contends the order denying class certification must be reversed because the
trial court improperly decided a merits issue when it determined that a
four-year statute of limitations applied to telephone bill debts. She relies on Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429 (
are not to decide an action on its merits when determining whether to certify a
class. Linder does not support Rose’s contention. There, the Supreme Court stated that “the
question of certification” is “essentially a procedural one” in which courts
“do[] not ask whether an action is legally or factually meritorious.” (Id.
at pp. 439-440.) However, it also
stated, “Nothing we say today is intended to preclude a court from scrutinizing
a proposed class cause of action to determine whether, assuming its merit, it
is suitable for resolution on a classwide basis. Indeed, issues affecting the merits of a case
may be enmeshed with class action requirements, such as whether substantially
similar questions are common to the class and predominate over individual
questions or whether the claims or defenses of the representative plaintiffs
are typical of class claims or defenses.
[Citations.]” (
A
number of courts have relied on the language in Linder in upholding a trial court’s consideration of the merits at
the class certification stage. In
122 Cal.App.4th 1442, for example, the Court of Appeal rejected the plaintiff’s
argument that the trial court “improperly weighed the conflicting evidence and
made a finding on the merits of the case in determining that common issues
would not predominate.” (
is “ ‘enmeshed with’ ” a class action requirement, the trial court is
“authorized to scrutinize a proposed class cause of action to determine whether
it is suitable for resolution on a classwide basis.” (Ibid.) In Ali
v. U.S.A. Cab. Ltd. (2009) 176 Cal.App.4th 1333, the plaintiffs argued the
trial court impermissibly weighed the merits of the lawsuit in determining that
two class certification requirements—predominance of common questions and
superiority of class treatment—had not been met. The Court of Appeal rejected the argument,
noting the trial court “did not deny class certification based on a finding the
complaint lacks merit as a matter of law.
The court did not require plaintiffs to prove their case as a prerequisite
to class certification. Rather,
. . . ‘the court simply considered evidence bearing on the factual
elements necessary to determine whether to certify the class.’ [Citation.]”
(Id. at p. 1346.)
Similarly,
here, the trial court did not rule on
the merits of Rose’s case and did not require her to prove her claims against
Asset as a prerequisite to class certification; rather, it expressly allowed
her action to proceed, albeit on an individual basis. The court did decide an issue related to the
merits of Rose’s claims when it determined what statute of limitations applies
to telephone bill debts. Resolving that
threshold question was necessary, however, in order to determine whether the
class was “sufficiently numerous [and] ascertainable.” (Fireside
Bank v. Superior Court, supra, 40
Cal.4th at p. 1089.)
name="_ftnref1" title="">[1] Because the issue of whether Asset violated
the Rosenthal Act or engaged in unfair business practices by filing time-barred
lawsuits was “enmeshed with” class action requirements, the court had the authority
to address the statute of limitations issue in ruling on Rose’s motion for
class certification.
Rose
contends the order denying class certification should nevertheless be reversed
because a federal two-year statute of limitations under the Federal
Communications Act (FCA), 47 U.S.C. section 415(a)
(Section 415(a))—not a state four-year statute of limitations under Code
of Civil Procedure section 337—applies to telephone bill debts.
determined that Asset’s claims were governed by the four-year state statute of
limitations.
Section
415(a) provides: “All actions at law by
carriers for recovery of their lawful charges, or any part thereof, shall be
begun within two years from the time the cause of action accrues, and not
after.”
its holding that Section 415(a) applies only to federally regulated
telephone charges, the trial court ruled that because Rose had not presented
any evidence that Asset’s collection action sought to recover any federally
regulated charges, Section 415(a) did “not apply on the facts of this case
and the four year statute of limitations in [Code Civ. Proc.] § 337
applies to Asset’s claims.”
Subsequently, the United States Court of Appeals for the Fifth Circuit
affirmed the district court’s decision in
Castro v. Collecto, Inc. (5th Cir.
2011) 634 F.3d 779 (Castro).
In
Castro, the plaintiff received two
letters from debt collectors regarding a debt he allegedly owed to mobile phone
company Sprint PCS based on unpaid phone bills.
(Castro, supra, 634 F.3d at p. 781.)
The plaintiff sued the debt collectors on the ground that they violated
the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.,
by sending him letters threatening to sue on an approximately three-year-old
debt as to which the applicable statute of limitations had elapsed. (Castro,
supra, 634 F.3d at p. 781.) The district court granted the defendants’
motion to dismiss, or alternatively, for judgment on the pleadings, reasoning
that a four-year Texas statute of limitations,
rather than the two-year federal statute of limitations period, applies to
telephone bill debts, and that the defendants therefore had not threatened to
sue on time-barred debts. (
The
Court of Appeals focused on the issue of preemption in concluding
Section 415(a) did not apply to the plaintiff’s debts. First, the Court began with the assumption
that Section 415(a) did not preempt the state statute of limitations
“ ‘unless that was the clear and manifest purpose of
Congress.” ’ [Citation.]” (Castro,
supra, 634 F.3d at p. 784.) There was no such showing “because Congress
has not made clear that it intended for [Section 415(a)] to preempt state
statutes of limitations with respect to actions to collect debts like those at
issue here. (Ibid.) “Although the federal
government formerly controlled telecommunications regulation nationwide, in
1993, Congress amended the FCA to permit the states to handle many aspects of
regulating commercial mobile services, including billing practices and consumer
protections. [Fn. omitted.] In addition, states have traditionally
governed matters regarding contracts and consumer protections, which, on a more
general level, are the issues involved in this case.” (Id.
at pp. 784-785.)
From
there, the Court turned to the question whether “conflict preemption”
applied. (Id. at p. 785.) The
Court stated that this issue “depends on whether the term ‘lawful charges’ in
[Section 415(a)] should be read to include non-tariffed charges or only
tariffed charges. If ‘lawful charges’
does include non-tariffed as well as tariffed charges, then we would agree . . .
that conflict preemption would apply, because the [state] statute of
limitations would be in conflict with the balancing of interests expressed in
the federal statute of limitations.” (
The Court observed that although many telecommunications carriers were
released from the requirement of filing tariffs in the mid-1990s, thereby
placing their charges outside of the definition of “lawful charges,” Congress
had never defined the phrase “lawful charges” and had not amended the language
of Section 415(a), thus leaving it “unclear” what charges were covered by
that section. (Id. at pp. 785-787.)
The Court held the state statute of limitations therefore applied: “Because we conclude that the meaning of
‘lawful charges’ is ambiguous, we therefore decline to interpret the term in
such a way that conflict preemption would apply. . . . [T]he Texas
statute of limitations provides the limitations period in this case
. . . .” (
We
find the analysis in Castro to be
persuasive and conclude that because Section 415(a) did not preempt state
law in regards to the limitations period for collection of telephone bill
debts, the four-year statute of limitations set forth in Code of Civil
Procedure section 337, under which Asset sought to collect the debts,
applied. Rose asserts that due to various
evidentiary problems, Asset “cannot now and will never be able to prove its
case on the merits” under its theory that it was entitled to collect the debts
under Code of Civil Procedure section 337.
Whether Asset will ultimately be able to prove its claims under that
section, however, is not relevant to whether the class should have been
certified. As the trial court stated,
“The claims that Ms. Rose seeks to prosecute on behalf of the class are
that Asset is prosecuting claims that are time barred, not that Asset is
pursuing claims that it cannot prove on their merits.”
In
light of our conclusion the trial court properly determined the statute of
limitations issue, we need not, and will not, decide Rose’s alternate argument
that the court erred in finding that a class action was not a superior method
of resolving her claims. We also decline
to address the contentions Asset makes in its cross-appeal—whether the court
should have denied the motion for class certification on the ground that the
class was not ascertainable, common legal issues did not exist, or Rose and/or
her counsel were inadequate.
Finally,
we deny Rose’s request that we take judicial notice of: (1) the legislative history of the Rosenthal
Act, which she asserts shows that “it is the specific public policy of the
[Rosenthal Act] to allow class actions for collector deceptive and unfair
practices, including filing time barred complaints”; and (2) Asset’s response
to an interrogatory “wherein Asset acknowledge[d] that of the 14,821 lawsuit[s]
it filed, it only had 316 contested cases.
First, Rose did not present either of these documents to the trial court
in support of her motion for class certification. (See Cuenca
v. Safeway San Francisco Employees Fed. Credit Union (1986) 180 Cal.App.3d
985, 997 [appellate court declined to take judicial notice of court records not
judicially noticed by the trial court].)
Second, she has not shown that the information contained in the
documents is relevant to the determination of this appeal. (See People
ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2
[“any matter to be judicially noticed must be relevant to a material
issue”].) Even if the legislative
history shows that class actions are allowed or even encouraged under the
Rosenthal Act, this does not eliminate Rose’s burden to show that each
requirement for class certification has been met in her particular case. As to Asset’s interrogatory response, she
asserts only that the response “tend[s] to indicate that it is unrealistic to
believe that individuals will actually have a determination of whether
violations of the [Rosenthal Act] absent class treatment and, therefore, class
action treatment is superior to leaving the issues to hypothetical individual
determination.” Because, as noted, we
are not deciding whether a class action would have been a superior method of
resolving her claims, the interrogatory response’s “tend[ency]” to show that
“class action treatment is superior” is not relevant here.
Disposition
The
trial court’s order denying class certification is affirmed. Respondent shall recover its costs on appeal.
_________________________
McGuiness,
P.J.
We concur:
_________________________
Siggins, J.
_________________________
Jenkins, J.
because Rose had presented no evidence regarding the number of debtors Asset
had sued beyond the limitations period in violation of the Rosenthal Act or the
Unfair Competition Law, she had not established her burden of establishing
numerosity.
name="_ftn2" title="">[2] Presumably, her argument is that if a
two-year statute of limitations applies, she would be able to show that the
class is numerous.
