Sean Munekiyo v. Capital One Bank USA N.A. et al
Filing
35
(IN CHAMBERS) Capital One Defendants' Motion To Dismiss First Amended Complaint by Judge Christina A. Snyder 22 : Capital One Defendants' motion is GRANTED in its entirety without prejudice. Plaintiff shall have 20 days to file an amended complaint. (kpa)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
Present: The Honorable
Date
December 5, 2011
CHRISTINA A. SNYDER, U.S. DISTRICT JUDGE
RITA SANCHEZ
Deputy Clerk
N/A
Court Reporter / Recorder
N/A
Tape No.
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants:
N/A
N/A
Proceedings:
I.
(In Chambers:) CAPITAL ONE DEFENDANTS’ MOTION
TO DISMISS FIRST AMENDED COMPLAINT (filed
10/3/2011)
INTRODUCTION
On April 13, 2011, plaintiff Sean Munekiyo (“plaintiff”) filed the instant class
action complaint against defendants Capital One Bank (USA) N.A. (“Capital One
Bank”), Capital One Services, LLC (“Capital One Services”) (collectively, “Capital One
Defendants”), NCO Financial Systems, Inc. (“NCO”), and Does 1–10. On September 2,
2011, plaintiff filed a first amended complaint (“FAC”). The FAC alleges six violations
of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq., against
NCO: (1) falsely representing the character, amount or legal status of any debt; (2) use of
deception to collect a debt; (3) failing to identify communications as an attempt to collect
a debt; (4) true name of the debt collector’s business, company, or organization; (5) use
of unfair or unconscionable means to collect a debt; and (6) failing to provide a debt
validation notice.1 The FAC asserts four additional claims against all defendants:
(7) deceptive acts and practices in violation of the Rosenthal Fair Debt Collection
Practices Act (“RFDCPA”), Cal. Civ. Code §§ 1788 et seq.; (8) violation of the
California Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1770 et seq.;
(9) violation of California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§
17200 et seq.; and (10) common law fraud.
On October 3, 2011, the Capital One Defendants filed a motion to dismiss the four
1
See 15 U.S.C. §§ 1692e (2), (10), (11), (14), 1692f, and 1692g(a).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
claims asserted against them in the FAC.2 Plaintiff filed his opposition on November 7,
2011, and the Capital One Defendants filed their reply on November 21, 2011. After
carefully considering the arguments set forth by both parties, the Court finds and
concludes as follows.
II.
BACKGROUND
Plaintiff maintains a credit card account with Capital One Bank. See FAC ¶ 8. By
April, 2010, plaintiff owed back payments of approximately $7,500. Mot. at 1. On April
29, 2010, Capital One Services, a subsidiary of Capital One that provides services for
Capital One Bank and other affiliates, sent plaintiff a letter informing him that his
account was eligible for a 0% Annual Percentage Rate (“APR”) if he agreed to enter a
repayment plan (the “Letter”). FAC ¶ 18.3 The Letter, printed on “Capital One”
letterhead, displays in prominent bold text “Pay Over Time” with “0% APR” directly
underneath in the upper right hand corner, along with a toll-free telephone number for
consumers to call. Id. ¶ 18, Exh. A (emphasis in original). The body of the letter states:
We realize circumstances can sometimes make it difficult to manage your finances.
The good news is—there is a way to pay it off.
Your account is eligible to have the Annual Percentage Rate (“APR”) reduced to
0% provided you call [toll-free number] to make arrangements for an acceptable
2
NCO filed its answer to the FAC on October 3, 2011. Accordingly, the claims
against NCO, including the six alleged violations of the FDCPA, are not at issue for
purposes of the present motion. Furthermore, plaintiff notes his non-opposition to the
Capital One Defendants’ motion to dismiss the CLRA, UCL, or common law fraud
claims as to the Capital One Defendants. Opp’n at 1 n.1. The Court GRANTS the
motion insofar as it involves those claims. Thus, the only claim presently at issue is the
seventh claim for violations of the RFDCPA against the Capital One Defendants.
3
A copy of the letter is attached to the FAC as Exhibit A. Because a court may
consider exhibits submitted with or alleged in the complaint, the Court may rely on the
substance of the letter for purposes of this motion. See Lee v. City of Los Angeles, 250
F.3d 668, 689 (9th Cir. 2001).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
repayment plan. After you have made acceptable arrangements, your APR will be
reduced to 0% within 8 days.
***
[Signed] Capital One Services, LLC.
P.S. Call today at [toll-free number] to make payment arrangements and start to
resolve your debt.
Id.
At the bottom of the first page, bold text states: “NOTICE: PLEASE SEE
REVERSE SIDE FOR IMPORTANT INFORMATION.” Id. (emphasis in original).
The back of the letter provides:
1. Who We Are and Who We Service. Capital One Services, LLC is a subsidiary
of Capital One, National Association, and services the following Capital One
affiliated companies:
•
Capital One Bank (USA), National Association;
•
Capital One, National Association; and
•
Capital One Auto Finance. Inc.
The name of your creditor has been previously disclosed to you and is identified
for purposes of this letter by the creditor name and/or your Account number on the
front. Unless another servicer is disclosed in this letter or has been separately
disclosed to you as the current servicer of your Account, we are the current
servicer of your Account.
2. State and Local Disclosures. The following disclosure is required by state or
local law if your Account involves a debt primarily for personal, family, household
or other consumer purpose(s) and you receive this letter in Connecticut, the District
of Columbia, Iowa, New York City, North Carolina or Vermont:
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
This is an attempt to collect a (consumer) debt (claim). Any information
obtained will be used for that purpose.
The following disclosure is required by state or local law if your Account involves
a debt primarily for personal, family, household or other consumer purpose(s) and
you receive this letter in Iowa:
This communication is from a debt collector.
The following disclosure is required by state or local law if your Account involves
a debt primarily for personal, family, household or other consumer purpose(s) and
you receive this letter in Massachusetts:
NOTICE OF IMPORTANT RIGHTS: YOU HAVE THE RIGHT TO MAKE
A WRITTEN OR ORAL REQUEST THAT TELEPHONE CALLS
REGARDING YOUR DEBT NOT BE MADE TO YOU AT YOUR PLACE
OF EMPLOYMENT. ANY SUCH ORAL REQUEST WILL BE VALID FOR
ONLY TEN DAYS UNLESS YOU PROVIDE WRITTEN CONFIRMATION
OF THE REQUEST POSTMARKED OR DELIVERED WITHIN SEVEN
DAYS OF SUCH REQUEST. YOU MAY TERMINATE THIS REQUEST
BY WRITING TO THE CREDITOR.
The terms used in this Section are defined by applicable state or local law. This is
not a complete list of the rights that you might have.
Id. ¶ 19, Exh. A (emphasis in original).
Plaintiff alleges that when he (and other similarly situated consumers) called the
toll-free number, he was connected not with a Capital One representative, but with a
representative from NCO, a separate debt collection entity. Id. ¶ 22. Plaintiff avers that
consumers are “trapped” into speaking with specially-trained collectors rather than
customer service representatives of the Capital One Defendants, and that the 0% APR
“pay over time” offer is illusory because defendants only stop the accrual of interest if the
consumer makes a “lump sum” payment. Mot. at 5; FAC ¶¶ 27–28.
III.
LEGAL STANDARD
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a
complaint. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitlement to relief’ requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v.
Twombly, 127 S. Ct. 1955, 1964-65 (2007). “[F]actual allegations must be enough to
raise a right to relief above the speculative level.” Id. at 1965.
In considering a motion pursuant to Fed. R. Civ. P. 12(b)(6), a court must accept as
true all material allegations in the complaint, as well as all reasonable inferences to be
drawn from them. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). The complaint
must be read in the light most favorable to the nonmoving party. Sprewell v. Golden
State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Parks Sch. of Bus., Inc. v. Symington,
51 F.3d 1480, 1484 (9th Cir. 1995). However, a court need not accept as true
unreasonable inferences or conclusory legal allegations cast in the form of factual
allegations. Sprewell, 266 F.3d at 988; W. Mining Council v. Watt, 643 F.2d 618, 624
(9th Cir. 1981).
Dismissal pursuant to Rule 12(b)(6) is proper only where there is either a “lack of a
cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal
theory.” Balistreri v. Pac. Police Dept., 901 F.2d 696, 699 (9th Cir. 1990).
Furthermore, unless a court converts a Rule 12(b)(6) motion into a motion for
summary judgment, a court cannot consider material outside of the complaint (e.g., facts
presented in briefs, affidavits, or discovery materials). In re American Cont’l
Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on
other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523
U.S. 26 (1998). A court may, however, consider exhibits submitted with or alleged in the
complaint and matters that may be judicially noticed pursuant to Federal Rule of
Evidence 201. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999);
Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).
For all of these reasons, it is only under extraordinary circumstances that dismissal
is proper under Rule 12(b)(6). United States v. City of Redwood City, 640 F.2d 963, 966
(9th Cir. 1981).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th
Cir. 2000).
IV.
DISCUSSION
Plaintiff’s third claim alleges violations of the RFDCPA, Cal. Civ. Code
§§ 1788.13(a), (i), & (l), and § 1788.17. Section 1788.13 states, in pertinent part:
No debt collector shall collect or attempt to collect a consumer debt by means of
the following practices:
(a) Any communication with the debtor other than in the name either of the debt
collector or the person on whose behalf the debt collector is acting;
***
(i) The false representation of the true nature of the business or services being
rendered by the debt collector; [or]
***
(l) Any communication by a licensed collection agency to a debtor demanding
money unless the claim is actually assigned to the collection agency.
Cal. Civ. Code §§ 1788.13(a), (i), & (l).
Section 1788.17 states:
Notwithstanding any other provision of this title, every debt collector collecting or
attempting to collect a consumer debt shall comply with the provisions of Sections
1692b to 1692j, inclusive, of, and shall be subject to the remedies in Section 1692k
of, Title 15 of the United States Code. However, subsection (11) of Section 1692e
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
and Section 1692g shall not apply to any person specified in paragraphs (A) and
(B) of subsection (6) of Section 1692a of Title 15 of the United States Code or that
person’s principal.
Cal. Civ. Code § 1788.17.
Plaintiff avers that defendants communicated with plaintiff “using names other
than their own” by not indicating that the Letter was sent on behalf of both the Capital
One Defendants and NCO. FAC ¶ 89. Plaintiff further alleges that defendants “failed to
disclose that the consumer[’]s account was handled by NCO Collections.” Id. ¶ 90.
Finally, plaintiff alleges that “[b]y virtue of their act and practices in violation of [the
FDCPA], defendants violated [the RFDCPA].” Id. ¶ 92.
The Capital One Defendants move to dismiss the RFDCPA claim against Capital
One Bank on the ground that Capital One Bank is not a “debt collector” under the
RFDCPA. Mot. at 6. The Capital One Defendants also assert that the “plain language”
of the Letter discloses that: (1) plaintiff’s debt was not in the hands of Capital One Bank;
(2) calls to the toll-free number could be routed to an external agency; (3) the 0% APR
offer is not guaranteed; and (4) its purpose is to collect a debt. Id. at 7–10. The Capital
One Defendants further argue that plaintiff has failed to allege that the Capital One
Defendants are “licensed collection agencies.” Id. 11.
In opposition, plaintiff argues that Capital One Bank is a debt collector because
“Capital One Bank was part of the scheme to trick consumers into calling NCO.” Opp’n
at 8. Plaintiff also contends that the Letter “deceive[s] and mislead[s]” the least
sophisticated debtor in five respects. Id. at 10–18. First, plaintiff argues that the 0%
APR offer is “false” because an offer to make a lump sum payment in order to reduce
interest rates is not a “pay over time” scheme as the letter indicates. Id. at 10. Second,
plaintiff contends that a consumer who calls the toll-free number is transferred to NCO
“without warning or disclosure” which is a “prime example of a collection abuse.” Id. at
10–11 (relying on Wood v. Capital One Servs., LLC, 718 F. Supp. 2d 286, 292
(N.D.N.Y. 2010), Knoll v. Allied Interstate, Inc., 502 F. Supp. 2d 943, 946 (D. Minn.
2007), and Sohns v. Bramacint, LLC, 2010 WL 3926264 (D. Minn. 2010)). According to
plaintiff, “[b]y omitting reference to NCO from the Letter there was no reasonable
expectation on the part of the consumer that he or she would be connected to a third
part[y] debt collector NCO . . . rather than one of the Capital One Defendants.” Id. at 13.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
Plaintiff argues that the disclosure on the back of the Letter does not cure the alleged
deficiency because “[c]onditional language, particularly in the absence of any language
clarifying or explaining the conditions, does not insulate a debt collector from liability.”
Id. (quoting Gonzales v. Arrow Fin. Servs., LLC., --- F.3d ---, 2011 WL 4430844, *5 (9th
Cir. 2011)). Third, plaintiff asserts that “the Letter does not clearly communicate who it
is from or that it is from a debt collector.” Opp’n at 15–16 (arguing that the least
sophisticated consumer would be “bewildered” about who was trying to collect his debt
because the Letter does not disclose “all those who are attempting to collect” it)
(emphasis in original). Fourth, plaintiff contends that the Letter misrepresents the
account’s legal status “by creating the false impression that the [plaintiff’s] account
remained with the Capital One Defendants when in fact it had been sent to NCO.” Id. at
17. Finally, plaintiff argues that the Capital One Defendants acted wrongfully “by
communicating with [plaintiff] at a time when his account had actually been assigned to
NCO” in violation of Cal. Civ. Code § 1788.13(l). Id.
Capital One Defendants reply that the Letter contains the “required disclosure” that
it is a communication from Capital One Services to collect a debt on behalf of plaintiff’s
creditor, Capital One Bank, and that “[n]ot even the least sophisticated consumer could
be confused as to who sent the Letter and for what purpose it was sent.” Reply at 2, 5.
Capital One Defendants argue that the Letter “goes a step further and discloses the
possibility that an external agency may be servicing the account by the time the recipient
calls the toll free number.” Id. at 2–3. According to Capital One Defendants, the
RFDCPA requires the external agency to disclose to the consumer that it was attempting
to collect a debt once the toll-free number is called, and that “there are no allegations in
the First Amended Complaint that this external agency failed to abide by its separate
disclosure requirements.” Id. at 3. Capital One Defendants further argue that the
RFDCPA and FDCPA specifically require “the debt collector—not the creditor or its
account-servicing arm—to disclose in the initial communication with a debtor that it is a
debt collector attempting to collect a debt.” Id. (citing 15 U.S.C. § 1692e(11) and Cal.
Civ. Code § 1788.17). Capital One Defendants contend that plaintiff “seeks to trump
these legislative decisions regarding how specifically a debt collector’s involvement
should be disclosed using the statutes’ general prohibition against deceptive and
misleading communications.” Reply at 3. Moreover, Capital One Defendants argue that
everything in the Letter is true, that routing calls is not misleading, that the 0% APR offer
is not “false,” and that plaintiff’s claim under Cal. Civ. Code § 1788.13(l) fails because
the FAC alleges his debt was assigned to both Capital One Services and NCO. Id. at
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
5–10.
The Court finds that plaintiff’s seventh claim should be dismissed. The RFDCPA,
like its federal counterpart the FDCPA, “is designed to protect consumers from unfair and
abusive debt collection practices.” Robinson v. Managed Accounts Receivable Corp.,
654 F. Supp. 2d 1051, 1060 (C.D. Cal. 2009). Whether or not a communication or debt
collection practice is deceptive under the RFDCPA is determined from the standpoint of
the “least sophisticated debtor.” See Wade v. Reg’l Credit Assoc., 87 F.3d 1098, 1100
(9th Cir. 1996) (applying standard to FDCPA). The “least-sophisticated consumer”
standard is a question of law to be measured objectively. Swanson v. S. Or. Credit Serv.,
Inc., 869 F.2d 1222, 1227 (9th Cir. 1988); Hosseinzadeh v. M.R.S. Assoc., Inc., 387 F.
Supp. 2d 1104, 1114 (C.D. Cal. 2005). “The Court must balance this debtor-friendly
framework by protecting legitimate debt collectors from unreasonable interpretations of
collection letters.” Cruz v. MRC Receivables Corp., 563 F. Supp. 2d 1092, 1096–97
(N.D. Cal. 2008).
As an initial matter, the Court finds that plaintiff has failed to allege Capital One
Bank is a “debt collector” within the meaning of Cal. Civ. Code § 1788.2(b). Paragraph
10 of the FAC alleges that Capital One Bank “regularly engages in debt collection and is
therefore a ‘debt collector’ within the meaning of Cal. Civ. Code § 1788.2(c).” FAC ¶
10. But plaintiff’s “conclusory labeling of [the defendant] as a ‘debt collector,’ without
further substantiation, fails to state a claim under the RFDCPA.” Sanchez v. U.S.
Bancorp, 2009 WL 3157486, *6 (S.D. Cal., Sept. 25, 2009) (citing Twombly, 550 U.S. at
555). Furthermore, plaintiff’s allegations that defendants collectively “devised” a
program to “funnel” telephone calls from consumers to NCO does not provide a factual
basis on which to conclude that Capital One Bank is a debt collector. FAC ¶¶ 15–16;
Iqbal, 129 S.Ct. at 1951 (holding that the plaintiff failed to state a claim because he
merely alleged that certain defendants were the “principal architect[s]” of a
discriminatory scheme and “instrumental” in implementing that scheme). Accordingly,
the Court GRANTS Capital One Defendants’ motion to dismiss the RFDCPA claim as to
Capital One Bank without prejudice.
The Court will address the remaining RFDCPA sections in turn.
A.
CV-90 (06/04)
Misleading or Deceptive Practices in Alleged Violation of Cal. Civ. Code
§§ 1788.13(a) & (i)
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
Cal. Civ. Code § 1788.13(a) prohibits communication with a debtor using a false
name and § 1788.13(i) prohibits misrepresentation of services being rendered by a debt
collector. Plaintiff argues that Capital One Defendants violated these provisions in two
ways: first, by failing specifically to disclose NCO in the letter, and second, by offering
an “illusory” promise of 0% APR financing.
1.
Failing Specifically to Disclose NCO in the Letter
Plaintiff argues that the Capital One Defendants violated the RFDCPA by not
defining “external agencies” in the Letter or otherwise indicating that NCO may be
involved in debt collection. Opp’n at 15–16. The Second Circuit recently rejected this
exact argument. See Rogers v. Capital One Servs., LLC, 2011 WL 5829688 (2d Cir.,
Nov. 21, 2011). Rogers involved claims against Capital One Defendants under the
FDCPA and a parallel Connecticut debt collection statute arising out of a letter plaintiff
had received from Capital One Services that is nearly identical to the letter at issue here.
Id. In affirming the district court’s dismissal of plaintiff’s claims against Capital One
Defendants, the court held that the plaintiff could not “plausibly allege deception from
the mere fact that [the third party debt collector URS] is not identified by name as the
particular external agency that Capital One Services will use for servicing [plaintiff’s]
debt.” Id. at *2. The court noted:
[Plaintiff] does not allege that Capital One Services or URS ever failed to use their
true name in dealing with [plaintiff.] At most, it complains of a failure to identify
URS as the external agency that Capital One Services would use on [plaintiff’s]
account. Because the letter sent by Capital One Services informed [plaintiff] of the
possible involvement of such an external agency, if not the exact identity of such
agency, he cannot plausibly state a claim for a violation of § 1692e(14).
Id. (emphasis added).
Here, as in Rogers, the Letter discloses that an external agency may be servicing
plaintiff’s account.4 FAC ¶ 19, Exh. A (noting that an outside servicer may be
4
At oral argument, plaintiff argued that unlike in Rodgers, here the plaintiff has
alleged that the Capital one Defendants have caused confusion as to the identity of the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
“separately disclosed” to the consumer). The Capital One Defendants were not obligated
to specifically disclose NCO, and there are no allegations in the FAC that NCO failed to
abide by its own disclosure requirements.5 Rogers, 2011 WL 5829688 at *2.
Accordingly, the Court finds that the Letter is not misleading or deceptive merely
because it fails to disclose NCO as the external debt servicer.6 The Court GRANTS the
debt collectors and that such confusion is actionable under the RFDCPA. Plaintiff’s
argument misses the point, however, because the Second Circuit held that disclosing “the
possible involvement” of an external agency satisfied Capital One Service’s burden under
the RFDCPA. See Rogers, 2011 WL 5829688 at *2. It is sufficient that the Letter
apprised the plaintiff that a third-party creditor may be involved, regardless whether the
plaintiff knew the exact identity of that third party. See id.
5
Moreover, the Letter would not cause the least sophisticated consumer to be
misled into believing that the account remained with the Capital One Defendants when
the Letter clearly states that an external agency may be servicing plaintiff’s account. See
15 U.S.C. § 1692e(2)(A).
6
Furthermore, the Court is unpersuaded by plaintiff’s contention that routing the
toll-free number to NCO constitutes a misleading or deceptive practice in violation of the
RFDCPA because, again, the Letter specifically discloses that an external agency could
be handling a given consumer’s debt. FAC ¶ 19, Exh. A. The cases relied upon by
plaintiff are inapposite. First, in Wood, the court held that a reasonable consumer would
expect to be connected with Capital One Services because the letter at issue “omitt[ed]
mention of any third party involvement,” unlike the Letter here that clearly states possible
involvement of an external agency. Cf. Wood, 718 F. Supp. 2d at 292. Second, both
Knoll and Sohns involved affirmative deception on the part of a debt collector in an
attempt to deceive a debtor into speaking with them. See Knoll, 502 F. Supp. 2d at 945
(holding that the debt collector violated consumer protection laws by causing the name
“Jennifer Smith” to appear on the debtor’s caller ID in an attempt to “lure” the debtor to
answer the telephone, despite the fact that the debtor had previously informed the debt
collector to stop calling him because the limitations period had run); Sohns, 2010 WL
3926264 at *1 (holding that the use of caller ID “spoofing” to “ma[ke] it look like [the
agent] was [the debtor’s] mother-in-law so that she would answer the call” violated the
FDCPA). Finally, the “conditional” language in Gonzales was found to be misleading
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
Capital One Defendants’ motion under this theory without prejudice.
2.
0% APR Financing Offer
Plaintiff argues that the 0% APR offer is “false” because “when a consumer tries to
accept they are instead only offered the opportunity to pay a lump sum with no interest.”
Opp’n at 10; FAC ¶ 27. The plain language of the Letter, however, belies plaintiff’s
assertions. The Letter states that the consumer’s account “is eligible” to have the APR
reduced to 0% “provided you . . . make arrangements for an acceptable repayment plan.
After you have made acceptable arrangements, your APR will be reduced to 0%.” FAC ¶
18, Exh. A (emphasis added). Thus, the least sophisticated consumer would not be
misled into believing a call to the toll-free number would guarantee a 0% APR financing
plan for repaying outstanding debt. See Cruz, 563 F. Supp. 2d at 1097 (noting that courts
must protect “legitimate debt collectors from unreasonable interpretations of collection
letters”).7
Accordingly, the Court GRANTS the Capital One Defendants’ motion without
prejudice insofar as plaintiff alleges the 0% APR financing offer is false and misleading.
B.
Communicating With Plaintiff When His Account Had Been
Transferred to NCO in Alleged Violation of Cal. Civ. Code § 1788.13(l)
because it was impossible and illegal for the debt collector to satisfy the condition, in
contrast to the present case in which the Capital One Defendants are not prohibited to
assign plaintiff’s debt to an external agency. Cf. Gonzales, --- F.3d ---, 2011 WL
4430844 at *4–5.
7
Moreover, the FAC alleges that “[c]onsumers who call to receive the offer are
informed that a 0% APR pay over time plan is available only if a lump sum payment is
made.” FAC ¶ 27. It does not, however, allege that a consumer must pay off his or her
full balance to receive 0% APR. Thus, as currently pled, the FAC plausibly suggests that
an “acceptable payment plan” to trigger 0% APR financing is predicated on first making
a “lump sum” payment, because “lump sum” does not necessarily mean “payment in
full.”
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 12 of 14
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
Cal. Civ. Code § 1788.13(l) prohibits a collection agency from “demanding money
[from a debtor] unless the claim is actually assigned to the collection agency.” Plaintiff
argues that the Capital One Defendants violated this section by sending him the Letter
when his account had been transferred to NCO. Opp’n at 17. There are two problems
with plaintiff’s argument: first, the Letter does not “demand[] money” from plaintiff.
Second, the FAC alleges that plaintiff’s debt was assigned to both NCO and Capital One
Services. See FAC ¶ 61 (alleging that the debt “was transferred to Capital One
Collections and NCO Collections, i.e. debt collectors, for handling”). Capital One
Services could not have run afoul of § 1788.13(l)’s prohibitions if, as the FAC alleges,
the debt had been assigned to Capital One Services.
Accordingly, the Capital One Defendants’ motion is GRANTED as to plaintiff’s
claim insofar as it arises under Cal. Civ. Code § 1788.13(l).
C.
Unfair or Unconscionable Means to Attempt to Collect a Debt in
Alleged Violation of Cal. Civ. Code § 1788.17
Plaintiff alleges that the Capital One Defendants violated Cal. Civ. Code § 1788.17
via 15 U.S.C. § 1692f because their alleged practices are an “unfair and unconscionable
means to collect or attempt to collect a debt.” FAC ¶ 81. Plaintiff asserts no new bases
for this claim other than to incorporate by reference his previous allegations. Because the
Court finds that the Letter is neither misleading nor deceptive, plaintiff’s “unfair or
unconscionable” claim must also fail. See Moya v. Chase Cardmember Serv., 661 F.
Supp. 2d 1129, 1133 (N.D. Cal. 2009) (“Having found that plaintiff has failed to state a
claim that the accused language is false and deceptive . . . he has also failed to state a
claim that it is unfair or unconscionable.”).
Accordingly, the Capital One Defendants’ motion is GRANTED insofar as
plaintiff alleges “unfair or unconscionable” means to attempt to collect a debt.
IV.
CONCLUSION
In accordance with the foregoing, the Capital One Defendants’ motion is
GRANTED in its entirety without prejudice. Plaintiff shall have twenty (20) days to file
an amended complaint.
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 13 of 14
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 11-3143 CAS (JCx)
Date
December 5, 2011
Title
SEAN MUNEKIYO v. CAPITAL ONE BANK, N.A., ET AL.
IT IS SO ORDERED.
00
Initials of
Preparer
CV-90 (06/04)
CIVIL MINUTES - GENERAL
:
00
RS
Page 14 of 14
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