Knowles v. United Debt Holdings, LLC et al

Filing 37

STIPULATED REQUEST and ORDER for Dismissal, signed by District Judge Anthony W. Ishii on 9/16/2015.CASE CLOSED (Martin-Gill, S)

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Ray E. Gallo (SBN 158903)
[e-mail]
Dominic Valerian (SBN 240001)
[e-mail]
GALLO LLP
1299 Fourth Street, Suite 505
San Rafael, CA 94901
Phone: [phone]
Attorneys for Plaintiff Mandy Knowles
Jeffrey A. Topor (SBN 195545)
[e-mail]
Liana Mayilyan (SBN 295203)
[e-mail]
SIMMONDS & NARITA LLP
44 Montgomery Street, Suite 3010
San Francisco, CA 94104-4816
Telephone: [phone]
Facsimile: [phone]
Attorneys for Defendant
United Debt Holdings, LLC

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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MANDY KNOWLES,

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Plaintiff,

Case No. 1:14-CV-01815-AWI-GSA
STIPULATED REQUEST AND ORDER
FOR DISMISSAL

v.
UNITED DEBT HOLDINGS, LLC, et al.,
Defendants.

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Pursuant to the Court’s August 13, 2015 Order (ECF No. 35) and Local Rule 160 of the

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United States District Court for the Eastern District of California, Plaintiff Mandy Knowles and

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Defendant United Debt Holdings, LLC (“UDH”) hereby submit this stipulated request for

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dismissal of the above-captioned matter. Ms. Knowles and UDH have reached a settlement that

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would resolve Ms. Knowles’ individual claims against all Defendants. Ms. Knowles and UDH

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request that, pursuant to their settlement agreement, the Court dismiss Ms. Knowles’ individual

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claims with prejudice and dismiss the class claims without prejudice. Because a class has not

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been certified and because the settlement does not in any way affect the rights of absent members

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of the originally proposed class, the Court should dismiss this case without notice to the class.

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1. Background

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Plaintiff filed this class action lawsuit on November 19, 2014. Complaint, ECF No. 1.

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Plaintiff asserts claims for violation of the Fair Debt Collection Practices Act (“FDCPA”) and

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Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) against Defendants UDH; Nationwide

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Services (“Nationwide”); Hartford Mediation Group (“Hartford”); Payment Management

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Solutions, Inc. (“PMS”); and Vantage Point Services, LLC (“Vantage”). First Amended

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Complaint (“FAC”), ECF No. 23. Plaintiff alleges that UDH acquired a defaulted debt of hers and

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placed it with abusive debt collector Vantage for collection, despite knowing that Vantage

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engaged in unlawful collection practices. FAC ¶¶ 12-23, 24-28. Plaintiff alleges that Vantage

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(with assistance from its payment processor PMS) subsequently attempted to collect her debt in a

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series of phone calls by, among other things, falsely threatening her with arrest and criminal

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charges and misrepresenting its identity. FAC ¶¶ 29-64. Plaintiff asserts her FDCPA claim on

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behalf of a nationwide subclass of debtors who UDH referred to Vantage for collection and

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asserts her RFDCPA claim on behalf of a California subclass of debtors who UDH referred to

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Vantage for collection. FAC ¶¶ 70-71; 82-94.

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Plaintiff has served UDH, PMS, and Vantage but only UDH has appeared. Valerian Decl.

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¶ 2. Defendants Nationwide Service and Hartford Mediation Group appear to be fabrications of

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Vantage. Id. Vantage and PMS are in receivership as a result of a complaint filed by the Federal

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Trade Commission and the New York State Office of the Attorney General. Id. ¶ 3. The receiver

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for Vantage and PMS has indicated that Vantage and PMS are unlikely to be able to satisfy any

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judgment against them in this action. Id.

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Since the filing of the action, it has become apparent that litigating this case on a class

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basis presents several significant challenges, including: (1) class members’ primary damages

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consist of emotional distress, which generally is not compensable on a class basis; (2) establishing

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liability arguably requires an individualized inquiry into the content of class members’ telephone
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calls with Vantage; and (3) Vantage and PMS appear judgment proof, Nationwide and Hartford

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appear not to exist, and UDH has a potentially dispositive defense that it is not a “debt collector”

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as defined by the FDCPA and RFDCPA because it collected debts through third party debt

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collectors. Valerian Decl. ¶ 4; see also, Gold v. Midland Credit Mgmt., Inc., No. 13-CV-02019-

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BLF, 2015 WL 1037700, at *5 (N.D. Cal. Mar. 10, 2015) (company that purchased debts from

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original creditor but engaged a second company to collect on those debts was not a “debt

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collector” under the FDCPA or RFDCPA). Accordingly, Plaintiff and UDH—the only viable

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Defendant—explored and reached a settlement on an individual basis. Valerian Decl. ¶ 4.

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2. Dismissal of the Pre–Certification Putative Class Claims Without Notice Is Proper

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Plaintiff and UDH request that the Court dismiss Plaintiff’s claims with prejudice

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pursuant to their settlement agreement and dismiss the class claims without prejudice. The

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settlement reached encompasses all of named Plaintiff’s claims and does not resolve or bar any

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claims by any putative absent class member.

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Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a

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certified class may be settled, voluntarily dismissed, or compromised only with the court's

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approval.” Fed. R. Civ. P. 23(e). Where no class has been certified in this case, the requirements

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of Rule 23(e), do not apply. See Fed. R. Civ. P. 23(e), adv. comm. notes, 2003 amdts. (“The new

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rule requires approval only if the claims, issues, or defenses of a certified class are resolved by a

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settlement....”).

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Although Rule 23(e) now expressly refers to certified classes, before Rule 23(e) was

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amended in 2003, the Ninth Circuit held that the prior version of the rule applied to pre-

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certification dismissals and compromises. Diaz v. Trust Territory of the Pac. Islands, 876 F.2d

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1401, 1408 (9th Cir.1989). In Diaz, the Ninth Circuit stated that pre-certification approval was

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required “to ensure that [a settlement] is not collusive or prejudicial.” Id. In making that

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determination, the Ninth Circuit stated that “the district court should inquire into possible

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prejudice from (1) class members possible reliance on the filing of the action if they are likely to

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know of it either because of publicity or other circumstances, (2) lack of adequate time for class

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members to file other actions, because of a rapidly approaching statute of limitations, and (3) any
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settlement or concession for class interests made by the class representative or counsel in order to

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further their own interests.” Id.; see also Lewis v. Vision Value, LLC, No. 1:11-CV-01055-LJO,

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2012 WL 2930867, at *3 (E.D. Cal. July 18, 2012) (applying the Diaz factors); Lyons v. Bank of

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Am., NA, No. C 11-1232 CW, 2012 WL 5940846, at *2 (N.D. Cal. Nov. 27, 2012) (same). While

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it is unclear that court approval of pre-certification dismissals and compromises is required in the

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wake of the 2003 amendments to Rule 23(e), this Stipulation addresses the relevant factors in an

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abundance of caution.

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A. Absent Class Members Have Not Relied on Plaintiffs’ Class Claims

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“With respect to ‘reliance’ on the part of absent putative class members, ‘[t]he danger of

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reliance is ... generally limited to actions that would be considered of sufficient public interest to

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warrant news coverage of either the public or trade-oriented variety, and such reliance can occur

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only on the part of those persons learning of the action who are sophisticated enough in the ways

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of the law to understand the significance of the class action allegation.’” Lewis, 2012 WL

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2930867, at *3 (quoting Del Rio v. CreditAnswers, LLC, 2011 WL 1869881 (S.D.Cal.2011)).

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This action has not been the subject of media coverage, and does not otherwise appear to be of

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significant public interest. Valerian Decl. ¶ 5. Accordingly, it is unlikely that any absent class

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member has opted to rely on this case rather than pursue action of his or her own.

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B. Absent Class Members Will Not Be Prejudiced by a Rapidly Approaching Statue of

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Limitations

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“In considering whether the putative class members will be prejudiced by the dismissal,

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the Court considers ‘possible prejudice from ... lack of adequate time for class members to file

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other actions, because of a rapidly approaching statute of limitations.’” Lewis, 2012 WL 2930867,

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at *4 (quoting Diaz, 876 F.2d at 1408).

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Absent class members will not be prejudiced here. The filing of a class action on both

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federal and state law claims tolls the applicable statute of limitations for members of the putative

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class. See Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 553-554 (1974); Jolly v. Eli Lilly & Co.,

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44 Cal. 3d 1103, 1122 (1988). The statutes of limitations will resume running when Plaintiff’s

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class claims are dismissed. See Tosti v. City of Los Angeles, 754 F.2d 1485, 1488 (9th Cir. 1985)
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(statute of limitations resumed running on plaintiff's Section 1983 claims after class certification

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denied). As such, putative class members will be in the same position upon dismissal of the class

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claims as when the suit was initially filed. Accordingly, there is no prejudice to the class. See

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Lewis, No. 1:11-CV-01055-LJO, 2012 WL 2930867, at *4 (finding notice to the class was not

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required where class members were in the exact same position with respect to the statute of

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limitations upon dismissal of the class claims as when the suit was initially filed).

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C. Plaintiffs Have Not Made Any Concession of Class Interests to Further Their Own

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Interests

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The class claims in this case are being dismissed without prejudice, so there has been no

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“settlement or concession” of class interests. Moreover, while the Settlement Agreement provides

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for its terms to remain confidential, Plaintiff’s recovery is within the reasonable range of the

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value of her individual claim based on comparable verdicts and settlements for individual claims

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and Plaintiff’s counsel’s recovery does not exceed their costs and lodestar. Valerian Decl. ¶ 6.

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3. Dismissal of the Claims Against Nationwide, Hartford, PMS, and Vantage Is Proper.

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Although Nationwide, Hartford, PMS, and Vantage do not join in this stipulation, Plaintiff

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may dismiss them without their consent because they have not appeared. See Fed. R. Civ. P.

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41(a)(1).

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NOW, THEREFORE, PLAINTIFF AND UDH HEREBY STIPULATE, AGREE,
AND RESPECTFULLY REQUEST as follows:
1. That the Court dismiss Plaintiff Mandy Knowles’ individual claims in their
entirety, with prejudice;
2. That the Court dismiss the claims of the putative class members in their entirety,
without prejudice; and
3. That, except as otherwise expressly agreed in writing, the parties shall each bear
their own attorneys' fees and costs.

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IT IS SO STIPULATED.

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DATED: September 16, 2015

GALLO LLP

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By: /s/ Dominic Valerian
Ray E. Gallo
Dominic Valerian
Patrick V. Chesney
Attorneys for Plaintiff

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DATED: September 9, 2015

SIMMONDS & NARITA LLP

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/s/ Jeffrey A. Topor (as authorized on September 9,
By: 2015)
Jeffrey A. Topor
Liana Mayilyan
Attorneys for Defendant
United Debt Holdings, LLC

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ORDER

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Accordingly, in light of the parties’ stipulation, it is hereby ordered that:
1. Plaintiff Mandy Knowles’ individual claims in their entirety are dismissed with
prejudice;
2. The claims of the putative class members are dismissed in their entirety, without
prejudice;
3. Except as otherwise expressly agreed in writing, the parties shall each bear their
own attorneys' fees and costs; and

4. The Clerk is directed to close this case.
IT IS SO ORDERED.
Dated: September 16, 2015
SENIOR DISTRICT JUDGE

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