Lowery v. Account Outsourcing Group, LLC

Filing 14

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Kendall J. Newman on 07/27/17 RECOMMENDING that plaintiff's 12 Motion for Default Judgment be granted in part on the following terms: Judgment be entered in plaintiff's favor and against defendant.; that Plaintiff be awarded statutory damages in the amount of $1,000.00 and that the case be closed. Referred to Judge Kimberly J. Mueller; Objections to these F&Rs due within 14 days. (Benson, A)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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LORETTA LOWERY

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Plaintiff,

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v.

FINDINGS AND RECOMMENDATIONS

ACCOUNT OUTSOURCING GROUP,
LLC,
Defendant.

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No. 2:16-cv-3007-KJM-KJN

INTRODUCTION
Presently pending before the court is plaintiff Loretta Lowery’s motion for entry of default

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judgment against defendant Account Outsourcing Group, LLC (“Account Outsourcing”), a

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Delaware limited liability company. (ECF No. 12.)1 On June 13, 2017, after defendant failed to

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oppose plaintiff’s motion in accordance with Local Rule 230, the court vacated the hearing on the

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motion and gave defendant one final opportunity to oppose the motion by June 29, 2017. (ECF

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No. 13.) After defendants again failed to oppose plaintiff’s motion, plaintiff’s motion was taken

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under submission on the court’s own motion pursuant to Local Rule 230(g). (Id.)
After carefully considering the written briefing, the court’s record, and the applicable law,

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the court RECOMMENDS that plaintiff’s motion be GRANTED IN PART.
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This motion for default judgment proceeds before the assigned magistrate judge pursuant to
Local Rule 302(c)(19).
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BACKGROUND

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Plaintiff Loretta Lowery alleges that defendant unlawfully and abusively attempted to

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collect on a debt allegedly owed by plaintiff on September 14, 2016. (ECF No. 1 at 5:10-12.) On

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that date, an unidentified agent of Account Outsourcing called plaintiff at her home at

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approximately 6:26 a.m., and attempted to collect on plaintiff’s alleged debt. (Id.)2 Plaintiff

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informed the agent that the timing of the call was unacceptable and asked to speak with the

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agent’s supervisor. Plaintiff was then transferred to Charlisa Cole, another agent of Account

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Outsourcing. (Id. at 5:12-15.) Plaintiff requested Ms. Cole to identify the company seeking to

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collect the alleged debt, but Ms. Cole refused to disclose the name of the company without

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plaintiff first verifying confidential and personal information. (Id. at 5:14-17.)

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After completing the 6:26 a.m. phone call, plaintiff received another call at 6:33 a.m. from

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an unidentified agent of Account Outsourcing attempting to collect on plaintiff’s alleged debt.

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(ECF No. 1 at 6:10-12.) Plaintiff then received a third call from the same number at 6:55 a.m.,

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wherein an unidentified agent again attempted to collect on the alleged debt. (Id. at 6:20-22.)

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Based on the above, plaintiff commenced this action against defendant on December 23,

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2016, alleging: (1) violations of the Fair Debt Collection Practices Act under 15 U.S.C. §§ 1692

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et seq. (“FDCPA”) and (2) violations of the Rosenthal Fair Debt Collection Practices Act under

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California Civil Code §§ 1788 et seq. (“RFDCPA”). (ECF No. 1.) Plaintiff’s complaint seeks

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actual and statutory damages, attorneys’ fees, and costs. (Id.) After defendant was properly

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served with process and failed to appear in the action, the Clerk of Court entered defendant’s

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default upon plaintiff’s request. (ECF Nos. 6-8.) The instant motion for default judgment

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followed. (ECF No. 12.)

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LEGAL STANDARD

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Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party

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against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend

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against the action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not

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All phone calls on September 14, 2016, were placed from (XXX) XXX-2260 and received by
plaintiff at (XXX) XXX-0755.
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automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans,

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238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25

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(9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies

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within the district court’s sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.

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1980). In making this determination, the court considers the following factors:

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(1) the possibility of prejudice to the plaintiff, (2) the merits of
plaintiff’s substantive claim, (3) the sufficiency of the
complaint, (4) the sum of money at stake in the action[,] (5) the
possibility of a dispute concerning material facts[,] (6) whether
the default was due to excusable neglect, and (7) the strong
policy underlying the Federal Rules of Civil Procedure favoring
decisions on the merits.

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Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
As a general rule, once default is entered, well-pled factual allegations in the operative

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complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc.

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v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin.

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Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs,

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285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pled allegations in the complaint

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are admitted by a defendant’s failure to respond, “necessary facts not contained in the pleadings,

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and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co.

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of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388

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(9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (stating

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that a defendant does not admit facts that are not well-pled or conclusions of law); Abney v.

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Alameida, 334 F. Supp. 2d 1221, 1235 (S.D. Cal. 2004) (“[A] default judgment may not be

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entered on a legally insufficient claim”). A party’s default does not establish the amount of

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damages. Geddes, 559 F.2d at 560.

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DISCUSSION

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Appropriateness of the Entry of Default Judgment under the Eitel Factors
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Factor One: Possibility of Prejudice to Plaintiff

The first Eitel factor considers whether the plaintiff would suffer prejudice if default
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judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting

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a default judgment. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. Here, plaintiff would face

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prejudice if the court did not enter a default judgment, because plaintiff would be without another

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recourse against defendant. As such, the first Eitel factor favors the entry of a default judgment.
Factors Two and Three: The Merits of Plaintiff’s Substantive Claim and

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2.

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the Sufficiency of the Complaint

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The court considers the merits of plaintiff’s substantive claim and the sufficiency of the

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complaint together below because of the relatedness of the two inquiries. The court must

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consider whether the allegations in the complaint are sufficient to state a claim on which plaintiff

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may recover. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F. Supp. 2d at 1175.
Here, plaintiff has adequately alleged that defendant violated 15 U.S.C. § 1692c(a)(1)

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(prohibiting calls prior to 8:00 a.m. and after 9:00 p.m.), as well as 15 U.S.C. § 1692d(6)

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(requiring debt collectors to meaningfully identify themselves on the phone). Moreover, because

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a violation of those provisions is also a violation of the California Rosenthal Fair Debt Collection

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Practices Act, see Cal. Civ. Code § 1788.17, plaintiff has also adequately alleged a violation of

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that state statute. As such, plaintiff’s claims have merit.

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Therefore, the second and third Eitel factors favor the entry of default judgment.

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3.

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Under the fourth factor cited in Eitel, “the court must consider the amount of money at

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stake in relation to the seriousness of Defendant’s conduct.” PepsiCo, Inc., 238 F. Supp. 2d at

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1176-77; see also Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 500 (C.D.

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Cal. 2003). In this case, plaintiff does not seek an especially large sum: $2000.00. Furthermore,

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as discussed below, the court actually recommends the award of a slightly lesser amount of

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statutory damages. Therefore, the sum of money at stake does not preclude the entry of a default

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judgment.

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Factor Four: The Sum of Money at Stake in the Action

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Factor Five: The Possibility of a Dispute Concerning Material Facts

The court may assume the truth of well-pled facts in the complaint (except as to damages)
following the clerk’s entry of default, and defendant has not appeared to dispute any such facts.
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Thus, there is no likelihood that any genuine issue of material fact exists. See, e.g., Elektra

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Entm’t Group Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations in

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a well-pleaded complaint are taken as true after the court clerk enters default judgment, there is

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no likelihood that any genuine issue of material fact exists”); accord Philip Morris USA, Inc., 219

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F.R.D. at 500; PepsiCo, Inc., 238 F. Supp. 2d at 1177. Accordingly, the fifth Eitel factor favors

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the entry of default judgment.

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5.

In this case, there is no indication in the record that defendant’s default was due to

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Factor Six: Whether the Default Was Due to Excusable Neglect

excusable neglect. Indeed, despite having been provided with multiple opportunities to appear

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and defend its interests, defendant apparently declined to do so. Accordingly, the sixth Eitel

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factor favors the entry of a default judgment.

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6.

Factor Seven: The Strong Policy Underlying the Federal Rules of Civil Procedure

Favoring Decisions on the Merits
“Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782

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F.2d at 1472. However, district courts have concluded with regularity that this policy, standing

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alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action.

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PepsiCo, Inc., 238 F. Supp. 2d at 1177; see also Craigslist, Inc. v. Naturemarket, Inc., 694 F.

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Supp. 2d 1039, 1061 (N.D. Cal. 2010). Accordingly, although the court is cognizant of the policy

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in favor of decisions on the merits—and consistent with existing policy would prefer that this

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case be resolved on the merits—that policy does not, by itself, preclude entry of default judgment.

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In sum, upon consideration of all the Eitel factors, the court concludes that plaintiff is
entitled to a default judgment against defendant.

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Terms of the Judgment to Be Entered

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After determining that a party is entitled to the entry of default judgment, the court must

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determine the terms of the judgment to be entered. Plaintiff’s motion for default judgment seeks

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an award of statutory damages, which were also requested in the complaint.3 More specifically,

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Although plaintiff’s complaint also sought an award of attorneys’ fees and costs, such relief is
not requested in plaintiff’s motion for default judgment. As such, the court does not evaluate
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plaintiff seeks a total of $2,000.00 in statutory damages.
In a claim for violation of the FDCPA, a plaintiff may elect to seek statutory damages not

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exceeding $1,000. See 15 U.S.C. § 1692k(a)(2)(A). In determining the amount of statutory

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damages, “the court shall consider, among other relevant factors – (1) in any individual action

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under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector,

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the nature of such noncompliance, and the extent to which such noncompliance was intentional.”

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Id. § 1692k(b)(1). Additionally, a plaintiff may elect to seek between $100 and $1,000 in

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statutory damages for a violation of the RFDCPA. See Cal. Civ. Code § 1788.30(b).

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In this case, defendant’s representatives called plaintiff three times in one day, each time

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well before 8:00 a.m. in the morning. Defendant’s representatives also refused to identify the

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company that was collecting the debt. Therefore, there can be little doubt that defendant’s

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conduct was intentional and in bad faith. That said, the conduct alleged concerns a total of 3

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telephone calls, and plaintiff does not allege continuing conduct spanning multiple days or weeks.

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As such, the court is not persuaded that the maximum amount of statutory damages is warranted.

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Instead, the court finds it appropriate to award $500.00 in statutory damages for violation of the

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FDCPA, and $500.00 in statutory damages for violation of the RFDCPA, for a total amount of

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$1000.00 in statutory damages.

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CONCLUSION

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For the foregoing reasons, IT IS HEREBY RECOMMENDED that:

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1. Plaintiff’s motion for default judgment (ECF No. 12) be GRANTED IN PART on the

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following terms.

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2. Judgment be entered in plaintiff’s favor and against defendant.

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3. Plaintiff be awarded statutory damages in the amount of $1,000.00.

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4. The Clerk of Court be directed to close this case.

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These findings and recommendations are submitted to the United States District Judge

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assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen (14)

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whether any attorneys’ fees and costs should be awarded.
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days after being served with these findings and recommendations, any party may file written

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objections with the court and serve a copy on all parties. Such a document should be captioned

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“Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections

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shall be served on all parties and filed with the court within fourteen (14) days after service of the

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objections. The parties are advised that failure to file objections within the specified time may

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waive the right to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th

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Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 1991).

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IT IS SO RECOMMENDED.
Dated: July 27, 2017

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