Delisle v. Speedy Cash

Filing 80

ORDER Denying Motion to Compel Arbitration and Stay Proceedings Upon Remand (ECF Nos. 18 , 62 , 63 ). Signed by Judge Gonzalo P. Curiel on 11/20/20.(dlg)

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Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.597 Page 1 of 15 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 CINDY DELISLE and ROBERT DOUGHERTY, individually and on behalf of all others similarly situated, 13 14 15 16 Case No.: 3:18-cv-02042-GPC-RBB ORDER DENYING MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS UPON REMAND Plaintiffs, v. SPEEDY CASH, [ECF Nos. 18, 62, 63] Defendant. 17 18 On July 24, 2020, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) 19 vacated the Court’s Order Denying Defendant’s Motion to Compel Arbitration and Stay 20 Proceedings (“Order”), ECF No. 23, and remanded for the limited purpose of considering 21 what effect, if any, California Financial Code Section 22304.5(a) has on the Court’s 22 public injunctive relief analysis. ECF No. 62. Parties filed supplemental briefs, along 23 with an evidentiary objection and response. ECF Nos. 63, 65–68. A hearing was held on 24 the matter on October 16, 2020. ECF No. 73. 25 26 27 28 Having considered all related documents and the applicable law, the Court once again DENIES Speedy Cash’s Motion to Compel Arbitration and Stay Proceedings, and 1 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.598 Page 2 of 15 1 finds that the enactment of Section 22304.5 does not deny Plaintiffs’ standing to seek 2 public injunctive relief. 3 I. RELEVANT BACKGROUND 4 A. 5 Defendant Speedy Cash offers loans through its physical stores and online loan Plaintiffs’ Loan Agreements and Complaint 6 portals. According to Plaintiffs, Speedy Cash conducts comprehensive advertising 7 campaigns in California to generate business for what it characterizes as “Easy, Fast & 8 Friendly Cash Loans.” First Am. Compl. (“FAC”), ECF No. 16, ¶ 20. 9 Plaintiffs Cindy Delisle and Robert Dougherty entered into loan agreements with 10 Speedy Cash (“Loan Agreements”). Exs. A and B to Decl. of Katrina Anthony, ECF No. 11 18-3 at 1–17.1 Specifically, on July 14, 2018, Ms. Delisle entered into an “Installment 12 Loan and Promissory Note” with Defendant, which provided that Defendant would loan 13 $4457.38 to Ms. Delisle at an Annual Percentage Rate (“APR”) of 95.737%. On October 14 16, 2017, Mr. Dougherty signed a similar contract with Speedy Cash, under which 15 Speedy Cash agreed to loan him $2600 at an APR of 135.441%. The high APRs charged 16 meant that Ms. Delisle would be required to repay Defendant a minimum of $15,097.63, 17 and Mr. Dougherty, a minimum of $12,746.78. FAC, ECF No. 16, ¶¶ 22–23. 18 The Loan Agreements contain an “Arbitration Provision,” which obligated both 19 Speedy Cash and its customer to arbitrate “any claim, dispute or controversy between you 20 and us . . . that arises from or relates in any way to this Agreement or any services you 21 request or we provide under this Agreement . . . .” E.g., Ex. A to Decl. of Katrina 22 Anthony, ECF No. 18-3 at 6. Section 5 of the Arbitration Provision sets out which 23 claims are waived in any forum. Specific to the matter at-issue, Section 5(D) disallows 24 25 26 27 28 1 References to specific page numbers in a document filed in this case correspond to the page numbers assigned by the Court’s Electronic Case Filing (“ECF”) system. 2 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.599 Page 3 of 15 1 Plaintiffs from “act[ing] as a private attorney general in court or in arbitration,” and 2 Section 5(E) prohibits Plaintiffs from “join[ing] or consolidate[ing] claims involving you 3 with claims involving any other person.” Id. at 8. Section 10 discusses the Arbitration 4 Provision’s survivability. Generally, the Arbitration Provision is survivable. However, it 5 also contains a “poison pill” which provides: “if Section 5(C), (D) and/or (E) is declared 6 invalid in a proceeding between you and us, without in any way impairing the right to 7 appeal such decision, this entire Arbitration Provision . . . shall be null and void in such 8 proceeding.” Id. 9 10 B. The First Amended Complaint The FAC in this putative class action suit was filed on October 16, 2018. ECF No. 11 16. Plaintiffs assert that Speedy Cash’s lending practices violate California Financial 12 Code Section 22303 and/or California Civil Code 1670.5, because class members were 13 induced to take out loans of $2,500 or above with unconscionable interest rates (of 90% 14 or higher), and with unfair, unlawful, and objectively oppressive terms. Specifically, 15 Defendant allegedly locks consumers into loans that they cannot afford to repay, id. ¶ 15, 16 and once they default, Defendant compounds its exorbitant profits by adding interest and 17 penalties and thereafter employs aggressive collection efforts, id. ¶ 18. The FAC claims 18 that the loan terms are so onerous that they are beyond the reasonable ability of the 19 consumer to repay the amount borrowed. Id. ¶ 26. 20 Plaintiffs further allege that they did not understand the terms of the promissory 21 note and disclosure statement, id. ¶ 28, because Speedy Cash presented the loan terms 22 rapidly without any actual or reasonable opportunity for review, id. ¶ 27. In addition, 23 disclosure documents were not provided until final signing and a reasonable consumer 24 would not understand the interest and penalty provisions due to the deceptive and rapid 25 manner that Speedy Cash presented the information as to disguise the terms of the Loans. 26 Id. ¶¶ 27, 28. Finally, the Promissory Note and disclosure statements presented to 27 28 3 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.600 Page 4 of 15 1 Plaintiffs and the members of the class were presented on a “take it or leave it” basis. Id. 2 ¶ 24. 3 With respect to the interest rate, Plaintiffs allege that Speedy Cash’s business 4 model is premised on selling loans with usurious interest rates that people cannot afford 5 to pay back. Id. ¶ 15. Plaintiffs claim that the APR charged by Defendant is excessive 6 and prohibited by California law, namely, the prohibitions against unfair, unlawful, and 7 deceptive business practices espoused by California’s Unfair Competition Law (“UCL”) 8 and California’s Consumer Legal Remedies Act (“CLRA”). Id. ¶¶ 41, 50, 66. For these 9 wrongs, Plaintiffs seek disgorgement, restitution, punitive damages, reasonable attorney’s 10 fees, and a declaration that Speedy Cash is in violation of UCL and CLRA. Id. at 14–15. 11 Finally, Plaintiffs, in the role as a Private Attorney General under Section 17204 of 12 UCL, seek public injunctive relief “permanently and immediately prohibiting Defendant 13 Speedy Cash from engaging in the unlawful conduct alleged herein, including but not 14 limited to the inclusion in its loan agreements any provision having the effect of imposing 15 an APR of over 90% on loans of more than $2,500.” Id. Plaintiffs also request injunctive 16 relief requiring Defendant to “institute corrective advertising and provid[e] written notice 17 to the public of the unlawfully charged interest rate on prior loans.” Id. at 15. 18 C. 19 On October 30, 2018, Speedy Cash moved to compel arbitration and stay the Motion to Compel Arbitration 20 proceedings, including discovery, pending arbitration. ECF No. 18. The parties briefed 21 the Court on the motion. ECF Nos. 20, 21. Plaintiffs argued that the arbitration 22 provisions in the loan agreements are unconscionable and against California public 23 policy. They contended that waivers of public injunctive relief are invalid under McGill 24 v. Citibank, N.A., 2 Cal. 5th 945 (2017), and therefore the entire Arbitration Provision 25 falls pursuant to the poison pill clause. Defendant disputed that McGill applies, arguing 26 27 28 4 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.601 Page 5 of 15 1 that Plaintiffs had not made a true claim for public injunctive relief, and that, in any 2 event, the Federal Arbitration Act preempts the rule in McGill. 3 On June 10, 2019, the Court issued its Order denying Speedy Cash’s motion. First, 4 the Court found that California law governs the issues related to contract formation and 5 validity. ECF No. 23 at 6–8. Next, the Court determined that the Arbitration Provision is 6 unconscionable under California law, both procedurally and substantively. Id. at 8–22. 7 Of note, in determining that the Arbitration Provision was substantively unconscionable, 8 the Court concluded: (1) the Arbitration Provision contained a waiver of public injunctive 9 relief; (2) Plaintiffs’ FAC articulated a true prayer for public injunctive relief; and (3) 10 McGill is not preempted by the Federal Arbitration Act. Id. at 12–22. Lastly, since the 11 Arbitration Provision contains terms that the Court found to be invalid, the Court held 12 that the poison pill provision invalidated the entire Arbitration Provision. Id. at 23. 13 D. 14 Speedy Cash appealed the Order to the Ninth Circuit and filed a Notice of Appeal 15 on July 9, 2019. ECF No. 31. During pendency of the appeal, newly enacted California 16 Financial Code Section 22304.5 became effective on January 1, 2020. Section 22304.5 17 generally states that for any loan of at least $2,500 but less than $10,000, a finance lender 18 may not charge an interest rate of 36% plus the Federal Funds Rate (rate published by the 19 Board of Governors of the Federal Reserve System in the preceding month). See Cal. 20 Fin. Code § 22304.5(a), (b). Defendant’s Appeal and California Financial Code Section 22304.5 21 Speedy Cash flagged this new law in its Ninth Circuit reply brief. It argued that, 22 since the new law expressly prohibits Speedy Cash from issuing loans between $2,500 23 and $10,000 with interest rates over 36% (plus the Federal Funds Rate), Plaintiffs’ 24 request to enjoin Speedy Cash from issuing loans for amounts over $2,500 with interest 25 rates exceeding 90% would not proscribe conduct that threatens future injury. Thus, 26 according to Speedy Cash, Plaintiffs do not seek public injunctive relief, which must 27 28 5 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.602 Page 6 of 15 1 have “the primary purpose and effect of prohibiting unlawful acts that threaten future 2 injury to the general public.” McGill, 2 Cal. 5th at 955 (internal quotations and citation 3 omitted). 4 E. 5 On June 9, 2020, the Ninth Circuit issued a Memorandum vacating and remanding Ninth Circuit Mandate and Subsequent Procedural History 6 the Order (to which the related Mandate was filed on July 24, 2020). ECF No. 62. The 7 Memorandum agreed with the Order “[b]ased on the record and law as it stood at the 8 time.” Id. at 3. The Ninth Circuit agreed that California law should apply, and that the 9 Federal Arbitration Act does not preempt the McGill rule. Id. at 5–7. 10 However, the Ninth Circuit remanded the Order “for the limited purpose” of 11 considering “what effect, if any, California Financial Code § 22304.5(a) has on [the 12 Court’s] analysis.” Id. at 5. According to the Memorandum, whether Plaintiffs’ 13 requested injunction would prevent a threat of future harm—a requirement for public 14 injunctive relief—became “questionable” with the new law. While Plaintiffs, as pleaded, 15 seek to enjoin Speedy Cash from issuing loans above $10,000, neither of the named 16 Plaintiffs executed loans greater than $10,000, and the FAC does not specifically allege 17 Speedy Cash’s issuance of loans greater than $10,000. See id. at 4–5. 18 The Ninth Circuit stated that the new law “possibly impacts the analysis.” Id. at 5. 19 It clarified, should the Court conclude that California Financial Code § 22304.5(a) has no 20 effect or impact on the Court’s analysis, McGill would void the Arbitration Provision’s 21 public injunction waiver, which in turn would invalidate the entire Arbitration Provision 22 per the poison pill clause. Id. at 5 n.1. 23 Upon remand, parties filed supplemental briefs to the Court. ECF Nos. 63, 65, 66. 24 Plaintiffs also filed an evidentiary objection (“Objection”) to Speedy Cash’s Reply Brief, 25 which made a factual claim that “Speedy Cash does not issue loans in California over 26 27 28 6 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.603 Page 7 of 15 1 $10,000” and cited its own webpage to support the claim. ECF No. 67. Speedy Cash 2 filed a Response to the Objection. ECF No. 68. 3 A hearing on the supplemental briefs was held on October 16, 2020. At the 4 hearing, the Court granted Plaintiffs the option of filing a second amended complaint to 5 account for the change in the law. Plaintiffs notified the Court on October 22, 2020 that 6 they elected to not file a second amended complaint, and to submit on the supplemental 7 motion papers already filed. ECF No. 74. 8 II. DISCUSSION ON REMAND 9 Pursuant to the Ninth Circuit’s remand of “limited purpose,” this Court must 10 consider “what effect, if any, California Financial Code § 22304.5(a) has on its analysis.” 11 ECF No. 62 at 5, 5 n.1. Specifically, the Court must consider whether Plaintiffs have 12 standing to seek public injunctive relief where loans between $2,500 and $10,000 can no 13 longer bear unconscionably high interest rates. 14 For reasons discussed below, the Court concludes that the passage of California 15 Financial Code Section 22304.5(a) affects the court’s analysis but not the Court’s 16 conclusion on the motion. This is because Plaintiffs’ FAC challenges a range of business 17 practices that go beyond what is proscribed by Section 22304.5 (that is, the charging of 18 unconscionably high interest loans for loans between $2,500 and $10,000). Specifically, 19 Section 22304.5 does not address the additional unconscionable business practices raised 20 in Plaintiffs’ FAC, which include: (1) presenting the loan terms to consumers without any 21 actual or reasonable opportunity for review; (2) locking consumers into loans that they 22 could not afford to repay which resulted in consumers falling into default; and (3) 23 employing aggressive collection tactics. Consequently, Plaintiffs have preserved their 24 Article III standing to proceed with the lawsuit because Defendant allegedly continues to 25 employ deceptive and unconscionable practices in extending loans of more than $2,500. 26 27 28 7 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.604 Page 8 of 15 1 However, Section 22304.5 does affect the Court’s analysis as to the claim relating 2 to unconscionable interest rates on loans from $2,500 to $10,000. The request for 3 injunctive relief on this part of the case is moot by the new law since there is little, if any, 4 likelihood that Defendant will continue to charge interest rates exceeding 90% on future 5 loans between $2,500 and $10,000. As to loans in excess of $10,000, the FAC alleges 6 generally that the putative class is made up of consumers who obtained loans in excess of 7 $2,500 but does not specifically allege that Defendant extends loans in excess of $10,000. 8 Following remand, the Court provided Plaintiffs an opportunity to amend their FAC and 9 the Plaintiffs did not avail themselves of that opportunity. As a result, the FAC does not 10 specifically allege that Speedy Cash issues loans in amounts exceeding $10,000. Given 11 the conclusion that the FAC seeks injunctive relief as to unconscionable business 12 practices not covered by Section 22304.5, the Court finds that it is unnecessary to 13 determine whether Plaintiffs have standing to represent consumers who obtained loans in 14 excess of $10,000. 2 15 A. 16 Plaintiffs primarily challenge Speedy Cash’s high interest rates. See, e.g., FAC, Nature of Plaintiffs’ Allegation 17 ECF No. 16, ¶¶ 1, 2, 14, 15 (seeking to protect the California public “from the threat of 18 future injury in terms of an excessive interest rate”). The FAC explicitly requests 19 enjoining “loan agreements with an APR in excess of 90%,” or at least “imposing an 20 APR of over 90% on loans of more than $2,500.” Id. at 12, 15. 21 But, Plaintiffs also allege that Speedy Cash engages in unconscionable practices 22 when issuing the loans. The “pernicious” loan terms and disclosure statements were 23 presented “rapidly without any actual or reasonable opportunity for review.” Id. ¶¶ 17, 24 25 26 27 28 2 Relatedly, the Court also will not rule on Plaintiffs’ Objection and Defendant’s Response, ECF No. 67, 68, because it makes no difference in the Court’s analysis. 8 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.605 Page 9 of 15 1 27. In fact, the promissory notes and disclosure documents were only provided upon 2 final signing. Id. ¶ 27. Plaintiffs allege that a reasonable person would not understand 3 the implications of the loans due to the “deceptive and rapid manner” Speedy Cash 4 presented the information, which was “intended to disguise the terms of the Loans.” Id. 5 ¶¶ 27, 28. And once consumers eventually defaulted because they were locked into loans 6 designed to fail, Defendant would add default interest and penalties, in addition to 7 “aggressive” collection efforts. Id. ¶¶ 15, 18. Accordingly, Plaintiffs seek public 8 injunctive relief that prohibits Defendant “from engaging in the unlawful conduct alleged 9 herein,” id. at 14, and directs it to “institute corrective advertising and provid[e] written 10 notice to the public of the unlawfully charged interest rate on prior loans,” id. at 15. 11 Thus, Plaintiffs’ request for public injunctive relief goes beyond what Section 12 22304.5 proscribes. Specifically, Section 22304.5 does not prohibit deceptive, 13 unconscionable practices in issuing loans, such as inadequate opportunities for a 14 reasonable person to understand the implications of the loans, and aggressive debt 15 collection tactics. And the FAC, as it is written, seeks to prohibit such practices. 16 B. 17 Because the challenged business practice of engaging in unfair and deceptive loan Mootness 18 practices could continue despite enactment of Section 22304.5 and because granting 19 Plaintiffs’ requested remedy can stop such practice, the need for public injunctive relief is 20 not moot. “A case becomes moot only when it is impossible for a court to grant any 21 effectual relief whatever to the prevailing party.” Chafin v. Chafin, 568 U.S. 165, 172 22 (2013) (internal quotations and citation omitted). If “changes can still be made to help 23 alleviate any adverse effects,” the issue is not moot. Tyler v. Cuomo, 236 F.3d 1124, 24 1137 (9th Cir. 2000). 25 26 27 28 “The burden of demonstrating mootness ‘is a heavy one.’” Los Angeles Cty. v. Davis, 440 U.S. 625, 631 (1979) (citation omitted). “The ‘heavy burden of persua[ding]’ 9 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.606 Page 10 of 15 1 the court that the challenged conduct cannot reasonably be expected to start up again lies 2 with the party asserting mootness.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. 3 (TOC), Inc., 528 U.S. 167, 189 (2000) (alteration in original) (citation omitted). In the 4 case before the Court, the “challenged conduct” is the practice of high interest loans and 5 “pernicious conduct in its lending and loan practices.” FAC, ECF No.16, ¶ 33.C. Just 6 because one manifestation or subset of the practice is no longer possible does not mean 7 that the unaffected and remaining illegal practices will not continue. 8 Here, completely aside from high interest rates, Speedy Cash may continue to 9 extend loans under financial terms that cannot be met while depriving its consumers of a 10 meaningful opportunity to understand what they are signing up for, followed by late fees, 11 penalties, and aggressive debt collection efforts upon their default. 12 Defendant argues in its Supplemental Brief, ECF No. 63 at 14, that the “new 13 statutory enactment has removed the basis or need for relief” because “[t]here can be no 14 real expectation that the alleged wrongs will recur now that the people of the state have 15 prohibited them.” Smith v. Univ. of Washington, Law Sch., 233 F.3d 1188, 1195 (9th Cir. 16 2000). But as discussed previously, no part of the new law prevents the allegedly unfair 17 and deceptive practices engaged in by Speedy Cash. Consequently, the Court finds there 18 is live case and controversy beyond what the new statute has addressed and resolved. Cf. 19 id. at 1193 (discussing that there is no case or controversy “if it turns out that resolution 20 of the issue presented cannot really affect the plaintiff’s rights,” and that no real relief can 21 be provided “once the statute and its aftermath had accomplished all that a judgment 22 could accomplish”). 23 C. 24 As discussed in the previous Order, ECF No. 23 at 13, “public injunctive relief Public Injunctive Relief 25 under the UCL, [and] the CLRA . . . is relief that has ‘the primary purpose and effect of’ 26 prohibiting unlawful acts that threaten future injury to the general public.” McGill v. 27 28 10 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.607 Page 11 of 15 1 Citibank, N.A., 2 Cal. 5th 945, 955 (2017) (citing Broughton v. Cigna Healthplans of 2 California, 21 Cal. 4th 1066, 1077 (1999)). 3 Defendant argues that Plaintiffs’ requested relief would not prohibit conduct that 4 threatens future harm to the public because an intervening change in law proscribes the 5 Defendant’s challenged conduct. See Def.’s Supp. Br., ECF No. 63 at 12–14. Speedy 6 Cash relies on Kilgore v. KeyBank, Nat. Ass’n, 718 F.3d 105, 1061 (9th Cir. 2013), to 7 argue that a request to enjoin future conduct is not enough to establish public injunctive 8 relief when a plaintiff does not allege that the defendant is engaging in that conduct.3 See 9 Def.’s Reply Br., ECF No. 66 at 8. Indeed, Kilgore concluded that the injunctive relief 10 sought only concerned past harms (and thus was private in nature) because the complaint 11 “expressly notes that [defendant] had completely withdrawn from the private school loan 12 business and does not allege that the [defendant] is engaging in other comparable 13 transactions.” 718 F.3d at 1061. 14 In the instant case, there is a threat of future injury to the general public by the 15 business practice of unreasonable loan issuance/collection tactics. Unlike in the cases 16 cited by Defendant, see Clifford v. Quest Software Inc., 38 Cal. App. 5th 745, 753–55 17 (2019), review denied (Nov. 13, 2019); M Resorts, Ltd. v. New Eng. Life Ins. Co., No. 19- 18 cv-1545-WQH-AGH, 2019 U.S. Dist. LEXIS 216053, at *12 to *15 (S.D. Cal. Dec. 16, 19 2019); Johnson v. JP Morgan Chase Bank, N.A., No. EDCV 17-2477 JGB (SPx), 2018 20 U.S. Dist. LEXIS 167272, at *18 (C.D. Cal. Sep. 18, 2018), the potential beneficiaries of 21 22 23 24 25 26 27 28 3 Defendant is correct that Plaintiffs’ request to “institute corrective advertising and provid[e] written notice to the public of the unlawfully charged interest rate on prior loans,” FAC, ECF No. 16 at 15 (emphasis added), would not qualify for public injunctive relief due to reasons discussed in Kilgore. However, the plain language of the FAC requests more than that. See, e.g., id. at 14 (“prohibiting Defendant Speedy Cash from engaging in the unlawful conduct alleged herein”). 11 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.608 Page 12 of 15 1 the injunction are more than just the Plaintiffs and similarly situated people, and the 2 requested relief is more than correcting a past harm. Here, if the requested injunction is 3 issued, future Speedy Cash consumers would benefit. Defendant will be required to 4 engage in due diligence in determining whether a consumer can afford the loan payments 5 on any loan of more than $2,500 and will be precluded from issuing loans to individuals 6 who do not have the ability to pay. Defendant will also be precluded from presenting 7 consumers promissory note terms and disclosure statements immediately before the final 8 signing on loans over $2,500 without any actual or reasonable opportunity for review. 9 In fact, the new Section 22304.5 makes the Plaintiffs’ case stronger. The named 10 Plaintiffs will not be the ones benefiting from an injunction that enjoins the illegal 11 business practices that are not covered by the new law. Cf. Broughton v. Cigna 12 Healthplans of California, 21 Cal. 4th 1066, 1080 n.5 (1999) (discussing how the 13 requested injunction “will obviously not benefit [plaintiffs] directly, since they have 14 already been injured, allegedly, by [defendant’s] practices and are aware of them”). 15 D. 16 For Article III standing, there must be injury-in-fact, causation, and redressability. Standing 17 Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). Citizen suit provisions—such as 18 those provided by UCL and CLRA, see Cal. Bus. & Prof. Code § 17204; Cal. Civ. Code 19 § 1780—may create “procedural injury,” but a concrete injury-in-fact must still exist. 20 Lujan, 504 U.S. at 571–78; see also Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548–49 21 (2016), as revised (May 24, 2016) (“Article III standing requires a concrete injury even in 22 the context of a statutory violation.”). 23 Plaintiffs advance an unfair competition claim under UCL. The claim is premised 24 on unlawful business conduct, which Section 17200 of UCL proscribes. Cal. Bus. & 25 Prof. Code § 17200. By prohibiting unlawful business practices, “‘section 17200 26 ‘borrows’ violations of other laws and treats them as unlawful practices’ that the unfair 27 28 12 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.609 Page 13 of 15 1 competition law makes independently actionable.” Cel-Tech Communications, Inc. v. 2 Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 180 (1999). The California 3 Financial Code, Section 22302(b) may “suppl[y] the requisite ‘violations of other laws’ 4 by making ‘[a] loan found to be unconscionable’ a violation of the California Financing 5 Law.” De La Torre v. CashCall, Inc., 5 Cal. 5th 966, 980 (2018) (second alteration in 6 original). 7 UCL grants standing to “a person who has suffered injury in fact and has lost 8 money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code § 9 17204. For UCL standing, “a party must now (1) establish a loss or deprivation of money 10 or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that 11 that economic injury was the result of, i.e., caused by, the unfair business practice or false 12 advertising that is the gravamen of the claim.” Kwikset Corp. v. Superior Court, 51 Cal. 13 4th 310, 322 (2011) (emphasis in original). Similarly, CLRA’s standing provision states: 14 “Any consumer who suffers any damage as a result of . . . practice declared to be 15 unlawful by Section 1770 may bring an action . . . .” Cal. Civ. Code § 1780(a); see also 16 In re Vioxx Class Cases, 180 Cal. App. 4th 116, 129 (2009) (discussing how the illegal 17 action must cause the harm). Here, Plaintiffs allege in part that Speedy Cash’s 18 unconscionable business practices incurred them financial injury, so the requirements for 19 standing (based on procedural injury as established by UCL and CLRA) are met. 20 According to Defendant, Plaintiffs have failed to demonstrate that Speedy Cash’s 21 conduct caused an injury subject to injunctive relief given the change in law. The new 22 statutory regime creates two loan products that are distinct and affect the causation 23 analysis, Def.’s Suppl. Br., ECF No. 63 at 17, and Plaintiffs do not allege that Defendant 24 issues the loans they seek to enjoin, Def.’s Reply Br., ECF No. 66 at 8. Speedy Cash’s 25 argument proceeds as follows: (1) Activity X, allegedly illegal, has caused the injury 26 under the FAC; (2) the new law now divides X into Y and Z, which are governed by 27 28 13 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.610 Page 14 of 15 1 different legal regimes and thus must be considered different activities; (3) the FAC only 2 alleges that Y caused the injury and Y is now proscribed by the new law. As a result, the 3 FAC fails to establish causation for Z because Plaintiffs were not harmed by the conduct 4 that makes up Z (i.e. unconscionable interest rates on loans of more than $10,000). 5 However, Plaintiffs do not limit their challenge to Speedy Cash’s practices of 6 charging interest rates above 90%. As the Court has noted, the new law does not change 7 the way these loans may be extended or presented to the consumer when signing the loan 8 agreement, nor does the new law change how the loans may be collected. Ultimately, the 9 court’s “responsibility to guard against consumer loan provisions with unduly oppressive 10 terms” stays the same. See De La Torre, 5 Cal. 5th at 973. The new law does not affect 11 the chain of causation because Section 22304.5 does not prohibit all forms of alleged 12 deception and default interest and penalties—unconscionable practices that are alleged to 13 have harmed Plaintiffs. See, e.g., FAC, ECF No. 16, ¶¶ 45–48, 50, 68–70. Accordingly, 14 Defendant’s arguments on high interest loans of $10,000 being a new, distinct loan 15 product has no bearing on the Court’s standing analysis and thus the Court need not 16 address it. 17 III. CONCLUSION 18 For reasons discussed above, the Court has concluded that the newly effective 19 Section 22304.5 has not altered the Court’s conclusion. Plaintiffs’ FAC still seeks public 20 injunctive relief. 21 As discussed in the Ninth Circuit Memorandum, if the Court’s analysis stays the 22 same despite the new law, “McGill [v. Citibank, N.A., 2 Cal. 5th 945 (2017)] voids the 23 loan agreement’s waiver clause, which, in turn, invalidates the arbitration provision in 24 full.” ECF No. 62 at 5 n.1. Further, the Federal Arbitration Act does not preempt 25 McGill. Id. at 5–6. 26 27 28 14 3:18-cv-02042-GPC-RBB Case 3:18-cv-02042-GPC-RBB Document 80 Filed 11/20/20 PageID.611 Page 15 of 15 1 Since the Arbitration Provision is invalidated in its entirety,4 Speedy Cash’s 2 Motion to Compel Arbitration and to Stay Proceedings, ECF No. 18, is DENIED. 3 IT IS SO ORDERED. 4 5 Dated: November 20, 2020 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 Because the Court denies Defendant’s Motion due to the Arbitration Provision unconscionably waiving a public injunctive relief that was actually requested, the Court will not address Plaintiffs’ argument that the Arbitration Provision is void regardless, Pls.’ Opp’n Br., ECF No. 65 at 24–29, and Defendant’s Reply to it, ECF No. 66 at 12–15. In any case, the Court was directed to conduct a “limited” analysis on remand and must not overstep the terms of the Mandate. 15 3:18-cv-02042-GPC-RBB

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