9th Circuit: Plaintiff has Standing to Bring FDCPA Action for Communications He Did Not Receive

In Tourgeman v. Collins Financial Services, Inc., et al., the Ninth Circuit Court of Appeals reversed the district court’s summary judgment in favor of defendants in a Fair Debt Collection Practices Act class action.  Specifically, the panel held that the plaintiff had Article III standing and a statutory cause of action under the FDCPA based on debt collection letters he did not receive.  The Court also held that dunning letters and a state court collection action were materially misleading by misstating the name of plaintiff’s original creditor.

Plaintiff Tourgeman financed a computer from Dell Financial Services, with a loan originated by CIT Online Bank.  Although he lived in Mexico, he had the computer shipped to his parents’ home in California.  After plaintiff allegedly defaulted on the loan, a collection agency and law firm sent dunning letters to plaintiff at the California address, incorrectly identifying the original creditor as American Investment Bank, N.A.  Plaintiff never received the dunning letters, but discovered them when defending a collection action filed in state court. 

Continue Reading...

Ninth Circuit Details Pre-Certification Class Settlement Approval

In Laguna v. Coverall North America, Inc., the Ninth Circuit affirmed the district court's approval of a pre-certification class settlement, and further detailed factors for settlement approval under Federal Rule of Civil Procedure 23(e)

In Coverall, plaintiffs asserted a putative class against defendant, a janitorial franchising company, alleging mis-classification of franchisees as independent contractors, as well as breach of the franchise agreement, fraud, and unfair business practices for removing and reassigning customer accounts among franchisees without cause.  The parties agreed to a settlement before class certification, after two years of significant litigation.  The district court approved the settlement in a fairness hearing in November 2011.  A sole objector appealed. 

Continue Reading...

One to Watch: U.S. Supreme Court to Review Evidence Required for CAFA Removal

The U.S. Supreme Court has granted certiorari in Dart Cherokee Basin v. Owens to determine "[w]hether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required 'short and plain statement of the grounds for removal' enough."

In Dart Cherokee, defendants removed a putative class action from state court to the District of Kansas based on the Class Action Fairness Act ("CAFA").  The district court granted plaintiff's remand motion, holding that defendants had failed to prove by a preponderance of the evidence that the amount in controversy exceeded $5 million, because they had failed "to incorporate any evidence supporting this calculation in the Notice of Removal, such as an economic analysis of the amount in controversy or settlement estimates."  Although defendants submitted such evidence in opposition to plaintiff's remand motion, the district court held that this was insufficient, because defendants were "obligated to allege all necessary jurisdictional facts in the notice of removal."

Continue Reading...

Ninth Circuit Holds Order Compelling Arbitration is Not Appealable

Multiple plaintiffs filed purported class action lawsuits against defendant Consumerinfo.com, Inc., alleging violations of California's consumer protection laws.  Each plaintiff had purchased a credit report monitoring program from the defendant.  The terms and conditions of the purchase included an arbitration clause.  The district court stayed the actions, ordered individual arbitration of each plaintiff's claims, and denied 28 U.S.C. § 1292(b) certification for interlocutory appeal.  The plaintiffs timely appealed.

In Johnson v. Consumerinfo.com, The Ninth Circuit dismissed the appeals, finding that the Judicial Improvements and Access to Justice Act, codified as 9 U.S.C. § 16, bars appeals of all orders compelling arbitration, including collateral ones.  Plaintiffs "creative[ly]" argued that because section 16(b) expressly bars appeals of "interlocutory" orders compelling arbitration, orders compelling arbitration that might be considered "final" under the collateral order doctrine are appealable.  But, after examining the statutory language of the Act, as well as its overall design, objectives, and legislative history, the court disagreed.

Continue Reading...

Court of Appeal Affirms Denial of Fraud and Unfair Competition Claims for Failure to Plead with Specificity

In Cansino, et al. v. Bank of America, et al., the Sixth District Court of Appeals affirmed the trial court's order sustaining the demurrer to plaintiffs' second amended complaint with prejudice for failure to plead causes of action for fraud and unfair competition with requisite specificity.  The Court of Appeal held that predictions regarding the future of the real estate market constitute mere opinions, which are not actionable in fraud.  Moreover, the Court of Appeal identified that both causes of action were time-barred by the respective statutes of limitation.

Plaintiffs Carlos and Resurrection Cansino filed a complaint in Santa Clara Superior Court after a foreclosure.  Between 2000 and 2005, Plaintiffs obtained an original mortgage loan which they refinanced multiple times during that period.  In 2010, plaintiffs discovered that their property value had dropped to 35-40% less than the amount of their refinance in 2005.  At that point, they sought loan modification and stopped making payments on the 2005 loan.

Continue Reading...

Second District Upholds Arbitration Agreement That Gives Employer Unilateral Power to Modify

The Second Appellate District has held that an arbitration agreement is not illusory simply because only the drafting party may modify or terminate the agreement. In Casas v. CarMax Auto Superstores California LLC, the appellate court reversed the lower court's order denying CarMax's motion to compel arbitration of a former employee's claims stemming from the termination of his employment.

The lower court found that the arbitration agreement was illusory because only CarMax could unilaterally modify or terminate the agreement, and it could notify employees of any such changes indirectly, simply by posting notification at all CarMax locations. In reversing the lower court's order, the appellate court first distinguished the primary case that order relied upon, Sparks v. Vista Del Mar Child & Family Services. The appellate court distinguished Sparks on the grounds that it involved an agreement that permitted the employer to change the arbitration agreement with no notice at all to employees, and that the brief agreement was hidden in a handbook that the employee simply acknowledged receiving.

Continue Reading...

Court of Appeal Affirms Denial of Plaintiff's Request for Voluntary Dismissal Without Prejudice During Demurrer Hearing

In Pielstick v. Midfirst Bank et al., the Second District Court of Appeal affirmed a trial court's denial of plaintiff's request for voluntary dismissal without prejudice pursuant to Code of Civil Procedure § 581.  The Court of Appeal held that the trial court did not commit error in denying plaintiff's oral request for dismissal without prejudice after the commencement of a demurrer hearing.  

The underlying action arises out of a nonjudicial foreclosure sale of real property previously owned by Plaintiff.  Plaintiff filed his original verified complaint in Los Angeles Superior Court alleging multiple causes of action against Defendants Midfirst Bank and Midland Financial Company.  Plaintiff filed a First Amended Complaint ("FAC") adding Defendant Quality Loan Service Corporation as well as two causes of action.  

Continue Reading...

Ninth Circuit: A National Bank is Only a Citizen of the State in Which its Main Office is Located for Purposes of Diversity Jurisdiction

In Rouse v. Wachovia Mortgage, the Ninth Circuit held that, for purposes of diversity jurisdiction, a national banking association is a citizen only of the state in which its main office is located.  

In Rouse, the plaintiffs filed suit in the Superior Court of the State of California against Wells Fargo Bank, N.A., its Wachovia Mortgage division, and NDeX West, LLC, alleging multiple causes of action under state and federal law arising out of plaintiffs' home loan and deed of trust.  Wells Fargo removed the case to federal court based on diversity and federal question jurisdiction. Defendants filed a motion to dismiss for failure to state a claim.  The district court granted the motion and dismissed the complaint with leave to amend.

Plaintiffs filed an amended complaint containing only state law claims.  On an order to show cause why the case should not be remanded to state court for lack of diversity jurisdiction, the district court held that national banks are citizens of the state where their principal place of business is located as well as the state in which their main office is located as designated by their articles of association. The district court remanded the case to California Superior Court for lack of jurisdiction, finding that because Wells Fargo's main office is in South Dakota and its principal place of business is in California, and the plaintiffs are citizens of California, there was no diversity of citizenship.

On appeal, the Ninth Circuit disagreed.  The Court held that under 28 U.S.C. Section 1348, a national bank is a citizen only of the state in which its main office is located; accordingly, Wells Fargo is a citizen only of South Dakota because that is where its main office is located.  The Ninth Circuit held that the district court had diversity jurisdiction because there was complete diversity between the plaintiffs, who were citizens of California, and Wells Fargo, a citizen of South Dakota.

Continue Reading...

9th Circuit Requires Specific Explanation on Attorneys' Fee Reduction

In Carter v. Caleb Brett LLC, a three judge panel for the 9th Circuit Court of Appeals vacated the district court's order awarding reduced attorneys' fees to appellant.  The panel reiterated and confirmed prior 9th Circuit holdings requiring a sufficiently specific explanation in order to determine the reasonableness of a fee award.  District courts must explain the reason for a fee award with sufficient specificity so that the appellate court can review the lower court's analysis for an abuse of discretion.  The greater the reduction, the more specificity required in the explanation. 

Appellant Rick Carter appealed the district court's order awarding him $14,268.50 in attorneys' fees and costs where his fee petition was sought $22,585.  Carter appealed, arguing that the district court's failure to sufficiently explain its rationale for the fee reduction constituted error as a matter of law.  The 9th Circuit agreed.  

Continue Reading...

9th Circuit Holds Private Attorney General Action is Not a CAFA Class Action

In Baumann v. Chase Investment Services, Inc., the 9th Circuit held that a Private Attorney General action under California law is not a "class action" for purposes of removal jurisdiction under the Class Action Fairness Act (CAFA).  In Baumann, plaintiff filed a complaint in California state court under the California Labor Code Private Attorneys General Act of 2004 (PAGA), Labor Code sections 2698-2699.5, on behalf of himself and other "aggrieved parties," alleging unpaid overtime wages, among other things.  

Defendant removed the case to federal court based on diversity jurisdiction and CAFA.  Plaintiff moved to remand, arguing that the claims could not be aggregated to meet the minimum amount in controversy.  The district court denied the motion to remand but did not reach the CAFA issue.  Plaintiff appealed.

Continue Reading...