District Court (Cal.) Says Plaintiff States a Claim for Unauthorized Recording of Telephone Call, Says FDCPA Not Good Law Upon Which To Hinge UCL Claim

In Bailey v. Household Finance Corp. of California, 2010 WL 4569950 (S.D.Cal. 2010), Judge Hayes found that a Plaintiff stated a tort claim arising from defendant’s recording of their collection communications, explaining:

Plaintiff alleges that Defendants violated California’s Invasion of Privacy Act, California Penal Code § 630, et seq. by using “a software system that enables [Defendants] to secretly record confidential telephone conversations ….” Id. at 20 ¶ 105. Plaintiff alleges that Defendants violated California’s Invasion of Privacy Act, and the federal Telephone Consumer Protection Act by secretly recording confidential telephonic communications “without an advisory at the initiation of the telephone call that these confidential telephonic communications could be or were being monitored and/or recorded, and without obtaining express advance consent to record such conversations or providing an advisory at the initiation of the call [that] such calls would be recorded.” Id. at 20-21 ¶ 108; 22 ¶ 117. ¶  . . .  Defendants contend that the Penal Code claim against HSBC Card Services and HSBC Bank Nevada should be dismissed because Plaintiff expressly consented to call recording and monitoring. (ECF No. 20-1 at 21). Defendants have submitted a cardmember agreement which states, “You agree that our supervisory personnel may listen and record telephone calls between you and our representatives [.]” (ECF No. 20-2 at 15). Defendants request the Court take judicial notice of the cardmember agreement. (ECF No. 20-2 at 2). Defendants explain that “Plaintiff references her credit card account with HSBC Bank Nevada in the First Amended Complaint, but does not attach the operative agreement as an exhibit.” Id. Defendant seeks judicial notice “[t]o remedy that omission [.]” Id. ¶  Plaintiff opposes Defendants’ request for judicial notice and disputes the document’s authenticity asserting that it is “a generic, undated and unsigned purported ‘operative agreement’ that does not even contain plaintiff’s name or any indicia relating the document to plaintiff.” Plaintiff also contends that the document is hearsay because “Defendants improperly rely on [the operative agreement] to prove the truth of what it states.” Id. at 5. ¶  Fed R. Evid. 201 provides that “a judicially noticed fact must be one not subject to reasonable dispute in that it is … capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed R. Evid. 210(b). “[D]ocuments whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994) (overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119, 1125 (9th Cir.2002)). “Such consideration does not convert the motion to dismiss into a motion for summary judgment.” Id. (quotation omitted). “[A] court may not take judicial notice of a fact that is subject to reasonable dispute.” Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cal.2001) (quotation omitted). ¶   In this case, Plaintiff questions the authenticity of the cardmember agreement and the document is not “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201. The cardmember agreement is not referred to in the allegations of the Complaint. Defendants’ request for judicial notice (ECF No. 20-2) is denied. Defendant’s Motion to Dismiss the Penal Code claim relies upon documents outside the allegations in the Complaint which is not appropriate under Rule 12(b)(6). Defendants’ Motion to Dismiss Plaintiff’s claim for violation of California Penal Code Section 632 is denied.

Judge Hayes also confirmed that the FDCPA is an inappropriate tool upon which to hinge a UCL claim since the UCL requires disgorgement of ill-gotten gains; i.e. sums in which the defendant was not entitled to keep.  See Hyman, “California’s Unfair Competition Law Does Not Confer Enhanced Remedies for Unfair Debt Collection Practices”, 8 Cons. Fin. Serv. L. Rep. (2005).   

Plaintiff alleges in her Complaint that she received a loan from Household Finance Corp. of California which required monthly payments of $229. (ECF No. 14 at ¶ 24). Plaintiff alleges that she stopped making payments in 2009. Id. at ¶ 26, 36 Cal.Rptr.3d 592. Plaintiff alleges sometime after July 2009, Plaintiff paid $229 to Household Finance Corp. of California after receiving hundreds of phone calls. Id. at ¶ 89, 36 Cal.Rptr.3d 592. Therefore, Plaintiff has alleged she paid money to Household Finance Corp. of California but she has not alleged facts that show that Household Finance Corp. of California “obtained something to which it was not entitled and [Plaintiff] … [gave] up something which [she] was entitled to keep.” Day, 63 Cal.App.4th at 340, 74 Cal.Rptr.2d 55; see also Feitelberg, 134 Cal.App.4th at 1012, 36 Cal.Rptr.3d 592. ¶  In addition, Plaintiff alleges that she paid money to third parties as a result of the harassing phone calls including “additional amounts for cellular telephone charges attributable to such calls, $100 to a bankruptcy attorney based on her trying to determine if there was a way to stop such calls, and approximately $25 in mailing costs ….” (ECF No. 14 at ¶ 89). These additional amounts were not paid by Plaintiff to Household Finance Corp. of California. Plaintiff has failed to allege that Household Finance Corp. of California wrongfully acquired these funds. Feitelberg, LLC, 134 Cal.App.4th at 1012, 36 Cal.Rptr.3d 592. These additional amounts of damages for money paid to third parties are not available under California’s UCL. See Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1150, 131 Cal.Rptr.2d 29, 63 P.3d 937 (Cal.2003) (“[I]t is well established that individuals may not recover damages [under California’s Unfair Competition Law].”) (citing Bank of the West v. Superior Court, 2 Cal.4th 1254, 1266, 10 Cal.Rptr.2d 538, 833 P.2d 545 (Cal.1992)). Defendants’ Motion to Dismiss Plaintiff’s UCL claim based on her loan from Household Finance Corp. of California is granted.