District Court (Cal.) Grants SLAPP Motion to Debt Collector on UCL Unfair Debt Collection Claim After Debt Collector Dismissed State Court Collection Action

In Carr v. Asset Acceptance, LLC, 2011 WL 3568338 (E.D.Cal. 2011), Judge O’Neill protected a debt collector from a UCL/Malicious Prosecution lawsuit deriving from rather uncomplicated facts.  AA was a debt buyer who retained a law firm, FFG, to collect on a charged off account.  FFG sued.  When the debtor propounded discovery asking for the factual basis of the debt, FFG dismissed the Action without prejudice.  The debtor sued in federal court under the UCL and for malicious prosecution.  The debt collector and its attorney filed a motion under California’s anti-SLAPP statute, claiming that the filing of the state court collection action was protected action.  Judge O’Neill agreed, finding the anti-SLAPP statute applicable in federal court and applicable to the case.  Pertinent parts of the lengthy decision are below:

Defendants argue that the “gravamen” of Ms. Carr’s complaint “arises from prosecution” of the collection action given that FFG allegedly lacked probable cause to pursue the collection action which was time barred. Defendants contend that their actions at issue here furthered constitutional rights to petition and are protected by section 425.16. Defendants continue that with their satisfaction of the protected activity prong, the burden shifts to Ms. Carr to demonstrate probable success on her claims.  Ms. Carr fails to challenge that defendants engaged in activity protected by section 425.16. This Court agrees with defendants that filing the collection action and related activity is connected sufficiently to a judicial proceeding to satisfy the protected activity prong of section 425.16.

The record merely shows that defendants dismissed the collection action without prejudice after Ms. Carr propounded discovery. Standing alone, such dismissal fails to demonstrate Ms. Carr’s innocence. Ms. Carr does not deny that she owes or owed the credit card debt. She merely suggests it was discharged. Although Ms. Carr argues that dismissal of the collection actions supports her innocence, see MacDonald v. Joslyn, 275 Cal.App.2d 282, 289, 79 Cal.Rptr. 707 (1969), she points to neither evidence nor proposed discovery that demonstrates her innocence. The favorable termination factor weighs in defendants’ favor. Ms. Carr’s points whether she received proper debt collection notice and representations as to purported debt collection fail to address her innocence.

Defendants argue that the complaint’s unfair business practices claim “falls squarely within the scope of the litigation privilege” in that the claim is premised on “privileged acts of prosecuting the litigation and communications made in the context of litigation.” Defendants conclude that since defendants engaged in privileged “litigation-related activity,” Ms. Carr is unable to demonstrate a probability of prevailing on the unfair business practices claim.  Ms. Carr fails to oppose meaningfully application of the section 47(b) privilege to the unfair business practices claim. Ms. Carr offers nothing to substantiate the claim or to negate the effectiveness of the section 47(b) privilege. As such, Ms. Carr fails to demonstrate probability of prevailing on the unfair business practices claim.