In Consumer Financial Protection Bureau v. CashCall, Inc., 2015 WL 9591569, at *1-2 (C.D.Cal., 2015), Judge Walter said that the CFPB was not alleging an ipso facto rule, namely that a state court violation automatically constitutes a UDAAP violation. Accordingly, Judge Walter allowed the Complaint to survive a pleadings challenge.
Defendants’ primary argument for dismissal is based on a mischaracterization of the First Amended Complaint, i.e. that the Bureau alleges that a state-law violation constitutes a per se violation of the CFPA’s prohibition on unfair, deceptive, and abusive acts or practices (“UDAAP”). Rather than alleging that a state-law violation constitutes a per se UDAAP violation, the Bureau alleges that Defendants’ conduct (taking and demanding payment from consumers for amounts that they do not actually owe) satisfies the required elements for each UDAAP violation (unfairness, deception, and abusiveness). In other words, as the Bureau states in its Opposition, “the Complaint does not allege that Defendants violated the CFPA because they violated state law, but because their conduct in taking and demanding payment from consumers for purported loan debts that they did not owe satisfies the requisite elements of the UDAAP prohibitions under the CFPA.” Opposition at 8–9. Although Defendants’ alleged violations of state law are necessary to the Bureau’s claims, that does not necessarily mean that the Bureau is “federalizing” state law. As the Sixth Circuit stated, in analyzing the Fair Debt Collection Practices Act: “We agree that Congress did not turn every violation of state law into a violation of the FDCPA. But that does not mean that a violation of state law can never also be a violation of the FDCPA. The proper question in the context of an FDCPA claim is whether the plaintiff alleged an action that falls within the broad range of conduct prohibited by the Act.” Currier v. First Resolution Inv. Corp., 762 F.3d 529, 537 (6th Cir.2014). Likewise, the Court concludes that the proper question in the context of a CFPA claim is whether the plaintiff has alleged an action that falls within the broad range of conduct prohibited by the CFPA. However, Defendants fail to argue or attempt to meaningfully demonstrate that the alleged conduct does not fall within the broad range of conduct prohibited by the CFPA. The Court also concludes that the Bureau is not seeking to establish a usury limit. Instead, the Bureau is seeking to enforce a prohibition on collecting amounts that consumers do not owe.