District Court (Cal.) Says Creditor’s Defense Counsel is Not Subject to FDCPA Because Defense Counsel Was Not Collecting on a Debt; Says in Dicta that Creditor May Not Be Vicariously Liable for Acts of Litigation Counsel

In Bird v. Real Time Resolutions, Inc., 2017 WL 661375, at *8 (N.D.Cal., 2017), Judge Davila dismissed claims against a creditor and the creditor’s law firm arising under the FDCPA.

Here, Mr. Reyes is an attorney at the law firm Ericksen Arbuthnot, which was retained as defense counsel for Real Time in the lawsuits filed by Plaintiff. Nowhere in the Complaint does Plaintiff allege that Mr. Reyes himself, or the Ericksen firm, sought to collect on Plaintiff’s outstanding debt. In her Opposition, Plaintiff highlights a supporting exhibit to the Complaint that states “Real Time Resolutions is a debt collector” and “this is an attempt to collect a debt …” in support her position that “Real Time’s agents were engaged in debt collection.” Opp. to RT at 7. However, there is no dispute that Real Time is a debt collector; the focus is on Mr. Reyes. Upon careful review the facts alleged here, and the court finds nothing in the Complaint, the attached exhibits, or the briefing papers to support that Mr. Reyes qualifies as a debt collector under the FDCPA. Because he is not a debt collector, Mr. Reyes’ statement is not governed by the requirements of the FDCPA, which in turn means his statement cannot form the basis for an FDCPA cause of action. And, because Mr. Reyes is not personally liable for a violation of the FDCPA, Real Time also cannot be held liable.

Judge Davila suggested in a footnote that a creditor cannot be vicariously liable for the acts of litigation counsel because litigation counsel acts as an independent contractor.

Because this is a sufficient basis upon which to dismiss this claim, the court need not address Real Time’s other arguments in favor of dismissal. However, it merits noting that even if Mr. Reyes could be considered a debt collector, because Mr. Reyes was a lawyer for the firm hired as Real Time’s outside legal counsel, he would likely be considered an independent contractor, which means Real Time would not be subject to liability for individual torts committed by Mr. Reyes. Lynn v. Superior Court, 180 Cal. App. 3d 346, 349 (Ct. App. 1986) (“In our view independent counsel retained to conduct litigation in the courts act in the capacity of independent contractors” and “[a]bsent compelling reasons of public policy … an employer is not liable for the negligence of an independent contractor.”) (internal citations omitted). Plaintiff seeks to distinguish this case, arguing that “Real Time’s attorneys did not commit a mere tort … [Mr. Reyes] committed an intentional misrepresentation.” Opp. to RT at 4. In the interest of clarity, the court notes that intentional misrepresentation is a tort.