9th Circuit Holds NOI Plaintiff’s Nominal Payment Designed to Give Standing Failed to Confer Such Standing; Says Plaintiffs’ FCRA Expert Evan Hendricks’ Opinion Was “Vague and Abstract”

In Wright v. General Motors Acceptance Corp., — Fed.Appx. —-, 2013 WL 6137482 (9th Cir. 2013), the Court of Appeals for the Ninth Circuit affirmed in an unpublished opinion that an automobile customer who paid a small sum of money to set up his right to bring an NOI class action lacked UCL standing to bring the claim. 

On April 6, 2007, Wright purchased a car from a California auto dealer, financing the vehicle with a loan from Ally. He made payments on the car for about two years before defaulting on his loan. Ally repossessed the car in July 2009, and soon thereafter sent Wright a Notice of Intent to Dispose of Repossessed Vehicle (“NOI”). The NOI said that Ally planned to sell the car at auction and that Wright had a limited statutory right to preempt the sale by rein-stating his contract or redeeming the car. Wright did not do so in the time permitted, and Ally sold the car at auction on October 1, 2009, applying the sale proceeds to Wright’s outstanding contract balance. The resulting deficiency was in the amount of $9,694.43, and Ally sent Wright a letter on October 7, 2009, giving an accounting for this deficiency and telling Wright how he could make a payment on it. Ally also reported the deficiency to the credit bureaus. ¶  On October 16, 2009, Wright made a partial payment of $25. He filed this putative class action less than a week later, arguing that the NOI he received did not comply with the Rees– Levering Automobile Sales Finance Act, Cal. Civ.Code § 2981 et seq., be-cause (1) it did not fully inform him of the amount he had to pay Ally to cure his default, and (2) it did not provide him with a physical address at which he could personally serve Ally with a form that would have extended the statutory redemption or reinstatement period by an additional ten days. These failures, according to Wright, invalidated Ally’s deficiency claim and rendered Ally’s attempt to collect on the allegedly invalid deficiency a violation of the UCL.

The Court of Appeals for the Ninth Circuit affirmed that the Plaintiff’s payment demonstrated no causal connection to the purported unfair business practice and, therefore, the Plaintiff lacked standing under the UCL to bring the class claim.

Wright argues that he suffered economic harm both by paying Ally $25 to partially offset his nearly $10,000 deficiency and when Ally reported his deficiency to the credit bureaus. Even if each of these injuries could independently serve as a basis for standing under the UCL, a proposition we assume without deciding here, because Wright cannot show the type of “causal connection” between either injury and any alleged unfair competition by Ally, we affirm the district court. See id. at 887 (internal quotation marks omitted).  ¶  Wright does not argue, because he cannot argue, that his $25 payment was caused by Ally’s allegedly defective NOI. Rather, he contends that it was caused by Ally’s October 7, 2009, letter, which Wright maintains was an illegal attempt to collect on an in-valid deficiency. But the October 7 letter was not, as Wright characterizes it, a “demand for payment.” The letter did not demand anything of Wright. It was merely an accounting that (1) gave Wright information about how his $9,694.43 deficiency was calculated; (2) explained that the deficiency could change based on credits, rebates, charges, or accrued interest; and (3) provided instructions on how to get “more information about this transaction or to make payment arrangements.” Ally sent the letter pursuant to statute, see Cal. Civ.Code § 2983.2(b), and in accordance with a promise in the NOI to send Wright “a written accounting of the sale of the vehicle automatically within 45 days” of the sale. Because the letter was not a demand for payment, it was not unfair competition, and Wright cannot establish the necessary causal connection with respect to his $25 payment.  ¶  Nor has Wright demonstrated a causal connection between his damaged credit and any unfair competition. Wright testified that he was unable to secure financing for a new car from six different auto dealers “because of the GMAC deficiency on [his] credit report.” Wright’s heavily redacted credit report shows the deficiency, but Wright offers nothing more than a conclusory statement in his declaration as proof that it was this specific deficiency that caused the auto dealers not to extend him credit. In fact, Wright had many other delinquent debts, and he has offered no evidence that shows he would have obtained credit for a new car without the $9,694 .43 deficiency. Equally unavailing is Wright’s reliance on Evan Hendricks’ vague and abstract expert testimony, which also fails to establish a causal connection between Wright’s damaged credit and Ally’s alleged unfair competition.  ¶  Because Wright has not established a causal connection between either economic injury he alleges and any unfair competition on the part of Ally, he has failed to establish standing to bring this suit under the UCL.

  Contact Erik Kemp (ek@severson.com) or Jan Chilton (jtc@severson.c0m) for questions regarding this matter.