Auto Finance Company Sued with Western Union for Split of Fees Associated with Western Union “SpeedPay”; District Court (Cal.) Says Western Union Not Subject to Rosenthal Act

In Lindblom v. Santander Consumer USA, Inc., 2015 WL 8483118, at *1 (E.D.Cal., 2015), Judge O’Neill granted summary judgment to an automobile finance company against claims arguing that its fees associated with “SpeedPay” were not permissible.

Plaintiff purchased a car, which she financed with a loan that Santander eventually began to service. FAC at ¶¶ 1-2. Plaintiff made payments on the loan by phone and online through Western Union’s “Speedpay” service. Id. at ¶ 12. To do so, Plaintiff was required to pay a fee to Western Union. Id. at ¶ 14. Western Union remitted most of that fee to Santander. Id. at ¶¶ 2, 14.    Plaintiff alleges that, in doing so, Defendants created a “partnership,” the purpose of which is to help Santander increase its profits by charging the customer the Speedpay fee and splitting the proceeds. Id. at ¶ 13. Plaintiff asserts this fee-sharing agreement violated the FDCPA and the Rosenthal Act. See id. at ¶¶ 2, 12, 13, 24, 27. Specifically, Plaintiff asserts that Western Union violated § 1692f(1) of the FDCPA and, in turn, violated § 1788.17 of the Rosenthal Act, “which prohibits any entity covered by the Rosenthal [Act] from violation the [FDCPA].” Id. at ¶ 27. Plaintiff also alleges Defendants’ fee-charging-and-splitting arrangement independently violated the Rosenthal Act. Id. at ¶ 28.  On behalf of a putative class, Plaintiff brings one claim against Western Union for violation of the Rosenthal Act. See FAC at 9-11. Western Union moves to dismiss the claim on two primary grounds: (1) the Rosenthal Act does not apply to Western Union because Plaintiff has not plausibly alleged Western Union is a “debt collector”; and (2) the Speedpay fees were permissible under the Rosenthal Act.

The District Court found that Western Union was not subject to the Rosenthal Act.

The term “debt collector” means any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection, but does not include an attorney or counselor at law.  (Emphasis added). “Debt collection,” in turn, is defined as “any act or practice in connection with the collection of consumer debts.” § 1788.2(b).  Plaintiff contends that Western Union’s Speedpay service is a “collection medium” used or intended to be used for debt collection under § 1788.2(c) and qualifies as an “act or practice [used] in connection with the collection of consumer debts” under § 1788.2(b). Doc. 34 at 3, 7, 12-14. To support these contentions, Plaintiff interprets “media” in § 1788.2(c) to be the plural of “medium,” and points to three dictionary definitions of “medium”3 ; Plaintiff provides no other support for her position. See id.  The resolution of Western Union’s motion to dismiss therefore turns on whether its Speedpay service constitutes a form of “collection media,” as that term is used in § 1788.2(c). The parties do not provide—and, despite extensive research, the Court cannot find—any case that has meaningfully addressed the issue of what constitutes “collection media” under § 1788.2(c). . . When read in isolation, the term “collection media” in § 1788.2(c) does not have a clear and unambiguous meaning. Plaintiff is of course correct that “media” is the plural of “medium.” But, as the dictionaries Plaintiff cites establishes, “media” also refers to methods of communication. . . Applying the ejusdem generis canon here, “other collection media,” as used in § 1788.2(c), must be interpreted in light of the specific words that immediately precede it, i.e., “forms” and “letters.” See § 1788.2(c). Read in that context, “collection media” most reasonably refers to written means of communication used to collect debt. This interpretation is further supported by § 1788.2(c)’s definition of debt collectors as including those who “compose and sell…or offer to compose and sell…forms, letters, and other collection media.” (Emphasis added.) Although one may certainly “compose” a letter or form used in debt collection, it is a stretch, at best, to argue that Western Union “composed” the Speedpay service. . . Accordingly, Western Union potentially could be a debt collector under § 1788.2(c) even though the Speedpay service does not qualify as a form of “collection media.”   But the Court reiterates and emphasizes that Plaintiff has provided no other argument to support her contention that Western Union is a debt collector under the Rosenthal Act. Plaintiff simply argues that Western Union is a debt collector because the Speedpay service is a “medium” that was used “in connection with the collection of consumer debts.” See Doc. 34 at 12-13. The Court further reiterates and emphasizes that Plaintiff has provided no authority to support this contention beyond pointing to a few dictionary definitions of the word “media.” See id. Plaintiff has provided no authority to support her position, and the Court cannot find any that remotely supports it in the text, legislative history, or case law interpreting the Rosenthal Act.