District Court (Cal.) — Chief Judge of Central District Says Debt Collection Calls to Residential Line Owned by Mistaken Debtor That Do Not Include Pre-Recorded Voice Are Exempt from TCPA

In Herrera v. AllianceOne Receivable Management, Inc., 2016 WL 1077110, at *1 (S.D.Cal., 2016), Chief Judge Moskowitz held that the TCPA does not apply to debt collection calls placed by an autodialer for debt collection purposes when the call does not include a pre-recorded message.  The facts were as follows:

The allegations in Plaintiffs’ FAC, filed on June 23, 2015, stem from a “Demand for Payment-Court Ordered Debt Collection” issued by the Franchise Tax Board and received by Plaintiff Gilverto Herrera in January 2012. (FAC ¶ 5.) The demand was submitted to the Franchise Tax Board by AllianceOne, and referenced three cases in San Diego Superior Court against a “Gilberto G. Herrera” for unpaid traffic tickets. (FAC ¶¶ 5, 10.) Because Plaintiffs believed the demand was for a different individual, Plaintiffs faxed a letter in February 2012 to the Franchise Tax Board and AllianceOne and included a copy of Gilverto’s driver license and social security card as identification. (FAC ¶ 7.) Plaintiffs also visited Defendant’s office at the San Diego Superior Court, South County, multiple times in February and March 2012. (FAC ¶ 8.)   Plaintiffs’ income tax refund was seized and sent to the Franchise Tax Board on March 21, 2012. (FAC ¶ 9.) Plaintiffs subsequently filed a petition in San Diego Superior Court for the return of the funds and to remove the case from Gilverto’s credit record. (FAC ¶ 11.) The Plaintiffs received a judgment in their favor in May 2012 and Gilverto successfully removed the citations from his driving record soon thereafter. (FAC ¶¶ 11-12.)  Plaintiffs allege that despite the court order, Defendant continued contacting Plaintiffs on their residential telephone and by mail. (FAC ¶ 13.) Plaintiffs also allege that Gilverto’s credit score was negatively impacted as a result of Defendant’s actions. (FAC ¶ 13.) Specifically, Plaintiffs allege that they were denied credit on several occasions, had difficulty refinancing their home loan, and obtained loans at a higher interest rate because of Gilverto’s low credit score. (FAC ¶ 13.) Plaintiffs also insist that they continued to receive notices from the Franchise Tax Board and IRS about non-payment of fines and potential garnishment of their property and future wages. (FAC ¶ 13.)  Gilverto works for the Department of Defense and maintains a security clearance, which allegedly requires that he maintain a good credit rating. (FAC ¶ 14.) Because of the adverse credit report, Plaintiffs allege that Gilverto received an adverse work evaluation and that his job was in jeopardy. (FAC ¶ 14.)

The District Court granted the Defendant debt collector’s motion to dismiss.

In 1995, the FCC again reiterated its decision that “prerecorded debt collection calls are adequately covered by exemptions adopted in our rules.” Rules and Regulations Implementing the TCPA, 10 FCC Rcd. 12391, 12400 (Aug. 7, 1995) (“1995 Report and Order”). The FCC further clarified that “prerecorded debt collection calls are exempt from the prohibitions on prerecorded calls to residences as commercial calls which do not transmit unsolicited advertisement.” Id. (citing 1992 Report and Order, 7 FCC Rcd. at 8773) (alterations omitted).  However, the FCC has not specifically addressed the applicability of the TCPA to debt collection calls with made to non-debtors. Given this ambiguity in the FCC’s regulations, courts have struggled to determine how the FCC’s explicit language—exempting “debt collection calls”—applies when the calls are erroneously made to non-debtors.  The court in Watson v. NCO Group, Inc., 462 F.Supp.2d 641 (E.D.Pa.2006), noted that a non-debtor has a greater right to privacy than someone who has fallen into debt. The court stated that the FCC exempted calls that “adversely affect the privacy rights intended to be protected by the TCPA.” Id. at 645. Therefore, because the court held that a non-debtor’s rights are violated when they are subjected to erroneous debt collection calls, the court found that the defendant’s calls were not exempt from the TCPA. Id.  However, in Franasiak v. Palisades Collection, LLC, 822 F.Supp.2d 320 (W.D.N.Y.2011), the court held that all debt collection calls are exempt under the FCC’s regulations regardless of whether or not the intended recipient was in fact a debtor. The court noted that grouping calls to debtors and non-debtors together afforded the proper deference to the FCC’s regulations. Id. at 325; see also Santino v. NCO Fin. Sys., Inc., No. 09–CV–982–JTC, 2011 WL 754874 (W.D.N.Y. Feb. 24, 2011) (noting that the court in Watson failed to “accord appropriate judicial deference to agency rules”); Meadows v. Franklin Collection Serv., Inc., No. 09–CV–605–LSC, 2010 WL 2605048 (N.D.Ala. June 25, 2010) (stating that the FCC has determined that all debt collection calls are excluded from the TCPA, including contacts to non-debtors) aff’d in relevant part, 414 Fed.Appx. 230 (11th Cir.2011).  The Court agrees with the reasoning in Franasiak. The FCC explicitly stated that prerecorded debt collection calls are covered by the exemption that applies to commercial calls that do not transmit an unsolicited advertisement. See 1995 Report and Order, 10 FCC Rcd. At 12400. Until the FCC instructs otherwise, the Court follows the reasoning in Franasiak, and holds that the phrase “debt collection calls” in the FCC’s regulations includes calls made to non-debtors.  Applied to the case at hand, Plaintiffs’ TCPA claims should be dismissed. Although Plaintiffs allege that they are non-debtors, Defendant’s calls were made for a commercial purpose and did not transmit an unsolicited advertisement. It is for the FCC, not the Court, to determine whether or not debt collection calls made to non-debtors are an exception to the general debt collection exemption. Therefore, Defendant’s motion to dismiss Plaintiffs’ fifth and sixth causes of action is GRANTED.