District Court (Cal.) Says Creditor Can Be Vicariously Liable for TCPA-Violating Calls Under Apparent Agency Theory; Says Unanswered Calls Can Violate the Rosenthal Act

In N.L., an infant by his mother and natural guardian Sandra Lemos v. Credit One Bank, N.A., et.al., (No. 2:17-CV-01512-JAM-DB), 2018 WL 5880796 (E.D. Cal. November 8, 2018), Judge Mendez denied Summary Judgment to a caller under the TCPA and Rosenthal Act. The facts were as follows:

A customer of Credit One, D.V., provided a phone number ending in -9847 (“the -9847 number”) to the bank upon opening an account in March 2014. Def.’s Undisputed Facts #1–4. D.V. subsequently relinquished that phone number, which was reassigned to Plaintiff on December 19, 2016. Def.’s Undisputed Facts #5. In an approximately four-month period between February 20, 2017 and June 13, 2017, Credit One’s vendors called the -9847 number 189 times after D.V. failed to make timely payments. Pl.’s Statement of Undisputed Facts #1. Of those calls, 115 calls were made by Defendant iEnergizer between February 20, 2017 and March 16, 2017; 48 calls were made by Defendant GC Services between March 18, 2017 and March 26, 2017; and 26 calls were made by Defendant First Contact between April 8, 2017 and June 13, 2017.2 Def.’s Undisputed Facts #9. At the time of the calls, Plaintiff was ten or eleven years old and had no relationship with Credit One. Pl.’s Statement of Undisputed Facts #2. Plaintiff testified in his deposition that he answered one of the calls on February 21, 2017 and told the caller that he was a child and that they should stop calling. N.L. Dep., ECF No. 55-10, p. 44. The call notes substantiate that the vendor spoke with a third-party on February 22, 2017.3 ECF No. 65-2, p. 2. Plaintiff stated that he answered the phone one or two more times when Credit One’s vendors called, but hung up when he heard them say they were debt collectors. N.L. Dep. at 47. He further testified that he tried calling Credit One about the calls between one and three times, but it “just took [him] to the phone system” and he did not continue because “[he] was looking for the person that had directly called [him], not the system.” Id. at 48. Plaintiff reported the phone calls through the Metro PCS app on his phone. Id. at 52. Plaintiff’s mother testified that an attorney, Kevin Crick, called her to consult on the calls around the second week of January 2017, Lemos Dep., ECF No. 55-11, p. 53; however, the undisputed facts indicate that the calls did not begin until February 2017. The calls stopped in June 2017 after D.V. made a payment that resolved the outstanding debt. Def.’s Mot. at 4 n.3.

In an apparent dig, Judge Mendez noted that an ATDS was, despite the Defendant’s claim that, “Credit One argues that “[t]he Arbitrator should ignore Marks, and follow the D.C. Circuit, Second Circuit and Third Circuits’ correct interpretation and application of the statutory definition of an ATDS.”) Judge Mendez declined the defendant’s invitation to ignore 9th Circuit precedent, and held that a triable issue of fact existed as to whether an ATDS was used.  Judge Mendez also held that the Creditor could be vicariously liable under the TCPA for the calls placed on its behalf.

Review of recent cases reveals no evidence that the FCC’s 2008 ruling on creditor liability for third-party debt collection calls has been reversed or explicitly modified. Credit One goes on to assert that it cannot be held liable for its vendors’ TCPA violations because its contracts require vendors to comply with state and federal law. Def.’s Reply at 5. Credit One has not provided any argument as to why it could not seek to recover damages it might have to pay a debtor for TCPA violations by pursing its vendors for breach of the parties’ contract. Even if Plaintiff had to show that Credit One was the principal of its third-party vendors under the common law theory of agency, issues of material fact would remain. The extent of control exercised by the principal is the essential ingredient in determining whether vicarious liability may be imposed. Jones v. Royal Admin. Servs., Inc., 887 F.3d 443, 450–51 (9th Cir. 2018). . . .The Ninth Circuit also recognizes apparent agency as a ground for TCPA vicarious liability. Thomas v. Taco Bell Corp., 582 F. App’x 678, 679–80 (9th Cir. 2014). The evidence submitted could allow a reasonable jury to find Credit One was vicariously liable for its vendors’ TCPA violations, where the vendors were hired by Credit One to collect debts and represented themselves as Credit One. See C.A.R. Transp. Brokerage Co. v. Darden Restaurants, Inc., 213 F.3d 474, 479–80 (9th Cir. 2000) (“the extent of an agent’s authority is a question of fact and should not be decided on summary judgment”). Based on the facts submitted, even if the Court did not find the 2008 FCC order imposed liability on Credit One, a genuine issue of material fact would remain as to whether Credit One was vicariously liable for its vendors.

Finally, Judge Mendez rejected the argument that calls could not form the basis for a Rosenthal Act violation under these circumstances.

Credit One argues that Plaintiff cannot maintain a claim under § 1788.11(e) because he did not “communicate” with the debt collectors. See Krapf v. Nationwide Credit Inc., 2010 WL 2025323, at *4 (C.D. Cal. 2010) (finding that § 1788.11(e) entails “actual contact between the debt collector and the debtor, rather than just ‘[c]ausing a telephone to ring.’ ”). This is a dispute of fact, however, as Plaintiff alleged he communicated with a vendor and requested the calls stop because he was a child and a noncustomer. The Court also rejects Credit One’s contention that the calls to Plaintiff were not annoying or harassing because they went largely unanswered. Section 1788.11(d) prohibits “[c]ausing a telephone to ring repeatedly or continuously to annoy the person called.” Answering the phone and communicating with the debt collector is not a requirement of this subsection, nor is it a requirement for continuous and repeated calls to be an annoyance. “A creditor’s voluminous calls, even if unanswered, can also warrant civil penalties, suggesting that the California legislature and other reasonable people could consider such conduct highly offensive.” Romero v. Dep’t Stores Nat’l Bank, 725 F. App’x 537, 540 (9th Cir. 2018); see also Meadows v. Franklin Collection Serv., Inc., 414 F. App’x 230, 234 (11th Cir. 2011) (“[A] ringing telephone, even if screened and unanswered, can be harassing, especially if it rings on a consistent basis over a prolonged period of time and concerns debts that one does not owe.”) (considering a claim under the analogous provision of the FDCPA). Credit One cannot seek to hold a ten-year-old child responsible for not stopping its vendors’ conduct. Under the evidence presented by Plaintiff, Credit One’s vendors called him over 85 times in a single month, at a rate of six or more calls per day, to collect an unrelated individual’s debt. A reasonable jury could conclude that calling a child up to nine times per day over four months to collect on a debt he did not owe constitutes “[c]ausing a telephone to ring repeatedly or continuously to annoy the person called.” Cal. Civ. Code § 1788.11(d). Should a jury believe Plaintiff’s testimony regarding the request to stop calling, they may also find that this constituted a communication and that the vendors’ subsequent conduct was harassing. Accordingly, the Court denies Credit One summary judgment on Plaintiff’s Rosenthal Act claim.