In Norton v. Lvnv Funding, No. 18-cv-05051-DMR, 2019 U.S. Dist. LEXIS 146863, at *15-16 (N.D. Cal. Aug. 28, 2019), Magistrate Judge Ryu held that equivocal pleading of a debt’s consumer nature survived an FRCP 12(b)(6) motion.
Defendants essentially argue that a plaintiff’s allegations about consumer debt must be unequivocal and ironclad in order to withstand a Rule 12 challenge. This ignores well-established pleading standards. Moreover, adopting such a position could incentivize creditors to conceal the nature of the debts they are attempting to collect in order to prevent debtors from discovering sufficient factual information to adequately contest unfair debt collection practices. Given that consumers may have more than one delinquent debt and that many debts are sold and resold through various collection agencies, it would be antithetical to the purposes of the FDCPA and Rosenthal Act to prohibit debtors from contesting unlawful debt collection practices if they are unable to unequivocally identify the underlying debt after diligent investigation. “In enacting the FDCPA, Congress sought to counter the abusive, deceptive and unfair debt collection practices sometimes used by debt collectors against consumers.” Turner, 362 F.3d at 1226. “[W]e seek to ensure that even the least sophisticated debtor is able to understand, make informed decisions about, and participate fully and meaningfully in the debt collection process.” [*16] Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1171 (9th Cir. 2006). A plaintiff must allege a consumer debt but may do so through non-conclusory factual allegations that support plausible inferences. Norton has done so here. Discovery ultimately may reveal that the underlying debt at issue in this case is not a consumer debt, and Norton’s claims may fail on the merits. However, as a pleading matter, Norton’s factual allegations about the nature of her debt are sufficient to state a facially plausible claim for relief.
Magistrate Ryu found that the Plaintiff could pursue injunctive relief.
Defendants argue that even if Norton had standing for injunctive relief at the beginning of the case, her request for injunctive relief is now moot. Reply at 14. They contend that in order to defeat mootness, Norton would still have to show that there is “a reasonable expectation that [she] will be subject to the same action again.” Id. (quoting Bruton v. Gerber Prod. Co., No. 12-cv-02412-LHK, 2018 WL 1009257, at *7 (N.D. Cal. Feb. 13, 2018)). Defendants aver that there is “zero probability that Defendants will attempt to enforce the judgment against [Norton] or claim costs without complying with Section 673 because H&Z filed the Assignment.” Mot. at 21 (emphasis in original). Norton responds by relying on Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) for the proposition that defendants cannot “‘buy off’ proposed class representatives before a court can certify a class, thereby ‘frustrat[ing] the objectives of class actions.” 653 F.3d at 1088 (quoting Deposit Guar. Nat. Bank, Jackson, Miss. v. Roper, 445 U.S. 326, 339 (1980)). Pitts was a putative class action alleging various claims for relief under the Fair Labor Standards Act and state law. Id. at 1084. Before the class had been certified, the defendant made an offer of judgment under Rule 68 that fully compensated the named plaintiff for his claimed damages. Id. at 1085. The named plaintiff declined the offer, and the defendant filed a motion to dismiss based on lack of subject matter jurisdiction, arguing that its offer of judgment rendered the case moot. Id. at 1085. The district court granted the motion, and the plaintiff appealed. Id. The Ninth Circuit engaged in an exhaustive review of the Supreme Court’s caselaw on mootness and found that “if the district court has certified a class, mooting the putative class representative’s claim will not moot the class action.” Id. at 1090. This is because “the class of unnamed persons described in the certification acquire[s] a legal status separate from the interest asserted by [the named plaintiff].” Id. at 1087. However, the court recognized that the issue is murkier if a class has not yet been certified by the time the class representative’s claims are mooted. Id. at 1090. Where the claims at issue are “so inherently transitory that the trial court will not have even enough time to rule on a motion for class certification before the proposed representative’s individual interest expires,” the standing of the class as a whole “relates back” to the filing of the complaint and prevents a case from being mooted when the named plaintiff’s individual claim is mooted. Id. at 1087-88. Pitts extended the “relate back” doctrine to claims that, while “not inherently transitory—become no less transitory . . . [because] they are ‘acutely susceptible to mootness in light of [the defendant’s] tactic of ‘picking off’ lead plaintiffs with a Rule 68 offer to avoid a class action.” Id. at 1091 (quoting Weiss v. Regal Collections, 385 F.3d 337, 347 (3d Cir. 2004)). The court also pointed out that the “core concern” of Rule 23 is “the aggregation of similar, small, but otherwise doomed claims,” and allowing defendants to evade class actions through picking off named plaintiffs undermines the purpose of Rule 23. Id. The court accordingly held that an unaccepted Rule 68 offer made before a class is certified does not moot a class action. Id. The Pitts rule has also been extended to situations where the named plaintiff’s individual standing for injunctive relief has been mooted before class certification. Haro v. Sebelius, 747 F.3d 1099, 1110 (9th Cir. 2014) (finding that an injunctive relief claim filed on behalf of a putative class did not become moot when the named plaintiff’s individual claim expired prior to class certification based on voluntary conduct by the defendant). Pitts applies here. Norton’s key allegations are that Defendants engaged in unfair debt collection practices through attempting to collect on the judgment against her without complying with section 673. Section 673 requires merely that a creditor acknowledge that they have acquired a debt through an assignment. The Acknowledgement in this case is less than two pages long, and Defendants filed it less than a month after this case was filed. Def. RJN, Ex. B. The process of complying with section 673 appears to be simple and fast. If the court found that Norton’s claims were mooted by the filing of the Acknowledgement, it is near certain that no plaintiffs could maintain a similar case against Defendants, as Defendants could quickly moot those claims as well. This is precisely the kind of claim that Pitts found to be “capable of repetition yet evading review”—a claim that is rendered “transitory by virtue of the defendant’s litigation strategy.” 653 F.3d at 1091. Finding such claims to be moot prior to class certification undermines the purpose of Rule 23. Although Norton’s own claim for injunctive relief expired once Defendants filed the Acknowledgement, the injunctive relief claim on behalf of the putative class was not mooted. See Haro, 747 F.3d at 1110. Therefore, Norton may continue to represent the class for the purposes of seeking injunctive relief. Defendants’ motion to dismiss the class injunctive relief claim is denied.