Eastern District follows Sial decision, says “no” to Norr-Pennington doctrine and Litigation Privilege

In Gerber v. Citigroup, Inc. 2009 WL 248094 (E.D.Cal.2009), District Judge Moulds followed the Southern District’s opinion in Sial v. Unifund CCR Partners, 2008 WL 4079281 (S.D.Cal.Aug.28, 2008), and rejected both the Norr-Pennington doctrine and the litigation privilege as defenses to a Rosenthal Act claim.

This court is unpersuaded that the Noerr-Pennington doctrine bars actions under the FDCPA. Rather, this court finds persuasive the reasoning of Sial v. Unifund CCR Partners, 2008 WL 4079281, *3-5 (S.D.Cal.Aug.28, 2008), in which the court held that the doctrine did not bar an FDCPA claim. The Sial court relied on the Supreme Court’s decision in Heintz, which held that litigating attorneys were “debt collectors” under the FDCPA. Although Heintz did not directly address the instant question, the holding of Heintz strongly suggests that the Noerr-Pennington doctrine does not apply to FDCPA ac-tions. ¶ Here, plaintiff alleges multiple instances of harassing communications and conduct. [footnote omitted] To find defendants immunized by the Noerr-Pennington doctrine would eviscerate the Fair Debt Collection Practices Act. Debt collectors should not be able to employ tactics forbidden by the FDCPA simply because they also happen to be lawyers, or because they are attempting to collect on a debt owed. ¶ With regard to the California litigation privilege, this court again finds the Sial court’s reasoning persuasive. Sial, 2008 WL 4079281 at *5. ¶ California Civil Code § 47(b) provides, in pertinent part, that a privilege attaches to a publication or broadcast made in any judicial proceeding. The litigation privilege “applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” Silberg v. Anderson, 50 Cal.3d 205, 212, 266 Cal.Rptr. 638, 786 P.2d 365 (1990). Here, the parties do not dispute that the scope of the litigation privilege generally includes the actions alleged by Plaintiff. ¶ The parties also acknowledge a split in opinion among federal district courts as to whether the Rosenthal Act and the litigation privilege are irrec-oncilable. Compare Oei v. N. Star Capital Acquisitions, LLC, 486 F.Supp.2d 1089, 1100 (C.D.Cal.2006) (Rosenthal Act not reconcilable with litigation privilege); Butler v. Resurgence Financial, LLC, 521 F.Supp.2d 1093, 1095-97 (C.D.Cal.2007) (following Oei ); Mello v. Great Seneca Financial Corp., 526 F.Supp.2d 1024, 1030-31 (C.D.Cal.2007) (same); with Taylor v. Quall, 458 F.Supp.2d 1065, 1067-69 (C.D.Cal.2006) (litigation privilege precludes Rosenthal Act claims); Nickoloff v.. Wolfpoff & Abramson, L.L.P., 511 F.Supp.2d 1043, 1045-46 (C.D.Cal.2007) (distinguishing Oei, finding Rosenthal Act and litigation privilege not irreconcilable); Reyes v. Kenosian & Miele, LLP, 525 F.Supp.2d 1158, 1162-65 (N.D.Cal.2007) (same). Having considered these divergent cases, the court agrees with those courts that have found the litigation privilege and the Rosenthal Act irreconcilable. “Applying the privilege … would effectively vitiate the Rosenthal Act and render the protections it af-fords meaningless.” Oei, 486 F.Supp.2d at 1100. Thus, the court “applies the familiar principle of statutory construction that, in cases of irreconcilable conflict, the specific statute prevails over the general one,” id. at 1100, and finds that the Rosenthal Act prevails over the statutory litigation privilege. ¶ Sial, 2008 WL 4079281 at *5. Because the FDCPA applies to this case, the court also finds the Rosenthal Act applicable. But see Lopez Reyes v. Kenosian & Miele, LLP, 525 F.Supp.2d 1158, 1163-64 (N.D.Cal.2007) (discussing cases). Accordingly, this court finds that defendants are not protected under the Noerr-Pennington doctrine or California‘s litigation privilege. [footnote omitted] Thus, defendants’ motion to dismiss or strike claims on the grounds of litigation privilege should be denied.

The District Court also held that, under the circumstances of the case, FDCPA cases were not amenable to suit under the UCL:

Plaintiff’s allegations are insufficient to meet the in-jury-in-fact standing requirement of the UCL. Restitution under the UCL is limited to either “money or property that defendants took directly from plaintiff” or “money or property in which [plaintiff] has a vested interest.” Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1146-1147, 131 Cal.Rptr.2d 29, 63 P .3d 937 (2003); see also Baugh v. CBS, Inc., 828 F.Supp. 745, 757-58 (N.D.Cal.1993) (dismissing a restitution claim for emotional damages because restitution requires defendant to have taken something of value from plaintiff that plaintiff asks be restored). Plaintiff has not alleged he paid interest or other fees to defendants or that defendants have otherwise profited from their actions in violating the FDCPA. Moreover, “nonrestitutionary disgorgement of profits obtained by means of an unfair business practice is not an available remedy in either an individual or representative action under the UCL.” Palmer v. Stassinos, 348 F.Supp.2d 1070, 1088-89 (N.D.Cal.2004), citing Korea Supply, 29 Cal.4th at 1152, 131 Cal.Rptr.2d 29 (nonrestitutionary disgorgement not available in an individual action); Kraus v. Trinity Mgmt. Servs., Inc., 23 Cal.4th 116, 126 n. 10, 96 Cal.Rptr.2d 485 (2000) (nonrestitutionary disgorgement not available in a representative action).

(See my article arguing this point at Hyman, “California’s Unfair Competition Law Does Not Confer Enhanced Remedies for Unfair Debt Collection Practices”, 8 Cons. Fin. Serv. L. R. # 19 (2005)).) Finally, the District Court retained jurisdiction over Citi’s counter-claim.