Case 3:14-cv-05266-VC Document 225 Filed 06/04/18 Page 1 of 34 · NO. 3:14-cv-05266-VC PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Honorable Vince Chhabria CLASS

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION CASE NO. 3:14-CV-05266-VC

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Michael F. Ram, CSB #104805 Email: [email protected] Susan S. Brown, CSB #287986 Email: [email protected] ROBINS KAPLAN LLP 2440 West El Camino Real, Suite 100 Mountain View, California 94040 Telephone: (650) 784-4040 Facsimile: (650) 784-4041 [Additional Counsel Appear on Signature Page] Attorneys for Plaintiffs

U.S. DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION KAREN SOLBERG, NANCY MORIN, and NARISHA BONAKDAR, on their own behalf and on behalf of others similarly situated,

Plaintiffs,

v. VICTIM SERVICES, INC., d/b/a CorrectiveSolutions, NATIONAL CORRECTIVE GROUP, INC., d/b/a CorrectiveSolutions, AMERICAN JUSTICE SOLUTIONS, INC., d/b/a/ CorrectiveSolutions, BIRCH GROVE HOLDINGS, INC., MATS JONSSON and KARL THOMAS JONSSON,

Defendants.

NO. 3:14-cv-05266-VC

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION

Honorable Vince Chhabria CLASS ACTION DEMAND FOR TRIAL BY JURY DATE: August 9, 2018 TIME: 10:00 a.m. LOCATION: Courtroom 4 - 17th Floor

Case 3:14-cv-05266-VC Document 225 Filed 06/04/18 Page 1 of 34

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION - i CASE NO. 3:14-CV-05266-VC

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NOTICE OF MOTION

PLEASE TAKE NOTICE that on August 9, 2018, at 10 a.m., in Courtroom 4, 17th

floor, of the U.S. District Court for the Northern District of California, 450 Golden Gate

Avenue, San Francisco, California, 94102, Plaintiffs will move for certification of Plaintiffs’

class claims. The motion will be based on: this Notice of Motion; the following Memorandum

of Points and Authorities; the declarations submitted herewith; the records and file in this

action; and on such other matters as may be presented before or at the hearing of the motion.


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TABLE OF CONTENTS Page No.

NOTICE OF MOTION ................................................................................................................. i TABLE OF AUTHORITIES ....................................................................................................... iv I. INTRODUCTION .............................................................................................................1 II. STATEMENT OF FACTS ................................................................................................2 A. Defendants send the same letters to class members in thirty-three California counties .................................................................................................2 B. Defendants enter into form contracts with county district attorneys .....................4 C. Defendants’ uniform collections procedures and training .....................................5 D. Defendants’ collection procedures did not change when VSI took over the business ....................................................................................................7 E. Plaintiffs will establish each Defendant’s role in operation of the Bad Check Restitution Program using common evidence ....................................8 F. Defendants sent false and deceptive letters to the Plaintiffs .................................8 1. Nancy Morin ..............................................................................................8 2. Karen Solberg ............................................................................................9 3. Narisha Bonakdar ....................................................................................10 III. THE PROPOSED CLASSES ..........................................................................................11 IV. CLASS CLAIMS .............................................................................................................11 A. The Fair Debt Collection Practices Act ...............................................................11 B. The California Unfair Competition Law .............................................................13 C. Fraudulent Misrepresentation ..............................................................................14 D. Negligent Misrepresentation ...............................................................................15 V. ARGUMENT AND AUTHORITY ................................................................................16


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A. The requirements of Rule 23 are satisfied ...........................................................16 1. The numerosity standard is met ...............................................................16 2. The commonality standard is met ............................................................17 3. Plaintiffs’ claims are the same as the class members’ claims .................20 4. The classes are adequately represented ...................................................21 B. The requirements of Rule 23(b) are satisfied ......................................................22 1. Common factual and legal questions predominate ..................................22 2. The superiority requirement is met ..........................................................23 3. Constitutionally sound notice can be provided to Class members ..........24 VI. CONCLUSION ...............................................................................................................24


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TABLE OF AUTHORITIES

Page No.

FEDERAL CASES

Abdullah v. U.S. Sec. Assoc., Inc., 731 F.3d 952 (9th Cir. 2013) ...........................................................................................17 Abels v. JBC Legal Grp., P.C., 227 F.R.D. 541 (N.D. Cal. 2005) ....................................................................................23 Alonso v. Blackstone Fin. Grp., LLC, 962 F. Supp. 2d 1188 (E.D. Cal. 2013) ...........................................................................19 Amgen, Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S. 455 (2013) ..................................................................................................16, 22 Ballard v. Equifax Check Servs., Inc., 186 F.R.D. 589 (E.D. Cal. 1999) .....................................................................................22 Breidenbach v. Experian, 3:12-CV-1548-GPC-BLM, 2013 WL 1010565 (S.D. Cal. Mar. 13, 2013) ....................19 Charles v. Lundgren & Assocs., P.C., 119 F.3d 739 (9th Cir. 1997) ...........................................................................................11 Cruz v. Int’l Collection Corp., 673 F.3d 991 (9th Cir. 2012) ...........................................................................................11 Datta v. Asset Recovery Solutions., LLC, 15-CV-00188-LHK, 2016 WL 1070666 (N.D. Cal. Mar. 18, 2016) ..............................17 del Campo v. Am. Corrective Counseling Servs., Inc., 254 F.R.D. 585 (N.D. Cal. 2008) ........................................................................15, 16, 20 Elias v. Hewlett- Packard Co., 903 F. Supp. 2d 843 (N.D. Cal. 2012) .............................................................................13 Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015 (9th Cir. 2012) ...................................................................................20, 21 Gold v. Midland Credit Mgmt., Inc., 306 F.R.D. 623 (N.D. Cal. 2014) ....................................................................................18


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Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055 (9th Cir. 2011) ...................................................................................11, 17 Gradisher v. Check Enforcement Unit, Inc., 203 F.R.D. 271 (W.D. Mich. 2000) .................................................................................16 Hamilton v. Am. Corrective Counseling Servs., Inc., 2007 WL 541817 (N.D. Ind. 2007) ...........................................................................16, 24 Hunt v. Check Recovery Sys., Inc., 241 F.R.D. 505 (N.D. Cal. 2007) ....................................................................................22 Just Film, Inc. v. Buono, 847 F.3d 1108 (9th Cir. 2017) ........................................................................................20 Keele v. Wexler, 149 F.3d 589 (7th Cir. 1998) ...........................................................................................22 Leyva v. Medline Indus. Inc., 716 F.3d 510 (9th Cir. 2013) ...............................................................................16, 22, 23 Liles v. Am. Corrective Counseling Servs., Inc., 231 F.R.D. 565 (S.D. Iowa 2005) ....................................................................................16 Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152 (9th Cir. 2001) .........................................................................................24 Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306 (1950) ........................................................................................................24 Quiroz v. Revenue Prod. Mgmt., Inc., 252 F.R.D. 438 (N.D. Ill. 2008) ......................................................................................22 Rubio v. Capital One Bank, 613 F.3d 1195 (9th Cir. 2010) .........................................................................................13 Schwarm v. Craighead, 233 F.R.D. 655 (E.D. Cal. 2006) ...................................................................15, 16, 20, 24 Terran v. Kaplan, 109 F.3d 1428 (9th Cir. 1997) .........................................................................................17 Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109 (9th Cir. 2014) .........................................................................................17


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Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) ..................................................................................................17, 18 Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008) ...........................................................................................18

STATE CASES

Danzig v. Jack Grynberg & Associates, 161 Cal. App. 3d 1128 (Cal. Ct. App. 1984) ...................................................................14 Goonewardene v. ADP, LLC, 5 Cal. App. 5th 154 (Cal. Ct. App. 2016) ........................................................................15 Graham v. Bank of Am., N.A., 226 Cal. App. 4th 594 (2014) ..........................................................................................14 In re Tobacco II Cases, 46 Cal.4th 289 (2009) ......................................................................................................13 Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (2003) ..........................................................................................18 Tourgeman v. Nelson & Kennard, 222 Cal. App. 4th 1447 (2014) ........................................................................................13

FEDERAL STATUTES

15 U.S.C. § 1692a(6) .............................................................................................................11, 19 15 U.S.C. § 1692d(6) ...................................................................................................................12 15 U.S.C. § 1692e .................................................................................................................11, 12 15 U.S.C. § 1692f ........................................................................................................................11 15 U.S.C. § 1692f(1) ...................................................................................................................12 15 U.S.C. § 1692g(a) ...................................................................................................................13

STATE STATUTES

Cal. Bus. & Prof. Code § 1700 ....................................................................................................13


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Cal. Penal Code § 1001.60 ..........................................................................................................13 Cal. Penal Code § 1001.62 ..........................................................................................................14 Cal. Penal Code § 1001.64 ..........................................................................................................13 Cal. Penal Code § 1001.65 ..........................................................................................................13

FEDERAL RULES

Fed. R. Civ. P. 23 ........................................................................................................................22 Fed. R. Civ. P. 23(a) ....................................................................................................................15 Fed. R. Civ. P. 23(a)(1) ...............................................................................................................16 Fed. R. Civ. P. 23(a)(2) ...............................................................................................................17 Fed. R. Civ. P. 23(a)(3) ...............................................................................................................20 Fed. R. Civ. P. 23(a)(4) ...............................................................................................................21 Fed. R. Civ. P. 23(b)(3) ...............................................................................................................23 Fed. R. Civ. P. 23(c)(2) ...............................................................................................................24 Fed. R. Civ. P. 23(g)(1)(C) ..........................................................................................................21


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I. INTRODUCTION

Courts regularly certify classes in cases challenging debt collection practices because

the central and determinative questions in such cases are whether form collection letters violate

the law. Plaintiffs challenge Defendants’ uniform debt collection practices under the “Bad

Check Restitution Program.” Under that program, Defendants pay local district attorneys to use

the district attorney’s name, seal, and authority in their communications with check writers.

Defendants receive dishonored check information or data directly from merchants or

other debt collectors. Defendants then send form collection letters on district attorney

letterhead. The letters state that the check writer has been accused of committing a crime

punishable by up to one year in county jail. Check writers can avoid criminal prosecution, the

letters state, by paying fees that are not authorized by law—including $160 or more for a

“Financial Accountability Class.” But unlike a legitimate criminal diversion program, no

district attorney has reviewed the evidence, no criminal charges have been filed, there is no

need to actually take the class, and actual prosecutions are rare. The threats are empty, made

solely for the purpose of coercing check writers to pay unlawful fees. The consumer need only

pay the fees to make the threats and demands go away. Defendants’ collection practices are

much like those of any other high-volume check collector, except Defendants invoke the

district attorney’s name and authority, using the threat of criminal charges to extort payment.

Though the Defendants revised their letters in May 2015 after they were sued by the Consumer

Financial Protection Bureau, the letters still imply that a consumer may be prosecuted if the

consumer does not pay the illegal fees Defendants demand.

Plaintiffs received Defendants’ letters and seek to certify a class of all California

consumers who received similar letters or made payments to Defendants from May 11, 2012 to

the present. Class certification is appropriate because Defendants followed a standardized set of

collection procedures and treated the Plaintiffs and members of the class in the same way. The

most significant and common question in this case is whether Defendants’ form letters are



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false, deceptive, or misleading or violate the Fair Debt Collection Practices Act and

California’s Unfair Competition Law. The Court can resolve those issues as a matter of law, in

one stroke, using common evidence—the letters themselves, along with Defendants’

documents and data, and the testimony of their employees.

Plaintiffs respectfully request that the Court grant their motion for class certification,

designate Plaintiffs as class representatives, and appoint Terrell Marshall Law Group, Law

Office of Paul Arons, Gupta Wessler PLLC, and Robins Kaplan LLP as class counsel.

II. STATEMENT OF FACTS

A. Defendants send the same letters to class members in thirty-three California counties.

Defendants collect dishonored checks by sending standard collection letters on district

attorney letterhead to check writers throughout California. Exs. 1–311 (first collection letter for

every county except Santa Cruz2). Defendants conduct this collection activity under contract

with county district attorney’s offices under the guise of being a statutorily authorized “Bad

Check Restitution Program.” The collection letters Defendants send to check writers are

standard forms that they use in every California county in which they operate. Defendants

provide the templates to district attorney’s offices as part of their standard “start-up” packet

containing program documents designed by Defendants. Exs. 32-33; Ex. 35 (Deposition of Karl

Thomas Jonsson on behalf of VSI (“T. Jonsson Dep. (VSI)”)) at 29:17-20. Although

Defendants implemented some changes to the content of their letters in 2015, their core

practices have remained unchanged throughout the class period.

1 Unless otherwise noted, all Exhibits are attached to the Declaration of Paul Arons in support of Plaintiffs’ Motion for Class Certification (“Arons Decl.”). 2 Defendants did not produce in discovery the form letters used in Santa Cruz County prior to 2015. Defendants have agreed to correct this inadvertent omission. Arons Decl. ¶ 37. Defendants testified that the form collection letters used in each county prior to 2015 were substantially the same. Ex. 35 (Deposition of Megan McClung on Behalf of VSI (“McClung Dep. (VSI)”)) at 51:4–52:12.



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The letters Defendants send in every county are materially the same. Until May 2015,

the letters shared the following common characteristics: (1) they were printed on the letterhead

of the county district attorney; (2) they stated that the recipient has been accused of a crime; (3)

they did not include the true name of the entity sending the letter; (4) they directed the recipient

to mail payments to a local address that was actually a mail drop for Defendants; (5) they

directed the recipient to call a telephone line that is staffed by Defendants’ employees at

Defendants’ San Clemente office; (6) they demanded fees that are not authorized by any statute

or permitted by law; and (7) they did not include disclosures and consumer notices expressly

required by the FDCPA. Exs. 1–31. See also Ex. 35 (McClung Dep. (VSI)) at 51:4–52:12.

Defendants were required to revise their letters in May 2015 under a consent order with

the Consumer Financial Protection Bureau (“CFPB”). The revised letters share the following

common characteristics: (1) they are printed on the letterhead of the county district attorney; (2)

they direct the recipient to mail disputes to a local address that is actually a mail drop for

Defendants; (3) they direct the recipient to call a telephone line that is staffed by Defendants’

employees at Defendants’ San Clemente office; (4) they demand fees that are not authorized by

any statute or permitted by law; and (5) they do not include disclosures and consumer notices

expressly required by the FDCPA. See Ex. 33 at 19–24; Ex. 36 (letter to district attorneys

explaining the uniform changes Defendants made to the letters in May 2015). Although they

have added a reference to their own name, Defendants continue to send these “second

generation” letters on letterhead that contains the district attorney’s name and seal,

misrepresenting that the local district attorney has some real and substantive involvement in the

daily operation of the program.

The letters contain false threats of prosecution. Although the letters inform check

writers that they have been accused of committing a crime punishable by one year in jail,

Defendants have no knowledge of how many checks referred to the district attorney’s offices

are actually prosecuted. Ex. 34 (T. Jonsson Dep. (VSI)) at 201:23-202:7, 222:7-15. And in



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some cases, Defendants send letters threatening to prosecute check writers, knowing that the

check does not meet the district attorney’s requirements for prosecution. In most counties, the

intake criteria—which determine whether a check is eligible for collection—are not identical to

the prosecution criteria. See Ex. 37. For instance, in Glenn County, there is no minimum

amount a check must meet to be eligible for collection, but a check must exceed $100 to be

referred to the district attorney for prosecution review. Ex. 32 at 5–6 (intake criteria), 38–40

(prosecution criteria). Defendants also attempt to collect checks for which the statute of

limitation for criminal prosecution has run. Ex. 38 (Deposition of James Noland on behalf of

VSI (“Noland Dep. (VSI)”)) at 54:7–25; Ex. 39 (Deposition of James Noland on behalf of

NCG (“Noland Dep. (NCG)”)) at 44:12–46:1. And as long as check writers pay the fees

Defendants demand, failure to attend the financial accountability class that is purportedly the

fundamental basis of the diversion program will not result in a referral to the district attorney.

Ex. 34 (T. Jonsson Dep. (VSI)) at 134:3-5.

Defendants demand the same categories of illegal fees from check writers throughout

California. Ex. 35 (McClung Dep. (VSI)) at 19:20-23; Ex. 34 (T. Jonsson Dep. (VSI)) at 135:6-

137:16; see also Exs. 1–31 (initial collection letters). They demand payment for the value of

the dishonored check, an administrative fee, and a fee of between $160 and $200 for a

“financial accountability class.” Exs. 1–31. Defendants also charge check writers a convenience

fee, a missed class fee, a late payment fee, a returned item fee, and an overpayment fee. See

Ex. 40.

B. Defendants enter into form contracts with county district attorneys.

Defendants NCG and VSI have entered into form contracts with California district

attorneys. Exs. 41–43; Ex. 44 (Deposition of Megan McClung on behalf of NCG (“McClung

Dep. (NCG)”)) at 52:7-58:13; Ex. 35 (McClung Dep. (VSI)) at 56:4-21. Under the contracts,

Defendants’ responsibilities include conducting the financial education class for check writers

and providing administrative support. Ex. 41-42 at § 4.a, 4.b; Ex. 45 at Attachment A, § 2, 2.M.



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The district attorney’s offices’ responsibilities include establishing procedures for referring

cases of check writers who fail to complete the program. Exs. 41–42 at § 5; Ex. 45 at

Attachment A, § 3.B. And under each contract, the district attorney’s office receives part of the

administrative fee and Defendants keep the class fee, part of the administrative fee, and other

incidental fees. Exs. 41–42 at Schedule I, § G; Ex. 45 at Attachment B. Twenty-nine counties

all use the same contracts based on Defendants’ template, and four counties use contracts that

vary in only immaterial respects. Arons Decl. ¶¶ 52-53.

C. Defendants’ uniform collections procedures and training.

Defendants give their employees a single Manual that governs their collection efforts in

every California county. Ex. 46 (“Compliance Services Training and Policy Manual”

(“Manual”)). The Manual contains phone scripts used by Defendants’ employees in

conversations with check writers. Id. at 47–68. Until mid-2015, these scripts directed

employees to greet check writers by stating “[t]hank you for calling the Bad Check Restitution

Program” and not to give Defendants’ name or location to check writers. Id. at 47; Ex. 34 (T.

Jonsson Dep. (VSI)) at 185:25-187:15. And until 2015, when check writers in many counties

called the telephone number on the collection letter, they heard a prerecorded message from the

county’s district attorney. E.g., Ex. 54; Ex. 32 at 31.

Defendants’ collection procedures are fully automated using a computer system called

the Super System. The Manual directs Defendants’ employees on how to use the Super System

at each step of the collection process, including accepting payments from check writers,

entering disputes made by check writers, and keeping notes of conversations with check

writers. Ex. 46 at 102–27. The Super System is programmed with the various intake, dispute,

and prosecution criteria and the form collection letters for each county. Ex. 38 (Noland Dep.

(VSI)) at 39:7-40:13, 42:2-17; Exs. 37, 49. The Super System is also programmed to charge the

same categories of fees to check writers in California. Ex. 40. Dishonored checks submitted for

collection to Defendants by debt collectors and merchants are imported into the Super System.



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Ex. 50 (Deposition of Karen Boyd on behalf of VSI (“Boyd Dep. (VSI)”)) at 26:8-27:2; Ex. 51

(Deposition of Karen Boyd on behalf of NCG (“Boyd Dep. (NCG)”)) at 22:18-24:1; Ex. 38

(Noland Dep. (VSI)) at 21:3-22:12; Ex. 52 (Deposition of Mats Jonsson on behalf of NCG (“M.

Jonsson Dep. (NCG)”)) at 35:24-36:15. Then, the Super System applies the intake criteria to

identify the checks that are eligible for collection. Ex. 32 at 5–6; Ex. 38 (Noland Dep. (VSI)) at

24:16-26:10; Ex. 52 (M. Jonsson Dep. (NCG)) at 35:24-37:15. The Super System automatically

generates and sends a series of collection letters in a predetermined order on a predetermined

schedule. Ex. 32 at 16; Ex. 33 at 18; Ex. 38 (Noland Dep. (VSI)) at 27:3-21, 34:14-38:20; Ex.

52 (M. Jonsson Dep. (NCG)) at 35:24-37:15. After Defendants complete their collection

efforts, the Super System screens the account, applying the programmed prosecution criteria.

Ex. 38 (Noland Dep. (VSI)) at 42:2-17; Ex. 32 at 38–40. Defendants then determine whether to

forward an account file to the district attorney’s office for further action. Ex. 32 at 38–40.

Defendants do not track what action if any, a district attorney takes once an account is

forwarded. Ex. 34 (T. Jonsson Dep. (VSI)) at 201:23-202:7, 222:7-15. Defendants do not

provide district attorneys lists of those who either have successfully completed the bad check

program, or those who did not complete the program but are not being forwarded to the district

attorney. Ex. 38, Noland Dep. (VSI) at 54:7-16. All check writer information, payment

information, and the letters sent to each check writer are saved in the Super System. Ex. 38

(Dep. Noland (VSI)) at 89:20-91:17.

District attorneys have no meaningful involvement in Defendants’ collection process.

Defendants—not the district attorney—are responsible for screening checks according to intake

criteria approved by the district attorney’s office. See, e.g., Ex. 32 at 6–7; Ex. 38 (Noland Dep.

(VSI)) at 24:16-26:10; Ex. 52 (M. Jonsson Dep. (NCG)) at 35:24-37:15. Defendants send

district attorneys an “Eligible Check Report,” containing minimal check information about

newly-received checks, with a cover email giving the district attorney forty-eight to seventy-

two hours to pull a check writer from the list of those whom Defendants will target for



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collection. Ex. 32 at 7. But before mid-2015, in nearly every county, if the district attorney did

not approve or reject any of the checks within forty-eight hours, Defendants initiated collection

efforts. Ex. 34 (T. Jonsson Dep. (VSI)) at 96:25-99:19. Some district attorneys opted to not

receive the report of eligible checks and allowed Defendants to initiate collection with no

district attorney review. Ex. 52 (M. Jonsson Dep. (NCG)) at 46:17-47:13. There is no evidence

that any district attorney routinely reviews any other information about the check or the check

writer before Defendants initiate collection. See, e.g., Ex. 47 (Deposition of Nancy Anderson

on behalf of El Dorado District Attorney’s Office) at 34:7-38:18. Indeed, Defendants have no

knowledge of the review, if any, that district attorneys conduct before Defendants attempt to

collect a dishonored check. Ex. 34 (T. Jonsson Dep. (VSI)) at 196:21-197:3.

Defendants, not the district attorneys, receive payments made by check writers. Exs. 41-

42 at § 4(b). Likewise, when a check writer calls the telephone number for the district attorney

listed on the collection letters, an employee of Defendants answers. Ex. 35 (McClung Dep.

(VSI)) at 47:18-48:1. And before mid-2015, Defendants were not required to consult with the

district attorney’s offices when a check writer disputed that they owed the check that

Defendants were attempting to collect. Ex. 34 (T. Jonsson Dep. (VSI)) at 158:24-159:5.

D. Defendants’ collection procedures did not change when VSI took over the business.

Defendants National Corrective Group, Inc. (“NCG”) and Victim Services, Inc. (“VSI”)

operated the check collection business in the same manner and engaged in the same illegal

collection practices. NCG operated the check collection business until June 2014, when it sold

the business to VSI. See Ex. 53. VSI took over the contracts with the district attorneys and

continued to collect checks that had already been submitted to the program. Id. at § 2.2, 37–42

(Schedule 2.2(f)). VSI continued to use the Super System’s automated processes in the same

way as NCG did, and inherited the intake and prosecution criteria, the form letters, and the fee

structure from NCG. Ex. 35 (McClung Dep. (VSI)) at 44:21-25, 54:14–55:14; Ex. 38 (Noland

Dep. (VSI)) at 91:15-17. Indeed, VSI did not make any changes to the form collection letters or



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the start-up packets for district attorney’s offices that contain templates of program documents

until after it entered into a settlement with the Consumer Financial Protection Bureau in 2015.

Ex. 34 (T. Jonsson Dep. (VSI)) at 36:1-16.

E. Plaintiffs will establish each Defendant’s role in operation of the Bad Check Restitution Program using common evidence.

Each of the Defendants is liable for illegal acts related to the bad check program.

Defendant NCG operated the bad check program until June 2014 when the business assets were

sold to Defendants Birch Grove Holdings, Inc. (“BGH”), American Justice Solutions, Inc.

(“AJS”), and VSI. See Ex. 53. VSI took over NCG’s contracts with the district attorneys,

continued to collect checks that had already been submitted to the program, and continued to

use the same form collection letters and other program documents. See supra Section II.D. On

the date of the purchase, VSI entered into a contract with Defendant AJS under which AJS

operates the bad check program. Ex. 55. VSI contracts with Birch Grove to provide

management services relating to the assets and operations of VSI. Ex. 56. Defendant Mats

Jonsson owns all shares of Birch Grove and is the president of VSI and CEO of AJS. Ex. 48

(Deposition of Mats Jonsson on behalf of VSI (“M. Jonsson Dep. (VSI)”)) at 5:16–6:3; 23:14–

24:20. Thomas Jonsson was the president of VSI between June 2014 and October 2016, and is

now VSI’s vice president, chief operating officer, and general counsel. Ex. 34 (T. Jonsson

(VSI)) at 15:23–16:8. And both Mats Jonsson and Thomas Jonsson are employed by Birch

Grove. Ex. 48 (M. Jonsson Dep. (VSI)) at 20:5–20.

F. Defendants sent false and deceptive letters to the Plaintiffs.

Plaintiffs are three Californians whose checks were referred to Defendants for

collection.

1. Nancy Morin.

On September 10, 2014, Nancy Morin wrote a check for $165.87 to her local Safeway

supermarket for groceries for her family. Morin Decl. ¶ 3. The check did not initially clear,



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even though Ms. Morin has overdraft protection for her account. Id. The check was redeposited

less than two weeks later and cleared. Id. More than two months later, Ms. Morin received a

letter dated December 10, 2014 on the official letterhead of the “Placer County District

Attorney Bad Check Restitution Program” supposedly sent by “R. Scott Owens, District

Attorney.” Id. ¶ 4. The letter stated that Ms. Morin was “accused” of committing a crime

punishable by “up to one . . . year in the county jail.” Id. ¶ 5. The letter said that Ms. Morin

could avoid the possibility of further action by participating in the “Bad Check Restitution

Program, which would require that she attend a financial accountability class, pay the check

amount, and pay $245.25 in program fees. Id. Ms. Morin was terrified by this letter. Id. ¶ 6. She

felt she had been accused of a crime, essentially convicted without a trial, and told that she had

to pay $407 to avoid going to jail. Id. She mailed a letter to the address listed on the letter and

explained that her check cleared on redeposit and should have been covered by overdraft

protect when it was initially deposited. Id. ¶¶ 7–9. She enclosed a redacted copy of her bank

statement showing that the check had cleared and a copy of her account profile, showing that

she had overdraft protection. Id. ¶ 9. Despite evidence that the check had been paid, Defendants

continued to attempt to collect the check and their fees from Ms. Morin for another four

months, sending her four more collection letters. Id. ¶¶ 10–16. Ms. Morin has not made any

payments to Defendants and has not been prosecuted. Id. ¶ 17.

2. Karen Solberg.

In April 2013, Karen Solberg went to the Sacramento office of the Freeway Insurance

Company for car insurance. Declaration of Karen Solberg (“Solberg Decl.”) ¶ 3. An insurance

representative told Ms. Solberg that there would be no additional charge to add her daughter as

an additional driver. Id. But when she returned the next day, the representative insisted that she

pay an additional $75 to add her daughter. Id. ¶ 4. Ms. Solberg wanted her daughter insured so

she wrote a check for $75. Id. ¶ 5. Ms. Solberg left the Freeway Insurance office feeling

confused and upset. Id. Later, she called the local office supervisor and corporate offices and



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was told the insurance company would not refund the additional charge. Id. Ms. Solberg

stopped payment of the $75 check and cancelled the insurance policy. Id. ¶ 6. Subsequently,

Ms. Solberg received a collection letter from FedChex Recovery seeking payment of the $75

check plus a $25 service charge. Id. ¶ 7. Knowing that she owed neither the check amount nor

the additional charges because she had stopped payment as a result of a good faith dispute over

the company’s charges, Ms. Solberg sent FedChex a letter disputing that she owed anything. Id.

In October 2013, NCG sent Ms. Solberg a collection letter on the letterhead of the

Orange County District Attorney seeking payment of the $75 check she had allegedly written to

“Spot Coverage.” Id. ¶¶ 8–9. Ms. Solberg did not understand why the Orange County District

Attorney was threatening her over a check she had written to “Freeway Insurance” in

Sacramento County. Id. ¶ 10. Ms. Solberg called the telephone number listed on the letter and

explained that she had stopped payment of the $75 check due to a good faith dispute with the

insurance company. Id. ¶ 11. NCG told Ms. Solberg that she had to submit her bank records,

which she refused to do. Id. ¶ 14. Defendants sent four more collection letters to Ms. Solberg.

Id. ¶¶ 12–16. Ms. Solberg has not paid the fees that NCG demanded and has not been

prosecuted. Id. ¶¶ 17–18.

3. Narisha Bonakdar.

In March 2014, Narisha Bonakdar wrote a check for $200 to the El Dorado Transit

Authority for her monthly bus pass. Declaration of Narisha Bonakdar (“Bonakdar Decl.”) ¶ 4.

Shortly after writing the check, she received notification that the check had not cleared. Id. Ms.

Bonakdar mistakenly believed the notification was for a different check that had been paid in

full and disregarded the notice. Id. ¶¶ 3–4. In June 2014, Ms. Bonakdar received a letter on the

official letterhead of the El Dorado County District Attorney supposedly sent by “Vern Pierson,

District Attorney.” Id. ¶ 5. The letter stated that Ms. Bonakdar was accused of committing a

crime punishable by up to a year in the county jail and could avoid charges by participating in

the “Bad Check Restitution Program,” which would require that she pay restitution of the $200



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check and $248.50 in program fees, and attend a financial accountability class. Id. ¶ 6.

Confused and frightened by the letter, and believing that she had been accused of a crime, Ms.

Bonakdar made six payments of $74.75 to Defendants, totaling $448.50, and attended the

financial education class. Id. ¶¶ 7–12.

III. THE PROPOSED CLASSES Umbrella class: All persons to whom Defendants sent a collection demand in connection with a returned check, purporting to be a letter from a California county district attorney, or who made payments to Defendants in connection with a returned check, between May 11, 2012 and final resolution of this action. FDCPA Subclass: All members of the umbrella class, from whom Defendants attempted to collect, or collected money for checks written for personal, family, or household purposes, beginning one year preceding December 1, 2014, and continuing through final resolution of this action.

IV. CLASS CLAIMS

A. The Fair Debt Collection Practices Act.

“The FDCPA comprehensively regulates the conduct of debt collectors, imposing

affirmative obligations and broadly prohibiting abusive practices.” Gonzales v. Arrow Fin.

Servs., LLC, 660 F.3d 1055, 1060–61 (9th Cir. 2011). It is a strict liability statute. Cruz v. Int’l

Collection Corp., 673 F.3d 991, 997 (9th Cir. 2012).

Under the FDCPA, Plaintiffs must establish that each Defendant: (1) is a “debt

collector” under the statute; and (2) has violated the FDCPA because it, inter alia, collects or

attempts to collect debts using “false, deceptive, or misleading representations” or “unfair or

unconscionable means.” See 15 U.S.C. §§ 1692e, 1692f. The statute defines a “debt collector”

as a person who regularly uses the mails to collect debts owed or asserted to be owed to

another. 15 U.S.C. § 1692a(6). “[A] dishonored check is a ‘debt’ within the meaning of the

FDCPA.” Charles v. Lundgren & Assocs., P.C., 119 F.3d 739, 742 (9th Cir. 1997).

Defendants violate the FDCPA in at least four categorical ways:

1. Defendants misrepresent their identity by sending letters on the

letterhead of the district attorney, having their phone agents present themselves as part of a



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county district attorney’s office, and playing prerecorded messages from the county district

attorney when a check writer calls the program. See 15 U.S.C. § 1692e(3) (prohibiting the

“false representation or implication that any individual is an attorney or that any

communication is from an attorney”) (emphasis added); id. § 1692e(9) (prohibiting the “use or

distribution of any written communication which simulates or is falsely represented to be a

document authorized, issued, or approved by any court, official, or agency of . . . any State”);

id. § 1692e(14) (prohibiting the “use of any business, company, or organization name other

than the true name of the debt collector’s business, company, or organization”); id § 1692d(6)

(prohibiting the “placement of telephone calls without meaningful disclosure of the caller’s

identity”).

2. Defendants threaten prosecution without knowing whether a check writer

will ever be prosecuted. Id. § 1692e(4) (prohibiting the “representation or implication that

nonpayment of any debt will result in the arrest or imprisonment of any person . . . unless such

action is lawful and the debt collector or creditor intends to take such action”) (emphases

added); id. § 1692e(5) (prohibiting a debt collector from threatening to take action that it does

not intend to take). They demand payment for an expensive “Financial Accountability Class,”

but do not require participants to attend the class in order to complete the “diversion” program.

Defendants attempt to collect checks written by people that they know will never be

prosecuted, either because the statute of limitations has run or the check does not meet the

threshold requirements to be forwarded for prosecution review. Furthermore, Defendants have

no knowledge of any prosecutions by California district attorneys.

3. Defendants attempts to collect fees that are not permitted by law. Id. §§

1692e(2)(A), 1692f(1). Although Defendants have increased the amounts that they charge for

some fees, they have charged the same categories of fees throughout the class period. The fees

Defendants attempts to collect have not changed since resolution of the enforcement action

brought by the CFPB, which did not address fees.



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4. Defendants’ letters do not include required notices and disclosures. Id. §

1692e(11) (requiring disclosure that the communication is from a debt collector); id. § 1692g(a)

(requiring debt collector’s initial communication to notify the consumer of the right to dispute

the debt and request verification).

B. The California Unfair Competition Law.

California’s Unfair Competition Law (UCL) creates a cause of action for business

practices that are unlawful, unfair, or fraudulent. Cal. Bus. & Prof. Code §§ 1700, et seq.; In re

Tobacco II Cases, 46 Cal.4th 289, 311 (2009). Each of these three “prongs” create a distinct

theory of liability. Rubio v. Capital One Bank, 613 F.3d 1195, 1203 (9th Cir. 2010).

“The unlawful prong of the UCL borrows violations of other laws and treats them as

unlawful practices which the UCL then makes independently actionable.” Elias v. Hewlett-

Packard Co., 903 F. Supp. 2d 843, 858 (N.D. Cal. 2012) (quoting Cel-Tech Commc’ns v. L.A.

Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999)). Violations of the FDCPA also violate the UCL.

See Tourgeman v. Nelson & Kennard, 222 Cal. App. 4th 1447 (2014). Because Defendants’

collection practices violate the FDCPA, they also violate the UCL. In addition, a debt

collector’s use of a prosecutor’s name and authority is an ethical breach condemned by the

American Bar Association in a Formal Ethics Opinion. The opinion emphasizes that such

practices are “deceptive” because they “misuse the criminal justice system by deploying the

apparent authority of a prosecutor to intimidate an individual,” and are “abusive” because they

convey “the impression that the machinery of the criminal justice system has been mobilized”

against the consumer. Dkt. 216-8.

In addition, the California Bad Check Diversion Act, Cal. Penal Code §§ 1001.60–.67

(“BCDA”), sets the specific requirements for operation of a bad check diversion program, with

which Defendants’ “bad check restitution program” fails to comply. Defendants ignore the

Act’s mandatory procedures and charges fees far in excess of the two fees permitted by the Act.

Id. §§ 1001.64(b), (c); 1001.65(a), (c). In further violation of the BCDA, Defendants operate



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with only minimal district attorney oversight or supervision. Defendants attempt to collect on

checks where no district attorney has made a determination of probable cause. They attempt to

collect checks without a district attorney considering mandatory statutory referral criteria. Id. §

1001.62. And Defendants’ check collection business is not a real diversion program because all

a check writer needs to do to avoid the threatened prosecution is to pay money; participation in

a diversion class is not required. Defendants’ demands for fees not authorized by California law

and other violations of the BCDA are “unlawful” under the UCL.

Further, Defendants’ actions are “unfair” and “fraudulent” because Defendants falsely

threaten to prosecute consumers unless they pay the unlawful fees. Defendants have no power

to prosecute anyone and, in fact, actual prosecutions are rare. Indeed, Defendants have no

information regarding the number of prosecutions brought by the district attorneys’ offices.

Contrary to Defendants’ representations to consumers in both collection letters and telephone

calls, Defendants are not the office of any district attorney.

C. Fraudulent Misrepresentation.

To establish a claim for fraudulent misrepresentation, Plaintiffs must prove: (1)

Defendants represented to Plaintiffs and class members that an important fact was true; (2) that

representation was false; (3) Defendants knew the representation was false when Defendants

made it or Defendants made the representation recklessly and without regard for its truth; (4)

Defendants intended that Plaintiffs and class members rely on the representation; (5) Plaintiffs

and class members reasonably relied on the representation; (6) Plaintiffs and class members

were harmed; and (7) Plaintiffs and class members’ reliance on Defendants’ representation was

a substantial factor in causing that harm. Graham v. Bank of Am., N.A., 226 Cal. App. 4th 594,

605–06 (2014). An inference of reliance arises where there is a showing that the

misrepresentation was material. Danzig v. Jack Grynberg & Associates, 161 Cal. App. 3d 1128,

1138 (Cal. Ct. App. 1984) (“[O]ur highest court has consistently held if the trial court finds



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material misrepresentations were made to class members, at least an inference of reliance

would arise as to the entire class.”) (internal quotation and citation omitted).

Defendants’ collection letters contain multiple false representations, including that their

collection letters are communications from the local district attorney, the district attorney has

made a determination of probable cause prior to the sending of the letter, that the check writer

has been properly referred to the bad check restitution program, the fees Defendants demand

are authorized by law, and failure to pay all the fees Defendants demand will likely result in

criminal prosecution. Knowing that these representations were false, Defendants sent collection

letters to Plaintiffs and class members intending that they rely on the representations and pay

the demanded fees. As a result, Plaintiffs and class members have paid millions of dollars in

unlawful fees to Defendants.

D. Negligent Misrepresentation.

To prove their claim for negligent misrepresentation, Plaintiffs must show: (1)

misrepresentation of a past or existing material fact, without reasonable ground for believing it

to be true, and with intent to induce another's reliance on the fact misrepresented; (2) ignorance

of the truth and justifiable reliance on the misrepresentation by the party to whom it was

directed; and (3) resulting damage. Goonewardene v. ADP, LLC, 5 Cal. App. 5th 154, 175 (Cal.

Ct. App. 2016), as modified on denial of reh’g (Nov. 29, 2016). As discussed, Defendants’

form collection letters are replete with express and implied misrepresentations. Believing that

the representations in the letter were true, class members paid unlawful fees to Defendants.

Whether Defendants’ collection practices are unlawful, unfair, or fraudulent will be

resolved using common evidence. See del Campo v. Am. Corrective Counseling Servs., Inc.,

254 F.R.D. 585, 592 (N.D. Cal. 2008) (finding common legal and factual questions relating to

FDCPA and UCL claims where the plaintiffs alleged that debt collector sent standardized

letters on district attorney letterhead containing false threats of prosecution, unlawful collection

demands, and misrepresentations); Schwarm v. Craighead, 233 F.R.D. 655, 661 (E.D. Cal.



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2006) (finding common legal and factual questions where the defendants “engaged in

standardized practices of sending form letters to putative class members regarding dishonored

checks”). Plaintiffs will use the common evidence summarized above, which includes the

letters themselves, Defendants’ records and documents, and the testimony of Defendants’

employees and agents to prove each element of their FDCPA and UCL claims.

V. ARGUMENT AND AUTHORITY

A. The requirements of Rule 23 are satisfied.

To be certified, a class must meet the four threshold requirements of Rule 23(a):

numerosity, commonality, typicality, and adequacy of representation. Fed. R. Civ. P. 23(a);

Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 2013). A district court must conduct a

“rigorous” analysis of the Rule 23 requirements, but the rule “grants courts no license to engage

in free-ranging merits inquiries at the certification stage. Amgen, Inc. v. Conn. Ret. Plans &

Trust Funds, 568 U.S. 455, 466 (2013).

Courts that have considered the question of class certification in cases against

Defendants’ predecessors and similar “check diversion” companies—cases that are materially

indistinguishable from this one—have held that class certification is appropriate. See del

Campo, 254 F.R.D. at 597; Hamilton v. Am. Corrective Counseling Servs., Inc., 2007 WL

541817 (N.D. Ind. 2007); Schwarm v. Craighead, 233 F.R.D. 655 (E.D. Cal. 2006); Liles v.

Am. Corrective Counseling Servs., Inc., 231 F.R.D. 565 (S.D. Iowa 2005); Gradisher v. Check

Enforcement Unit, Inc., 203 F.R.D. 271 (W.D. Mich. 2000). Whether Defendants’ collection

business violates state and federal law are questions ideally suited for resolution on a class-

wide basis.

1. The numerosity standard is met.

The numerosity requirement is satisfied where the class is so large that “joinder of all

members is impracticable.” Fed. R. Civ. P. 23(a)(1). Although there is no bright-line rule

setting a minimum number of class members, many courts find that numerosity standard is



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“usually satisfied” by a class with at least forty members. See, e.g., Datta v. Asset Recovery

Solutions., LLC, 15-CV-00188-LHK, 2016 WL 1070666, at *2 (N.D. Cal. Mar. 18, 2016).

Here, numerosity is easily satisfied. Defendants have produced data showing that Defendants

sent at least one collection letter to 115,155 Californians during the class period. Declaration of

Jeffrey Munson (“Munson Decl.”) ¶ 21. Each of these individuals is a member of the Umbrella

Class, and 57,076 of these individuals are also members of the FDCPA sub-class. Id. ¶ 22.

Joinder of 115,155 class members is impracticable.

2. The commonality standard is met.

Commonality is satisfied when “there are questions of law or fact common to the class.”

Fed. R. Civ. P. 23(a)(2). The plaintiff must make a “common contention . . . of such a nature

that it is capable of class-wide resolution—which means that determination of its truth or falsity

will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-

Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). In other words, “[w]hat matters to class

certification is not the raising of common ‘questions’—even in droves—but rather, the capacity

of a classwide proceeding to generate common answers apt to drive the resolution of the

litigation. Id. (internal marks and citation omitted; emphasis in original). A “single significant

question of law or fact” can satisfy the commonality requirement. Abdullah v. U.S. Sec. Assoc.,

Inc., 731 F.3d 952, 957 (9th Cir. 2013) (quotation omitted and emphasis in original).

Whether Defendants’ collection letters violate the FDCPA is a question of law.

Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1118 (9th Cir. 2014); Terran v. Kaplan,

109 F.3d 1428, 1432 (9th Cir. 1997). Determining whether a letter violates section 1692e

“requires an objective analysis that takes into account whether the least sophisticated debtor

would likely be deceived by the communication.” Gonzales, 660 F.3d at 1061 (holding that

conditional language in a debt collection letter implying that the collections agency would

report obsolete debt to credit agencies is false and misleading under section 1692e).



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Similarly, whether Defendants’ collection practices are unfair or deceptive under the

UCL is a question of law. Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 503 (2003).

Courts evaluate UCL claims using the “reasonable consumer” standard. Id. at 504–513;

Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008) (reversing dismissal of UCL

claim and finding that misrepresentations on product packaging could likely deceive a

reasonable consumer). Under this objective standard, a party “must show that members of the

public are likely to be deceived.” Id. (internal quotation marks and citation omitted).

The form letters that Defendants send in thirty-three California Counties are virtually

identical. As the Court has recognized, it can read the form letters and determine as a matter of

law that the letters violate the FDCPA and the UCL. Dkt. 62 at 7, 14–15 (transcript of oral

argument on Defendants’ Motion to Dismiss).

Defendants’ form contracts with county district attorney’s offices are also key common

evidence here. Under the contracts, Defendants send collection letters that contain the same

misrepresentations and charge the same categories of illegal fees to check writers throughout

California. Each step of Defendants’ collections process is automated through the Super

System, from screening new checks for collection eligibility, to sending collection letters, and

determining whether the check can be sent to the district attorney if collection efforts fail.

Defendants provide their employees with uniform training on Defendants’ collection

procedures and use of the Super System, and directs employees to use the same Manual to

guide their interactions with check writers.

The common answer to the questions of whether Defendants’ letters violate the FDCPA

and California UCL are central to this case and are “apt to drive resolution of the litigation.”

Dukes, 564 U.S. at 350; see also Gold v. Midland Credit Mgmt., Inc., 306 F.R.D. 623, 631

(N.D. Cal. 2014) (“[B]ecause a debt collector’s liability under § 1692e of the FDCPA is a

question of law, the Court’s resolution of the issue of liability will generate a dispositive

common answer in this action.”).



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Each Defendant’s liability for operation of the Bad Check Restitution Program is a

common question. Defendants NCG, VSI, and AJS are debt collectors under the FDCPA. See

15 U.S.C. § 1692a(6) (defining “debt collector” as “any person who uses any instrumentality of

interstate commerce or the mails in any business the principal purpose of which is the

collection of any debts, or who regularly collects or attempts to collect, directly or indirectly,

debts owed or due or asserted to be owed or due another.”). Plaintiffs will establish their

liability using common evidence, including their deposition testimony, form collection letters,

and other documents produced by Defendants in discovery.

Whether Defendant Birch Grove may be held vicariously liable for the illegal acts of its

fully-owned subsidiaries, VSI and AJS, is a common question. See Breidenbach v. Experian,

3:12-CV-1548-GPC-BLM, 2013 WL 1010565, at *3 (S.D. Cal. Mar. 13, 2013) (“General

principles of agency form the basis of vicarious liability under the FDCPA.”). Plaintiffs will

establish Birch Grove’s liability using its deposition testimony, its Management Agreement

with VSI, and other records relating to the management of the bad check program.

Whether Defendants Mats Jonsson and Karl Thomas Jonsson have actively exercised

control over the bad check program and can be held personally liable as debt collectors under

the FDCPA is a common question. See Alonso v. Blackstone Fin. Grp., LLC, 962 F. Supp. 2d

1188, 1205 (E.D. Cal. 2013) (“[A]n individual can be personally liable as a debt collector under

the FDCPA when he exercises control over the affairs of the debt collection business or was

regularly engaged, directly and indirectly, in the collections of debts.”). Plaintiffs will establish

that Mats Jonsson and Thomas Jonsson are personally liable for the corporate Defendants

conduct using their own testimony and documents produced by Defendants in discovery.

Additional common questions of law and fact include:

• Do Defendants collect or attempt to collect fees that are not permitted by law?

• Do Defendants violate 15 U.S.C. 1692e(3), (9) and (14) and 15 U.S.C. 1692d(6)

by falsely representing or implying that they is the county district attorney’s office?



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• Do Defendants violate 15 U.S.C. 1692e(11) and g(a) by failed to disclose that

Defendants are debt collectors and that consumers have the right to dispute the debt?

• Do district attorneys have any meaningful involvement in Defendants’ standard

collection process?

• What injunctive relief, actual damages, and statutory damages are necessary to

remedy the injuries of Plaintiffs and Class members?

The requirements of Rule 23(a)(2) are easily satisfied.

3. Plaintiffs’ claims are the same as the class members’ claims.

Typicality is satisfied if “the claims or defenses of the representative parties are typical

of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). “The test of typicality is

whether the other members have the same or similar injury, whether the action is based on

conduct which is not unique to the named plaintiffs, and whether other class members have

been injured in the same course of conduct.” Evon v. Law Offices of Sidney Mickell, 688 F.3d

1015, 1030 (9th Cir. 2012) (reversing denial of class certification in FDCPA case). “The

requirement is permissive, such that representative claims are typical if they are reasonably

coextensive with those of absent class members; they need not be substantially identical.” Just

Film, Inc. v. Buono, 847 F.3d 1108, 1116 (9th Cir. 2017) (internal marks and quotation

omitted) (affirming grant of class certification in fraudulent marketing case).

Like the members of the proposed classes, Plaintiffs received from Defendants

collection letters printed on the letterhead of a county district attorney that demanded payment

of unauthorized fees and threatened Plaintiffs with criminal prosecution if they did not pay.

These form letters were substantively the same as the ones sent to class members. Schwarm,

233 F.R.D. at 661–62 (finding the typicality requirement satisfied where defendants sent

slightly different collection letters to class members in different counties); del Campo, 254

F.R.D. at 593 (same). Plaintiffs acted in response to Defendants’ false and misleading

communications and suffered injuries as a result. Ms. Bonakdar paid the illegal fees Defendants



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demanded, as did many Class members. Although Defendants modified some of the content of

their collection letters as a result of the CFPB’s enforcement action, they continued to charge

the same categories of fees throughout the class period.

4. The classes are adequately represented.

The final Rule 23(a) prerequisite requires that the representative parties have and will

continue to “fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).

This inquiry requires the Court to determine (1) that there are no conflicting interests between

Plaintiffs or their counsel and absent class members and (2) that Plaintiffs and their counsel

will vigorously prosecute the action on behalf of the Class. Evon, 688 F.3d at 1031. With

respect to the adequacy of counsel, a district court considers the work counsel has done to

investigate the claims of the proposed Class, counsel’s experience in handling similar cases and

litigating class actions, counsel’s knowledge of applicable law, and the resources counsel will

commit to representing the Class. Fed. R. Civ. P. 23(g)(1)(C).

Neither the Plaintiffs nor their counsel have any conflicts of interest with the members

of the proposed Classes. Plaintiffs interests are the same as those of the class members: first,

recovering actual and statutory damages for Defendants’ unlawful conduct and second,

obtaining equitable relief precluding Defendants from engaging in unlawful conduct in the

future. Plaintiffs understand their responsibilities as class representatives and are willing to

fulfill them. Bonakdar Decl. ¶¶ 13–18; Morin Decl. ¶¶ 18–23; Solberg Decl. ¶¶ 19–24.

Plaintiffs have already responded to written discovery, produced documents, and been deposed.

Id.

Plaintiffs have retained competent and capable trial lawyers with significant experience

in complex litigation, including consumer class actions. Arons Decl. ¶¶ 2–5; Declaration of

Beth Terrell in Support of Plaintiffs’ Motion for Class Certification ¶¶ 1–13; Declaration of

Deepak Gupta in Support of Plaintiffs’ Motion for Class Certification ¶¶ 2–8; Declaration of

Michael Ram in Support of Plaintiffs’ Motion for Class Certification ¶¶ 3–8. Plaintiffs’ counsel



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have been appointed class counsel in several class actions against debt collectors under the

FDCPA and in consumer cases under the UCL. Id. They have already put significant time and

resources into the case and have the resources to continue to do so. Terrell Decl. ¶ 8.

B. The requirements of Rule 23(b) are satisfied.

In addition to satisfying the requirements of Rule 23(a), a proposed class must satisfy

one of the requirements of Rule 23(b). Fed. R. Civ. P. 23; Leyva, 716 F.3d at 512. Plaintiffs

seek certification under Rule 23(b)(3), which requires that “questions of law or fact common to

class members predominate over any questions affecting only individual members, and that a

class action is superior to other available methods for fairly and efficiently adjudicating the

controversy.” “[T]he focus of Rule 23(b)(3) is on the predominance of common questions.”

Amgen, 568 U.S. at 466. The Supreme Court clarified in Amgen that predominance requires

that liability may be “proved through evidence common to the class.” Id.

1. Common factual and legal questions predominate.

Predominance is satisfied because Plaintiffs’ claims hinge on the legality of

Defendants’ uniform collection practices. There are no individualized issues in this case.

In FDCPA actions there is a common nucleus of operative facts where “defendants have

engaged in standardized conduct toward members of the proposed class by mailing to them

allegedly illegal form letters or documents.” Keele v. Wexler, 149 F.3d 589, 594 (7th Cir.

1998). The answer to each question about the legality of Defendants’ form letters will be the

same for all class members. See Ballard v. Equifax Check Servs., Inc., 186 F.R.D. 589, 595

(E.D. Cal. 1999); Hunt v. Check Recovery Sys., Inc., 241 F.R.D. 505, 514 (N.D. Cal. 2007);

Quiroz v. Revenue Prod. Mgmt., Inc., 252 F.R.D. 438, 443-444 (N.D. Ill. 2008) (finding

predominance satisfied in case challenging debt collector’s letters). Defendants’ collection

letters either demand payment of unlawful fees, in violation of 15 U.S.C. §§ 1692e(3) and

1692f(1), or they do not. Defendants’ collection letters either falsely represent that Defendants

or their agents are attorneys or agents of the state, in violation of 15 U.S.C. § 1692e(3), (9), and



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(14), or they do not. And the letters either threaten criminal prosecution in violation of 15

U.S.C. §§ 1692e(4) and (5), or they do not.

Defendants’ collection practices are unlawful under the UCL because they violate the

FDCPA and Defendants attempt to collect fees not authorized by California’s Bad Check

Diversion Act. In addition, Defendants’ actions are unfair and fraudulent because Defendants

falsely threaten to prosecute consumers unless they pay unlawful fees. Finally, Defendants’ use

of the district attorneys’ names and authority is deceptive and abusive under the American Bar

Association’s Formal Ethics Opinion. Whether Defendants’ common practices are unethical,

unlawful, deceptive, or unfair will be answered once for the entire class.

The central focus of this litigation will be the legality of Defendants’ collection

practices, purportedly in the name of local district attorneys, and their letters which they have

sent to thousands of California debtors. Moreover, the amount of each class member’s damages

can be calculated from Defendants’ computerized records, which Defendants have produced in

this litigation. Arons Decl. ¶ 62. Differences in the amount of damages to each class member

do not preclude certification. Leyva, 716 F.3d at 514. Because common issues predominate

over any individualized issues, the predominance requirement is satisfied.

2. The superiority requirement is met.

The Court should certify the Class if it finds that a “class action is superior to other

available methods for fair and efficient adjudication of the controversy.” Fed. R. Civ. P.

23(b)(3). A class action is superior “[w]here class wide litigation of common issues will reduce

litigation costs and promote greater efficiency,” and “if no realistic alternative exits.” Abels v.

JBC Legal Grp., P.C., 227 F.R.D. 541, 547 (N.D. Cal. 2005).

Given the multitude of common issues present, the large number of Class members, and

the small dollar value of their individual claims, use of the class action device is the most

efficient and fair means of adjudicating the claims that arise out of Defendants’ common

courses of unfair and deceptive conduct. Most class members lack the resources necessary to



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seek individual legal redress for Defendants’ misconduct and, without class treatment, would

have no effective remedy for their injuries. See Local Joint Exec. Bd. of Culinary/Bartender

Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1163 (9th Cir. 2001) (cases involving

“multiple claims for relatively small individual sums” are particularly well suited to class

treatment). Plaintiffs and class members are people whose checks, often for small dollar

amounts, have been dishonored on presentment. Most of these individuals do not have the

resources to hire an attorney to pursue claims against Defendants and are likely unaware of

their rights under the FDCPA. See Schwarm, 233 F.R.D. at 664 (noting that “most individual

consumers [are] unaware of their rights under the FDCPA”); Hamilton, 2007 WL 541817, at *5

(“Class actions have been found superior . . . where potential plaintiffs might not be aware of

their rights or be able to hire competent counsel to protect these rights.”).

3. Constitutionally sound notice can be provided to Class members.

To protect the rights of absent Class members, the Court must provide them with the

best notice practicable when it certifies a class under Rule 23(b)(3). Fed. R. Civ. P. 23(c)(2).

The best practicable notice is “reasonably calculated, under all the circumstances, to apprise

interested parties of the pendency of the action and afford them an opportunity to present their

objections.” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).

Defendants have already provided Plaintiffs with electronic records of the consumers to

whom they sent their form collection letters in California during the class period, including the

names, addresses, phone numbers and email addresses for the majority of class members.

Arons Decl. ¶ 63. Notice can be sent directly via mail or email to all Class members. If

certification is granted, Plaintiffs will submit a detailed notice plan to the Court.

VI. CONCLUSION

For all the foregoing reasons, Plaintiffs respectfully request that the Court certify the

proposed classes, and appoint Plaintiffs and their counsel of record to represent the certified

classes.



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RESPECTFULLY SUBMITTED AND DATED this 4th day of June, 2018.

TERRELL MARSHALL LAW GROUP PLLC By: /s/ Beth E. Terrell, CSB #178181

Beth E. Terrell, CSB #178181 Email: [email protected] Blythe H. Chandler, Admitted Pro Hac Vice Email: [email protected] 936 North 34th Street, Suite 300 Seattle, Washington 98103-8869 Telephone: (206) 816-6603 Facsimile: (206) 319-5450 Paul Arons, CSB #84970 Email: [email protected] LAW OFFICE OF PAUL ARONS 685 Spring Street, Suite 104 Friday Harbor, Washington 98250 Telephone: (360) 378-6496 Facsimile: (360) 378-6498 Deepak Gupta, Admitted Pro Hac Vice Email: [email protected] GUPTA WESSLER PLLC 1735 20th Street, NW Washington, DC 20009 Telephone: (202) 888-1741 Facsimile: (202) 888-7792

Michael F. Ram, CSB #104805 Email: [email protected] Susan S. Brown, CSB #287986 Email: [email protected] ROBINS KAPLAN LLP 2440 West El Camino Real, Suite 100 Mountain View, California 94040 Telephone: (650) 784-4040 Facsimile: (650) 784-4041

Attorneys for Plaintiffs



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CERTIFICATE OF SERVICE

I, Beth E. Terrell, hereby certify that on June 4, 2018, I electronically filed the

foregoing with the Clerk of the Court using the CM/ECF system which will send notification to

all registered CM/ECF users:

Michael A. Taitelman, CSB #156254 Email: [email protected] Sean M. Hardy, CSB #266446 Email: [email protected] FREEDMAN & TAITELMAN, LLP 1901 Avenue of the Stars, Suite 500 Los Angeles, California 90067 Telephone: (310) 201-0005 Facsimile: (310) 201-0045 Attorneys for Defendants Victim Services, Inc., National Corrective Group, Inc., and Mats Jonsson

DATED this 4th day of June, 2018. TERRELL MARSHALL LAW GROUP PLLC By: /s/ Beth E. Terrell, CSB #178181

Beth E. Terrell, CSB #178181 Email: [email protected] 936 North 34th Street, Suite 300 Seattle, Washington 98103-8869 Telephone: (206) 816-6603 Facsimile: (206) 319-5450

Attorneys for Plaintiffs


Documents

Case 3:14-cv-05266-VC Document 225 Filed 06/04/18 Page 1 of 34 · NO. 3:14-cv-05266-VC PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Honorable Vince Chhabria CLASS