Aguilar v. Mandarich Law Grp. ( 2023 )

Filed 1/17/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
ALEXANDER ZAVAL AGUILAR, H049860
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 21CV378926)
v.
MANDARICH LAW GROUP, LLP, et
al.,
Defendants and Respondents.
In this case we consider whether a party seeking to establish a prima facie
violation of Civil Code section 1788.17 of the Rosenthal Fair Debt Collection Practices
Act (Rosenthal Act), premised on a misrepresentation in connection with the collection of
a debt as specified by those incorporated provisions of the federal Fair Debt Collection
Practices Act (FDCPA), must show the alleged violation is material. We decide
materiality is a proper consideration under the Rosenthal Act where the alleged state law
violation is premised on enumerated provisions of the federal statute, which federal
courts uniformly interpret as incorporating a materiality requirement.
Plaintiff and appellant Alexander Zaval Aguilar (Aguilar) incurred a debt on a
loan issued by consumer lender OneMain Financial, Inc. (OneMain Financial). OneMain
Financial later sold or assigned the debt to OneMain Financial Issuance Trust 2015–1
(OneMain Financial Issuance Trust), and that entity charged off the debt and sold it to a
debt buyer, CACH, LLC (CACH). CACH filed a debt collection action against Aguilar
to collect the charged-off debt (collection action). CACH later dismissed the collection
action without prejudice. CACH’s dismissal followed Aguilar’s attempt to file a cross-
complaint alleging statutory violations of the Rosenthal Act (Civ. Code, § 1788 et seq.),1
premised on incorporated provisions of the federal FDCPA and on an alleged violation of
the California Fair Debt Buying Practices Act (CFDBPA), based on CACH’s apparent
misidentification of the charge-off creditor as OneMain Financial rather than OneMain
Financial Issuance Trust.
After CACH dismissed its action, Aguilar brought suit against CACH and its
counsel in the collection action, Mandarich Law Group LLP (MLG) and Christopher
Mandarich (Mandarich), alleging that CACH, MLG, and Mandarich made false or
misleading representations in the collection action, in violation of the Rosenthal Act. In
response to Aguilar’s lawsuit, defendants and respondents MLG and Mandarich filed an
anti-SLAPP motion2 under Code of Civil Procedure section 425.16 to strike the
Rosenthal Act claim against them from Aguilar’s complaint.3 The trial court granted the
anti-SLAPP motion after deciding, under the second prong of the statutory analysis, that
Aguilar had not demonstrated a likelihood of prevailing on the merits of his claim against
MLG and Mandarich.
On appeal from the granting of the anti-SLAPP motion, Aguilar challenges the
trial court’s ruling on the grounds that the court (1) improperly weighed the evidence
concerning the identity of the charge-off creditor, (2) improperly admitted and considered
hearsay evidence submitted in support of the anti-SLAPP motion, and (3) erred in finding
that MLG and Mandarich did not make a false or misleading statement in the collection
action against Aguilar. Because we decide the trial court correctly considered whether
1
Unspecified statutory references are to the Civil Code.
2
An anti-SLAPP motion is “a special motion to strike a ‘strategic lawsuit against
public participation (SLAPP).’ ” (Parrish v. Latham & Watkins (2017) 3 Cal.5th 767,
773–774.)
3
CACH did not join the anti-SLAPP motion and is not a party to this appeal.
2
Aguilar had made a prima facie showing of a material misrepresentation under the
Rosenthal Act, insofar as the alleged violation is premised on a purported failure to
comply with the requirements of the federal FDCPA, we conclude the trial court did not
err in finding the complaint lacked minimal merit. We therefore affirm the order granting
MLG’s and Mandarich’s anti-SLAPP motion.
I. FACTS AND PROCEDURAL BACKGROUND4
A. The Alleged Debt
In October 2015, Aguilar incurred a debt in the form of a consumer credit account
with OneMain Financial. The credit account was for the purpose of purchasing food,
groceries, and other household items. When Aguilar could no longer afford to make
payments on the credit account, he stopped paying. Aguilar denies that he owes any
money on the debt, which he refers to as the “alleged debt.”
At some point thereafter, OneMain Financial sold, assigned, or transferred the debt
to OneMain Financial Issuance Trust. In June 2016, Aguilar made his last payment on
the debt. In January 2017, OneMain Financial Issuance Trust “ ‘charged off’ ” the debt
by removing it from its books as an asset and treating it as a loss or expense. According
to Aguilar, OneMain Financial Issuance Trust therefore became “ ‘the charge-off creditor
at the time of charge off’ ” within the meaning of section 1788.58 of the CFDBPA. The
account was subsequently sold and assigned to CACH.
4
We draw the following facts from the pleadings and supporting declarations
submitted in the trial court. We accept Aguilar’s factual assertions as true for the purpose
of resolving whether the trial court erred in granting the anti-SLAPP motion and consider
only whether any contrary evidence from MLG and Mandarich establishes their
entitlement to prevail as a matter of law. (Park v. Board of Trustees of California State
University (2017) 2 Cal.5th 1057, 1067 (Park); Laker v. Board of Trustees of California
State University (2019) 32 Cal.App.5th 745, 754 (Laker).)
3
B. Collection Action
In September 2020, MLG filed a complaint in the collection action on behalf of
CACH. Mandarich, who is a partner of MLG, was counsel of record in the collection
action and signed the complaint.
The collection action identified “[t]he charge-off creditor at the time of charge off”
as OneMain Financial, located at 300 St. Paul Street, Baltimore, MD 21202, and the
account No. associated with the debt as XXXX7855. The collection action complaint
alleged that Aguilar failed to make payments due on the account, resulting in a debt
balance at charge-off of $5,214.02, and that CACH, as the debt buyer, was the sole owner
of the debt. The collection action asserted that as a result of nonpayment on the account,
Aguilar was liable under theories of breach of contract and open book account for
damages of $5,214.02.
In the course of discovery in the collection action, Aguilar’s counsel, Fred
Schwinn (Schwinn), came to believe that the complaint in the collection action had not
correctly identified the charge-off creditor. According to Schwinn, “the true name of the
creditor at charge-off was OneMain Financial Issuance Trust 2015-1, and not OneMain
Financial Inc., as stated in paragraph 4 of [the collection action] Complaint.” In February
2021, Schwinn contacted Mandarich to request a stipulation for leave to file a cross-
complaint in the collection action, based on violations of the Rosenthal Act and the
CFDBPA (§§ 1788.50–1788.64) arising from the purported misrepresentation of the
charge-off creditor in the collection action complaint. Shortly after, on February 18,
2021, CACH filed a unilateral request for dismissal, without prejudice, of the collection
action complaint.
C. Aguilar’s Complaint
On March 2, 2021, Aguilar filed the lawsuit from which this appeal arises. The
complaint seeks declaratory relief and damages, claiming defendants are engaged in
unfair and deceptive collection practices in violation of the Rosenthal Act and maintain a
4
“routine practice of filing and serving” noncompliant collection complaints in violation
of the CFDBPA. Aguilar’s complaint asserts that defendant CACH “fail[ed] to truthfully
state ‘the name and an address of the charge-off creditor at the time of charge-off’ ” in
violation of section 1788.58, subdivision (a)(6), of the CFDBPA (§ 1788.50 et seq.). As
to defendants MLG, Mandarich, and CACH, the complaint asserts a single claim that
respondents’ misrepresentation of the name of the charge-off creditor violated section
1788.17 of the Rosenthal Act, as premised on violations of the federal FDCPA (15
U.S.C. § 1692 et seq.) for “false, deceptive, and misleading representations in an attempt
to collect the debt” (15 U.S.C. §§ 1692e & 1692e(10)) and “misrepresent[ing] the
character or legal status of the debt.” (Id., § 1692e(2)(A).)5
D. Anti-SLAPP Motion
MLG and Mandarich (together, MLG) filed an anti-SLAPP motion to strike the
Rosenthal Act claim from Aguilar’s complaint. MLG argued the trial court should strike
the claim because it arose from protected litigation activity (namely, the filing of the
collection action complaint on behalf of its client, CACH) and Aguilar had no probability
of prevailing on the merits.
On this second prong, MLG asserted that the collection action complaint made no
misrepresentation regarding the charge-off creditor, and even if it was inaccurate to
identify OneMain Financial as the charge-off creditor, it was not a material
misrepresentation and therefore does not support an actionable violation of the relevant
statutes. According to MLG, OneMain Financial is the entity that charged off the debt,
while OneMain Financial Issuance Trust is a special purpose vehicle trust wholly owned
and administered by OneMain Financial and used to back its consumer loans. MLG
5
We examine in more detail (part II.C.1, post), and as relevant to the claim at
issue here, the relationship between the Rosenthal Act, the federal FDCPA, and the
CFDBPA. In his complaint, Aguilar identifies title 15 United States Code section 1692e,
1692e(2)(A), and 1692e(10) as the relevant federal provisions underlying MLG’s alleged
Rosenthal Act violation.
5
maintained that because Aguilar’s “only contact” about his loan was through OneMain
Financial, which “serviced the account and administered the special purpose vehicle
trust” until OneMain Financial charged off the loan and sold it to CACH, naming
OneMain Financial as the charge-off creditor was accurate, or, if inaccurate, was not a
material misrepresentation.
MLG also asserted that Aguilar could not prevail on his claim regarding the
identity of the charge-off creditor, because Aguilar should have raised the claim through
a compulsory cross-complaint and his claim was therefore procedurally barred. Further,
MLG argued that the trial court should strike Aguilar’s request for declaratory relief as
coextensive with the Rosenthal Act claim.
MLG submitted declarations and exhibits in support of the anti-SLAPP motion.
Mandarich submitted a declaration in which he asserted his familiarity with the issues
before the court and attached documents, including copies of the 2015 promissory note
for OneMain Financial’s loan to Aguilar and the 2017 bill of sale and assignment
between OneMain Financial and CACH. June D. Coleman, attorney of record for
Mandarich and MLG, also submitted a declaration in which she attached a copy of an
excerpt of a memorandum titled “September 24, 2015 Private Placement Memorandum
Re: Financial Issuance Trust 2015-3.”
Aguilar filed a written opposition to the anti-SLAPP motion and submitted a
declaration attesting to the nature of the consumer credit account issued to him by
OneMain Financial and the collection action filed against him. In addition, Aguilar
attached the declaration of his counsel, Schwinn, who described the litigation history of
the collection action and discovery regarding “the true name of the creditor at charge-off”
in the collection action. Aguilar also filed a request for judicial notice of over 100 court
pleadings in what appeared to be other, similar collection cases filed by MLG in 2021.
Aguilar conceded under the first prong of the anti-SLAPP statute that his claims
arose from conduct protected by Code of Civil Procedure section 425.16. Nevertheless,
6
Aguilar claimed that he met his prima facie burden on the second prong of showing a
substantial likelihood of success on the merits. Aguilar argued that because the FDCPA
and Rosenthal Act are strict liability statutes, the incorrect identification of the charge-off
creditor in the collection action complaint established a prima facie violation of these
provisions, entitling him to damages under the Rosenthal Act. Aguilar disputed MLG’s
reliance on materiality at this stage of the litigation. Aguilar argued that materiality is a
factual question not appropriate for resolution in an anti-SLAPP proceeding and, in any
event, that misrepresenting the creditor’s identity is material under the applicable, least
sophisticated consumer standard.
Aguilar challenged MLG’s assertion that the Rosenthal Act claim was compulsory
and should have been asserted as a cross-complaint in the underlying collection action.
Aguilar also maintained there was no “claim” for declaratory relief for the court to strike,
and to the extent MLG relied on the fact that it had dismissed the collection action
complaint (thus removing any active controversy for purposes of declaratory relief), the
dismissal was without prejudice and would not preclude defendants from refiling the
collection case.
MLG filed a reply brief reiterating its prior arguments that Aguilar had failed to
submit evidence that established a violation of the FDCPA provisions upon which
Aguilar based his Rosenthal Act claim and that any alleged misrepresentation was not
material.
E. Order Granting the Anti-SLAPP Motion
The trial court issued a written order granting MLG’s anti-SLAPP motion. It
denied Aguilar’s request for judicial notice, finding the requested materials were not
relevant to the disposition of the anti-SLAPP motion. On the first prong of the anti-
SLAPP motion, the court noted there was no dispute that Aguilar’s complaint against
MLG was based on the contents of the pleading filed in the collection action and
7
therefore arose from protected conduct in the form of statements made in connection with
civil litigation. (Code Civ. Proc., § 425.16, subd. (e)(1).)
Regarding the likelihood of success on the merits of Aguilar’s Rosenthal Act
claim, the trial court questioned whether the FDCPA and Rosenthal Act are indeed strict
liability statutes and cited case authority applying an objective standard to decide whether
the conduct at issue would be misleading to the least sophisticated debtor. The court
noted that Aguilar’s Rosenthal Act claim relies on an alleged violation of title 15 United
States Code section 1692e, concerning false representations of the “ ‘character, amount,
or legal status’ ” of the debt and reasoned that the identity of the “ ‘charge-off creditor’ ”
does not come under any of those categories. The court observed that the federal statute
does not define “ ‘charge-off creditor’ ” and therefore did not support Aguilar’s
contention that MLG’s identification of OneMain Financial as the charge-off creditor was
false.
The court rejected Aguilar’s arguments regarding both the inaccuracy of the
description of the charge-off creditor in the collection action complaint and that
materiality could not be determined as a matter of law. It noted that the CFDBPA
requires only that a complaint by a debt buyer on a consumer debt allege the name and an
address of the charge-off creditor “in sufficient form so as to reasonably identify the
charge-off creditor.” (§ 1788.58, subd. (a)(6), hereafter § 1788.58(a)(6).) In the absence
of additional statutory language concerning charge-off creditor in the FDCPA, and in
light of the evidence submitted by MLG that showed that OneMain Financial had
administered Aguilar’s account until the debt was sold, the court agreed with MLG that
the pleading in the collection action was not inaccurate. It further agreed with MLG that
even if the collection action complaint was inaccurate, identifying OneMain Financial as
the charge-off creditor rather than OneMain Financial Issuance Trust was not a material
misrepresentation. The court decided that, viewed objectively, the alleged
misidentification of the charge-off creditor would not mislead the least sophisticated
8
debtor and therefore does not qualify as an actionable violation of the FDCPA and, by
extension, the Rosenthal Act. The court concluded that Aguilar had not shown a
probability of prevailing on the merits of his claim against MLG.
Aguilar filed a timely notice of appeal of the trial court’s order granting MLG’s
anti-SLAPP motion.
II. DISCUSSION
A. The Anti-SLAPP Statute
Code of Civil Procedure section 425.16, commonly known as the anti-SLAPP
statute, provides that a cause of action arising from an act in furtherance of a person’s
constitutional right of petition or free speech in connection with a public issue is subject
to a special motion to strike, unless the plaintiff establishes a probability of prevailing on
the claim. (Code Civ. Proc., § 425.16, subd. (b)(1).) A court evaluates a special motion
to strike in two steps. The first examines the nature of the conduct that underlies the
plaintiff’s allegations to determine whether it is protected by Code of Civil Procedure
section 425.16; the second assesses the merits of the plaintiff’s claim. (Barry v. State Bar
of California (2017) 2 Cal.5th 318, 321 (Barry); see also Laker, supra, 32 Cal.App.5th at
p. 760.)
In the first step, “the trial court determines whether the cause of action ‘arises
from’ an ‘act in furtherance of a person’s right of petition or free speech under the United
States or California Constitution in connection with a public issue.’ ” (Laker, supra, 32
Cal.App.5th at p. 760, quoting City of Montebello v. Vasquez (2016) 1 Cal.5th 409, 422.)
The first step of the analysis is not at issue. Aguilar concedes his claim against MLG
arises from protected conduct under Code of Civil Procedure section 425.16, subdivision
(e), namely the allegations in the complaint MLG filed on behalf of CACH in the
collection action. The parties’ dispute centers on the second step of the anti-SLAPP
analysis.
9
If the defendant prevails at the first step, the burden shifts to the plaintiff to
demonstrate the merit of the challenged claim or claims by establishing a probability of
success. (Code Civ. Proc., § 425.16, subd. (b)(1); Wilson v. Cable News Network, Inc.
(2019) 7 Cal.5th 871, 884 (Wilson).) The plaintiff must “ ‘demonstrate that the complaint
is both legally sufficient and supported by a sufficient prima facie showing of facts to
sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’ ”
(Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291 (Soukup).)
In evaluating probability of success at the second step, “a trial court considers ‘the
pleadings, and supporting and opposing affidavits stating the facts upon which the
liability or defense is based’ . . . ([Code Civ. Proc., § 425.16], subd. (b)(2)).” (Barry,
supra, 2 Cal.5th at p. 321.) “ ‘ “ ‘The court accept[s] as true the evidence favorable to the
plaintiff [citation] and evaluate[s] the defendant’s evidence only to determine if it has
defeated that submitted by the plaintiff as a matter of law.’ ” ’ ” (Ibid.) “[T]he statute
permits the court to ‘consider the pleadings, and supporting and opposing affidavits
stating the facts upon which the liability or defense is based.’ ([Code Civ.
Proc., § 425.16], subd. (b)(2).) Through this ‘summary-judgment-like procedure,’ the
statute authorizes the quick dismissal of meritless claims, thereby ensuring that SLAPP
suits are ended ‘ “ ‘early and without great cost to the SLAPP target.’ ” ’ ” (Id. at p. 324.)
“If the plaintiff is unable to demonstrate that his or her claim has at least minimal merit,
then the trial court should deem the cause of action a SLAPP and should strike it.”
(Laker, supra, 32 Cal.App.5th at p. 760.)
B. Standard of Review
“We review de novo the grant or denial of any anti-SLAPP motion. [Citation.]
We exercise independent judgment in determining whether, based on our own review of
the record, the challenged claims arise from protected activity.” (Park, supra, 2 Cal.5th
at p. 1067.) We consider the pleadings and declarations, accepting as true the evidence
that favors the plaintiff (here, Aguilar) and evaluating the defendant’s evidence (here,
10
MLG) “ ‘ “ ‘only to determine if it has defeated that submitted by the plaintiff as a matter
of law.’ ” ’ ” (Barry, supra, 2 Cal.5th at p. 321.)
C. Analysis
Aguilar argues that he met his prima facie burden and the trial court erred in
finding otherwise. He contends that in granting respondents’ anti-SLAPP motion, the
court erred by considering respondents’ unauthenticated hearsay evidence, improperly
weighing that evidence, and making a “materiality” determination based on case law
interpreting the federal FDCPA, which he maintains is not a proper consideration under
the Rosenthal Act. Because Aguilar’s contention that he “ ‘ “stated and substantiated a
legally sufficient claim” ’ ” (Navellier v. Sletten (2002) 29 Cal.4th 82, 88) under the
Rosenthal Act to prevail against the anti-SLAPP motion rests upon underlying
requirements of the CFDBPA and federal FDCPA, we begin our analysis by outlining the
relevant provisions of the Rosenthal Act, the CFDBPA and the FDCPA.
1. Statutory Basis for Aguilar’s Rosenthal Act Claim
Aguilar’s sole claim against MLG is based on an alleged violation of the
Rosenthal Act—namely section 1788.17. That section provides that “every debt collector
collecting or attempting to collect a consumer debt shall comply with the provisions of
[15 U.S.C. s]ections 1692b to 1692j, inclusive . . . and shall be subject to the remedies in
[15 U.S.C. s]ection 1692k . . . .” (§ 1788.17.) The Rosenthal Act, through section
1788.17, thus “incorporates by reference the [federal] FDCPA’s requirements . . . and
makes available the FDCPA’s remedies for violations.” (Riggs v. Prober & Raphael (9th
Cir. 2012) 681 F.3d 1097, 1100.) A violation of any of these FDCPA provisions is per se
a violation of the Rosenthal Act. (Best v. Ocwen Loan Servicing, LLC (2021) 64
Cal.App.5th 568, 575 (Best).) A Rosenthal Act claim premised on a violation of the
federal FDCPA, however, “remains a state claim.” (Alkan v. Citimortgage, Inc. (N.D.Cal.
2004) 336 F.Supp.2d 1061, 1065 (Alkan).)
11
Whether the trial court properly concluded Aguilar’s section 1788.17 claim lacks
minimal merit thus depends on whether the alleged violation of the underlying FDCPA
provisions “ ‘is both legally sufficient and supported by a sufficient prima facie showing
of facts to sustain a favorable judgment if the evidence submitted by [Aguilar] is
credited.’ ” (Soukup, supra, 39 Cal.4th at p. 291.)
The federal FDCPA regulates the conduct of debt collectors by prohibiting “any
false, deceptive, or misleading representation or means in connection with the collection
of any debt.” (15 U.S.C. § 1692e.) It is a violation of the FDCPA to falsely represent
“the character, amount, or legal status of any debt” (id., § 1692e(2)(A)) or to “use . . . any
false representation or deceptive means to collect or attempt to collect any debt.” (Id.,
§ 1692e(10).) A false or misleading statement is not actionable under the FDCPA unless
it is material. (Afewerki v. Anaya Law Group (9th Cir. 2017) 868 F.3d 771, 773 [“To
constitute a violation of the FDCPA, a false statement must be ‘material.’ ”] (Afewerki),
citing Donohue v. Quick Collect, Inc. (9th Cir. 2010) 592 F.3d 1027, 1033 (Donohue).)6
The FDCPA is a strict liability statute that does not ordinarily require proof of an
intentional violation. (Tourgeman v. Collins Financial Services, Inc. (9th Cir. 2014) 755
F.3d 1109, 1119 (Tourgeman); Gonzales v. Arrow Financial Services, LLC (9th Cir.
2011) 660 F.3d 1055, 1061 (Gonzales).) The question of “ ‘a debt collector’s liability
under § 1692e of the FDCPA is an issue of law.’ ” (Tourgeman, at p. 1119.) “The
analysis is objective and ‘takes into account whether the “least sophisticated debtor
would likely be misled by a communication.” ’ ” (Ibid.)7 “The ‘least sophisticated
debtor’ standard is ‘lower than simply examining whether particular language would
6
Every federal circuit court of appeal to consider the question has decided that the
FDCPA requires materiality. (See Tavernaro v. Pioneer Credit Recovery (10th Cir.
2022) 43 F.4th 1062, 1067 & fn. 3 (Tavernaro).)
7
Some federal circuit court of appeals measure materiality under the FDCPA from
the perspective of the “reasonable consumer” rather than the “unsophisticated” or “least
sophisticated consumer.” (See Tavernaro, supra, 43 F.4th at pp. 1068–1070.) Those
distinctions are immaterial to our analysis here.
12
deceive or mislead a reasonable debtor.’ [Citation.] The standard is ‘designed to protect
consumers of below average sophistication or intelligence,’ or those who are ‘uninformed
or naive,’ particularly when those individuals are targeted by debt collectors.” (Gonzales,
at pp. 1061–1062.) “At the same time, the standard ‘preserv[es] a quotient of
reasonableness and presum[es] a basic level of understanding and willingness to read
with care.’ ” (Id. at p. 1062.) “In assessing FDCPA liability, we are not concerned with
mere technical falsehoods that mislead no one, but instead with genuinely misleading
statements that may frustrate a consumer’s ability to intelligently choose his or her
response.” (Donohue, supra, 592 F.3d at p. 1034.)
Here, the claimed false statement in contravention of the federal FDCPA
(specifically, title 15 United States Code section 1692e(2)(A) and e(10)) and comprising
the alleged section 1788.17 violation is based on the collection action complaint’s alleged
misidentification of the charge-off creditor, which Aguilar contends violated
section 1788.58(a)(6) of the California Fair Debt Collection Practices Act (CFDCPA).
The California Legislature enacted the CFDCPA in 2013 as a corollary to existing
state and federal laws regulating the practice of debt collection. (See Stats. 2013, ch. 64,
§ 1.) The CFDCPA regulates the activities of debt buyers, which the statute defines as “a
person or entity that is regularly engaged in the business of purchasing charged-off
consumer debt for collection purposes.” (§ 1788.50, subd. (a)(1).) In enacting the
CFDCPA, the Legislature cited the need to “create documentation and process standards
for the collection of consumer debt that all interested parties can easily understand” and
to ensure the “[d]ocumentation used to support the collection of a debt [is] sufficient to
prove that the individual who is being asked to pay the debt is in fact the individual
associated with the original contract or agreement, and that the amount of indebtedness is
accurate.” (Stats. 2013, ch. 64, § 1.)
The CFDCPA requires, in relevant part, that the complaint allegations in an
“action brought by a debt buyer on a consumer debt” include “[t]he name and an address
13
of the charge-off creditor at the time of charge off and the charge-off creditor’s account
number associated with the debt. The charge-off creditor’s name and address shall be in
sufficient form so as to reasonably identify the charge-off creditor.” (§ 1788.58(a)(6).)
2. The Factual Basis for the Alleged CFDBPA Violation Is Insufficient to
Establish a Prima Facie Violation of Section 1788.17 of The Rosenthal Act
Aguilar contends the trial court erred in finding that his Rosenthal Act claim
lacked minimal merit under the applicable anti-SLAPP standards. He asserts that the
failure of the collection action complaint to comply with the charge-off creditor
disclosure requirement set forth in the CFDBPA (§ 1788.58 (a)(6)) is “patent” when
comparing the collection action complaint with the verified discovery responses from the
collection action which supply the relevant debt assignment information. Aguilar argues
that the verified discovery responses and collection action complaint together satisfy his
burden to make a prima facie showing of facts to support a judgment in his favor,
because the section 1788.58 violation “necessarily also constitutes a false statement in an
attempt to collect a debt” under the federal FDCPA. (Italics omitted.) He contends that
in finding otherwise, the trial court improperly weighed the evidence submitted,
including unauthenticated hearsay, and applied federal case law based on a “materiality”
standard that is inapplicable to the Rosenthal Act.
As a preliminary matter, we need not decide whether the trial court improperly
considered and weighed the evidence submitted by MLG because we conclude that
Aguilar has not met his initial burden to demonstrate that his prima facie showing is
enough to win a favorable judgment on his Rosenthal Act claim. We recognize this
“threshold is ‘not high’ ” and “[c]laims with minimal merit proceed.” (Citizens of
Humanity, LLC v. Hass (2020) 46 Cal.App.5th 589, 598.) However, having carefully
considered Aguilar’s arguments and the evidence Aguilar submitted in opposition to the
anti-SLAPP motion, we decide that Aguilar has not made a prima facie showing
sufficient to establish a probability of success on his Rosenthal Act claim.
14
That claim, as pleaded in Aguilar’s complaint, is derivative of the federal
FDCPA’s prohibition against any use of “false, deceptive, or misleading representation or
means in connection with the collection of any debt” (15 U.S.C. § 1692e), which in turn
is based on the alleged violation of section 1788.58(a)(6) of the CFDBPA. For reasons
we explain below, we question whether the evidence submitted by Aguilar is sufficient to
establish a prima facie violation of the underlying claim based on section 1788.58(a)(6).
But even assuming for purposes of this appeal that Aguilar has shown a violation of the
CFDBPA, we conclude the nature of the violation is insufficient to establish that MLG
made a “false representation” of the “character, . . . or legal status” of the debt (15 U.S.C.
§ 1692e(2)(A)), as required to demonstrate the requisite probability of success on
Aguilar’s Rosenthal Act claim. (Code Civ. Proc., § 425.16, subd. (b)(1); see Wilson,
supra, 7 Cal.5th at p. 884; Soukup, supra, 39 Cal.4th at p. 291.) We examine each
issue—the claimed CFDBPA violation and resulting Rosenthal Act claim—in turn.
The CFDBPA violation, though asserted in the complaint only against CACH (as
the debt buyer), serves as the factual basis for Aguilar’s Rosenthal Act claim. That is,
because the Rosenthal Act claim at issue in this appeal is premised on the alleged,
underlying CFDBPA violation, Aguilar’s prima facie showing in support of the
Rosenthal Act claim depends on whether he submitted sufficient evidentiary support for
his CFDBPA claim.
Crediting, as we must, Aguilar’s evidence submitted in opposition to the anti-
SLAPP motion, we accept as true the information provided in the declaration submitted
by Aguilar’s counsel, Schwinn, including discovery responses provided by CACH in the
collection action. (Soukup, supra, 39 Cal.4th at p. 291; Barry, supra, 2 Cal.5th at p. 321.)
According to Schwinn, the document attached to CACH’s discovery responses shows
that “the true name of the creditor at charge-off was OneMain Financial Issuance Trust
2015-1 and not OneMain Financial Inc., as stated in paragraph 4 of the [collection action
complaint].” Aguilar claims that because the CFDBPA mandates identification of the
15
charge-off creditor, not merely the current creditor or original creditor, any incorrect
identification of the charge-off creditor violates the CFDBPA (§ 1788.58(a)(6)) and
necessarily constitutes a “ ‘false representation of’ ” the character and legal status of the
debt and under title 15 United States Code section 1692e(2)(A)). Aguilar submits that
MLG’s failure to identify OneMain Financial Issuance Trust as the true name of the
charge-off creditor in the collection action—rather than OneMain Financial—violated
section 1788.58(a)(6) of the CFDBPA and constituted a prima facie false statement in
connection with the collection of the debt, in violation of the Rosenthal Act (§ 1788.17;
15 U.S.C. § 1692e). This argument, however, glosses over key language in the CFDBPA
and conflates the statutory standards applicable to the CFDBPA with that of the federal
FDCPA and Rosenthal Act.
With respect to the underlying violation, Aguilar cites the requirement in the
CFDBPA that a debt buyer’s collection complaint against a consumer debtor allege “[t]he
name and an address of the charge-off creditor at the time of charge off”
(§ 1788.58(a)(6)) but ignores the accompanying dictate that “[t]he charge-off creditor’s
name and address shall be in sufficient form so as to reasonably identify the charge-off
creditor.” (Ibid.)
The purpose of the CFDBPA, as set forth in the uncodified legislative findings and
declarations, is to regulate “the adequacy of documentation required to be maintained by
the [debt buying] industry in support of its collection activities and litigation” (Stats.
2013, ch. 64, § 1, subd. (a)) and ensure the “[d]ocumentation used to support the
collection of a debt [is] sufficient to prove that the individual who is being asked to pay
the debt is in fact the individual associated with the original contract or agreement” (id.,
§ 1, subd. (c)). Given these statutory purposes, the requirement that the collection
complaint allege “[t]he name and an address of the charge-off creditor at the time of
charge off . . . in sufficient form so as to reasonably identify the charge-off creditor”
16
(§ 1788.58(a)(6)) appears intended to ensure adequate documentation to link the debt
buyer’s claim to the charge-off creditor and consumer account of the debtor.
Whether the nature of the relationship between OneMain Financial and OneMain
Financial Issuance Trust is such as might satisfy the “reasonably identify” standard set
out in section 1788.58(a)(6) is a factual question that we need not resolve for purposes of
this appeal. Instead, even if we assume, without deciding, that the verified discovery
response from the collection action is sufficient to establish a prima facie violation of
section 1788.58(a)(6)’s charge-off creditor disclosure requirement, we are not persuaded
that the asserted CFDBPA violation supports a Rosenthal Act violation for false or
misleading statements in connection with collection of a debt, as stated in the federal
FDCPA.
As noted ante, whether debt collection efforts are false, deceptive, or misleading
for purposes of the federal FDCPA requires an objective analysis that “ ‘takes into
account whether the “least sophisticated debtor would likely be misled by a
communication.” ’ ” (Tourgeman, supra, 755 F.3d 1109 at p. 1119.) This inquiry “does
not ask the subjective question of whether an individual plaintiff was actually misled by a
communication. Rather, it asks the objective question of whether the hypothetical least
sophisticated debtor would likely have been misled.” (Afewerki, supra, 868 F.3d at
p. 775.) A logical “ ‘corollary’ to the least sophisticated debtor standard” under the
FDCPA is the requirement that a misrepresentation must be material to be actionable.
(Ibid.) The Ninth Circuit Court of Appeals in Afewerki explained the materiality
requirement, which other federal circuits have also adopted: “ ‘[F]alse but non-material
representations are not likely to mislead the least sophisticated consumer and therefore
are not actionable under [15 U.S.C.] § 1692e.’ ” (Ibid.) Put another way, “A statement
directed to consumers is designed to provide information that helps them choose
intelligently, ‘and by definition immaterial information neither contributes to that
17
objective (if the statement is correct) nor undermines it (if the statement is incorrect).’ ”
(Tavernaro, supra, 43 F.4th at p. 1068.)
Here, assuming that Aguilar has established that OneMain Financial was not the
charge-off creditor at the time of charge off and, as a result, the collection action
complaint was incorrect and did not “reasonably identify” the charge-off creditor in
violation of section 1788.58(a)(6), there is no support for his contention that this
translates into a de facto “false representation of” the “character, . . . or legal status of the
debt” under title 15 United States Code section 1692e(2)(A).
The purported misidentification of the charge-off creditor does not implicate the
debt’s “character, amount, or legal status.” (15 U.S.C. § 1692e(2)(A).) To the contrary,
the collection action complaint accurately alleged the character of the debt (a credit
account issued by OneMain Financial), the amount (a debt balance of $5,214.02 after the
last date of payment on June 17, 2016), and the legal status (the debt was charged-off and
purchased by CACH, the debt buyer and sole owner of the debt). (Ibid.) Nor do we
perceive in what manner the misidentification of the charge-off creditor—under the
circumstances presented here—constitutes use of a “false representation or deceptive
means to collect or attempt to collect” a debt under title 15 United States Code
section 1692e(10).
Aguilar has not shown how the purported misrepresentation of the charge-off
creditor is a material misrepresentation under the standard applicable to alleged federal
FDCPA violations, let alone how it would be likely to mislead the hypothetical least
sophisticated debtor. (See Tourgeman, supra, 755 F.3d at p. 1119; Afewerki, supra, 868
F.3d at p. 775.) To the contrary, unlike the identity of a consumer’s original creditor,
whose “false identification in a dunning letter would be likely to mislead some
consumers in a material way” (Tourgeman, at p. 1121), a hypothetical debtor receiving
CACH’s collections complaint would recognize OneMain Financial as the creditor that
issued and serviced the credit account until nonpayment on the account, charge-off, and
18
sale to the debt buyer bringing the collections suit. The misidentification of the charge-
off creditor in this instance (OneMain Financial instead of OneMain Financial Issuance
Trust) falls squarely within the category of “mere technical falsehoods that mislead no
one.” (Donohue, supra, 592 F.3d at p. 1034.) Insofar as section 1788.17 “incorporates
the FDCPA, so that a violation of the FDCPA is per se a violation of the Rosenthal Act”
(Best, supra, 64 Cal.App.5th at p. 576), we conclude the inverse is also true: A
misrepresentation that is immaterial and thus not actionable under the FDCPA fails to
support a prima facie violation of section 1788.17.
In drawing this conclusion, we reject Aguilar’s assertion that materiality is not a
proper consideration under the Rosenthal Act. Aguilar observes that although section
1788.17 of the Rosenthal Act incorporates specified provisions of the federal FDCPA as
per se violations under state law, the alleged violation—and any resulting liability under
the Rosenthal Act—remains a state claim. He further argues that state law and federal
law are, in this respect, distinct, and the concept of materiality, as developed by the
federal circuit courts, does not bind California courts applying state law.
It is true that a claim under section 1788.17 that is based on conduct prohibited by
the FDCPA remains a state claim. (Alkan, supra, 336 F.Supp.2d at p. 1065.) It is also
true that federal circuit opinions interpreting federal law, like Tourgeman and Afewerki,
though persuasive, are not binding on state courts. (See People v. Memro (1995) 11
Cal.4th 786, 882; Raven v. Deukmejian (1990) 52 Cal.3d 336, 352.) On the other hand,
in the absence of some countervailing state interest, where the federal courts’
interpretation of the law is uniform, persuasive, and applies equally to the state statute,
we are aware of no proscription against adopting that reasoning, or at least
acknowledging its relevance to the claim under state law.
Aguilar points out that the Rosenthal Act was amended to add section 1788.17,
which in its current form took effect on January 1, 2001. (Stats. 2000, ch. 688, § 1.) The
statute’s incorporation of specified sections of the FDCPA is expressly tied to the federal
19
code provisions “as they read January 1, 2001.” (§ 1788.17.) Aguilar argues that at that
time, the concept of materiality had not arisen with respect to FDCPA liability, and since
section 1788.17 is expressly limited to the federal FDCPA as it read in 2001, any federal
district or circuit court decisions since that time “are necessarily less persuasive than any
that published before [s]ection 1788.17 came into effect.”
Aguilar further relates the development of the materiality standard in FDCPA
jurisprudence to a perceived narrowing of opportunity to obtain relief on the statutory
claim in federal court—a development he submits state courts should decline to follow.
Aguilar contends that because federal courts have shifted away from recognizing Article
III of the United States Constitution standing for pure statutory damages cases and
toward limiting Article III standing to those consumer plaintiffs who can show “
‘concrete injury’ ” for purposes of Article III standing, “materiality will never again be an
issue in federal courts, as any consumer protection case alleging a concrete injury will
necessarily result from a material violation.” By contrast, he argues that state judicial
power under the California Constitution is vested more broadly, assigning the superior
courts jurisdiction over “all other causes” apart from those specified to other courts (Cal.
Const., art. VI, § 10), unlike the United States Constitution’s more limited extension of
judicial power to “Cases” and “Controversies” (U.S. Const., art. III, § 2; see
Massachusetts v. EPA (2007) 549 U.S. 497, 516). Aguilar asserts that “[b]ecause Article
III standing is irrelevant in California [s]uperior [c]ourts, this [c]ourt need not and should
not construe materiality as an element of the [Rosenthal Act].” He also points out that
the “very few California appellate decisions” which analyze the Rosenthal Act have not
addressed materiality.8
8
Indeed, we are unaware of any published appellate court authority that has
addressed whether materiality is a proper consideration in evaluating a claim under
section 1788.17.
20
Aguilar’s arguments conflate the materiality requirement applied to FDCPA
claims with the question of Article III standing based upon the violation of a statutory
right. These are distinct concepts.9 As various federal circuit decisions illustrate,
materiality in the context of the FDCPA is not driven by federal constitutional standing
jurisprudence but is a matter of statutory law, which courts address only upon confirming
the threshold issue of subject matter jurisdiction. (See, e.g., Cohen v. Rosicki, Rosicki &
Assocs., P.C. (2d Cir. 2018) 897 F.3d 75, 82, fn. 6 [clarifying that courts do not consider
the “merits issue” of materiality as part of the standing analysis].) Under the FDCPA,
materiality is a corollary to the least sophisticated debtor standard that enables courts to
distinguish between “mere technical falsehoods that mislead no one” (Donohue, supra,592 F.3d at p. 1034) and actionable misrepresentations under 15 U.S.C. section 1692e.
Nevertheless, “the materiality requirement remains a fairly narrow exception to the
general rule requiring accuracy in communications from debt collectors.” (Afewerki,
supra, 868 F.3d at p. 776.) Whereas material false representations “are those that could
‘cause the least sophisticated debtor to suffer a disadvantage in charting a course of
action in response to the collection effort’ ” (ibid.), immaterial false representations “are
those that are ‘literally false, but meaningful only to the “hypertechnical” reader.’ ”
(Ibid.)
That those federal decisions applying the materiality standard postdate the
California Legislature’s enactment of section 1788.17 renders them no less persuasive,
because the relevant statutory language of the federal FDCPA has not changed since
2001. Moreover, though the concept of “materiality” may be absent from earlier FDCPA
The United States Supreme Court has recently clarified the “concrete injury”
9
required for Article III standing in cases involving the violation of a statutory right.
(TransUnion LLC v. Ramirez (2021) 594 U.S __ [141 S.Ct. 2190, 2204–2205]; see also
Spokeo, Inc. v. Robins (2016) 578 U.S. 330, 340–341.) We reject Aguilar’s contention
that a shift in the jurisprudence surrounding Article III standing affects our resolution of
the merits of the anti-SLAPP motion.
21
cases, its underpinnings (consisting of the least sophisticated consumer standard,
balanced against a baseline of reasonableness in reading collection notices) have long
been applied to the FDCPA. (See, e.g., Clomon v. Jackson (2d Cir. 1993) 988 F.2d 1314,
1318 [articulating the “widely accepted test for determining whether a collection letter
violates § 1692e” using “an objective standard based on the ‘least sophisticated
consumer’ ”]; id. at p. 1319 [balanced against “the concept of reasonableness”].) Absent
some basis in law requiring a different understanding, the express incorporation of
enumerated FDCPA violations into section 1788.17 makes federal authority interpreting
and defining the scope of those FDCPA violations relevant to the determination of a
section 1788.17 violation premised on those FDCPA provisions. Unsurprisingly, the
Ninth Circuit has held that “[t]o the extent that a Rosenthal Act claim is derivative of a 15
U.S.C. § 1692e claim, . . . false statements are also subject to the materiality requirement
for purposes of the Rosenthal Act claim.” (Afewerki, supra, 868 F.3d at p. 776.) We
agree.
Aguilar asserts that even if materiality is deemed to be a relevant consideration to
a claim under section 1788.17 of the Rosenthal Act, it is a fact-specific issue and
therefore not appropriate as a basis to grant an anti-SLAPP motion. Aguilar’s argument
lacks support in case law interpreting the FDCPA. The question before the court in
evaluating materiality is whether the conduct in connection with the collection of a debt
would likely mislead a hypothetical, uninformed or naïve consumer (“least sophisticated
debtor”), thus constituting an actionable misrepresentation under 15 U.S.C. section
1692e. This is an objective test. (Tourgeman, supra, 755 F.3d at p. 1119; Afewerki,
supra, 868 F.3d at p. 775.) The Ninth Circuit has characterized the question of
materiality as an issue of law for the court to determine. (Tourgeman, at p. 1119;
Gonzales, supra, 660 F.3d at p. 1061.)
The objective standard lends itself to independent assessment by the court,
because whether the language in a collection letter or, as relevant here, a collection
22
complaint, would “mislead or confuse a least sophisticated debtor does not turn on the
credibility of extrinsic evidence.” (Terran v. Kaplan (9th Cir. 1997) 109 F.3d 1428,
1432.) We are not persuaded by Aguilar’s reference to an unpublished district court case
in support of his contention that “ ‘[m]ateriality is a fact-specific issue that should
ordinarily be left to the trier of fact’ ” (Tourgeman v. Collins Fin. Servs. (S.D.Cal. July
26, 2011) 2011 U.S.Dist. LEXIS 81070, at *17), as that reliance ignores later Ninth
Circuit decisions holding that “ ‘a debt collector’s liability under § 1692e of the FDCPA
is an issue of law’ ” (Tourgeman, supra, 755 F.3d at p. 1119) and fails to reconcile the
purportedly “fact-specific” nature of the materiality determination with the settled
application of an objective standard. (Ibid.)
A court tasked with an anti-SLAPP motion “does not weigh evidence or resolve
conflicting factual claims.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.) However,
where, as here, the relevant representation in connection with the collection of the debt
(i.e., the collection action complaint) is not subject to conflicting factual claims and the
viability of the claim is evaluated according to an independent, objective standard of
review, the court can properly ascertain the plaintiff’s showing at the second step of the
anti-SLAPP procedure without weighing the evidence or resolving factual disputes.
Our resolution of whether Aguilar met his burden in the second step of the anti-
SLAPP analysis is bounded by the misrepresentation Aguilar alleged in his complaint.
According to the evidence supplied by Aguilar, the sole misrepresentation was
respondents’ identification in the collection action complaint of the charge-off creditor as
OneMain Financial instead of OneMain Financial Issuance Trust. Applying an objective
standard, we are unable to perceive how the collection action complaint’s technical
failure to identify the charge-off creditor at the time of charge off, as required by section
1788.58(a)(6), could have disadvantaged even the least sophisticated debtor in
responding to the complaint. This is not, as Aguilar contends, a matter of accepting
“substantial compliance” with the requirements of the Rosenthal Act. Instead, we apply
23
the terms of the statute based on its incorporation of the federal FDCPA provisions as
they have long been understood.
Having applied the settled standard for evaluating a false statement or
misrepresentation as set forth in the federal FDCPA based on a false, deceptive, or
misleading representation in connection with the collection of a debt, specifically title 15
United States Code section 1692e, we decide Aguilar has not met his burden to
demonstrate a prima facie violation of section 1788.17 of the Rosenthal Act.10 Therefore,
the trial court did not err in granting MLG’s anti-SLAPP motion.
III. DISPOSITION
The trial court’s order granting MLG’s and Mandarich’s special motion to strike
under Code of Civil Procedure section 425.16 is affirmed. Respondents are entitled to
recover their reasonable costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
10
Our conclusion renders it unnecessary to address the additional issue on appeal
raised in response to respondents’ alternative claim in support of the anti-SLAPP motion,
about whether Aguilar’s Rosenthal Act claim is a compulsory counterclaim that should
have been brought in the collection action.
24
______________________________________
Danner, J.
WE CONCUR:
____________________________________
Greenwood, P.J.
____________________________________
Wilson, J.
H049860
Aguilar v. Mandarich Law Group, LLP et al.
Trial Court: Santa Clara County Superior Court
No. 21CV378926
Trial Judge: Hon. Christopher G. Rudy
Counsel for Plaintiff and Appellant Frederick William Schwinn
Alexander Zaval Aguilar: Raeon Rodrigo Roulston
Matthew C. Salmonsen
Consumer Law Center, Inc
Counsel Defendants and Respondents June D. Coleman
Mandarich Law Group, LLP and Messer Strickler Burnette, Ltd.
Christopher D. Mandarich
H049860
Aguilar v. Mandarich Law Group, LLP et al.