Ninth Circuit Allows Class Recovery of Cumulative Damages Under FDCPA and California Rosenthal Act

On September 23, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court's decision granting summary judgment to a class of plaintiffs for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e (FDCPA) and California's Rosenthal Act, Cal. Civ. Code § 1788, et seq., and a jury's award of statutory damages under both statutes.  In Gonzales v. Arrow Financial Services, No. 10-55379 (Sept. 23, 2011 9th Cir.), Mr. Gonzales, on behalf of himself and a class of plaintiffs, alleged that defendant Arrow Financial Services, a debt buyer and collector, violated the FDCPA and Rosenthal Act when it sent nearly identical letters to 40,000 California residents implying that failure to repay certain debts it was attempting to collect could result in its reporting negative information to credit reporting agencies about those consumers. The Ninth Circuit affirmed the district court's ruling that the letters were "false, deceptive, or misleading" because, in fact, the debts were too old to be legally reported under the FDCPA's limit on reporting debts more than seven years old. After granting summary judgment on these facts, the district court held a jury trial to determine damages. The jury awarded cumulative damages for the FDCPA and the Rosenthal Act, allowing the lead plaintiff and class members to recovery equal amounts under each act for the violations. Defendant argued that the Rosenthal Act does not allow class actions and, even if it did, recovery should not be allowed under both it and the FDCPA. The court rejected these arguments. First, it held the Rosenthal Act was amended in 1999 to allow class actions.  Second, it explained that the jury's award was consistent with the Rosenthal Act's intention that its remedies be "cumulative and . . . in addition to" remedies of other laws, and with the FDCPA's express language and deterrent purpose. Affirming the district court decisions, the court summarized that "letters, which misleadingly implied that [defendant] had the ability to report obsolete debts to credit bureaus, and impliedly threatened to make such reports, violated [the FDCPA]," and that "the Rosenthal Act's remedies are cumulative, and available even when the FDCPA affords relief."