Judge: Mark E. Windham, Case: 24STLC00831, Date: 2024-09-11 Tentative Ruling

Case Number: 24STLC00831    Hearing Date: September 11, 2024    Dept: 26

Jimenez v. Lending Club Corp., et al.

DEMURRER

(CCP §§ 430.10, et seq.)

TENTATIVE RULING:

Defendant LendingClub Corporation’s Demurrer to the First Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND. DEFENDANT IS TO FILE A PROPOSED JUDGMENT WITHIN 20 DAYS OF THIS ORDER.

ANALYSIS:

On February 5, 2024, Plaintiff Tommie Jimenez (“Plaintiff”) filed this action for violations of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) against Defendant LendingClub Corporation (erroneously sued as “Lending Club Corporation”) (“Defendant”). Defendant filed a Demurrer to the Complaint, which was taken off calendar when Plaintiff filed the First Amended Complaint on April 23, 2024. Defendant filed the instant Demurrer to the First Amended Complaint on May 23, 2024. Plaintiff filed an opposition on July 3, 2024 and Defendant replied on July 11, 2024.

Discussion

The First Amended Complaint alleges that Plaintiff is a natural person obligated to pay a consumer debt to Defendant alleged as due and owing, and is therefore a “debtor,” within the meaning of RFDCPA. (FAC, p. 2 at ¶9.) As a natural person allegedly obligated to pay money to Defendant arising from a consumer credit transaction, the money owed is a “consumer debt” within the meaning of the RFDCPA. (Id., pp. 2-3 at ¶10.) Defendant engages in “debt collection” under the RFDCPA. (Id., p. 3 at ¶12.) On August 14, 2023, Plaintiff’s attorneys sent Defendant a letter by USPS First-Class mail, communicating that Plaintiff was represented by counsel with respect to the consumer debt. (Id., p. 3 at ¶1.) The letter instructed Defendant to cease communications about the debt to Plaintiff and direct those communications to Plaintiff’s counsel. (Id., p. 3 at ¶2.) Despite the letter, Defendant telephoned Plaintiff several times in September 2023 for the purpose of collecting the Debt. (Id., p. 3 at ¶5.) The communications were made with the intent to invade Plaintiff’s privacy and caused Plaintiff undue stress, confusion, and anxiety. (Id., p. 3 at ¶¶6-7.) This conduct by Defendant violated section 1788.14 subdivision (c) of the RFDCPA and section 1692c, subdivisions (a)(2) and (c) of the Fair Debt Collection Practices Act (“FDCPA”). (Id., pp. 3-4 at ¶¶12-18.)

 Communicating with a debtor who is represented by an attorney is a violation of section 1692c, subdivision (a)(2) of the FDCPA. Communicating with a consumer who refuses to pay a debt or wishes the debt collector to cease further communication with the consumer is a violation of section 1692c, subdivision (c) of the FDCPA. A violation of the FDCPA is also a violation of section 1788.18 of the RFDCPA. (Ibid.)  

The Demurrer is accompanied by a meet and confer declaration as required by Code of Civil Procedure section 430.41. (Demurrer, Narita Decl., ¶¶2-4.) Defendant demurs to both causes of action of the First Amended Complaint for lack of standing and failure to allege sufficient facts. (Citing Code Civ. Proc., § 430.10, subds. (a), (e).)

Lack of Standing

Defendant first demurs the First Amended Complaint on the grounds that Plaintiff lacks standing. It points to a case in which the California Court of Appeals held that the plaintiff’s “informational injury” was insufficient to show standing under the Fair Credit Reporting Act (“FCRA”) and argues that this is relevant to the case at hand. Defendant goes on to disparage the case on which Plaintiff relies, a district court case, as non-binding and unpersuasive.

However, Limon v. Circle K Stores Inc. (2022) 84 Cal. App. 5th 671, upon which Defendant relies, concerned standing under the FCRA, not the RFDCPA. Defendant makes no argument for why the Court of Appeal’s holding regarding standing under the FCRA should instruct the Court regarding standing under the RFDCPA. In Limon, the Court of Appeals undertook a substantial analysis of the statute and the plaintiff’s allegations in relation to the FCRA. (Limon v. Circle K Stores Inc. (2022) 84 Cal. App. 5th 671, 704-706.) It also discussed whether an informational injury—where required information is provided but is provided in the wrong format but causes no adverse effects— was sufficient to confer standing, which is not at issue in this action. (Id. at 707.) Therefore, the Court does not find Limon’s holding relevant to determining whether Plaintiff’s allegations are sufficient to confer standing in this action. The Court of Appeals, however, did lay the groundwork for a broader consideration of standing in California, as follows:

[T]o assess a plaintiff’s standing to pursue claims in California courts, one must consider whether the plaintiff suffered an injury— i.e. an “ ‘invasion of [his or her] legally protected interests’ ” and whether it is “ ‘sufficient to afford them an interest in pursuing their action vigorously.’ ” (Angelucci supra, 41 Cal.4th at p. 175, 59 Cal.Rptr.3d 142, 158 P.3d 718.) The latter consideration is met where the injury is “ ‘ “(a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.” ’ ” (Associated Builders supra, 21 Cal.4th at pp. 361–362, 87 Cal.Rptr.2d 654, 981 P.2d 499; Luna Crest supra, 245 Cal.App.4th at p. 883, 200 Cal.Rptr.3d 128.)

(Limon v. Circle K Stores Inc. (2022) 84 Cal.App.5th 671, 704.)

Defendant goes on to argue that the Court should consider certain federal cases on which it relies. In Pennell v. Global Trust Management, LLC (7th Cir. 2021) 990 F.3d 1041, the plaintiff sent her creditor a letter refusing to pay her debt and requesting that all future debt communications cease. (Pennell v. Global Trust Management, LLC (7th Cir. 2021) 990 F.3d 1041, 1043.) When the debt was soon thereafter sold to the defendant, a debt collector, it had no actual knowledge that the plaintiff refused to pay her debt and that she was represented by counsel and sent her a collections letter. (Ibid.) The plaintiff then informed the defendant that all future debt communications should stop and refused to pay the debt, to which the defendant agreed. (Ibid.) The plaintiff then sued the debt collector under the FDCPA, alleging that her injuries were “stress and confusion.” (Ibid.) The 7th Circuit Court of Appeals ruled that this was not sufficient for standing because “ ‘the state of confusion is not itself an injury. [citations omitted].’ Nor does stress by itself with no physical manifestations and no qualified medical diagnosis amount to a concrete harm.” (Id. at 1045.)

Plaintiff argues that Pennell is distinguishable because the plaintiff there had not notified the debt collector that she refused to pay the debt and should not be contacted regarding the debt. While those facts are different from the allegations in this case, the difference has no bearing on the issue of what  injury is sufficient to allege standing. Pennell holds that purely psychological harm does not suffice to confer standing. (Id. at 1045.)

Also in opposition, Plaintiff cites to a federal district court case, Medicredit v. Lupia (D. Colo. 2020) 445 F.Supp.3d 1271, to argue that intangible harms that have a close relationship to “a harm that has traditionally been regarded as providing a basis for a lawsuit” such as “intrusion upon seclusion” are sufficient to confer standing for violations of the FDCPA. Although Defendants argue in reply that Medicredit is distinguishable, they offer no analysis of how the facts of Medicredit are distinct from this action. They also go on to argue that Medicredit is contradicted by other district court rulings. In Medicredit, the district court granted summary judgment in favor of the plaintiff with respect to a violation of the FDCPA that arose from a phone call made to the plaintiff by the defendant debt collector after the plaintiff informed the defendant that the debt was disputed and demanded all telephone communications to cease. (Medicredit v. Lupia (D. Colo. 2020) 445 F. Supp. 3d 1271, 1278.) The facts of Medicredit, therefore, are quite analogous to those in the action here. The district court ruled that the plaintiff’s claims “plainly are akin to a common law claim for invasion of privacy, most particularly that branch of the tort that protects individuals from unreasonable intrusion on their seclusion.” (Id. at 1280.) The problem with Medicredit, however, is that it relies on case law that has since been cast into doubt by a United States Supreme Court ruling. , as the Court will discuss below.

Although Medicredit is analogous to this action because it concerned a violation of both subdivisions (a)(2) and (c) of section 1692 of the FDCPA, its holding is that standing can be based on a risk of future harm, as opposed to actual harm. The Mericredit court took the idea of standing based on a risk of future harm from Spokeo, Inc. v. Robins (2016) 578 U.S. 330. (Medicredit, supra, 445 F.Supp.3d at 1279.) In Spokeo, the United States Supreme Court speculated that the risk of real harm can satisfy the requirement of concreteness for standing. (Spokeo, Inc. v. Robins (2016) 578 U.S. 330, 341.) This was later answered in the negative by a future Supreme Court case, TransUnion LLC v. Ramirez (2021) 594 U.S. 413, 436-438.)

Defendants also seek to discredit Mericredit by pointing to Simpson v. Revco Solutions, Inc. (S.D. Ill. 2022) 2022 WL 17582742, which concerned, in part, whether the plaintiff’s receipt of the defendant debt collector’s letter, after it was notified that the plaintiff was represented by an attorney, is analogous to an intrusion upon seclusion for standing. (Simpson v. Revco Solutions, Inc. (S.D. Ill. 2022) 2022 WL 17582742, *4.) The federal district court ruled that “mere receipt of letter could not be highly offensive to a reasonable person” in a manner sufficient to confer standing. (Id. at *5.) However, Simpson is distinguishable from this action in an important respect: it concerned a letter as opposed to phone calls. Simpson specifically referred that that distinction in its jurisprudence.

The Court finds that the cases within this circuit indicate a letter after advisement of lawyer representation does not point to an intrusion upon seclusion. In fact, other cases point to types of communication that are particularly intrusive into an individual's private life. See Gadelhak, 950 F.3d at 462 n. 1 (“This is different in kind than unwanted text messages or phone calls. The undesired buzzing of a cell phone from a text message, like the unwanted ringing of a phone from a call, is an intrusion into peace and quiet in a realm that is private and personal.”); Gunn v. Thrasher, Buschmann & Voelkel, P.C., 982 F.3d 1069, 1071 (7th Cir. 2020) (“Pestiferous text messages, spam phone calls, and unwelcome faxes can cause cognizable injury, for the reasons we gave in Gadelhak when explaining how the common law treats noises and other aggravating intrusions.”).

(Ibid.) Ultimately, none of the cases above are both factually analogous to this action and legally sound enough to follow entirely. Instead, the Court considers the principles elucidated in these federal cases involving the FDCPA and is persuaded of the following. Actual harm to a common law analogue, such as intrusion upon seclusion, is sufficient to confer standing under the RFDCPA. Allegations of emotional effects, such as stress, anxiety and confusion, however, are not sufficient for standing.

Both parties agree on the law regarding what facts must be alleged to sufficiently state a cause of action. Specifically, that a complaint must state “ultimate facts,” which are the facts upon which liability depends. (Doe v. City of Los Angeles (2007) 42 Cal. 4th 531, 550.) “A complaint must allege the ultimate facts necessary to the statement of an actionable claim. It is both improper and insufficient for a plaintiff to simply plead the evidence by which he hopes to prove such ultimate facts.” (Careau & Co. v. Security Pac. Bus. Credit, Inc. (1990) 222 Cal. App. 3d 1371, 1390.)

The First Amended Complaint does not allege ultimate facts to demonstrate that Plaintiff has standing to assert a claim under the standard above. Plaintiff alleges “Defendant’s repeated communications after being notified of Plaintiff’s representation and wish to have all communications about the debt directed to his attorneys, were made with the intent to invade Plaintiff’s right of privacy. Defendant’s actions, directly and proximately, caused Plaintiff undue stress, confusion, and anxiety; thereby damaging Plaintiff.” (FAC, ¶¶6-7.) The opposition incorrectly characterizes the First Amended Complaint as alleging that Defendant’s repeated phone calls amounted to an invasion of Plaintiff’s privacy. No such allegations are included in the operative pleading. Plaintiff only allegedly intended to invade Defendant’s privacy. Nor does the First Amended Complaint include allegations of physical symptoms suffered by Plaintiff. Therefore, the demurrer to the First Amended Complaint is sustained.

Leave to Amend

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.) Plaintiff has not shown that an amendment to the First Amended Complaint is possible to correct her lack of standing. Leave to amend is denied.

Conclusion

Defendant LendingClub Corporation’s Demurrer to the First Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND. DEFENDANT IS TO FILE A PROPOSED JUDGMENT WITHIN 20 DAYS OF THIS ORDER.

Moving party to give notice.