Ballard v. Equifax Check Services, Inc.
| Decision Date | 17 August 2001 |
| Docket Number | No. Civ.S-96-1532 FCD GGH.,Civ.S-96-1532 FCD GGH. |
| Citation | 158 F.Supp.2d 1163 |
| Parties | Gary BALLARD and Nancy Ballard, Plaintiffs, v. EQUIFAX CHECK SERVICES, INC., Defendant. |
| Court | U.S. District Court — Eastern District of California |
Paul Arons, Law Offices of Paul Arons, Redding, CA, O. Randolph Bragg, III, Horwitz, Horwtitz & Assoc., Chicago, IL, for Plaintiff.
David L. Hartsell, Ross & Hardies, Chicago, IL, Audrey A. Millemann, Weintraub, Genshlea, Chediak & Sproul, Sacramento, CA, for Defendants.
Plaintiff and class representative Gary Ballard1 brings this action on behalf of himself and others who are similarly situated against defendant Equifax Check Services, Inc. ("ECS") for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., and the California Unfair Business Practices Act ("CUBPA"), Cal.Bus. & Prof.Code §§ 17200 et seq. This matter is before the court on plaintiffs motion for partial classwide summary judgment. For the reasons set forth below, the motion is GRANTED.
Defendant ECS is in the check authorization and warranty business. ECS enters into subscriber agreements with retail merchants who accept checks from their customers. Under the terms of these subscriber agreements, when a customer presents a check to the merchant, the merchant contacts ECS for authorization. ECS then consults its computer files to see if it has any pertinent information on the checkwriter and advises the merchant to either accept or decline the check. When a check authorized by ECS is dishonored, ECS purchases the check for full value, up to a certain dollar amount and initiates collection efforts on its own behalf. In addition to the amount of the unpaid check, ECS demands payment of a $20 service charge. ECS' collection efforts include a series of standardized collection letters. In some of its letters, ECS represents that the service charge is authorized under California law.
According to ECS, each of its subscriber agreements requires the merchant to post a sign advising checkwriters of the $20 service charge. For example, ECS' agreement with Reebok Factory Direct required Reebok to "display Equifax-supplied service-charge notices at the point-of-sale at each of its Locations ... so that they are clearly visible to all Checkwriters."
During the relevant time period, August 26, 1992 to December 31, 1996,2 ECS sought to collect a $20 service charge from approximately 1.4 million California residents. Plaintiff contends that ECS' practice of sending letters demanding a $20 service charge and representing that the charge was authorized under California law violated the FDCPA and the CUBPA. By this motion, plaintiff seeks an order: (1) finding that ECS violated the FDCPA and CUBPA by sending letters demanding the service charge and representing that the service charge was permitted under California law; (2) finding that ECS is liable to pay actual damages to the class for violations of the FDCPA; (3) finding that ECS is liable to pay restitution to the class for violations of the CUBPA; (4) declaring that the service charge is unlawful under the FDCPA and CUBPA; (5) declaring that Cal Civ.Code § 1671 prohibits ECS from attempting to collect its service charge; (6) declaring that ECS' demand for payment of a service charge is a demand for fees unauthorized by law in violation of 15 U .S.C. §§ 1692e(2), 1692e(10) and 1692f; and (7) permanently enjoining ECS from collecting a service charge on dishonored checks written before January 1, 1997 and from refusing to authorize checks because such charges have not been paid. Plaintiff does not, by this motion, seek an award of statutory damages, a determination of the total amount of actual damages under the FDCPA, or the total amount of restitution under the CUBPA.
On August 17, 1998, this court granted partial summary judgment in favor of plaintiff Gary Ballard only. The court rejected, as a matter of law, ECS' argument that California's Commercial Code provided a basis under which to collect the service charge.3 The court further found that ECS failed to present evidence sufficient to create a triable issue of material as to whether Gary Ballard agreed to pay the service charge at the time he wrote the check. Mem. & Ord, filed Aug. 17, 1998.4
Several months later, on February 22, 1999, this court amended a prior order by Judge Garland E. Burrell, to whom this case was previously assigned, denying plaintiffs' motion for class certification, and certified this action as a class action. The court certified named plaintiff Gary Ballard as the representative and defined the class as follows:
All California consumers on whose claims the statute of limitations has not run who were sent, or will be sent during the pendency of this action, a letter by defendant ECS, demanding payment to ECS of a service charge for collecting a dishonored check written prior to January 1, 1997.
Mem. & Ord., filed Feb. 22, 1999. The court certified the issues of liability, declaratory relief and statutory damages under the FDCPA and injunctive relief and restitution under the CUBPA pursuant to Fed.R.Civ.P. 23(b)(2)5 and certified the issue of actual damages pursuant to Rule 23(b)(3).6
Thereafter, on August 16, 1999, plaintiff noticed the instant motion for partial classwide summary judgment, relying in large part on this court's August 17, 1998 order. ECS opposed the motion and moved for reconsideration of the court's order certifying the class on the ground that the order violated the one-way intervention rule. More specifically, ECS argued that the court's August 17 order was a "decision on the merits," and thus, the court lacked the authority to thereafter certify the class. This court denied the motion for reconsideration, finding that its August 17 order was specific to Gary Ballard and the facts of his case, namely the lack of any evidence of an agreement between Gary Ballard, the merchant or ECS to pay the service charge. See Mem. & Ord., filed Feb. 8, 2000. With respect to plaintiffs motion for partial class-wide summary judgment, the court was concerned that ruling on that motion prior to providing notice to the class might run afoul of the one-way intervention rule. Accordingly, the court deferred ruling on plaintiff's motion for class-wide summary judgment and requested supplemental briefing on the consequences of ruling on the motion prior to notice being given to the class. Id.
In the interim, on February 18, 2000, ECS filed a petition for permission to appeal the class certification order with the Ninth Circuit, and requested this court defer notifying the class and ruling on plaintiffs pending motion for partial class-wide summary judgment pending a decision on ECS' petition. Additionally, on February 24, 2000, ECS filed a "motion for 28 U.S.C. § 1292(b) for stay pending appeal."7 On March 23, 2000, this court certified the following issue for interlocutory appeal: whether ECS is precluded as a matter of law from arguing that its service charge was authorized as an "incidental damage" under California Commercial Code sections 2104, 2707, 2709 and 2710. The court further ordered the proceedings stayed pending a ruling by the Ninth Circuit on ECS' petitions.
The Ninth Circuit denied both petitions on July 27, 2000, and this court set the matter for a status conference on September 22, 2000. At the court's request, the parties addressed plaintiffs pending motion for partial class-wide summary judgment, class notice, and settlement in their joint status conference statement. Following the status conference, on September 28, 2000, the court held that "notice must be provided to members of the (b)(3) class in accordance with Rule 23(c)(2) prior to the court ruling on plaintiffs pending motion for partial class-wide summary judgment." Mem. & Ord., filed Sep. 28, 2000. The court approved the contents of the proposed class notice on December 13, 2000. On April 24, 2001, plaintiff notified the court that the (b)(3) class had been notified, and the court set plaintiffs motion for class-wide summary judgment for hearing on July 13, 2001.
On May 1, 2001, ECS filed a notice of additional authority, alerting the court to, among other things, the case of Slenk v. Transworld Systems, Inc., 236 F.3d 1072 (9th Cir.2001), which, according to ECS, addressed "the need to develop proper evidence of whether the debt(s) at issue are `consumer debts' within the meaning of the [FDCPA]." Not. of Add'l Auth. at 1, filed May 1, 2001. Plaintiff filed an objection thereto. The court heard oral argument on July 13, 2001. By minute order dated July 13, 2001, the court requested supplemental briefing on the "Slenk issue." The parties filed supplemental briefs on July 27, 2001 in accordance with the court's order. Having carefully considered all of the pleadings filed in support of and in opposition to the instant motion, as well as the arguments of counsel, the court now disposes of the instant motion.
The Federal Rules of Civil Procedure provide for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). One of the principal purposes of the rule is to dispose of factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
In considering a motion for summary judgment, the court must examine all the evidence in the...
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