de la Torre v. CashCall, Inc.
56 F. Supp. 3d 1073
N.D. Cal.2014Background
- CashCall offered unsecured personal loans to California borrowers; plaintiffs allege EFTA and UCL violations and unconscionable terms.
- The Conditioning Class consisted of about 96,583 borrowers who were required to sign an EFT authorization box to obtain funding.
- Borrowers could cancel EFT after funding, but initial funding depended on agreeing to EFT; 15,506 borrowers later canceled EFT after funding.
- Promissory notes expressly authorized EFT withdrawals, and CashCall funded loans only if the EFT box was checked.
- Plaintiffs seek damages under EFTA and statutory damages; CashCall seeks summary judgment arguing no conditioning, no unconscionability, and limited damages.
- The court held: deny CashCall’s conditioning and unconscionability motions; grant plaintiffs’ cross-motion on EFTA violation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did CashCall condition credit on EFT repayment? | de la Torre and Kempley: EFT authorization was a mandatory condition to fund loans. | CashCall: promissory note only permitted, not required, EFT; other payment methods allowed. | Yes; CashCall violated EFTA §1693k(1). |
| Does EFTA violation support a UCL unlawful-prong claim? | UCL claim premised on EFTA violation is independently actionable. | If no EFTA violation, UCL unlawful fails. | Yes; partial summary judgment on UCL premised on EFTA violation granted. |
| Are there triable issues on actual damages for the Conditioning Claim? | Damages can be proved as to whether NSF fees were caused by the EFT conditioning. | Damage causation and amount require individualized proof; summary judgment warranted in part. | Denied; issues of causation remain for trial. |
| Is CashCall entitled to summary judgment on the Unconscionability Claim? | Lenders’ rates and terms were unconscionable given risk and product design. | Rates and terms are justified by risk, competition, and market conditions. | Denied; numerous factual disputes preclude summary judgment. |
Key Cases Cited
- Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (Cal. 1999) (unlawful prong borrows violations of other laws)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (adhesion contracts and unconscionability framework)
- Nagrampa v. MailCoups, Inc., 469 F.3d 1257 (9th Cir. 2006) (procedural unconscionability and oppression framework)
- Dean Witter Reynolds, Inc. v. Superior Court, 211 Cal.App.3d 758 (Cal. App. 1989) (adhesion and opportunistic terms considerations)
- Perdue v. Crocker National Bank, 38 Cal.3d 913 (Cal. 1985) (factors for substantive unconscionability and price fairness)
- Wayne v. Staples, Inc., 135 Cal.App.4th 466 (Cal. App. 2006) (adhesion contracts and procedural unconscionability considerations)
- Morris v. Redwood Empire Bancorp, 128 Cal.App.4th 1305 (Cal. App. 2005) (oppression and market alternatives in unconscionability)
- California Grocers Ass’n v. Bank of America, 22 Cal.App.4th 205 (Cal. App. 1994) (monetary value and profit standards in unconscionability)