Gonzales v. Arrow Financial Services, LLC
2011 U.S. App. LEXIS 19494
| 9th Cir. | 2011Background
- Arrow buys obsolete consumer debts and attempts to collect them despite not reporting them to credit bureaus,
- In 2004 Arrow sent nearly 40,000 California letters offering 50% settlements and mentioning credit reporting,
- Gonzales sued, alleging FDCPA and Rosenthal Act violations from misleading debt-collection language,
- The district court certified a class of 39,727 Californians and later granted summary judgment on liability,
- A jury awarded statutory damages under both FDCPA and Rosenthal Act, totaling $225,500, which the district court affirmed, and Arrow appealed
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Arrow's letters violated FDCPA §1692e(10) | Gonzales argues the language reasonably implied reporting to credit bureaus, which is false | Arrow maintains its conditional language was not a misrepresentation and cannot be read to promise reporting | Yes; letters were deceptive under §1692e(10) under the least sophisticated debtor standard |
| Whether Arrow's letters violated FDCPA §1692e(5) | Gonzales contends the letters implied a threat to report obsolete debts | Arrow argues there was no actual threat or intention to report | Yes; implied threat to report obsolete debts violated §1692e(5) |
| Whether Rosenthal Act permits class actions and permits duplicative statutory damages with FDCPA | Gonzales argues Rosenthal Act allows class actions and dual damages alongside FDCPA | Arrow asserts Rosenthal Act does not permit class actions and duplicative damages are preempted or improper | Rosenthal Act permits class actions; damages may be cumulated with FDCPA so long total damages stay within 1692k cap |
| Whether federal preemption limits the damages recovery under Rosenthal Act and FDCPA | Gonzales contends state and federal damages can coexist without preemption | Arrow argues duplicative damages exceed FDCPA cap and may be preempted | No preemption; damages under both statutes are permissible so long within 1692k cap |
Key Cases Cited
- Brown v. Card Serv. Ctr., 464 F.3d 450 (3d Cir. 2006) (deceptive reading of debt letters under FDCPA §1692e(10))
- Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222 (9th Cir. 1988) (least sophisticated debtor standard applied to FDCPA claims)
- Donohue v. Quick Collect, Inc., 592 F.3d 1027 (9th Cir. 2010) (FDA CP A liability as a question of law under §1692e)
- Rosenau v. Unifund Corp., 539 F.3d 218 (3d Cir. 2008) (definition of deceptive conduct under §1692e(10))
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir. 2010) (duality of remedies; class action admissible under Rosenthal Act)