Patricia Arellano v. Clark County Collection Serv.
875 F.3d 1213
| 9th Cir. | 2017Background
- Arellano owed $371.89 for medical debt; a collection agency sent a letter with a justice-court complaint and a 30‑day dispute statement, while the summons required a written court response within 20 days.
- Arellano did not respond; the agency obtained a default judgment that increased the amount through costs, interest, and fees.
- The agency sought and obtained a writ of execution that described Arellano’s pending FDCPA lawsuit as attachable "property"; the sheriff auctioned the claim and the agency bought Arellano’s FDCPA claims for $250.
- After purchasing the claim, the agency moved to dismiss in federal court, arguing Arellano no longer had standing; the district court dismissed her FDCPA suit.
- The Ninth Circuit considered whether Nevada’s execution procedure could be used by a debt collector to acquire and extinguish a debtor’s federal FDCPA claim, and whether that state-law execution practice is preempted by federal law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a creditor may use state writ-of-execution procedures to acquire a debtor's FDCPA claims and thereby defeat federal enforcement | Arellano: execution sale used to strip her of FDCPA claims was an improper tactic that frustrates the Act’s remedial purpose | Agency: state execution law permits sale of choses in action; FDCPA does not address executions so no preemption | Held: State execution law is preempted to the extent it permits a private party to use execution to acquire and destroy a debtor’s FDCPA claims. |
| Whether Nevada’s execution sale here created an actual conflict with the FDCPA’s objectives | Arellano: conflict exists because the sale thwarts Congress’s private-attorney-general enforcement scheme and enables collectors to evade liability | Agency: FDCPA is silent on executions; allowing sale is a legitimate state collection mechanism and even benefitted debtor by reducing judgment | Held: The execution-sale tactic conflicts with and frustrates the FDCPA’s goals, so it is preempted. |
| Whether federalism or savings clauses bar preemption absent explicit federal text on executions | Arellano: the Act’s purpose and private enforcement mechanism justify preemption despite traditional state role in execution | Agency: states’ historic police powers and execution procedures should not be displaced without clear congressional intent | Held: Even given federalism concerns, conflict preemption applies where state procedure interferes with federal statute’s methods and objectives. |
| Remedy — what should happen to the dismissal and case going forward | Arellano: dismissal improper because acquisition of claim was an impermissible evasion of federal law | Agency: acquisition valid under state law so dismissal correct | Held: Reversed and remanded; federal law preempts use of execution to acquire/destroy FDCPA claims and case should proceed consistent with that conclusion. |
Key Cases Cited
- Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055 (9th Cir. 2011) (describing FDCPA purpose and remedies)
- International Paper Co. v. Ouellette, 479 U.S. 481 (U.S. 1987) (preemption inquiry guided by federal law goals when statute silent)
- Geier v. American Honda Motor Co., 529 U.S. 861 (U.S. 2000) (conflict preemption requires state law to not obstruct federal objectives)
- Altria Group, Inc. v. Good, 555 U.S. 70 (U.S. 2008) (Congress’s purpose is the touchstone in preemption cases)
- CTS Corp. v. Waldburger, 134 S. Ct. 2175 (U.S. 2014) (federalism presumption against preemption absent clear congressional intent)
- Boggs v. Boggs, 520 U.S. 833 (U.S. 1997) (example of preemption applying within traditional state-regulation areas when conflict exists)