DAVID TOURGEMAN v. NELSON & KENNARD, a partnership; COLLINS FINANCIAL SERVICES, INC., DBA Precision Recovery Analytics, Inc., a Texas corporation; COLLINS FINANCIAL SERVICES USA, INC.; PARAGON WAY, INC.; DELL FINANCIAL SERVICES, LP
No. 16-56190
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
August 20, 2018
D.C. No. 3:08-cv-01392-CAB-NLS
FOR PUBLICATION
OPINION
Appeal from the United States District Court for the Southern District of California
Cathy Ann Bencivengo, District Judge, Presiding
Argued and Submitted June 7, 2018
Pasadena, California
Filed August 20, 2018
Before: Richard C. Tallman and Jacqueline H. Nguyen, Circuit Judges, and Mark W. Bennett,* District Judge.
Opinion by Judge Tallman
SUMMARY**
Fair Debt Collection Practices Act
The panel affirmed the district court‘s dismissal of a consumer class action under the Fair Debt Collection Practices Act.
The FDCPA provides for class statutory damages “not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector.” The panel held that the plaintiff bears the burden of introducing evidence at trial to establish the debt collector‘s net worth because such evidence is essential to an award of class statutory damages.
The panel addressed other issues in a concurrently-filed memorandum disposition.
* The Honorable Mark W. Bennett, United States District Judge for the Northern District of Iowa, sitting by designation.
** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.
COUNSEL
Brett M. Weaver (argued), San Diego, California; Daniel P. Murphy, San Diego, California; for Plaintiff-Appellant.
Tomio Buck Narita (argued) and Jeffrey A. Topor, Simmonds & Narita LLP, San Francisco, California, for Defendant-Appellee.
TALLMAN, Circuit Judge:
David Tourgeman appeals the dismissal of his consumer class action under the Fair Debt Collection Practices Act (“FDCPA“),
I
Tourgeman financed the purchase of a Dell computer through a loan agreement.2 Dell Financial Services arranged for and serviced the loan, which originated with CIT Online Bank. After Tourgeman‘s account allegedly became delinquent, Dell Financial Services charged off and sold the purported debt to Collins Financial Services. Paragon Way, Inc., Collins‘s affiliated debt-collection company, sent several letters encouraging Tourgeman to pay the alleged debt. Collins then referred Tourgeman‘s file to the law firm of Nelson & Kennard, which sent Tourgeman another collection letter. All of these letters identified the original creditor as American Investment Bank, rather than CIT Online Bank. When Tourgeman did not respond to Nelson & Kennard‘s letter, the law firm filed a collection complaint against Tourgeman in state court. The state court complaint, like the collection letters, misidentified Tourgeman‘s original creditor as American Investment Bank. Tourgeman responded to the complaint by retaining counsel. Nelson & Kennard ultimately dismissed the lawsuit.
Tourgeman brought suit against Nelson & Kennard and other entities allegedly involved in collecting his disputed debt.3 He claimed that the letters and complaint violated the
FDCPA by using “false, deceptive, or misleading representation[s] or means in connection with the collection of any debt.”
The district court dismissed Tourgeman‘s lawsuit on summary judgment, but we reversed and remanded. Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1125 (9th Cir. 2014). We held that the misidentifications were material under the FDCPA as a matter of law, subjecting Nelson & Kennard to strict liability. Id. at 1118, 1123-24. On remand, the district court dismissed Tourgeman‘s letter-based claims on standing grounds, allowing only his complaint-based claim to proceed to trial. The focus at trial was to be evidence supporting the class award of statutory damages and Nelson & Kennard‘s bona fide error defense.4
In response to the parties’ pretrial motions in limine to exclude evidence and argument regarding net worth, the district court instructed the parties to address a related issue: which party would carry the burden at trial of introducing evidence regarding Defendant‘s net worth. The district
II
We have jurisdiction under
III
Tourgeman argues the district court misallocated the burden of proof as to Nelson & Kennard‘s net worth. We disagree. In light of the statutory text and structure, we conclude that Congress intended the plaintiff to carry the burden at trial of introducing evidence of the defendant‘s net worth.5
A
Section 1692k of the FDCPA imposes civil liability against “any debt collector who fails to comply with any provision of this subchapter with respect to any person[.]”
two-step determination for awarding statutory damages to class members, excluding named plaintiffs. See
the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector‘s noncompliance was intentional.
The parties agree that one percent of Nelson & Kennard‘s net worth is less than
conceded below that he could not produce any competent evidence of this amount at trial. He asserts, however, that Nelson & Kennard should have carried the burden of introducing evidence of its own net worth.
B
It is “one of the most basic propositions of law . . . that the plaintiff bears the burden of proving his case, including the amount of damages.” Faria v. M/V Louise, 945 F.2d 1142, 1143 (9th Cir. 1991) (citation omitted); see also Schaffer ex rel. Schaffer v. Weast, 546 U.S. 49, 56 (2005) (“Perhaps the broadest and most accepted idea is that the person who seeks court action should justify the request, which means that the plaintiffs bear the burdens on the elements in their claims.” (quoting C. Mueller & L. Kirkpatrick, Evidence § 3.1, p. 104 (3d ed. 2003))). This is because the party who “seeks to change the present state of affairs . . . naturally should be expected to bear the risk of failure of proof or persuasion.” Schaffer, 546 U.S. at 56 (quoting 2 J. Strong, McCormick on Evidence § 337, p. 412 (5th ed. 1999)).
This fundamental rule is not without exceptions. For example, “certain elements of a plaintiff‘s claim may be shifted to defendants, when such elements can fairly be characterized as affirmative defenses or exemptions.” Id. at 57 (citation omitted); see also FTC v. Morton Salt Co., 334 U.S. 37, 44-45 (1948) (“[T]he burden of proving justification or exemption under a special exception to the prohibitions of a statute generally rests on one who claims its benefits[.]“). But where the plain text of the statute is silent as to which party carries the burden of proof, as is the case here, we “begin with the ordinary default rule that plaintiffs bear the risk of failing to prove their claims.” Schaffer, 546 U.S. at 56 (citations omitted). “Absent some
reason to believe that Congress intended otherwise, therefore, we will conclude that the burden of [proof] lies where it usually falls, upon the party seeking relief.” Id. at 57-58.
1
When allocating the burden of proof, “the touchstone of our inquiry is, of course, the statute.” Id. at 56. We first consider the text of the FDCPA. See Bros. v. First Leasing, 724 F.2d 789, 792 (9th Cir. 1984) (“In construing a statute in a case of first impression, [we] look to the traditional signposts for statutory interpretation: first, the language of the statute itself[.]” (citation and internal quotations omitted)); Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 175-76 (2009) (“Statutory construction must begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.” (citation and internal quotations omitted)).
Section 1692k limits statutory damages for the class to ”the lesser of” $500,000 or one percent of the defendant‘s net worth.
If Congress had intended to depart from the default rule and make net worth an affirmative defense or exemption, Schaffer, 546 U.S. at 57, it could have limited liability to $500,000 unless the defendant could establish that one
percent of its net worth is less than that amount. See Evankavitch v. Green Tree Servicing, LLC, 793 F.3d 355, 362 (3d Cir. 2015) (reasoning that use of “unless” in another section of the FDCPA,
Instead, Congress made evidence of the defendant‘s net worth essential to establishing the statutory damages cap. This case is therefore distinguishable from Kemezy v. Peters, 79 F.3d 33 (7th Cir. 1996), a case on which Tourgeman relies heavily. There, the Seventh Circuit placed the burden on the defendant to introduce evidence of its own wealth, but emphasized that such evidence is unnecessary to determine a punitive damages award under
2
The structure of
a
The FDCPA provides a dual-step formula for calculating class statutory damages. The factfinder first determines the defendant‘s maximum liability.
Tourgeman urges us to adopt a different interpretation. He contends that the factfinder can simply skip the cap analysis in subsection (a) and proceed directly to the list of factors in subsection (b), on which he concedes he carries the burden of proof. Under Tourgeman‘s theory, the factfinder may award any amount, which the debt collector can subsequently attempt to limit based on evidence of its net worth. Beyond ignoring the plain language of
quotations omitted)). Before the factfinder can apply the list of factors, plaintiffs must first produce evidence from which the factfinder can determine the limit on statutory damages.
This preliminary showing of net worth distinguishes the FDCPA from the statutory scheme in Hernandez-Miranda v. Empresas Diaz Masso, Inc., 651 F.3d 167 (1st Cir. 2011). There, the First Circuit held that the defendant in a Title VII employment discrimination action carried the burden of proving caps on damages. Id. at 175-76. But, unlike the damages cap under the FDCPA, the caps under Title VII “come into to play only after there has been a verdict award,” and “the defendant employer must affirmatively move to impose the cap and to present relevant evidence.” Id. at 173, 176 (emphasis added) (citing Schaffer, 546 U.S. at 57). Moreover, Title VII explicitly “forbids the court from informing the jury of the limitations on recovery,” which “are for the court, not the jury, to apply.” Id. at 173 (citations omitted). This “ensure[s] that no pressure . . . will be exerted on the amount of jury awards by the existence of the statutory limitations.” Id. (citation and internal quotations omitted). In contrast, the FDCPA‘s damages cap comes into play first when the plaintiff is seeking statutory damages, and is determined by the factfinder as part of plaintiff‘s case in chief. Hernandez-Miranda is inapposite.
b
The two exceptions to liability that are delineated in
provisions imposing liability on debt collectors.” Id. at 578. Neither involves evidence of net worth.
The first exception is the bona fide error defense:
[a] debt collector may not be held liable . . . if [it] shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.
The Third Circuit has explained that §§ 1692k(c) and 1692k(e) are “delineated as affirmative defenses by § 1692k(a)‘s
Sections 1692k(c) and 1692k(e) inform our view that Congress knew how to shift the burden of proof to the defendant, but chose not to do so regarding evidence of net worth. See Camacho v. Bridgeport Fin. Inc., 430 F.3d 1078, 1081 (9th Cir. 2005) (“[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” (quoting Russello v. United States, 464 U.S. 16, 23 (1983))). We have also acknowledged the “effort by Congress in drafting the FDCPA to be both explicit and comprehensive, in order to limit the opportunities for debt collectors to evade the under-lying legislative intention.” Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1178 (9th Cir. 2006) (citation and internal quotations omitted).
This is “the backdrop against which the Congress writes laws, and we respect it unless we have compelling reasons to think that Congress meant to put the burden of [proof] on the other side.” Meacham, 554 U.S. at 91-92 (citing Schaffer, 546 U.S. at 57-58). Here, we see no reason to depart from the default rule. The statute—its text and structure—makes evidence of net worth essential to a class statutory damages award; it is not an affirmative defense. If a plaintiff seeks class statutory damages, it carries the burden of introducing such evidence at trial.
3
Tourgeman argues that Nelson & Kennard must bear the burden on this issue because it has superior access to the relevant evidence. We disagree. No rule of statutory construction or evidence compels that result.
The Supreme Court has acknowledged the general principle that a litigant ordinarily does not carry the burden of “establishing facts peculiarly within the knowledge of his adversary.” Schaffer, 546 U.S. at 60 (citations and internal quotations omitted); see also Dixon v. United States, 548 U.S. 1, 9 (2006). But the Court has also cautioned that “this rule is far from . . . universal,” and “[v]ery often one must plead and prove matters as to which his adversary has superior access to the proof.” Schaffer, 546 U.S. at 60 (citations and internal quotations omitted). Access to evidence, while perhaps a consideration, is far from determinative.
We also note that it is not uniquely difficult for consumer plaintiffs to acquire the debt collector‘s financial information. Compare Thomas v. George, Hartz, Lundeen, Fulmer, Johnstone, King, & Stevens, P.A., 525 F.3d 1107, 1114 (11th Cir. 2008) (declining to apply the “superior access” rule because “proper use of discovery tools, such as interrogatories, requests for admissions, and depositions, will reveal which enumerations may apply,” and thus the plaintiff will not be unfairly surprised at trial), with Evankavitch, 793 F.3d at 365-66 (emphasizing the difficulty of acquiring, as an FDCPA plaintiff, information
Here, Tourgeman had every opportunity to acquire evidence of Nelson & Kennard‘s net worth. A protective
order was entered to give Tourgeman access to Defendant‘s financial information, and Nelson & Kennard was ordered to produce it. Tourgeman obtained hundreds of pages of bank statements, copies of checks, tax returns, and deposition testimony regarding Defendant‘s financial condition.8 FDCPA plaintiffs seeking evidence of net worth “are not peculiarly at a disadvantage in the discovery of necessary facts[.]” Thomas, 525 F.3d at 1114.
Tourgeman also argues that placing the burden on the plaintiff would increase litigation costs, make discovery battles inevitable, and generally discourage class actions under the FDCPA. But “[w]hatever merits these and other policy arguments may have, it is not the province of this Court to rewrite the statute to accommodate them.” Artuz v. Bennett, 531 U.S. 4, 10 (2000) (per curiam); see also Correia v. C.I.R., 58 F.3d 468, 469 (9th Cir. 1995) (“Although [plaintiffs] put forth what may be a legitimate policy rationale[,] . . . it is for Congress, not the courts, to make such a change.” (citation omitted)). We think the statute is clear, and our inquiry ends there.
IV
We conclude, based on the text and structure of
collector‘s net worth to establish entitlement to class statutory damages under the FDCPA.
Costs are awarded to the Appellee. See
AFFIRMED.