Plaintiff Cheryl Anatole Holmes (“Holmes” or “Plaintiff’) brings this action against Defendants Electronic Document Processing, Inc. (“EDP”) and Tanaya V. Sulcer (“Sulcer”) (collectively, “Defendants”) for alleged' violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”); the Rosenthal Fair Debt Collection Practices Act, California Civil Code §§ 1788 et seq. (“RFDCPA” or “Rosenthal. Act”); and California Business and Professions Code §§ 17200 et seq. (“Unfair Competition Law” or “UCL”). Holmes contends that, in an attempt to collect a debt, Defendants filed a false proof of service in a state court action.
Before the Court is Defendants’ Motion to Dismiss Plaintiffs Complaint, ECF No. 13 (“Mot. to Dismiss”), and Defendants’ Motion to Strike Portions of Plaintiffs Complaint, ECF No. 14 (“Mot. to Strike”). Pursuant to Civil Local Rule 7 — 1(b), the Court found this matter appropriate for determination without oral argument. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court hereby DENIES Defendants’ Motion to Dismiss, and DENIES Defendants’ Motion to Strike.
I. BACKGROUND
A. Factual Allegations
Plaintiff Holmes allegedly incurred a consumer credit debt (“the alleged debt”) at some unknown time for personal, family, or household purposes. See Compl. ¶44, ECF No. 1. The debt was consigned and/or otherwise assigned to Lang, Richert & Patch, a debt collection law firm. Compl. ¶ 45.
On June 14, 2012, Lang, Richert & Patch filed a lawsuit against Holmes in the Santa Clara Superior County,. Unifund, CCR Partners v. Cheryl Anatole Holmes, Santa Clara County Case No. 1-12-CV-226523 (the “State Court Action”), in an attempt to collect the debt. See Compl. ¶ 46. Thereafter, Lang, Richert & Patch allegedly hired Electronic Document Processing, Inc. (“EDP”) — a California corporation engaged in the business of composing and selling forms, documents, and other media to be used for debt collection — to serve Holmes by delivering to her a copy of the State Court Summons and Complaint. See Compl. ¶¶ 10, 47. Tanaya V. Sulcer (“Sulcer”) is a process server who is or was an employee and/or agent of EDP. See Compl. ¶¶ 11, 21(b).
Holmes contends that, on or about. July 18, 2012, EDP composed a false Proof of Service of Summons and filed it in the Santa Clara Superior Court in order to obtain a default judgment against her. See Compl. ¶¶48, 49; id. at Ex. 1. This Proof of Service of Summons represents, under penalty of perjury, that’ Sulcer personally served Holmes with a copy of the Summons and Complaint for the Superior Court lawsuit. See Compl. ¶¶ 48-9. However, Holmes disputes that she was served personally. Rather, on or about July 10, 2012, “Plaintiff returned home from work and found the Summons and Complaint wedged under her front door.” Compl. ¶ 54. In addition, the Proof of Service of Summons describes the person served as a female Caucasian, 50-years-old, with brown hair and brown eyes, 5 feet 8 inches tall, and weighing 165 pounds. See Compl. ¶ 54. However, Holmes is 62-years-old, with blond hair and blue eyes, and weighs 125 pounds. See id.
Holmes further alleges that EDP authorized Sulcer to use EDP’s address and
According to Holmes, EDP and Sulcer are engaged in the “practice of ‘sewer service’ — i.e., failing to serve a debtor and filing a fraudulent affidavit attesting to service so that when the debtor later fails to appear in court, a default judgment can be entered against her.” Compl. ¶ l.
B. Procedural History
Holmes filed her Complaint on December 6, 2012. ECF No. 1. On February 19, 2013, Defendants filed their Motion to Dismiss and Motion to Strike the Complaint. See ECF Nos. 6, 7. The following day, the case was reassigned to the undersigned judge. ECF No. 12. On February 26, 2013, Defendants amended and re-noticed their Motion to Dismiss and Motion to Strike Plaintiffs Complaint. See Mot. to Dismiss, ECF No. 13; Mot. to Strike, ECF No. 14. On April 12, 2013, Holmes filed her Opposition to the Motion to Dismiss, see Opp’n to Mot. to Dismiss, ECF No. 18, and her Opposition to the Motion to Strike, see Opp’n to Mot. to Strike, ECF No. 19.
II. LEGAL STANDARDS
A. Motion to Dismiss Under Rule 12(b)(6)
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to
However, a court need not accept as true allegations contradicted by judicially noticeable facts, Shwarz v. United States,
B. Motion to Strike
Federal Rule of Civil Procedure 12(f) permits a court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” See Fed.R.Civ.P. 12(f). “[T]he function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” Sidney-Vinstein v. A.H. Robins Co.,
III. MOTION TO DISMISS
Defendants’ Motion to Dismiss argues that: (1) Holmes fails to state a claim under the FDCPA because Defendants are entitled to the “process server exception” pursuant to 15 U.S.C. § 1692a(6)(D); and (2) Plaintiffs claims are barred by Califor
A. Failure to State a Claim under the FDCPA
To state a claim alleging violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (“FDCPA”), a plaintiff must show: “(1) that [s]he is a consumer; (2) that the debt arises out of a transaction entered into for personal purposes; (3) that the defendant is a debt collector; and (4) that the defendant violated one of the provisions of the FDCPA.” Freeman v. ABC Legal Services, Inc.,
1. Whether Defendants Are “Debt Collectors”
a. “Debt Collector” as Defined by 15 U.S.C. § 1692a(6)
Holmes asserts that Sulcer and EDP act indirectly as “debt collectors” because they regularly serve process for debt collection lawsuits. Compl. ¶¶ 10, 11, 21, 22, 25-28, 37. Specifically, Holmes alleges that, by manufacturing false Proofs of Service, EDP and Sulcer assist other debt collectors in obtaining default judgments when debtors fail to appear in court. Id. Moreover, EDP’s purported advertising and marketing of process service to debt collectors suggest that EDP targets at least some of its service of legal process to assist debt collectors. See Compl. ¶ 21. Defendants dispute that they are “debt collectors” under the FDCPA simply because “a portion of [EDP’s] [attorney] services relate to collection actions of consumer debt.” Mot. to Dismiss at 8.
Pursuant to 15 U.S.C. § 1692a(6), a “debt collector” is defined as any person whose principal purpose of business is to collect debt, or “who regularly collects or attempts to collect, directly or indirectly, debts owed or due.” 15 U.S.C. § 1692a(6). Notably, the term “debt collector” is not limited to formal debt collection agencies. See, e.g., Heintz v. Jenkins,
b. Process Server Exemption
Nevertheless, the FDCPA does carve out certain exceptions to the term
Holmes disputes that Defendants are exempt from the purview of the FDCPA and contends that Defendants’ alleged filing of a false process server return brings Defendants outside of the role of a process server. As Judge Edward Chen noted in Freeman v. ABC Legal Services, Inc.,
Importantly, 15 U.S.C. § 1692d, which is entitled “Harassment or Abuse,” proscribes debt collectors from “engag[ing] in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15 U.S.C. § 1692d. “Without limiting the general application of the foregoing,” Section 1692d lists examples of conduct that is considered unlawful. See 15 U.S.C. § 1692d(l)-(6). For example, a debt collector may not attempt to collect a debt by threatening or using violence to harm a person, using obscene or profane language as a form of. abuse, engaging in public shaming, or harassing people with continuous telephone calls. Id.
While Defendants acknowledge that the process server exemption does not apply when someone engages in prohibited abusive or harassing activities as enumerated in 15 U.S.C. § 1692d, Defendants urge this Court to adopt a narrow interpretation of the “abusive and harassing” behavior which forfeits the process server exemption. See Mot. to Dismiss at 5. In particular, Defendants claim that alleged sewer service does not forfeit the exemption because sewer service is not specifically listed in 15 U.S.C. § 1692d as one of the proscribed harassing, oppressive, or abusive behaviors.
The Court is not persuaded by Defendants’ argument that “the filing of a false proof of service cannot be equated with the type of abusive and oppressive conduct specifically identified by the statute.” Mot. at 6. Importantly, the list of proscribed abusive and harassing activities in Section 1692d is non-exhaustive. See 15 U.S.C. § 1692d (listing six harassing and abusive behaviors that violate the statute “[wjithout limiting the general application” of the statute’s prohibition on harassing, oppressive, or abusive conduct); see also Gonzales v. Arrow Fin. Servs., LLC,
Even if sewer service constitutes the type of “abusive and harassing activity” that forfeits the process server exemption, Defendants still dispute that one instance of sewer service suffices. See Mot. to Dismiss at 6. However, Defendants provide no legal support for their “suggestion” that “[a] single isolated incident does not equal the ‘practice of sewer service’ such that it should obliviate [sic] the process server exemption under the FDCPA.” Id. Moreover, courts have indicated that “the execution of one false proof of service” could “be enough to forfeit the process server exemption.” Freeman,
In light of Freeman and Spiegel, the Court finds that Holmes has alleged sufficient facts to state a claim that Defendants are not covered by the process server exemption. The Complaint alleges that Defendants engaged in at least one act of sewer service because they “failed to serve court process entrusted to them and instead provide[d] a perjured Proof of Service of Summons.” Compl. ¶4. Rather than serving Holmes personally — as Defendants claimed in the Proof of Service— Defendants merely wedged the Summons and Complaint under Holmes’s front door. Further, Holmes alleges that the Proof of Service of Summons describes the person served as a female Caucasian, 50-years-old, with brown hair and brown eyes, 5 feet 8 inches tall, and weighing 165 pounds. See Compl. ¶ 54. However, Holmes is 62-years-old, with blond hair and blue eyes, and weighs 125 pounds. See id. Moreover, Holmes asserts that the Defendants included only limited information on the process server return in an effort shield Defendants from liability if sued. See Compl. ¶ 26. As it may be possible for even one instance of sewer service to forfeit the process server exemption, the Court finds that Holmes has sufficiently alleged that Defendants are “debt collectors” under the FDCPA who are ineligible for the process server exception because of their engagement in “sewer service.” See Freeman,
2. Whether Defendants Violated any Provisions of the FDCPA
The second issue for the Court to resolve is whether Holmes has alleged conduct that violates any provisions of the FDCPA. Holmes claims that, by filing a false Proof of Service and withholding EDP’s name and process server registration number from the Proof of Service, Defendants violated Sections 1692d, 1692e, 1692e(2), 1692é(10) and 1692f of the FDCPA. See Compl. ¶ 69.
As noted above, Section 1692d prohibits “any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15 U.S.C. § 1692d. In addition, Section 1692e prohibits a debt collector from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. Further, Section 1692f prohibits the use of “unfair or unconscionable means to collect or attempt to collect a debt.” 15 U.S.C. § 1692f.
Holmes asserts that Defendants violated Sections 1692d, 1692e, 1692e(2), 1692e(10) and 1692f of the FDCPA by virtue of their engagement in sewer service. Specifically, Holmes asserts that Defendants violated the FDCPA “by making false and misleading representations, and engaging in unfair and abusive practices” which “include, but are not limited to” the following:
(1) manufacturing and selling a fraudulent Proof of Service of Summons that falsely stated that Plaintiff was personally served with a Summons and Complaint when in fact Plaintiff was not;
(2) manufacturing and selling fraudulent, deceptive, and misleading statements and documents which are used in the collection of consumer debts;
(3) knowingly and intentionally withholding their true name and process server registration numbers from process server returns in violation of California Business and Professions Code § 22356.5(a) with the intent to deceive, misrepresent the true nature of the services being provided, and to conceal and obscure Defendants’ joint responsibility for service of process irregularities; and
(4) aiding, abetting and ratifying the fraud, perjury, breach of official duty and other wrongful acts committed by the other Defendants in this case.
See Compl. ¶ 69.
Despite these contentions, Defendants submit that Holmes has failed to sufficiently allege violations of the FDCPA. In addition to the arguments already raised by Defendants as to why they believe that their actions should not constitute “abusive and harassing” conduct as prohibited by 15 U.S.C. § 1692d, see supra Part III.A.l.b, Defendants argue that Plaintiffs claim must fail because Defendants have presented a prima facie case of valid service, see Reply Supp. Mot. to Dismiss at 5. As the same factual allegations of “sewer ser
The Ninth Circuit has held that “a signed return of service constitutes prima facie evidence of valid service which can be overcome only by strong and convincing evidence.” SEC v. Internet Solutions for Bus., Inc.,
However, a Rule 12(b)(6) Motion to Dismiss challenges the legal sufficiency of the alleged claims, rather than whether a plaintiffs evidence establishes a likelihood of prevailing at trial. See Fed.R.Civ.P. 12(b)(6); Freeman,
Because Holmes has sufficiently alleged that Defendants are “debt collectors” and that Defendants have violated provisions of the FDCPA, Holmes has set forth a prima facie case for violation of the FDCPA. Therefore, the Court DENIES Defendants’ Motion to Dismiss on this basis.
B. The Rosenthal Act and California’s Litigation Privilege
Next, Defendants argue that Plaintiff’s claim under the Rosenthal Act is barred by California’s litigation privilege, California Civil Code § 47(b). Mot. to Dismiss at 10. Section 47(b) of the California Civil Code provides in relevant part that, “[a] privileged publication or broadcast is one made ... [i]n any ... judicial proceeding....” Cal. Civ.Code § 47(b). Defendants argue that the alleged filing of a false proof of service constitutes a “privileged communication” made in a judicial proceeding, and thus falls within the scope of California’s litigation privilege.
The California Supreme Court has held that the litigation privilege “applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” Rusheen v.
However, courts have recognized exceptions to the litigation privilege under statutes that: “(1) are ‘more specific’ than the privilege, and (2) would be ‘significantly or wholly inoperable’ if the privilege applied.” Komarova,
To support Defendants’ assertion that the litigation privilege applies here, Defendants cite the minority line of district court cases which stand for the proposition that a claim brought under the RFDCPA is barred by California’s litigation privilege. See Reply Supp. Mot. to Dismiss at 4-5 (citing Lopez Reyes v. Kenosian & Miele, LLP,
However, the California Court of Appeal in Komarova v. Nat’l Credit Acceptance, Inc.,
Nevertheless, Defendants maintain that Komarova is not controlling in the instant action. See Reply Supp. Mot. to Dismiss at 5. Defendants argue that neither Komarova nor any “of the cases cited by Plaintiff where the court denied application of the litigation privilege to state law claims involved eases where the entirety of the alleged conduct took place within the context of litigation such as the filing of a false proof of service.” Reply Supp. Mot. to Dismiss at 5.
Notably, “[t]he California Supreme Court has not ruled on the issue of whether the litigation privilege bars Rosenthal Act claims founded on unfair debt collection practices that occur during the course of litigation.” Huy Thanh Vo v. Nelson & Kennard,
For the foregoing reasons, the Court declines to dismiss Plaintiffs RFDCPA claim as barred by the litigation privilege.
Next, Defendants move to strike various portions of Plaintiffs Complaint as immaterial or scandalous. First, Defendants move to strike as immaterial Holmes’s allegations regarding the filing of a false proof of service because Defendants contend that the allegations are barred by the litigation privilege. Mot. to Strike, ECF No. 7, at 3. As discussed above, the Court rejects this argument. See Komarova,
Second, Defendants move to strike as scandalous and immaterial Holmes’s allegations that Defendants engaged in sewer service and other improper business practices. See Mot. to Strike at 5. Scandalous material has been defined as allegations that cast a “cruelly derogatory light” on a party or person. See Righthaven LLC v. Democratic Underground, LLC,
Given that motions to strike are generally disfavored and the challenged portions of the Complaint are relevant to the claims, the Court DENIES Defendants’ Motion to Strike. See Cruz, No. 12-CV-00846,
IV. CONCLUSION
For the foregoing reasons, the Court hereby DENIES Defendants’ Motion to Dismiss, and DENIES Defendants’ Motion to Strike.
IT IS SO ORDERED.
Notes
. As explained in Richardson v. Alliance Tire & Rubber Co.,
. On February 28, 2013, the parties filed a joint stipulation to amend the briefing schedule, which the Court hereby grants. See Stipulation, ECF No. 15.
. Although Defendants contend that “[e]x-tending the provisions of the FDCPA to process servers ... would have a chilling effect on process servers and grind the already slow wheels of justice to a halt, or at least a trickle,” Mot. at 2, the Court doubts that such a catastrophic effect will indeed transpire. Notably, pursuant to 15 U.S.C. § 1692k, "[a] debt collector may not be held liable in any action ... if the debt collector shows by a
. Defendants also raise for the first time in their Reply in support of the Motion to Dismiss that “[n]either the FDCPA nor the RFDCPA directly regulate service of process,” and "[t]he RFDCPA does not apply to Defendants.” see Reply Supp. Mot. to Dismiss at 7-8. This Court "need not consider arguments raised for the first time in a reply brief.” Zamani v. Carries,
. In addition, it is well established that ‘‘[t]he California litigation privilege ... does not apply to FDCPA claims.” Santos, Case No. 11-02683,