Mario Contreras v. Toyota Motor Sales U.S.A. Inc.Mario Contreras v. Toyota Motor Sales U.S.A. Inc.
Finally, the district court ignored the cases cited by Ceresko in support of his FDCPA claim. In Reichert v. National Credit Systems, Inc., 2005 WL 5549677 (D.Ariz. Mar.31, 2005), Gostony v. Diem Corporation, 320 F.Supp.2d 932 (D.Ariz. 2003), and Axtell v. Collections USA, 2002 WL 32595276 (D.Ariz. Oct. 22, 2002), the district courts held that a request for attorneys’ fees or costs in a demand letter was misleading because no judicial proceedings had been initiated and there had been no determination that the creditor was the prevailing party, as required for the recovery of such fees. Although those cases involved demand letters rather than a complaint in a collection case, the underlying claims are similar to the one here: that a demand for fees or costs by a creditor when there has been no determination that the creditor is the prevailing party, is misleading.
Because the district court‘s findings were based on clear errors and its analysis of the controlling cases consisted of repeated errors of law, its award of attorneys’ fees and costs against Ceresko was clearly erroneous and constituted an abuse of discretion. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990).
Anthony Anscombe, Frederick Douglas Baker, Partner, Stephanie Anne Sheridan, Alison Williams, Sedgwick LLP, San Francisco, CA, for Defendant-Appellee.
Jason Baker, Michael Andrew McShane, Esquire, Audet & Partners, LLP, Michael Francis Ram, Esquire, Ram, Olson, Cereghino & Kopczynski LLP, San Francisco, CA, Charles L. Laduca, Alexandra C. Warren, Cuneo Gilbert & Laduca, LLP, Washington, DC, Robert K. Shelquist, Es-
Before: THOMAS and N.R. SMITH, Circuit Judges, and OLIVER, Chief District Judge.*
MEMORANDUM **
Plaintiffs appeal the district court‘s dismissal of their complaint pursuant to
I
In Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), the Supreme Court described the “irreducible constitutional minimum of standing” as consisting of three criteria:
First, the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized ..., and (b) actual or imminent, not conjectural or hypothetical.... Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be fairly trace[able] to the challenged action of the defendant, and not
Id. at 560-61, 112 S.Ct. 2130 (citations and internal quotation marks omitted; some alterations in the original).
In this case, the district court correctly concluded that the plaintiffs lacked standing to bring their claims concerning limitation of the notice of recall to certain states because they had failed to establish injury-in-fact. When Toyota made the repair available, free of charge, in both recall and non-recall states, Toyota effectively eliminated any distinction between the plaintiffs and vehicle owners in recall states. Plaintiffs do not allege that Toyota‘s repair was ineffective. Therefore, plaintiffs cannot establish injury-in-fact with regard to Toyota‘s response to the defect, and they lack standing.
Plaintiffs asserted an alternative theory, namely that they either paid too much when they bought their vehicles because the vehicles were defective, or that they would not have purchased the vehicles had they known of the defect. However, despite the fact that Toyota made a factual challenge to standing, plaintiffs did not present evidence—even through verified complaint—to establish injury-in-fact, although it was their burden to establish standing. Oregon v. Legal Servs. Corp., 552 F.3d 965, 969-70 (9th Cir.2009); see also Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n. 2 (9th Cir.2003). Therefore, the district court did not err in dismissing the complaint for lack of standing.
II
The district court erred in declining to grant leave to amend. Courts “should freely give leave” to amend “when justice so requires,”
Although the unverified complaint was insufficient to overcome Toyota‘s standing challenges, it is not inconceivable that plaintiffs could have amended their complaint to establish standing through economic harm at the time of purchase or at the time of resale. See United States v. Students Challenging Regulatory Agency Procedures (“SCRAP“), 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973). It is noteworthy that, although plaintiffs did not submit evidence of such economic harm, directly or through verified complaint, Toyota did not present any direct evidence to challenge that theory. Given that an amendment might not be futile, the district court should have allowed the plaintiffs the opportunity to submit an amended complaint. We do not prejudge whether the amendment would have been sufficient, we only hold that the opportunity should have been given.
Each party should bear its or their own costs.
AFFIRMED IN PART; REVERSED IN PART; REMANDED.