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Tourgeman v. Nelson & Kennard

United States Court of Appeals, Ninth Circuit

August 20, 2018

David Tourgeman, Plaintiff-Appellant,
v.
Nelson & Kennard, a partnership, Defendant-Appellee, and Collins Financial Services, Inc., DBA Precision Recovery Analytics, Inc., a Texas corporation; Collins Financial Services USA, Inc.; Paragon Way, Inc.; Dell Financial Services, LP, Defendants.

          Argued and Submitted June 7, 2018 Pasadena, California

          Appeal from the United States District Court for the Southern District of California D.C. No. 3:08-cv-01392-CAB-NLS Cathy Ann Bencivengo, District Judge, Presiding

          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.

          Before: Richard C. Tallman and Jacqueline H. Nguyen, Circuit Judges, and Mark W. Bennett, [*] District Judge.

         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.

          OPINION

          TALLMAN, CIRCUIT JUDGE.

         David Tourgeman appeals the dismissal of his consumer class action under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq. 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[.]" § 1692k(a)(2)(B). The statute is silent as to which party bears the burden of introducing evidence at trial to establish the debt collector's net worth. Tourgeman appeals the district court's conclusion that he bore this burden. Because the FDCPA makes evidence of the defendant's net worth essential to an award of class statutory damages, we agree with the district court and affirm.[1]

         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." 15 U.S.C. § 1692e. The court later certified a class of consumer plaintiffs.

         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 court ultimately held that Tourgeman carried this burden. Because Tourgeman lacked competent evidence of Nelson & Kennard's net worth, the district court dismissed his complaint-based class claim. Tourgeman moved to dismiss his remaining individual claim with prejudice. The district court granted the motion, and Tourgeman timely appealed.

         II

         We have jurisdiction under 28 U.S.C. § 1291. Whether the district court properly allocated the burden of proof is a conclusion of law reviewed de novo. Molski v. Foley Estates Vineyard & Winery, LLC, 531 F.3d 1043, 1046 (9th Cir. 2008). We review the district court's interpretation of the ...


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