Mar/Apr - California Association of Collectors

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Rosenthal
Debt
By The Numbers:
FDCPA – Collection Facts & Figures
2014 Year & Credit
on our Changing
in Review Reporting
Workforce
COLLECTOR’S
PUBLISHED BY THE CALIFORNIA ASSOCIATION OF COLLECTORS | MARCH/APRIL 2015 | VOL. 66, NO. 13
STEPHEN
Turner
Lewis, Brisbois, Bisgaard, & Smith, LLP
NATIONAL BIG DAY OF GIVING
Support the CAC Educational Scholarship Foundation
on May 5, 2015
The CAC Educational Scholarship Foundation will participate
in the national Big Day of Giving on May 5 by conducting a
24-hour online campaign in support of its annual scholarship program.
Look for outreach on and before May 5
via emails, Facebook, and LinkedIn.
By donating on May 5, you may help the CAC Educational Scholarship Foundation
earn incentives and prizes that would enhance the financial reach of your donation.
CAC Educational Scholarship Foundation
The CAC Educational Scholarship Foundation receives nearly 800 scholarship applications
each year and awards three scholarships annually to high school seniors. All applicants enhance their
financial literacy by researching and writing an essay on establishing and maintaining good financial credit.
Big Day of Giving
During the Big Day of Giving, more than 150 communities across the country will rally support
for the vital work of local nonprofits in the hopes of raising more than $100 million nationwide.
CAC’S
VENDOR
HIGHLIGHT
Thomson Reuters CLEAR
Andrea Berg
610 Opperman Drive
Eagan, MN 55123
651-848-4232
andrea.berg@thomsonreuters.com
clear.thomsonreuters.com
CLEAR, from Thomson Reuters, is the nextgeneration research tool from Thomson
Reuters with a robust collection of public and
proprietary records, including work affiliations
data and alerting functionality, to help you
find and evaluate debtors. Web Analytics, a
feature within CLEAR, instantly searches and
categorizes social network sites, blogs, news sites
and watch lists within the deep web. CLEAR
also offers integrated solutions including
system-to-system and integrated batch
processing to meet your specific investigative,
analytic, and collection needs.
TABLE OF contents
CAC Volunteer Leadership
5
President’s Article
7
Director’s Message
9
Legislative Update
11
General Counsel Update
13
ACA International Update
15
Member’s Corner
17
Region Round-Up
19
CAC Legislative Day Registration
23-26
Notes from the Litigation Trenches:
Rosenthal FDCPA – 2014 Year in Review
27
Debt Collection & Credit Reporting
38
By The Numbers: Facts & Figures
on our Changing Workforce
39
Keep Your Friends Close
& Your Consumer Attorneys Closer
40
Member Spotlight: Stephen Turner
50
COLLECTORS
Editor in Chief/Executive Director
Vickie Kirk
Vickie@calcollectors.net
Member Services Coordinator
Rachel Myers
Rachel@calcollectors.net
©2015 California Association of Collectors, Inc. All rights reserved.
Materials may not be reproduced without written permission.
MARCH/APRIL 2015
COLLECTOR’S INK
3
REGION news
1
Region Presidents...
REGION 1
Francesca Strucksberg
Tel: 510-632-3366
Francesca@myarmteam.com
REGION 3
Courtney Reynaud
Tel: 559-485-7900
courtney@fresnocredit.com
REGION 2
Kelly Parsons O’Brien
Tel: 707-432-2401
kelly@cbacredit.com
REGION 4
David Cotter
Tel: 619-295-1200
dcotter@absoluteresolutions.com
REGION 5
Shawn Suhr
Tel: 805-899-4431
shawn@contcred.com
2
3
5
4
UPCOMING REGION EVENTS
REGION 1+2
Friday, May 15
Program followed by lunch
Scott’s Seafood Restaurant
Oakland
REGION 3
Monday, May 18
Program followed by lunch
The Cliffs Resort
Pismo Beach
REGION 4
TBA
REGION 5
Thursday, May 14
Late afternoon program
followed by dinner
The Castaway Restaurant
Burbank
UPCOMING STATEWIDE EVENTS
2015 LEGISLATIVE DAY
AND PAC FUND RAISER
March 22-23, 2015
Sacramento
98TH ANNUAL
CONFERENCE & EXPO
October 12-13, 2015
Monterey
4
COLLECTOR’S INK
MARCH/APRIL 2015
CAC VOLUNTEER leadership
CAC Executive Committee
President
Patrick Collins
Herbert P Sears
Company, Inc.
Bakersfield
Tel: 661-283-0229
pcollins@hpsears.com
President-Elect/CFO
Linda Guinn
CB Merchant Services
Stockton
Tel: 209-944-9001
lguinn@cbmerchantservices.com
Vice President/Secretary
Sandy Lubin
Credit Bureau of
San Luis Obispo &
Santa Barbara Counties
Grover Beach
Tel: 805-481-3155
slubin@cbslo.com
Member-at-Large
Credit Bureau Associates
Fairfield
Tel: 707-432-2401
kelly@cbacredit.com
Immediate Past President
Matt Logan
Collection Consultants
of California
Glendale
Tel: 818-551-5600
mmlogan@ccocinc.com
Committee Chairs
Budget
Linda Guinn
209-944-9001
lguinn@cbmerchantservices.com
Education
707-432-2401
kelly@cbacredit.com
Legislative Council
Cindy Marler
916-631-7085
cindy.marler@statesrecovery.com
Communications
Sandy Lubin
805-481-3155
slubin@cbslo.com
Legal & Legislative Fund
Sean Escobar
213-985-2111
sescobar@uscbinc.com
Membership
Rodney Meeks
800-679-6888
rodney@e-ccsinc.com
Vendor Membership
TBD
PAC
Robert Tavelli
707-509-5565
rtavelli@tavellico.com
Foundation
Education Scholarship Foundation President
Matt Logan
818-551-5600
mmlogan@ccocinc.com
COLLECTORS
Collector’s Ink welcomes letters to the editor and submissions from CAC members, however, we
cannot guarantee that we publish any of the articles we receive. Collector’s Ink editors also reserve
the right to edit all submissions.
of publication. It is not intended to be a full and exhaustive explanation of the law in any area,
nor should it be used to replace the advice of your own counsel. You are encouraged to seek the
advice of counsel relating to any matters affecting you or your business.
Advertisement of products or services in Collector’s Ink does not constitute an endorsement by CAC.
Mailing Address:
Collector’s Ink (ISSN 0199-2341) is published bi-monthly by the California Association of Collectors.
Collector’s Ink
1455 Response Road, Suite 240
Sacramento, CA 95815
Phone: 916-929-2125
Fax: 916-929-7682
Website: www.calcollectors.net
Email: cac@calcollectors.net
The annual subscription rate for members of the Association is $30 included in the annual
membership dues. Collector’s Ink is the official publication of the California Association of
Collectors, Inc.
Information contained in Collectors Ink is not intended to be legal advice and may not be used
as legal advice. Every effort has been made to ensure this information is up-to-date as of the date
MARCH/APRIL 2015
COLLECTOR’S INK
5
PRESIDENT’S article
Are we expecting better or
different results in our business
this year? Expecting “different,” but
doing everything the same way?
Change it up in 2015 and attend a Region meeting!! I have attended four of the five region meetings (San Diego, I’ll be there in
the spring) for the start of this year and that helped me recognize
what a GREAT resource they can be!
The theme for all the meetings revolved around “Human Resources,” with a specific review of all the new “labor” laws going
into effect in California in 2015. I heard mention that many
agency members did not see a need to attend the meetings because they already knew the laws, or they have their own “HR”
resource so why go?
The scope of the discussions at all the regions had incredible
value well beyond the letter of the law, and was a huge missed
opportunity if you did not attend. The different presenters at each
session all had different ideas about how to approach the laws and
implement the new regulations, with a perspective based on size
and scope of each business. A variety of different examples and
specific questions by agency members and vendors also helped
provide a lot of practical clarification and direction on the subtleties of the new (and some existing) laws.
Need other reasons to attend? These meetings included wine
tastings (including winery reps), wine auctions, 50/50 drawings,
great locations and great food. The networking and an opportunity to meet some new people was also of great value. Use the
meetings as a reward for some of your other staff including unit
leaders, collectors or client services. We want to see all of you
MARCH/APRIL 2015
Patrick Collins
PRESIDENT
too, but bringing along a “fresh face” to
introduce to your association can help explain “what you do at all these meetings”
and perhaps you help determine interest or develop new leaders
for your own company.
It’s also a great opportunity to bring one of your vendors if they
are in the neighborhood and host their lunch/dinner as a way to
say thanks for their support of our industry. You can also bring a
client (just give them an alias if you’re concerned about competition!?!!?) or bring a prospective new member, agency, vendor or
credit grantor. We can have fun with these meetings and create
some energy for our own business and the industry.
Lastly, thanks to all our Region Presidents. We have a great crew
that now “meets” on a regular basis to discuss content, locations
and all the other elements to build great region meetings and add
value to your business. They would be:
Region 1
Region 2
Region 3
Region 4
Region 5
Francesca Strucksberg,
American Revenue Management
Kelly Parsons-O’Brien, Credit Bureau Associates
Courtney Reynaud, Fresno Credit Bureau
David Cotter, Absolute Resolutions
Shawn Suhr, Continental Credit Control
They also serve on the Board of Governors and I am grateful for
all their input and energy. A big THANKS to them all!!
Patrick Collins is the owner of Herbert P. Sears Company, Inc. He
can be reached at pcollins@hpsears.com or (661) 283-0229.
COLLECTOR’S INK
7
CAC star ted as a cause…
and it still is.
CAC founders were a
community and we still are.
CAC was founded as an association to ser ve a ‘purpose’
and we still do.
CAC work was a shared responsibility and it still is.
CAC’s success was clear…and it still is.
Celebrating 98 years of serving our clients and our commu
nities.
DIRECTOR’S message
Vickie Kirk
EXECUTIVE DIRECTOR
L
ast week I had the privilege of attending a by-invitation association
executive director two-day facilitated course entitled Evolving our Associations…Evolving Ourselves. It was outstanding. My brain was very tired by the end of
the second day.
The discussion began with the beginning…
the beginning of our associations…WHY
did our founders come together to form
our associations. There was great discussion about understanding and appreciating
each of our association’s histories and the
evolutionary leaders over the time of those
histories. It was stated that for all of these
associations there was a cause before there
was an organization. And, that the original governing Boards were there for the
cause…NOT for the organization. And
those causes fueled the passion in those
early leaders to organize and work together
to accomplish what they could not accomplish alone. Can the momentum from the
past propel us into the future?
I thought a lot about the perseverance and
solidarity of our leaders…past and present…particularly with the legislation that
keeps coming back again and again nipping
at the heels of this industry, sometimes
taking a big bite and shaking its ugly head
without reason and understanding. CAC
leaders have been and are advocates of the
purpose of this association.
You have an opportunity in a few weeks
to advocate for CAC at the Capitol. Please
plan to join your colleagues for the CAC
Legislative Day events. Begin on Sunday,
March 22 with the fabulous evening along
the Sacramento River with a delicious meal
and lively silent and live auctions to raise
money for the CAC PAC. On Monday,
March 23 we will hear from legislators and
policy makers throughout the morning and
visit them in their offices in the afternoon.
The culmination of the event will be the
Scholarship Banquet where CAC will present three high school students with scholarships to enhance their college experiences.
Plan to be there.
COLLECTOR’S INK
9
LEGISLATIVE update
The California Legislature is rushing to its bill
introduction deadline on February 27th. While the
Legislature began the 2015-16 Legislative Session
the first week of December with the swearingin of Members and election of Leadership, most
actual legislative proposals will be introduced the
last week of February. With two-thirds of the
Legislature either freshman or just starting their
second terms, many of the bills introduced to
meet the deadline will be what we call “spot bills.”
“Spot bills” are introduced by Members
of the Legislature because they know they
want to do something about a particular
issue but are not sure what – it could
be privacy, gun control, immigration or
greenhouse gases. They drop in a bill that
changes a “that” to a “the” in a relevant
code section, the bill could be as simple
as that or it could say, “it is the intent of
the Legislature to enact a bill to protect
consumers from______”. They then have
a bill that they can amend after 30 days
with more substantive provisions. A good
example of this tactic was AB 1710, which
when introduced, “made technical non-
MARCH/APRIL 2015
substantive changes” to existing law, then
was amended into a massive privacy bill
covering the collection, usage and storage
of personal information.
As your legislative advocates, during
the course of the year we will review the
thousands of bills introduced in the Senate and the Assembly looking for legislation that we will flag, which might impact
your business. We review any bill that
looks like a possibility with CAC legal
counsel Tom Griffin, Executive Director
Vickie Kirk and the Legislative Council
and then determine which bills are priorities to oppose and seek amendments or
Cliff Berg
GOVERNMENTAL
ADVOCATES
watch. We then repeat this process every
time a bill is amended to review how the
amendments might impact you.
The other inside baseball phrase common
at the Capitol is “gut and amend.” This
phrase refers to bills that are gutted – the
contents are taken out, and replaced with
an entirely new bill. The last few days
of the Legislative Session in August or
September are the time periods when
gut-and-amends become the business of
the day as the Legislature meets literally
around the clock, rules are waived, and
interests that have been lying in wait all
year come forward with amendments at
midnight two days before adjournment,
that create new bills without public notice
or scrutiny. That is when we are also here
monitoring amendments, on the lookout
for anything that might be a problem for
CAC.
Between the introduction of bills, spot
bills, and the gut-and-amends at the end
the Legislature will literally hear and vote
on many thousands of bills in Committee hearings and on the floor. CAC will
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Legislative Update continued from previous page
support some, oppose some and seek
amendments to others, working with
other stakeholders in areas that impact
the collection industry.
At the moment CAC is looking to sponsor two bills, one to fix the Greentree
decision and the other to provide a cost
of living bump to statutory set attorneys’
fees for open book accounts. In Greentree, a court found that payment plans
agreed to by the debtor and the creditor
that reduced the amount owing in return
for a payment schedule were illegal if
they reverted back to the original debt,
if the debtor failed to make the timely
payments. This bill will be introduced
by Assemblyman Scott Wilk (R-Santa
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Clarita). The attorney fee measure will be
introduced by Senator Mike Morrell (RInland Empire).
The Legislature will continue to deal with
issues related to privacy. The State Assembly created a new Standing Committee on Privacy and Consumer Protection.
It is chaired by Assemblyman Mike Gatto
(D-Los Angeles) and will be holding its
first hearing next week to take ideas from
the public via the internet. The Senate
Judiciary Committee held a hearing this
week on the threat to privacy proposed
by drones. New technologies continue
to be perceived as threats to personal
privacy. We have seen bill proposals floating around on drones, internet, smart
phone applications, and voice recognition
technology.
We also expect to see a number of bills
related to data breaches and data security.
Assemblyman Bob Wieckowski is now
Senator Wieckowski and we expect him to
re-introduce legislation on private student
loan collection, bankruptcy exemptions
and something on wage garnishments.
All of these are important reasons why you
should come to Sacramento in March for
CAC’s annual Legislative Lobbying Day.
Cliff Berg is CAC’s Legislative Advocate. He
can be reached at cberg@govadv.com or by
phone at (916)448-8240.
MARCH/APRIL 2015
GENERAL COUNSEL update
An Update, Another Update,
A Shift & An Opportunity
An Update: Diaz v. Kubler Corporation
This is the case in which the federal district court in San Diego
held that, when a creditor’s contract does not have a prejudgment
interest clause, the collection agency violates the FDCPA and the
Rosenthal Act when it sends a demand letter that it includes a claim
for prejudgment interest. The district court held that a demand for
prejudgment interest, when the contract is silent on such interest,
may only be made in the context of litigation. In other words, a collection agency must sue in order to recover prejudgment interest in
the absence of an interest clause in the contract.
CAC and ACA filed a joint amicus brief before the Ninth Circuit. In the amicus brief, CAC and ACA argued (correctly) that the
court incorrectly interpreted Civil Code Sections 3287 and 3289. The
oral argument on the appeal has now been set for April 7 in Burbank.
The question being asked by CAC members is when will the
Ninth Circuit render a decision in this case. Unfortunately, there is
no deadline for such a decision. However, most cases are decided
within three months to one year after oral argument.
Another Update: Greentree Fix
CAC has found an author to introduce its bill to amend Civil
Code Section 1671 to “fix” the Greentree decision. In that case, the
parties negotiated a settlement agreement with a stipulated judgment. Under the agreement, if the debtor made the agreed-upon
payments (totaling $20,000), no judgment would be entered and the
action would be dismissed. However, if the debtor defaulted, judgment would be entered for the full amount sought in the complaint
including damages, interests, recoverable costs and fees (about
$61,000), minus the amount of the payments, if any, received under
MARCH/APRIL 2015
Tom Griffin
CAC GENERAL COUNSEL
the settlement agreement. The debtor defaulted on the first payment
due under the settlement agreement; no payment was made under
the agreement. The creditor then sought the entry of judgment pursuant to the settlement agreement and the debtor objected, arguing
that the increased amount was an unreasonable liquidated damage.
The court agreed with the debtor. The court held that, upon the
default of the debtor under the settlement agreement, the creditor
was limited to having the judgment entered for $20,000. The court
held that to allow a judgment to be entered for the higher figure
(about $61,000) would violate Civil Code Section 1671 since the
higher figure constituted an unreasonable liquidated damage.
These types of settlement agreements are relied upon regularly
as a “carrot and stick” approach designed to foster payment. The
Greentree decision is wrong. It relies on a faulty interpretation of the
statute and it is against public policy since it undermines settlements
and promotes pursuing lawsuits to judgment. The bill offered by
CAC seeks to clarify the statue to protect against a Greentree-type
decision by excluding the entry of a judgment for the full amount
sought in the complaint (principal, interest, attorneys’ fees and costs),
less any payments made, from the definition of liquidate damages.
A Shift: Time-Barred Debt
Increasingly, regulators and legislators are moving toward making it unlawful to attempt to collect debt that is beyond the applicable
statute of limitations, so called “out of stat debt.” Federal Regulators
have averred that creditors and their agents should not file lawsuits
to collect “out of stat debt.” The Sixth Circuit Court of Appeals has
recently ruled that the inclusion of a settlement offer in a collection
agency’s demand letter aimed at collecting “out of stat debt” may
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General Counsel Update continued from previous page
violate the FDCPA. The question should at least be put to a jury, the
court said. (Buchanan v. Northland Group, January 13, 2015). In that
case, the plaintiff sued (and sought class action status) claiming that
the inclusion of the term “settlement” in a demand letter concerning time-barred debt was deceptive and illegal under the FDCPA.
The court found that the term “settlement” is a legal term and its use
may cause the least sophisticated consumer to assume he or she will
be sued in the future. The court also noted that the letter failed to
disclose that a partial payment - like the one solicited in the letter –
would restart the statute of limitations and could, then, expose the
consumer to liability that had otherwise been extinguished.
There is a split among the circuit courts on the issue addressed in Buchanan. Additionally, some states like New York have
instituted regulations and passed laws requiring significant new
(and at times conflicting and confusing) disclosure requirements
and procedures when attempts are made to collect “out of stat debt.”
Further, the National Consumer Law Center (“NCLC”) has urged
the CFPB to prohibit debt collectors from attempting to collect “out
of stat” debts, whether by demand letter, litigation or other means.
The NCLC also wants to ban the sale of time-barred debts.
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A long time ago, while in law school, this author was taught
– repeatedly – that the statute of limitations was an affirmative
defense, firmly rooted in our common law. That fundamental principle is unfortunately shifting.
The question now is how significant will the shift be? Where
will we end up? As one CAC member recently observed, “Will
credit reporting on debt owed by Californians be limited to four
years?” How slippery will this slope be?
An Opportunity: Legislative Day
CAC’s annual Legislative Day is set for March 22-23 in Sacramento. This meeting offers members a fantastic opportunity to
meet with state legislators and to share a more accurate picture
of the collection industry. This relationship building has proven,
and will continue to prove, to be very beneficial in presenting and
representing the industry’s issue before the legislature.
Please make plans to attend.
Tom Griffin is CAC’s General Counsel and can be reached at
TGriffin@hsmlaw.com or (916)925-6620.
MARCH/APRIL 2015
ACA INTERNATIONAL update
ACA’S WASHINGTON INSIGHTS CONFERENCE —
Now Is the Time to Come to DC
ACA International and its staff work hard to represent
you everyday, but our greatest strength will always be
the involvement of our members in staying informed and
telling the truth about our industry to decision-makers.
That is one of the reasons that ACA International has expanded
this year’s April conference and created the new Washington Insights Conference. This year’s conference will be held from April
14-16, and our special keynote speaker will be the influential columnist and television commentator Charles Krauthammer. This
is a rare opportunity to hear directly from
Dr. Krauthammer about the dynamics of the
political process and the latest news from the
nation’s capitol. A number of Congressional
leaders and regulators will also be there,
ready to speak with you about the important
issues you and your business face everyday.
Dr. Krauthammer
All ACA members are encouraged to attend.
Think that your voice will get lost in the chorus on Capitol Hill?
Not so. Now is the perfect time to make your voice heard in Washington. The beginning of the 114th Congress is upon us, which
means many new faces as well as familiar faces are back on Capitol
Hill. As a result of the November elections, the Republicans now
control both the Senate and House, and there is a new determination to get things done. New Congressional members are now
learning what they need to know about the issues and concerns you
face every day. Even political veterans are rethinking priorities for
the next two years. To make sure our views on TCPA and CFPB are
part of those discussions now is the time to cultivate new relationships and/or further develop relationships with your legislators.
Pat Morris
CEO,
ACA INTERNATIONAL
coming for our industry. You will learn about the latest changes and
the actions being considered by the regulators of the federal government. You will get the very latest information right from the source.
2. Your voice will be heard. We are not powerless against these
organizations—the CFPB, FCC, FTC, and others—and it is important for representatives of these agencies to hear directly from
you. They need and want to hear real-life examples of what their
past actions have caused for your employees, business, and those
consumers from whom you are attempting to collect. Your input
will enable your elected representatives – those Senators and Representatives from back home—understand what changes they can
make to fix the problems with our current debt collection laws.
3. You will help your business. You will have a chance to meet
and hear from leading members of Congressional, industry-leading lobbyists pm TCPA and other regulatory issues, officials from
regulatory agencies such as the FCC and the CFPB, and highranking members of the FCC. There will be plenty of opportunity
to ask questions and dive deep into how you can best be prepared
to meet the demands your business will face in 2015 and beyond.
Make sure you join us in Washington for this new Washington
Insights Conference, April 14-16, 2015. You can find all the details
on the events calendar by clicking on www.ACAInternational.org
I sincerely hope to see you there so that our voice is heard loud
and clear on The Hill.
Why is attending this meeting so important? Three good reasons:
1. You will be empowered by real information and insight. Attending this meeting will ensure that you are informed about what is
MARCH/APRIL 2015
Pat Morris is CEO of ACA International. He can be reached at
Morris@acainternational.org.
COLLECTOR’S INK
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MARCH/APRIL 2015
MEMBER’S corner
FCN helps to make spirits bright at Christmas
There are very few opportunities in our industry where we
get to be seen as the hero so when that time comes, you grab it!
Ann’s Kids for Christmas is one of those opportunities…
December 13, 2014 was just an ordinary Saturday, but for 313
very special children in Tulare County, the day turned out to be
magical. Each little one had been chosen to attend the 31st annual
Ann’s Kids for Christmas Party!
An announcement of their arrival resounded in the auditorium. As they entered, each child was greeted by a line of elves (volunteers) wishing them a Merry Christmas and welcoming them
with numerous high fives, smiles and jolly faces. What would the
remainder of the party be like? Anticipation filled the air!
The Ann’s Kids for Christmas Program has a rich history of touching the lives of literally thousands of children
over its 31 year history. The program works with staff members and teachers from various local schools to help select
children between the ages of 3 and 10. Without this event,
many of these children may not have the chance to experience the magic of Christmas.
The program gives the children an opportunity to enjoy
pizza, lemonade, cookies, fruit, new sweatshirts, new (age appropriate) books, new shoes and new socks. The biggest moment of all is the arrival of Santa and the opportunity for him
to visit with each child, giving each a special Christmas gift,
and hearing each of their hopes and wishes for Christmas.
What an amazing day! Smiles and the laughter filled the
room as the children looked around to see all the wonders of
the amazing day. “We even get shoes?” said one young girl.
The volunteer’s response was “Yes, along with three new pair
of socks.” Her response “OMG I’m going to cry!” And then,
just as quickly as it started, the event was over. Each child
walked back to the buses sporting a new pair of shoes and
carrying a huge bag of gifts. Each volunteer left with a full heart.
Financial Credit Network, Inc. has supported the program
since the early 1980’s. In 2013, FCN took over from the founders
of the event and now is responsible for coordinating the efforts
of the volunteers, fundraising and purchasing toys, sweatshirts,
socks and shoes.
For more information on how you or your company can
get involved with Ann’s Kids for Christmas 2015 please contact
Venita Jourdan at 800-540-9011 or vjour@fcnetwork.com or visit
their web site at www.fcnetwork.com to see a video montage of
the history of the event.
ATTENTION MEMBERS
Do you have news or accolades to share about your agency?
Please let us know at cac@calcollectors.net.
If you would like to submit editorial ideas, contact: Vickie Kirk
at CAC at 916-929-2125 or vickie@calcollectors.net
MARCH/APRIL 2015
Welcome to the newest
CAC members:
■U
nited Legal Group and Credit Collection Bureau
■T
ransworld Systems
■W
elk Hospitality Group, Inc.
COLLECTOR’S INK
17
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REGION round-up
REGION 1
Gary Looney
Creditors Trade Association
What made you get into the
collection industry?
Happenstance. In 1978 I was taking
business management courses at Sonoma State, and answered
an ad for sales manager trainee. The company was Trans World
Systems the first collection company to offer a letter service. The
advertised job was for selling their pre-paid letter service, but
In the interview they said I was better suited for their standard
collection division. I was offered a job as telephone collector and
went to work in the Santa Rosa branch. Subsequently I became
the branch manager for the Oakland office and in 1982 I was
transferred to the company headquarters in Rohnert Park in the
capacity of regional VP overseeing 14 branch offices.
When did you open your own business?
I briefly left the industry in 1988 only to realize that I had been
bitten by the collection industry’s entrepreneurial bug and
started looking for an opportunity in that direction. I found it
with Great Western Collection Bureau, a commercial collection
firm in existence in San Francisco for 68 years. The firm’s second
and current owner was winding down the activity and I saw the
opportunity to revive the flagging company by leveraging its
longevity with the experience I had accumulated in my roles at
Trans World. There was only one snag, I had no money to buy
the company. Somehow the stars aligned because the owner
trusted me to take over and make unsecured monthly payments,
which turned out good for both of us.
I lived in Santa Rosa and made the daily commute to San Francisco along with my wife Debbie, until we moved the operation to
Santa Rosa and retained only an executive office in San Francisco.
In 1999 I had the good fortune to acquire Creditors Trade Association of Sacramento, and combined the two companies in 2001.
MARCH/APRIL 2015
What are you most proud of regarding your
company?
We specialize in collections for wine and food wholesale distributors and we are proud to give our client more than they expect
in liquidation rate. Early on, we implemented a collection model
consisting of one contact to determine cooperation, followed
by immediate litigation if the conversation did not result in an
arrangement. Instead of collectors we hired staff attorneys to
negotiate and sue. The discovery and implementation of a little
known Code allowing the seizure of a judgment creditor’s liquor
license was the definitive turning point for the liquidation rate.
Is there a basic philosophy of the company or
organization and, if so, what is it?
Before it became a buzz phrase, we were applying a thinkingout-of-the-box philosophy, to the “me too” system common
to every industry. We were fortunate that it worked well and
resulted in a niche business. We also operate from the principle
that it is much easier to retain a client than acquire a new one;
so we treat each client as if they are the only one.
Who in the industry do you look up to?
I met Allan Strucksberg in 1979 when his sales ability became
legendary within Trans World. In 1991 when he started his
own agency without even one client in the wings, the odds were
stacked against him, but he put his company on the map and I
don’t know of anyone with the kind of mettle.
I looked up to him for his talent and fortitude, but most importantly for the impeccable integrity he demonstrated in business
and friendship. I had occasion to be on the receiving end of that
integrity when a sales rep left my employee and applied for a
sales job with Allan saying he had a large portfolio of clients to
bring aboard. Allan would have no part of that, so he unceremoniously declined the offer and notified me that my client list was
being shopped around.
What are the most important personal satisfactions
connected with your position in this industry?
COLLECTOR’S INK
19
Region Round-Up continued from previous page
That despite the connotation attached to the profession of “bill
collector,” we perform a needed service in our credit society, and
we can do so while respecting all involved.
If you were entering this career path today, what if
anything would you do differently?
In looking back I appreciate the opportunities and the chance to
seize them at the right moment, so I probably wouldn’t change
anything.
This is YOUR forum, is there anything you would
like to comment on about your company or the
industry?
The industry has come a long way in the last 25 years by way of
improving its visibility and image with lawmakers and with its
newly-acknowledged positive impact on businesses. There is
yet much work to be done as we get our footing into this new
technology-driven century. Now more than ever, the name of
the game is to remain preemptive and innovative.
tion as a regular clerk and she worked her way up from there.
Ana has always been a hard worker, so shortly after the clerk
position she became the Clerk Supervisor. Moving forward she
then became Collection Supervisor and with hard work she is
now the Collection Manager. Ana states “she enjoys learning
the whole aspect of the collection recovery cycle and likes the
satisfaction of collecting money for clients.”
There was a common theme to Ana’s answers; always community and recovering money for clients.
Ana is especially proud that CB Merchant Services has been able
to give back to the community by donating time and money to
non-profits and through scholarships. Ana says their company
philosophy is “Serving the collection needs of San Joaquin
County and surrounding areas for over 64 years.”
One of the questions I asked Ana was, “What are the most important personal satisfactions connected with your position in
this industry?” Her answer: “Giving back to the community the
money they may have thought they lost.” This is one thing that
many people not in the collection industry don’t realize, how
much we bring back into the community.
It is nice to have someone like Ana so dedicated to this industry.
REGION 2
Ana Molina
Collection Manager with CB Merchant Services
Ana Molina and I met in 1999 at the western
management institute, located in Asilomar,
Monterey. This was a management retreat put on by the Associated Credit Bureaus. The location was beautiful and remote
which allowed us plenty of time for learning and reflection.
As a 20 year old, I knew very little about management, as a
matter of fact very little about the world. Ana on the other hand
had a few more years of life experience and knew more about
management than I. She has been a mentor of mine for a while
now and I appreciate all she has taught me. I remember asking
her who she looked up to in the industry and without hesitation
she said “John Yaklin with States Recovery.”
Ana has been with CB Merchant Services for 35 years now and
continues to help the company grow and strive to be the best.
She started her career while in high school as a filing clerk for
the School ROP (Regional Occupational Program). Once her
assignment ended, Mr. Marengo offered her a part-time posi-
20
COLLECTOR’S INK
REGION 3
Dennis Wright
Central Business Bureau in Porterville
What made you get involved in the collection
industry?
I started out my adult life as a Juvenile Probation Officer, after
that I enlisted in the Army and was an Army Medic. After my
discharge from the Army in 1970 I had lots of choices to make
about my future and my future career options. My Dad approached me, during that time, to work at CBB, I became the
owner in 1990 and the rest is history.
What is your favorite tool or technique that has
helped you or your business be successful?
I would say my best tool is the name recognition of CBB and
hometown knowledge amongst the consumers and the creditors
in Porterville. We have spent many years developing rapport and
a solid reputation as an ethical and honest collection agency.
MARCH/APRIL 2015
What incentive programs have been most successful,
and is their success attributable to team spirit or
individual gain?
We have a small office staff and our turnover of employees is
very low. We have employees that have worked for us for over
40 and as little as seven years. Over the years, we have found
that good pay, combined with offering insurance benefits, and
incentivizing goal achievement with commissions has allowed
us to have long-term and happy employees. The successes that
we achieve every day are attributed to team spirit. We have a
very open floorplan at CBB. There are no cubicles and everyone
works together closely.
What is your ratio of collectors to non-collection
personnel, and would you like it to be different?
We have seven employees and every employee at Central Business Bureau is a collector. While each employee’s job deals with
different aspects of debt collection, every employee in our office
is a collector.
The collection industry has been great for me and my family but
in hindsight, I’m not sure I would take the same path if I could
do it all again. The industry has changed dramatically since I
first became involved in the industry in 1970 and if I knew back
then what I know now I probably would have chosen to go back
to Juvenile Probation.
REGION 5
Hunter Quinn
Collections Manager, Continental Credit Control, Santa Barbara
How long have you been in the collections industry?
I have been in the industry since 1987.
How many employees does Continental Credit
Control have?
Currently we have 12 employees; over the years we’ve had up to 20.
How has your company been involved in the
community?
MARCH/APRIL 2015
We contribute to various charitable organizations and take part
in events that benefit our community. One example is an event
called Fish-for-Food. In this event, we sponsor our staff to participate in a day of fishing to benefit the local food bank.
What kind of incentive programs have been
successful with your company?
We use progressive commissions and bonuses as well as periodic contests. One of the most fun (and successful) is a game that
divides staff into two teams that compete against each other.
This promotes healthy competition as well as teamwork.
What are you most proud of regarding your
company?
I like to believe that we are here to provide a service to the
consumer as well as the creditor. When we focus on “win-win,”
we ensure that everyone walks away satisfied and we preserve
relationships.
What made you get into the collection industry?
I was introduced to the business by a friend. At the time, I was
working as a telemarketer. My friend happened to manage this
agency and thought I had good communication skills so he
asked me if I would like to try it out.
Who in the industry do you look up to?
I respect and admire anyone who treats people with respect and
dignity and refuses to compromise values. I look up to leaders
who insist on doing the right thing even when it’s inconvenient.
Why did this type of work/industry interest you, and
how did you get started?
I don’t think anyone ever dreamed of being a debt collector. The
profession is really misunderstood and gets a pretty bad rap. So I
had never even considered it as a career until my friend proposed
it. I started out handling small balance accounts and returned
checks while also processing mail and other clerical duties.
Remember that it’s not just dollars and cents; it’s about relationships.
What are the most important personal satisfactions
connected with your position in this industry?
Relationships. If the consumer doesn’t thank us we’re doing it
wrong. Knowing that we have helped someone work out a difficult problem makes me feel good.
COLLECTOR’S INK
21
CAC 2015 Legislative Day
Monday, March 23
Hyatt Regency, Sacramento
Sunday, March 22
PAC Fundraising Dinner and Silent Auction
At the riverfront home of a CAC member
Register Online at www.calcollectors.net
“CAC’s Legislative Day is on my calendar
every year! Not only do I get a chance
to network with other collection professionals, but I feel I make a difference by
visiting my legislators and helping educate
them on issues that affect our industry.
7KH LQIRUPDWLRQ ZH VKDUH FDQ LQÁXHQFH
our leaders to make the best decisions
possible for our organization and others
throughout California. The Scholarship
Banquet is also a highlight, as we impact
the lives of young people with the giving of
$6,000 in scholarship funds.”
Kris Davisson
Vice President
Financial Credit Network, Inc.
Photo: Jeanne Marie Tokunaga
CAC 2015 Legislative Day Events
2015 Legislation Day
Monday, March 23
Hyatt Regency, Sacramento
Sunday, March 22
At the riverfront home
of a CAC member
Sunday, March 22
6:00 – 9:00 p.m.
At the riverfront home of a CAC member
Socialize with your colleagues and support the CAC PAC during a lovely evening at the home
of a CAC member along the Sacramento River. Separate fee required ($150/Attendee). Transportation provided.
Monday, March 23
8:00 – 8:45 a.m.
Breakfast With a Legislator
Enjoy breakfast and a presentation by one of the legislative leaders from the Capitol.
Hyatt Regency Hotel
9:00 – 11:00 a.m.
Legislator Presentations
Hyatt Regency Hotel
3UHVHQWDWLRQVE\PHPEHUVRIWKH&DOLIRUQLD/HJLVODWXUHDQGSROLF\PDNHUV
Legislative Overview and Capitol Visit Preparation
Highlights include:
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E\WKH&DOLIRUQLD/HJLVODWXUH
3UHSDUDWLRQIRUYLVLWVWRWKH&DSLWRO²KRZWRPDNHWKHPRVWRI\RXUYLVLWV
11:00 a.m. – 12:30 p.m. Legal Panel – bring your questions
Hyatt Regency Hotel
12:30 – 1:00 p.m.
Lunch
Hyatt Regency Hotel
1:00 – 4:00 p.m.
Visits to the California State Capitol
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Hyatt Regency Hotel
4:00 – 5:00 p.m.
'HEULHÀQJRI&DSLWRO9LVLWV
Hyatt Regency Hotel
6:00 – 9:00 p.m.
Scholarship Banquet
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Hyatt Regency Hotel
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may register as well. ($85/Additional Attendee)
Annual PAC Dinner & Silent Auction
7KHWKLUGDQQXDO3$&'LQQHUDW/DUU\·V5LYHU5DQFKZLOODJDLQSURYHWREHDPXVWDWWHQGHYHQLQJ&$&*HQHUDO&RXQVHO7RP*ULIÀQDQG/HJLVODWLYH&RXQFLO
Chair Cindy Marler plan to prepare a sumptuous meal served as dinner guests overlook the lazy Sacramento River at sunset. Auction items always include golf
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The CAC Political Action Committee (PAC) Fund
6HYHUDOWKRXVDQGELOOVDUHLQWURGXFHGLQWRWKH&DOLIRUQLD/HJLVODWXUHHYHU\VHVVLRQ6HYHUDOKXQGUHGRIWKHVHELOOVPD\DIIHFWWKHFROOHFWLRQLQGXVWU\DQG
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environment that allows businesses like yours to grow and prosper.
Event Pricing:
Early Bird
Registration
Before March 5, 2015
One Attendee Per Form, please
Late
Registration
Registration Form
After March 5, 2015
Legislative Day
$WWHQGHH,QIRUPDWLRQ
March 23
$GG·WOVWDIIIURPVDPHDJHQF\
$345
$250
PAC Fundraiser
$150
CAC Member
$395
$305
March 22
Attendee Name:
Agency Name:
Contact Person:
Address:
City:
State:
=,3
Phone:
(PDLO
+27(/5(6(59$7,216
The Hyatt Regency Sacramento is conveniently located across from the
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rants and shopping. The Hyatt has reserved a block of rooms for the CAC
at the special group rate of $170 (plus tax) for single or double occupancy.
To receive this special group rate, contact the Hyatt today, by calling
FHQWUDOUHVHUYDWLRQVDWDQGLGHQWLI\\RXUVHOIDVDPHPEHU
of our group. Be sure to make your reservations by February 26. After
this date, reservations will be accepted on a space and rate available basis.
This is an extremely busy time in Sacramento so make your reservations
WRGD\2QFH&$&·VEORFNLVIXOORUWKHFXWRIIGDWHSDVVHVUDWHVFDQHDVLO\
jump to over $200.
$&&2002'$7,21
,f you have a disability that may require accommodation regarding your partici
pation in this meeting, please check the box. One of our staff will contact you
prior to the event to discuss your request. We cannot assure timely availability
RIDSSURSULDWHDFFRPPRGDWLRQVZLWKRXWSULRUQRWLÀFDWLRQ
Vegetarian meals, please
, have special dietary requirements. (A member of the CAC staff will
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Visiting Legislators
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people. We will be making appointments and will provide
talking points for you as well.
Event Pricing:
Early Bird
Registration
Before March 5, 2015
Late
Registration
After March 5, 2015
Legislative Day:
&$1&(//$7,2132/,&<
CAC Member
$345
$395
$GG·WOVWDIIIURPVDPHDJHQF\
$250
$305
PAC Fundraiser
$150
Scholarship Banquet
$85
Full refund/credit less $25 processing fee per registrant will be granted to
cancellations received by CAC in writing no later than February 27. No refunds
will be granted after February 27. However, you may send a substitute in your
place from your agency or company. No refunds for no shows. All refunds will be
issued after the conference.
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Event Total: $
,ZRXOGOLNHWRGRQDWHWRWKH6FKRODUVKLS)RXQGDWLRQ
Amount: $
,Zould like to donate to the PAC Fund
Amount: $
California Association
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1455 Response Rd. #240
or fax to:
Please print or type all
information and com
plete all portions of this
form. Keep a photocopy
of this form for your re
cords, return the original
registration form with
your payment to:
Total Amount: $
Payment Information:
RUHPDLOLWWR
cac@calcollectors.net
or register online at:
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Visa
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Card Number:
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Date:
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Sponsorship Opportunities
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Finalist and parent travel and housing $1,000 †
Finalist and parent tour of the Capitol $200
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Amount $ ___________________________________
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Visibility via signage throughout our
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Exposure in the May/June edition of the
Collector’s Ink magazine
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Recognition from the podium throughout
the conference
Sponsor Ribbon
Sponsor acknowledgement on CAC website

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:LWK&$&DSSURYDO\RXPD\SURGXFHFXSVQDSNLQVWHQWFDUGV
and other items with a company logo or product name for your
sponsored social event.
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Contact Person:___________________________________________________________________________________________
Company: _______________________________________________________________________________________________
Address: ________________________________________________________________________________________________
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Phone:___________________________ Fax:____________________________ Cell: ___________________________________
(PDLOBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB:HEVLWH ________________________________________________
TOTAL DUE $
Payment: Visa MC AMEX Ck # ________ &DUG+ROGHU·V1DPH _____________________________________________
Billing Address:____________________________________________________________________________________________
City: _____________________________________ State: ____________________________________ =,3 _________________
Card Number: ______________________________ Exp: _____________________________ Security Code: _________________
Signature: _____________________________________________ Date:_____________________________________________
NOTES FROM THE LITIGATION TRENCHES:
Rosenthal FDCPA – 2014 Year in Review
By June Coleman – Kronick, Moscovitz, Tiedemann & Girard
As in past years, this Article will provide you with the highlights of cases discussing evolving
issues in California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal FDCPA”). This
year saw a decrease in the number of cases decided that referenced the Rosenthal FDCPA, which
appears to correspond with the decrease in FDCPA cases that were filed this year in federal courts.
Nonetheless, there were approximately 88 cases in 2014 that referenced the Rosenthal FDCPA.
The issues below highlight emerging trends in California Rosenthal FDCPA litigation and useful
information for addressing not only Rosenthal FDCPA claims, but federal FDCPA claims.
Rosenthal FDCPA Pleading Standards
Many defendants attack Plaintiff ’s
pleadings in hopes of resolving the case,
although most times, Plaintiff is given
leave to fix any problems. Over the last
few years, courts have frequently held
that complaints lack sufficient allegations to support the alleged violation, and
provided plaintiffs with another chance
to amend their complaints sufficiently to
plead the violations identified. This year,
a court held that alleging simply that a
debt collector “attempted to collect fees
and charges that were not permitted by
law” was insufficient. The Court wanted
a description of why the amount was
wrong. (Marquette v. Bank of Am., N.A.,
MARCH/APRIL 2015
No. 13CV2719-WQH-JMA, 2015 WL
461852, *18 (S.D. Cal. Feb. 4, 2015).) The
Marquette Court also held that simple
recitations that a defendant had violated a
certain provision of the Rosenthal FDCPA
were insufficient, “consist[ing] of nothing
more than ‘labels and conclusions’ and
‘formulaic recitation[s] of the elements of
[] cause[s] of action.’” (Id. at *19-20.) In
another case, the consumer alleged that
several different defendants contacted her
after she had provided a written request
to cease and desist. The Court found these
allegations insufficient without further
information as to when the communications happened in reference to the cease
and desist request. (Lachi v. GE Capital
Bank, 993 F. Supp. 2d 1228, 1232 (S.D. Cal.
2014).) The Lachi Court also found that
the allegation that Plaintiff was obligated
to pay a debt was insufficient, especially
when the letter Plaintiff received from one
of the Defendants was not even addressed
to Plaintiff. (Id. at 1232-33.) And in yet
another case, Plaintiff ’s allegations that the
creditor telephoned more than once a day,
for more than 150 calls in 2 months, and
telephoned after an oral request to stop
calling, were insufficient, especially since
Plaintiff did not identify what portion of
the Rosenthal FDCPA was violated. (Gross
v. Wells Fargo Bank, No. 13-CV-1250-W
BGS, 2014 WL 232272, at *4 (S.D. Cal. Jan.
21, 2014)
COLLECTOR’S INK
27
Rosenthal FDCPA continued from previous page
The Rosenthal FDCPA and Mortgages
Courts have held that foreclosure activities do not provide a basis for a Rosenthal
FDCPA claim. Most of these cases have
lacked analysis as to the Rosenthal claim,
dismissing the Rosenthal claim because
the FDCPA claim failed. The FDCPA
claims fail because the FDCPA excludes
from the definition of debt collector those
who are attempting to enforce security
interests, such as through foreclosure.
Recently, courts have taken a harder look
at these claims and rejected dismissing the
Rosenthal claim.
This year, Bankruptcy Judge Ron Sargis extensively analyzed this issue, and
concluded that the Rosenthal FDCPA
does not provide the same exclusion from
the definition of “debt collector” that the
FDCPA does. (In re Ganas, 513 B.R. 394,
401-09 (Bankr. E.D. Cal. 2014).) Judge Sargis also analyzed whether Section 1788.17,
which imports the remedies and obligations under the FDCPA, imported the FDCPA’s exclusion from the “debt collector”
definition. Based on the plain language of
Section 1788.17 and the legislative history
underlying Section 1788.17, Judge Sargis
concluded that Section 1788.17 does not
graft the FDCPA debt collector exclusion
into the Rosenthal FDCPA. (Id. at 409.)
The Ganas case involved an adversary
proceeding filed in the bankruptcy court
regarding a proof of claim, which the debtor alleged was false because the debt was
paid in full. Judge Sargis followed a long
line of bankruptcy authorities in holding
that a Rosenthal FDCPA case cannot be
premised on the filing of a proof of claim.
Irregularities in a proof of claim fall within
the exclusive jurisdiction of the bankruptcy courts. The proper course of action is to
object to the claim and possibly seek sanctions. (Id. at 409-10.) “An alleged improper
proof of claim is not the opportunity to
commence collateral proceedings under
the … Rosenthal Act … and forsake the
comprehensive statutory process [bankruptcy] enacted by Congress.” (Id. at 409.)
28
COLLECTOR’S INK
This year, the hot button issue of loan
modifications finally entered the debt collection world. Plaintiff alleged that defendant made false representations regarding
a loan modification. The Court rejected
Defendant’s argument that this claim was
like foreclosure claims. The Court held
that the Rosenthal FDCPA could potentially regulate loan modification activities.
To the extent that the Plaintiff was actually
alleging that type of claim, the claim withstood the Defendant’s motion to dismiss.
(Agbowo v. Nationstar Mortgage LLC, No.
C 14-01295 LB, 2015 WL 628333, *9 (N.D.
Cal. Feb. 12, 2015).)
Debt and Debt Collector Defined Under
the Rosenthal FDCPA
Few cases have addressed the Rosenthal’s
definition of a debt, which requires that the
debt arise from a credit transaction. (Civ.
Code § 1788.2(e)-(f).) In Minarik v. Smith,
Gardner, Slusky, Lazer, Pohren & Rogers,
LLP, No. 14-CV-01849-BLF, 2014 WL
6657747, *2 (N.D. Cal. Nov. 21, 2014), the
Court held that the assessment of fines by
a home owners association is not a credit
transaction under the Rosenthal FDCPA.
In another case, Plaintiff alleged that
that his former employer violated the
Rosenthal FDCPA when the employer
demanded in two letters the repayment
of monies overpaid for paid time off. The
Court failed to discuss whether the “debt”
was for household, family or personal
purposes, or whether the “debt” arose
from a credit transaction. The Court
simply stated that sending two letters did
not reflect debt collection in the ordinary
and regular course of business for the
employer. (Hanson v. Raytheon Co., No.
SA CV 13-0896-DOC, 2014 WL 185911,
at *7 (C.D. Cal. Jan. 14, 2014).)
Validation of the Debt
According to a judge from the Eastern
District of California, the FDCPA, incorporated into the Rosenthal FDCPA, does
not require that a collector provide proof
of the debt for purposes of validation.
(Protzel v. ALAW, No. 2:14-CV-02875KJM-AC, 2015 WL 224754, *3 (E.D. Cal.
Jan. 15, 2015).)
Lack of Meaningful Attorney
Involvement
Although not grounded in the FDCPA’s
statutory language, Courts have held that
the FDCPA prohibits letters that imply
that an attorney is involved in the debtor’s
file when the attorney does not have sufficient involvement. (Irwin v. Mascott, 112
F.Supp.2d 937, 949 (N.D. Cal. 2000).) And
such a violation is a violation of the Rosenthal FDCPA. (Cal. Civ. Code § 1788.17.)
Over the last decade, courts have recognized that when the letter plainly states
that no attorney is involved, then the
letter cannot imply some level of attorney
involvement. (Greco v. Trauner, Cohen &
Thomas, L.L.P., 412 F.3d 360, 363 (2d Cir.
2005).) However, in Nepomuceno v. Legal
Recovery Law Offices, Inc., No. 13-CV1802-L RBB, 2014 WL 2711828, (S.D.
Cal. June 16, 2014), the Court explained
that a Greco statement is not a “get out of
jail free” card. In Nepomuceno, the letter
used language referencing legal action,
including attorney fees, court costs, judgment, and even legal action. Even with
the Greco disclaimer of attorney involvement, the use of such language gives the
least sophisticated consumer the impression of impending litigation with attorney
involvement. (Id. at *3.) Therefore, such a
letter violated the FDCPA and the Rosenthal FDCPA.
Litigating Time Barred Debt
In 2014, there was an interesting case
out of the Southern District of California
discussing a Rosenthal claim based on
litigating a time barred debt. The debt collector inadvertently filed a lawsuit 2 days
after the statute of limitations ran, because
the process server Defendant hired did not
follow the express instructions to file no
later than 2 days earlier. The debtor timely
responded to the collection lawsuit and
raised the statute of limitations defense.
MARCH/APRIL 2015
discovered that the debt was time barred,
the collection lawsuit was filed 2 years
after the case was time barred.
The collection lawsuit was immediately
dismissed upon discovery that it was
passed the statute of limitations. (Koch
v. 704 Grp., LLC, No. 13-CV-2569-BAS
WVG, 2014 WL 7330877, *4-6 (S.D. Cal.
Dec. 18, 2014).
Moreover, the Koch Court looked to
whether the debtor was subjectively misled, and determined that the debtor was
not because the debtor timely responded
to the lawsuit and raised a statute of limitations defense. The Court then concluded
under the facts of this case that the conduct did not violate the unfair prohibitions
of the FDCPA found in section 1692f. The
Court also noted that there was no binding legal authority to find liability under
section 1692f for the filing of a time barred
collection lawsuit.
The Koch Court recognized that the Ninth
Circuit has held that filing a lawsuit after
the statute of limitations expired violated
the FDCPA (McCollough v. Johnson,
Rodenburg & Lauinger, LLC, 637 F.3d 939,
947 (9th Cir.2011) (finding liability based
on the FDCPA’s misrepresentation statute,
section 1692e).) Nonetheless, the Court
distinguished the Koch case from McCollough because the Koch collection lawsuit
was filed 2 days after the expiration of the
statute of limitations without knowledge of
the time barred nature of the debt and dismissed immediately upon discovery that
the claim was time barred. On the other
hand, the McCollough collection lawsuit
was pursued 4 months after Defendant
Finally, the Court also found that the
debt collector had sufficient policies and
procedures by having the attorney check
for time barred claims before filing and
informing the process server of the last
filing date, even though these policies were
unwritten and simple. Thus, the Court
found that even if there was liability, the
bona fide error defense would bar liability.
(Koch, supra, 2014 WL 7330877, at *6.)
Rosenthal FDCPA Claim Based on State
Court Collection Litigation
In 2014, there were a few cases based on
allegations pled in a collection lawsuit
complaint. For instance, in De Amaral
v. Goldsmith & Hull, No. 12-CV-03580WHO, 2014 WL 572268 (N.D. Cal. Feb.
11, 2014), Plaintiff alleged violation of
the Rosenthal FDCPA and the FDCPA
because the collection lawsuit complaint
alleged that the current creditor, a debt
buyer, was the original creditor. The Court
followed other cases from 2013 and found
that such a false statement is material, and
therefore violative. (Id. at *5-7.)
It is not uncommon for the Plaintiff ’s bar
to defend a collection lawsuit and file a
cross-complaint against the Plaintiff creditor, and then file an FDCPA and Rosenthal
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COLLECTOR’S INK
29
FDCPA lawsuit in federal court against the
collection attorney representing the creditor. In these cases, the cross-complaint
alleges that the creditor should be held
liable for the actions of the collection
attorney, and the federal lawsuit seeks to
hold the collection attorney liable for the
same actions. In Claflin v. Mandarich Law
Grp., LLP, No. C 13-05255 WHA, 2014
WL 688962 (N.D. Cal. Feb. 21, 2014),
Judge Alsup from the Northern District
addressed this very situation, and whether
the federal action should be stayed. The
Court noted that the parties of the crosscomplaint and the federal action were different, and then explained that a decision
on the cross-complaint for or against the
creditor would not bind the collection attorneys. (Id. at *2-3.) This appears to overlook the issue that the creditor is alleged to
be vicariously liable for the liability of the
collection attorneys. If liability is established in the cross-complaint, it is hard to
30
COLLECTOR’S INK
imagine that the determination of liability
will not be applied to the collection attorneys, especially since the creditor is being
held liable for the actions of the collection
attorneys. Moreover, if the creditor pays
the judgment, the collection attorneys
should owe nothing because the creditor
paid the liability of the collection attorney.
Although the Court denied a stay based
on the reasons above, Judge Alsup did stay
discovery related to the strategy of the collection attorney until after the collection
litigation was due to go to trial.
Rooker Feldman Doctrine
This year, a court addressed the RookerFeldman doctrine in the context of a
settlement with a stipulated judgment. In
King v. Legal Recovery Law Offices, Inc.,
No. CV 13-05347-KAW, 2014 WL 938559
(N.D. Cal. Mar. 6, 2014), a law firm negotiated the resolution of a collection lawsuit
against a consumer with a payment plan
and a stipulated judgment which would be
filed if payments were late. The consumer
claimed that despite being represented, the
law firm contacted the consumer directly
and that the law firm threatened to file the
stipulated judgment when the judgment
could not be filed because the law firm
had sent notice of the missing payment to
the consumer, rather than the consumer’s
attorney in accordance with the settlement agreement. The law firm argued
that these Rosenthal FDCPA and FDCPA
claims were barred by the Rooker-Feldman
doctrine. The Rooker-Feldman doctrine
bars federal claims that would collaterally
attack a state court judgment. The King
Court acknowledged that some courts
have applied the Rooker-Feldman doctrine in settlement situations. (Id. at *4.)
Nonetheless, the Court explained that a
state court judgment is only being attacked
when (1) the plaintiff claims the state
court made errors in the judgment and (2)
the plaintiff is asking the federal court to
MARCH/APRIL 2015
relieve her from the obligations of the state
court judgment. Here, the consumer in
the King action (1) was not alleging error
by the state court and (2) was seeking for
the federal court to enforce the settlement agreement by forcing the law firm to
provide correct notice to the proper party.
Based on the foregoing, the King Court
found that the Rooker-Feldman doctrine
did not apply. (Id.)
Default Judgments
As noted in previous articles, default judgments can be very enlightening in relation
to what a court might award in damages
and attorneys’ fees. As courts have seen
increased FDCPA lawsuit filings, courts
have taken a more strict approach to default
judgments, and have critically examined
claims of emotional distress and the sufficiency of the pleadings. And it is important
to remember that even if a plaintiff seeks a
default judgment, a defendant can oppose
the motion for default judgment to dispute
the amount of damages or attorneys’ fees.
In Young v. Law Offices of Herbert Davis,
No. C 13-01108 JSW, 2014 WL 3418209
(N.D. Cal. July 11, 2014), Plaintiffs alleged
that Defendant had held itself out as a party
that could resolve indebtedness, based on
a monthly payment. Plaintiffs alleged that
after paying over $12,000, Defendant had
done nothing. Plaintiffs alleged a variety
of violations under the FDCPA and the
Rosenthal FDCPA, including validation notice requirements, misrepresentations, and
unfair collection efforts. The Court awarded
actual damages in the amount of payments
that Plaintiffs made, plus statutory damages
of $1,000 each under the FDCPA and the
Rosenthal FDCPA. The Court also awarded
10.9 hours at $350 per hour in attorneys’
fees, totaling $3,815. (Id. at *5-6.)
In Esget v. TCM Fin. Servs. LLC, No.
1:11-CV-00062-AWI, 2014 WL 258837
(E.D. Cal. Jan. 23, 2014), Judge McAuliffe
from the Eastern District issued a default
judgment where Plaintiff had alleged that
Defendant discussed the debt with Plain-
MARCH/APRIL 2015
tiff ’s work supervisor, made false threats
of litigation and garnishment of wages,
and failed to identify Defendant as a debt
collector in several communications.
According to the Court, such allegations
warranted maximum statutory damages
of $1,000 under both the FDCPA and the
Rosenthal FDCPA. (Id. at *7.) The Court
also awarded $12,800 in lost bonuses and
promotions; $1,500 in medical expenses
and lost wages for missed work; and
$5,000 in emotional distress, noting that
figure was on the low end of awards for
emotional distress. (Id. at *8.) As for attorneys’ fees, the Court was quite distressed
that Plaintiff ’s counsel, Arash Arjang and
Tom Martin of Price Law Group, took 4
tries to obtain a default judgment based on
faulty service and incomplete briefing. The
Court found that Plaintiff ’s counsel’s skill
warranted a $250 per hour rate, and fees
totaling $4,372.70. (Id. at *10-11 (awarding
fees for a paralegal at $130 per hour).)
Judge Moskowitz of the Southern District
awarded a default judgment prosecuted
by Douglas Baek and Rory Leisinger of
Krohn & Moss. Plaintiff alleged there were
multiple voice mail messages left, threats
to disclose the debt to Plaintiff ’s commanding officer were made, and that the
debt collector failed to identify itself as a
debt collector on the messages. The Court
found the threat to reveal Plaintiff ’s debt
to his commanding offer to be particularly reprehensible, willful, knowing, and
of such culpable nature to warrant the
maximum $1,000 in statutory damages
under both the FDCPA and the Rosenthal
FDCPA. (Crawford v. Dynamic Recovery
Servs., Inc., No. 13CV1328 BTM RBB,
2014 WL 130458, at *2 (S.D. Cal. Jan. 10,
2014).) The Court awarded fees of $3,096,
reflecting an hourly rate of $285 for Douglas Baek and Rory Leisinger, and $145 for
a paralegal.
Rosenthal Statutory Damages
There are few cases that actually discuss
the standard for statutory damages. With
an interesting analysis, one court this year
discussed statutory damages and whether
the plain language of section 1788.30(b),
which requires a knowing and willful violation, is superseded by section 1788.17,
which incorporates the FDCPA’s statutory
damage and the FDCPA does not contain
a knowing or willful element. The Court’s
comments were dicta, and the Court
expressly made no official determination
on this issue. (Bentkowsky v. Benchmark
Recovery, Inc., No. 13-CV-01252-VC, 2015
WL 502948, *1-2 (N.D. Cal. Feb. 3, 2015).)
The Court also hinted in a footnote that
an award of additional statutory damages
under the Rosenthal FDCPA would exceed
the cap set for statutory awards under the
FDCPA. But again, the Court’s comments
were dicta, and cannot be used as a definitive statement of the law. (Id. at *2 n. 1.)
However, the Court found that when there
was no intent to deceive the debtor, and
thus, any additional statutory damages
under the Rosenthal FDCPA was not warranted. (Id. at *2.)
In Forkum v. Co-Operative Adjustment
Bureau, Inc., No. C 13-0811 SBA, 2014
WL 3101784 (N.D. Cal. July 3, 2014), the
Court held that Plaintiff was not entitled
to any statutory damages under the Rosenthal FDCPA because Plaintiff had failed to
show that a single message which did not
identify the caller as a debt collector was
knowing and willful, necessary elements
to meet for statutory damages under the
Rosenthal FDCPA. (Id. at *2 (holding that
such a call was worth $250 in statutory
damages under the FDCPA); accord Davis
v. Hollins Law, 25 F.Supp.3d 1292, 129697 (E.D. Cal. 2014) (awarding $250 in
FDCPA damages for one phone call which
failed to disclose the call was from a debt
collector after earlier calls that had made
such a disclosure).)
In De Amaral v. Goldsmith & Hull, No.
12-CV-03580-WHO, 2014 WL 572268
(N.D. Cal. Feb. 11, 2014), the Court
awarded $500 in statutory damages for
falsely alleging in a collection lawsuit that
the current creditor, a debt buyer, was the
COLLECTOR’S INK
31
original credit. (Id. at *7 (awarding $500
in statutory damages under the FDCPA as
well). Notably, Plaintiff also sought $3,000
to defend the collection lawsuit. The Court
rejected these fees as actual damages, noting that the defense of the action was not
related to the false allegations.
And statutory damages as well as actual
damages are the only remedies available
under the Rosenthal FDCPA – the Rosenthal FDCPA does not provide for punitive
damages or declaratory relief or injunctive
relief. (Varnado v. Midland Funding LLC,
No. C-13-05705 DMR, 2014 WL 1994622,
*5-6 (N.D. Cal. May 15, 2014).)
Attorneys’ Fees
Attorneys’ fees orders are instructive as to
how much is a reasonable fee at different
stages in litigation, and what are appropriate hourly rates. In Forkum v. Co-Operative
Adjustment Bureau, Inc., No. C 13-0811
SBA, 2014 WL 3827955, *1 (N.D. Cal.
Aug. 4, 2014), Judge Armstrong of the
Northern District awarded Krohn &
Moss $290 per hour to $387 per hour for
attorneys Ryan Lee, Matt Rosenthal, and
Rory Leisinger, as well as $145 per hour
for paralegal work. In an earlier opinion,
the Court found the Laffey Matrix and
the Consumer Law Attorney Fee Survey
unhelpful as neither hourly rate survey
provided data for the prevailing hourly
rate charged in the Northern District
of California. (Forkum v. Co-Operative
Adjustment Bureau, Inc., No. C 13-0811
SBA, 2014 WL 3101784, *4 (N.D. Cal. July
3, 2014); accord Mulvihill v. St. Amant &
Associates, No. 2:13-CV-0080 TLN DAD,
2014 WL 1665229, *4 (E.D. Cal. Apr. 24,
2014) (awarding $3,422 in attorneys’ fees
at $290 per hour for Krohn & Moss attorneys and $145 per hour for paralegals).)
The Forkum Court based its fee award
on 61 hours for written discovery, one
deposition, and a motion for summary
judgment.
In Long v. Nationwide Legal File & Serve,
Inc., No. 12-CV-03578-LHK, 2014 WL
32
COLLECTOR’S INK
3809401 (N.D. Cal. July 23, 2014), Judge
Koh from the Northern District awarded
Fred Schwinn and his associate $450 per
hour and $300 per hour, respectively, as
well as $175 per hour for a law clerk who
had graduated from law school 5 years
ago. This case involved a couple of depositions, written discovery, and a motion for
summary judgment filed by Defendant.
After the summary judgment motion was
denied, Plaintiff accepted a Rule 68 offer
that included fees and costs to be determined by the Court. The Court awarded
$58,752.91 in fees and costs. Long is an
interesting case, demonstrating a growing
effort to sue process servers. (Id. at *12.)
In Davis v. Hollins Law, 25 F.Supp.3d 1292
(E.D. Cal. 2014), Judge Karlton awarded
Krohn & Moss $35,813.30 in attorneys’
fees based on hourly rates of $387 for Ryan
Lee, $290 for Matthew Rosenthal, and
Douglas Baek, and $237 for Jessica Pascale,
the latter based on the Consumer Law
Attorney Fee Survey Report 2010-2011.
(Id. at 1299-1300.) The parties exchanged
written discovery, conducted at least one
deposition, prosecutrf cross-motions for
summary judgment, and conducted a
bench trial. Judge Karlton explained that
he was aware that consumer attorneys
were reluctant to file cases in the Eastern
District because the attorneys feared they
would be shortchanged in their fees.
While the cost of living in the
Eastern District is somewhat lower
than other parts of California, the
fact remains that the majority of
consumer attorneys are clustered in
the coastal cities and must pay the
costs of living there. Forcing them
to accept lower rates reduces their
willingness to accept cases in this
judicial district, and thereby tacitly
weakens the protections available to
consumers in this part of the state
relative to consumers in the rest of
the state.
(Id. at 1300.)
Judge Karlton concluded that these higher
rates must be appropriate or consumer
protection in the Eastern District would
be weakened. However, Judge Karlton
determined that there was no evidence to
support an hourly rate for paralegal time,
and denied the request as to the paralegal
time. (Id. at 1301.)
In Tsoi v. Patenaude & Felix, Case No. No.
C 13–143 SI, 2014 WL 1477521 (N.D. Cal.
Apr. 15, 2014), the Court awarded $15,300
in attorneys’ fees in a case based on filing a
time barred complaint. Fees were awarded
using $450 per hour for Fred Schwinn
and $300 per hour for Raelston Roulston.
(Id. at *4-5.) This case included a motion
to strike affirmative defenses and written
discovery.
In Brown v. Mandarich Law Grp., LLP,
No. 13-CV-04703-JSC, 2014 WL 1340211
(N.D. Cal. Apr. 2, 2014) adhered to on
reconsideration, No. 13-CV-04703-JSC,
2014 WL 2860631 (N.D. Cal. June 23,
2014), Mr. Schwinn and Mr. Roulston
were awarded hourly rates of $450 and
$350, respectively, by Magistrate Corley
in the Northern District. (Id. at *2-3.)
This case appears to involve duplicative
motions to strike affirmative defenses sa
to each Defendant. The only violation
claimed was mailing a letter directly to
Defendant after knowledge that Defendant was represented. The Court initially
reviewed several cases in which courts
had cut Mr. Schwinn’s hours, including
Kinh Tong v. Capital Mgmt. Servs. Grp.,
Inc., No. 07–1026 RMW, 2008 WL 171035,
*1-2 (N.D. Cal. Jan. 18, 2008), where the
fee request was cut by 70% “in large part
because of confusion and stonewalling
instigated by Schwinn to increase attorney
fees, which prevented the matter from
being resolved at a much earlier stage.” (Id.
at *3.) The Court cut the requested hours
for duplicative work after comparing the
hours claimed against hours claimed in
other cases, ultimately awarding $7,485 in
fees from the originally requested $9,170.
Mr. Schwinn is frequently awarded rates
MARCH/APRIL 2015
in the $450 range and ($350 range for his
associate, Mr. Roulston). (See De Amaral
v. Goldsmith & Hull, No. 12-CV-03580WHO, 2014 WL 1309954, *3 (N.D. Cal.
Apr. 1, 2014).) In De Amaral, Judge Orrick
explained that “[t]o cut Mr. Schwinn and
Mr. Roulston’s hourly rates to $300 and
$250 per hour would be a stark departure
from the rates awarded to them by this
court in recent years.” (Id.)
This case involved heavy litigation before
liability was established at the summary
judgment stage, including a motion to
dismiss, motions to strike, a motion
to transfer venue, a motion to compel
discovery and obtain sanctions, and cross
motions for summary judgment, as well
as written discovery and depositions.
Liability was based on the claim that the
collection lawsuit on behalf of a debt buyer
had material misrepresentations, including
but not limited to the allegation that the
debt buyer had extended credit and that
MARCH/APRIL 2015
the lawsuit did not mention the original creditor. Although Defendants were
successful in arguing that a percentage
reduction of the fee award was appropriate
because the claim that Defendants filed a
time barred claim was dropped, the Court
had no evidence to determine what the
reduction should be. The Court noted that
the claim was not substantively raised or
briefed, and merely referenced in some
filing. Recognizing that there must have
been some time devoted to this abandoned
claim, the Court ultimately reduced the fee
request 5%. The Court ultimately awarded
$111,263 in attorneys’ fees after various
reductions. (Id. at *8; see also Delalat v.
Syndicated Office Sys., Inc., No. 10CV1273DMS NLS, 2014 WL 930162, at *4 (S.D.
Cal. Jan. 28, 2014) (awarding $230,342 in
fees based on $325 and $300 per hour for
the attorneys and $100 per hour for the
paralegal for a case that went to trial).)
In Alonso v. Blackstone Fin. Grp.. LLC, No.
1:11-CV-01693-SAB, 2014 WL 788338
(E.D. Cal. Feb. 25, 2014), the parties
litigated the case, and Plaintiff prevailed,
providing a basis for attorneys’ fees. Two
senior attorneys at Kenmitzer, Barron
& Krieg, William Krieg and John Gist,
sought hourly rates of $425. Mr. Krieg has
over 35 years of experience in civil litigation, including litigating consumer issues.
Mr. Gist had practiced for 15 years, and
was an experienced bankruptcy attorney,
but had little experience in civil litigation
or FDCPA litigation. Noting that the going
hourly rate in the Eastern District for this
kind of work is $250, Judge Ishii awarded
fees at $300 an hour for Mr. Krieg and
$200 an hour for Mr. Gist.
Plaintiff ’s counsel sought about 390 hours
to litigate this case to a bench trial. The
Court noted that “two attorneys cannot bill for attending the same meeting
or communicating with each other.” (Id.
at *4.) The Court noted that Mr. Gist
COLLECTOR’S INK
33
essentially became an observer after associating in Mr. Krieg, based on a review
of the time records as well as observation
during hearings and the trial. The Court
explained that ‘[t]ime billed by an attorney
is not reasonably expended where it serves
as training rather than for productive legal
work.” (Id. at *5.) And finally, the Court
noted that this case was a straightforward
case and the only factual dispute was
whether the Plaintiff was lying. Therefore,
the Court concluded that Plaintiff ’s attorneys were seeking a significant number
of duplicative hours and excessive time
for tasks that should have taken less time
given Mr. Krieg’s experience. The Court
ultimately awarded 342.09 hours, for a total $112,727. The Court declined Plaintiff ’s
request to apply a multiplier to increase
the award, finding that while the result was
good, it was not excellent. (Id. at *6-7.)
Judge McDermott from the Central District addressed fees in a case where Andre
Verdun and Eric LaGuardia represented
a consumer who alleged that he received
too many harassing phone calls, a dunning letter that sought to collect the wrong
amount, and a failure to serve the state
court collection lawsuit. Ultimately, Plaintiff settled with the collection attorneys,
and then filed an Amended Complaint
dropping all but the wrongful amount
claim. Thereafter, the case settled through
a Rule 68 offer, and Plaintiff ’s counsel
sought fees. Defendant argued that Plaintiff was unsuccessful on the two claims
that were dropped, and was therefore
entitled to only 1/3 of the attorneys’ fees.
Work on related claims is recoverable, and
work on interrelated claims may be denied
where there is partial or limited success.
(Kottle v. Unifund CCR, LLC, 992 F. Supp.
2d 982, 986 (C.D. Cal. 2014).) However,
neither party addressed the relatedness of
the claims, leaving the Court without sufficient information or argument. Ultimately,
the Court reduced the requested fees by
50%, acknowledging that the remaining
claim stopped the creditor from seeking
allegedly more money than the creditor
was entitled. The Court awarded $10,782,
with an hourly rate of $300 for Mr. LaGuardia and $315 for Mr. Verdun. (Id.)
Conclusion
As the economy begins to turn around,
and collection agencies address the issues
that have fueled Rosenthal FDCPA litigation in the past, we anticipate that the
plaintiff ’s bar will become inventive in the
theories that they use to support litigation.
New claims seem to focus on process servers and collection litigation. We are seeing
less FDCPA/Rosenthal FDCPA cases,
and more cases involving cell phone calls.
Tracking the development of the Rosenthal FDCPA case law prepares you to manage the risk of claims CFPB investigations
and to address claims as they occur …
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36
COLLECTOR’S INK
MARCH/APRIL 2015
Debt Collection & Credit Reporting
By Adrienne Kelly, Esq. – Kimball, Tirey & St. John LLP
Are you confident your collection agency or collection law firm
is maximizing its ability to recover monies owed to you? Are you
confident it’s doing so in a manner that reduces liability to you, its client?
One tool often used to increase the amount of money collected is
the ability to report the debt as a negative tradeline to the credit
reporting agencies, namely Experian, Equifax, and Transunion.
With this tool comes great responsibility in ensuring the information is reported accurately.
The Fair Credit Reporting Act is a federal statute that dates back
to 1971. It regulates the activities of the credit reporting agencies
as well as those who furnish information to the credit reporting
agencies, such as debt collectors. The purpose of the Fair Credit Reporting Act is to protect consumers’ reputations by placing various
obligations on those who use and create consumer credit reports.
Debt collectors who report information to the credit reporting agencies must maintain reasonable policies and procedures
to update any and all information associated with a negative
tradeline. For example, the amount owed and the date of delinquency must be accurately reported to the credit bureaus. If the
debtor has filed for bankruptcy, this fact should be submitted to
the bureaus as well. Once the debt has been satisfied, the collector
must update its tradeline to reflect the amount has been paid in
full. If the client terminates a file with the collection agency or law
firm, it’s important that the negative tradeline is deleted from the
consumer’s credit report.
Even more challenging is the debt collector’s legal duty to reasonably investigate disputes received directly from consumers as
well as those received from the credit bureaus. Compliant debt
collectors should ensure the files received from their clients are
current and complete. In the course of investigating a consumer
dispute, a debt collector might be required to contact their client
to verify any information needed in order to properly investigate
the dispute. The debt collector often has a short window in which
to investigate the dispute. Once a dispute is resolved, the debt collector must report the outcome to the credit reporting agencies.
One misstep related to the character or accuracy of the information could lead to potential liability for the debt collector and the
client. One advantage of having a law firm handle your collection
needs is its ability to ensure that the amount demanded by the
client may be legally demanded and reported.
While reporting a negative tradeline to a consumer’s credit
report is an essential tool in the collection process, it also has
the ability to wreak havoc on debt collectors and clients who are
unable to fully comply with the Fair Credit Reporting Act. Be
sure your current collection agency or law firm is equipped with
the knowledge and know-how to minimize the liability associated with credit reporting.
Kimball, Tirey & St. John LLP is a full service real estate law
firm representing residential and commercial property owners
and managers. This article is for general information purposes
only. Laws may have changed since this article was published.
Before acting, be sure to receive legal advice from our office. If you
have questions, please contact your local KTS office. For contact
information, please visit our website: www.kts-law.com. For past
Legal Alerts, Questions & Answers, and Legal Articles, please
consult the Resource Library section of our website.
38
COLLECTOR’S INK
MARCH/APRIL 2015
BY THE
NUMBERS
FACTS & FIGURES ON OUR
CHANGING WORKFORCE
Are you investing in your talent? Has your
company identified and responded to the
needs and values of the emerging talent?
Do you have a succession plan?
XYZ University shared these workplace stats that show that companies
need to be ready for a changing workforce. The future is now!
FOUR
MILLION
American Baby Boomers (1946-1964) will
retire this year. (Social Security Administration)
44%
Of Generation X (1965-1981)
workers are reportedly actively
disengaged, meaning they’re planning to look for another job within
the next 12 months. (Gallup)
Starting in 2015, Baby Boomers will no
longer be the majority of the workforce. The
majority of the workforce will be Generation
Y, ages 20-33. (U.S. Bureau of Labor Statistics)
4.8
1 out of 3 young professionals under age 30 prioritize social media freedom over salary when choosing
to accept a job offer. (Cisco Connected World Report)
MARCH/APRIL 2015
4.8 million jobs are open in the United States
right now; the highest level since January 2001.
However, roughly half of the employers can’t
find qualified workers. The skills gap between
higher education and workforce training has
been identified as a “critical problem” for the US.
(Council on Jobs and Competitiveness)
COLLECTOR’S INK
39
KEEP YOUR FRIENDS CLOSE
& YOUR CONSUMER ATTORNEYS CLOSER
By Lloyd D. Dix, Dix & Associates and Stephen Turner, Lewis Brisbois Bisgaard & Smith, LLP
A
t ACA’s Fall Forum in San Francisco last November, active members of the defense bar, Lloyd Dix, who is the
managing partner of Dix & Associates and was formerly
the Legal Advocate for the California Association of Collectors
and Stephen Turner, a partner at Lewis Brisbois Bisgaard & Smith
where he is the Chairman of the firm’s Consumer Litigation Defense And Financial Services national practice group, participated
in a panel discussion with leading members of the consumer bar
regarding how the consumer attorneys evaluate and handle cases.
Lloyd was the moderator and Stephen provided the perspective
of the defense bar. Because the panel provided a rare look into
how the consumer bar operates, Lloyd and Stephen were asked to
share their observations of the comments made by the panelists.
THE PANELISTS
The panelists from the consumer bar were:
Tammy Hussin of the Hussin Law Firm;
Josh Swigart of Hyde & Swigart;
Abbas Kazerounian of the Kazerounian Law Group; and
Todd Friedman of The Law Offices Of Todd Friedman.
ST and LD: Each of the panelists are well known and experienced
members of the consumer bar. All of the individuals have handled
class actions. Recently, Messrs. Swigart and Kazerounian have jointly
represented plaintiffs in these types of suits. The questioning began
with their screening, selection and acceptance of clients.
40
COLLECTOR’S INK
THE PRELIMINARY EVALUATION
AND SELECTION OF CASES
In response to being asked how they obtained, evaluated and
selected their cases, the panelists said that they got many of
their cases from the internet and referrals from other attorneys.
When asked what percentage of his cases they rejected, Mr.
Friedman said he accepted 85% of the prospective clients who
contacted him.
ST: I inferred from Mr. Friedman’s response and the fact the other
panelists were equivocal, the panelists rejected very few cases.
LD: The panelists indicated that many of the cases they receive
are very egregious. They indicated that the reason that they accept
such a high percentage of the matters they review, is that there are
many very bad actors, and the cases they obtain from referrals are
“pre-screened” by the referring attorney.
THE PANELISTS COMMENTS ABOUT
THE CHARACTERISTICS OF THEIR CLIENTS
The panelists all said that their clients were not financially sophisticated and could easily misunderstand communications they
received from debt collectors. Ms. Hussin added that, by the time
her clients contacted her they were emotionally battered by both
their financial circumstances and their interactions with the debt
collectors. The other panelists did not speak so explicitly about
the emotional state of their clients.
ST: I have no doubt that people whose financial condition is
such that they are being contacted by debt collectors are under
MARCH/APRIL 2015
great stress and emotional pressure. However, like Lloyd I have
defended many debtors who had filed a number of lawsuits at
least some of which were, seemingly, frivolous.
LD: There is a large dichotomy in our perception, and the perception of the panel. Our clients typically spend tens of thousands
of dollars trying everything to be compliant. It is easy to forget
that there are people that do not care about compliance and are
willing to break the law to get what they want. We rarely, if ever,
have any knowledge or contact about these operations, except as
they make the 6 o’clock news. The Plaintiffs’ bar deals with these
individuals and patterns on a daily basis.
HOW THE PANELISTS REACT TO THE THREAT
FROM A DEFENDANT TO SEEK ATTORNEY’S FEES
All of the panelists said that they investigate a threat from a
defendant to seek its attorney’s fees. Mr. Swigart said that he personally investigates ever case in which the defendant has threatened to seek to recover its attorneys fees. He added that because
he very rarely drafts complaints now he meets with the associate
in his firm who drafted the complaint and they “drill down” to
determine if the allegations have merit and if there is any basis for
the threat from the defendant.
The other panelists made similar comments. They all said that,
not surprisingly, they do not take seriously a threat from a defense
counsel, who, as a matter of course, threatens to attempt to recover his client’s fees.
ST: I have litigated hundreds if not thousands of cases with the
panelists. I know them to be honest, professional and skilled. I
also note that of all the cases I have litigated with them, only one
was dismissed. This is not to say that they bring frivolous cases.
Rather, it reflects the reality that it is extremely difficult to obtain
an award of attorney’s fees under any theory including 15 U.S.C.
§ 1692k(a)(3) of the FDCPA and the Rosenthal Act which allow
for the recovery of fees if a case has been brought in bad faith and
for purposes of harassment, Federal Rule of Civil Procedure 11,
28 U.S.C. 1927 which allows the court to order an attorney to pay
fees for unnecessarily multiplying the proceedings and the general
authority of the court. I obtained the largest award of attorney’s
fees ever awarded under the FDCPA. It was reversed on appeal. I
obtained the largest award of attorney’s fees ever awarded under
the Rosenthal Act. It was reversed on appeal. The threat to seek
attorney’s fees should be used sparingly and defendants should
realize it is extremely unlikely that the plaintiff and his counsel
will be ordered to pay the defendant’s fees.
MARCH/APRIL 2015
LD: The Plaintiffs’ bar is just like us. If you threaten them, tell
them that you are going to seek sanctions, and/or otherwise
impugn their reputation, the Senior Partners of the various firms
will get personally involved and do everything in their power to
defeat you. It is not personal with them. It is personal with our
clients. If we make it personal with Plaintiffs’ Counsel, you can
expect to incur their wrath.
CURRENT TRENDS IN CONSUMER LITIGATION
The panelists all agreed that they are handling far fewer cases
based on improper letters. They said they were seeing an increase in the number of cases involving allegations of harassing
phone calls.
Messrs. Friedman, Swigart and Kazerounian all said there was
a significant increase in the number of Telephone Consumer
Protection Act (TCPA) cases. They all anticipated that the trend
would continue.
ST: I am experiencing the same shifts in cases as described by the
panelists. As an aside, I note that there is an urgent need to amend
the TCPA. At the time the TCPA was enacted a “mobile” phone,
with antennae, was nearly two feet long and weighed 10 pounds.
LD: The panelists are moving away from the case with limited
liability and only attorneys fees. Typically these cases settle for
small dollars at an early stage of the proceedings. The trend is to
go for higher dollar cases such as TCPA, FCRA, and call recording where both the damages and the amount of attorney time
involved will lead to much larger monetary recovery.
CONCLUSION
For many years, people have believed that collectors are ugly
monsters with six heads and 12 arms. As an industry we spend
significant time and money doing everything we can to dispel
this myth. This includes visits to the various legislative bodies,
thousands of hours of charity work, numerous scholarship
and education funds, and many other projects both large and
small. Despite the fact that we are frequently victims of these
stereotypes, it is easy to commit the same transgression with
regard to the consumer attorneys. The panelists were completely honest, gracious, and answered each and every question
that the audience asked. They took the time from their own
law practice, and paid their own expenses. Those in attendance
learned many new things and gained a new perspective, especially those audience members that had never met the panelists in person. Future sessions between the audience and the
panelists can only be productive.
COLLECTOR’S INK
41
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THE
COLLECTION
SOFTWARE
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MARCH/APRIL 2015
COLLECTOR’S INK
43
CACESF
CAC Educational Scholarship Foundation
The Educational Scholarship Foundation was
founded in 2005 by the California Association
of Collectors (CAC). The California Association
of Collector’s Educational Scholarship Foundation (CACESF) awards three scholarships
during the CAC Legislative Day Conference in
Sacramento each spring. First place is awarded
$2,500, second place $2,000 and third place
$1,500. To date, the foundation has awarded
$54,000 to high school seniors.
2015 Supporters
The scholarship requires a simple one-page application and an essay on “The Importance of
Establishing and Maintaining Good Financial
Credit During Your College Years.” The scholarship is available to any California high school
senior for their use at any accredited college,
university, or vocational school.
CB Merchant Services – Linda Guinn
Annually, CACESF receives nearly 800 scholarship applications. CACESF expects the numbers
to grow each year. CACESF would like you to
consider supporting the scholarship program.
Help our future leaders by giving them the opportunity to research, learn, and share with others the
importance of good credit while also demonstrating the generosity of the collection industry.
Financial Credit Network – Alicia Sundstrom
Credit Consulting Services, Inc – Rodney Meeks
Tavelli Co. Inc. – Robert Tavelli
Fresno Credit Bureau – Courtney Reynaud
USCB America – Albert Cadena
Union Adjustment Co. – Nat & Alma Rubinfeld
States Recovery Systems – John Yaklin
Kronick Moskovitz Tiedemann & Girard – June Coleman
Collection Consultants of California – Matt Logan
Anonymous Donor
Tim McDonald
Billing Tree
Carlson & Messer – Jeffery Carlson
Vickie Kirk
Brian Wiggins
Collection Bureau of America – Shawn DeLuna
Continental Credit Control – Shawn Suhr
Credit Bureau Associates – Kathy Parsons
Credit Bureau of Ukiah – Bob & Melissa Burke
If you would like to donate to
the scholarship fund, a 501(c)3,
charitable foundation, call the
CAC office at 916-929-2125
to make a pledge and receive
an invoice, or visit the website,
cacesf.org, or print the Pledge
Form on the next page.
44
COLLECTOR’S INK
Dix & Associates – Lloyd & Mary Dix
HP Sears – Patrick Collins
Rash Curtis & Associates – Terry Paff
Credit Bureaus of San Luis Obispo & Santa Barbara Counties – Sandy Lubin
Techlock
Kris Davisson
Franklin J. Love
Boston Private Bank
Northern CA Collection Service – Larry Cassidy
MARCH/APRIL 2015
CACESF Fund
Platinum Founder$7,500
Gold Founder$5,000
Silver Founder
$2,500
Founder
$500 per year OR $50 per month ($600)
Benefactor $250 per year OR $25 per month ($300)
Donor
Any donation $25 - $249
CACESF Pledge Form
Company Name:___________________________________________________________________________________________
Contact Person:____________________________________________________________________________________________
Address:_________________________________________________________________________________________________
City: __________________________________________________________ State:____________Zip:________________________
Phone:___________________________________________Email:____________________________________________________
Name(s) under which donation will list in Collector’s Ink:______________________________________________________________
Please select from the following choices:
Award Levels
Enclosed $______________________________
Platinum Founder:❏ $7,500
Founder:
Gold Founder:
Benefactor:❏ $250 single payment OR
❏ $25 per month ($300)
Silver Founder:
❏ $5,000
❏ $2,500
Donor:
❏ $500 single payment OR
❏ $50 per month ($600)
❏ Single contribution of
$__________________
❏ Save me the paperwork!
Renew my pledge annually until I choose to cancel.
❏ Check enclosed
(Please make separate checks payable to CACESF.)
❏ MasterCard ❏ Visa ❏ AMEX
Card Holder’s Name:________________________________________________________________________________________
Card Number:____________________________________Expiration Date:_____________________Security Code:_______________
Billing Address:_____________________________________________________________________________________________
City:__________________________________________________________ State:____________Zip:________________________
Signature:_______________________________________________________ Date:______________________________________
The CACESF is a 501(c)(3) non-profit charitable foundation. All donations are tax deductible.Tax ID Number: 56-2521491
MARCH/APRIL 2015
COLLECTOR’S INK
45
PAC and L&L
Political Action Committee and Legal & Legislative Funds
CAC needs your support for both the PAC and the L&L Funds to ensure the continued promotion of CAC’s principles in the legislative process. Remember, your donations, no matter what size, make a difference. With your help
and support, we will continue to improve your business environment and protect your right to conduct business in
California. CAC extends its thanks to contributors to the current PAC and L&L Fund campaigns. Contact the CAC
office at 916-929-2125 to make a pledge and receive an invoice, or print page 43 of this magazine.
PAC
L&L
SUSTAINING DIAMOND FOUNDERS
Collection Consultants of California –
Ewing Bartgis & Matt Logan
Credit Consulting Services, Inc. – Rodney Meeks
Northern CA Collection Service, Inc. – Larry Cassidy
Union Adjustments Co. Inc – Nat Rubinfeld
USCB America – Mel Shaw & Albert Cadena
SUSTAINING DIAMOND FOUNDERS
Collection Consultants of California –
Ewing Bartgis & Matt Logan
Northern CA Collection Service, Inc. – Larry Cassidy
USCB America – Mel Shaw & Albert Cadena
DIAMOND FOUNDERS
Financial Credit Network, Inc. – Alicia Sundstrom
CRYSTAL FOUNDERS
Rash Curtis & Associates dba Professional Recovery
Systems – Terry Paff
States Recovery Systems, Inc. – John & Judy Yaklin
PLATINUM FOUNDERS
Herbert P Sears Company, Inc. – Patrick Collins
FOUNDERS
Credit Bureau Associates – Kathy Parsons
Ellis Law Group – Mark Ellis
BENEFACTOR
Terri Collins Team (CAC First Lady for 2015)
DIAMOND FOUNDER
Sierra Receivables Management, Inc. – Carmen Saylor
PLATINUM FOUNDERS
GOLD FOUNDERS
Credit Consulting Services, Inc. – Rodney Meeks
FOUNDERS
CAC Region 5
Rash Curtis & Associates dba Professional Recovery
Systems – Terry Paff
BENEFACTORS
Butte County Credit Bureau – Patti Souza
CB Merchant Services – Linda Guinn
CIR, Law Offices – Felipe Becerra
DONORS
Financial Credit Network, Inc. – Alicia Sundstrom
DONORS
Butte County Credit Bureau – Patti Souza
CIR, Law Offices – Felipe Becerra
46
COLLECTOR’S INK
MARCH/APRIL 2015
Political Action
Committee (PAC) Fund
Legal & Legislative
(L&L) Fund
Several thousand bills continue to be introduced into the
Legislature every session. Several hundred of these bills may
affect the collection industry and, ultimately, your business.
The CAC PAC Fund needs your support to help elect
legislators who favor creating a pro-business environment
in California; an environment that allows businesses like
yours to grow and prosper.
The Legal & Legislative Fund may be utilized for CAC’s
direct involvement in legal or legislative issues that affect
the collection industry as a whole. The L&L Fund allows
our Association to draft and support legislation beneficial
to the collection industry, as well as to actively oppose
anti-business and anti-industry legislation. It also provides
the funding for the Association to support or oppose legal
challenges in both state and federal courts on behalf of the
collection industry.
Company Name:___________________________________________________________________________________________
Contact Person:____________________________________________________________________________________________
Address:_________________________________________________________________________________________________
City:__________________________________________________________ State:____________Zip:________________________
Phone:__________________________ Fax:____________________________ Email:______________________________________
Name(s) under which donation will list in Collector’s Ink: _____________________________________________________________
Please select from the following choices:
PAC Fund
L&L Fund
Founder:
Founder:
❏ $1,500 single payment OR
❏ $125 per month
❏ $500 single payment OR
❏ $50 per month ($600)
❏ $50 per month ($600)
❏ $25 per month ($300)
Donor:
Donor:
$_______________________
$_______________________
Enclosed $______________________ Please make separate checks payable to CAC-PAC and/or CAC L&L Fund.
❏ Save me the paperwork! Renew my pledge annually until I choose to cancel.
❏ Check enclosed ❏ MasterCard ❏ Visa ❏ AMEX
Card Holder’s Name:________________________________________________________________________________________
Card Number:____________________________________Expiration Date:_____________________Security Code:_______________
Billing Address:_____________________________________________________________________________________________
City:__________________________________________________________ State:____________Zip:________________________
Signature:_______________________________________________________ Date:______________________________________
MARCH/APRIL 2015
COLLECTOR’S INK
47
Collectors Insurance Agency
A Subsidiary of ACA International
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COLLECTION network
INDEX OF advertisers
ACA
Need to hire someone? Need to find a job?
Selling office equipment or furniture?
Place an ad here!
Call CAC at 916-929-2125 or visit
www.calcollectors.net today!
43, 48
Accurate Computer Technology, Inc.*
22
Advanced Payment Systems*
34
Billing Tree*
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CDS Software*
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CLEAR, Thomson Reuters*
BUSINESS SERVICES
Columbia Ultimate*
Expert Agency Appraisals from $300.
Call Ray Edwards,
CAC Past President 1976-1977.
760-231-1147
Business address changed?
New website or email address?
Help us keep our
membership records current
so that you receive the most
up-to-date information
possible. Send your changes
to Rachel@calcollectors.net
or call 916-929-2125.
3, 29
CAC
The Association of Collection
Professionals in California
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Compumail*
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Comtech Systems, Inc.*
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Comtronic Systems, LLC*
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DAKCS Software Systems, Inc.*
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DiBuduo & DeFendis Insurance Brokers, LLC*
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Global Connect*
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IAT Interactive Data*
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LexisNexis*
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NobelBiz*
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PDC4U – Pay Day Center, LLC*
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TCN, Inc.*
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TechLock, Inc.*
51
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1455 Response Road, Suite 240
cac@calcollectors.net
916-929-2125 • www.calcollectors.net
MARCH/APRIL 2015
*denotes CAC Vendor Members
COLLECTOR’S INK
49
Stephen Turner
MEMBER spotlight
Why did the legal side of
the collection industry
interest you, and how did
you get started?
I became involved in the defense
of debt collectors as a result of
being asked, almost 20 years
ago, by an insurance carrier, to
defend the collectors it insured.
I have found the practice to be
both satisfying and challenging.
It is challenging because the
applicable statutes are, obviously,
one sided, and the public understands neither how that the
overwhelming majority of debt
collectors operate ethically and
legally, nor the cost of unpaid
bills. There truly is no unpaid
bill. I have been proud and
honored to be a small part of the
collection industry by defending
debt collectors.
If you were entering this
career path today, what
if anything would you do
differently?
I have thought about this question a great deal because my
daughter is in her first year of
legal school at the University of
Pennsylvania. I have reflected
on my career so as to, hopefully,
give her the benefit of my experience. If I were starting, again,
earlier in my career I would
seek out more trial experience
and intentionally market my
expertise and abilities.
What are some of the
most important personal
satisfactions connected with
50
COLLECTOR’S INK
your position in this industry?
I am very pleased to be the
national chairman of my firm’s
consumer litigation defense and
financial practice group. Lewis
Brisbois has 32 offices and over
950 attorneys, nationwide. I am
proud that I have been selected
to lead the firm’s practice group
defending consumer law suits.
I am also proud to have been
called upon to defend debt collectors in difficult situations.
Would you please give us a
brief history of your firm?
My firm started in 1979 with
four attorneys and, as I mentioned, it has grown to 32 offices
and 950 attorneys nationwide.
We have five offices in California, as well as offices in Nevada,
Arizona, Texas, Louisiana,
Georgia, Florida, West Virginia, Washington DC, New
York, New Jersey, Connecticut,
Rhode Island, Massachusetts,
Illinois, Colorado, Washington
and Connecticut. Although,
at first, the firm’s practice was
solely litigation, the practice has
expanded to where we are a full
service firm and able to assist
clients with both litigation and
non-litigation matters.
What are you most proud of
regarding your firm?
I am most proud two aspects
of my firm. First, I am very
proud of my firm’s commitment to its clients which is
manifested by the results we
have obtained, which, in turn,
LEWIS, BRISBOIS,
BISGAARD, & SMITH, LLP
has led directly to our growth.
I am equally proud that every
year Lewis Brisbois is recognized as being one of the most,
if not the most, racially diverse
firms in the country.
What is the best book on
business, sales or leadership
that you have read lately?
David & Goliath.
What is your hometown?
Where were you raised?
I was born and raised in Santa
Barbara, California.
Do you belong to
other organizations or
associations? What are your
hobbies and interests?
I am particularly active in
groups involved in representing
the interests of the collection
and credit industry.
I am a founding and active
member of my church, THAD’s,
which is a non-traditional Episcopal Church in the diocese
of Los Angeles. Members of
our church tell people to visit
our website: Thads.org—NOT
thads.com. The Thad’s of the
latter website describes itself as
the only licensed swingers club
in San Diego.
We at THAD’s find this vastly
amusing. We think this is the
Holy Spirit at work in that you
will now not forget our website!
I have been married to my wife
Bonnie (the best lawyer in my
family) for 31 years. We are the
proud parents of three chil-
dren: David, who is involved in
politics as a campaign operative
(most recently as press secretary for Senator Warner’s
successful re-election campaign
in Virginia), Kathryn, the previously mentioned law student,
and John, who is a freshman at
the University of Washington
where he plays football. Bonnie
and I are VERY enthusiastic
Huskies fans. (The bowtie I am
wearing in my picture has the
UW purple and gold.)
If you could meet any famous
person or historical figure,
who would it be and what
would you ask/tell him/her?
Winston Churchill because of
his perseverance. Early in his
career it was assumed Churchill
was going to be the youngest
Prime Minister in the history of
England. However, in the late
20’s and 30’s, due to a number
of circumstances, Churchill
found himself out of power, out
of parliament, and out of favor.
Yet he rallied, personally, to
become the oldest Prime Minister in England’s history and led
England to victory in WWII.
I would ask Churchill what
sustained him through defeats,
challenges and, indeed, ridicule
and humiliation, and gave him
the will to persevere to victory
for himself and his country.
MARCH/APRIL 2015
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