Case Name: Pamela Shereé Chambers v. Merchants & Medical Credit Corporation, Inc., et al.
Case No.: 18-CV-324210

This is a putative class action alleging violations of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). Before the Court is a motion to quash for lack of personal jurisdiction by individual defendants David Edward Cairnduff and James Matthew Hresko. Also at issue is a pro hac vice application by defendants’ counsel Charity A. Olson, which plaintiff opposes.

I. Allegations of the Operative Complaint

Defendant Merchants & Medical Credit Corporation, Inc. (“MMCC”) is a Michigan corporation engaged in the business of collecting defaulted consumer debts in California. (Complaint, ¶ 11.) Defendants Cairnduff and Hresko are Michigan residents who plaintiff alleges are employees, agents, officers, and/or directors of MMCC and are themselves “third-party debt collectors” under the RFDCPA. (Id. at ¶¶ 12-13.) Plaintiff alleges that defendants routinely send initial written communications, like the one sent to her, that fail to provide the “Consumer Collection Notice” required by Civil Code section 1812.700, subdivision (a) in a type size that is at least the same as the type size used to inform the debtor of his or her specific debt or in at least 12-point type, in violation of Civil Code section 1812.701, subdivision (b). (Id. at ¶ 3.)

Plaintiff brings this action on behalf of a putative class of California residents to whom defendants sent an initial written communication like the one she received in an attempt to collect a defaulted consumer debt originally owed to Chase Bank USA, N.A. (Complaint, ¶ 31.) The Complaint asserts a single cause of action for injunctive relief and statutory damages, as well as treble damages tied to plaintiff’s disability, under Civil Code sections 1812.700-1812.702.

II. Motion to Quash

The individual defendants contend that they have no personal contacts with California and cannot be required to defend this action here. Plaintiff argues that the Court has specific personal jurisdiction over the individual defendants based on their debt collection activities, and requests an opportunity to conduct jurisdictional discovery if the Court deems the record inadequate to deny defendants’ motion outright.

A. Legal Standard

California courts may assume jurisdiction over a nonresident defendant if the defendant has sufficient minimum contacts with the forum state to make the exercise of jurisdiction fair. (See Goehring v. Superior Court (Bernier) (1998) 62 Cal.App.4th 894, 903; see also Code Civ. Proc., § 410.10 [California courts “may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States”].) When a defendant believes that it lacks sufficient contacts with California to justify the exercise of personal jurisdiction, the defendant may move to quash service of summons pursuant to Code of Civil Procedure section 418.10. Upon such a motion, the plaintiff has the initial burden to produce evidence warranting the exercise of either general or special jurisdiction over the defendant, and the burden then shifts to the defendant to show that the exercise of jurisdiction would be unreasonable or unfair. (See Goehring, supra, 62 Cal.App.4th at p. 903.)

To satisfy its initial burden, “[t]he plaintiff must do more than merely allege jurisdictional facts,” but instead “must provide affidavits and other authenticated documents in order to demonstrate competent evidence of jurisdictional facts.” (In re Auto. Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 110.) If there is a conflict in the parties’ evidence, then the court must weigh the evidence and resolve the conflict, and its findings will not be disturbed on appeal if there is substantial evidence supporting its conclusions. (See Goehring, supra, 62 Cal.App.4th at p. 903.)

B. Analysis

Plaintiff contends that the Court has specific personal jurisdiction over the individual defendants. The question of whether a court may exercise specific jurisdiction over a nonresident defendant involves examining (1) whether the defendant has purposefully directed its activities at the forum state; (2) whether the plaintiff’s claims arise out of or are related to these forum-directed activities; and (3) whether the exercise of jurisdiction is reasonable and does not offend traditional notions of fair play and substantial justice. (Bristol-Myers Squibb Company v. Superior Court (Anderson) (Cal. 2016) 206 Cal.Rptr.3d 636, 649, reversed on another ground by Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (2017) 137 S.Ct. 1773.) A plaintiff has the initial burden of demonstrating facts to support the first two factors, which establish the requisite minimum contacts with the forum state; the burden then shifts to the defendant to show that the exercise of jurisdiction would be unreasonable under the third factor. (Ibid.)

Many courts have held that sending a single collection letter into the forum state suffices to create specific personal jurisdiction over a debt collector under the federal Fair Debt Collection Practices Act (“FDCPA”). (See, e.g., Maloon v. Schwartz, Zweban & Slingbaum, L.L.P. (D. Hawaii 2005) 399 F.Supp.2d 1108, 1113 [citing cases].) Perhaps for this reason, defendants do not contend that the Court lacks personal jurisdiction over MMCC. Rather, they urge that the requirements for personal jurisdiction must be met as to each defendant over whom a state court exercises jurisdiction (see Bristol-Myers Squibb Co. v. Superior Court, supra, 137 S.Ct. 1773, 1783), and plaintiff has made no showing as to the individual defendants here.

Plaintiff alleges that the individual defendants are themselves debt collectors subject to the RFDCPA. Under the broad definition adopted by the statute (see Civil Code, § 1812.700, subd. (a), adopting FDCPA definition set forth in 15 U.S.C. sec. 1692 et seq.), individual officers and directors of corporations engaged in debt collection are regularly found to be debt collectors. The majority of courts, including those in the Ninth Circuit, have held that “a shareholder, officer, or director of a debt-collecting corporation may be held personally liable for FDCPA violations regardless of whether the plaintiff can pierce the corporate veil.” (Schwarm v. Craighead (E.D. Cal. 2008) 552 F.Supp.2d 1056, 1072; see also Del Campo v. Am. Corrective Counseling Serv., Inc. (N.D. Cal. 2010) 718 F.Supp.2d 1116, 1126-1127 [holding that individual defendants may be liable for violating the FDCPA regardless of whether they are alter egos of the corporation through which they operate, while acknowledging that the Seventh Circuit takes a different view].) In the Ninth Circuit, “[t]here is an open question whether, if an officer qualifies as a debt collector, that officer may be held personally liable based solely on the action of serving in his role as officer of the company.” (Cruz v. International Collection Corp. (9th Cir. 2012) 673 F.3d 991, 1000, italics added.) Regardless, the majority view is that “an individual can be considered a debt collector and be held personally liable without piercing the corporate veil … if the individual materially participated in the debt collection activities.” (del Campo v. Kennedy (N.D. Cal. 2006) 491 F.Supp.2d 891, 903, aff’d (9th Cir. 2008) 517 F.3d 1070, internal citations and quotations omitted.) Courts have found individuals liable based both on “their supervisory control of debt collection employees” and when they “exercise[] control over the affairs of the debt collection business or w[ere] regularly engaged, directly and indirectly, in the collections of debts.” (Alonso v. Blackstone Financial Group LLC (E.D. Cal. 2013) 962 F.Supp.2d 1188, 1205, citing cases.)

This substantive law (which is not addressed by the parties) is relevant to the Court’s jurisdictional analysis, but the jurisdictional analysis is ultimately distinct. As one court observed in the context of alleged agency and alter ego liability, “reliance on state substantive law … to determine the constitutional limits of specific personal jurisdiction is … an imprecise substitute for the appropriate jurisdictional question.” (Anglo Irish Bank Corp., PLC v. Superior Court (Brar) (2008) 165 Cal.App.4th 969, 983 [noting, however, that “the inquiry may be similar in some circumstances”].) The proper question is “whether the defendant has purposefully directed its activities at the forum state by causing a separate person or entity to engage in forum contacts” or by engaging in such contacts personally. (Ibid.) Mere allegations of substantive liability do not “automatically give[] the trial court jurisdiction over the defendant against whom such allegations are directed.” (Sonora Diamond Corp. v. Superior Court (Sonora Union High School Dist.) (2000) 83 Cal.App.4th 523, 540.) Although the plaintiff need not prove the merits of his or her case to defeat a motion to quash, he or she must still “present evidence to justify a finding that the requisite jurisdictional minimum contacts exist.” (Ibid., italics added; see also In re Automobile Antitrust Cases I & II, supra, 135 Cal.App.4th at p. 113 [“Allegations of conspiracy do not establish as a matter of law that if one conspirator comes within the personal jurisdiction of our courts, then California may exercise jurisdiction over other nonresident defendants who are alleged to be part of that same conspiracy. Personal jurisdiction must be based on forum-related acts that were personally committed by each nonresident defendant.”].)

Here, the only evidence presently before the Court regarding the individual defendants’ involvement with the debt collection activities at issue is that the defendants are officers of MMCC. Plaintiff does not appear to contend that this fact, standing alone, establishes specific personal jurisdiction. Rather, she points to her allegations that defendants set and approve MMCC’s collection policies, practices, and procedures and directed and participated in the collection activity giving rise to the complaint. Allegations, however, are inadequate to defeat a motion to quash. (See In re Auto. Antitrust Cases I & II, supra, 135 Cal.App.4th at p. 110.)

C. Requested Continuance

Plaintiff requests a continuance to conduct jurisdictional discovery in the event the Court finds she has not met her burden in opposition to defendants’ motion. The Court may permit jurisdictional discovery in its discretion. (See Goehring v. Superior Court (Bernier) (1998) 62 Cal.App.4th 894, 911 [“A plaintiff is generally entitled to conduct discovery with regard to a jurisdictional issue before a court rules on a motion to quash.”].)

As discussed above, establishing specific personal jurisdiction over a defendant in a debt collection case is not unduly difficult. (See Paradise v. Robinson and Hoover (D. Nev. 1995) 883 F.Supp. 521, 526 [court had specific personal jurisdiction over law firm and partner in FDCPA action “based upon the fact that [defendants] sent a collection letter to Plaintiff as a Nevada resident”]; Weakley v. Redline Recovery Services, LLC (S.D. Cal. 2010) 723 F.Supp.2d 1341, 1344 [specific personal jurisdiction found where individual defendants “contacted Plaintiff and Plaintiff’s military workplace, in California, by telephone to collect Plaintiff’s alleged debt”].) Plaintiff correctly notes that, contrary to defendants’ argument, Cairnduff and Hresko’s status as individuals acting on behalf of a corporate entity “does not insulate [them] from personal jurisdiction” based on forum contacts resulting from their business activities. (Anglo Irish Bank Corp., PLC v. Superior Court, supra, 165 Cal.App.4th at p. 981.)

Here, evidence regarding the individual defendants’ involvement in the debt collection activities at issue may support personal jurisdiction. The Court will thus permit plaintiff to conduct discovery on this subject. Plaintiff may also seek discovery regarding the individual defendants’ contacts with California.

D. Conclusion and Order

The motion to quash is CONTINUED TO DECEMBER 7, 2018 at 9:00 a.m. in Department 1. Plaintiff may conduct discovery with respect to the single issue of the Court’s personal jurisdiction over the individual defendants. Plaintiff shall file any supplemental opposition papers by November 7, and defendants shall file any supplemental reply papers by November 21. The parties’ supplemental briefs shall be limited to 10 pages.

Plaintiff’s request for an order requiring the individual defendants to appear for deposition in San Jose is DENIED, as plaintiff has not met the requirements set forth in Code of Civil Procedure sections 2025.250-2025.260.

In the event that there is no challenge to the tentative ruling, the case management conference scheduled for July 27, 2018 is CONTINUED TO DECEMBER 7, 2018 at 10:00 a.m. in Department 1.

III. Application to Appear as Counsel Pro Hac Vice

The Court has discretion to permit out-of-state counsel to appear pro hac vice upon written application. (Cal. Rules of Court, rule 9.40(a).) Here, Charity A. Olson has filed a timely, verified application satisfying the requirements of rule 9.40.

Plaintiff submits a request for judicial notice in opposition to her application, attaching an order denying Ms. Olson’s pro hac vice application in an unrelated matter before a federal district court in Georgia. As stated in the order, the opposing party in that case argued that Ms. Olson had repeatedly violated a local rule by appearing as counsel of record without seeking admission pro hac vice. Noting that Ms. Olson did not file a reply addressing the opposition, the court denied her application. Here, Ms. Olson has filed a reply, which attaches evidence that she was later admitted pro hac vice in the Georgia case.

Plaintiff does not submit any brief in connection with her request for judicial notice or explain why the Georgia court’s denial of Ms. Olson’s pro hac vice application in an unrelated matter should cause this Court to deny her application here. If Ms. Olson was remiss in failing to apply to appear pro hac vice in the past, she has avoided any such oversight in this action. The Court finds no reason to deny Ms. Olson’s application.

Ms. Olson’s application to appear as counsel pro hac vice is accordingly GRANTED.

The Court will prepare the order.