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Justices Do Not Decide if Outsource Company That Duns, Doesn’t Collect, Is ‘Debt-Collector’
C.A. Affirms Order to Comply With Administrative Subpoena for Records
By a MetNews Staff Writer
Div. Two of the Fourth District Court of Appeal has upheld an order of the Riverside Superior Court to a company to comply with an administrative subpoena issued in a multi-county probe by district attorneys offices into whether it is in violation of the Rosenthal Fair Debt Collection Practices Act, undeterred by its protest that it is not subject to the act because it merely make dunning calls on behalf of clients but does not itself collect money.
The appeals court, in an opinion by Justice Frank J. Menetrez that was filed March 14 and certified for publication on Tuesday, does not squarely address the issue of whether Alorica, Inc., which directs no remittances of funds from debtors to itself, is a debt collector. Instead, Menetrez said:
“[T]he People have the authority to subpoena records from Alorica in order to determine whether Alorica—which concedes that it makes ‘outbound calls on behalf of and in the name of its clients to consumers who are late paying active accounts’—is a debt collector under the Rosenthal Act. It follows that Alorica cannot resist the subpoena by claiming that it is not a debt collector.”
District Court Ruling
Alorica pointed to an unpublished April 26, 1999 decision by U.S. District Court Judge Christina A. Snyder of the Central District of California who recited that only one to two percent of a company’s work consisted of collecting debts on behalf of creditors. That, she said, was insufficient to show that the company “regularly” collects debt, as required by the Rosenthal Act, “and should be considered a ‘debt collector’ ” under that act.
Menetrez said in a footnote:
“We are not persuaded. First, a federal court’s interpretation of California state law is not binding….Second, the district court’s summary judgment ruling was necessarily limited to the evidence that was before the court. Assuming for the sake of argument that the ruling was legally sound, the People would still have the authority to collect evidence in order to determine whether Alorica is relevantly similar to the defendant in the federal case—the People are not required to take Alorica’s word for it. Third, it is difficult to understand how Alorica’s argument could be sound. If Alorica makes debt collection calls every day, for example, then it is at least arguable that Alorica regularly engages in debt collection, even if Alorica is such a large business that the debt collection calls comprise only one percent of its business according to some metric.”
Multi-National Company
The United States Equal Employment Opportunity Commission, in an Aug. 1, 2018 press release announcing a $3.5 million settlement by Alorica of a sexual harassment action, said that Alorica, based in Irvine, “employ[s] 100,000 workers across 16 countries, in 140 locations.” According to Bloomberg, it “is a global leader in customer experience solutions” and “delivers a host of world-class services for industries of all kinds.”
A myriad of complaints portrays the company as engaging in improper and harassing tactics in pressing for the making of past-due payments.
The investigation into Alorica’s dunning practices in California is being conducted by the district attorneys’ offices of Los Angeles, Riverside, San Diego, and Santa Clara counties.
Records that are sought relate to services Alorica performs on behalf of two particular customers, one of which is the Las Vegas-based Credit One. Alorica contends that two of the requests constitute an impermissible “visitation” upon Credit One in violation of the National Bank Act.
Menetrez declared:
“Because Alorica is not a national bank, the National Bank Act does not apply to Alorica. We accordingly conclude that the National Bank Act does not preclude the People from subpoenaing the debt collection call records in Alorica’s custody, control, or possession that Alorica made for Credit One.”
The case is People v. Alorica Inc., 2022 S.O.S. 1441.
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