Minute OrderCal. Super. - 6th Dist.December 7, 2020SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Line 1 Hearing Start Time: 1:30 PM Chai v. Velocity Investments, LLC, et al. 20CV373916 Hearing Type: Motion: Order Date of Hearing: 02/23/2022 Comments: Heard By: Lucas, Patricia M Location: Department 3 Courtroom Reporter: - No Court Reporter Courtroom Clerk: Ann Vizconde Court Interpreter: Court Investigator: Parties Present: Future Hearings: Johnson, Timothy P Attorney Roulston, Raeon Rodrigo Attorney Exhibits: - Motion by Plaintiff David Chai for Class Certification; Related Motion by Defendants to Seal Certain Financial Documents. Appearances by above listed Counsel via CourtCalI. The Tentative Ruling is contested by Mr. Johnson on behalf ofthe Deft. Matter is heard / argued. Having reviewed and considered the written submissions and oral argument of all Counsel, THE COURT ADOPTS THE TENTATIVE RULING AS ISSUED, see below: I. INTRODUCTION Plaintiff David Chai ( Chai ) brings this putative consumer class action pursuant to the California Fair Debt Buying Practices Act ( CFDBPA ) against defendants Velocity Investments, LLC and Velocity Portfolio Group, Inc. (collectively, Defendants ). According to the allegations of the Class Action Complaint ( Complaint ), filed on December 7, 2020, Plaintiff incurred debt with Citibank, N.A. ( Citibank ) for personal, family, or household purposes. (Complaint, 15.) Thereafter, Citibank removed the debt from its books as an asset and treated it as a loss or expense. (Id. at 16.) Sometime after January 1, 2014, the debt was sold or resold to Defendants for collection purposes. (Id. at 17.) Defendants hired, contracted, or otherwise engaged Convergent Outsourcing, Inc. ( Convergent ) to collect the debt from Plaintiff on their behalf. (Complaint, 19.) 0n or about September 23, 2020, Convergent sent, or caused to be sent, a written communication to Plaintiff regarding the debt on Defendants behalf. (Id. at 21-22 & Ex. 1.) The communication is attached to the Complaint as Exhibit 1. This was the first written communication from Defendants to Plaintiff regarding the debt. (lbid.) The written communication did not contain the notice required by Civil Code section 1788.52, subdivision (d)(1). (Id. at 23.) Printed: 2/23/2022 02/23/2022 Motion: Order - 20CV373916 Page 1 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Plaintiff alleges it is Defendants standard practice and policy to send, or cause to be sent, initial collection communications in the form of Exhibit 1, which seek to collect charge-off consumer debts incurred for personal, family, or household purposes. (Complaint, 26.) Furthermore, it is Defendants standard practice and policy to send initial collection communications in the form of Exhibit 1, which fail to contain the notice required by the CFDBPA. (Id. at 27.) Based on these allegations the Complaint sets forth a single cause of action for violation of the CFDBPA. Plaintiff now moves for class certification. Defendants oppose the motion. Defendants also move to seal financial information submitted in connection with their opposition. II. MOTION TO SEAL A. LEGAL STANDARD Unless confidentiality is required by law, court records are presumed to be open. (Cal. Rules of Court, rule 2.550(c).) A record must not be filed under seal without a court order. The court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties. (Cal. Rules of Court, rule 2.551(a).) The court may order that a record be filed under seal only if it expressly finds facts that establish: 1. There exists an overriding interest that overcomes the right of public access to the record; 2. The overriding interest supports sealing the record; 3. A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; 4. The proposed sealing is narrowly tailored; and 5. No less restrictive means exist to achieve the overriding interest. (Cal. Rules of Court, rule 2.550(d).) A party moving to seal a record must file a memorandum and a declaration containing facts sufficient to justify the sealing. (Cal. Rules of Court, rule 2.551(b)(1).) A declaration supporting a motion to seal should be specific, not conclusory, as to the facts supporting the overriding interest. If the court finds that the supporting declarations are conclusory or otherwise unpersuasive, it may conclude that the moving party has failed to demonstrate an overriding interest that overcomes the right of public access. (See In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 305 (In re Providian).) Further, where some material within a document warrants sealing but other material does not, the document should be edited or redacted if possible, to accommodate the moving party s overriding interest and the strong presumption in favor of public access. (See Cal. Rules of Court, rule 2.550(e)(1)(B); see also In re Providian, supra, 96 Cal.App.4th at p. 309.) In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or- nothing basis. (In re Providian, supra, 96 Cal.App.4th at p. 309.) Printed: 2/23/2022 02/23/2022 Motion: Order - 20CV373916 Page 2 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER B. DISCUSSION Defendants move to seal the financial information included in: (1) the Consolidated Financial Statements attached as Exhibits 1 and 2 to the declaration of Linh Nguyen filed in support of Defendants opposition; (2) the Consolidated Balance Sheet for 2021, attached as Exhibit 3 to the declaration of Linh Nguyen; and (3) those portions of the declaration of Linh Nguyen referencing the dollar amounts from the Consolidated Financial Statements. Defendants submit a declaration from their counsel, Timothy P. Johnson, who declares that the Consolidated Financial Statements and the Consolidated Balance Sheet are confidential documents that contain the audited financial records of Defendants for the years that are the subject of the financial statements. (Declaration of Timothy P. Johnson in Support of Defendants Notice of Motion and Motion to Seal Unredacted Financial Statements and Declaration of Linh Nguyen, 3-4.) Those documents contain detailed financial and economic data regarding Defendants business operation, which would cause Defendants competitive harm and injury to their interests if disclosed to third parties. (Id. at 4.) Additionally, the declaration of Linh Nguyen analyzes the economic and financial data from Defendants Consolidated Financial Statements and Balance Sheet and states Defendants net worth based on that data. (Id. at 5.) The data in the declaration regarding Defendants net worth would cause Defendants competitive harm and injury to their interests if disclosed to third parties. (Ibid.) Generally, financial information involving confidential matters relating to the business operations of a party is subject to sealing when public revelation of these matters would interfere with the parties ability to effectively compete in the marketplace. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1286.) Therefore, based on the information provided by Defendants, the financial and economic data in the subject documents is subject to sealing. Moreover, Defendants request is narrowly tailored in that it takes a line-by-line approach to sealing portions of the subject documents. Thus, the request for sealing is well-taken. Accordingly, Defendants motion to seal is GRANTED. Ill. MOTION FOR CLASS CERTIFICATION A. LEGAL STANDARD As explained by the California Supreme Court: The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. A trial court ruling on a certification motion determines whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Ca|.4th 319, 326 (Sav-On), internal quotation marks, ellipses, and citations omitted.) California Code of Civil Procedure section 382 authorizes certification of a class when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . As interpreted by the California Supreme Court, section 382 requires: (1) an ascertainable class; and (2) a well-defined community of interest among the class members. (Sav- On, supra, 34 Cal.4th at p. 326.) The community-of-interest requirement encompasses three factors: (1) predominant questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. (Sav-On, supra, 34 Cal.4th at p. 326.) Other relevant considerations Printed: 2/23/2022 02/23/2022 Motion: Order - 20CV373916 Page 3 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435 (Linder).) The plaintiff has the burden of establishing that class treatment will yield substantial benefits to both the litigants and to the court. (Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385.) B. DISCUSSION 1. Ascertainable Class The trial court must determine whether the class is ascertainable by examining (1) the class definition, (2) the size of the class and (3) the means of identifying class members. (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) Class members are ascertainable where they may be readily identified without unreasonable expense or time by reference to official records. (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932.) The class sought to be certified in Plaintiff s motion is the same as defined in the complaint: All persons with addresses in California (ii) to whom CONVERGENT OUTSOURCING, |NC., sent, or caused to be sent, an initial written communication in the form of Exhibit 1 to the Class Action Complaint for Statutory Damages herein on behalf of Defendants (iii) in an attempt to collect a charged-off consumer debt originally owed to CITIBANK, N.A., (iv) which was sold or resold to Defendants on or after January 1, 2014, (v) which were not returned as undeliverable by the U.S. Post Office (vi) during the period one year prior to the date of filing this action through the date of class certification. (Notice of Motion and Plaintiff s Motion for Class Certification, p. 1:27-2:5.) Plaintiff states that Defendants provided discovery responses advising that the putative class is estimated to be 602 individuals based on Defendants review of records. The proposed class definition uses objective criteria and class members can be ascertained from Defendants records. Furthermore, it is estimated that there are approximately 602 class members. Defendants make no argument in opposition to this factor. Thus, the class is both ascertainable and sufficiently numerous. 2. Community of Interest a. Predominant Questions of Law or Fact Regarding the predominance of questions of law or fact: The ultimate question in every case of this type is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1104-1105, quoting Collins v. Rocha (1972) 7 Cal.3d 232, 238.) The answer hinges on whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment. (Sav- On, supra, 34 Cal.4th at p. 327.) Plaintiff argues that common legal and factual issues predominate because the class members claim for violation of the CFDBPA arises from Defendants practice of sending out collection letters that do not include the disclosure required by Civil Code section 1788.52, subdivision (d)(1). Plaintiff states that Printed: 2/23/2022 02/23/2022 Motion: Order - 20CV373916 Page 4 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Defendants sent nearly identical letters to every member of the proposed class and, therefore, the case will not turn on circumstances or characteristic of individual class members. Defendants make no argument in opposition to this factor. As Plaintiff persuasively argues, the claim will turn on issues regarding Defendants collection letters and its conduct and practice with respect to class members. The factual and legal issues are susceptible to class-wide proof. Thus, the court finds that common questions of law and fact predominate over individual issues. b. Typicality The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained. (Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.) Defendants make no argument in opposition to this factor and there is no contention that Plaintiff does not have a similar claim to other putative class members with regard to common issues surrounding the alleged violation of the CFDBPA. Consequently, the court finds that Plaintiff has met the typicality requirement. c. Adequacy of Representation Adequacy of representation depends on whether the plaintiff s attorney is qualified to conduct the proposed litigation and the plaintiff s interests are not antagonistic to the interests of the class. (McGhee v. Bank of America (1976) 60 Cal. App. 3d 442, 450.) The fact that a class representative does not personally incur all of the damages suffered by each different class member does not necessarily preclude the representative from providing adequate representation to the class. (Wershba v. Apple Computer, Inc. (2001) 91 Cal. App. 4th 224, 238.) Defendants argue Plaintiff is not an adequate class representative. Defendants state that a class should not be certified where the named plaintiff is simply lending his name to a suit controlled entirely by the class attorney or the plaintiff has credibility issues. Defendants then point to portions of deposition testimony wherein Plaintiff testified that he reviewed documents but could not recall the specifics of certain documents sent to him; he does not understand the relevance of Defendants net worth to the lawsuit; he has no plan as to how to resolve the lawsuit and he is relying on his attorneys guidance as to the resolution of the case; and he has not made any specific decisions himself regarding the progress of the lawsuit. Defendants conclude that Plaintiff is not involved with the lawsuit and is not an adequate representative in this lawsuit. In reply, Plaintiff contends that his deposition testimony merely reflects that he has no legal training and did not draft the pleadings he was questioned about by Defendants counsel. Plaintiff states that he has sufficient knowledge of the facts and issues of this case and his role as a class representative to be an adequate representative. In support of his position, Plaintiff submits a declaration stating that he received a collection notice identical to the one used as an example in the class definition; the debt Defendants were trying to collect was a debt for the purpose of the CFDPBA; he understands this lawsuit is for Defendants violation of the CFDPBA; and he understands his responsibilities as a class representative. (Declaration of David Chai in Support of Plaintiff s Motion for Class Certification, 3-12.) Plaintiff also Printed: 2/23/2022 02/23/2022 Motion: Order - 20CV373916 Page 5 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER points to portions of his deposition testimony that demonstrate that he reviewed the complaint; he understands that the Complaint is a class action lawsuit seeking statutory damages and alleges that Exhibit 1 violates the CFDBPA because a required attachment is missing; he reviewed the applicable law on his own and with his attorneys prior to the pandemic, but could not recall the specifics; he has spent ten plus hours on phone calls, emails, meetings, and reviewing information in connection with the case; he understands that he is obligated to be involved in the case; he reviewed all documents filed with the court; and he understands that the decisions in his case are ultimately his but he relies on the guidance and recommendations of his attorneys. (Supplemental Declaration of Raeon R. Roulston in Support of Plaintiff s Motion for Class Certification, Ex. C, pp. 15-18, 22-30.) The evidence before the court does not establish that Plaintiff has credibility issues or that he is simply lending his name to an action controlled entirely by class counsel. Plaintiff s lack of knowledge of the legal intricacies of the action is entitled to little weight particularly in light of the fact that Plaintiff demonstrates knowledge of the general facts and legal issues raised by the Complaint. Moreover, a great deal of reliance on the expertise of counsel is to be expected and Plaintiff has shown that he understands that the decisions in the case are ultimately his to make. In sum, there is nothing before the court that indicates Plaintiff will not adequately protect the interests of the class. For these reasons, the court finds that Plaintiff has met the adequacy of representation requirement. 3. Substantial Benefits of Class Litigation [A] class action should not be certified unless substantial benefits accrue both to litigants and the courts . (Basurco v. 215t Century Insurance Co. (2003) 108 Cal.App.4th 110, 120, internal quotation marks omitted.) The question is whether a class action would be superior to individual lawsuits. (|bid.) Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification. (|bid.) Generally, a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action. (Id. at pp. 120-121, internal quotation marks omitted.) Defendants argue that there is no substantial benefits to proceeding as a class action because they have a negative net worth and, therefore, there is no potential for damage recovery for the putative class. Defendants argument is not well taken. As a preliminary matter, Defendants do not cite any legal authority providing that there is no substantial benefit to proceeding as a class action when a defendant has a negative net worth and, therefore, there is no potential for damages for the putative class under the CFDBPA. Defendants rely heavily on the case of Collins v. Safeway Stores (1986) 187 Cal.App.3d 62 (Collins). But the court in Collins focused on the ascertainability factor; it did not hold that there was a lack of superiority. Even assuming for the sake of argument that Defendants have a negative net worth and the putative class cannot recover damages, this does not establish a lack of superiority. The relevant question with respect to the superiority factor is whether a class action would be superior to individual lawsuits. Defendants do not explain why the purported lack of damages makes individual lawsuits superior to a class action. Moreover, the legal issues to be decided by the court in this case are common throughout the class. It would be inefficient for the court to hear and decide the same issues separately and repeatedly for each class member. Consequently, the court finds that a class action would be superior in this case. 4. Conclusion Accordingly, Plaintiff s motion for class certification is GRANTED. The court will prepare the final order if this tentative ruling is not contested Printed: 2/23/2022 02/23/2022 Motion: Order - 20CV373916 Page 6 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER ***** NOTICE: The court has rescinded, effective June 21, 2021, all prior general orders restricting courthouse access. Remote appearances for complex civil matters are still permitted, but are no longer mandatory. (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at https://www.scscourt.org/genera|_info/news_media/newspdfs/ZOZ1/Genera|OrderRescindingPortionof0506 2lGeneraIOrderConcerningComplexCiviIActions.pdf.) If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall. State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a telephonic hearing. The court does not provide court reporters for proceedings in the complex civil litigation departments. Any party wishing to retain a court reporter to report a hearing may do so in compliance with this court s October 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter may participate remotely and need not be present in the courtroom. 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