OrderCal. Super. - 6th Dist.December 7, 2020KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA DAVID CHAI, individually and 0n behalf 0f all Case N0. 20CV373916 others similarly situated, ORDER RE: MOTION TO SEAL; Plaintiff, MOTION FOR CLASS CERTIFICATION VS. VELOCITY INVESTMENTS, LLC, a New Jersey limited liability company; VELOCITY PORTFOLIO GROUP, INC., a Delaware corporation; and DOES 1 through 10, inclusive, Defendants. The above-entitled matter came 0n for hearing 0n Wednesday, February 23, 2022, at 1:30 pm. in Department 3, the Honorable Patricia M. Lucas presiding. Having reviewed and considered the written submissions filed by the parties, and having listened carefully t0 arguments 0f counsel, the court rules as follows: I. INTRODUCTION Plaintiff David Chai (“Chai”) brings this putative consumer class action pursuant t0 the California Fair Debt Buying Practices Act (“CFDBPA”) against defendants Velocity Investments, LLC and Velocity Portfolio Group, Inc. (collectively, “Defendants”). According t0 the allegations 0f the Class Action Complaint (“Complaint”), filed 0n December 7, 2020, 1 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION Electronically Filed by Superior Court of CA, County of Santa Clara, on 2/24/2022 10:48 AM Reviewed By: R. Walker Case #20CV373916 Envelope: 8360997 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO Plaintiff incurred debt with Citibank, NA. (“Citibank”) for personal, family, 0r household purposes. (Complaint, 1] 15.) Thereafter, Citibank removed the debt from its books as an asset and treated it as a loss 0r expense. (Id. at 1] 16.) Sometime after January 1, 2014, the debt was sold 0r resold t0 Defendants for collection purposes. (Id. at 1] 17.) Defendants hired, contracted, 0r otherwise engaged Convergent Outsourcing, Inc. (“Convergent”) t0 collect the debt from Plaintiff 0n their behalf. (Complaint, 1] 19.) On 0r about September 23, 2020, Convergent sent, 0r caused t0 be sent, a written communication t0 Plaintiff regarding the debt 0n Defendants’ behalf. (Id. atw 21-22 & EX. 1.) The communication is attached t0 the Complaint as Exhibit 1. This was the first written communication from Defendants t0 Plaintiff regarding the debt. (Ibid) The written communication did not contain the notice required by Civil Code section 1788.52, subdivision (d)(1). (Id. at 1] 23.) Plaintiff alleges it is Defendants’ standard practice and policy t0 send, 0r cause t0 be sent, initial collection communications in the form 0f Exhibit 1, which seek t0 collect charge-off consumer debts incurred for personal, family, 0r household purposes. (Complaint, 1] 26.) Furthermore, it is Defendants’ standard practice and policy t0 send initial collection communications in the form of Exhibit 1, which fail t0 contain the notice required by the CFDBPA. (Id. at 1] 27.) Based 0n these allegations the Complaint sets forth a single cause 0f action for Violation 0f the CFDBPA. Plaintiffnow moves for class certification. Defendants oppose the motion. Defendants also move t0 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 t0 be open.” (Cal. Rules 0f Court, rule 2.550(0).) “A record must not be filed under seal without a court order. The court must not permit a record t0 be filed under seal based solely 0n the agreement 0r stipulation 0f the parties.” (Cal. Rules 0f Court, rule 2.551(a).) The court may order that a record be filed under seal only if it expressly finds facts that establish: 2 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO 1. There exists an overriding interest that overcomes the right 0f public access t0 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. N0 less restrictive means exist t0 achieve the overriding interest. (Cal. Rules 0f Court, rule 2.550(d).) A party moving t0 seal a record must file a memorandum and a declaration containing facts sufficient t0 justify the sealing. (Cal. Rules 0f Court, rule 2.55 1 (b)(l).) A declaration supporting a motion t0 seal should be specific, not conclusory, as t0 the facts supporting the overriding interest. If the court finds that the supporting declarations are conclusory 0r otherwise unpersuasive, it may conclude that the moving party has failed t0 demonstrate an overriding interest that overcomes the right 0f 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 0r redacted if possible, t0 accommodate the moving party’s overriding interest and the strong presumption in favor 0f public access. (See Cal. Rules 0f 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 t0 the information in the document, rather than framing the issue t0 the court 0n an all-or-nothing basis. (In re Providian, supra, 96 Cal.App.4th at p. 309.) B. DISCUSSION Defendants move t0 seal the financial information included in: (1) the Consolidated Financial Statements attached as Exhibits 1 and 2 t0 the declaration 0f Linh Nguyen filed in support 0f Defendants’ opposition; (2) the Consolidated Balance Sheet for 2021, attached as Exhibit 3 t0 the declaration 0f Linh Nguyen; and (3) those portions 0f the declaration 0f 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 3 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO Financial Statements and the Consolidated Balance Sheet are confidential documents that contain the audited financial records 0f Defendants for the years that are the subject 0f the financial statements. (Declaration 0f Timothy P. Johnson in Support 0f Defendants’ Notice 0f Motion and Motion t0 Seal Unredacted Financial Statements and Declaration 0f Linh Nguyen, W 3-4.) Those documents contain detailed financial and economic data regarding Defendants’ business operation, which would cause Defendants competitive harm and injury t0 their interests if disclosed t0 third parties. (Id. at 1] 4.) Additionally, the declaration 0f Linh Nguyen analyzes the economic and financial data from Defendants’ Consolidated Financial Statements and Balance Sheet and states Defendants’ net worth based 0n that data. (Id. at 1] 5.) The data in the declaration regarding Defendants’ net worth would cause Defendants competitive harm and injury t0 their interests if disclosed t0 third parties. (Ibid) Generally, financial information involving confidential matters relating t0 the business operations 0f a party is subject t0 sealing when public revelation 0f these matters would interfere with the parties’ ability t0 effectively compete in the marketplace. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1286.) Therefore, based 0n the information provided by Defendants, the financial and economic data in the subj ect documents is subj ect t0 sealing. Moreover, Defendants’ request is narrowly tailored in that it takes a line-by-line approach t0 sealing portions 0f the subject documents. Thus, the request for sealing is well- taken. Accordingly, Defendants’ motion t0 seal is GRANTED. III. MOTION FOR CLASS CERTIFICATION A. LEGAL STANDARD As explained by the California Supreme Court: The cgrtification question is essentially. a procedural one that. does not ask whqther an aptlon ls legally 0r factually merltorlous. A trlal court rulmg 0n a certlficatlon mptlon determmgs whether the 1.33qu whlch may be Jelntly trled, when. compared Wlth those requlrlnF separate adjudlcatlon, are so numerous 9r substantlal that the malntenance 0f a c ass actlon would be advantageous t0 the Judlclal process and t0 the 11t1gants. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 (Sav-On), internal quotation marks, ellipses, and citations omitted.) 4 ORDER RE: MOTION T0 SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO California Code 0f Civil Procedure section 382 authorizes certification 0f a class “when the question is one 0f a common 0r general interest, 0f many persons, 0r when the parties are numerous, and it is impracticable t0 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 0f 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 0f law 0r fact; (2) class representatives with claims 0r defenses typical 0f the class; and (3) class representatives who can adequately represent the class. (Sav-On, supra, 34 Cal.4th at p. 326.) “Other relevant considerations include the probability that each class member will come forward ultimately t0 prove his 0r her separate claim t0 a portion 0f the total recovery and whether the class approach would actually serve t0 deter and redress alleged wrongdoing.” (Linder v. Thrifty Oil C0. (2000) 23 Cal.4th 429, 435 (Linder).) The plaintiff has the burden 0f establishing that class treatment will yield “substantial benefits” t0 both “the litigants and t0 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 0f the class and (3) the means 0f 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 0r time by reference t0 official records.” (Rose v. City ofHayward (1981) 126 Cal.App.3d 926, 932.) The class sought t0 be certified in Plaintiffs motion is the same as defined in the complaint: A11 ersons with addresses in California (ii) t0 whom CQNVERGENT OU SOURCING, INC., sent, 0r caused t0 be sent an 1n1t1al wrltten . commumcatlon 1n the fqrm 0f Exhlblt “1” t0 the Class Actlon Complalnt for Statutory Damages hereln 0n behalf 0f Defendants 111) 1n an attempt t0 cpllect a charged-off consumer debt orlglnall owed t0 CITI ANK, N.A., (1V) whlch was sold 0r resold t0 Defendants 0n 0r a er Janna? 1, 2014, (V) whlch were not returned as undellverable by the US. Post Of lce (V1) durlng the erlod one year prlor t0 the date 0f fillng thls actlon through the date 0f class ce 1ficat10n. (Notice 0f Motion and Plaintiff’s Motion for Class Certification, p. 1:27-2:5.) 5 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO Plaintiff states that Defendants provided discovery responses advising that the putative class is estimated t0 be 602 individuals based 0n Defendants’ review 0f records. The proposed class definition uses obj ective criteria and class members can be ascertained from Defendants’ records. Furthermore, it is estimated that there are approximately 602 class members. Defendants make n0 argument in opposition t0 this factor. Thus, the class is both ascertainable and sufficiently numerous. 2. Community 0f Interest a. Predominant Questions 0f Law 0r Fact Regarding the predominance 0f questions 0f law 0r fact: The ultimate question in every case 0f this type is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous 0r substantial that the maintenance 0f a class action would be advantageous t0 the judicial process and t0 the litigants. (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1104-1 105, quoting Collins v. Rocha (1972) 7 Cal.3d 232, 238.) The answer hinges 0n “whether the theory 0f recovery advanced by the proponents 0f certification is, as an analytical matter, likely t0 prove amenable t0 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 0f the CFDBPA arises from Defendants’ practice 0f sending out collection letters that d0 not include the disclosure required by Civil Code section 1788.52, subdivision (d)(1). Plaintiff states that Defendants sent nearly identical letters t0 every member 0f the proposed class and, therefore, the case will not turn 0n circumstances 0r characteristic 0f individual class members. Defendants make n0 argument in opposition t0 this factor. As Plaintiff persuasively argues, the claim will turn 0n issues regarding Defendants’ collection letters and its conduct and practice with respect t0 class members. The factual and legal issues are susceptible t0 class-wide proof. Thus, the court finds that common questions 0f law and fact predominate over individual issues. b. Typicality The typicality requirement is meant t0 ensure that the class representative is able tp adequately represent the class and focus 0n common lssues. It ls only when a defense umque t0 6 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO the class representatiquill be.a major focus 0f the litigation, 0r when the class representative’s 1nterests. are antagomstlp t0 9r 111 confllct Wlth the 0b] ectlves 0f those she pu orts t0 represent that denlal 0f class certlficatlon ls approprlate. But even fihgn, the court shou d determlne 1f 1t would be feasible t9 divide the class 1nt0 subclasses t0 ellmlnate the confllct and allow the class action t0 be malntalned. (Medrazo v. Honda OfNorth Hollywood (2008) 166 Cal. App. 4th 89, 99, internal Citations, brackets, and quotation marks omitted.) Defendants make n0 argument in opposition t0 this factor and there is n0 contention that Plaintiff does not have a similar claim t0 other putative class members with regard t0 common issues surrounding the alleged Violation 0f the CFDBPA. Consequently, the court finds that Plaintiff has met the typicality requirement. c. Adequacy 0f Representation “Adequacy 0f representation depends 0n whether the plaintiff” s attorney is qualified t0 conduct the proposed litigation and the plaintiff’s interests are not antagonistic t0 the interests 0f the class.” (McGhee v. Bank ofAmerica (1976) 60 Cal. App. 3d 442, 450.) The fact that a class representative does not personally incur all 0f the damages suffered by each different class member does not necessarily preclude the representative from providing adequate representation t0 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 0r the plaintiff has credibility issues. Defendants then point t0 portions 0f deposition testimony wherein Plaintiff testified that he reviewed documents but could not recall the specifics 0f certain documents sent t0 him; he does not understand the relevance 0f Defendants’ net worth t0 the lawsuit; he has n0 plan as t0 how t0 resolve the lawsuit and he is relying 0n his attorneys’ guidance as t0 the resolution 0f the case; and he has not made any specific decisions himself regarding the progress 0f 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 n0 legal training and did not draft the pleadings he was questioned about by Defendants’ counsel. Plaintiff states that he has sufficient knowledge 0f the facts and issues 0f this case and his role as a class representative t0 be an adequate representative. In support 0f his position, Plaintiff 7 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO submits a declaration stating that he received a collection notice identical t0 the one used as an example in the class definition; the debt Defendants were trying t0 collect was a “debt” for the purpose 0f the CFDPBA; he understands this lawsuit is for Defendants’ Violation 0f the CFDPBA; and he understands his responsibilities as a class representative. (Declaration 0f David Chai in Support 0f Plaintiff” s Motion for Class Certification, W 3-12.) Plaintiff also points t0 portions 0f 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 0n his own and with his attorneys prior t0 the pandemic, but could not recall the specifics; he has spent ten plus hours 0n phone calls, emails, meetings, and reviewing information in connection with the case; he understands that he is obligated t0 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 0n the guidance and recommendations 0f his attorneys. (Supplemental Declaration 0f Raeon R. Roulston in Support 0f Plaintiffs Motion for Class Certification, EX. C, pp. 15-18, 22-30.) The evidence before the court does not establish that Plaintiff has credibility issues 0r that he is simply lending his name t0 an action controlled entirely by class counsel. Plaintiff” s lack 0f knowledge 0f the legal intricacies 0f the action is entitled t0 little weight particularly in light of the fact that Plaintiff demonstrates knowledge 0f the general facts and legal issues raised by the Complaint. Moreover, a great deal 0f reliance 0n the expertise 0f counsel is t0 be expected and Plaintiff has shown that he understands that the decisions in the case are ultimately his t0 make. In sum, there is nothing before the court that indicates Plaintiff will not adequately protect the interests 0f the class. For these reasons, the court finds that Plaintiff has met the adequacy 0f representation requirement. 3. Substantial Benefits 0f Class Litigation “[A] class action should not be certified unless substantial benefits accrue both t0 litigants and the courts ....” (Basurco v. 21st Century Insurance C0. (2003) 108 Cal.App.4th 8 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO 110, 120, internal quotation marks omitted.) The question is whether a class action would be superior t0 individual lawsuits. (Ibid.) “Thus, even if questions 0f law 0r fact predominate, the lack 0f superiority provides an alternative ground t0 deny class certification.” (Ibid.) Generally, “a class action is proper where it provides small claimants with a method 0f obtaining redress and when numerous parties suffer injury 0f insufficient size t0 warrant individual action.” (Id. at pp. 120-121, internal quotation marks omitted.) Defendants argue that there is n0 substantial benefits t0 proceeding as a class action because they have a negative net worth and, therefore, there is n0 potential for damage recovery for the putative class. Defendants’ argument is not well taken. As a preliminary matter, Defendants d0 not cite any legal authority providing that there is n0 substantial benefit t0 proceeding as a class action when a defendant has a negative net worth and, therefore, there is n0 potential for damages for the putative class under the CFDBPA. Defendants rely heavily 0n the case 0f Collins v. Safeway Stores (1986) 187 Cal.App.3d 62 (Collins). But the court in Collins focused 0n the ascertainability factor; it did not hold that there was a lack 0f superiority. Even assuming for the sake 0f argument that Defendants have a negative net worth and the putative class cannot recover damages, this does not establish a lack 0f superiority. The relevant question with respect t0 the superiority factor is whether a class action would be superior t0 individual lawsuits. Defendants d0 not explain why the purported lack 0f damages makes individual lawsuits superior t0 a class action. Moreover, the legal issues t0 be decided by the court in this case are common throughout the class. It would be inefficient for the court t0 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. // // // // 9 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO 4. Conclusion Accordingly, Plaintiff” s motion for class certification is GRANTED. Dated: February 23, 2022 Patricia M. Lucas Judge 0f the Superior Court 1 0 ORDER RE: MOTION TO SEAL; MOTION FOR CLASS CERTIFICATION
