Calif. Appeals Court Upholds Subpoena of Debt Collector

A state Appeals Court in California has upheld a ruling from a lower court compelling a debt collector to comply with a subpoena it received from four District Attorney’s offices in the state investigating the collector’s compliance with the Rosenthal Fair Debt Collection Practices Act and the Telephone Consumer Protection Act.

A copy of the ruling in the case of People v. Alorica can be accessed by clicking here.

The defendant received a subpoena from the District Attorney’s offices in November 2019. The subpoena contained 11 separate document requests. The defendant objected to most of the requests and the two sides engaged in meet-and-confer sessions to work out a compromise. But after a year, the DA’s offices petitioned the court for an order compelling the defendant’s full compliance with the subpoena. The defendant argued it was not a debt collector subject to the Rosenthal FDCPA and that it had already substantially complied with the subpoena, but a trial court granted the people’s petition, which the defendant appealed.

The defendant reiterated its argument that it is not a collector under the Rosenthal FDCPA and that the subpoena improperly sought records related to a client that were in violation of the National Bank Act. The defendant claimed that only 1% of its business related to making outbound account-related calls on behalf of four clients, but that does not preclude the DA’s from investigating whether the company is subject to their jurisdiction. The DA’s have the authority to subpoena records from the defendant to determine whether it is a collector under the Rosenthal FDCPA, the Appeals Court ruled.

The defendant also attempted to argue that the subpoena violated the National Bank Act because it sought records related to a client governed by the Act. The Act prohibits state officials from examining the records of national banks, the defendant argued. But the Appeals Court used an example to illustrate what it deemed to be an “implausible” interpretation of the Act by the defendant.

” … [I]f a licensed general contractor performs construction work for a national bank, then the contractor will have records regarding that work,” the Appeals Court wrote. “A state agency investigating the contractor for compliance with state licensing requirements should be able to access such records in the contractor’s possession. But if Alorica were right that any record regarding a national bank is beyond the reach of state officials, then the state agency would be barred from examining those records or requiring the contractor to produce them. Such an interpretation would make no sense as a matter of policy.”

Ultimately, because the defendant is not a national bank, the National Bank Act does not apply to it, the Appeals Court ruled.

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