Thursday, September 20, 2018

FYI: 9th Cir Holds CAFA Amount In Controversy Includes Future Attorney's Fees Incurred After Removal

The U.S. Court of Appeals for the Ninth Circuit recently reversed a trial court's order remanding a putative class action lawsuit to state court on the ground that the defendant removing party failed to prove that the amount in controversy exceed the $5 million, as required for jurisdiction under the Class Action Fairness Act ("CAFA").

In so ruling, the Ninth Circuit held that the amount in controversy for jurisdiction under CAFA includes all attorneys' fees that the plaintiff would be entitled to under a contract or statute, including future fees incurred after the date of removal.

A link to the opinion is available at:  Link to Opinion

A driver ("Employee") filed a wage-and-hour class action against his employer ("Employer"), a trucking and transportation company.  The Employee alleged that the Employer denied him and other employees proper overtime pay, meal periods, and appropriate wage statements. 

The complaint sought wages and premiums owed, prejudgment interest, statutory penalties, attorneys' fees under California Labor Code § 218.5 and 1194, and costs of suit.  The Employee also asked for equitable relief under California's unfair competition law and statutory damages under California's Private Attorneys General Act (PAGA).

During the litigation, the Employee delivered a mediation brief that listed total damages in the amount of $5,924,104, which included $948,192 in unpaid rest period premiums, $150,000 in attorneys' fees and costs incurred as of the date of the brief, and $531,404 in interest on unpaid overtime wages.  The Employee also estimated that the Employer faced PAGA penalties of $5,874,079.

In October 2017, the Employer filed a notice of removal asserting jurisdiction under CAFA.  As you may recall, CAFA gives trial court's jurisdiction over civil actions in which "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," the proposed class consists of more than 100 members, and "any member of [the] class of plaintiffs is a citizen of a State different from any defendant."  28 U.S.C. § 1332(d)(2).

Using the damages listed in the mediation brief -- minus estimated interest payments and PAGA penalties, which are not included in the amount in controversy -- the Employer alleged that the amount in controversy was $5,392,700.  The Employer also argued that in addition to the $150,000 in attorneys' fees and costs incurred to date, the trial court could recognize future attorneys' fees that would accrue over the course of the case.

The trial court determined that because the complaint did not include a claim for failure to provide rest periods, the $948,192 for unpaid rest period premiums could not be included as part of the jurisdictional amount.  The trial court also ruled that attorneys' fees may only include fees incurred as of the date of removal, which was $150,000.  Because the Employer established that only $4,778,575 was at stake, the trial court held that this amount did not meet the minimum required under CAFA, and remanded the case to state court.

This appeal followed.

The Ninth Circuit began its analysis by observing that where "it is unclear or ambiguous from the face of a state-court complaint whether the requisite amount in controversy is pled,  the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold."  Urbino v. Orkin Servs. of Cal., 726 F.3d 1118, 1121-22 (9th Cir. 2013).

While the appeal was pending, the Ninth Circuit issued its ruling in Chavez v. JPMorgan Chase & Co., 888 F.3d 413 (9th Cir. 2018), which held that "the amount in controversy is not limited to damages incurred prior to removal -- for example, it is not limited to wages a plaintiff-employee would have earned before removal (as opposed to after removal)," but rather "is determined by the complaint operative at the time of removal and encompasses all relief a court may grant on that complaint if the plaintiff is victorious." 

The Ninth Circuit acknowledged that before Chavez, it had not clarified what it meant to say by the amount in controversy is determined "at the time of removal," and trial courts had not consistently applied this language.  However, the Ninth Circuit clarified this issue in Chavez.  Therefore, the only issue on appeal was whether the trial court erred in concluding that the Employer had failed to prove, by a preponderance of the evidence, that CAFA's amount in controversy requirement was met. 

The Employee argued that Chavez should be limited to its facts, and that it applied only to the claims for future wage loss.

However, while Chavez itself concerned a claim for future wage loss, the Ninth Circuit stated that its holding applied to any class of damages included in the amount in controversy.  Specifically, the amount in controversy included "all relief claimed at the time of removal to which the plaintiff would be entitled if she prevails."  Chavez, 888 F.3d at 418.  Thus, the Ninth Circuit concluded that its reasoning in Chavez applied equally to attorneys' fees available under fee shifting statutes.

Next, the Employee argued that future attorneys' fees should not be included in the amount in controversy because they are inherently speculative and can be avoided by the defendant's decision to settle an action quickly.  The Employee relied on Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955 (7th Cir. 1998), where the Seventh Circuit held that under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2310(d), the amount in controversy cannot include attorneys' fees that have not yet been incurred.

The Ninth Circuit explained that its precedent in Chavez was controlling. 

Moreover, unlike the Seventh Circuit where the defendant need only show "a  reasonable probability" that the amount in controversy exceeds the minimum, the Ninth Circuit requires a removing defendant to prove that the amount in controversy (including attorneys' fees) exceeds the jurisdictional threshold by a preponderance of evidence.  The defendant is also required to make this showing with summary judgment type evidence.

Given defendants' obligation to prove future attorneys' fees by a preponderance of the evidence, and noting the trial's expertise in evaluating litigation expenses, the Ninth Circuit concluded that it did not share the Seventh Circuit's concerns about calculating future attorneys' fees.

In the Ninth Circuit's view, the amount in controversy must include future attorneys' fees because the complaint demanded attorneys' fees permitted by California law.  The trial court's conclusion that, as a matter of law, the amount in controversy included only the $150,000 in attorneys' fees incurred up to the time of removal was incorrect.

Accordingly, the Ninth Circuit reversed the trial court's order remanding the case to state court.


Eric Tsai
Maurice Wutscher LLP 
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
Mobile: (714) 600-6000
Email: etsai@MauriceWutscher.com

Admitted to practice law in California, Nevada and Oregon




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Monday, September 3, 2018

FYI: 9th Cir Holds FDCPA Plaintiff Must Prove Defendant's Net Worth

The U.S. Court of Appeals for the Ninth Circuit recently held that the plaintiff carries the burden of proving the debt collector's net worth to obtain statutory damages in a class action under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA").

A copy of the opinion is available at:  Link to Opinion

A consumer financed the purchase of a computer through an installment loan.  When the consumer defaulted, the creditor charged off the account and sold the debt to a third party.  The third party referred the account to a law firm which sent collection letters that failed to identify the correct original creditor.  The law firm filed a complaint but ultimately dismissed the lawsuit.

The consumer filed suit alleging that the law firm's letters and complaint violated section 1692e of the FDCPA by using "false, deceptive, or misleading representation[s] or means in connection with the collection of any debt."  The trial court certified a class of consumer plaintiffs.

The trial court then granted the debt collector's motion for summary judgment, but the Ninth Circuit reversed and remanded.  The Ninth Circuit found that the misidentifications were material under the FDCPA as a matter of law.

On remand, the trial court dismissed the consumer's letter-based claims for lack of standing.  The consumer's complaint-based claim went to trial.  The focus at trial was evidence supporting the class award of statutory damages and the law firm's bona fide error defense.

The trial court determined that the plaintiff carried the burden at trial of introducing evidence regarding the law firm's net worth.  The law firm had produced hundreds of pages of bank statements, copies of checks, tax returns, and deposition testimony regarding its financial condition.  Despite access to this evidence, the consumer did not provide an expert to interpret the financial information for the jury.

Thus, the trial court found that the consumer lacked competent evidence to satisfy his burden of production at trial, and dismissed his complaint-based class claim. 

This appeal followed.

As you may recall, the FDCPA provides a two-step determination for awarding statutory damages to class members, excluding named plaintiffs.  15 U.S.C. § 1692k(a)-(b). 

First, the fact finder determines the damages ceiling.  Specifically, a class may recover statutory damages "not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector[.]"  15 U.S.C. § 1692k(a)(2)(B). 

Second, the exact amount of damages within that range is determined based on various non-exhaustive factors, including "the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector's noncompliance was intentional."  15 U.S.C. § 1692k(b)(2). 

The FDCPA, however, is silent as to which party carries the burden of producing evidence at trial of the defendant's net worth. 

The parties agreed that one percent of the law firm's net worth was less than $500,000, and therefore the limit on statutory damages available to the class must be one percent of the law firm's net worth.  The consumer argued that the law firm carried the burden of introducing evidence of its own net worth.

The Ninth Circuit began its analysis by observing "one of the most basic positions of law -- that the plaintiff bears the burden of proving his case, including the amount of damages"  Faria v. M/V Louise V, 945 F.2d 1142, 1143 (9th Cir. 1991). 

To determine whether the FDCPA provides an exception to the default rule, the Ninth Circuit noted that section 1692k limits statutory damages for the class to "the lesser of" of $500,000 or one percent of the defendant's net worth.  Congress' use of "the lesser of" signals that the FDCPA requires the factfinder to determine the defendant's net worth in calculating statutory damages. 

Thus, the Ninth Circuit held that evidence of the defendant's net worth was a prerequisite to establishing statutory damages in a class action.

Next, the consumer argued that the fact finder can skip the cap analysis in subsection (a), and proceed directly to the list of factors in subsection (b), on which he conceded that he carried the burden of proof. 

The consumer also argued that the law firm must bear the burden of proof because it had superior access to the relevant evidence, and placing the burden on the plaintiff would increase litigation costs and discourage class actions under the FDCPA. 

The Ninth Circuit rejected these arguments because Congress did not structure section 1692k to allow the factfinder to award any amount, and then allow the debt collector to limit damages by introducing evidence of its net worth as an affirmative defense.  The Ninth Circuit supported its reasoning with the FDCPA's two exceptions to liability of debt collectors. 

The first exception is the bona fide error defense for defendants that can "show by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error."  15 U.S.C. § 1692k(c). 

The second exception is the safe harbor from liability where the defendant can show it complied with an advisory opinion by the Consumer Financial Protection Bureau.  15 U.S.C. § 1692k(e). 

The Court held that sections 1692k(c) and 1692k(e) indicate that "Congress knew how to shift the burden of proof to the defendant, but chose not to do so regarding evidence of net worth."  Therefore, the Court continued, the FDCPA's "text and structure" makes evidence of net worth essential to a class statutory damages award; it is not an affirmative defense." 

Thus, the Ninth Circuit held that "[i]f a plaintiff seeks class statutory damages, it carries the burden of introducing such evidence at trial."

Accordingly, the Ninth Circuit affirmed the trial court's dismissal of the consumer's class action.  


Eric Tsai
Maurice Wutscher LLP 
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
Mobile: (714) 600-6000
Email: etsai@MauriceWutscher.com

Admitted to practice law in California, Nevada and Oregon




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Monday, August 27, 2018

FYI: CA Imposes SOL Notice Requirement on Debt Collectors; Bans Legal Action on 'Time-Barred' Debt

The California legislature recently passed Assembly Bill 1526, relating to the collection of a debt that is beyond the statute of limitations for bringing legal action.

As you may recall, since 2014, when collecting from California residents, debt buyers have been required by Cal. Civ. Code § 1788.52(d)(2) to provide one of two notices, as applicable, when a debt is "time-barred."

The new legislation creates the same requirement for debt collectors, making it a violation for a debt collector to send a collection letter to a consumer on a time-barred debt without providing the debtor with one of the following written notices, depending on the age of the debt:

"The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt collector] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.";

or,

"The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency."

The applicable notice must be included in the first written communication sent to the consumer after the debt becomes time-barred.

The new law also amends Cal. Civ. Proc. Code § 337, pertaining to the statute of limitations for written contracts and book accounts, by prohibiting the initiation of a legal action on time-barred debt, rather than requiring a consumer to raise it as an affirmative defense.  A similar prohibition currently exists for debt buyers under Cal. Civ. Code § 1788.56.

Pending approval by the governor, the new law will become effective Jan. 1, 2019.


Eric Tsai
Maurice Wutscher LLP 
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
Mobile: (714) 600-6000
Email: etsai@MauriceWutscher.com

Admitted to practice law in California, Nevada and Oregon




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Monday, August 13, 2018

FYI: 9th Cir Holds 4-yr Federal "Catch-All" SOL Applies to SCRA Claims

On an issue of first impression, the U.S. Court of Appeals for the Ninth Circuit recently held the federal catchall statute of limitations of four years under 28 U.S.C. § 1658(a) applies to private suits alleging violations of section 303(c) of the federal Servicemembers Credit Relief Act ("SCRA"). 

Accordingly, the Ninth Circuit affirmed the dismissal of the plaintiff's complaint as time-barred.

A copy of the opinion is available at:  Link to Opinion

In 2006, the plaintiff ("Plaintiff"), a U.S. Marine, refinanced a mortgage loan on his home in the state of Washington with a loan from the defendant mortgagee ("Mortgagee"). On January 16, 2009, the Mortgagee initiated foreclosure proceedings.  Four months later, on May 18, 2009, the Marines recalled Plaintiff to active service in Iraq.

On July 21, 2010, after Plaintiff completed his service in Iraq, the Marines released him from military duty.  Following his release, Plaintiff advised the Mortgagee of his military service and requested an opportunity to refinance his loan.

The Mortgagee allegedly ignored his request and proceeded with a foreclosure sale of Plaintiff's home on August 20, 2010.

Almost six years after the sale, Plaintiff filed suit in federal district court against the Mortgagee alleging it violated section 303(c) of the SCRA, which at that time prohibited the "sale, foreclosure, or seizure of property" for a breach of a mortgage obligation if "made during, or within nine months after, the period of the servicemember's military service" unless such sale, foreclosure, or seizure occurred by court order or under waiver by the servicemember of his SCRA rights.  50 U.S.C. § 3953(c).

The Mortgagee moved to dismiss the complaint as time-barred, arguing that the SCRA does not contain a statute of limitations, and therefore the district court should apply the closest state-law analogue to the SCRA, which the Mortgagee argued was the Washington Consumer Protection Act (four-year limitation period), or the Deeds of Trust Act (two-year limitation period). 

In response, Plaintiff argued that the court need not look to a state statute, and that the Uniformed Services Employment and Reemployment Rights Act ("USERRA") was the most analogous.  The USERRA expressly provides that "there shall be no limit on the period for filing" a claim.  Plaintiff argued in the alternative that the court should apply the six-year statute of limitations for breach of contract claims. 

In its reply, the Mortgagee argued for the first time that 28 U.S.C. § 1658(a) should apply, which provides a four-year statute of limitations.

The trial court granted the Mortgagee's motion to dismiss, applying the four-year statute of limitations contained in the Washington Consumer Protection Act.  The trial court did not comment on the applicability of 28 U.S.C. § 1658(a).  The case was then appealed to the Ninth Circuit. 

On appeal, Plaintiff argued that the trial court erred and should have applied the limitations period of either the USERRA or breach of contract claim. The Mortgagee's primary argument on appeal was that the SCRA claim was time-barred under the catchall four-year limitations period of 28 U.S.C. § 1658(a).

The Ninth Circuit first noted that "[t]raditionally, when a federal statute creating a right of action did not include a limitations period, courts would apply the limitations period of the 'closest state analogue.'"  However, "in 1990, Congress established – in 28 U.S.C. § 1658(a) – a uniform, catchall limitations period for actions arising under federal statutes enacted after December 1, 1990."  Section 1658(a) provides a four-year limitation period.

Notably, a cause of action "'aris[es] under an Act of Congress enacted after' 1990 within the meaning of § 1658(a) if the 'plaintiff's claim against the defendant was made possible by a post-1990 enactment.'"  Further, "[s]uch enactments include amendments to preexisting statutes that create 'new rights of action and corresponding liabilities.'" 

The Mortgagee argued that because no private right of action for section 303(c) violations existed until 2010 when the SCRA was amended to add an express private right of action, section 1658(a) applied. 
The Ninth Circuit agreed, stating that "[t]he applicability of § 1658(a) turns on whether the 2010 amendment to the SCRA created a 'new right[] of action and corresponding liabilities' that were not available to servicemembers before 1990.'" 

It was undisputed that neither the SCRA nor its predecessors (which dated back to 1918) contained an express private right of action until Congress, in the Veterans' Benefits Act of 2010, added a section to the SCRA providing that servicemembers whose SCRA rights are violated may "obtain any appropriate equitable or declaratory relief . . . [and] recover all other appropriate relief, including monetary damages." 

However, Plaintiff argued that despite lack of an express right of action prior to 2010, servicemembers had an implied private right of action under the predecessor to the SCRA before 1990.

The Ninth Circuit disagreed, noting that "[n]o federal appeals court, including this Court, has ever held that these acts created a private right of action before 2010, and several district courts in this circuit and elsewhere that addressed this question have come to difference conclusions about the various sections of the SCRA."  

Accordingly, the Ninth Circuit held that Plaintiff's "complaint arises under an Act of Congress enacted after 1990 and is thus governed – and barred – by the four-year limitations period in 28 U.S.C. § 1658(a)."


Eric Tsai
Maurice Wutscher LLP 
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
Mobile: (714) 600-6000
Email: etsai@MauriceWutscher.com

Admitted to practice law in California, Nevada and Oregon




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Wednesday, July 11, 2018

FYI: 9th Cir Holds Judicial Foreclosures Are Debt Collection Under FDCPA

A panel of the U.S. Court of Appeals for the Ninth Circuit recently held that a law firm's effort to collect homeowner association ("HOA") assessments through judicial foreclosure constitutes debt collection under the federal Fair Debt Collection Practices Act ("FDCPA").

In so ruling, for purposes of whether activity constitutes debt collection under the FDCPA, the Court distinguished judicial foreclosures that allow for deficiency judgments from non-judicial foreclosures that do not allow for deficiency judgments.

A copy of the opinion is available at:  Link to Opinion

The plaintiff consumer purchased the subject property in Arizona subject to annual HOA annual assessments pursuant to a declaration of covenants, conditions, and restrictions. 

The assessments were payable in monthly installments. Upon default on payment of the assessments, the HOA had the right to collect the debt, as well as late fees, costs, and attorneys' fees, by suing the Plaintiff or bringing an action to foreclose the lien.  The HOA was required to make a written demand prior to recording a notice of lien against Plaintiff's property. 

The HOA first notified plaintiff of her failure to pay the assessment debt in 2009.  Defendant law firm represented the HOA in a suit against plaintiff in state court that was resolved with a payment agreement.  After default under the agreement, defendant revived the suit and obtained a default judgment in 2010.  In 2012, defendant represented the HOA in another suit in state court against plaintiff after a subsequent default.  The second suit was resolved pursuant to a new payment plan and plaintiff executed a stipulated judgment recognizing the HOA's right to collect the debt by selling the subject property.

In 2013, plaintiff defaulted under the new payment plan and defendant requested, via praecipe and writ of special execution for the foreclosure of the subject property.  The state court granted defendant's request and the property was sold for $75,000 at a foreclosure sale.  Defendant and the HOA received $11,600.12 in satisfaction of the debt, attorneys' fees and costs.

Plaintiff filed suit in federal court alleging defendant violated the FDCPA in 2013 and 2014 by misrepresenting the amount of plaintiff's debt and seeking attorneys' fees to which it was not entitled. 

The trial court granted defendant's motion for summary judgment as to the FDCPA claim on two independent grounds. First, the trial court found that defendant was not engaged in debt collection as defined under the FDCPA.  Second, the trial court found that filing the writ did not violate the FDCPA because the state trial court later approved the attorneys' fees claimed in the writ.  Plaintiff appealed.

On appeal, the Ninth Circuit ruled that the trial court erred in holding that the judicial foreclosure proceedings were not debt collection for purposes of the FDCPA. 

The Court noted that the FDCPA defines a "debt" as "'any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.'" See 15 U.S.C. § 1692a(5).  Further, the Court explained that the FDCPA "defin[es] the term 'debt collector' to embrace anyone who 'regularly collects or attempts to collect . . . debts owed or due . . . another.'" Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718, 1721 (2017) (citing 15 U.S.C. § 1692a(6)).

The Ninth Circuit noted that "'attorneys who 'regularly' engage in consumer-debt-collection activity" are debt collectors under the Act, "even when that activity consists of litigation.'" Heintz v. Jenkins, 514 U.S. 291, 299 (1995). Further, Plaintiff's obligation to pay HOA dues arose "out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes[.]" Thus, the Court explained that the record was clear that defendant was a "debt collector" collecting "debt" under the plain language of the FDCPA.

In so ruling, the Court rejected defendant's contention that they are not debt collectors when pursuing a foreclosure to enforce a security interest under Ho v. ReconTrust Co., NA, 858 F.3d 568 (9th Cir.), cert. denied, 138 S. Ct. 504 (2017). In Ho, the Court held that "actions taken to facilitate a non-judicial foreclosure . . . are not attempts to collect a 'debt' as that terms is defined by the FDCPA[,]" because "[t]he object of a non-judicial foreclosure is to retake and resell the security, not to collect money from the borrower[,]" and because "California law does not allow for a deficiency judgment following non-judicial foreclosure[,]" "the foreclosure extinguishes the entire debt even if it results in a recovery of less than the amount of the debt."

The Ninth Circuit explained that Ho was distinguishable, because here, defendants "filed the Praecipe and Writ in order to collect a debt arising from Plaintiff's failure to pay homeowner association fees as part of a judicial foreclosure scheme that in many cases allows for deficiency judgments. See Ariz. Rev. Stat. §§ 33-727(A), 33-729(B)-(C).  Thus, defendant's actions in the judicial foreclosure constituted debt collection under the FDCPA.

The Court also rejected the trial court's finding that the writ did not violate the FDCPA because the state trial court later approved the attorneys' fees claimed therein.  Specifically, the Court found that the trial court failed to examine whether defendants were legally entitled to claim the attorneys' fees owed at the time of the writ application.

Under the FDCPA, debt collectors "may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt[,]" which includes "[t]he false representation of the character, amount, or legal status of any debt[.]" See 15 U.S.C. § 1692e.  The Court noted that defendant stated in the writ that accruing post-judgment attorney's fees were due pursuant to the stipulated judgment.  However, in Arizona, requests for post-judgment attorneys' fees must be made in a motion to the court. See Ariz. R. Civ. P. 54(g).

The Ninth Circuit found that no state court had approved the "accruing" attorneys' fees claimed in the writ at the time it was filed, and therefore, defendant violated the FDCPA by "falsely represented the legal status of this debt, by implicitly claiming that the accruing attorneys' fees of $1,597.50 already had been approved by a court."

Accordingly, the Court reversed the trial court's granting of summary judgment in part and remanded the case for a determination on damages for the FDCPA claim.


Eric Tsai
Maurice Wutscher LLP 
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
Mobile: (714) 600-6000
Email: etsai@MauriceWutscher.com

Admitted to practice law in California, Nevada and Oregon




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Monday, July 9, 2018

FYI: California Enacts Consumer Privacy Act of 2018

California recently passed into law the California Consumer Privacy Act of 2018 (Privacy Act), which becomes operative on Jan. 1, 2020.

As with the EU's General Data Protection Regulation (GDPR), the Privacy Act gives consumers greater control over the use and sharing of their personal information.

The Privacy Act allows a consumer to request that a business disclose:

-the categories and specific pieces of personal information that it collects about the consumer;
-the categories of sources from which that information is collected;
-the business purposes for collecting or selling the information;
-the categories of third parties with which the information is shared; and
-the specific pieces of personal information it has collected about the consumer.

A consumer may request similar information with respect to personal information that a business sells to third parties, and a consumer may instruct a business not to sell her or his personal information.  Such businesses must include a link on their homepage titled "Do Not Sell My Personal Information."

A consumer may also request deletion of any of her or his personal information the business has collected. However, a business is not required to comply with a deletion request under certain circumstances including, but not limited to, when the personal information is necessary to:

-complete the transaction for which the personal information was collected;
-enable solely internal uses that are reasonably aligned with the expectations of the consumer based on the consumer's relationship with the business;
-comply with a legal obligation; and
-use the consumer's personal information, internally, in a lawful manner that is compatible with the context in which the consumer provided the information.

Additionally, the Privacy Act is specifically inapplicable in a number of instances, including with respect to information that is de-identified or aggregated, information to or from a consumer reporting agency pursuant to the Fair Credit Reporting Act, information disclosed pursuant to the Gramm-Leach-Bliley Act, and information disclosed pursuant to the Driver's Privacy Protection Act of 1994.

The Privacy Act provides consumers a private right of action in the event of the theft or disclosure of nonencrypted or nonredacted personal information resulting from a failure to maintain reasonable security measures. 

The Privacy Act allows for injunctive relief and damages of $100 to $750 per consumer per incident or actual damages, whichever is greater.  Prior to initiating an individual or class action, a consumer must provide the 30 days' notice to the business to cure the violation.

A business may seek the opinion of the Attorney General on how to comply with the provisions of the Privacy Act.  Violations may result in civil penalties of up to $2,500 per violation pursuant to Cal. Bus. & Prof. Code § 17206, or up to $7,500 per violation for intentional violations.

Eric Tsai
Maurice Wutscher LLP 
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
Mobile: (714) 600-6000
Email: etsai@MauriceWutscher.com

Admitted to practice law in California, Nevada and Oregon




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