California Judge Pushes Forward Consolidated TCPA Action Against Debt Buyer

A federal judge in California Wednesday ruled that a debt buyer must face a consolidated TCPA lawsuit for the actions of one of its subsidiaries, specifically, using an autodialer to make debt collection calls to cell phones without the express consent of consumers. The order also noted that one of the company’s officers could be held liable.

U.S. District Judge John A. Houston in the Southern District of California ruled that while Portfolio Recovery Associates, Inc. (NASDAQ: PRAA) could not be held directly liable for calls made by Portfolio Recovery Associates LLC, the plaintiffs had shown enough evidence for vicarious liability under the Telephone Consumer Protection Act (TCPA) on the part of the parent company. The judge also ruled the same for the company’s chief operating officer, Neal Stern.

The case, Allen v. Portfolio Recovery Associates LLC, is comprised of five consolidated class action suits from various states and at least 20 “tagalong” filings. All cases allege that the company violated the TCPA by calling cellular telephone numbers with an automatic telephone dialing system (ATDS) without prior express consent.

PRA Inc. moved to dismiss the case against it and Stern arguing that it did not actually place the calls. Instead, a separate entity, PRA LLC, made the calls in question. But the plaintiffs noted in the consolidated action that “PRA LLC ‘accounts for the overwhelming majority (approximate 80%) of PRA Inc.’s revenue’ and that ‘[a]ccordingly, PRA, Inc. directly manages PRA LLC’s daily operations – and does not treat PRA LLC as a passive investment.’”

As for Stern’s involvement, the plaintiffs argued that “PRA Inc.’s compensation to Mr. Stern has been based, in part, on his development and implementation of strategies that increased the number of dollars recovered from consumers…” and that PRA LLC had acted as an agent of PRA Inc. and Stern.

Judge Houston agreed with the arguments as presented, writing, “This Court agrees with defendants that there are no allegations PRA Inc. or Stern made or placed any calls to plaintiffs and, thus, plaintiffs’ direct liability theory fails. However, this Court’s review of the record reflects that plaintiffs sufficiently plead facts in support of vicarious liability in the form of veil-piercing, agency and/or ratification theories. Construing the facts presented here as true and in the light most favorable to plaintiffs, this Court finds there are sufficient allegations contained in the FACC to state a plausible theory for vicarious liability against defendants PRA Inc. and Stern.”

Houston, thusly, denied PRA Inc.’s motion to dismiss.

PRA Inc. also sought to dismiss the plaintiffs’ request for attorneys’ fees under California law on the grounds that the TCPA does not expressly authorize them. The judge and defendants conceded that point, but Houston ultimately ruled that there is no compelling case law that shows successful cases not being awarded attorneys’ fees.

“Although plaintiffs do not dispute the TCPA does not expressly authorize fee-shifting or an award of attorneys’ fees, this court finds no reason to deny plaintiffs the opportunity, at this early stage of litigation, to seek such an award should plaintiffs prevail,” Houston wrote.