Kashanian v. National Enterprise Systems, Inc.
What’s at Stake
This case is about whether the First Appellate District of the California Court of Appeals will continue to recognize that having statutory claims is enough to sue in state court or whether it will follow the federal courts and require concrete harm separate from the statutory violation itself to bring a lawsuit.
Standing is the legal principle that decides who gets to bring a lawsuit. Traditionally, a person who has experienced the violation of a statute has standing to bring a claim for that violation. For example, the California Rosenthal Fair Debt Collection Practices Act (RFDCPA) says that people can bring claims when a debt collector does not include notices in their letters explaining debtors’ rights. However, in recent years the U.S. Supreme Court has held that in order to sue in federal court, the person alleging the violation must also show that they suffered an injury distinct from the statutory violation. Following this holding, people who had their rights violated also have to prove they suffered concrete harm beyond the statutory violation (say, an erroneous background check kept them from getting a job) before they can go to court. Meanwhile, a company that knowingly broke the law sees no consequences.
Summary
Jimmy Kashanian opened a Bank of America credit card, and after he was unable to pay his alleged credit card debt, it was transferred to debt collector National Enterprise Systems. National Enterprise sent Jimmy a letter to collect the debt, but the notices required by the California Consumer Collection Notice Statute—which explain to the consumer their rights to be free from a number of abusive debt collection practices—were smaller than the font size required by the statute. A class action against National Enterprises for alleged violation of the RFDCPA was filed (violations of the Consumer Collection Notice Statute are violations of the RFDCPA). The class sought statutory damages for the improper notice, and the trial court certified the class. National Enterprises argued that the case should be dismissed before it proceeded further, because Jimmy lacked standing since he had not been injured by their violation. In an oral decision, the trial court granted summary judgment for National Enterprises, holding that Jimmy did not have standing to sue because he had not alleged actual damages. And, relying in part on Limon v. Circle K, the trial court also interpreted that the RFDCPA requires a plaintiff show actual damages to be entitled to statutory damages.
Core Legal Problem
Our amicus brief, written by the Berkeley Center for Consumer Law and Economic Justice, argues that Limon v. Circle K was wrongly decided by the Fifth Appellate District and that California courts should not import harsh injury requirements from federal law, particularly from the U.S. Supreme Court’s TransUnion v. Ramirez decision. It also explains why people should be able to recover statutory damages when companies break the law, even when there were not demonstrable harms separate from the statutory violation.
On September 10, the First Appellate District of the California Court of Appeals issued an unpublished opinion holding that a debt collector’s violation of the Rosenthal Act makes them liable for statutory damages “regardless of whether there were actual damages,” also noting that while some consumer protection laws do require actual injuries for standing, “[w]e presume the Legislature intentionally omitted such language from the Rosenthal Act, and we will not read it back in.”