The California Attorney General submitted a brief in support of Riverside District Attorney Michael Hestrin’s attempted prosecution of Credit One May 26.
The DA’s office is attempting to prosecute Credit One for their debt-collection practices in state court, with the district attorneys of San Diego, Los Angeles and Santa Clara. They claim the bank illegally harasses consumers to pay off debts by continually calling them as often as nine times a day.
In one month in 2019, Credit One had 12,250 consumers called a combined 1.8 million times, for an average of 146 calls per person in a month. Another 9,700 consumers received a total of 1.5 million collection calls, for an average of 154 calls in a month.
From the complaint
Credit One argued in an Oct. 15, 2020, federal complaint against Hestrin that the district attorney does not have the power to prosecute a federal bank. The National Bank Act prevents county law enforcement from “visiting,” or inspecting, a national bank, and Credit One argued that provision applies to enforcement actions.
The federal court dismissed Credit One’s complaint, and the bank appealed.
Attorney General Rob Bonta’s amicus brief supported Hestrin’s argument.
“(T)he Supreme Court has made clear that enforcement actions are not an exercise of visitorial powers, a rule that applies equally to cases brought by an attorney general and to cases brought by local law enforcement officials. Not only are Credit One’s arguments legally wrong, but if accepted, they would seriously hamper the State’s ability to protect Californians from abusive business practices that non-preempted California law prohibits,” his brief reads.
Hestrin’s complaint
The DA’s complaint alleged Credit One allowed its debt collector vendor, Alorica, to call debtors eight times a day, plus an additional two times under certain circumstances. The Rosenthal Fair Debt Collection Practices Act prohibits unreasonably frequent or harassing phone calls to collect debt.
In one month in 2019, Credit One, through Alorica, called 12,250 consumers a combined 1.8 million times, for an average of 146 calls per person in a month, the complaint claims. Another 9,700 consumers received a total of 1.5 million collection calls, for an average of 154 calls in a month, the complaint claimed.
In January, 2019, in the federal case 17-cv-01512, a jury found that Credit One had automatically called an 11-year-old, who had no relationship to Credit One, 189 times over four months, the complaint claimed.
One consumer received 550 calls between Jan. 15, 2019, and Aug. 15, 2019, and a second consumer received 150 calls between Nov. 17, 2018, and March 8, 2019, the complaint claims.
The complaint alleged violation of the Rosenthal Act and the California Right to Privacy. The district attorneys requested a civil penalty of at least $10 million, and for Credit One to be restrained from its alleged acts.
The right to sue
Credit One claimed in federal court the county prosecutors could not bring their action. Their case originally was against a subpoena filed by the DA’s office, which the DA eventually withdrew.
“Specifically, the National Bank Act, regulations prescribed by the Office of the Comptroller of the Currency (OCC), and the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibit the District Attorney from bringing any enforcement actions challenging the banking operations of a national bank such as Credit One, because such enforcement actions constitute an unlawful exercise of ‘visitorial powers,’” Credit One argued in its motion for summary judgment.
California Central District Judge Jesus Bernal found that the federal court could not interfere with the DA’s investigation, and ruled Credit One’s motion for summary judgment as moot. Bernal applied doctrines established in the 1971 case Younger v. Harris and Middlesex County Ethics Committee v. Garden State Bar Association (1982).
The DAs have an interest in enforcing state law, and the federal court should not interfere with them, Bernal ruled.
Case information
Riverside Superior Judge Craig Reimer presides locally.
Riverside case number CVRI2101654.
Read Hestrin’s complaint against Credit One here.
Abraham Colman, Raymond Kim, Paul Bond and Travis Nelson of Los Angeles’ Holland & Knight represented Credit One.
California Central District Judge Jesus Bernal presided at the federal level.
Federal case number 5:20-cv-02156.
Read Credit One’s motion for summary judgment here.
Read the federal ruling against Credit One here.
Timothy Brown and Harold Anderson represented the District Attorney at the appellate level.
Ninth Circuit Court of Appeals number 21-56271.
Read Bonta’s amicus brief here.
