People v. Alorica Inc.

77 Cal.App.5th 60

291 Cal.Rptr.3d 905

The PEOPLE, Plaintiff and Respondent,

v.ALORICA INC., Defendant and Appellant.

E076786

Court of Appeal, Fourth District, Division 2, California.

Filed March 14, 2022

Goodwin Procter, David R. Callaway, Redwood City, Laura A. Stoll, Los Angeles, and Tierney E. Smith for Defendant and Appellant.

Michael A. Hestrin, District Attorney, and Emily R. Hanks, Deputy District Attorney, for Plaintiff and Respondent.

OPINION

MENETREZ, J.

This case arises from an ongoing investigation by the district attorneys' offices of several counties into the debt collection practices of Alorica Inc. (Alorica). Alorica appeals from a trial court order compelling it to comply with an administrative subpoena. We affirm.

BACKGROUND

According to the Riverside County District Attorney's office, in January 2019, the district attorneys' offices of the counties of Riverside, Los Angeles, San Diego, and Santa Clara began investigating Alorica for compliance with the Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act; Civ. Code, § 1788, et seq. ) and the Telephone Consumer Protection Act ( 47 U.S.C. § 227 ). (We refer to these district attorneys' offices collectively as the People.) In November 2019, the People served Alorica with an investigative subpoena. The subpoena contained 11 separate document requests and covered the time period from February 2015 through the date the subpoena was served.

The People directed Alorica to respond by December 13, 2019, and to specify whether any of the requested records were no longer in Alorica's "possession, custody or control." The People sought the collection services agreements and other agreements between Alorica and its top five clients as defined on an annual basis by the volume of consumer debt calls made, by the amount of debt sent for collection, and by the number of individuals engaged in making such calls (Request No. 2). The People sought all of the call records of all debt collection calls made for these clients to California residents during the relevant period (Request No. 11). The People also directed Alorica to identify any company that monitored or audited Alorica for compliance with debt collection practice laws (Request No. 3), to produce all policies and procedures Alorica followed related to collecting debt in California (Request No. 4), and to provide organizational charts regarding Alorica's corporate structure along with specific identifying information regarding that structure (Request Nos. 5, 6).

In addition, the People sought records related specifically to Alorica's clients Credit One Bank, N.A. (Credit One) and another bank, including any specific policies followed or dialing systems used for these clients and specified information related to those dialing systems (Request Nos. 7, 8). The People directed Alorica to provide all of the call records of all debt collection calls Alorica made for Credit One and the other bank to California residents during the relevant period (Request Nos. 9, 10).

In December 2019, Alorica served its objections and responses to the subpoena. Alorica objected to most of the requests and argued that the requests violated Alorica's right to privacy and right against unreasonable searches and seizures. Alorica claimed that it did not have any debt collection clients, so it denied having any of the requested agreements with clients related to debt collection, policies and procedures relating to the collection of consumer debt, or call records of debt collection calls as to the defined top five clients.

Concerning the debt collection call records for Credit One and the other specified bank, Alorica stated that it would provide the documents that were in its custody, possession, or control. For Credit One, those records consisted of "dialer files for Credit One for the prior 30 days." According to Alorica's counsel, "under the terms of Alorica's contract with Credit One, Alorica only keeps call records for 30 days. The call data is transmitted to Credit One and Credit One may retain call records sent by Alorica each day (or periodically as required by Credit One)."

The parties continued to meet and confer. Alorica subsequently produced an organizational chart and some client identification information.

One year later, in November 2020, the People petitioned for an order compelling full compliance with the subpoena. Alorica opposed and argued that it is not a debt collector subject to the Rosenthal Act, so the subpoena was invalid as it was not reasonably relevant to an investigation concerning debt collection. An Alorica company executive attested that "Alorica is a customer experience company" and "is not a ‘debt collector’ or debt buyer" because "Alorica does not collect funds from debtors and is not paid based on amounts collected from consumers." For four clients, including Credit One, Alorica makes "outbound calls on behalf of and in the name of its clients to consumers who are late paying active accounts." Those calls comprise less than one percent of Alorica's business.

Alorica argued in the alternative that it had substantially complied with the subpoena by producing "all of the responsive information and documents with respect to Credit One" for the last 30 days in December 2019 because Alorica retains only 30 days worth of call records for its clients, including Credit One. Alorica argued that by seeking additional call data the People were treating the subpoena as "an ongoing obligation with no end in sight." In addition, Alorica argued that it should not be required to produce further information relating to Credit One because the People were not authorized to seek such records under the National Bank Act.

At a hearing on the matter, the trial court granted the People's petition. The court ordered Alorica to provide further responses to Request Nos. 2 through 4 and 7 through 11, and to confirm that Alorica produced all organizational charts responsive to Request Nos. 5 and 6. The minute order directs that "[f]urther issues discussed clarifying [the] court order" were provided in the hearing.

At the hearing, the court concluded that Alorica is a debt collector under the Rosenthal Act, that each of the contested requests was reasonably relevant to the People's investigation into Alorica's debt collection practices, and that Alorica's original responses were incomplete. The court rejected Alorica's argument that because the People could not obtain Credit One's call data directly from the bank absent "some sort of legal action," the same data was not subject to disclosure by Alorica in response to the subpoena. The court thus concluded that Alorica's "claim that it should not have to provide more than 30 days of call data is unsupported." After further discussion, the court added that the People were requesting that Alorica "turn over the call data information that's in your possession," "what's in your possession" has "a clear meaning," and the order did not require Alorica to produce documents on an ongoing basis.

DISCUSSION

Alorica argues that it is not a debt collector under the Rosenthal Act and that the trial court therefore erred by ordering it to comply with the administrative subpoena. Alorica also argues that the subpoena improperly seeks Credit One's call records in violation of the National Bank Act. Both arguments lack merit.

A. Administrative Subpoena Power

Government Code section 11180 authorizes the Attorney General (and other administrative department heads) to investigate and to prosecute actions concerning matters related to the business activities and subjects under its jurisdiction. The Attorney General's power is granted to a district attorney in certain circumstances. ( Bus. & Prof. Code, § 16759.) As part of such an investigation, the district attorney may issue subpoenas for "the production of papers, books, accounts, documents, ... and testimony pertinent or material to any inquiry, investigation, hearing, proceeding, or action conducted in any part of the state." ( Gov. Code, § 11181, subd. (e).)

The power to make an administrative inquiry is akin "to the power of a grand jury, which does not depend on a case or controversy in order to get evidence but can investigate ‘merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.’ " ( Brovelli v. Superior Court of Los Angeles County (1961) 56 Cal.2d 524, 529, 15 Cal.Rptr. 630, 364 P.2d 462 ( Brovelli ).) Such subpoenas do not violate the constitutional prohibition against unreasonable searches and seizures if (1) the inquiry is "one which the agency demanding production is authorized to make," (2) the demand is "not too indefinite," and (3) the information sought is "reasonably relevant" to the intended investigation. ( Ibid. ; Fielder v. Berkeley Properties Co. (1972) 23 Cal.App.3d 30, 40, 99 Cal.Rptr. 791.) We broadly construe the relevance standard. ( State Water Resources Control Bd. v. Baldwin & Sons, Inc. (2020) 45 Cal.App.5th 40, 57, 258 Cal.Rptr.3d 425.) We independently review whether the subpoena meets these enforcement standards. ( Millan v. Restaurant Enterprises Group, Inc. (1993) 14 Cal.App.4th 477, 485, 18 Cal.Rptr.2d 198 ( Millan ).)

B. The Rosenthal Act

The Rosenthal Act was enacted "to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts." ( Civ. Code, § 1788.1, subd. (b).) The statute defines " ‘debt collector’ " as "any person who, in the ordinary course of business, regularly, on behalf of that person or others, engages in debt collection." ( Civ. Code, § 1788.2, subd. (c).) "The term ‘debt collection’ means any act or practice in connection with the collection of consumer debts." ( Civ. Code, § 1788.2, subd. (b).) The Rosenthal Act is a remedial statute that we interpret broadly to effectuate its purpose. ( Komarova v. National...