Collection attorneys who file state court collection actions routinely face FDCPA cross-complaints filed by consumers. Many of these cross-complaints are of the “cookie cutter” variety, and they amount to little more than a list of legal conclusions about alleged FDCPA violations with no factual basis for the claims. Debtors file these cross-complaints solely to dissuade the creditor from continuing with the collection action. They know the cost of defending FDCPA cross-complaints can be substantial, and they hope the creditor or its attorney will pay the debtor’s attorney some money to dismiss the cross-complaint and go away. How can a collector turn the table in these cases?
One effective method for combating FDCPA cross-complaints filed in state court is the anti-SLAPP motion. Anti-SLAPP statutes are procedural devices designed to encourage early dismissal of lawsuits that have been filed solely to chill a person’s freedom of speech or petition (the acronym “SLAPP” stands for “Strategic Litigation Against Public Participation”). Although this article will focus on California’s anti-SLAPP statute, many other states have enacted similar legislation. In fact, according to a website sponsored by the Public Participation Project (see http://www.anti-slapp.org/?q=node/12), there are at least twenty-seven states that have enacted anti-SLAPP statutes.
In California, the anti-SLAPP statute is found at section 425.16(b) of the Code of Civil Procedure, which provides as follows:
“A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”
Cal. Code Civ. Proc. § 425.16(b)(1).
The California legislature enacted the anti-SLAPP statute to provide “an efficient procedural mechanism to obtain an early and inexpensive dismissal of nonmeritorious claims ‘arising from any act’ of the defendant ‘in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue . . . .’” Martinez v. Metabolife Int’l, Inc., 113 Cal. App. 4th 181, 186 (2003); accord Jarrow Formulas v. LaMarche, 31 Cal. 4th 728, 737 (2003) (explaining that § 425.16 “is a procedural device for screening out meritless claims”). The phrase “in furtherance of the person’s right of petition or free speech” is defined broadly:
As used in this section, ‘act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; . . . .
Cal. Code Civ. Proc. § 425.16(e).
The California legislature and courts have dictated that section 425.16 “shall be construed broadly.” Id. § 425.16(a); Navellier v. Sletten, 29 Cal. 4th 82, 92 (2002)(rejecting narrow construction of the statute that “would contravene the Legislature's express command that section 425.16 ‘shall be construed broadly’”); Kibler v. Northern Inyo County Local Hosp. Dist., 39 Cal. 4th 192, 195-96 (2006). The Court explained why a broad construction was appropriate in Kibler:
Because these meritless lawsuits seek to deplete the defendant's energy and drain his or her resources, the Legislature sought to prevent SLAPPs by ending them early and without great cost to the SLAPP target.
Kibler, 39 Cal. 4th at 195 (citations and quotation marks omitted); see Martinez, 113 Cal. App. 4th at 186 (anti-SLAPP statute implemented to provide “efficient procedural mechanism to obtain an early and inexpensive dismissal of nonmeritorious claims. . . ”).
In California, the court’s first step is to determine if the action is subject to a special motion to strike. If it is, the Court must then determine if the opposing party has established a probability of prevailing on his claim. See HMS Capital, Inc. v. Lawyers Title Co., 118 Cal. App. 4th 204, 211 (2004); Barak v. Quisenberry, 135 Cal. App. 4th 654, 661 (2006) (“In order to trigger a response from a plaintiff in a special motion to strike, a moving defendant need only demonstrate that the action arises out of protected First Amendment activity.”).
The first prong of the test will almost always be met with respect to a motion to strike an FDCPA cross-complaint. These pleadings generally target the allegations made in the collection complaint, and thus implicate the creditor’s right to petition. The California Supreme Court held that the “constitutional right to petition . . . includes the basic act of filing litigation.” Briggs v. Eden Council for Hope & Opportunity, 19 Cal. 4th 1106, 1115 (1999).
Once the creditor shows that the cross-complaint implicates its right to petition, the burden shifts to the debtor to “establish a probability of prevailing in the litigation.” To do so, the debtor will need to show that his cross-complaint is “both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by [him] is credited.” HMS Capital, 118 Cal. App 4th at 213 (internal quotation marks omitted). Evidence “that would be admissible at trial is required.” Id. at 212. Declarations submitted by the debtor “based upon ‘information and belief’” are not sufficient. Id.; see Evans v. Unkow, 38 Cal. App. 4th 1490, 1497-98 (1995). The Court considers “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” Cal. Code Civ. Proc. § 425.16(b)(2); see Navellier, 29 Cal. 4th at 89. If the party opposing the motion has submitted sufficient evidence, the court “evaluate[s] the defendant’s evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law.” HMS Capital, Inc., 118 Cal. App. 4th at 212.
California’s anti-SLAPP statute has a few additional features that make it particularly effective at fighting FDCPA cross-complaints. Once the motion is filed, there is a freeze on discovery. See Cal. Code Civ. Proc. § 425.16(g). This prevents the debtor and his counsel from arguing they are entitled to pursue expensive and time-consuming discovery in order to respond to the motion. They must defeat the motion with whatever evidence they have on hand, which is usually not much.
The other benefit to California’s anti-SLAPP motion is that the prevailing party is entitled to recover the attorneys’ fees and costs incurred in connection with the motion. See Cal. Code Civ. Proc. § 425.16(c) (“In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs.”). The prospect of having the cross-complaint quickly dismissed and then paying the creditor’s attorneys’ fees can act as a strong deterrent to frivolous FDCPA cross-complaints.
The laws governing anti-SLAPP motions may vary significantly in your state, and of course an anti-SLAPP motion is not appropriate in every case. But these motions can provide creditors and their counsel with a powerful tool for fighting back against frivolous FDCPA cross-complaints.