We broadly construe the relevance standard. (State Water Resources Control Bd. v.
Baldwin & Sons, Inc. (2020) 45 Cal.App.5th 40, 57.) We independently review whether
the subpoena meets these enforcement standards. (Millan v. Restaurant Enterprises
Group, Inc. (1993) 14 Cal.App.4th 477, 485 (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 Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324,
340; People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 313 [“civil statutes
for the protection of the public are, generally, broadly construed in favor of that
protective purpose”].)
Alorica does not dispute that the People have the authority to investigate whether
debt collectors comply with the Rosenthal Act. Alorica instead claims that it is not a debt
7
collector under the statute, so the subpoena seeks information that is not reasonably
relevant to the People’s authority to investigate compliance with the Rosenthal Act. In
support of that argument, Alorica claims that it does not regularly engage in debt
collection services because only one percent of its business consists of making outbound
account-related calls, and those calls are made on behalf of only four clients.1
Alorica’s argument lacks merit. An agency has the power to investigate a matter
within its jurisdiction “‘merely on suspicion that the law is being violated, or even just
because it wants assurance that it is not.’” (Brovelli, supra, 56 Cal.2d at p. 529.)
Encompassed within that investigative power is “the authority to conduct an investigation
and to subpoena records to determine whether the entity under investigation is subject to
the agency’s jurisdiction and whether there have been violations of provisions over which
the agency has jurisdiction.” (Millan, supra, 14 Cal.App.4th at p. 487.) Accordingly, the
People have the authority to subpoena records from Alorica in order to determine
whether Alorica—which concedes that it makes “outbound calls on behalf of and in the
name of its clients to consumers who are late paying active accounts”—is a debt collector
under the Rosenthal Act. It follows that Alorica cannot resist the subpoena by claiming
that it is not a debt collector.2
1 Alorica does not concede that the “outbound account-related services it performs” constitute debt collection, because Alorica does not “actually receive any payments from consumers made to its clients’ accounts.” Rather, Alorica argues that even if those services constitute debt collection, Alorica still is not a debt collector.
2 Alorica cites an unpublished federal district court summary judgment ruling for the proposition that Alorica is not a debt collector under the Rosenthal Act because debt
8
C. The National Bank Act
Alorica argues that Request Nos. 9 and 11 of the subpoena are invalid and
unenforceable because the requests amount to an impermissible “visitation” upon Credit
One under the National Bank Act. We are not persuaded.
The National Bank Act provides: “No national bank shall be subject to any
visitorial powers except as authorized by Federal law, vested in the courts of justice or
such as shall be, or have been exercised or directed by Congress or by either House
thereof or by any committee of Congress or of either House duly authorized.” (12
U.S.C. § 484, subd. (a).) Under that provision, only the federal Office of the Comptroller
of the Currency (the OCC) “or an authorized representative of the OCC may exercise
visitorial powers with respect to national banks.” (12 C.F.R. § 7.4000(a)(1); Cuomo v.
Clearing House Ass’n, L.L.C. (2009) 557 U.S. 519, 524.) Visitorial powers include
examining a national bank, inspecting a national bank’s records, regulating activities
permitted under federal banking law, and “[e]nforcing compliance with any applicable
collection calls make up only one percent of its business. (See Pflueger v. Auto Finance Group, Inc. (C.D.Cal. Apr. 26, 1999, No. CV-97-9499 CAS (CTX)) 1999 WL 33740813.) We are not persuaded. First, a federal court’s interpretation of California state law is not binding. (Qualified Patients Assn. v. City of Anaheim (2010) 187 Cal.App.4th 734, 764.) Second, the district court’s summary judgment ruling was necessarily limited to the evidence that was before the court. Assuming for the sake of argument that the ruling was legally sound, the People would still have the authority to collect evidence in order to determine whether Alorica is relevantly similar to the defendant in the federal case—the People are not required to take Alorica’s word for it. Third, it is difficult to understand how Alorica’s argument could be sound. If Alorica makes debt collection calls every day, for example, then it is at least arguable that Alorica regularly engages in debt collection, even if Alorica is such a large business that the debt collection calls comprise only one percent of its business according to some metric.
9
Federal or state laws concerning those activities, including through investigations that
seek to ascertain compliance through production of non-public information by the
bank . . . .” (12 C.F.R. § 7.4000(a)(2).) State officials “may not exercise visitorial
powers with respect to national banks, such as conducting examinations, inspecting or
requiring the production of books or records of national banks, or prosecuting
enforcement actions, except in limited circumstances authorized by federal law.”
(12 C.F.R. § 7.4000(a)(1).)
The People do not claim to have been authorized by federal law to exercise
visitorial powers as to a national bank. Moreover, the parties do not dispute that Alorica
is not a national bank and thus is not itself subject to the provisions of the National Bank
Act. Alorica instead argues that the subpoena is an impermissible visitation upon Credit
One because (1) the National Bank Act prohibits state officials from examining the
“records of national banks” (12 C.F.R. § 7.4000(a)(1)), and (2) “[a]ny records Alorica
possesses regarding Credit One” constitute records “of” a national bank within the
meaning of the regulations. The only authority that Alorica cites for its expansive
interpretation of the regulations is a dictionary definition of the word “of,” which of
course has many meanings.
Alorica’s interpretation is implausible on its face. For example, if a licensed
general contractor performs construction work for a national bank, then the contractor
will have records regarding that work. A state agency investigating the contractor for
compliance with state licensing requirements should be able to access such records in the
10
contractor’s possession. But if Alorica were right that any record regarding a national
bank is beyond the reach of state officials, then the state agency would be barred from
examining those records or requiring the contractor to produce them. Such an
interpretation would make no sense as a matter of policy. The point of the prohibition on
“visitation” by state agents is to protect the exclusive regulatory authority of the OCC
concerning national banks. But the OCC has no ability to enforce state licensing
requirements for general contractors, or otherwise to investigate or prosecute wrongdoing
by other third parties providing services to national banks. Thus, if Alorica’s
interpretation were correct, the National Bank Act and associated regulations would
arbitrarily curtail state law enforcement authority without creating an equivalent federal
law enforcement authority to fill the gap. It is not reasonable to infer that such a result
was intended.
Fortunately, there are alternatives to Alorica’s interpretation. One ordinary
meaning of the word “of” is “to indicate belonging or a possessive relationship.”
webster.com/dictionary/of> [as of Mar. 10, 2022].) We are not aware of any basis to
interpret “of” in the federal regulations in any other way—the regulations prohibit state
officials from examining or requiring production of records possessed by national banks.
But the regulations do not prohibit state officials from examining or requiring production
of other individuals’ or entities’ records of their dealings with national banks. The trial
11
court’s order is therefore consistent with the regulations, because it requires Alorica to
produce only records in Alorica’s possession.
Because Alorica is not a national bank, the National Bank Act does not apply to
Alorica. We accordingly conclude that the National Bank Act does not preclude the
People from subpoenaing the debt collection call records in Alorica’s custody, control, or
possession that Alorica made for Credit One.3 The People’s requests for those
documents (Request Nos. 9 & 11) are consequently valid and enforceable.
DISPOSITION
The January 14, 2021, order compelling Alorica’s compliance with the
investigative subpoena is affirmed.
MENETREZ J.
We concur:
RAMIREZ P. J. FIELDS J.
3 Alorica argues that because it does not maintain more than 30 days’ worth of call records for Credit One at any given time, the trial court order requires it to request and to obtain its historical call records directly from Credit One. The argument is not supported by the record. The trial court stated that Alorica was required to produce only those records in its possession.
12
Filed 4/5/22 CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
THE PEOPLE,
Plaintiff and Respondent, E076786
v. (Super.Ct.No. CVMV200170)
ALORICA INC., ORDER CERTIFYING OPINION FOR PUBLICATION Defendant and Appellant.
THE COURT:
We have received two requests pursuant to California Rules of Court, rule 8.1120(a), to publish the nonpublished opinion in this matter that was filed on March 14, 2022. Having reviewed those requests, we conclude that the opinion meets the standards for publication set forth in California Rules of Court, rule 8.1105(c).
We therefore grant the requests and order that this opinion be certified for publication pursuant to California Rules of Court, rule 8.1105(b). We consequently certify for publication the opinion filed in this matter on March 14, 2022.
CERTIFIED FOR PUBLICATION MENETREZ J.
We concur:
RAMIREZ P. J. FIELDS J.
AI Brief
AI-generated · verify before citing
Holding. The court held that the trial court properly compelled Alorica Inc. to comply with an administrative subpoena because the People have the authority to investigate whether an entity is subject to the Rosenthal Act, and the National Bank Act does not shield third-party records in Alorica's possession.
Issues
Whether the People have the authority to issue an administrative subpoena to determine if an entity is a 'debt collector' under the Rosenthal Act.
Whether the National Bank Act prohibits state officials from subpoenaing records of a national bank's dealings that are in the possession of a third-party service provider.
Disposition. affirmed
Quotations verified verbatim against the opinion
“The People have the authority to subpoena records from Alorica in order to determine whether Alorica—which concedes that it makes “outbound calls on behalf of and in the name of its clients to consumers who are late paying active accounts”—is a debt collector under the Rosenthal Act.”
“The regulations do not prohibit state officials from examining or requiring production of other individuals’ or entities’ records of their dealings with national banks.”