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HINSHAW & CULBERTSON Ww?
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Los Angeles, CA 90071-3402
213-680-2800,
16CV300096
Santa Clara — Civil
JUSTIN PENN (SBN CA 302350)
jpenn@hinshawlaw.com
SHALINI BHASKER (SBN CA 326729)
sbhasker@hinshawlaw.com
HINSHAW & CULBERTSON LLP
350 South Grand Ave., Suite 3600
Los Angeles, CA 90071-3402
Telephone: 213-680-2800
Facsimile: 213-614-7399
Electronically Filed
by Superior Court of CA,
County of Santa Clara,
on 8/18/2022 3:36 PM
Reviewed By: R. Walker
Case #16CV300096
Envelope: 9750430
Attorneys for Plaintiff and Cross-Defendant Velocity
Investments, LLC and Cross-Defendant Velocity Portfolio
Group, Inc.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
VELOCITY INVESTMENTS, LLC,
Plaintiff,
vs.
MARIA CANUL,
Defendant.
MARIA CANUL,
Cross-Complainant,
vs.
VELOCITY INVESTMENTS, LLC, a New
Jersey limited liability company; VELOCITY
PORTFOLIO GROUP, INC., a Delaware
corporation; and ROES 2 through 10, inclusive,
Cross-Defendants.
1
Case No.: 18CV338986
CROSS-DEFENDANTS’ OPPOSITION
TO DEFENDANT/CROSS-
COMPLAINANT’S MOTION FOR
CLASS CERTIFICATION
[Filed concurrently with Declaration of
Shalini Bhasker]
Date: August 31, 2022
Time: 1:30 p.m.
Dept.: 3
CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION
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Til.
IV.
TABLE OF CONTENTS
Page
INTRODUCTION ...0....ccceesescessceseseeseseeseseseeseseeeeseseeseseseessseseeseseesssesnsssaesesaesesucasseeasseaeensseanes 3
SUMMARY OF PERTINENT FACTS AND THEORY OF LIABILITY «0.0... cecessesseeseeses 4
LEGAL STANDARD ......ceccssecsessessesesseesessesesscsseseeseeseessenssssesssessesseeseessesesseessansaessesseeneeseenee 6
A. Class Counsel’s Duplicitous Litigation Spreads Risk to the Class and
Increases Attorneys’ Fees Over the Interest of Adequately Representing
Potential Class Members and Benefitting the Litigants
B. Ambiguity in the Proposed Class Definitions Among Putative Class
Counsel’s Multiple Cases Creates Ascertainability Issues and Further
Underscores the that Class Treatment is not Appropriate Let Alone Superior.
CONCUSSION ee eee 13
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TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD:
Cross-Defendants VELOCITY INVESTMENTS, LLC (“Velocity”) and VELOCITY
PORTFOLIO GROUP, INC. (“VPGI’) (collectively, “Cross-Defendants”) hereby submit their
Opposition to Defendant/Cross-Complainant MARIA CANUL’s (“Cross-Claimant”) Motion for
Class Certification as follows:
I. INTRODUCTION
Cross-Claimant seeks class certification for a putative class alleging violations of the
California Fair Debt Buying Practices Act, California Civil Code §§ 1788.52(b), 1788.52(d)(1),
1788.58(a)(6), 1788.58(a)(9), and 1788.58(b), based solely on collection complaints filed on behalf
of Velocity. However, for reasons outlined in further detail below, Cross-Claimant has failed to
meet the requirements of section 382 of the California Code of Civil Procedure and by this court in
the Guidelines for Motions Relating to Class Certification! necessary to warrant class certification.
Cross-Claimant alleges that there are 1,845 individuals in California who meet the proposed
class definition of: 1) all persons with addresses in California; 2) against whom Cross-Defendants
“yp
filed a collection Complaint in the form of Exhibit to Canul’s First Amended Class Action
Cross-Complaint for Declaratory Relief and Damages; 3) allegedly seeking to collect a charged-off
consumer debt; 4) originally owed to WebBank; 5) that was sold or resold to Velocity on or after
January 1, 2014; and 6) during the period December 10, 2017 through the date of class certification.
However, this class definition is nearly identical, or in some instances actually identical, other than
dates, to four other proposed class actions filed by the same proposed class counsel against the same
Cross-Defendants. This selective bifurcation is in direct conflict with the intended purposes for class
actions. It does not benefit the litigants or the court. Instead, only proposed class counsel benefits
from this approach and spreads its risk. This piecemeal class litigation creates a firm conflict of
interest, rendering counsel inadequate and demonstrating the class process is not the superior
' Some of the case law cited in this opposition is from federal courts. As the Court is likely aware, while California has
developed its own class action procedures and common law, California courts still look to Federal Rule 23 as a gap-
filler for areas where California law is not fully developed. Ticconi v. Blue Shield of California Life & Health Ins. Co.,
160 Cal. App. 4th 528, 546 (2008). As such, where appropriate, Cross-Defendants points out those instances where
class certification is inappropriate because it also fails to meet the prerequisites set forth in Rule 23(a) of the Federal
Rules of Civil Procedure.
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method of litigation here. Accordingly, class certification should be denied due to a failure in the
adequacy of class counsel to put the needs of the class members above their own.
Thus, Pascual’s Motion for Class Certification should be denied.
Il. SUMMARY OF PERTINENT FACTS AND THEORY OF LIABILITY
On January 20, 2016 Velocity Investments, LLC filed a collection action against Cross-
Claimant. In February of 2019, Cross-Claimant, through her attorneys at Consumer Law Center,
Inc., filed a class action cross-complaint for statutory damages. Then on November 4, 2021, Cross-
Claimant filed the operative cross-complaint, first amended class action cross-complaint (“FACC”),
that was served on Cross-Defendants on November 19, 2021. Cross-Defendants answered the FACC
asserting the affirmative defenses of failure to state a claim upon which relief may be granted and
the statutory bona fide error defense. Cross-Claimant also filed this Motion for Class Certification
on March 29, 2022 to be heard on August 31, 2022.
Cross-Claimant alleges violations of the California Fair Debt Buying Practices Act,
California Civil Code §§ 1788.52(b), 1788.52(d)(1), 1788.58(a)(6), 1788.58(a)(9), and 1788.58(b).
Looking at each of these, § 1788.52(b) requires the debt buyer to be able to access certain documents
prior to attempting to collect from a consumer. Section 1788.52(d)(1) requires specific language be
included in the first communication with the consumer. Section 1788.58(a)(6) requires identification
of the charge-off creditor. Section 1788.58(a)(9) requires compliance with § 1788.52, and §
1788.58(b) requires a copy of the contract be attached to the collection complaint (and has nothing
to do with the content of the complaint). This action is one of several nearly identical class actions
filed by counsel for Pascual, alleging not only the same causes of actions, but also the same
substantive class definitions against the same Cross-Defendants.
These actions are: (1) Velocity Investments, LLC v. Pascual, 18CV300096; (2) Velocity
Investments, LLC v. Sipin, 18CV338986; (3) Velocity Investments, LLC vy. Jayawardena,
19CV357372; and (4) Velocity Investments, LLC v. Thong Nguyen, STK-CV-UCC-2019-15406.
See Declaration of Shalini Bhasker In Support of Cross-Defendants’ Opposition to
Defendant/Cross-Claimant’s Motion for Class Certification (“Bhasker Decl.”), {] 3.
The same exact violations are alleged in Velocity Investments, LLC v. Pascual as they are
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here. Bhasker Decl., §] 3-5, Exs. A and B. In Velocity Investments, LLC v. Thong Nguyen, the
putative class alleges violations for §§ 1788.52(b) and 1788.58(b). Bhasker Decl., § 6, Ex. C. In
Velocity Investments, LLC y. Sipin and Velocity Investments, LLC v. Jayawardena, the same
allegations are made as here, and they allege causes of actions for violations of the Federal Fair Debt
Collection Practices Act, 15 U.S.C. §§ 1692e, 1692e(2)(A), and 1692e(10), and the California
Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788.17. Bhasker Decl., ]]
7-8 Exs. D and E. Further, and not surprisingly, the evidence relied upon for each of these allegations
is the same across all proposed class actions.
What is more telling is how substantively similar the actual class definitions are for each:
Pascual: All persons with addresses in California against whom Cross-Defendants
filed a collection Complaint in the form of Exhibit “1” to the First Amended Class
Action Cross-Complaint for Declaratory Relief and Damages herein, in an attempt
to collect a charged-off consumer debt originally owed to WEBBANK, which was
sold or resold to VELOCITY on or after January 1, 2014, during the period
December 10, 2017, through the date of class certification”.
Canul: All persons with addresses in California against whom Cross-Defendants
filed a collection Complaint in the form of Exhibit “1” to the First Amended Class
Action Cross-Complaint for Declaratory Relief and Damages herein, in an attempt
to collect a charged-off consumer debt originally owed to WEBBANK, which was
sold or resold to VELOCITY on or after January 1, 2014, during the period October
24, 2018, through the date of class certification>.
Sipin: all persons with addresses in California against whom VELOCITY filed a
collection Complaint in the form of Exhibit “1”, in an attempt to collect a charged-
off consumer debt originally owed to WEBBANK, which was sold or resold to
VELOCITY on or after January 1, 2014, during the period one year prior to the
date of filing this action through the date of class certification’.
Jayawardena: all persons with addresses in California against whom Cross-
Defendant filed a collection Complaint in the form of Exhibit “1”, in an attempt to
collect a charged-off consumer debt originally owed to WEBBANK, which was
sold or resold to VELOCITY on or after January 1, 2014, during the period one
? Memorandum of Points and Authorities in Support of Defendant/Cross-Claimant’s Motion for Class Certification in
Velocity Investments, LLC v. Eva Pascual. Bhasker Decl, Exhibit B.
3 Memorandum of Points and Authorities in Support of Defendant/Cross-Claimant’s Motion for Class Certification in
Velocity Investments, LLC v. Maria Canul. See Bhasker Decl. Exhibit A.
4 Class Action Cross-Complaint for Statutory Damages; Velocity Investments, LLC v. Farrah Sipin. See Bhasker Decl.
Exhibit D.
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year prior to the date of filing this action through the date of class certification>.
Nguyen: all persons with addresses in California against whom VELOCITY filed
a collection Complaint which fail to contain an attached copy of a contract or other
document evidencing the debtor’s agreement to the debt, in an attempt to collect a
charged-off consumer debt originally owed to LENDINGCLUB CORPORATION,
which was sold or resold to VELOCITY on or after January 1, 2014, during the
period one year prior to the date of filing this action through the date of class
certification®.
Further, based on these class definitions, the time periods for each proposed class overlaps as
follows:
July December October November | September August
2016 2017 2018 2018 2019 2022
Pascual ee
Caml a
Sipin I
ayawardena a
— a
Ill. LEGAL STANDARD
According to California Code of Civil Procedure, Class certification is permitted when “the
question is one of a common or general interest, of many persons, or when the parties are numerous,
and it is impracticable to bring them all before the court.” Cal. Civ. Proc. § 382. Factors to discuss
in class certification briefings include: 1) commonality and predominance; 2) ascertainability; 3)
numerosity; 4) typicality; 5) adequacy; and 6) substantial benefits or superiority’. Should any one
of these factors fail, class certification should be denied. “On a motion to certify class status of an
action, it is the [Cross-Claimant’s] burden to establish that in fact the requisite for continuation of
the litigation in that format are present... satisfaction of that burden requires that the plaintiff
5 Class Action Cross-Complaint for Statutory Damages; Velocity Investments, LLC v. Sanjay Jayawardena. See Bhasker
Decl. Exhibit E.
© Class Action Cross-Complaint for Statutory Damages; Velocity Investments, LLC v. Thong Nguyen. See Bhasker Decl.
Exhibit C.
7 Santa Clara County Superior Court Guidelines for Motions Relating to Class Certification, Departments 1 and 3 —
Complex Civil Litigation.
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establish more than a ‘reasonable possibility’ that class action treatment is appropriate.” Hamwi v.
Citinational-Buckeye Inv. Co., 72 Cal. App. 3d 462, 471 (1977). The Court is required to perform a
rigorous analysis of all factors, and indeed could easily conclude that Pascual has failed to sustain
her evidentiary burden on any of the factors. This opposition focuses on factors (2), (5), and (6).
A. — Class Counsel’s Duplicitous Litigation Spreads Risk to the Class and Increases
Attorneys’ Fees Over the Interest of Adequately Representing Potential Class
Members and Benefitting the Litigants
It is well settled that “[t]he community of interest requirement embodies three factors: (1)
predominant common questions of law or fact; (2) class representatives with claims or defenses
typical of the class; and (3) class representatives who can adequately represent the class.” (citations
omitted) Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal. 4th 319, 326 (2004). Further, the
“[a]dequacy of representation depends on the qualifications of counsel for the representatives, an
absence of antagonism, a sharing of interests between representatives and absentees, and the
unlikelihood that the suit is collusive.” In re Northern Dist. of California, Dalkon Shield IUD
Products Liability Litigation, 693 F. 2d 847, 855 (1982).
Cross-Claimant seeks certification in this case of a class consisting of persons against whom
Velocity has filed a collection complaint alleging that the collection complaint gives rise to statutory
violations. They conclude that the only individual questions of law or fact is whether or not Cross-
Defendants filed the collection complaints in question’. This conclusion on the part of Cross-
Claimant may be an oversimplification of the considerations the Court will need to make at trial;
however, assuming it is accurate, the position demonstrates why class counsel should not be
maintaining multiple class actions on the same theories.
Putative class counsel has filed five class actions alleging the same common questions of
law or fact against the same Cross-Defendants. It appears that the only reason for sustaining multiple
nearly identical class actions is to afford class counsel multiple attempts to collect attorneys’ fees
and to spread the risk of adverse judgment to the classes, and not to counsel. There is neither a
8 See Bhasker Decl., 9, Ex. F, relevant excerpt from Cross-Claimant’s First Amended Class Action Cross-Complaint
for Declaratory Relief and Damages
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benefit to the litigants, nor to the court, and this approach puts class counsel in direct conflict of the
interests class actions are meant to protect. “Before the imposition of a judgment binding on absent
parties can be justified, it must be shown that substantial benefits both to the litigants and the court
will result. The burden of such a showing falls on plaintiff, and the ultimate determination of
whether the class action is appropriate turns on the existence and extent of common questions of
law and fact.” (Citations omitted). City of San Jose v. Superior Court, 12 Cal. 3d 447, 460 (1974).
Furthermore, “[rJeason and the constitutional mandates of due process compel” the denial of a
proceeding that “could deprive either the defendant or the members of the class — or both — of a fair
trial.” Jd., at 462.
Beginning on September 10, 2019, counsel for Cross-Claimant has four complaints running
simultaneously with identical class definitions and one with a substantively identical class
definition. The inherent confusion this multiplicity of litigation presents, as well as counsel’s
fomenting of litigation on fee-shifting claims in contradiction to the fiduciary duty to those they
represent, renders this case unsuitable for class certification. By maintaining multiple class actions
that should otherwise be combined, there exists opportunity for varying decisions disfavoring the
litigants and the efficiency of the court. However, class counsel has created a mechanism by which
they are afforded multiple attempts at collecting attorney’s fees for the same exact litigation efforts.
Prosecuting claims against the same defendant in different actions can create a conflict of
interest for the attorneys, placing a class at risk that its interests will be compromised for the benefit
of parties in another action. See Kayes v. Pacific Lumber Co., 51 F.3d 1449, 1465 (9th Cir. 1995);
Sullivan v. Chase Inv. Serv., Inc., 79 F.R.D. 246, 258 (N.D. Cal. 1978). For example, two classes
might have antagonistic interests because defendant would be unable to satisfy a judgment in each
case. See Sullivan v. Chase Inv. Serv., Inc., 79 F.R.D. 246, 258 (N.D.Cal.1978).
Federal courts have recognized that this approach should be avoided, where classes are far
too narrow to be “superior”. That is because any resolution based upon an overly narrow definition
would unfairly and inefficiently resolve only a fraction of possible pending claims. See Wenig v.
Messerli & Kramer, P.A., 2013 U.S. Dist. LEXIS 39013, *17-18 (D. Minn. 2013) (“a class action
that resolves only a fraction of the possible claims ... [is] neither a ‘fair[]’ nor ‘efficient[]’ way to
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“adjudicate[e] the controversy.”). Limited classes, which Wenig described as arbitrary
“gerrymandering” “deprive the class-action device of much of its utility” and “[t]he Court is hard-
pressed to discern the benefit to anyone—the Court, the public, [defendant], or potential class
members—of adjudicating [limited class claims].” /d. at *18. As pointed out in Guevarra v.
Progressive Fin. Servs., 497 F. Supp. 2d 1090, 1091 (N.D. Cal. 2007), narrow classes improperly
“encourage[] the multiplication of proceedings” and “plaintiffs might divide into an increasing
number of classes, each taking a bite at the golden apple until the company is broke.”
This issue was squarely addressed, and class counsel’s approach was squarely rejected, in
Lou v. Ma Labs, Inc. No. C 12-05409 WHA, 2014 U.S. Dist. LEXIS 2665 (N.D. Cal. Jan. 8, 2014).
In Lou, class counsel sought to certify a class with many of the same or substantially similar claims
as another lawsuit also involving class counsel. Even though the defendants in that case did not fully
develop this position in their challenge of counsel’s adequacy, the court’s vigorous review included
a careful examination of the two lawsuits and their implications on the adequacy of counsel. The
court explained class certification “requires that the representative parties, including counsel, ‘fairly
and adequately protect the interests of the class[,]’ [and] [t]his threshold inquiry is so important
that[Rule 23] requires consideration of ‘any other matters pertinent to counsel's ability to fairly and
adequately represent the interests of the class.’” /d. at *4. The court continued:
Adequacy of class counsel is vital to protect the interests of absent class
members. Class counsel wield great power. Strategic decisions made by
counsel to litigate and/or settle class claims have profound implications on
the rights of absent class members. At best, absent class members' interests
can be vindicated. At worst, litigation and settlement decisions can result in
preclusion, collusion, and exclusion. It is thus critical that sufficient
procedural and structural protections be enforced so that the interests of
absent and putative class members are not abridged.
Id. at *5. That prerequisite is why, no doubt, the court explained “[t]he Supreme Court has stated
that an attorney who currently represents another class against the same defendant may not serve as
class counsel.” Jd., citing Ortiz v. Fibreboard Corp., 527 U.S. 815, 856, 119 S. Ct. 2295, 144 L. Ed.
2d 715 (1999). Further, “[a] prominent treatise states: ‘Courts have consistently held that counsel
cannot simultaneously represent a class and prosecute either individual or class claims against the
same defendants in a different proceeding, even if there is partial overlap among the plaintiffs or
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class members in the cases.” /d., quoting 1 McLaughlin on Class Actions 4:39 (10th ed.).
The Lou court was not persuaded by the argument that there was no overlap among the actual
class members. Instead, the court correctly observed:
When there are different plaintiffs in different actions proceeding at the same
time with the same claims, same counsel, and same defendants, the risk of
counsel compromising one class for another is intensified. Here, plaintiffs'
counsel state that there is no overlap between the 553 employees on the Tian
class list and the 283 employees on the Lou class list [citation omitted].
Nonetheless, the Lou action and parallel Tian action involve the same
plaintiffs’ counsel, same defendants, and substantially similar claims and
evidence.
Id. at *6. That is exactly the scenario here, and the class mechanism requires putative classes “to be
championed by its counsel unencumbered by their duties to other clients. Counsel have a conflict
and may not serve.” /d.
Cross-Claimant has not explained any meaningful distinction among these overlapping and
identical classes. There are none. Just as in Lou, all of these actions will involve the same substantive
evidence, without meaningful or legal distinction. Cross-Claimant has not set forth that there are
unique circumstances among the four separate WebBank sets of debts such that unique
circumstances will be presented in the four WebBank classes as to what documents Velocity had
access to (§ 1788.52(b)). Nor has Cross-Claimant set forth what unique theory among the various
classes will be set forth demonstrating differences sufficient to warrant multiple separate classes
because the charged-off creditor was not WebBank (§ 1788.58(a)(6)). Finally, the theory that the
contract needs to be attached to the collection complaint (§ 1788.58(b)) has nothing to do with the
form of the collection complaint itself, and so it is not at all clear why this theory is unique in any
class. This burden rests with Cross-Claimants, and they have failed.
One of the purposes of class actions is to mitigate against “inconsistent or varying
adjudications” or where individual actions “would substantially impair or impede [potential class
members’] ability to protect their interests.” Fed. R. Civ. P. 23(b)(1)(A) and (B). That purpose is
thwarted where the same class counsel maintains multiple similar or identical lawsuits. The scheme
devised by class counsel to afford them numerous attempts at attorneys’ fees at the risk to various
classes actually encourages exactly what class actions are intended to prevent.
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Thus, for these reasons alone, class certification should be denied; however, there are further
complications that refute class certification based on Cross-Claimant’s proposed definition.
B. Ambiguity in the Proposed Class Definitions Among Putative Class Counsel’s
Multiple Cases Creates Ascertainability Issues and Further Underscores the
that Class Treatment is not Appropriate Let Alone Superior
The proposed class definition, when compared to that proposed by class counsel in other
litigations carries inherent confusion due to the overlap present on the face of the matters. This
confusion makes it impossible to ensure that proposed class members are a part of the litigation that
would prove most advantageous to their recovery. “A class definition that is ambiguous presents a
problem of class ascertainability that goes to the heart of the question of class certification, which
requires a class definition that is precise, objective and presently ascertainable.” (citation omitted)
Cho v. Seagate Technology Holdings, Inc., 177 Cal. App. 4th 734, 746 (2009). Rather, California
Rules of Court, Rule 3.765 provides a solution should there be the need to segment certain class
members. It provides that “[w]hen appropriate, an action may be maintained as a class action limited
to particular issues... [and] divided into subclasses.” Cal. Rules of Court, Rule 3.765(b). But that is
not what counsel for Cross-Claimant is proposing here. This problem arises in large part because
class counsel crafts the definitions based upon the form of the collection complaints, but the theories
are not proximately related to the form of the complaints.
Depending on what class definition is certified, there will be confusion and ambiguity among
the various class actions. As mentioned above, theories such what documents are accessible to
Velocity at the time the suit is initiated (§ 1788.52(b)) have nothing to do with the form of the
collection complaint. While Cross-Claimant bases her class definition here on the form of the
collection complaint, if the court were to certify a class based upon what documents Velocity was
able to obtain, it would go obviously beyond the form of the collection complaint (and up to the date
of certification). This fast and loose approach is antithetical to the class mechanism. Indeed, it would
subject Velocity to overlapping classes with vague (and evolving) class definitions in other matters
(depending on when the certification order is entered), and allow multiple different rulings on the
merits. “However, because group action is also capable of injustice, the representative plaintiff must
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show substantial benefit will result both to the litigants and to the court.” (citations omitted)). Blue
Chip Stamps v. Superior Court of Los Angeles County, 18 Cal. 3d 381, 385 (1976). Cross-Claimant
has failed to meet her burden here.
This overlap of class definitions also gives rise to concerns regarding which class it would
be most advantageous for an individual to join. The California Fair Debt Buying Practices Act
provides in § 1788.62(b) of the California Civil Code that the damages available to the proposed
class cannot “exceed the lesser of five hundred thousand dollars ($500,000.00) or 1 percent of the
net worth” of Cross-Defendants. Thus, an individual’s recovery is greatest when they are in the
smallest, most narrowly tailored class. This is because individual recovery will vary based on how
many individuals are in their class, the more individuals, the greater the total recovery will be
divided by.
It is required “that a class action [be] superior to other methods of adjudication. Where
classwide litigation of common issues will reduce costs and promote greater efficiency, a class
action may be superior to other methods of litigation. A class action is the superior method for
managing litigation if no realistic alternative exists.” Valentino v. Carter-Wallace, Inc., 97 F. 3d
1227, 1234-35 (9th Cir. 1996). Cross-Claimant has failed to demonstrate that a class action would
be more efficient and effective than individual suits filed by potential class members. “[C]lass
actions may create injustice. The class action may deprive an absent class member of the opportunity
to independently press his claim, preclude a defendant from defending each individual claim to its
fullest, and even deprive a litigant of a constitutional right.” City of San Jose v. Superior Court,
supra, at 458. Rather, “the representative plaintiff must show substantial benefit will result both to
the litigants and to the court... [FJor a class action to be maintained, it must be superior to other
available methods for the fair and efficient adjudication of the controversy. This superiority criterion
has been held to be manifest in the requirement that the class mechanism confer substantial
benefits.” (citations omitted). Caro v. Procter & Gamble Co., supra, at 662.
While the argument has been made that class member’s claims are too small to justify the
costs of individual litigation, the state legislature has taken that into consideration and included §
1788.62(c) incentivizing those wronged to bring suits to protect their rights by transferring legal
12
CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION
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HINSHAW & CULBERTSON Ww?
380 South Grand Ave., Suite 3600
Los Angeles, CA 90071-3402
213-680-2800
costs to a debt buyer who has actually violated the statute. What is worse in the present matter is
that potential class members would be waiving their right for greater damages by agreeing to be
included as a class member without realizing that they are likely participating in a process that
irrevocably limits their recovery based on latent conflicts of interest, while unwittingly supporting
class counsel’s attempts to take advantage of the exact statute intended to protect them from
financial abuse. Each time a class action is certified, class counsel stands to receive a significant
amount in attorneys’ fees. “[W]hen the individual’s interests are no longer served by group action,
the principal — if not the sole — beneficiary then becomes the class action attorney. To allow this is
to sacrifice the goal for the going, burdening if not abusing our crowded courts with actions lacking
proper purpose.” Blue Chip Stamps v. Superior Court of Los Angeles County, supra, at 386. Class
certification under the current circumstances benefits no one except for class counsel, least of all the
consumers they allege to represent and protect the rights of.
IV. CONCLUSION
Cross-Claimant’s counsel’s haphazard approach to class litigation is not appropriate. While
it may benefit class counsel to file a panoply of class actions to spread the risk of adverse rulings
and increase the fees recoverable, the law governing class actions is not so fickle. The motion for
class certification should be denied.
DATED: August 18, 2022 HINSHAW & CULBERTSON LLP
By: /s/ Shalini Bhasker
Justin Penn
Shalini Bhasker
Attorneys for Plaintiff and Cross-Defendant
Velocity Investments, LLC and Cross-
Defendant Velocity Portfolio Group, Inc.
13
CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION
1045141\311386737.v1PROOF OF SERVICE
Velocity Investments, LLC vs. Maria Canul, et al. and X-Action
Case No. 16CV300096
(STATE OF CALIFORNIA, COUNTY OF LOS ANGELES)
I am employed in the County of Los Angeles, State of California. I am over the age of 18
and not a party to the within actions; my business address is 350 South Grand Ave., Suite 3600,
Los Angeles, CA 90071-3476.
On August 18, 2022, I served the document(s) entitled CROSS-DEFENDANTS’
OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS
CERTIFICATION on the interested parties in this action by placing true copies thereof enclosed
in a sealed envelope(s) addressed as stated below:
SEE ATTACHED SERVICE LIST
M (BY ONE LEGAL ELECTRONIC TRANSMISSION): I caused each document to be sent
by electronic transmission through One Legal through the user interface at www.onelegal.com to
all email addresses on the list maintained by One Legal.
@M (BY E-MAIL OR ELECTRONIC TRANSMISSION): Based on a court order or an
agreement of the parties to accept service by e-mail or electronic transmission, I caused the
document(s) to be sent to the person[s] at the e-mail address[es] set forth herein. I did not receive,
within a reasonable time after the transmission, any electronic message or other indication that the
transmission was unsuccessful. See Cal.R.Ct.R. 2060
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Executed on August 18, 2022, at Los Angeles, California.
are. V.Ver80ay
1045141\309681129.v1nn
SERVICE LIST
Velocity Investments, LLC vs. Maria Canul, et al. and X-Action
Case No. 16CV300096
Fred W. Schwinn (SBN 225575)
Raeon R. Roulston (SBN 255622)
Matthew C. Salmonsen (SBN 302854)
CONSUMER LAW CENTER, INC.
38 West Santa Clara Street
San Jose, California 95113-1806
Telephone Number: (408) 294-6100
Facsimile Number: (408) 294-6190
Email Address:
fred.schwinn@sjconsumerlaw.com:;
raeon.roulston@sjconsumerlaw.com;
matthew.salmonsen@sjconsumerlaw.com
Attorneys for Defendant/Cross-Complainant
MARIA CANUL
1045141\309681129.v1
Preview
eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800, 16CV300096 Santa Clara — Civil JUSTIN PENN (SBN CA 302350) jpenn@hinshawlaw.com SHALINI BHASKER (SBN CA 326729) sbhasker@hinshawlaw.com HINSHAW & CULBERTSON LLP 350 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 Telephone: 213-680-2800 Facsimile: 213-614-7399 Electronically Filed by Superior Court of CA, County of Santa Clara, on 8/18/2022 3:36 PM Reviewed By: R. Walker Case #16CV300096 Envelope: 9750430 Attorneys for Plaintiff and Cross-Defendant Velocity Investments, LLC and Cross-Defendant Velocity Portfolio Group, Inc. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA VELOCITY INVESTMENTS, LLC, Plaintiff, vs. MARIA CANUL, Defendant. MARIA CANUL, Cross-Complainant, vs. VELOCITY INVESTMENTS, LLC, a New Jersey limited liability company; VELOCITY PORTFOLIO GROUP, INC., a Delaware corporation; and ROES 2 through 10, inclusive, Cross-Defendants. 1 Case No.: 18CV338986 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS- COMPLAINANT’S MOTION FOR CLASS CERTIFICATION [Filed concurrently with Declaration of Shalini Bhasker] Date: August 31, 2022 Time: 1:30 p.m. Dept.: 3 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 Til. IV. TABLE OF CONTENTS Page INTRODUCTION ...0....ccceesescessceseseeseseeseseseeseseeeeseseeseseseessseseeseseesssesnsssaesesaesesucasseeasseaeensseanes 3 SUMMARY OF PERTINENT FACTS AND THEORY OF LIABILITY «0.0... cecessesseeseeses 4 LEGAL STANDARD ......ceccssecsessessesesseesessesesscsseseeseeseessenssssesssessesseeseessesesseessansaessesseeneeseenee 6 A. Class Counsel’s Duplicitous Litigation Spreads Risk to the Class and Increases Attorneys’ Fees Over the Interest of Adequately Representing Potential Class Members and Benefitting the Litigants B. Ambiguity in the Proposed Class Definitions Among Putative Class Counsel’s Multiple Cases Creates Ascertainability Issues and Further Underscores the that Class Treatment is not Appropriate Let Alone Superior. CONCUSSION ee eee 13 2 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD: Cross-Defendants VELOCITY INVESTMENTS, LLC (“Velocity”) and VELOCITY PORTFOLIO GROUP, INC. (“VPGI’) (collectively, “Cross-Defendants”) hereby submit their Opposition to Defendant/Cross-Complainant MARIA CANUL’s (“Cross-Claimant”) Motion for Class Certification as follows: I. INTRODUCTION Cross-Claimant seeks class certification for a putative class alleging violations of the California Fair Debt Buying Practices Act, California Civil Code §§ 1788.52(b), 1788.52(d)(1), 1788.58(a)(6), 1788.58(a)(9), and 1788.58(b), based solely on collection complaints filed on behalf of Velocity. However, for reasons outlined in further detail below, Cross-Claimant has failed to meet the requirements of section 382 of the California Code of Civil Procedure and by this court in the Guidelines for Motions Relating to Class Certification! necessary to warrant class certification. Cross-Claimant alleges that there are 1,845 individuals in California who meet the proposed class definition of: 1) all persons with addresses in California; 2) against whom Cross-Defendants “yp filed a collection Complaint in the form of Exhibit to Canul’s First Amended Class Action Cross-Complaint for Declaratory Relief and Damages; 3) allegedly seeking to collect a charged-off consumer debt; 4) originally owed to WebBank; 5) that was sold or resold to Velocity on or after January 1, 2014; and 6) during the period December 10, 2017 through the date of class certification. However, this class definition is nearly identical, or in some instances actually identical, other than dates, to four other proposed class actions filed by the same proposed class counsel against the same Cross-Defendants. This selective bifurcation is in direct conflict with the intended purposes for class actions. It does not benefit the litigants or the court. Instead, only proposed class counsel benefits from this approach and spreads its risk. This piecemeal class litigation creates a firm conflict of interest, rendering counsel inadequate and demonstrating the class process is not the superior ' Some of the case law cited in this opposition is from federal courts. As the Court is likely aware, while California has developed its own class action procedures and common law, California courts still look to Federal Rule 23 as a gap- filler for areas where California law is not fully developed. Ticconi v. Blue Shield of California Life & Health Ins. Co., 160 Cal. App. 4th 528, 546 (2008). As such, where appropriate, Cross-Defendants points out those instances where class certification is inappropriate because it also fails to meet the prerequisites set forth in Rule 23(a) of the Federal Rules of Civil Procedure. 3 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 method of litigation here. Accordingly, class certification should be denied due to a failure in the adequacy of class counsel to put the needs of the class members above their own. Thus, Pascual’s Motion for Class Certification should be denied. Il. SUMMARY OF PERTINENT FACTS AND THEORY OF LIABILITY On January 20, 2016 Velocity Investments, LLC filed a collection action against Cross- Claimant. In February of 2019, Cross-Claimant, through her attorneys at Consumer Law Center, Inc., filed a class action cross-complaint for statutory damages. Then on November 4, 2021, Cross- Claimant filed the operative cross-complaint, first amended class action cross-complaint (“FACC”), that was served on Cross-Defendants on November 19, 2021. Cross-Defendants answered the FACC asserting the affirmative defenses of failure to state a claim upon which relief may be granted and the statutory bona fide error defense. Cross-Claimant also filed this Motion for Class Certification on March 29, 2022 to be heard on August 31, 2022. Cross-Claimant alleges violations of the California Fair Debt Buying Practices Act, California Civil Code §§ 1788.52(b), 1788.52(d)(1), 1788.58(a)(6), 1788.58(a)(9), and 1788.58(b). Looking at each of these, § 1788.52(b) requires the debt buyer to be able to access certain documents prior to attempting to collect from a consumer. Section 1788.52(d)(1) requires specific language be included in the first communication with the consumer. Section 1788.58(a)(6) requires identification of the charge-off creditor. Section 1788.58(a)(9) requires compliance with § 1788.52, and § 1788.58(b) requires a copy of the contract be attached to the collection complaint (and has nothing to do with the content of the complaint). This action is one of several nearly identical class actions filed by counsel for Pascual, alleging not only the same causes of actions, but also the same substantive class definitions against the same Cross-Defendants. These actions are: (1) Velocity Investments, LLC v. Pascual, 18CV300096; (2) Velocity Investments, LLC v. Sipin, 18CV338986; (3) Velocity Investments, LLC vy. Jayawardena, 19CV357372; and (4) Velocity Investments, LLC v. Thong Nguyen, STK-CV-UCC-2019-15406. See Declaration of Shalini Bhasker In Support of Cross-Defendants’ Opposition to Defendant/Cross-Claimant’s Motion for Class Certification (“Bhasker Decl.”), {] 3. The same exact violations are alleged in Velocity Investments, LLC v. Pascual as they are 4 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 here. Bhasker Decl., §] 3-5, Exs. A and B. In Velocity Investments, LLC v. Thong Nguyen, the putative class alleges violations for §§ 1788.52(b) and 1788.58(b). Bhasker Decl., § 6, Ex. C. In Velocity Investments, LLC y. Sipin and Velocity Investments, LLC v. Jayawardena, the same allegations are made as here, and they allege causes of actions for violations of the Federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692e, 1692e(2)(A), and 1692e(10), and the California Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788.17. Bhasker Decl., ]] 7-8 Exs. D and E. Further, and not surprisingly, the evidence relied upon for each of these allegations is the same across all proposed class actions. What is more telling is how substantively similar the actual class definitions are for each: Pascual: All persons with addresses in California against whom Cross-Defendants filed a collection Complaint in the form of Exhibit “1” to the First Amended Class Action Cross-Complaint for Declaratory Relief and Damages herein, in an attempt to collect a charged-off consumer debt originally owed to WEBBANK, which was sold or resold to VELOCITY on or after January 1, 2014, during the period December 10, 2017, through the date of class certification”. Canul: All persons with addresses in California against whom Cross-Defendants filed a collection Complaint in the form of Exhibit “1” to the First Amended Class Action Cross-Complaint for Declaratory Relief and Damages herein, in an attempt to collect a charged-off consumer debt originally owed to WEBBANK, which was sold or resold to VELOCITY on or after January 1, 2014, during the period October 24, 2018, through the date of class certification>. Sipin: all persons with addresses in California against whom VELOCITY filed a collection Complaint in the form of Exhibit “1”, in an attempt to collect a charged- off consumer debt originally owed to WEBBANK, which was sold or resold to VELOCITY on or after January 1, 2014, during the period one year prior to the date of filing this action through the date of class certification’. Jayawardena: all persons with addresses in California against whom Cross- Defendant filed a collection Complaint in the form of Exhibit “1”, in an attempt to collect a charged-off consumer debt originally owed to WEBBANK, which was sold or resold to VELOCITY on or after January 1, 2014, during the period one ? Memorandum of Points and Authorities in Support of Defendant/Cross-Claimant’s Motion for Class Certification in Velocity Investments, LLC v. Eva Pascual. Bhasker Decl, Exhibit B. 3 Memorandum of Points and Authorities in Support of Defendant/Cross-Claimant’s Motion for Class Certification in Velocity Investments, LLC v. Maria Canul. See Bhasker Decl. Exhibit A. 4 Class Action Cross-Complaint for Statutory Damages; Velocity Investments, LLC v. Farrah Sipin. See Bhasker Decl. Exhibit D. 5 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1— coO WN DN FP WwW NY 27 28 HINSHAW & CULBERTSON Uw? 380 South Grand Ave,, Suite 3600 ‘Los Angeles, CA 90071-3402 213-680-2800 year prior to the date of filing this action through the date of class certification>. Nguyen: all persons with addresses in California against whom VELOCITY filed a collection Complaint which fail to contain an attached copy of a contract or other document evidencing the debtor’s agreement to the debt, in an attempt to collect a charged-off consumer debt originally owed to LENDINGCLUB CORPORATION, which was sold or resold to VELOCITY on or after January 1, 2014, during the period one year prior to the date of filing this action through the date of class certification®. Further, based on these class definitions, the time periods for each proposed class overlaps as follows: July December October November | September August 2016 2017 2018 2018 2019 2022 Pascual ee Caml a Sipin I ayawardena a — a Ill. LEGAL STANDARD According to California Code of Civil Procedure, Class certification is permitted when “the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court.” Cal. Civ. Proc. § 382. Factors to discuss in class certification briefings include: 1) commonality and predominance; 2) ascertainability; 3) numerosity; 4) typicality; 5) adequacy; and 6) substantial benefits or superiority’. Should any one of these factors fail, class certification should be denied. “On a motion to certify class status of an action, it is the [Cross-Claimant’s] burden to establish that in fact the requisite for continuation of the litigation in that format are present... satisfaction of that burden requires that the plaintiff 5 Class Action Cross-Complaint for Statutory Damages; Velocity Investments, LLC v. Sanjay Jayawardena. See Bhasker Decl. Exhibit E. © Class Action Cross-Complaint for Statutory Damages; Velocity Investments, LLC v. Thong Nguyen. See Bhasker Decl. Exhibit C. 7 Santa Clara County Superior Court Guidelines for Motions Relating to Class Certification, Departments 1 and 3 — Complex Civil Litigation. 6 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 establish more than a ‘reasonable possibility’ that class action treatment is appropriate.” Hamwi v. Citinational-Buckeye Inv. Co., 72 Cal. App. 3d 462, 471 (1977). The Court is required to perform a rigorous analysis of all factors, and indeed could easily conclude that Pascual has failed to sustain her evidentiary burden on any of the factors. This opposition focuses on factors (2), (5), and (6). A. — Class Counsel’s Duplicitous Litigation Spreads Risk to the Class and Increases Attorneys’ Fees Over the Interest of Adequately Representing Potential Class Members and Benefitting the Litigants It is well settled that “[t]he community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.” (citations omitted) Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal. 4th 319, 326 (2004). Further, the “[a]dequacy of representation depends on the qualifications of counsel for the representatives, an absence of antagonism, a sharing of interests between representatives and absentees, and the unlikelihood that the suit is collusive.” In re Northern Dist. of California, Dalkon Shield IUD Products Liability Litigation, 693 F. 2d 847, 855 (1982). Cross-Claimant seeks certification in this case of a class consisting of persons against whom Velocity has filed a collection complaint alleging that the collection complaint gives rise to statutory violations. They conclude that the only individual questions of law or fact is whether or not Cross- Defendants filed the collection complaints in question’. This conclusion on the part of Cross- Claimant may be an oversimplification of the considerations the Court will need to make at trial; however, assuming it is accurate, the position demonstrates why class counsel should not be maintaining multiple class actions on the same theories. Putative class counsel has filed five class actions alleging the same common questions of law or fact against the same Cross-Defendants. It appears that the only reason for sustaining multiple nearly identical class actions is to afford class counsel multiple attempts to collect attorneys’ fees and to spread the risk of adverse judgment to the classes, and not to counsel. There is neither a 8 See Bhasker Decl., 9, Ex. F, relevant excerpt from Cross-Claimant’s First Amended Class Action Cross-Complaint for Declaratory Relief and Damages 7 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 benefit to the litigants, nor to the court, and this approach puts class counsel in direct conflict of the interests class actions are meant to protect. “Before the imposition of a judgment binding on absent parties can be justified, it must be shown that substantial benefits both to the litigants and the court will result. The burden of such a showing falls on plaintiff, and the ultimate determination of whether the class action is appropriate turns on the existence and extent of common questions of law and fact.” (Citations omitted). City of San Jose v. Superior Court, 12 Cal. 3d 447, 460 (1974). Furthermore, “[rJeason and the constitutional mandates of due process compel” the denial of a proceeding that “could deprive either the defendant or the members of the class — or both — of a fair trial.” Jd., at 462. Beginning on September 10, 2019, counsel for Cross-Claimant has four complaints running simultaneously with identical class definitions and one with a substantively identical class definition. The inherent confusion this multiplicity of litigation presents, as well as counsel’s fomenting of litigation on fee-shifting claims in contradiction to the fiduciary duty to those they represent, renders this case unsuitable for class certification. By maintaining multiple class actions that should otherwise be combined, there exists opportunity for varying decisions disfavoring the litigants and the efficiency of the court. However, class counsel has created a mechanism by which they are afforded multiple attempts at collecting attorney’s fees for the same exact litigation efforts. Prosecuting claims against the same defendant in different actions can create a conflict of interest for the attorneys, placing a class at risk that its interests will be compromised for the benefit of parties in another action. See Kayes v. Pacific Lumber Co., 51 F.3d 1449, 1465 (9th Cir. 1995); Sullivan v. Chase Inv. Serv., Inc., 79 F.R.D. 246, 258 (N.D. Cal. 1978). For example, two classes might have antagonistic interests because defendant would be unable to satisfy a judgment in each case. See Sullivan v. Chase Inv. Serv., Inc., 79 F.R.D. 246, 258 (N.D.Cal.1978). Federal courts have recognized that this approach should be avoided, where classes are far too narrow to be “superior”. That is because any resolution based upon an overly narrow definition would unfairly and inefficiently resolve only a fraction of possible pending claims. See Wenig v. Messerli & Kramer, P.A., 2013 U.S. Dist. LEXIS 39013, *17-18 (D. Minn. 2013) (“a class action that resolves only a fraction of the possible claims ... [is] neither a ‘fair[]’ nor ‘efficient[]’ way to 8 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 “adjudicate[e] the controversy.”). Limited classes, which Wenig described as arbitrary “gerrymandering” “deprive the class-action device of much of its utility” and “[t]he Court is hard- pressed to discern the benefit to anyone—the Court, the public, [defendant], or potential class members—of adjudicating [limited class claims].” /d. at *18. As pointed out in Guevarra v. Progressive Fin. Servs., 497 F. Supp. 2d 1090, 1091 (N.D. Cal. 2007), narrow classes improperly “encourage[] the multiplication of proceedings” and “plaintiffs might divide into an increasing number of classes, each taking a bite at the golden apple until the company is broke.” This issue was squarely addressed, and class counsel’s approach was squarely rejected, in Lou v. Ma Labs, Inc. No. C 12-05409 WHA, 2014 U.S. Dist. LEXIS 2665 (N.D. Cal. Jan. 8, 2014). In Lou, class counsel sought to certify a class with many of the same or substantially similar claims as another lawsuit also involving class counsel. Even though the defendants in that case did not fully develop this position in their challenge of counsel’s adequacy, the court’s vigorous review included a careful examination of the two lawsuits and their implications on the adequacy of counsel. The court explained class certification “requires that the representative parties, including counsel, ‘fairly and adequately protect the interests of the class[,]’ [and] [t]his threshold inquiry is so important that[Rule 23] requires consideration of ‘any other matters pertinent to counsel's ability to fairly and adequately represent the interests of the class.’” /d. at *4. The court continued: Adequacy of class counsel is vital to protect the interests of absent class members. Class counsel wield great power. Strategic decisions made by counsel to litigate and/or settle class claims have profound implications on the rights of absent class members. At best, absent class members' interests can be vindicated. At worst, litigation and settlement decisions can result in preclusion, collusion, and exclusion. It is thus critical that sufficient procedural and structural protections be enforced so that the interests of absent and putative class members are not abridged. Id. at *5. That prerequisite is why, no doubt, the court explained “[t]he Supreme Court has stated that an attorney who currently represents another class against the same defendant may not serve as class counsel.” Jd., citing Ortiz v. Fibreboard Corp., 527 U.S. 815, 856, 119 S. Ct. 2295, 144 L. Ed. 2d 715 (1999). Further, “[a] prominent treatise states: ‘Courts have consistently held that counsel cannot simultaneously represent a class and prosecute either individual or class claims against the same defendants in a different proceeding, even if there is partial overlap among the plaintiffs or 9 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 class members in the cases.” /d., quoting 1 McLaughlin on Class Actions 4:39 (10th ed.). The Lou court was not persuaded by the argument that there was no overlap among the actual class members. Instead, the court correctly observed: When there are different plaintiffs in different actions proceeding at the same time with the same claims, same counsel, and same defendants, the risk of counsel compromising one class for another is intensified. Here, plaintiffs' counsel state that there is no overlap between the 553 employees on the Tian class list and the 283 employees on the Lou class list [citation omitted]. Nonetheless, the Lou action and parallel Tian action involve the same plaintiffs’ counsel, same defendants, and substantially similar claims and evidence. Id. at *6. That is exactly the scenario here, and the class mechanism requires putative classes “to be championed by its counsel unencumbered by their duties to other clients. Counsel have a conflict and may not serve.” /d. Cross-Claimant has not explained any meaningful distinction among these overlapping and identical classes. There are none. Just as in Lou, all of these actions will involve the same substantive evidence, without meaningful or legal distinction. Cross-Claimant has not set forth that there are unique circumstances among the four separate WebBank sets of debts such that unique circumstances will be presented in the four WebBank classes as to what documents Velocity had access to (§ 1788.52(b)). Nor has Cross-Claimant set forth what unique theory among the various classes will be set forth demonstrating differences sufficient to warrant multiple separate classes because the charged-off creditor was not WebBank (§ 1788.58(a)(6)). Finally, the theory that the contract needs to be attached to the collection complaint (§ 1788.58(b)) has nothing to do with the form of the collection complaint itself, and so it is not at all clear why this theory is unique in any class. This burden rests with Cross-Claimants, and they have failed. One of the purposes of class actions is to mitigate against “inconsistent or varying adjudications” or where individual actions “would substantially impair or impede [potential class members’] ability to protect their interests.” Fed. R. Civ. P. 23(b)(1)(A) and (B). That purpose is thwarted where the same class counsel maintains multiple similar or identical lawsuits. The scheme devised by class counsel to afford them numerous attempts at attorneys’ fees at the risk to various classes actually encourages exactly what class actions are intended to prevent. 10 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 Thus, for these reasons alone, class certification should be denied; however, there are further complications that refute class certification based on Cross-Claimant’s proposed definition. B. Ambiguity in the Proposed Class Definitions Among Putative Class Counsel’s Multiple Cases Creates Ascertainability Issues and Further Underscores the that Class Treatment is not Appropriate Let Alone Superior The proposed class definition, when compared to that proposed by class counsel in other litigations carries inherent confusion due to the overlap present on the face of the matters. This confusion makes it impossible to ensure that proposed class members are a part of the litigation that would prove most advantageous to their recovery. “A class definition that is ambiguous presents a problem of class ascertainability that goes to the heart of the question of class certification, which requires a class definition that is precise, objective and presently ascertainable.” (citation omitted) Cho v. Seagate Technology Holdings, Inc., 177 Cal. App. 4th 734, 746 (2009). Rather, California Rules of Court, Rule 3.765 provides a solution should there be the need to segment certain class members. It provides that “[w]hen appropriate, an action may be maintained as a class action limited to particular issues... [and] divided into subclasses.” Cal. Rules of Court, Rule 3.765(b). But that is not what counsel for Cross-Claimant is proposing here. This problem arises in large part because class counsel crafts the definitions based upon the form of the collection complaints, but the theories are not proximately related to the form of the complaints. Depending on what class definition is certified, there will be confusion and ambiguity among the various class actions. As mentioned above, theories such what documents are accessible to Velocity at the time the suit is initiated (§ 1788.52(b)) have nothing to do with the form of the collection complaint. While Cross-Claimant bases her class definition here on the form of the collection complaint, if the court were to certify a class based upon what documents Velocity was able to obtain, it would go obviously beyond the form of the collection complaint (and up to the date of certification). This fast and loose approach is antithetical to the class mechanism. Indeed, it would subject Velocity to overlapping classes with vague (and evolving) class definitions in other matters (depending on when the certification order is entered), and allow multiple different rulings on the merits. “However, because group action is also capable of injustice, the representative plaintiff must CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 show substantial benefit will result both to the litigants and to the court.” (citations omitted)). Blue Chip Stamps v. Superior Court of Los Angeles County, 18 Cal. 3d 381, 385 (1976). Cross-Claimant has failed to meet her burden here. This overlap of class definitions also gives rise to concerns regarding which class it would be most advantageous for an individual to join. The California Fair Debt Buying Practices Act provides in § 1788.62(b) of the California Civil Code that the damages available to the proposed class cannot “exceed the lesser of five hundred thousand dollars ($500,000.00) or 1 percent of the net worth” of Cross-Defendants. Thus, an individual’s recovery is greatest when they are in the smallest, most narrowly tailored class. This is because individual recovery will vary based on how many individuals are in their class, the more individuals, the greater the total recovery will be divided by. It is required “that a class action [be] superior to other methods of adjudication. Where classwide litigation of common issues will reduce costs and promote greater efficiency, a class action may be superior to other methods of litigation. A class action is the superior method for managing litigation if no realistic alternative exists.” Valentino v. Carter-Wallace, Inc., 97 F. 3d 1227, 1234-35 (9th Cir. 1996). Cross-Claimant has failed to demonstrate that a class action would be more efficient and effective than individual suits filed by potential class members. “[C]lass actions may create injustice. The class action may deprive an absent class member of the opportunity to independently press his claim, preclude a defendant from defending each individual claim to its fullest, and even deprive a litigant of a constitutional right.” City of San Jose v. Superior Court, supra, at 458. Rather, “the representative plaintiff must show substantial benefit will result both to the litigants and to the court... [FJor a class action to be maintained, it must be superior to other available methods for the fair and efficient adjudication of the controversy. This superiority criterion has been held to be manifest in the requirement that the class mechanism confer substantial benefits.” (citations omitted). Caro v. Procter & Gamble Co., supra, at 662. While the argument has been made that class member’s claims are too small to justify the costs of individual litigation, the state legislature has taken that into consideration and included § 1788.62(c) incentivizing those wronged to bring suits to protect their rights by transferring legal 12 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1eoarAINY Dn fF WN NN KY KY KY NY NY KY NY KH Ke ee ee Se Se Se SY DU fF WwW NRK COD OD ANI DH FWY KF CO LY 28 HINSHAW & CULBERTSON Ww? 380 South Grand Ave., Suite 3600 Los Angeles, CA 90071-3402 213-680-2800 costs to a debt buyer who has actually violated the statute. What is worse in the present matter is that potential class members would be waiving their right for greater damages by agreeing to be included as a class member without realizing that they are likely participating in a process that irrevocably limits their recovery based on latent conflicts of interest, while unwittingly supporting class counsel’s attempts to take advantage of the exact statute intended to protect them from financial abuse. Each time a class action is certified, class counsel stands to receive a significant amount in attorneys’ fees. “[W]hen the individual’s interests are no longer served by group action, the principal — if not the sole — beneficiary then becomes the class action attorney. To allow this is to sacrifice the goal for the going, burdening if not abusing our crowded courts with actions lacking proper purpose.” Blue Chip Stamps v. Superior Court of Los Angeles County, supra, at 386. Class certification under the current circumstances benefits no one except for class counsel, least of all the consumers they allege to represent and protect the rights of. IV. CONCLUSION Cross-Claimant’s counsel’s haphazard approach to class litigation is not appropriate. While it may benefit class counsel to file a panoply of class actions to spread the risk of adverse rulings and increase the fees recoverable, the law governing class actions is not so fickle. The motion for class certification should be denied. DATED: August 18, 2022 HINSHAW & CULBERTSON LLP By: /s/ Shalini Bhasker Justin Penn Shalini Bhasker Attorneys for Plaintiff and Cross-Defendant Velocity Investments, LLC and Cross- Defendant Velocity Portfolio Group, Inc. 13 CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION 1045141\311386737.v1PROOF OF SERVICE Velocity Investments, LLC vs. Maria Canul, et al. and X-Action Case No. 16CV300096 (STATE OF CALIFORNIA, COUNTY OF LOS ANGELES) I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within actions; my business address is 350 South Grand Ave., Suite 3600, Los Angeles, CA 90071-3476. On August 18, 2022, I served the document(s) entitled CROSS-DEFENDANTS’ OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT’S MOTION FOR CLASS CERTIFICATION on the interested parties in this action by placing true copies thereof enclosed in a sealed envelope(s) addressed as stated below: SEE ATTACHED SERVICE LIST M (BY ONE LEGAL ELECTRONIC TRANSMISSION): I caused each document to be sent by electronic transmission through One Legal through the user interface at www.onelegal.com to all email addresses on the list maintained by One Legal. @M (BY E-MAIL OR ELECTRONIC TRANSMISSION): Based on a court order or an agreement of the parties to accept service by e-mail or electronic transmission, I caused the document(s) to be sent to the person[s] at the e-mail address[es] set forth herein. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. See Cal.R.Ct.R. 2060 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on August 18, 2022, at Los Angeles, California. are. V.Ver80ay 1045141\309681129.v1nn SERVICE LIST Velocity Investments, LLC vs. Maria Canul, et al. and X-Action Case No. 16CV300096 Fred W. Schwinn (SBN 225575) Raeon R. Roulston (SBN 255622) Matthew C. Salmonsen (SBN 302854) CONSUMER LAW CENTER, INC. 38 West Santa Clara Street San Jose, California 95113-1806 Telephone Number: (408) 294-6100 Facsimile Number: (408) 294-6190 Email Address: fred.schwinn@sjconsumerlaw.com:; raeon.roulston@sjconsumerlaw.com; matthew.salmonsen@sjconsumerlaw.com Attorneys for Defendant/Cross-Complainant MARIA CANUL 1045141\309681129.v1