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chised and company-owned stores throughout the United States, including 195 franchised stores in California (along
with two company-owned stores in 2005 and 2006), all of which do business as “Liberty Tax Service.” Liberty of-
fered tax preparation services, e-filing, “refund anticipation loans” (RAL) and “electronic refund checks” (ERC).
sive supplier of these products in California.
Liberty also benefitted from sales of RAL's and ERC's because these products made its tax preparation services
and those of its franchisees featured promises of speedy cash in order to attract customers.
The court found against Liberty in three relevant areas. First, it concluded that the handling fee charged to ERC
customers, typically $24 to $30.95 depending on the year, was an undisclosed finance charge in violation of the
TILA (15 U.S.C. § 1601 et seq.), because an ERC was a form of credit that allowed customers to delay payment for
transactions, were deceptive, unfair, and violated both federal and state laws. The court imposed $118,000 in civil
penalties, ordered Liberty to pay $135,886 in restitution to affected customers, and permanently enjoined certain
aspects of Liberty's practices.
Third, the trial court found Liberty liable for certain print and television advertisements that were “likely to de-
[a]dvertisement that directly or indirectly represents [an RAL] as a client's actual refund,” and from failing, in any
advertisement that mentions refund loans, to state “conspicuously” that the product is a loan, as well as the name of,
and fee or interest that will be charged by, the lending institution. Under the injunction, Liberty is required to moni-
tor its employees and franchisees to ensure they refrain from engaging in false advertising, to warn, then fine, and
then terminate those who commit violations, and to promptly notify the Attorney General's office of violations. The
We have also reviewed and considered several additional filings in this appeal. We have reviewed and consid-
ered the amicus curiae brief filed by the International Franchise Association in support of Liberty, the amicus curiae
[1]We have also taken under submission two motions to strike by the People. We discuss our rulings regarding
the first, a motion to strike portions of Liberty's reply brief, in the discussion, post. Regarding the People's motion to
strike portions of Liberty's response to the amicus curiae brief filed by the NCLC and NACA, the motion is denied.
However, we conclude the arguments by Liberty that the People seek to strike are unpersuasive for the reasons stat-
ed in the People's motion, including because they are raised for the first time in response to the amicus curiae brief,
Liberty argues the trial court erred in ruling that Liberty's ERC handling fee was an undisclosed finance charge
in violation of the TILA, that its cross-collection practices violated federal and state law, and that it was vicariously
liable under agency law for its franchisees' deceptive advertising. Liberty also challenges the court's method of cal-
culating certain of the civil penalties the court imposed for Liberty's advertising violations under the UCL and FAL.
Finally, Liberty argues the trial court abused its discretion in ordering certain permanent injunctive relief. We now
comparable cash transaction.” (12 C.F.R. § 226.4(a); accord, 15 U.S.C. § 1605(a).) Liberty argues the trial court
erred by concluding the ERC handling fee was a finance charge subject to the TILA because its customers pay it to a
bank, not Liberty, for setting up a temporary refund account, and also pay the same fee in comparable cash transac-
tions. We conclude the court did not err.
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
Liberty also argues the fee was not a finance charge because it did not vary based on when Liberty FN3 received
payment for tax preparation services. It cites no legal authority for this proposition, however, and nothing in the
TILA's definition of a finance charge provides support for this position. (12 C.F.R. § 226.4(a).) Therefore, this ar-
gument is unpersuasive as well.
2. Liberty's “Comparable Cash Transactions” Argument
Liberty next argues that, even if the ERC handling fee qualified as a finance charge under the TILA, it is also
payable in a comparable cash transaction and, therefore, exempt from TILA regulation. (15 U.S.C. § 1605(a); 12
C.F.R. § 226.4(a).) The People argue the court correctly rejected this argument pursuant to Carney, supra, 561 F.2d
1100 because virtually all of Liberty's ERC business was credit sales. We agree with the People.
Cir.2000) 224 F.3d 332, 334; Hodges v. Koons Buick Pontiac GMC, Inc. (E.D.Va.2001) 180 F.Supp.2d 786,
793; White v. Diamond Motors, Inc.(M.D.La.1997) 962 F.Supp. 867, 871.) However, none of these cases is persua-
sive in light of Carney, supra, 561 F.2d 1100 and Berryhill, supra, 578 F.2d 1092, because these two cases discuss
circumstances that are most analogous to those in the present case.
major appliances in which buyers were also required to purchase the freezer service policy. ( Carney, at p. 1102.)
The appellate court affirmed the district court's conclusion that the cost of the freezer service policy should have
been disclosed as part of the finance charge Worthmore disclosed pursuant to the TILA. The court rejected Worth-
more's argument that the service policy was not “an incident to the extension of credit” as meant in title 15 United
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
credit sales. In other words, the argument rests on disputed facts.
In short, we conclude Liberty's “comparable cash transactions” argument lacks merit.
II. Liberty's Cross–Collection Practices
Liberty next argues the trial court erred in concluding Liberty's cross-collection practices violated the state and
federal Fair Debt Collection Practices Act (FDCPA) and California's Consumer Legal Remedies Act (CLRA), re-
quiring reversal on this issue. The People disagree, and also argue that we should affirm based on the trial court's
determinations that Liberty violated the “fraudulent” and “unfair” prongs of the UCL and, for certain of its cross-
collection practices, the prohibition against deceptive advertising in the FAL. The People argue that Liberty does not
lecting past RAL debts.
Regarding FBOD, which Liberty made its largest supplier of RAL and ERC products in California from 2002 to
2005, Liberty's “first job was ‘bringing the consumer [to] the bank.’ ” The relevant RAL and ERC applications au-
thorized collection of prior RAL debts. Liberty advertised the loans, solicited loan applications from customers in
SBBT was Liberty's major supplier of RAL's and ERC's in California for a three-year period from 2006 through
2008. Liberty brought customers to SBBT by advertising the bank's RAL product in California. Liberty solicited
loan applications from individual customers and obtained their signatures on RAL and ERC applications that author-
ized cross-collection. Liberty transmitted the applications to SBBT, which deducted any past RAL debts owed by
customers were “unlikely” to recall the details of such debts, particularly those “incurred far in the past and perhaps
in connection with a loan issued by a different lender and/or obtained through a different tax preparer.”
Importantly, the court found that neither Liberty nor the banks informed customers before “inducing them to
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
‘authorize’ cross-collection whether they [were] believed to owe a past debt or not.” Thus, the trial court concluded,
“before the customer has been given meaningful notice about the existence of a debt, the customer has lost control
of the refund and, as a result, his or her right to effectively dispute the debt.... By seizing control of taxpayers' re-
funds before providing them any meaningful notice that they are believed to owe a debt, even a stale and possibly
uncollectible debt, the collection scheme at issue is deceptive, unfair, and frustrates the fundamental purpose of the
state and federal FDCPA.”
The trial court further found that the applications Liberty used did not “clearly and effectively communicate the
fact that the bank is acting as a debt collector and that any information obtained may be used for that purpose.” Cus-
tomers were not screened for a past debt until after they “ ‘authorized’ ” cross-collection, but the SBBT applications
The court rejected Liberty's contention that applicants with prior RAL debt were unlikely to be deceived, citing
“the fundamental problem with the scheme, which is that consumers are not told whether they owe a debt before
being induced to irrevocably authorize cross-collection, even of stale debts they may not recall, and/or debts they
may not legitimately owe.” The court found Liberty had attempted to collect “an extant debt” through debt collec-
tion regarding 118 of its customers, all between 2002 and 2005.
ered as a matter of law due to the passage of time” without first disclosing the purported debt. Also, the applications
did not satisfy the legal requirement that the debt “must be revived in writing, in the form of an express promise to
pay or an unconditional acknowledgment of the indebtedness, signed by the debtor, and communicated to the credi-
tor or his agent or representative.” Fourth, Liberty's cross-collection practices regarding the collection of “stale”
debts via SBBT's application were deceptive and, therefore, violated California's FAL.
Pursuant to its equitable powers and its powers under the UCL and FAL, the trial court also permanently en-
joined Liberty from participating in, or facilitating, any program to collect past RAL debts that does not make ap-
propriate disclosures to alleged debtors before they commit to any relevant authorization, as well as any program
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
that attempts to obtain a customer's authorization to collect “stale” debts as part of offering RAL's or ERC's unless
the customer revives the debt in the manner required by law.
B. Analysis
[5]Liberty argues in its opening brief that the trial court erred in ruling that its cross-collection practices violated
the state and federal FDCPA and the CLRA. In its opening brief, Liberty does not meaningfully challenge the court's
rulings that Liberty's cross-collection practices violated the “fraudulent” and “unfair” prongs of California's UCL
and FAL.
The People argue that Liberty has waived its appellate claim by failing to address the trial court's rulings that
Cal.App.4th at p. 794, fn. 3, 67 Cal.Rptr.2d 350; Reichardt v. Hoffman, supra, 52 Cal.App.4th at p. 764, 60
Cal.Rptr.2d 770.) We affirm the court's ruling based on Liberty's waiver, given Liberty's failure to meaningfully
address the court's UCL and FAL rulings in its opening brief.
California's UCL provides that “unfair competition shall mean and include any unlawful, unfair or fraudulent
that at the same time is forbidden by law’ ” ' ” ( Cel– Tech Communications, Inc. v. Los Angeles Cellular Telephone
Co. (1999) 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 ( Cel–Tech ).) Furthermore, its reference to “
‘any unlawful, unfair or fraudulent’ (italics added) practice makes clear that a practice may be deemed unfair even if
not specifically proscribed by some other law. ‘[S]ection 17200 is written in the disjunctive, it establishes three vari-
eties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. “ ‘ “In other words, a
UCL. The court's findings supported these independent bases. It concluded Liberty's failure to disclose certain in-
formation about cross-collection was deceptive, including its failure to notify applicants before accepting their ap-
plication that they had purported past RAL debts, including “stale” debts, to any lender participating in its cross-
sive supplier of these products in California.
Liberty also benefitted from sales of RAL's and ERC's because these products made its tax preparation services
and those of its franchisees featured promises of speedy cash in order to attract customers.
The court found against Liberty in three relevant areas. First, it concluded that the handling fee charged to ERC
customers, typically $24 to $30.95 depending on the year, was an undisclosed finance charge in violation of the
TILA (15 U.S.C. § 1601 et seq.), because an ERC was a form of credit that allowed customers to delay payment for
transactions, were deceptive, unfair, and violated both federal and state laws. The court imposed $118,000 in civil
penalties, ordered Liberty to pay $135,886 in restitution to affected customers, and permanently enjoined certain
aspects of Liberty's practices.
Third, the trial court found Liberty liable for certain print and television advertisements that were “likely to de-
[a]dvertisement that directly or indirectly represents [an RAL] as a client's actual refund,” and from failing, in any
advertisement that mentions refund loans, to state “conspicuously” that the product is a loan, as well as the name of,
and fee or interest that will be charged by, the lending institution. Under the injunction, Liberty is required to moni-
tor its employees and franchisees to ensure they refrain from engaging in false advertising, to warn, then fine, and
then terminate those who commit violations, and to promptly notify the Attorney General's office of violations. The
We have also reviewed and considered several additional filings in this appeal. We have reviewed and consid-
ered the amicus curiae brief filed by the International Franchise Association in support of Liberty, the amicus curiae
[1]We have also taken under submission two motions to strike by the People. We discuss our rulings regarding
the first, a motion to strike portions of Liberty's reply brief, in the discussion, post. Regarding the People's motion to
strike portions of Liberty's response to the amicus curiae brief filed by the NCLC and NACA, the motion is denied.
However, we conclude the arguments by Liberty that the People seek to strike are unpersuasive for the reasons stat-
ed in the People's motion, including because they are raised for the first time in response to the amicus curiae brief,
Liberty argues the trial court erred in ruling that Liberty's ERC handling fee was an undisclosed finance charge
in violation of the TILA, that its cross-collection practices violated federal and state law, and that it was vicariously
liable under agency law for its franchisees' deceptive advertising. Liberty also challenges the court's method of cal-
culating certain of the civil penalties the court imposed for Liberty's advertising violations under the UCL and FAL.
Finally, Liberty argues the trial court abused its discretion in ordering certain permanent injunctive relief. We now
comparable cash transaction.” (12 C.F.R. § 226.4(a); accord, 15 U.S.C. § 1605(a).) Liberty argues the trial court
erred by concluding the ERC handling fee was a finance charge subject to the TILA because its customers pay it to a
bank, not Liberty, for setting up a temporary refund account, and also pay the same fee in comparable cash transac-
tions. We conclude the court did not err.
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
Liberty also argues the fee was not a finance charge because it did not vary based on when Liberty FN3 received
payment for tax preparation services. It cites no legal authority for this proposition, however, and nothing in the
TILA's definition of a finance charge provides support for this position. (12 C.F.R. § 226.4(a).) Therefore, this ar-
gument is unpersuasive as well.
2. Liberty's “Comparable Cash Transactions” Argument
Liberty next argues that, even if the ERC handling fee qualified as a finance charge under the TILA, it is also
payable in a comparable cash transaction and, therefore, exempt from TILA regulation. (15 U.S.C. § 1605(a); 12
C.F.R. § 226.4(a).) The People argue the court correctly rejected this argument pursuant to Carney, supra, 561 F.2d
1100 because virtually all of Liberty's ERC business was credit sales. We agree with the People.
Cir.2000) 224 F.3d 332, 334; Hodges v. Koons Buick Pontiac GMC, Inc. (E.D.Va.2001) 180 F.Supp.2d 786,
793; White v. Diamond Motors, Inc.(M.D.La.1997) 962 F.Supp. 867, 871.) However, none of these cases is persua-
sive in light of Carney, supra, 561 F.2d 1100 and Berryhill, supra, 578 F.2d 1092, because these two cases discuss
circumstances that are most analogous to those in the present case.
major appliances in which buyers were also required to purchase the freezer service policy. ( Carney, at p. 1102.)
The appellate court affirmed the district court's conclusion that the cost of the freezer service policy should have
been disclosed as part of the finance charge Worthmore disclosed pursuant to the TILA. The court rejected Worth-
more's argument that the service policy was not “an incident to the extension of credit” as meant in title 15 United
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
credit sales. In other words, the argument rests on disputed facts.
In short, we conclude Liberty's “comparable cash transactions” argument lacks merit.
II. Liberty's Cross–Collection Practices
Liberty next argues the trial court erred in concluding Liberty's cross-collection practices violated the state and
federal Fair Debt Collection Practices Act (FDCPA) and California's Consumer Legal Remedies Act (CLRA), re-
quiring reversal on this issue. The People disagree, and also argue that we should affirm based on the trial court's
determinations that Liberty violated the “fraudulent” and “unfair” prongs of the UCL and, for certain of its cross-
collection practices, the prohibition against deceptive advertising in the FAL. The People argue that Liberty does not
lecting past RAL debts.
Regarding FBOD, which Liberty made its largest supplier of RAL and ERC products in California from 2002 to
2005, Liberty's “first job was ‘bringing the consumer [to] the bank.’ ” The relevant RAL and ERC applications au-
thorized collection of prior RAL debts. Liberty advertised the loans, solicited loan applications from customers in
SBBT was Liberty's major supplier of RAL's and ERC's in California for a three-year period from 2006 through
2008. Liberty brought customers to SBBT by advertising the bank's RAL product in California. Liberty solicited
loan applications from individual customers and obtained their signatures on RAL and ERC applications that author-
ized cross-collection. Liberty transmitted the applications to SBBT, which deducted any past RAL debts owed by
customers were “unlikely” to recall the details of such debts, particularly those “incurred far in the past and perhaps
in connection with a loan issued by a different lender and/or obtained through a different tax preparer.”
Importantly, the court found that neither Liberty nor the banks informed customers before “inducing them to
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
‘authorize’ cross-collection whether they [were] believed to owe a past debt or not.” Thus, the trial court concluded,
“before the customer has been given meaningful notice about the existence of a debt, the customer has lost control
of the refund and, as a result, his or her right to effectively dispute the debt.... By seizing control of taxpayers' re-
funds before providing them any meaningful notice that they are believed to owe a debt, even a stale and possibly
uncollectible debt, the collection scheme at issue is deceptive, unfair, and frustrates the fundamental purpose of the
state and federal FDCPA.”
The trial court further found that the applications Liberty used did not “clearly and effectively communicate the
fact that the bank is acting as a debt collector and that any information obtained may be used for that purpose.” Cus-
tomers were not screened for a past debt until after they “ ‘authorized’ ” cross-collection, but the SBBT applications
The court rejected Liberty's contention that applicants with prior RAL debt were unlikely to be deceived, citing
“the fundamental problem with the scheme, which is that consumers are not told whether they owe a debt before
being induced to irrevocably authorize cross-collection, even of stale debts they may not recall, and/or debts they
may not legitimately owe.” The court found Liberty had attempted to collect “an extant debt” through debt collec-
tion regarding 118 of its customers, all between 2002 and 2005.
ered as a matter of law due to the passage of time” without first disclosing the purported debt. Also, the applications
did not satisfy the legal requirement that the debt “must be revived in writing, in the form of an express promise to
pay or an unconditional acknowledgment of the indebtedness, signed by the debtor, and communicated to the credi-
tor or his agent or representative.” Fourth, Liberty's cross-collection practices regarding the collection of “stale”
debts via SBBT's application were deceptive and, therefore, violated California's FAL.
Pursuant to its equitable powers and its powers under the UCL and FAL, the trial court also permanently en-
joined Liberty from participating in, or facilitating, any program to collect past RAL debts that does not make ap-
propriate disclosures to alleged debtors before they commit to any relevant authorization, as well as any program
© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
that attempts to obtain a customer's authorization to collect “stale” debts as part of offering RAL's or ERC's unless
the customer revives the debt in the manner required by law.
B. Analysis
[5]Liberty argues in its opening brief that the trial court erred in ruling that its cross-collection practices violated
the state and federal FDCPA and the CLRA. In its opening brief, Liberty does not meaningfully challenge the court's
rulings that Liberty's cross-collection practices violated the “fraudulent” and “unfair” prongs of California's UCL
and FAL.
The People argue that Liberty has waived its appellate claim by failing to address the trial court's rulings that
Cal.App.4th at p. 794, fn. 3, 67 Cal.Rptr.2d 350; Reichardt v. Hoffman, supra, 52 Cal.App.4th at p. 764, 60
Cal.Rptr.2d 770.) We affirm the court's ruling based on Liberty's waiver, given Liberty's failure to meaningfully
address the court's UCL and FAL rulings in its opening brief.
California's UCL provides that “unfair competition shall mean and include any unlawful, unfair or fraudulent
that at the same time is forbidden by law’ ” ' ” ( Cel– Tech Communications, Inc. v. Los Angeles Cellular Telephone
Co. (1999) 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 ( Cel–Tech ).) Furthermore, its reference to “
‘any unlawful, unfair or fraudulent’ (italics added) practice makes clear that a practice may be deemed unfair even if
not specifically proscribed by some other law. ‘[S]ection 17200 is written in the disjunctive, it establishes three vari-
eties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. “ ‘ “In other words, a
UCL. The court's findings supported these independent bases. It concluded Liberty's failure to disclose certain in-
formation about cross-collection was deceptive, including its failure to notify applicants before accepting their ap-
plication that they had purported past RAL debts, including “stale” debts, to any lender participating in its cross-
