Home / Daily Dose / United States District Court Dismisses CFPB Enforcement Claims Over Discovery Abuses
Print This Post Print This Post

United States District Court Dismisses CFPB Enforcement Claims Over Discovery Abuses

GavelIn a stunning decision under Federal Rules of Civil Procedure governing discovery, the United States District Court for the Northern District of Georgia dismissed enforcement claims filed by the Consumer Financial Protection Bureau (CFPB) against several entities accused of committing fraudulent debt collection activities. In Consumer Financial Protection Bureau v Universal Debt Solutions, LLC, U.S.D.C. N.D. Ga., 1:15-CV-859-RWS (2017), various defendants filed motions for sanctions under applicable federal rules based upon the conduct of CFPB during discovery. In the opinion, the Court ultimately dismissed six defendants from the action.

In order to prepare their defense, various defendants sought discovery from CFPB, including testimony at oral depositions.  Upon receiving notice of the deposition, the CFPB claimed that information was already provided in discovery and that the requests were protected by the law enforcement and deliberative process privilege.  Despite Court orders permitting inquiry into certain areas, the CFPB refused to offer meaningful information outside of what was already provided, drafted a “memory aid” for witnesses to recite, and interposed repeated objections to questions based claims of information being privileged.  Even with Court orders, conference calls, and explanations regarding what is and is not privileged, the CFPB still refused to provide adequate responses.

In a powerfully stated conclusion, the Court explained that it:

finds that the CFPB willfully violated the Court’s repeated instructions to identify for Defendants the factual bases for its claims and that, in each deposition, it willfully failed to present a knowledgeable 30(b)(6) witness.  In light of the CFPB’s pattern of conduct in this case, the Court is not optimistic that reopening the depositions would be fruitful.  That is especially true given the CFPB’s continued use of privilege objections in response to questions that the Court expressly identified as permissible.  Thus, Defendants’ motions for Rule 37 sanctions . . . are all GRANTED.

The decision is a guide as to how parties in enforcement actions may use the discovery process to learn the facts underlying the lawsuit, as well as a good lesson in what can happen when the discovery process is abused.

About Author: Stephen M. Hladik

Stephen M. Hladik, Esquire, is a principal in Hladik, Onorato & Federman, LLP. Formerly the youngest Deputy Attorney General in charge of the Harrisburg office of the Pennsylvania Bureau of Consumer Protection, Hladik brings a broad range of experience to his mortgage foreclosure, bankruptcy, tax sale, and UDAP legal practice.

About Author: Douglas Sullivan

x

Check Also

The Industry Pulse: Updates on Roundpoint, CoreLogic, and More

Click through to learn more about the launch of new functionalities, new partnerships, and crucial hires in this weekly update.

GET YOUR DAILY DOSE OF DS NEWS

Featuring daily updates on foreclosure, REO, and the secondary market, DS News has the timely and relevant content you need to stay at the top of your game. Get each day’s most important default servicing news and market information delivered directly to your inbox, complimentary, when you subscribe.