Eleventh Circuit upholds sanctions against CFPB for discovery abuses

CFPB sanctions
Consumer Financial Protection Bureau v. Brown
Date: June 12, 2023

Issue: The Eleventh Circuit’s decision to uphold sanctions against CFPB for engaging in “discovery abuses.”

Case Summary: In a 3-0 decision, an Eleventh Circuit panel affirmed sanctions against CFPB for deposition obstruction in a Fair Debt Collection Practices Act (FDCPA) lawsuit.

CFPB sued eighteen defendants for engaging in a fraudulent data collection scheme under the Consumer Financial Protection Act (CFPA) and the Fair Debt Collection Practices Act. Thirteen of the defendants were individuals and their companies who directly participated in the scheme. Five of the companies—Global Payments Inc., Frontline Processing Corp., Pathfinder Payment Solutions Inc., Electronic Merchant Systems Inc. and Global Connect LLC (the appellees)—were not direct operators of the scheme. The appellees allegedly provided services which were used to withdraw funds from the consumers accounts.

In response to notices from five defendants to depose a CFPB representative, CFPB made three objections. CFPB said it already provided the information in its interrogatory responses; the notice included topics covered by deliberative process privilege; and the depositions impermissibly sought to question CFPB counsel about their mental impressions and analyses. But the district court overruled these objections, explaining federal civil procedure rules apply with equal force to government agencies, and defense counsel can dig into factual matters when those matters were disclosed in interrogatory responses.

CFPB then moved for a protective order to limit the scope of the depositions. The district court granted this in part by striking the balance that exculpatory facts were fair game, while questions digging into CFPB’s trial strategy’ was off limits. The parties went on with their depositions.

In the first deposition, CFPB stonewalled defense counsel by not answering questions. The bureau lodged more than 70 work product objections to fact-based questions the court instructed it to answer. The bureau also equipped its witness with “memory aids” from which the witness repeatedly engaged in “filibuster-style reading.” The memory aids were lawyer-prepared scripts that were hundreds of pages in length, which the witness read verbatim. Despite the district court’s instruction that it should answer questions about exculpatory facts, CFPB stated it could not exculpatory facts in the record. Afterward, the district court held a hearing and warned CFPB of these tactics. The court also reiterated that defendants were entitled to question the CFPB about exculpatory facts.

However, during the next four depositions, CFPB continued its obstructionist conduct. The bureau objected at every turn, instructed its witness not to answer, refused to acknowledge exculpatory facts, and instructed its witness to read the memory aids verbatim. Afterward, the defendants moved for sanctions, which the district court granted. As described by the court, “CFPB tried to game the system so that nothing was accomplished.” As a result, the court struck all claims against the five defendants and dismissed them from the case.

On appeal, a unanimous Eleventh Circuit panel affirmed the sanctions and dismissal. The panel explained CFPB engaged in “discovery abuses” by objecting excessively and having its representative answer with “filibuster-style” reading from notes. Further, CFPB willfully disregarded the district court’s instructions by reading from memory aids to bury defendants in so much information that they could not identify the support for CFPB’s claims. In the panel’s view, CFPB’s witness was effectively unavailable because he could not answer questions without memory aids and refused to address exculpatory evidence. The panel concluded reopening depositions would be fruitful given CFPB’s pattern of conduct in the case.

Bottom Line: The panel emphasized government agencies “do not have the power to decide which discovery rules they will abide by and which they will ignore.”

Documents: Opinion