In a decision issued on June 12, 2023, the Eleventh Circuit Court of Appeals affirmed the dismissal of the Consumer Financial Protection Board’s action against nine companies that provided services in connection with a fraudulent debt collection scheme of others. The CFPB claimed that the companies assisted the debt collectors and were guilty of their own unfair acts or practices.
When the targeted companies sought discovery though deposition notices pursuant to Federal Rule of Civil Procedure 30(b)(6), the CFPB objected. A 30(b)(6) notice calls for a corporate party to identify the person or persons most knowledgeable regarding specified subject areas. The district court largely overruled the CFPB’s objection ruling, in particular, that the companies could ask about exculpatory evidence in the hands of the CFPB even if some CFPB work product was protected from discovery.
As the Eleventh Circuit observed, one deposition transcript of 359 pages “reveals that the CFPB avoided answering questions through a number of impermissible tactics.” Those tactics included making “more than 70 work product objections” that included objections to questions seeking facts, which are not part of attorney work-product. CFPB’s attorney then frequently told the witness not to answer the question. Another was the use of “memory aids” in the witness’s testimony. The Eleventh Circuit noted, “In response to one question, for example, the witness read from his memory aid for more than 40 minutes and then, after a break, continued reading for 18 minutes before the parties stipulated that he would have read another 93 pages.” Finally, the witness said that he found no exculpatory facts even though he spent 300 hours preparing for his deposition. Similar tactics were employed at subsequent depositions.
The Eleventh Circuit summarized the CFPB’s conduct: “All in all, in each 30(b)(6) deposition, whether the CFPB’s tactic was to object at every turn, instruct its witness not to answer, refuse to acknowledge any exculpatory facts, or have its witness read extended and nonresponsive answers, the CFPB tried to game the system so that nothing was accomplished.”
The district court found that the CFPB’s conduct was egregious and struck its claims against five of the companies. The Eleventh Circuit affirmed the district court’s ruling finding that it was not an abuse of discretion. As it explained, the CFPB “repeatedly disobeyed the district court’s instructions and orders regarding the Rule 30(b)(6) depositions.”
The Eleventh Circuit’s decision prompts some questions. First, where did the CFPB attorneys defending these depositions learn that the tactics they employed were acceptable? Will state disciplinary authorities take notice and ask for an explanation? Or was the dismissal of the CFPB’s claims sufficient? If such conduct is typical of our federal agencies, will other courts take notice and act?
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