The bureau “does not have the power to decide which discovery rules” it will follow and those it will ignore, according to a decision on a CFPB appeal of the case in the 11th Circuit.
06/16/2023 1:10 P.M.
2 minute read
The 11th Circuit Court of Appeals has upheld a lower court’s decision that the Consumer Financial Protection Bureau did not follow the discovery process in a civil case.
The U.S. District Court for the Northern District of Georgia received a case from the CFPB in 2015 when companies outside of the debt collection industry were allegedly conducting a reported fraudulent debt collection scheme in violation of the Consumer Financial Protection Act (CFPA) and the Fair Debt Collection Practices Act.
In that case, U.S. District Court Judge Richard Story issued sanctions against the CFPB for its actions during discovery, according to the case CFPB v. Brown (PDF).
The CFPB appealed, but the 11th Circuit said that Story was within his authority to issue the sanctions.
For background in the case, the bureau filed a civil lawsuit “against 18 defendants for engaging in or substantially assisting a fraudulent debt collection scheme.”
The dismissal of the CFPB’s enforcement action against the defendants stems from its “problematic conduct” during discovery in the district court proceedings.
“When the district court ordered the CFPB to sit for Rule 30(b)(6) depositions, the CFPB doubled down by engaging in dramatic abuse of the discovery process. The district court imposed sanctions for this misconduct,” the decision states. “On appeal, the CFPB maintains that it behaved properly. We conclude, however, that violating the district court’s clear orders and derailing multiple depositions is nowhere near proper conduct. Thus, after careful review and with the benefit of oral argument, we affirm the district court’s sanctions order.”
The 11th Circuit concluded the CFPB “was determined to avoid 30(b)(6) depositions. To realize its goal, the CFPB employed tactics that the district court repeatedly forbade. As such, the CFPB clearly violated Rule 37(b) and severe sanctions were warranted. We therefore hold that the district court’s sanctions order dismissing the CFPB’s claims against the five appellees was not an abuse of discretion.”
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