Victim Servs., Inc. v. Consumer Fin. Prot. Bureau

298 F. Supp. 3d 26
CourtCourt of Appeals for the D.C. Circuit
DecidedFebruary 7, 2018
DocketCase No. 1:17–mc–03002 (CRC)
StatusPublished
Cited by1 cases

This text of 298 F. Supp. 3d 26 (Victim Servs., Inc. v. Consumer Fin. Prot. Bureau) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Victim Servs., Inc. v. Consumer Fin. Prot. Bureau, 298 F. Supp. 3d 26 (D.C. Cir. 2018).

Opinion

CHRISTOPHER R. COOPER, United States District Judge *27Before this Court is a motion to compel the Consumer Financial Protection Bureau to comply with a subpoena to produce documents. For the reasons that follow, the Court will transfer the motion to the court that issued the subpoena-the U.S. District Court for the Northern District of California-pursuant to Federal Rule of Civil Procedure 45(f).

The movants (collectively, "Victim Services") previously contracted with state prosecutors in California to manage a diversion program for people accused of writing bad checks. In a putative class action pending in the Northern District of California, several California residents allege that Victim Services unlawfully collected fees related to that diversion program. See Breazeale v. Victim Servs., Inc., 198 F.Supp.3d 1070 (N.D. Cal. 2016) ; Decl. of Sean M. Hardy Supp. Mot. Compel ("Hardy Decl.") Ex. 1, at 1. Specifically, those plaintiffs claim that notices sent to individuals eligible for the program created a false impression that Victim Services was a law enforcement entity (as opposed to a mere debt collector) and that the notices falsely suggested that, without enrollment in the diversion program, criminal charges would be imminent (even if the chances of prosecution were slim to none). Hardy Decl. Ex. 1 ¶¶ 2-3.

The year that class action was filed, the Consumer Financial Protection Bureau brought an enforcement action against Victim Services based on the same alleged conduct. Hardy Decl. Ex. 2, at 1. The parties settled that action through a stipulated final judgment and consent order approved by the District of Maryland in March 2015. Id. Ex. 3. The consent order enjoined Victim Services from continuing its diversion program and imposed a $50,000 civil penalty. Id. at 4-9. It did not require Victim Services to pay restitution to individuals who had paid them diversion-program fees.

Several months after entry of the consent decree, however, the Bureau allocated $23.26 million from its Civil Penalty Fund to reimburse people who paid diversion fees to Victim Services. Decl. Rumana Ahmad Supp. Opp'n Mot. Compel ¶ 3. The Civil Penalty Fund stores fines that the Bureau has collected in its enforcement actions. 12 U.S.C. § 5497(d)(1). The Bureau may use that money to pay "the victims of activities for which civil penalties have been imposed under the Federal consumer financial laws." Id. § 5497(d)(2).

With the class action still pending in California, Victim Services in October 2016 served a subpoena on the Bureau that had been issued by the California court. The subpoena requested all documents and communications related to the Bureau's payment of individuals after the enforcement action. Hardy Decl. Ex. 6. The Bureau responded with a letter asserting several objections to the subpoena. Id. Ex. 7. The parties conferred by telephone but were unable to resolve their disagreement. See id. Ex. 9.

Victim Services then filed this motion to compel the Bureau's compliance with the subpoena. As required by Federal Rule of Civil Procedure 45(c), the motion was filed in this Court, as the federal district court where compliance with the subpoena is required. In opposing the motion, the Bureau contends that complying with the subpoena would impose a significant burden on the Bureau because, under the Privacy Act, 5 U.S.C. § 552a, it would have to issue notices to the nearly 40,000 individuals whose information would be disclosed. And the Bureau claims that the cost of such notification-somewhere between *28$40,000 and $82,000, plus staff resources-far outweighs the minimal relevance of any disclosed information to the California litigation.

After reviewing the parties' briefs, this Court has determined that this motion should be transferred to the U.S. District Court for the Northern District of California-the court in which the putative class action against Victim Services is pending. In subpoena-related disputes, the federal district court where compliance is required "may transfer a motion ... to the issuing court ... if the court finds exceptional circumstances." Fed. R. Civ. P. 45(f). Where exceptional circumstances exist, a court may transfer such a subpoena-related motion sua sponte . See, e.g., Orix USA Corp. v. Armentrout, 2016 WL 3926507, at *2 (N.D. Tex. July 21, 2016) (" Rule 45(f) does not require that a motion to transfer be filed ...."). The advisory committee note accompanying Rule 45(f) provides further guidance on what constitutes exceptional circumstances: "transfer may be warranted in order to avoid disrupting the issuing court's management of the underlying litigation, as when that court has already ruled on issues presented by the motion or the same issues are likely to arise in discovery in many districts." Fed. R. Civ. P. advisory committee's note to 2013 amendments. Those interests must, however, be weighed against "burdens on local nonparties subject to subpoenas" that could result from transfer. Id.

The Court finds that exceptional circumstances warrant transfer of this motion, as this Court's resolution of the motion could substantially interfere with the California court's management of the underlying class action and that potential interference outweighs any potential burden on the Bureau.

The decision of whether to order the Bureau's compliance with the subpoena depends, first and foremost, on whether the information regarding payment from the Civil Penalty Fund "is relevant to any party's claim or defense." Fed. R. Civ. P. 26(b)(1). If the material were irrelevant as a matter of law-which the Bureau argues is the case-then Victim Services would not be entitled to its production no matter how insignificant the burden on the Bureau. If a court were to find the material relevant, it would then weigh that relevance against the Bureau's costs of compliance (which in turn would require resolving the parties' dispute over whether the Privacy Act demands individualized notice to people whose information is shared).

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Bluebook (online)
298 F. Supp. 3d 26, Counsel Stack Legal Research, https://law.counselstack.com/opinion/victim-servs-inc-v-consumer-fin-prot-bureau-cadc-2018.