Hall et al v. Housing Authority of the County of Marin

Filing 43

ORDER by Magistrate Judge Jacqueline Scott Corley granting in part 33 Motion to Compel (ahm, COURT STAFF) (Filed on 10/18/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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Northern District of California

United States District Court

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JACQUELYN HALL, et al.,
Plaintiffs,

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v.

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Case No. 12-04922 RS (JSC)
ORDER GRANTING IN PART MOTION
TO COMPEL
(Dkt. No. 33)

HOUSING AUTHORITY OF THE
COUNTY OF MARIN,
Defendant.

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In this putative class action brought under 42 U.S.C. Section 1983, Plaintiffs contend
Defendant Marin Housing Authority violated the U.S. Housing Act, 42 U.S.C. Section 1437 et
seq., based on an alleged pattern and practice of conduct related to the allocation of rent
payments, among other things. Pending before the Court is Plaintiffs’ Motion to Compel
Production of Documents and to Reschedule Motion for Class Certification (Dkt. No. 33).
The discovery dispute was referred by Judge Seeborg to the undersigned for decision. After
carefully considering the parties’ written submissions, and having had the benefit of vigorous
oral argument on October 17, 2013, the Court grants in part Plaintiffs’ motion to compel as
the documents Plaintiffs seek are relevant and discoverable.
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FACTUAL & PROCEDURAL BACKGROUND

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Plaintiffs Jacquelyn Hall, Ariana Martinez, Karla Fernandez, Chavon White, and

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Esther Williams (“Plaintiffs”) sue Defendant Marin Housing Authority (“MHA” or

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“Defendant”) seeking relief under 42 U.S.C. Section 1983 for alleged violations of the U.S.

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Housing Act, 42 U.S.C. Section 1437 et seq. Each plaintiff is a tenant of MHA. MHA is a

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Public Housing Authority established by the California legislature and operating under the

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U.S. Housing Act. “For those eligible for public housing under the Act, the amount that

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tenants pay for rent is calculated as a percentage of their income, and Public Housing

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Authorities are permitted to seek eviction on 14 days’ notice in Unlawful Detainer actions

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only for nonpayment of this calculated amount of rent.” (Dkt. No. 25 at 3) (citing 42 U.S.C. §

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1437a (1)(A), (B), and (c); 24 C.F.R. § 966.4(1)(3)).

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Plaintiffs seek “broad injunctive and declaratory relief to enforce federal civil rights on

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behalf of themselves and others similarly situated.” (Dkt. No. 18 at 5.) They allege that

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Defendant has engaged in the following practices in violation of Plaintiffs’ civil rights:

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1. Allocating rent payments to a variety of other charges, causing what
MHA contends is a rent shortfall, permitting both late charges and, after
sufficient time, eviction;
2. Failing to credit rent payments at all, by virtue of failure to create a
functioning accounting system;
3. Failing [to] provide meaningful grievance process, while proceeding to
eviction on 14 day notices based on the claims which are the subject of
the grievance;
4. Improperly re-calculating rent, or making the calculations late, then
assessing improper “back rent” charges when such retroactive charges are
improper. In instances when a decrease in rent is due, MHA fails to
apply the required credit for the decrease during the delay period;

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5. Improperly calculating the amounts demanded on 14 day eviction
notices, based on the errors described above;

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6. Assessing legal fees in settlements despite having no attorneys’ fees
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clause in the lease, and when MHA had not prevailed in court, as is
required by the act.
(Dkt. No. 40 at 4.)
Although the parties initially attempted to resolve the case through settlement, these
attempts were ultimately unsuccessful. As a result of their settlement efforts, discovery was
delayed such that Plaintiffs now seek discovery for purposes of their class certification motion
which was originally due to be filed August 16, 2013. In particular, Plaintiffs seek (1) the

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production of 200 randomly selected tenant files and corresponding transaction registers, and

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(2) files of the 40 tenants identified by MHA in its Legal Charges Report as having paid legal

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charges between 2008 and the filing of suit on September 20, 2012.

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Defendant has responded in part (providing over 7,000 pages of documents between

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July and August); however, Defendant objects to providing any additional documents in

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response to Plaintiffs’ First Request for the Production of Documents Numbers One, Two, and

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Ten, which largely request of tenant files containing what Defendant characterizes as highly

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sensitive information, on the grounds that the requests implicate third-party privacy rights and

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are grossly overbroad. (Dkt. No. 34 at ¶ 8; Dkt. No. 39.)

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LEGAL STANDARD
“Parties may obtain discovery regarding any matter, not privileged, that is relevant to

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the claim or defense of any party.” Fed. R. Civ. P. 26(b)(1). The matter is relevant when it

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seeks admissible evidence or when the evidence is “reasonably calculated to lead to the

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discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1). “The scope of discovery under

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the Federal Rules has been construed broadly to encompass any matter that bears on, or that

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reasonably could lead to other matters that could bear on, any issue that is or may be in the

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case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)(internal quotations

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omitted). If a party fails to make disclosures or cooperate in discovery, the discovering party

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may move for an order compelling discovery. Fed. R. Civ. P. 37(a). The moving party bears

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the burden of “informing the court of the reasons that any objections are not justified” and

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why the information sought is relevant to the action. Oyarzo v. Tuolumne Fire Dist., No. 11-

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01271, 2013 WL 1758798, at *4 (E.D. Cal. Apr. 24, 2013).
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DISCUSSION

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As an initial matter, the Court must address Defendant’s oral argument assertion that

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because many of the sought-after documents were produced by tenants subject to the Privacy

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Act, 5 U.S.C. § 552(a), the Court should not order them produced at all. Defendant’s

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argument, which it made without citation, is contradicted by the language of the Privacy Act

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itself. While the Act prevents the disclosure of “any record . . . except pursuant to a written

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request by, or with the prior written consent of, the individual to whom the record pertains,”

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there are 12 exceptions to the statute. Ibrahim v. Dep’t of Homeland Sec., C 06-00545 WHA,

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2013 WL 1703367 * 6 (N.D. Cal. Apr. 19, 2013) (citing 5 U.S.C. § 552(b)). One of those

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exceptions is when the disclosure is “pursuant to the order of a court of competent

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jurisdiction.” 5 U.S.C. § 552(b)(11).

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The standard the Court applies to decide whether to order production of documents

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subject to the Privacy Act is the same as any other relevant documents. As the D.C. Circuit

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has held:

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Neither the statute nor anything in its legislative history specifies the standards
for issuance of such a court order. We therefore find no basis for inferring that
the statute replaces the usual discovery standards of the FRCP—in particular,
Rules 26 and 45(b)—with a different and higher standard.

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Laxalt v McClatchy, 809 F.2d 885, 888 (D.C. Cir. 1987); see also Wallman v. Tower Air, Inc.,

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189 F.R.D. 566, 569 (N.D. Cal. 1999) (following Laxalt); Clavir v. United States, 84 F.R.D.

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612, 614 (S.D.N.Y. 1979) (the exception for court orders “makes it completely clear that the

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act cannot be used to block the normal course of court proceedings, including court-ordered

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discovery”). Thus, “the Privacy Act does not establish a qualified discovery privilege that

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requires a party seeking disclosure under 5 U.S.C. § 552a(b)(11) to prove that its need for the

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information outweighs the privacy interest of the individual to whom the information relates.”

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Ford Motor Co. v. United States, 825 F.Supp. 1081, 1083 (Ct. In’t Trade 1993). Further, a

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court can order the documents produced even if the agency’s regulations would ordinarily

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require the subject’s consent. See Christy v. United States, 68 F.R.D. 375 (N.D. Tex. 1975).

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While the Privacy Act does not mandate a higher standard, some, although not all, of

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the documents the Court orders produced as set forth below, are protected by a right to

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privacy. Regardless of whether the Court applies state or federal law the same principles

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govern: courts apply a balancing test to assess whether the need for the information sought

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outweighs the privacy right asserted. Compare Rubin v. Regents of University of California,

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114 F.R.D. 1, 1 (N.D. Cal. 1986) with Pioneer Electronics (USA) Inc. v. Super. Ct., 40 Cal.4th

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360, 371 (Cal. 2007). The Court has applied such balancing test and finds that Plaintiffs’ need

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for the information described below outweighs any privacy interests, especially in light of the

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Protective Order and other steps, such as redaction, that can be taken to reduce privacy

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concerns.

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A.

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Documents Related to the Payment of Legal Fees
One of Plaintiffs’ claims is that Defendant improperly coerced tenants to pay legal fees

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in settlement of rent/eviction disputes. Defendant has provided Plaintiffs with the names of

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40 tenants who purportedly paid such fees. At oral argument Plaintiffs narrowed their

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document request to seek each tenant’s lease with Defendant, any documents reflecting the

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settlements, and the tenants’ computerized transaction registers.

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At oral argument Defendant agreed to stipulate that the leases for certain, perhaps even

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most, of these tenants did not contain provisions entitling Defendant to collect legal fees from

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the tenant. Defendant was unsure, however, whether for some of the tenants older leases did

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include such a provision. Accordingly, Defendant shall provide Plaintiffs with a stipulation as

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to those of the 40 tenants whose lease did not contain a fees provision and, as for the others,

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produce the governing lease. Any information which Defendant deems confidential, such as

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the amount of rent paid, may be redacted from the lease.

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Defendant must also produce any Stipulation and Orders, or other documents, which

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reflect the settlement between Defendant and the tenant, including the obligation to pay legal

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fees. Such documents are relevant to Plaintiffs’ claim that Defendant improperly coerced

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tenants to pay legal fees in settlement of eviction actions. If such documents are confidential

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then they may be produced pursuant to the protective order governing this action.

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Finally, Defendant shall also produce the computerized transaction registers for each of

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these 40 tenants for the entire period the tenant has contracted with Defendant. The registers

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will show how payments the tenants made to Defendant were allocated and thus are relevant

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to Plaintiffs’ claim that Defendant misallocated rent payments to legal fees or maintenance

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fees or otherwise, leading to improper notices of rent deficiencies.
Defendant’s objection that Plaintiffs already possess the names and addresses of each

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of the 40 tenants and thus should have to question each tenant, that is, each putative class

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member, individually to obtain the information they seek is meritless. Such a process is

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unprecedented, burdensome, and unlikely to result in production of the relevant documents.

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Defendant’s assertion that it has recently refunded the tenant’s legal fees is likewise

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immaterial to the discovery dispute. Unless and until Plaintiffs’ legal fees claim is dismissed,

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it is in the case and thus Plaintiffs are entitled to reasonable discovery.

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B.

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Transaction Registers
Plaintiffs also seek the computerized transaction registers for a random sample of 200

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of Defendant’s tenants. They contend the registers are needed to enable their experts to

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evaluate and refute Defendant’s assertion that there was no consistent policy or practice that

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led to the alleged violations at issue in this lawsuit; that is, that the payments from all tenants

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were not always treated the same. Whether Defendant had a policy or practice that led to the

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alleged violations is of course directly relevant to class certification.

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The transaction registers are relevant and Plaintiffs’ request for a sample of 200 is

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reasonable. Defendant has not articulated any significant burden to producing these

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documents, and, at oral argument, forthrightly admitted that there are not serious privacy

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concerns. In any event, Plaintiffs have suggested that names and other identifying

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information could be redacted, provided there is a way to keep account of each tenant

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anonymously.

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Defendant’s lament that “class action grievances” are not permitted is unavailing. If

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Defendant believes that Plaintiffs are not permitted to maintain a class action as a matter of

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law then Defendant should move to dismiss the class action allegations. As of now the

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allegations are in the case and, absent a stipulation to class certification, Plaintiffs are entitled

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to reasonable discovery to support their class claims.

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C.

Retroactive Rent Increases
Plaintiffs have also narrowed their requests to seek the “recertification” documents for

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those current tenants who were charged retroactive rent increases. Another of Plaintiffs’

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claims is that after tenants provide Defendant with updated income information which

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mandates a rent increase, Defendant delays implementing the rent increase and then

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subsequently improperly charges a retroactive rent increase. According to Plaintiffs, while

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such a retroactive rent increase is warranted when the tenant delays in providing the

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information to Defendant (for obvious reasons), it is not allowed when the fault for the delay

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lies with Defendant. Plaintiffs need to review the recertification documents to determine

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where the fault lays in any given case.

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While Defendant belatedly raised a burden argument, it does not offer any alternative

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manner for Plaintiffs to obtain the relevant information. Its bald oral argument assertion that

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HUD found Defendant in 90% compliance is not helpful. Accordingly, Defendant shall

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produce the relevant recertification documents for the period September 2009 to the present.

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As these documents indisputably include private information, they may be produced subject to

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the Protective Order. Moreover, the parties shall follow the procedure set forth in paragraph 9

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of the Protective Order.
CONCLUSION

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While Plaintiffs’ document requests seeking “tenant files” were overbroad, their

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narrowed requests, as articulated at oral argument, seek relevant and discoverable documents.
Accordingly, their motion to compel is granted as explained above and set forth below.
1.

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evidentiary stipulation which identifies those tenants of the 40 whose lease did not include an
attorneys fee provision.
2.

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On or before October 23, 2013, Defendant shall provide Plaintiffs with an

On or before October 30, 2013 Defendant shall produce the lease agreements for

each of the 40 tenants who are not included in the stipulation described in paragraph one
above.
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3.

On or before October 30, 2013, Defendant shall produce the entire transaction

register for each of the 40 legal fees tenants.
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On or before October 30, 2013, Defendant shall provide the relevant tenants

with the notice required by paragraph 9 of the Protective Order in connection with the
production of the re-certification documents. Defendant shall provide Plaintiffs with a copy
of the intended notice on or before October 25, 2013. Defendant shall immediately
commence gathering and copying the responsive recertification documents, and it shall
produce such documents upon the expiration of the time for a non-party to move for a
protective order.
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On or before October 23, 2013, the parties shall meet in person to agree on a

process for identifying the random 200 tenants whose computerized transaction registers are
to be produced and on a schedule for production. If the parties are unable to agree, they shall
submit a joint letter brief by October 25, 2013, not to exceed four pages (two pages per side),
which presents each party’s last and final offer.
This Order disposes of Docket No. 33.
IT IS SO ORDERED.
Dated: October 18, 2013
_________________________________
JACQUELINE SCOTT CORLEY
UNITED STATES MAGISTRATE JUDGE

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