Fangman et al v. Genuine Title, LLC
Filing
218
MEMORANDUM AND ORDER granting in part and denying in part 146 Defendants' Joint Motion to Suspend Plaintiffs' Discovery Rights and Restrict Use of Third Party Personal and Financial Information; and directing parties to submit a Proposed Confidentiality Order. Signed by Judge Richard D Bennett on 12/15/2015. (bmhs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
EDWARD J. AND VICKI
FANGMAN, et al.,
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Plaintiffs,
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v.
Civil Action No. RDB-14-0081
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GENUINE TITLE, LLC, et al.
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Defendants.
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MEMORANDUM ORDER
Plaintiffs Edward J. Fangman and Vicki Fangman (“the Fangmans”) and forty-six
other Plaintiffs (collectively “Plaintiffs”) bring this purported class action lawsuit against
Genuine Title, LLC (“Genuine Title”); Brandon Glickstein, Inc.; Dog Days Marketing, LLC
(“Dog Days Marketing”); Competitive Advantage Marketing Group, LLC (“Competitive
Advantage”) (collectively “Genuine Defendants”); Wells Fargo Home Mortgage, Inc. and
Wells Fargo, N.A. (“Wells Fargo”); West Town Bank & Trust (“West Town”); PNC
Mortgage and PNC Bank, N.A. (“PNC”); MetLife Home Loans, LLC and MetLife Bank,
N.A. (“MetLife”); Net Equity Financial (“Net Equity”); Eagle National Bank (“Eagle
National”); E Mortgage Management (“E Mortgage”); and JP Morgan Chase Bank (“Chase”)
(collectively “Defendant Lenders”) alleging violations of the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. §§ 2607(a), (b), and MD. CODE ANN., REAL
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PROP. § 14-127 (“Section 14-127”).1 Currently pending before this Court is Defendants
Wells Fargo2, West Town, Net Equity, Emery Federal Credit Union (“Emery”)3, Eagle
National4, Chase, E Mortgage Management, and MetLife’s (collectively “Movants”) Joint
Motion to Suspend Plaintiffs’ Discovery Rights and Restrict Use of Third Party Personal and
Financial Information (ECF No. 146).5 The parties’ submissions have been reviewed, and a
hearing on the pending motion was held before this Court on December 9, 2015. For the
reasons that follow, Defendants’ Joint Motion to Suspend Plaintiffs’ Discovery Rights and
Restrict Use of Third Party Personal and Financial Information (ECF No. 146) is
GRANTED IN PART and DENIED IN PART. Specifically, this Court will not suspend
Plaintiffs’ discovery rights or restrict Plaintiffs’ future contact with potential class members,
Plaintiffs’ claims under the Maryland Consumer Protection Act, MD. CODE ANN., COM. LAW § 13-301 were
dismissed by this Court’s Amended Order, dated December 9, 2015 (ECF No. 214). By that same Amended
Order, nine Motions to Dismiss Plaintiffs’ claims under MD. CODE ANN., REAL PROP. § 14-127 were stayed,
pending clarification from the Court of Appeals of Maryland as to whether Section 14-127 implies a private
right of action.
2 Pursuant to this Court’s Amended Order dated December 9, 2015 (ECF No. 214), this Court will suspend
consideration of the pending Motion with respect to Wells Fargo.
3 Emery was previously named as a Defendant in this case, but all claims against Emery were transferred to
the Cincinnati Division of the United States District Court for the Southern District of Ohio by this Court’s
Amended Order dated December 9, 2015 (ECF No. 214). Therefore, Defendants’ Joint Motion (ECF No.
146) is DENIED AS MOOT with respect to Emery.
4 Plaintiffs’ RESPA claims against Eagle National were dismissed by this Court’s Amended Order dated
December 9, 2015 (ECF No. 214). Therefore, Plaintiffs’ claim under MD. CODE ANN., REAL PROP. § 14-127
is the only remaining claim against Eagle National.
5 Specifically, the Movants move to rescind this Court’s Orders dated July 8, 2014 (ECF No. 27) and October
31, 2014 (ECF No. 42), and to suspend Plaintiffs’ right to conduct discovery in this action until:
(a) this case is at issue;
(b) a Rule 26(f) conference between all joined parties has occurred; and
(c) a Scheduling Order has been entered.
In addition, the Movants seek the entry of an Order:
(a) protecting all confidential and sensitive personal and financial information relating to absent
members of the putative class (and other third party borrowers who closed loans with Genuine Title,
LLC) which the Plaintiffs have sought through premature discovery in this case; and
(b) requiring the Plaintiffs to cease the use of such information obtained through the issuance of
subpoenas to third party deponents and the Receiver of Genuine Title, LLC unless and until a class is
certified in this action.
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but will enter a Confidentiality Order governing the discovery of sensitive third-party
personal and financial information.
BACKGROUND
Plaintiffs’ factual allegations were set forth fully in this Court’s Memorandum
Opinion dated December 9, 2015 (ECF No. 211). The relevant procedural history of this
case is as follows: Plaintiffs Edward J. Fangman and Vicki Fangman (“the Fangmans”) filed
the initial class action complaint in this case against Genuine Title, LLC (“Genuine Title”)
on December 6, 2013. See Compl., ECF No. 2. The Complaint asserted only claims on
behalf of a purported class of borrowers who obtained loans from Genuine Title between
2007 and 2011. Compl. at ¶ 1, ECF No. 2. On July 2, 2014, this Court held a conference
call with the parties. Following that call, this Court issued a Letter Order dated July 8, 2014
(ECF No. 27), granting Plaintiffs leave to amend the Complaint and permitting counsel for
Genuine Title to withdraw from this action in light of Genuine Title’s insolvency.
According to Plaintiffs, they made clear to this Court during the call that they sought
discovery for the purpose of amending their Complaint to add additional parties given
Genuine Title’s insolvency. See Pl.’s Response, p. 3-4, ECF No. 150-2. Plaintiffs allege that
“[t]he Court indicated that its ruling would not operate to prohibit discovery.” Id. at 3.
Subsequently, Plaintiffs issued subpoenas duces tecum to the Maryland Insurance
Administration and several third parties6, requesting information about Genuine Title and an
alleged kickback scheme involving the Defendant Lenders. After several parties objected to
6 Defendants object that many of these third-party subpoenas were broader in scope than initially disclosed by Plaintiffs,
in both time and subject matter, seeking all documents related to the Genuine Defendants and documents from years
prior to 2007 and after 2011 (i.e., broader than the temporal limitations of the then-existing complaint). Defs’ Joint
Mem., p. 11, ECF No. 145-2.
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their subpoenas, Plaintiffs submitted a letter to this Court on July 30, 2014, seeking
clarification of the scope of authorized discovery (ECF No. 28).7 Also in July of 2013,
Plaintiffs filed a Petition for Emergency Appointment of a Receiver for the limited purpose
of retrieving and preserving the documents, books, and records of Genuine Title in the
Circuit Court for Baltimore County, Maryland. That court granted the petition on July 30,
2014. The Receiver immediately seized records that Plaintiffs allege were scheduled for
destruction. See Pl.’s Response, p. 5, ECF No. 150-2. Jay Zuckerberg, Genuine Title’s
owner, provided the Receiver with information necessary to access Genuine Title’s server.
In response to Genuine Title’s failure to appoint counsel or respond to litigation,
Plaintiffs filed a [SEALED] Motion for Discovery Prior to the Time Specified in Rule 26(d)
(ECF No. 39). In their Motion, Plaintiffs requested the ability to conduct limited discovery
for the purpose of amending the Complaint and adding additional parties. This Court
GRANTED that Motion via Letter Order on October 31, 2014, following a conference call
held that same day (ECF No. 42).
Shortly thereafter, Plaintiffs served a subpoena duces tecum on the Receiver, and began
working with the Receiver to extract documents and records responsive to the subpoena.
Plaintiffs have uncovered many of Genuine Title’s records, but claim that they have
purposively limited their search to information pertaining to those lenders believed to be
involved in the alleged kickback scheme that is the focus of this action. See Pl.’s Response,
p. 7, ECF No. 150-2. Furthermore, Plaintiffs claim that they have not disseminated the
information in any way, and have maintained the documents in a secure manner, although
Defendants contend that Plaintiffs learned before submitting this letter “that Genuine Title did not intend to hire new
counsel to defend this case.” Defs’ Joint Mem., p. 11, ECF No. 145-2.
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they have used the contact information found within Genuine Title’s records to contact a
small group of Plaintiffs who they believe were impacted by the alleged kickback scheme. Id.
On January 2, 2015, the Fangmans and thirty other Plaintiffs filed an Amended
Complaint on behalf of themselves and the alleged class, adding Brandon Glickstein, Inc.,
Dog Days Marketing, Competitive Advantage, and all-but-one of the Defendant Lenders as
Defendants in this case. Am. Compl., p. 5-6, ECF No. 47. Chase, the final Defendant
Lender to be added, was named as a Defendant in the Second Amended Complaint, filed on
May 20, 2015. Second Am. Compl. at ¶ 3, ECF No. 138. An additional sixteen Plaintiffs
were named at that time. Id. at p. 1.
ANALYSIS
I.
This Court Will Not Suspend Plaintiffs’ Discovery Rights
Movants object that Plaintiffs have conducted discovery where “none of the claims
asserted by the Plaintiffs are at issue, no Rule 26(f) Scheduling Conference has occurred and
no Scheduling Order has been issued.”8
Defs’ Joint Mem., p. 3, ECF No. 145-2.
Furthermore, after July 29, 2015, Plaintiffs no longer needed “discovery to determine
whether the Fangmans could meet the standard for class certification of their claims against
Genuine Title – as it was insolvent and apparently willing to subject itself to a judgment by
default.” Id. at 20. Therefore, Movants contend, Plaintiffs’ discovery requests after that
point “were, by [Plaintiffs’] own admissions, designed to identify new plaintiffs in order to
sue new defendant lenders which the Fangmans did not themselves have standing to sue – a
quintessential abuse of the discovery process and invasion of the privacy rights of numerous
This Court has now ruled on Defendants’ Motions to Dismiss (ECF No. 214) and a Scheduling Order in this case was
entered on December 14, 2015.
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borrowers.” Id. For these reasons, the Movants urge this “Court to . . . rescind its prior
discovery orders and to prohibit the Plaintiffs’ counsel from using any information or
documents produced by the Receiver” Id. at p. 21.
Rule 26(b)(1) of the Federal Rules of Civil Procedure provides the following:
Unless otherwise limited by court order, the scope of discovery is as follows:
Parties may obtain discovery regarding any nonprivileged matter that is
relevant to any party’s claim or defense and proportional to the needs of the
case, considering the importance of the issues at stake in the action, the
amount in controversy, the parties' relative access to relevant information, the
parties’ resources, the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery outweighs its likely
benefit. Information within this scope of discovery need not be admissible in
evidence to be discoverable.
Fed. R. Civ. Pro. 26(b)(1) (2015). “Plaintiffs [are] entitled to pre-certification discovery to
establish the record the court needs to determine whether the requirements for a class action
suit have been met.” See, e.g., Buchanan v. Consolidated Stores Corp. 217 F.R.D. 178, 185 (citing
Miller v. Baltimore Gas & Elec. Co., 202 F.R.D. 195, 201-02 (D. Md. 2001)). The United States
Supreme Court has contemplated discovery for this purpose. Griffin v. Harley Davidson Credit
Corp., No. 8:08-cv-466-HFF-BHH, 2010 WL 233764, at *1 (D.S.C. Jan. 14, 2010) (citing
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 354 n. 20 (1978) (“We do not hold that class
members’ names and addresses never can be obtained under the discovery rules. There may
be instances where this information could be relevant to issues that arise under Rule 23, see n.
13, supra, or where a party has reason to believe that communication with some members of
the class could yield information bearing on these or other issues.”)). The Fourth Circuit has
indicated the same. Id. (citing Doctor v. Seaboard Coast Line Railroad Co., 540 F.2d 699, 707 n.
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25 (4th Cir. 1976) (approving use of precertification discovery to determine if action was
maintainable as class action)).
While Defendants accept that Plaintiffs are entitled to pre-certification discovery,
they object that Plaintiffs’ use of discovery to identify new Plaintiffs in order to sue new
Lender Defendants is an impermissible use of pre-certification discovery. Defendants cite
the Manual for Complex Litigation (Fourth) § 21.14 (2014) for the proposition that
“[d]iscovery of unnamed members of a proposed class requires a demonstration of need.”
However, the one and only decision cited in the Manual for that proposition is Baldwin &
Flynn v. National Safety Associates, 149 F.R.D. 598 (N.D. Cal. 1993), a case in which Plaintiffs
sought not to examine a defunct Defendant’s computer system, as in the present case, but
rather to depose fifteen unnamed plaintiffs. Baldwin, 149 F.R.D. at 599. Furthermore, that
case states that “the extent of pre-certification discovery is at the discretion of the trial
court.” Id. at 600 (citing Kamm v. California City Development Co., 509 F.2d 205, 209 (9th Cir.
1975)).
Defendants cite several cases from courts outside the Fourth Circuit for the
proposition that pre-certification discovery must not be used for client solicitation. See, e.g.,
First Am. Title Ins. Co. v. Superior Court, 53 Cal. Rptr. 3d 734, 744 (Cal. Ct. App. 2007)
(denying discovery to plaintiff who was not a member of the proposed class and stating that
“the potential abuse of the class action procedure is overwhelming”); Flanigan v. American
Finance System of Georgia, Inc., 72 F.R.D. 563 (M.D. Ga. 1976) (holding that Rule 23 should not
be used to enable client solicitation as neither plaintiffs nor plaintiffs’ counsel have a duty to
act as unsolicited champion of others); Roshto v. Chrysler Corp., 67 F.R.D. 28, 30 (E.D. La.
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1975) (“The awakening of sleeping plaintiffs by either the plaintiff or the Court would fly in
the teeth of the centuries-old doctrine against the solicitation of claims”). These cases are in
many ways distinguishable from the present case. For example, the California Court in First
American denied pre-certification discovery because the plaintiff seeking the discovery was
not a member of the putative class. First Am., 53 Cal. Rptr. 3d at 743. Additionally,
plaintiffs in Flanigan had not demonstrated how they would “in any way satisfy the basic
requirement of Rule 23.” Flanigan, 72 F.R.D. at 563. “Until they do,” the Court held, “they
may not engage in discovery for the purpose of ‘digging up’ information to satisfy Rule 23.”
Id.
Finally, Roshto is unique in that the Court expressly declined to follow standard
procedures of class action suits under Rule 23, but rather proceeded pursuant to Section
211(b) of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. Roshto, 67 F.R.D. at 28.
The present case poses unique discovery challenges because Genuine Title, the
Defendant at the heart of the alleged kickback scheme, is no longer in business and is no
longer represented in this matter. Plaintiffs’ counsel have suggested that many of Genuine
Title’s documents were either destroyed or slated for destruction until seized by a Courtappointed Receiver. Only through the use of a sophisticated software system have Plaintiffs
been able to uncover the extent of the alleged kickback scheme, and to identify parties who
may have been affected. Plaintiffs’ counsel contend that, without their efforts, the class
members would never have discovered their cause of action due to Defendants’ concealment
of their unlawful relationship. It was Plaintiffs’ counsel’s concern that RESPA’s one year
statute of limitations would run before potential class members became aware of their cause
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of action that motivated Plaintiffs to file a Motion for Early Discovery, which this Court
granted via Letter Order dated October 31, 2014 (ECF No. 42).
CashCall, Inc. v. Superior Court, 159 Cal. App. 4th 273 (2008) involved a situation
similar to the present case. The plaintiffs in CashCall brought a class action suit against
CashCall, Inc., a consumer lender, alleging violations of privacy rights in connection with
CashCall’s secret monitoring of their collection calls. CashCall, 159 Cal. App. 4th at 278-79.
After discovering that their named Plaintiffs’ calls had not been recorded, but that
approximately 551 individuals had been monitored, Plaintiffs filed a motion for precertification discovery of the identities of absent class members. Id. at 291. “[B]ecause of
the secret nature of CashCall’s monitoring of its employees’ calls with customers,” they
argued, “none of the class members could have known their privacy rights had been
violated.” Id. The trial court granted Plaintiffs’ motion and required that CashCall provide
names and contact information for the customers it had monitored. Id. at 292. The Court
of Appeal affirmed, agreeing with the trial court that the rights of the class members
outweighed the potential for abuse of the class action procedure. Id. at 292-93; see also 27
C.J.S. Discovery § 27 (2015) (“Contact information regarding the identity of potential class
members is generally discoverable, so that the lead plaintiff may learn the names of other
persons who might assist in prosecuting the case.”).
Similar to CashCall, Plaintiffs in the present case requested pre-certification discovery
in order to identify the scope of an allegedly concealed kickback scheme and to identify
potential class members who could not otherwise have known of their cause of action. This
Court subsequently granted Plaintiffs’ request for pre-certification discovery, an exercise of
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its broad discretion to control discovery under Rule 26 of the Federal Rules of Civil
Procedure. Therefore, this Court will not suspend Plaintiffs’ discovery rights at this time.
II.
This Court Will Not Restrict Plaintiffs’ Future Contact With Potential Class
Members
Movants contend that Plaintiffs have solicited absent class members with misleading
mailings, including (1) a postcard dated May 14, 2013 that reads “We are currently
investigating allegations of widespread overcharging of customers and the payment of illegal
kickbacks,” Defs’ Ex. G, ECF No. 145-9 (emphasis added), and (2) a letter dated January 9,
2015 that reads “We are currently investigating allegations of the payment of illegal
kickbacks by Genuine Title to numerous lenders . . . ,” Defs’ Ex. H, ECF No. 145-10
(emphasis added). Defs’ Joint Mem., p. 17, ECF No. 145-2. With respect to the postcard,
Defendants object that the Second Amended Complaint contains no allegation of
“overcharge” and that “Plaintiffs’ allegations of widespread kickbacks are disputed and
misleading.” Id. With respect to the letter, Defendants object that Plaintiffs have only
alleged “kickbacks” to loan officers, not to the Defendant Lenders themselves. Id. In light
of these misleading statements and “the recognized potential for abuse that arises from precertification mailings to putative class members,” Movants argue that “due cause exists” for
this Court “to restrain further communications with putative class members by the Plaintiffs
and their counsel, absent review and approval by the Court, or unless and until this case is
certified as a class action.” Id.
The Plaintiffs have cited Gulf Oil Co., et al. v. Bernard, et al., 452 U.S. 89, 99-104 (1981),
in which the United States Supreme Court observed that class actions “present . . .
opportunities for abuse as well as problems for courts and counsel in the management of
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cases.” Gulf Oil, 452 U.S. at 100. “Because of the potential for abuse,” the Court reasoned,
“a district court has both the duty and the broad authority to exercise control over a class
action and to enter appropriate orders governing the conduct of counsel and parties.” Id.
Under Rule 23(d) of the Federal Rules of Civil Procedure, courts “may issue orders that . . .
protect class members and fairly conduct the action” and “impose conditions on the
representative parties.” Fed. R. Civ. Pro. 23(d) (2015). Gulf Oil involved a class action claim
by Gulf Oil Company employees against Gulf Oil Company and one of the unions at its
Port Arthur, Texas refinery, alleging racial discrimination in employment. Gulf Oil, 452 U.S.
at 91.
Following a conciliation agreement with the Equal Employment Opportunity
Commission (“EEOC”), including a requirement that Gulf Oil “offer backpay to alleged
victims,” Gulf Oil sent notices to its eligible employees, “stating the exact amount available
to each person in return for execution within 30 days of a full release of all discrimination
claims dating from the relevant period.” Id. Around that same time, plaintiffs’ counsel held
a meeting with employees discussing the case. Id. at 93-94. According to Gulf Oil, at that
meeting Plaintiffs “recommended that the employees not sign the releases.” Id. at 92-93.
Upon Gulf Oil’s Motion, a United States District Court issued a series of orders banning
communication between counsel and actual or potential class members, with limited
exceptions. Id. at 95-97. The Supreme Court held that the District Court had abused its
discretion in issuing the communications bans. Id. at 104. The Court observed that “[t]he
order interfered with [plaintiffs’] efforts to inform potential class members of the existence
of a lawsuit, and may have been particularly injurious—not only to [the plaintiffs] but to the
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class as a whole—because the employees at that time were being pressed to decide” whether
or not to accept Gulf Oil’s offer and opt-out of the litigation. Id. at 101. Additionally, the
Court observed, the order “made it more difficult for [plaintiffs], as the class representatives,
to obtain information about the merits of the case from the persons they sought to
represent.” Id. “Because of these potential problems,” the Court concluded, “an order
limiting communications between parties and potential class members should be based on a
clear record and specific findings that reflect a weighing of the need for a limitation and the
potential interference with the rights of the parties.” Id. “[T]he mere possibility of abuses
does not justify routine adoption of a communications ban that interferes with the formation
of a class or the prosecution of a class action in accordance with the Rules.” Id. at 104.
This Court applied Gulf Oil in Ross, et al., v. Wolf Fire Protection, Inc., et al., 799 F. Supp.
2d 518, 521 (D. Md. 2011), a class action against Wolf Fire Protection brought by its
employees, alleging violations of the Fair Labor Standards Act (“FLSA”). Ross, 799 F. Supp.
2d at 521. Shortly after plaintiffs filed the Complaint, a Wolf Fire Protection attorney held a
meeting with the company’s employees. Id. She informed them that she was conducting an
investigation into the allegations, had prepared an affidavit, and that they should sign it if
“they agreed with the contents.” Id. In response, plaintiffs requested a protective order “
‘prohibiting further unapproved contact with class members’ ” and striking the affidavits
collected. Id. at 525. Plaintiffs contended that the meeting was an attempt to “ ‘stave off a
wave of additional plaintiffs’ ” and “ ‘subvert the proper function of [the] class action.’ ” Id.
This Court reasoned that plaintiffs seeking a protective order must “show that (1) ‘a
particular form of communication has occurred or is threatened’ and (2) ‘the particular form
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of communication at issue is abusive in that it threatens the proper functioning of the
litigation.’ ” Id. at 526 (quoting Cox Nuclear Med. v. Gold Cup Coffee Servs., Inc., 214 F.R.D. 696,
697-98 (S. D. Ala. 2003) (collecting cases)).9 “A communication is sufficiently abusive to
warrant a protective order if it seeks to coerce prospective class members into excluding
themselves from the litigation, contains false, misleading or confusing statements, or
undermines “cooperation with or confidence in class counsel.” Id. (citing Cox, 214 F.R.D. at
698 (collecting cases)). This Court denied plaintiffs’ requests to strike and for a protective
order, concluding that the defendants’ communication with absent class members was not a
concern, even considering “ ‘the danger of . . . coercion between employers and employees.’
” Id. at 526 (citing E.E.O.C. v. Morgan Stanley & Co., 206 F. Supp. 2d 559, 562 (S.D.N.Y.
2002)). “[T]he record does not demonstrate a ‘blatant attempt’ to subvert the class action
process, or show the bad faith typically present in cases in which broad protective orders,
such as the one sought by the Plaintiffs, have been issued,” this Court concluded. Id. at 527.
“There is no indication that the Defendants will engage in bad faith tactics in the future.” Id.
In support of their argument for restraints on plaintiffs’ future communications,
Defendants cite Randolph v. PowerComm Const., Inc., 41 F. Supp. 3d 461, 465 (D. Md. 2014), a
case in which this Court found attempted settlement communications between a defendant
employer and plaintiff employees abusive and issued a protective order prohibiting future
discussions. Randolph, 41 F. Supp. 3d at 467. That case is distinguishable from the present
case in that the communications in Randolph were made by defendants to plaintiffs who had
9 As in Ross, the allegedly abusive communications in Cox were also issued by the defendants, not the plaintiffs. The
“alleged misrepresentation” was that a letter sent to putative class members by defendants characterized defendants’
alleged conduct as “inadvertent,” while the plaintiffs characterized it as “knowing, willful and intentional.” Cox, 214
F.R.D. at 698-99. The Court found for Defendants, finding that this distinction was not relevant to plaintiffs’ breach of
contract claim. Id.
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already opted-in to a conditionally certified collective action. Id. at 463, 466-67. More
importantly, the plaintiffs in that case were “confused and misled” by the negotiations,
“ ‘illustrative of the many harms which may occur when employers are allowed to ‘bargain’
with their employees.’ ” Id. at 467 (quoting Lynn’s Food Stores, Inc. v. U.S., 679 F.2d 1350,
1354-55 (11th Cir. 1982)).
Additionally, Defendants cite Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999 (11th
Cir. 1997), where the United States Court of Appeals for the Eleventh Circuit held that the
District Court abused its discretion in authorizing plaintiffs to communicate their allegations
against Motel 6 to current and former Motel 6 employees through mass mailings. The Court
found that the communications were injurious to the employer and the integrity of the
judicial system and were “surely causing serious and irreparable harm to Motel 6’s reputation
and to its relationship with its employees.” Jackson, 130 F.3d at 1004.
Rather than misleading potential class members, Plaintiffs’ communications in this
case have clearly conveyed the existence of a cause of action of which the recipients would
have remained unaware had they not received notification. Like in Gulf Oil, restrictions on
Plaintiffs’ communications with absent class members may “interfer[e] with their efforts to
inform potential class members of the existence of a lawsuit.” Gulf Oil, 452 U.S. at 101.
While the Second Amended Complaint does not allege the “overcharges” referenced in
Plaintiffs’ May 14, 2013 postcard, the Complaint did allege “inflated settlement charges” and
“elevated fees.” Compl. at ¶¶ 27, 43, ECF No. 2. This language was removed when the
complaint was amended, but long after the postcard was distributed. Plaintiffs’ January 9,
2015 letter may reference kickbacks paid “to numerous lenders,” whereas the Complaint
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describes kickbacks to specific brokers, but Plaintiffs have successfully pled the Defendant
Lenders into this action under the doctrine of respondeat superior.10 Additionally, unlike in
Jackson, the allegations against Genuine Title and Defendant Lenders have already been wellpublicized as a result of the Consumer Financial Protection Bureau’s investigation. See, e.g.,
CFPB Takes Action Against Wells Fargo and JPMorgan Chase for Illegal Mortgage Kickbacks,
Consumer
Financial
Protection
Bureau
(Jan.
22,
2015),
http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-wells-fargo-andjpmorgan-chase-for-illegal-mortgage-kickbacks/. Furthermore, unlike the mass mailings at
issue in Jackson, Plaintiffs’ counsel have stated that they “advise[d] a limited pool of
consumers.” Pl’s Response, p. 14, ECF No. 150-2. Overall, Defendants have not presented
a “clear record and specific findings” of abusive conduct or threatened conduct by Plaintiffs
that warrants “a limitation and . . . interference with the rights of the parties.” Gulf Oil, 452
U.S. at 101.
Consequently, Defendants’ argument for restrictions on Plaintiffs’ future
contact with and use of potential class members’ personal and financial information fails.
III.
This Court Will Enter a Confidentiality Order Governing the Discovery of
Sensitive Third-Party Personal and Financial Information.
Movants object that, by complying with an unlawfully broad subpoena issued by
Plaintiffs, Genuine Title and its appointed Receiver breached their obligation to protect the
private information of borrowers whose loans Genuine Title closed. Defs’ Joint Mem., p.
19, ECF No. 145-2. They specifically cite the Gramm-Leach-Bliley-Act, 15 U.S.C. § 6801 et
seq., and its limitations on disclosure of nonpublic personal information by “financial
See this Court’s Memorandum Opinion dated December 9, 2015 (ECF No. 211), denying Defendants’ Motion to
Dismiss the Second Amended Complaint for failure to plead respondeat superior.
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institutions.” Id. at p. 18. Movants claim that “the documents and data subpoenaed were
produced by the Receiver without any objection or redaction, and without any limitation on
the temporal or topical scope of the production or any restriction on the use of such
material.”
Id. at 21.
Therefore, they have requested that this Court issue an order
“protecting all confidential and sensitive personal and financial information . . . which the
Plaintiffs have sought through premature discovery.” Defs’ Joint Mot., p. 2, ECF No. 146.
Local Rule 104.13 provides as follows:
Any proposed confidentiality order shall include (a) a definition of
confidentiality consistent with Fed. R. Civ. P. 26(c); (b) a method for
challenging particular designations of confidentiality with the burden
remaining on the party seeking confidentiality to justify it under Rule 26(c); (c)
a provision that whenever materials subject to the confidentiality order (or any
pleading, motion or memorandum referring to them) are proposed to be filed
in the Court record under seal, the party making such filing must
simultaneously submit a motion and accompanying order pursuant to L.R.
105.11; and (d) a provision permitting the Clerk to return to counsel or
destroy any sealed material at the end of the litigation.
Local Rule 104.13 (D. Md. 2015).
In light of the fact that Plaintiffs’ discovery requests have included, and likely will
include, the sensitive personal and financial information of absent class members and other
third party borrowers who closed loans with Genuine Title, this Court will enter a
Confidentiality Order governing discovery in this matter. The parties are directed to submit
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a Proposed Confidentiality Order11, pursuant to Local Rule 104.13.
Accordingly,
Defendants’ Joint Motion to Suspend Plaintiffs’ Discovery Rights and Restrict Use of Third
Party Personal and Financial Information (ECF No. 146) is GRANTED IN PART and
DENIED IN PART. Specifically, this Court will not suspend Plaintiffs’ discovery rights or
restrict Plaintiffs’ future contact with potential class members, but will enter a Confidentiality
Order governing the discovery of sensitive third-party personal and financial information.
CONCLUSION
For the reasons stated above, it is this 15th day of December, 2015, ORDERED that:
1.
Defendants’ Joint Motion to Suspend Plaintiffs’ Discovery Rights and Restrict Use of
Third Party Personal and Financial Information (ECF No. 146) is GRANTED IN
PART and DENIED IN PART;
2.
The parties shall submit a Proposed Confidentiality Order, pursuant to Local Rule
104.13; and
3.
The Clerk of the Court transmit a copy of this Memorandum Order to Counsel.
___/s/_____________________
Richard D. Bennett
United States District Judge
The Proposed Confidentiality Order shall include provisions with respect to the redaction of personal information as
to any exhibits to be filed in this case. However, the exhibits themselves will remain a matter of public record. The
public and the press have a qualified right of access to judicial documents and records filed in civil proceedings. Doe v.
Pub. Citizen, 749 F.3d 246, 265 (4th Cir. 2014). The right of access exists even if no objections to a motion to seal are
made. See Bureau of Nat’l Affairs v. Chase, Civ. No. ELH–11–1641, 2012 WL 3065352, at *2 (D. Md. July 25, 2012) (stating
that a presumptive right to access exists after noting that no objections to sealing had been made). This right of access
derives from both the “First Amendment and the common-law tradition that court proceedings are presumptively open
to public scrutiny.” Id. (citations omitted).
11
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