Jenkins v. Pech et al

Filing 140

MEMORANDUM AND ORDER that the plaintiff's objection (Filing No. 115), to the magistrate judge's order (Filing No. 111) is sustained. The order of the magistrate judge (Filing No. 111) is affirmed in part and reversed in part, as set for th in this order. The named plaintiff's motion to compel the subpoena of records in the possession of FIA Card Services (Filing No. 81) is granted. The named plaintiff's motion to compel the subpoena of records in the possession of Tra k America (Filing No. 93) is denied without prejudice to reassertion on a proper showing of that entity's connection to this case. The magistrate judge's award of expenses as a sanction (Filing No. 111) and order approving the parties' stipulation (Filing No. 120) are hereby vacated. Ordered by Senior Judge Joseph F. Bataillon. (ADB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
LEE A. JENKINS, on behalf of himself and
all others similarly situated;
8:14CV41
Plaintiff,
vs.

MEMORANDUM AND ORDER

CHRISTOPHER E. PECH, PECH,HUGHES,
& MCDONALD, P.C., d/b/a Litow & Pech,
P.C., A Fictitious Name;
Defendants.

This matter is before the court on the plaintiff's objection, Filing No. 115, to the
magistrate judge's order, Filing No. 111, in connection with the plaintiff's motions to compel
subpoenas on FIA Card Servs., Inc., N.A. ("FIA") and Trak America BOA FIA NE ("Trak
America") and awarding payment of expenses to defendants as a sanction in connection
with the plaintiff's motions to compel. See Jenkins v. Pech, 2015 WL 728305 (D. Neb., Feb.
19, 2015).
This is a class action for violations of the Fair Debt Collection Practices Act, 15
U.S.C. § 1692, et seq. ("FDCPA") and the Nebraska Consumer Protection Act, Neb. Rev.
Stat. §§ 59–1601 to 59–1623 ("NCPA").1 The facts are set out in the magistrate judge's
Findings and Recommendation (F&R), Filing No. 110, the magistrate judge's order denying
the motion to compel, Filing No. 111, and this court's order on class certification, Filing No.
135, and need not be repeated here. Briefly, the plaintiff challenges a form debt collection
letter sent by defendants (an attorney and law firm) to approximately 560 Nebraskans. The

1

The magistrate judge recommended certification of the class and this court
overruled the defendant's objections to that recommendation. See Filing No. 110, Findings
and Recommendation; Filing No. 135, Memorandum and Order.

defendants contest liability on the ground, inter alia, that the debts at issue are not
consumer debts.
Plaintiff Lee A. Jenkins (hereinafter, "the named plaintiff") objects to the denial of the
motion to compel and the imposition of sanctions. The magistrate judge found Jenkins had
not explained how the requested documents would help differentiate personal from
business debts, noting that an account record or credit-card statement showing that an
individual made a purchase would not definitively identify the charge as a personal or
business expense. See Filing No. 111, Order at 5-6. Further, the magistrate judge found
the records minimally relevant, and found the relevance outweighed by the privacy interests
of the cardholders. Id. at 6. The magistrate judge also noted that Jenkins had not identified
FIA Card Services and Trak America or shown that the companies would have the
requested records. Id. at 6 & n.2. Further, the magistrate judge found that Jenkins could
obtain the contact information from the defendants and ask the 560 putative class members
for their credit card records. Id. at 6. The magistrate judge also awarded the defendants
their fees and expenses in responding to the motion as a sanction under Fed. R. Civ. P. 37,
finding that Jenkins's failure to address the relevance of the sought-after discovery justified
the award. Id. at 9.2
The named plaintiff contends his motion to compel was substantially justified.
Jenkins has shown that, after consultation with defendants' counsel with respect to the
assertion that the original request was overly broad and burdensome, he agreed to limit the
subpoena request to the 560 Nebraska putative class members disclosed by defendants as

2

The parties subsequently entered into a stipulation, without waiving the plaintiff's
objections, as to the amount of fees and expenses. Filing No. 117. That stipulation was
approved by the magistrate judge, and payment has been tendered in accordance with the
stipulation. Filing No. 120, Order on Stipulation; Filing No. 127, Satisfaction of Fee Award.
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recipients of the allegedly offending letters.3

Jenkins argues the credit card account

information is relevant and necessary to respond to the defendant's persistent assertions
that the plaintiff cannot show the obligations at issue were incurred for personal or
household, rather than business, expenses. Further, he argues that privacy concerns can
be obviated by the protective order issued in this case, and by appropriate redaction.4 See
Filing No. 30, Protective Order.
A magistrate judge’s authority over nondispositive pretrial matters is governed by 28
U.S.C. § 636(b)(1)(A). Gomez v. United States, 490 U.S. 858, 873-74 (1989); see also Fed.
R. Civ. P. 72(a). On review of a decision of the magistrate judge on a nondispositive matter,
the district court may set aside any part of the magistrate judge's order that it finds is clearly
erroneous or contrary to law.

28 U.S.C. § 636 (b)(1)(A); Fed. R. Civ. P. 72(a); see

Ferguson v. United States, 484 F.3d 1068, 1076 (8th Cir. 2007). (“A district court may
reconsider a magistrate judge's ruling on nondispositive pretrial matters where it has been
shown that the ruling is clearly erroneous or contrary to law.”).

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Jenkins originally sought production of all records and documents associated with
the credit card account of plaintiff Lee A. Jenkins for the Bank of America account at issue
and "[a]ll records and documents of any kind of all credit card accounts sold to or
transferred for collection to defendants Christopher E. Pech and/or the law firm Pech,
Hughes & McDonald, P.C." See Filing No. 62-1, FIA Subpoena; Filing No. 86-1, Trak
America Subpoena. The plaintiff now seeks:
All records and documents of any kind regarding the 560 accounts of those
Nebraska residents to whom Defendants’ sent the 560 letters identified by
Defendants during the period of June 2013 through February 2014 which
were sold to or transferred for collection to Defendants Christopher E. Pech
and/or the law firm Pech, Hughes & McDonald, P.C.
See Filing No. 81, Motion to Compel; see also Filing No. 86-2, Ex. A (regarding Trak
America Subpoena).
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The plaintiff also argues he was denied an opportunity to be heard in connection
with the motion for sanctions. In light of this disposition, the court need not address the
issue.
3

A decision is “‘clearly erroneous’ when, although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm conviction that a
mistake has been committed.” Chakales v. Commissioner of Internal Revenue, 79 F.3d
726, 728 (8th Cir. 1996); see Ferguson, 484 F.3d at 1076. “Under a contrary to law
standard, a district court can reverse a magistrate judge's order only if the order fails to
apply the relevant law." Brooks v. Lincoln Nat'l Life Ins. Co., No. 8:05CV118, 2006 WL
2487937, at *3 (D. Neb. Aug. 25, 2006). A magistrate is afforded broad discretion in the
resolution of nondispositive discovery disputes. See Sheets v. Butera, 389 F.3d 772, 780
(8th Cir. 2004) (stating that review of questions concerning discovery matters is very
deferential).
Rule 37(b) authorizes sanctions for failure to comply with discovery orders.
Roadway Express, Inc. v. Piper, 447 U.S. 752, 763 (1980); Comiskey v. JFTJ Corp., 989
F.2d 1007, 1011-12 (8th Cir. 1993).

Rule 37, interpreted consistent with its purposes,

authorizes an award encompassing “‘all expenses, whenever incurred, that would not have
been sustained had the opponent conducted itself properly.'" In re Stauffer Seeds, Inc., 817
F.2d 47, 50 (8th Cir. 1987) (quoting Aerwey Labs. v. Arco Polymers, 90 F.R.D. 563, 565–66
(N.D. Ill. 1981)). Federal Rule of Civil Procedure 37(b)(2)(C) requires the court to “order the
disobedient party . . . to pay the reasonable expenses, including attorney's fees, caused by
the failure, unless the failure was substantially justified or other circumstances make an
award of expenses unjust.” Under the Federal Rules, discovery is authorized on matters
that are “relevant to any party's claim or defense.” Fed. R. Civ. P. 26(b)(1).
I.

DISCUSSION

With due respect, the court finds the magistrate judge clearly erred in sustaining
defendant's objections to the motion to compel and in awarding sanctions. The record
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shows the defendant has vigorously and consistently argued that the personal/business
expense distinction may bar some or all of plaintiff's and plaintiff class's claims. Defendant
opposed the plaintiff's motion for class certification on that basis. See Filing No. 48, Brief in
opposition at 12-24. In fact, defendant criticized the plaintiff's failure to seek discovery or
present evidence of the records of the original creditors, which, it argued, would show how
and why the class members incurred the debts at issue. Id. at 13-14; see also Filing No.
83-2. Defendant then objected to the magistrate's F&R recommending class certification,
arguing that the class could not be ascertained because of uncertainty as to the nature of
the debt. See Filing No. 114-1, Defendants' Brief at 2 ("There is no evidence showing that
recipients of the challenged letter incurred a 'debt' subject to the FDCPA."). At depositions,
witnesses were questioned extensively on the nature of the debt. See, e.g., Filing No. 79-2,
Index of Evid., Ex. 1, Declaration of William Reinbrecht ("Reinbrecht Decl."), Ex.1A,
Deposition of Christopher Pech ("Pech Dep.") at 80-83; id., Ex.3A, Deposition of Tyler
Grimm ("Grimm Dep.") at 41-42; id., Ex.1G, Deposition of Lee A. Jenkins ("Jenkins Dep.")
at 59-61.
The court further disagrees with the magistrate judge's conclusion that because "the
production of account records will not definitively identify the charge as a business or
personal expense," they need not be produced. Evidence need not be definitive to be
relevant. The plaintiff has shown the evidence will at least be probative of the issue. The
court finds credit-card account records are relevant to counter the defendant's asserted
defense that debts at issue are not within the ambit of the FDCPA. As long as defendants
continue to assert that defense, the underlying documents are relevant. Further, the court
finds that it would be unduly burdensome on the named plaintiff to obtain such records from
putative class members, who may not have retained such records, whereas the defendant
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law firm and its credit-card processing client are highly automated entities with capabilities
to generate and obtain information by running queries in their computer systems. See Filing
No. 79-2, Ex. 1, Reinbrecht Decl., Ex. 1A, Pech Dep. at 87, 168.
The court agrees with the plaintiff that the defendant cannot have it both ways.
Defendants cannot oppose class certification on the basis that the named plaintiff and
putative class members cannot show the underlying debt are for personal or household
expenses and simultaneously object to a subpoena for those records being served on its
client and the custodian of the records of the credit-card debts at issue. Notably, the record
shows that FIA is Bank of America's credit-card processing arm and the defendants' client.
See Filing No. 79-18, Ex. 1, Reinbrecht Decl., Ex. 3A, Grimm Dep. at 34-35; Id., Filing No.
79-13, Jenkins dep. at 68; Filing No. 135, Memorandum and Order at 4 n.4, 18. The letters
at issue are aimed at collection on FIA accounts. Id.

Defendant Pech testified that he

could obtain the statements by merely asking the client. Filing No. 79-2, Index of Evid.,
Ex.1A, Pech Dep. at 80-81; Ex.3A, Grimm Dep. at 41-42.
Although the court assumes Trak America BOA is another entity owned or controlled
by Bank of America, there is no evidence with respect to that entity in the record. The
plaintiff will need to provide the court with more information as to the identity and position of
Trak America vis-à-vis the controversy in this case before any subpoena will issue.
Because the court finds the named plaintiff's position in moving to compel the
subpoenas was substantially justified in light of the defendants' continued reliance on the
business debt/personal or household debt distinction, the court finds awarding sanctions is
not appropriate. Accordingly,
IT IS ORDERED:

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1.

The plaintiff’s objection (Filing No. 115), to the magistrate judge's order

(Filing No. 111) is sustained.
2.

The order of the magistrate judge (Filing No. 111) is affirmed in part and

reversed in part, as set forth in this order.
3.

The named plaintiff's motion to compel the subpoena of records in the

possession of FIA Card Services (Filing No. 81) is granted.
4.

The named plaintiff's motion to compel the subpoena of records in the

possession of Trak America (Filing No. 93) is denied without prejudice to reassertion on a
proper showing of that entity's connection to this case.
5.

The magistrate judge's award of expenses as a sanction (Filing No. 111) and

order approving the parties' stipulation (Filing No. 120) are hereby vacated.
Dated this 23rd day of June, 2015
BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

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