Perry v. JTM Capital Management, LLC
Filing
79
ORDER granting remaining issues set forth in 61 Motion to Compel; temporarily granting 62 Motion for a protective order; and temporarily denying 65 Motion to Compel deposition. Motions for summary judgment are due no later than 6/26/2020. Signed by Hon. H. Kenneth Schroeder Jr. on 4/23/2020. (KER)
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
_________________________________
THERESA MULLERY,
Plaintiff,
v.
18-CV-549V(Sr)
JTM CAPITAL MANAGEMENT, LLC,
Defendant.
_________________________________
AMANDA PERRY,
Plaintiff,
18-CV-566V(Sr)
v.
JTM CAPITAL MANAGEMENT, LLC,
Defendant.
_________________________________
DECISION AND ORDER
These matters were referred to the undersigned by the Hon. Lawrence J.
Vilardo, in accordance with 28 U.S.C. § 636(b), for all pretrial matters and to hear and
report upon dispositive motions. 18-CV-549 at Dkt. #27; 18-CV-566 at Dkt. #26.
Plaintiff Mullery’s complaint1 alleges that plaintiff fell behind on debt
payments to Continental Finance Company (“Continental”), prompting her to seek the
1
Plaintiff Mullery’s complaint was filed in the Northern District of Illinois and transferred
to the Western District of New York, where plaintiff resides and defendant maintains its principal
place of business. Dkt. #19 & Dkt. #23.
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assistance of a legal aid attorney who, by letter dated April 21, 2015, informed
Continental that plaintiff was represented by counsel and directed that Continental
cease contact with plaintiff and cease further collection activities on the debt because
plaintiff’s income was protected from levy, attachment or garnishment by federal law
and plaintiff had no income available for payment or settlement of the debt. Dkt. #1,
¶¶ 8-9 & Dkt. #1-3. Defendant acquired the Continental account and, ignoring
Continental’s account notes identifying plaintiff’s attorney, “had another debt collector,
Northstar Location Services, send [plaintiff] a collection letter, dated January 26, 2017,
demanding payment of the Continental debt.” Dkt. #1, ¶ 10. The letter from Northstar
Location Services, LLC (“Northstar”), informs plaintiff that the Continental debt had
been referred to Northstar by defendant for collection. Dkt. #1-4.
Plaintiff Perry’s complaint2 alleges that plaintiff fell behind on debt
payments to Comenity Bank, prompting her to seek the assistance of a legal aid
attorney who, by letter dated August 27, 2015, informed Comenity Bank that plaintiff
was represented by counsel and directed that Comenity Bank cease contact with
plaintiff and cease further collection activities on the debt because plaintiff’s income
was protected from levy, attachment or garnishment by federal law and plaintiff had no
income available for payment or settlement of the debt. Dkt. #1, ¶¶ 8-9 & Dkt. #1-3.
Defendant acquired the Comenity Bank account and, ignoring Comenity Bank’s account
2
Plaintiff Perry’s complaint was filed in the Northern District of Illinois and transferred to
the Western District of New York, where defendant maintains its principal place of business.
Dkt. #18 & Dkt. #22.
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notes identifying plaintiff’s attorney, “had its attorney debt collector, Weltman, Weinberg
& Reis Co., send [plaintiff] a collection letter, dated March 4, 2017, dem anding payment
of the Comenity Bank debt.” Dkt. #1, ¶ 10. The letter from the attorney debt collector
informs plaintiff that the Comenity Bank debt had been referred to the attorney debt
collector by defendant for collection. Dkt. #1-4.
Plaintiffs allege that defendant violated the Fair Debt Collection Practices
Act (“FDCPA”), specifically, 15 U.S.C. § 1692c(c), which prohibits a debt collector from
communicating with a consumer after being directed to cease communications and
from continuing to demand payment of a debt that the consumer has indicated they
refuse to pay and that defendant violated 15 U.S.C. § 1692c(a)(2), which prohibits a
debt collector from communicating with a consumer if the debt collector knows the
consumer is represented by an attorney with respect to such debt and has knowledge
of, or can readily ascertain the attorney’s name and address. Dkt. #1.
Plaintiffs allege that defendant is a debt collector “because it regularly
uses the mails and/or the telephone to collect, or attem pt to collect, directly or indirectly,
defaulted consumer debts that it did not originate” and because its “principal, if not sole,
business purpose is the collection of defaulted consumer debts originated by others.”
Dkt. #1, ¶¶ 4&5. Plaintiffs further allege that defendant “operates a nationwide defaulted
debt collection business,” purchasing “large portfolios of defaulted consumer debts . . .
which it then collects upon through other collection agencies.” Dkt. #1, ¶¶ 4&5. Plaintiffs
also allege that defendant is a licensed collection agency. Dkt. #1, ¶ 7.
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Defendant moved to dismiss the complaints, arguing that it does not meet
the FDCPA’s definition of debt collector. 18-CV-549 at Dkt. #26-1; 18-CV-566 at Dkt.
#25-1. By Report, Recommendation and Order entered November 30, 2018, this Court
determined that plaintiffs’ allegations were sufficient to plausibly allege that defendant is
a debt collector pursuant to the “principal purpose” def inition of 15 U.S.C. § 1692a(6).
18-CV-549 at Dkt. #36; 18-CV-566 at Dkt. #35. By Decision and Order entered May 16,
2019, Judge Vilardo adopted this Court’s Report, Recommendation and Order. 18-CV549 at Dkt. #53; 18-CV-566 at Dkt. #51.
Currently before the Court is plaintiffs’ motion to compel discovery (18CV-549 at Dkt. #63; 18-CV-566 at Dkt. #61); plaintif fs’ motion for a protective order
regarding defendants’ notice of deposition (18-CV-549 at Dkt. #64; 18-CV-566 at Dkt.
#62); and defendant’s motion to compel plaintiffs’ deposition. 18-CV-549 at Dkt. #67;
18-CV-566 at Dkt. #65.
Discovery
The parties resolved discovery issues relating to defendant’s business
purposes by stipulation that in 2017 and 2018, over 95% of JTM’s revenue was derived
from activity undertaken by licensed third-party collectors or third-party law firms
engaged by JTM related to debts owned by JTM which were characterized as defaulted
consumer debts at the time of purchase. 18-CV-549 at Dkt. #75; 19-CV-566 at Dkt.
#75. Thus, this aspect of plaintiffs’ motion to compel is denied as moot.
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Plaintiffs’ Request for Production of Documents #6 seeks all documents
regarding plaintiffs’ alleged account, including but not limited to, any asset
purchase/forward flow agreements, assignments, signed account agreements, card
carriers, terms and conditions and any correspondence from plaintiffs’ attorneys. 18CV-549 at Dkt. #63-2, p.7; 18-CV-566 at Dkt. #61-2, p.7.
Defendant objected to the demand on the ground that the terms under
which it acquired plaintiffs’ accounts have no bearing on whether it violated the FDCPA.
18-CV-549 at Dkt. #63-2, p.7; 18-CV-566 at Dkt. #61-2, p.7. Def endant also objected
on the ground that the request sought confidential and proprietary information. 18-CV549 at Dkt. #63-2, p.7; 18-CV-566 at Dkt. #61-2, p.7. In response to the req uest,
defendant stated that it did not possess any correspondence from plaintiffs or their
attorneys other than that which was attached to the complaint. Dkt. #63-2, p.7; 18-CV566 at Dkt. #61-2, p.7.
Plaintiffs argue that the terms under which defendant purchased plaintiffs’
debts and the documentation provided at the time of purchase are relevant to
assessing whether defendant was aware that plaintiffs’ accounts were subject to
demands that communications cease and notices of attorney representation. 18-CV549 at Dkt. #63-1, pp.6-7; 19-CV-566 at Dkt. #61-1, pp.6-7. Plaintif fs note that
documentation obtained from their creditors contain contact information for plaintiffs’
counsel which presumably was provided to defendant. 18-CV-549 at Dkt. #63-1, p.6;
18-CV-566 at Dkt. #61-1, p.6.
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Defendant responds that the relevant question is whether JTM’s thirdparty debt collector knew that plaintiffs were represented by counsel and that the
agreement between the original creditor and JTM is not relevant to this question. 18CV-549 at Dkt. #74, p.2; 18-CV-566 at Dkt. #74, p.2.
Plaintiffs reply that JTM’s knowledge of plaintiffs’ notices to their original
creditors is relevant to plaintiffs’ claim that JTM attempted to collect a debt from each
plaintiff by using a third-party debt collector despite JTM’s knowledge that plaintiffs were
represented by counsel who advised that plaintiffs’ only source of funds was exempt
from collection and had demanded that contact with plaintiffs cease. 18-CV-549 at Dkt.
#76, p.3; 18-CV-566 at Dkt. #76, p.3. Plaintif fs reply that the documents sought will
likely indicate whether JTM purchased the debts with knowledge that plaintiffs were
represented by counsel and the debts were subject to cease contact demands and
refusals to pay. 18-CV-549 at Dkt. #76, p.3; 18-CV-566 at Dkt. #76, p.3.
Fed. R. Civ. P. 26(b)(1) provides, in relevant part:
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 the scope of discovery need not
be admissible in evidence to be discoverable.
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Motions to compel are “entrusted to the sound discretion of the district court.” In re
Fitch, Inc., 330 F.3d 104, 108 (2d Cir. 2003), quoting United States v. Sanders, 211
F.3d 711, 720 (2d Cir.), cert. denied, 531 U.S. 1015 (2000).
Plaintiffs’ complaints allege violation of 15 U.S.C. § 1692c(a)(2), which
provides, in relevant part, that a debt collector may not communicate with a consumer
in connection with the collection of any debt if the debt collector knows the consumer is
represented by an attorney and 15 U.S.C. § 1692c(c), which provides, in relevant part,
that if a consumer notifies a debt collector in writing that the consumer refuses to pay a
debt or that the consumer wishes the debt collector to cease further communication
with the consumer, the debt collector shall not communicate further with the consumer
with respect to such debt. Assuming that defendant is a debt collector, defendant’s
knowledge of plaintiffs’ representation by counsel is relevant at least to assessing
defendant’s obligations under the statute to refrain from contracting with a third-party to
collect plaintiffs’ debts. Conversely, the absence of any documentation provided by the
original creditor to defendant of communication from plaintiffs’ attorney would likely
preclude liability. See Pennell v. Global Trust Mgmt, LLC, No. 18-CV-1698, 2019 WL
3945846, at *1 (S.D. Ind. Aug. 20, 2019) (knowledge would not be imputed to debt
purchaser who sought to collect debt where creditor did not provide the letter from
plaintiff’s counsel or any other information indicating that plaintiff had counsel or
refused to pay the debt). Accordingly, plaintiffs’ motion to compel the documents sought
in its request for production of documents #6 is granted. Defendant shall respond to the
request for production of documents within 30 days of the entry of this Decision and
Order.
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Depositions
Plaintiffs argue that travel to Buffalo for a deposition would be difficult
given that neither plaintiff resides in the Western District of New York and Ms. Mullery is
of advanced age with health-related limitations and Ms. Perry is disabled. Dkt. #64-1,
¶¶ 7-8. Plaintiffs waive claims to actual damages and argues that their depositions are
unnecessary to resolution of their remaining claims for statutory damages under the
FDCPA. Dkt. #64-1, ¶¶ 11 & 13. Given that the amount in controversy for each plaintiff
is $1,000.00 in statutory damages, plaintiffs argue that requiring them to travel to
Buffalo for depositions is unduly burdensome, particularly given that they have no
knowledge as to the dispositive issue of whether their creditors provided defendant with
the notice of representation letter advising that they would not repay the debt and
demanding that attempts to collect the debts cease. Dkt. #72, p.5.
Defendant argues that it is entitled to depose plaintiffs to ascertain
plaintiffs’ personal knowledge about the facts of their claims and to assess plaintiffs’
credibility. Dkt. #67-1, p.4 & Dkt. #73, p.1. Defendant notes that plaintiffs have failed to
support their argument as to physical limitations by affidavit. Dkt. #73, p.3.
As relevant to the instant case, Rule 30 of the Federal Rules of Civil
Procedure provides that a party may, by oral questions, depose any person, including a
party, without leave of court. More specifically, a defendant in a civil action is entitled to
depose the party that filed suit against it. Shaw v. Yale New Haven Hosp., No. 3:18-CV67, 2019 WL 3252154, at *7 (D. Ct. July 19, 2019); See de Herbstein v. Dabbah
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Securities Corp., 169 F.R.D. 36, 40 (S.D.N.Y. 1996) (party who commences an action
presumptively obligates herself to sit for a deposition). Pursuant to Rule 26(c), however,
the court may limit discovery even if the information sought is relevant.” Tisby v. Buffalo
General Hosp., 157 F.R.D. 157, 170 (W.D.N.Y. 1994); Coyne v. Houss, 584 F. Supp.
1105, 1109 (E.D.N.Y. 1984). Rule 26(c) provides, in relevant part, that the court “may
make any order which justice requires to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense . . . .” “Protection against
unnecessary discovery is discretionary with the trial court and will be reversed only on a
clear showing of abuse of discretion.” Robertson v. National Basketball Ass’n, 622 F.2d
34, 35-36 (2d Cir. 1980).
In the instant case, the Court agrees that, notwithstanding plaintiffs’
waiver of their claims to actual damages and general claims of inability to appear in
person for depositions in this district, defendant is entitled to assess plaintiffs’ personal
knowledge, demeanor and credibility before their claims proceed to trial. However, the
court is cognizant that the issues in this case will most likely be narrowed, if not
resolved, by resolution of motions for summary judgment based upon facts and legal
issues independent of plaintiffs’ personal knowledge. Accordingly, plaintiffs’ motion for a
protective order is granted to the extent that plaintiffs’ depositions are stayed pending
resolution of motions for summary judgment. Should these cases proceed beyond
summary judgment, the Court will address appropriate accommodations for plaintiffs’
depositions at a subsequent pretrial conference.
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Motions for summary judgment shall be filed no later than June 26, 2020.
SO ORDERED.
DATED:
Buffalo, New York
April 23, 2020
s/ H. Kenneth Schroeder, Jr.
H. KENNETH SCHROEDER, JR.
United States Magistrate Judge
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