Pennington v. Midland Credit Management, Inc.

Filing 65

ORDERED that plaintiff's objection to the magistrate judge's order granting defendant's motion to compel is sustained. It is further Ordered that defendant's motion to compel is denied. Signed by District Judge T. S. Ellis, III on 8/9/2010. (nmcc)

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division

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AUG -9 2010
CLERK U.S. DISTRICT COURT ALEXANDRIA. VIRGINIA

TERESA L. PENNINGTON,
Plaintiff,

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MIDLAND CREDIT MANAGEMENT, INC.,
Defendant.

No. l:10cvll2

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ORDER

The matter came before the Court on plaintiffs Rule 72(a) objection to the Magistrate Judge's pretrial order granting a motion to compel by defendant Midland Credit Management
("MCM").

Plaintiff, Virginia State Trooper Teresa Pennington, was the victim of an identity theft in
2005 that resulted in multiple errors on Pennington's credit reports and erroneous efforts to

collect debts that were not hers. As a result in part of these events, Pennington brought this
action to recover damages for alleged violations of the Fair Debt Collection Practices Act

("FDCPA"), 15 U.S.C. § 1692 el seq., and the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., by defendant MCM, an alleged debt collection agency. During discovery, MCM requested that Pennington disclose agreements reflecting settlements she reached with four entities for acts ostensibly similar to those alleged in this case. The settlement agreements
resolved suits brought by Pennington against Equifax, Experian, and Trans Union--credit
reporting agencies--and AFNI--a debt collection agency.

After Pennington declined to produce the settlement agreements, MCM moved to compel

disclosure. (Doc. No. 34.) Magistrate Judge Anderson granted the motion to compel, but he did

not elaborate on his reasoning either at the hearing or in Order itself. See Pemington v. Midland

Credit Mgmt, Inc., No. 1:10cvl 12 (E.D. Va. July 2,2010) (Order). Pennington objected to the
Order, arguing that the settlement agreements are confidential and irrelevant. (Doc. No. 52.) A district court must reverse the decision of a magistrate judge on a nondispositive matter when the
ruling is "clearly erroneous or is contrary to law." Rule 72(a), Fed. R. Civ. P. A party seeking discovery must show that the material sought is admissible or

"reasonably calculated to lead to the discovery of admissible evidence." Rule 26(b)(l), Fed. R. Civ. P. MCM's principal argument in support of its request for the settlement agreements is that the agreements may lead to discovery of admissible evidence in light of the "one satisfaction
rule," which, MCM argues, limits Pennington to a single recovery for all of the credit errors

arising from the 2005 identity theft. See Chisholm v. UHP Projects, Inc., 205 F.3d 731, 737 (4th Cir. Va. 2000) ("The essential requirement for the 'one satisfaction rule' is that the amounts recovered by settlement and the judgment must represent common damages arising from a single,
indivisible harm.") Yet, MCM fails to show that the acts and injuries are the same. To the
contrary, it appears the acts are separate and the injuries are distinct. In any event, counsel for

Pennington has represented that the settlement agreements contain only broad dollar amounts
with no itemization for particular types of damages.

There are net settlement amounts in each agreement to compensate the plaintiff for her actual damages, punitive damages, legal fees and expenses. It would be impossible to look at those lump sum settlement amounts and determine what
amount was attributable to actual damages as opposed to legal fees, costs and
potential claims for punitive damages.

(Doc. No. 62.) At oral argument, counsel confirmed these representations and noted that the

settlement agreements contain no admissions of liability, no breakdown of damages, and no
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reference to any specific statutory violations. As such, the one satisfaction rule, even assuming

its applicability, does not support a conclusion that the agreements are relevant or would lead to
the discovery of relevant material.

MCM has also suggested that the settlement agreements would be relevant to other elements of Pennington's claims, such as causation. But neither the briefs nor the arguments made ai ihe hearing have iUuminaied any connection between the settlement agreements and the
material facts of [his case. Pennington's claims against MCM relate to a Dell Financial account

fraudulently opened in her name that was eventually sold to MCM for collection purposes, while
the seuled claims focus on different accounts and credit errors arising from the 2005 identity

theft. Because MCM has failed to demonstrate that its request for the settlement agreements is
reasonably calculated to lead to the discovery of admissible evidence, the morion to compel must
be denied. Should circumstances later arise indicating that the settlement agreements may
contain information that is admissible or reasonably calculated to lead to the discovery of
admissible evidence, counsel for defendant may renew the motion.
Accordingly, and for good cause,

It is hereby ORDERED that plaintiff's objection to the magistrate judge's order granting
defendant's motion to compel (Doc. No. 52) is SUSTAINED.

It is further ORDERED that defendant's motion to compel (Doc. No. 34) is DENIED.
The Clerk is directed to send a copy of this Order to all counsel of record.
Alexandria, Virginia August 9,2010

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United States District Judge

T.S.EUu,m