The deposition of a party’s corporate representative under Rule 30(b)(6) often presents a tension between inquiry into the party’s knowledge of facts—which is fair game—and inquiry into the party’s legal positions—which can delve into protected attorney work-product. Lawyers representing the Consumer Financial Protection Bureau (“CFPB”) in a case about an allegedly fraudulent debt-collection scheme provided a lesson to us all in how not to resolve this tension.
In Consumer Financial Protection Bureau v. Brown, No. 21-14468, 2023 WL 3939432 (11th Cir. June 12, 2023), the Eleventh Circuit affirmed the dismissal of all the CFPB’s claims against five defendants as a sanction under Rule 37(b), concluding that the district court was within its discretion to impose such severe sanctions based on the CFPB’s “dramatic abuse of the discovery process” in its determination to avoid 30(b)(6) depositions.
The case arose from a lawsuit brought by the CFPB alleging violations of the Consumer Financial Protection Act (CFPA) and the Fair Debt Collection Practices Act (FDCPA) against 18 different defendants. Thirteen of the defendants were individuals and their companies that actually participated in the scheme. The other five defendants were providers of telephone and payment-processing services that allegedly “provided substantial assistance” to the schemers and “knew or should have known” that their platforms were advancing unlawful conduct.
The trouble started when the service-provider defendants served the CFPB with notices to depose its corporate representative under Rule 30(b)(6) of the Federal Rules of Civil Procedure. The CFPB objected to the notices on numerous grounds, including that the information sought had already been provided in response to interrogatories and that the depositions were an improper attempt to discover the mental impressions of the CFPB’s counsel.
The district court overruled these objections, and the CFPB moved for a protective order. The court again rejected most of the CFPB’s arguments and specifically ruled that the witness must answer questions about “exculpatory facts.” The court did, however, confirm that the questioning could not “delve into [the CFPB’s] trial strategy.” In short, questions about facts are fair game; questions about attorney work-product are not.
Forced to prepare and present a 30(b)(6) witness for deposition, the CFPB engaged in “a number of improper tactics” throughout the first deposition to avoid actually providing answers. These tactics fell into three primary categories: improper work-product objections and instructions not to answer; filibustering by having the witness read verbatim from a script for extended periods of time; and refusal to identify any exculpatory facts.
In one example of an improper work-product objection, the CFPB’s counsel instructed its witness not to answer whether he had spoken to any witnesses in the case. As to “memory aids,” the witness was equipped with “lawyer-prepared scripts that were hundreds of pages in length.” In response to one question, the witness read from this script for 58 minutes before the parties stipulated that he would have read another 93 pages. Notably, the witnesses testified that he had spent 300 hours preparing for the deposition, yet he could not identify a single exculpatory fact. (Presumably the 300 hours was spent with counsel preparing the hundreds of pages of canned testimony.)
In anticipation of similar tactics at upcoming depositions, the defendants raised the issue with the district court, which held a telephonic hearing. Not yet having a copy of the deposition transcript, the court reiterated its prior ruling that the witness had to testify as to the facts establishing the elements of their claims, as well as to exculpatory facts. Finally, the court stated that use of memory aids was acceptable due to the voluminous record, but the witness should not simply regurgitate pre-written information.
The parties then held another four depositions, during which the CFPB continued the same conduct. It instructed witnesses not to answer questions like “does the CFPB rely on any facts to demonstrate that [the defendant’s] practices were unfair?” and “did you review any facts that lead you to the conclusion that [the defendant] authored [a specific email exhibit]?” The witnesses continued to rely on scripts, but rather than reading from the scripts they instead stipulated to the page ranges they would have read. For example, in answer to one question, the witness stated he would have read pages 32–33, 34–37 of a document followed by pages 5–78 of the memory aid.
On the defendants’ motion, the district court sanctioned the CFPB under Rule 37(b). Finding the CFPB’s conduct “egregious,” and convinced that reopening the depositions would not “be fruitful,” the court ordered arguably the most severe sanction allowed under Rule 37(b). The court struck all claims against the five service-provider defendants and dismissed them from the case.
The Eleventh Circuit easily affirmed. Throughout the process, “the CFPB tried to game the system so that nothing was accomplished.” The court rejected the CFPB’s argument that the district court’s instructions were not clear, noting the instructions should not have been necessary in the first place. The “district courts are not required to hold a litigant’s hand and guide him through the basics of discovery.” Nevertheless, the district court had given such guidance, both in overruling the CFPB’s objections and in its ruling on the motion for protecting order. After the first deposition, the court, during the telephonic hearing, again instructed the CFPB on proper deposition conduct, and the CFPB again ignored these instructions.
Dismissal of claims is warranted as a sanction under Rule 37(b) when a party has shown “flagrant disregard and willful disobedience of the court’s discovery orders.” The CFBP did just that, and the district court was not required to explicitly consider whether less-drastic sanctions were sufficient when the rest of its analysis made that determination obvious. The district court found that the CFPB’s “pattern of conduct” demonstrated “that reopening of the depositions would [not] be fruitful.” The district court did not abuse its discretion in dismissing the CFPB’s claims.
In a footnote, the Eleventh Circuit rejected the CFPB’s argument that it should get credit for the significant amount of time it spent preparing its witnesses. As the court stated, “We are unware of any rule or case law that recognizes preparation time as a metric of measuring compliance with the Federal Rules of Civil Procedure and it is not clear why preparation time—rather than level of preparedness exhibited during the deposition, for example—should be considered at all.”
By: Stacey Mohr