Opinion
Civil Action No. 20-11871-MLW
08-19-2021
Zachary CLOSE, Plaintiff, v. ACCOUNT RESOLUTION SERVICES, et al., Defendants.
Justin M. Baxter, Pro Hac Vice, Baxter & Baxter, LLP, Portland, OR, Matthew P. Cook, Pro Hac Vice, Cook Law, LLC, Grandville, MI, Elizabeth A. Miller, Boston, MA, for Plaintiff. John J. O'Connor, Christina T.E. Staffiere, Peabody & Arnold LLP, Boston, MA, for Defendant Account Resolution Services. John J. O'Connor, Peabody & Arnold LLP, Boston, MA, for Defendant Inphynet South Broward, LLC.
Justin M. Baxter, Pro Hac Vice, Baxter & Baxter, LLP, Portland, OR, Matthew P. Cook, Pro Hac Vice, Cook Law, LLC, Grandville, MI, Elizabeth A. Miller, Boston, MA, for Plaintiff.
John J. O'Connor, Christina T.E. Staffiere, Peabody & Arnold LLP, Boston, MA, for Defendant Account Resolution Services.
John J. O'Connor, Peabody & Arnold LLP, Boston, MA, for Defendant Inphynet South Broward, LLC.
ORDER ON DEFENDANTS’ MOTION TO COMPEL
On January 4, 2021, Judge Wolf referred the case to the undersigned for full pretrial management. Docket No. 19.
[Docket No. 58]
Boal, M.J.
Defendants Account Resolution Services ("ARS") and Inphynet South Broward, LLC ("ISB") (collectively, the "Movants") have moved for an order compelling plaintiff Zachary Close and defendants Equifax, Experian, and Trans Union (collectively, the "CRA Defendants") to produce certain documents and information, including the confidential settlement agreements between Close and the CRA Defendants. Docket No. 58. For the following reasons, I grant in part and deny in part the motion.
I. FACTUAL BACKGROUND
Close alleges that ISB, through ARS, attempted to collect an alleged $455 medical debt that Close did not owe. See generally Complaint at ¶¶ 13-19. In addition, ARS reported the debt and open collection account to the CRA Defendants. Id. at ¶ 13. Close sent a total of three disputes to each of the CRA Defendants. Id. at ¶ 23. Close alleges that ARS failed to conduct a reasonable investigation and, further, that having been put on notice that the account was previously paid and not owed, ARS continued to report the debt to the CRA Defendants. Id. at ¶¶ 29, 37.
Close alleges that the CRA Defendants failed to comply with the requirements imposed by the Fair Credit Reporting Act ("FCRA") by failing to (1) follow reasonable procedures to assure maximum possible accuracy of the information in his credit reports; and (2) to comply with the reinvestigation requirements of the FCRA. Id. at ¶¶ 44-54. In addition, Close alleges that ARS violated the FCRA by failing to conduct a reasonable investigation of his disputes and to permanently delete information which was inaccurate, incomplete, or which could not be verified. Id. at ¶¶ 55-63. Further, Close alleges that ARS violated the Fair Debt Collection Practices Act by misrepresenting the character, amount, or legal status of the alleged debt and by communicating credit information which ARS knew or should have known was false. Id. at ¶¶ 80-63. Finally, Close alleges that ARS and ISB's conduct constituted unfair or deceptive acts and practices in violation of M.G.L. c. 93A. Id. at ¶¶ 64-79.
Close alleges that, as a result of the Defendants’ actions, he has incurred damages including denial of credit, lost opportunity to receive credit, damage to reputation, worry, distress, frustration, embarrassment, and humiliation. See id. at ¶¶ 51, 57, 61, 85. He also seeks to recover attorney's fees incurred in this action. Id. at ¶¶ 48, 54, 58, 63, 79.
Soon after this suit was filed, counsel for the CRA Defendants notified counsel for the Movants that they had all settled in principle with Close. Docket No. 58 at 3-4. The Movants requested copies of the settlement agreements and related materials. Id. at 4. Close and the CRA Defendants have refused to produce such materials. Id. II. ANALYSIS
On May 4, 2021, Close and the CRA Defendants filed a stipulation of dismissal purporting to dismiss all claims against the CRA Defendants with prejudice. Docket No. 40. Rule 41(a)(1)(A) of the Federal Rules of Civil Procedure provides that, without a court order, a plaintiff may dismiss an action by filing "a stipulation of dismissal signed by all parties who have appeared." However, Rule 41 has been construed to "only permit[ ] complete dismissal of an ‘action,’ not partial dismissal of ‘fewer than all the claims.’ " Hanson v. Correctional Health Partners, LLC, No. 1:19-cv-00393-JDL, 2020 WL 974868, at *2 (D. Me. Feb. 28, 2020) (citations omitted); but see Choe v. United States, No. 2:19-CV-348-TLS-JEM, 2019 WL 6215287, at *2 (N.D. Ind. Nov. 21, 2019) (citation omitted) ("It would seem needlessly constraining, where Rule 41 otherwise contemplates dismissal of individual claims, to prohibit the dismissal of individual claims where both parties have stipulated to such."). In any event, the stipulation of dismissal was not signed by ARS or ISB and, as such, appears to have no effect. See Fed. R. Civ. P. 41(a)(1)(A)(ii).
A. Standard Of Review
"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." Fed. R. Civ. P. 26(b)(1). Whether discovery is proportional to the needs of the case depends on, among other things, "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 discovery in resolving the issues, and whether the expense of the proposed discovery outweighs its likely benefit." Id.
If a party fails to respond to requests for production of documents or interrogatories, the party seeking discovery may move to compel production of the requested information. See Fed. R. Civ. P. 37(a)(3). "[T]he party seeking an order compelling discovery responses over the opponent's objection bears the initial burden of showing that the discovery requested is relevant." Torres v. Johnson & Johnson, No. 3:18-10566-MGM, 2018 WL 4054904, at *2 (D. Mass. Aug. 24, 2018) (citation omitted). "Once a showing of relevance has been made, the objecting party bears the burden of showing that a discovery request is improper." Id. (citation omitted).
B. The Movants Have Not Sufficiently Shown The Relevance Of The Settlement Agreements Between Close And The CRA Defendants
The Movants seek an order compelling Close and the CRA Defendants to produce the settlement agreements between them. Docket No. 58 at 6-13. A "strong public policy favoring settlement of disputed claims dictates that confidentiality agreements regarding such settlements not be lightly abrogated." Thomasian v. Wells Fargo Bank, N.A., No. 03:12-cv-01435-HU, 2013 WL 4498667, at *2 (D. Or. Aug. 22, 2013) (citation omitted). Therefore, some courts have required a party seeking discovery of a confidential settlement agreement to make a particularized and/or heightened showing that the settlement information sought is relevant and likely to lead to admissible evidence. See Peters v. Equifax Information Servs., No. EDCV 12-1837-TJH, 2013 WL 12169355, at *2 (C.D. Cal. Dec. 13, 2013) (citation omitted). Other courts, including several judges in this Circuit, have not required such a heightened showing. Rather, they have allowed discovery of confidential settlement agreements consistent with the provisions of Rule 26. See Quilez-Velar v. Ox Bodies, Inc., No. 12-1780(SCC), 2014 WL 4385314, at *1 (D.P.R. Sept. 4, 2014) (citing cases). In any event, I find that the Movants have not shown that the settlement agreements between Close and the CRA Defendants are relevant to any claim or defense in this case.
First, the Movants argue that the settlement agreements are relevant to the issue of offset and must also be disclosed in order to avoid duplicative recovery. Docket No. 58 at 6-9. Specifically, the Movants argue that the complaint alleges concerted, joint activity by all of the defendants that led to the published credit reports that Close alleges are inaccurate and harmed him. Therefore, the Movants continue, they are entitled to an offset for any amounts paid by the CRA Defendants. I disagree.
Damages under the FCRA and the FDCPA fall into two categories: statutory damages and actual damages. See 15 U.S.C. §§ 1681n(a), 1681o(a)(1), 1692k(a). "Statutory damages are ‘cast not in terms of the plaintiff's recovery, but in terms of the defendant's liability." Zook v. Equifax Info. Servs., LLC, No. 3:17-cv-2003-YY, 2018 WL 10604347, at *2 (D. Or. Jul. 2, 2018) (quoting Overcash v. United Abstract Group, Inc., 549 F. Supp. 2d 193 (N.D.N.Y. 2008) ). "Such a rationale is directly contrary to that underlying the double recovery doctrine, the purpose of which is to avoid windfalls." Id. (citing Strasters v. Weinstein & Riley, P.S., No. CV-10-3070-RHW, 2011 WL 3320583, at *3 (E.D. Wash. Aug. 2, 2011) ).
In addition, " ‘the FDCPA does not contain any provision creating an implied or express right of contribution, indemnification, or equitable credit,’ nor does federal common law create such a right." Id. (citing Nelson v. Equifax Info., Servs., LLC, 522 F. Supp. 2d 1222, 1239 (C.D. Cal. 2007) ). "The same holds true for the FCRA." Id. (citing Boatner v. Choicepoint Workplace Sols., Inc., No. CV 09-1502-MO, 2010 WL 1838727, at *3 (D. Or. May 6, 2010) ). Therefore, multiple courts have held that there is no equitable offset for causes of action under either the FCRA or FDCPA. Id. (citing cases).
The Movants cite fourteen cases for the proposition that courts in Massachusetts and around the country have held that parties in the same position as them are entitled to offsets in cases alleging FCRA, FDCPA, and 93A violations. Docket No. 58 at 7. However, the vast majority of those cases do not involve FCRA or FDCPA claims or are otherwise inapposite. For example, several of the cases involve the common law right of setoff, which allows entities that owe each other money to apply their mutual debts against each other, thereby avoiding the absurdity of making A pay B when B owes A. See, e.g., Touch-N-Buy, Ltd. Partnership v. GiroCheck Financial, Inc., No. 15-10883, 2018 WL 2093949, at *4 (E.D. Mich. May 7, 2018) ; Mendoza v. Collection Bureau, Inc., No. 1:15-CV-00511-EJL, 2017 WL 690182, at *3 (D. Id. Feb. 21, 2017). No such issue is present here. To the extent that Chapter 93A allows for offsets, I note that Close has not brought a Chapter 93A claim against the CRA Defendants. Finally, to the extent that one or two of those cases actually hold that offsets should be allowed in FDCPA and FCRA actions, I disagree with the reasoning of those courts.
Accordingly, I find that the settlement agreements are not relevant to offset. In any event, even if there were any offset issues, those would not be presented to a jury and could be handled post-trial by the trial judge, as necessary. See, e.g., Thomasian, 2013 WL 4498667, at *2.
On the issue of attorney's fees, the Movants argue that there is potential for double recovery by Close for time spent by his attorneys on this case. Docket No. 58 at 10-11. Rather than potential double recovery, however, the appropriate inquiry is the determination of a reasonable attorney's fee award for work performed in obtaining a judgment against the Movants should Close ultimately prevail against them in this case. See Thomasian, 2013 WL 4498667, at *2. Again, that is an issue for the district court to determine, if necessary, after trial.
On the issue of potential bias by CRA Defendant witnesses, if they in fact testify at trial, the trial judge may review the settlement documents in camera and determine whether the settlement agreements should be disclosed to the jury. See id. The Movants also speculate that the settlement agreements may have been entered in bad faith and that the circumstances are suggestive of collusion. Docket No. 58 at 11-13. Such speculation is insufficient for the Movants to show discoverability under Rule 26.
Finally, the Movants argue that the settlement agreements are relevant to any settlement discussions that the parties may have later. Docket No. 58 at 9-10. While it may be informative for the Movants to obtain this information in evaluating their settlement position, they have not shown that such information is relevant to any claim or defense in this case. Accordingly, I deny the Movant's request for the settlement agreements between Close and the CRA Defendants.
C. Other Requests
The Movants also seek (1) Close's prior views of his credit report; (2) Close's call recordings; and (3) Close's communications with his father. Close states that he has made a "diligent and good faith effort" to respond to these requests and that he has produced all the information he has. See Docket No. 65 at 7. However, that response does not seem to apply to the prior views of his credit report. That information was the subject of an interrogatory. While he may not have any responsive documents, he has not answered the interrogatory. Accordingly, within two weeks, Close shall provide a supplemental answer to Interrogatory No. 10.
At oral argument, counsel for Close represented that Close cannot recall whether he recorded any calls but, if he did, he no longer has those recordings. With respect to communications with his father, his counsel agreed to search for responsive text messages in Close's and his father's phone. He shall do so and produce any responsive communications within two weeks. If, after a further search, no such communications are found, Close shall submit a sworn certification, signed by himself and counsel, to that effect.
III. ORDER
For the foregoing reasons, I grant in part and deny in part the motion.