Opinion
CIVIL ACTION NO. 02-1127, CIVIL ACTION NO. 02-8483
July 31, 2003
MEMORANDUM AND ORDER
Plaintiffs in these consolidated class-actions allege violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. Under the statute, if plaintiffs succeed in establishing liability, each plaintiff can be awarded actual damages, plus statutory damages not exceeding $1,000, plus attorney's fees; but the aggregate recovery of statutory damages for the entire class is limited to one percent of the culpable defendant's net worth, or $500,000, whichever is less. Now before the Court are various motions concerning discovery.
The discovery deadline expired December 31, 2002 (after several agreed-upon extensions). Plaintiffs assert that the defendants have not fully complied with outstanding discovery requests, while defendants insist that the discovery cut-off should be enforced, and that a documents-subpoena to defendant's accounting firm should be quashed.
Plaintiff originally sued Credit Bureau Collection Services, Inc., alleging that it was doing business as "CBCS and CBCS National, Inc." It appears probable, from the record, that Credit Bureau Collection Services, Inc. is a subsidiary of CBC Companies, Inc., and that the net worth of the subsidiary, standing alone, is less than $50 million, whereas the net worth of the parent, CBC Companies, Inc., exceeds that amount. Thus, the applicability of the $500,000 cap on statutory damages for the class depends upon which company or companies are legally responsible for the consequences of the mailings upon which plaintiff's claims are based. Hence, in the second of the two consolidated actions, defendant is designated as "CBC Companies, Inc., individually t/a and d/b/a CBCS and CBS National, Inc."
The discovery which plaintiffs seek to compel, and which defendants are resisting, is an attempt to develop further information concerning the precise net worth of the subsidiary, Credit Bureau Collection Services, Inc. Plaintiffs have already been furnished pertinent financial statements and tax returns, but have issued a very broad subpoena for further documentation from the accounting firm. On its face, the subpoena is unduly burdensome and, in the circumstances, seemingly unnecessary. At the very least, the subpoena is premature, since the issue of statutory damages will be resolved by the Court, and will be resolved if, and only if, liability is established. Moreover, if plaintiffs succeed in establishing liability on the part of the parent corporation, the limitation on statutory damages would become moot, as a practical matter.
Section 1692k(c) exempts from liability a debt collector who "shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error." Defendants will be attempting to avail themselves of this defense, at trial. Plaintiffs had previously scheduled four depositions of employees of the subsidiary but, for various reasons, these depositions have not yet occurred. To the extent that these depositions relate to the defense of inadvertence, plaintiffs should be permitted to conduct them, notwithstanding the expiration of the discovery deadline.
An Order in conformity with the foregoing discussion follows.
ORDER
AND NOW, this day of July 2003, upon consideration of all pending motions, IT IS ORDERED:1. The documents subpoena is QUASHED.
2. If defendants other than Credit Bureau Collection Services, Inc. are found liable at trial, jointly or severally, any award of statutory damages may not exceed $500,000 in the aggregate for the entire class.
3. If the only defendant held liable at trial is the subsidiary, Credit Bureau Collection Services, Inc., that defendant will then be required to provide all pertinent further information to permit a finding as to its net worth for purposes of any limitation on statutory damages.
4. If they have not already done so, the defendants shall, within ten (10) days, identify any witnesses or documentation relied upon to establish a § 1692k(c) defense and, if they have not already done so, plaintiffs will be permitted to depose such witnesses, within twenty (20) days thereafter.
5. Except as set forth above, all pending motions are DENIED.