Judge Sanctions Federal Consumer Bureau in Debt Collection Case

The Power of a Phone Call: Sanctions Against the Consumer Financial Protection Bureau


The beginning of the end was a phone call. After two years of aggressively going after payment processors for the alleged sins of debt collectors that used their services, the Bureau had spent the entire first day of its own deposition stonewalling every question and ignoring months of written judicial orders. With three more days to go, SMITH wanted to get the judge on the phone.


That phone call with all the parties and Judge Story ended up being the “human touch” defendants needed. During it, and for a final time, Judge Story told the Bureau it must play fair, and he clearly laid out what questions it must answer and which inquiries were fair game. But instead, the Bureau ignored the Court. Over the three days of depositions that followed, it flippantly disregarded everything the Court said during the call.


What happened next has been well-reported. The Court sanctioned the Bureau for its deposition conduct, struck four counts from the complaint, and dismissed all of the payment processors (including SMITH’s client) from the case.


While the Court’s decision to sanction the Bureau was clearly based, in part, upon the latter’s flippant disobedience of many written orders, the Bureau’s outright disregard for the Court’s explicit instructions during the telephone conference appears to have been the straw that broke the camel’s back. In fact, references to—and long quotations from—that telephone call make up the meat of the Court’s sanctions order. As Judge Story wrote, “[t]he Court was quite clear . . . during the April 12  telephone conference: more was expected of the CFPB’s witness than rote answers. . . . In the April 12 telephone conference, the Court repeatedly emphasized the importance of the witness’s ability to provide a ‘human touch’ by responding to Defendants’ follow-up questions.”

It is impossible to say whether the Court would have thrown the Bureau’s case out without ever having had that conference, but it is clear that the phone call was a major supporting factor.

What happened here is a very simple reminder to lawyers everywhere that no matter how excellent and well-supported your paper briefs may be, sometimes an added human touch—like a phone call with the Judge when your opponent is refusing to answer live questions—is the best way to win.

20170830_Daily Report CFPB

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