A federal magistrate judge in Rhode Island has ruled that the Consumer Financial Protection Bureau (CFPB or Bureau) must produce three employees for depositions, denying the agency’s motion for a protective order.
The lawsuit brought by the Bureau in 2020 alleges that Citizens Bank (Citizens) failed to reasonably investigate consumers’ claims of unauthorized credit card use and failed to issue proper credits when such unauthorized card use had occurred. The complaint alleges violations of the Truth in Lending Act and the Consumer Financial Protection Act of 2010. The Bureau seeks approximately $32.8 million in civil penalties.
Citizens served three deposition notices on the Bureau in December 2022, seeking the depositions of a deputy associate director, assistant director, and a field examination manager.
The notices sought testimony regarding the Bureau’s theory and basis for asserting liability, the bases and calculations of the proposed relief sought, and narrow discovery as to whether the Bureau knew or should have known of Citizens’ alleged violations prior to 2014. The notices came after the Bureau’s Rule 30(b)(6) designee was admittedly unprepared to give testimony regarding the above topics, relying on a “testifying aid” in responding to questions, which was allegedly prepared by the Bureau’s litigation team.
In its motion for a protective order, the Bureau argued, among other things, that high-ranking government officials should not be subject to depositions, that it has already produced written discovery and documents regarding the sought testimony, and privilege. In opposition, Citizens claimed that the Bureau spent two years obstructing discovery and that in filing its motion, the Bureau disregarded a prior deposition directive from the court.
The federal judge issued an order denying the Bureau’s motion, finding that the Bureau failed to show good cause and its arguments were “unreasonable attempts to micromanage and restrict its adversary’s discovery strategy and defense preparation.” He noted that the Bureau failed to make a sufficient showing of “undue burden or expense” as to any of the three depositions, or that allowing them to proceed would subject anyone to “annoyance, embarrassment, or oppression.” The order noted that the Bureau can object to any specific questions posed during the depositions as allowed under Rule 30(c)(2).
The court’s order forcing the Bureau to produce employees for deposition who can speak to the claims, facts, and documents the Bureau itself placed at issue in litigation, as well as the penalties sought by the Bureau, can be seen as a win for banks facing similar lawsuits. The order should be in the arsenal of any financial institution involved in litigation with the Bureau.