Analysis And Strategic Implications Of Consumer Financial Protection Bureau v. Brown

• Published date: 29 June 2023
• Subject Matter: Consumer Protection, Dodd-Frank, Consumer Protection Act
• Law Firm: Holland & Knight
• Author: Mr Anthony E. DiResta and Diego J. Troncoso Breton

Highlights

• The Consumer Financial Protection Bureau (CFPB) brought an action against 18 defendants under the Consumer Financial Protection Act (CFPA) and the Fair Debt Collection Practices Act (FDCPA) for engaging in or substantially assisting a fraudulent debt-collection scheme.
• In Consumer Financial Protection Bureau v. Brown, the U.S. District Court for the Northern District of Georgia imposed sanctions against the CFPB - dismissing claims against five defendants - due to a "dramatic abuse of the discovery process [by CFPB]" after being ordered to sit for depositions pursuant to Federal Rule of Civil Procedure 30(b)(6) and repeatedly violating the district court's order.
• The CFPB appealed and the U.S. Court of Appeals for the Eleventh Circuit affirmed the district court's sanctions order finding that CFPB clearly violated orders from the district court.
• This decision serves as a reminder to counsel involved in CFPB investigations to challenge misconduct and clarifies that the CFPB does not possess any governmental agency immunity to avoid depositions and obstruct due process.

The Consumer Financial Protection Bureau (CFPB) brought an action against 18 defendants under the Consumer Financial Protection Act (CFPA) and the Fair Debt Collection Practices Act (FDCPA) for engaging in or substantially assisting a fraudulent debt-collection scheme. In Consumer Financial Protection Bureau v. Brown, the U.S. District Court for the Northern District of Georgia imposed sanctions against the CFPB - dismissing claims against five defendants - due to a "dramatic abuse of the discovery process [by CFPB]"¹ after being ordered to sit for depositions pursuant to Federal Rule of Civil Procedure 30(b)(6) and repeatedly violating the district court's order. The CFPB maintained it behaved properly on appeal. The U.S. Court of Appeals for the Eleventh Circuit affirmed the district court's sanctions order finding that CFPB clearly violated orders from the district court, derailing multiple depositions in "...flagrant disregard and willful disobedience of the court's discovery orders."²

Background

The CFPB brought an action under the CFPA and the FDCPA against 18 defendants in the Northern District of Georgia for engaging in or substantially assisting a fraudulent debt-collection scheme. The CFPB alleged that several individuals created limited liability companies in Georgia and New York and perpetrated a debt-collection scheme targeting millions of consumers. Thirteen...