On February 13, the U.S. District Court for the Central District of California sided with a defendant, a fintech company, who filed a motion to compel discovery against the CFPB. As previously covered by InfoBytes, the CFPB alleged violations of consumer credit laws related to short-term, small-dollar loans made via an application. Then the CFPB filed an emergency ex parte application to stay the case, which the court denied (covered here). Now the defendant argued the CFPB failed to conduct a thorough search for documents and improperly asserted privilege over numerous documents, hindering the company’s ability to defend itself against allegations that could impact its operations across multiple states. The court granted the defendant’s motion.
The defendant’s motion alleged the CFPB did not properly comply with its discovery obligations in two ways: first, that it “failed to conduct even a rudimentary search for responsive information”; and second, it “improperly asserted privilege over “tens of thousands” of documents, most of which it has not reviewed.” The requests at issue concerned facts related to the company’s defenses, including products of the CFPB’s investigation, analysis of relevant markets, and potential exculpatory information.
The company emphasized the importance of these documents to demonstrate the benefits of its platform to consumers and competition, which it asserted was crucial for its defense against the CFPB’s claims. The defendant also sought the production of communications between the CFPB and state officials regarding compliance with state licensure and usury laws, arguing that such information was vital to understanding the basis of the CFPB’s allegations. The defendant averred the CFPB produced just “a few hundred” documents (excluding complaints), many of which were publicly available or had been redacted of virtually all substance.
