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Molnar v. Nco Financial Systems, Inc.

United States District Court, S.D. California

July 8, 2014

JEFFREY MOLNAR and WESLEY THORNTON, on behalf of themselves, all others similarly situated and the general public, Plaintiffs,
v.
NCO FINANCIAL SYSTEMS, INC., a Pennsylvania Corporation, Defendant.

ORDER ON JOINT STATEMENT FOR DETERMINATION OF DISCOVERY DISPUTE [ECF No. 85]

JILL L. BURKHARDT, Magistrate Judge

Plaintiffs bring this putative class action against Defendant NCO Financial Systems, Inc. under the Telephone Consumer Protection Act, 47 U.S.C. § 227, to stop defendant's alleged practice of making unsolicited telephone calls and text message calls to the telephones of consumers nationwide and to obtain redress for all persons injured thereby. (ECF No. 66.) Presently before the Court is the parties' Joint Statement for Determination of Discovery Dispute for which oral argument was held on May 20, 2014. (ECF No. 88.) The parties' discovery dispute concerns the scope of subpoenas served on and documents produced by plaintiffs' creditors and telephone carriers. The creditors and telephone carriers are not parties to this litigation. For the reasons stated below, plaintiffs' objections are overruled with the exception that each plaintiff may narrow the time period of call records to the extent they fall outside the time period for which a plaintiff seeks to hold defendant NCO liable.

I. Legal Standard

Federal Rule of Civil Procedure 45(d)(3) sets forth the limited reasons for which a subpoena can be quashed. "As a general proposition, a party lacks standing under Federal Rules of Civil Procedure Rule 45([d])(3) to challenge a subpoena issued to a non-party unless the party claims a personal right or privilege with respect to the documents requested in the subpoena." In re REMEC, Inc. Sec. Litig., No. 04cv1948, 2008 WL 2282647, *1 (S.D. Cal. May 30, 2008); Doe v. City of San Diego, No. 12cv689, 2013 WL 2338713, *2 (S.D. Cal. May 28, 2013). If the party claims a personal right or privilege with respect to the documents requested in the subpoena, the court "must quash or modify" the subpoena "if no exception or waiver applies." Fed.R.Civ.P. 45(d)(3)(A). "To evaluate privacy objections under either federal or state law, the Court must balance the party's need for the information against the individual's privacy rights." Brunsvik v. Hartford Life and Acc. Ins. Co., No. 11cv14, 2011 WL 5838221, *3 (E.D. Cal. Nov. 21, 2011).

Pursuant to Federal Rule of Civil Procedure 26(c)(1), a party may move for an order to protect itself from "annoyance, embarrassment, oppression, or undue burden or expense." A subpoena is subject to the relevance requirements set forth in Federal Rule of Civil Procedure 26(b). "Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.... Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Fed.R.Civ.P. 26(b)(1). "For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action." Id.

II. Analysis

A. Subpoenas to Creditors

The parties' dispute concerns defendant's requests for eight categories of documents from plaintiffs' creditors.[1] The documents sought are to support defendant NCO's defense that it called plaintiffs to collect a debt on behalf of a creditor and had plaintiffs' prior express consent to be called. If defendant can prove that plaintiffs provided prior express consent to their creditors for the calls, then under the TCPA defendant is not liable as the third party collector. In re Rules & Regs. Implementing Tel. Consumer Prot. Act of 1991, FCC Declaratory Ruling No. 07-232, 23 FCC Rcd. 559 ¶10 ("Calls placed by a third party collector on behalf of that creditor are treated as if the creditor itself placed the call"). Whether there was prior express consent for the calls is "an affirmative defense for which the defendant bears the burden of proof." Grant v. Capital Mgmt. Servs., L.P., 449 Fed.Appx. 598, 600 n.1 (9th Cir. 2011). Thus, the documents sought are relevant to this litigation.

Plaintiffs object to defendant's discovery requests as overbroad, harassing, a fishing expedition, and an invasion of privacy. Plaintiffs' objections are overruled. By filing this TCPA case against defendant NCO, plaintiffs placed at issue their creditors' documentary evidence of prior express consent. Defendant proffers that such evidence of prior express consent is maintained by plaintiffs' creditors. Under the facts of this case, the bases for plaintiffs' objections are outweighed by the public interest of ascertainment of the truth in connection with legal proceedings. Defendant should be afforded the opportunity to obtain evidence of prior express consent to defend itself against liability.

Pursuant to binding precedent from the FCC, third party collectors are not liable under the TCPA if the consumer provided the relevant creditor with prior express consent for the call. See FCC Declaratory Ruling No. 07-232, 23 FCC Rcd. 559 ¶10; Van Patten v. Vertical Fitness Group, LLC, No. 12cv1614, 2014 WL 2116602, *6 (S.D. Cal. May 20, 2014) ("this Court is inclined to follow the many other cases that treat the FCC Orders as binding"). This precedent supports the proposition that defendant NCO may rely on any documents in the creditors' possession. See also Wills v. Optimum Outcomes, Inc., No. 13cv26, 2014 WL 220707, *4 (D. Utah Jan. 21, 2014).

Plaintiffs object to the timing of defendant's request, arguing defendant should already be in possession of its prior express consent evidence. However, there simply is no legal authority for the proposition that third party collectors must already be in possession of documents in order to use them for purposes of defending against a TCPA case. In fact, the FCC recognizes that "[t]he creditors are in the best position to have records kept in the usual course of business showing such consent." See FCC Declaratory Ruling No. 07-232, 23 FCC Rcd. 559 ¶10. Thus, here, discovery directed to the relevant creditors' own documentary evidence of prior express consent is highly relevant and appropriate.

Moreover, because the parties are governed by a protective order in this case, the Court concludes that plaintiffs' privacy rights will be adequately protected.

B. Subpoenas to Carriers

The parties' Joint Statement raises a discovery dispute over two categories of document requests included as part of the subpoenas ...


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