Case Detail
| Case Title | FRANK LLP v. CONSUMER FINANCIAL PROTECTION BUREAU | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| District | District of Columbia | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| City | Washington, DC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Case Number | 1:2016cv00670 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Date Filed | 2016-04-08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Date Closed | 2018-01-31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Judge | Judge Christopher R. Cooper | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plaintiff | FRANK LLP | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Case Description | Frank LLP, a law firm representing plaintiffs in a class action suit alleging unfair debt collection practices, submitted a FOIA request to the Consumer Financial Protection Bureau for records supporting the agency's statement that there were 35,000 lawsuits against Entity, the company the law firm was suing. The agency denied the request based on Exemption 4 (confidential business information). Frank LLP appealed the denial and the agency decided to abandon the Exemption 4 claim and withheld the records instead under Exemption 7(E) (investigative methods and techniques). Frank LLP filed a complaint with OGIS, but after OGIS told Frank LLP that CFPB declined to participate in mediation, the law firm filed suit. Complaint issues: Exemption 7(E) - Investigative methods or techniques, Litigation - Vaughn index, Litigation - Attorney's fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Defendant | CONSUMER FINANCIAL PROTECTION BUREAU | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Documents | Docket Complaint Complaint attachment 1 Complaint attachment 2 Complaint attachment 3 Complaint attachment 4 Complaint attachment 5 Complaint attachment 6 Complaint attachment 7 Complaint attachment 8 Complaint attachment 9 Complaint attachment 10 Complaint attachment 11 Complaint attachment 12 Complaint attachment 13 Opinion/Order [29] FOIA Project Annotation: Judge Christopher Cooper has ruled that the Consumer Financial Protection Bureau properly responded to two FOIA requests from the law firm Frank LLP, which specialized in consumer class action suits, pertaining to an enforcement action against Encore Capital Group â€" one of the largest purchasers and collectors of consumer debt â€" by withholding records under Exemption 5 (privileges) and Exemption 7(E) (investigative methods and techniques) in response to Frank's first request and because Frank failed to exhaust its administrative remedies by not committing to pay fees for the second request. Cooper also found that Frank had standing to challenge CFPB's FOIA policies regarding its interpretation of Exemption 4 (confidential business information) and Exemption 8 (bank examination reports) and that while the agency's definition of a financial institution was appropriate under Exemption 8, its presumption that records were voluntarily submitted in response to a civil investigative demand issued by the agency was invalid because it was contrary to case law interpreting the meaning of what constituted a voluntary submission for purposes of Exemption 4. After CFPB filed a consent order finding that Encore Capital Group had filed misleading affidavits in hundreds of thousands of cases claiming ownership of debt without having substantiated those claims, citing 36,000 consumers who had paid debts after Encore filed such an affidavit, Frank submitted a FOIA request for records pertaining to the 36,000 identified consumers. The agency withheld the records entirely, claiming they were exempt under Exemption 4. Frank appealed. The agency upheld its decision to withhold the records entirely but claimed Exemption 7(E) instead of Exemption 4. Frank submitted a second FOIA request for records supporting the agency's finding in its consent order and compliance requirements imposed by that order. The agency again withheld all the records under Exemption 4 and Exemption 7(E) but added Exemption 8 as well. This time, the agency granted Frank's appeal, remanding for a better explanation of whether or not the records were segregable. Frank argued that the investigative techniques involved self-identifying the number of cases in which Encore filed an improper affidavit. Cooper noted, however, that the technique was "not so obvious," and pointed out that "if it were disclosed, targets of the Bureau's investigations might be able to complicate enforcement, if not outright evade it. The technique is admittedly not proprietary or especially complex. But, again, an agency is justified in withholding records based on a mere 'chance of a reasonably expected risk' of circumvention." Frank challenged the agency's claim that attorney's notes were privileged because they did not reflect mental impressions and were prepared for settlement, not litigation. Cooper rejected both claims. He indicated that while there was a distinction in discovery between fact and opinion work product, "there is no such fact-opinion distinction for purpose of Exemption 5" because work product materials would not routinely or normally be disclosed during discovery. As to the settlement/litigation distinction, Cooper observed that "at the time the notes were taken, the Bureau was investigating Encore's alleged violations of several statutes. . .[H]ad settlement discussions been unproductive [the agency] may have challenged Encore's practices in court." Cooper agreed with the agency that Frank had not yet committed to paying fees for its second request after remand from its initial appeal. The agency had indicated the existence of 48,000 pages of potentially responsive records and told Frank it would need to pay half of the estimated $52,603 fee upfront. Frank argued that since the agency had upheld some of its exemption claims as a result of its appeal it should be entitled to pursue judicial relief. Cooper, however, noted that "but to the extent that aspects of the Bureau's appellate determinations are unfavorable, it is only because they might foreshadow a denial of Frank's request on remand. Nothing in the determination itself is adverse in the sense relevant to judicial review under FOIA." Frank also argued CFPB had waived its right to collect fees when it did not charge for the initial processing of the request. Cooper found the agency's decision not to charge fees initially had no effect on its ability to charge future fees. He pointed out that "as a practical matter, the fees associated with reviewing Frank's initial request were likely negligible compared with the potential costs of review on remand, given that the Bureau's initial review resulted in a blanket denial under three FOIA Exemptions and its review on remand must involve a document-by-document segregability analysis." Cooper concluded that Frank had standing to challenge the agency's Exemption 4 and Exemption 8 policies because it was likely to continue to request information from the agency that fell within those exemptions. Finding the case law contradicted the agency's position on voluntary submissions, Cooper noted that "the D.C. Circuit has held that voluntariness does not turn on the recipient's perception of whether it must comply with the demand â€" it instead turns on the agency's power to induce compliance." He added that "if an agency has statutory authority to get a court order, its ability to obtain the information is not in jeopardy regardless of whether a court order has yet issued its order." Frank also challenged the agency's Exemption 8 policy interpreting "financial institution" to cover entities that buy and collect on debts. Rejecting Frank's claim, Cooper observed that "debt collectors â€" as a link in the credit-management chain â€" fit comfortably within the scope [of Exemption 8]."
Issues: Exemption 7(E) - Investigative methods or techniques, Exemption 5 - Privileges, Exemption 4 - Impairment of agency, Exemption 8 - Financial institution, Litigation - Jurisdiction - Failure to Exhaust | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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