District Court (Cal.) Allows Debt Collector to Subpoena Debtor’s Creditors to Establish TCPA Consent Given to Creditors

In Molnar v. NCO Financial Systems, Inc., 2014 WL 3371414 (S.D.Cal. 2014), Magistrate Judge Burkhardt allowed subpoenas to go forward issued by a TCPA defendant to the class Plaintiff’s creditors and telephone carriers.

The parties’ dispute concerns defendant’s requests for eight categories of documents from plaintiffs’ creditors.FN1 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).

The Magistrate Judge also allowed discovery into Plaintiff’s phone records, including calls from others besides the Defendant.

The second category of documents in dispute concerns “any and all [call] records for the account(s) related to telephone number(s) 415–[# ]–[] and 415–[# ][] from January 1, 2010 to present.” Defendant argues that these documents are relevant as they were identified by plaintiffs in their initial disclosures. Further, defendant argues they have the potential to show the extent of damages, whether plaintiffs were forwarding calls, whether calls were received from NCO telephone numbers, and whether the calls at issue ever connected such that they amount to the making of a call under the TCPA. Plaintiffs object on relevance grounds, arguing only calls from NCO are relevant, and the documents requested would disclose irrelevant information, including records of all calls to and from doctors, lawyers, family or friends. Plaintiffs propose that defendant provide all telephone numbers used by defendant so that plaintiffs might redact all other calls from the telephone records before providing a redacted copy of the records to defendant. At the hearing, the Court indicated that if plaintiffs were allowed to redact telephone call records and only produce the calls plaintiffs believe to be actionable calls placed by defendant, plaintiffs would be limited in their proof at trial to those calls appearing on the redacted call documents. Plaintiffs were not amenable to this limitation. Plaintiffs’ position was that they should be allowed to provide defendant with redacted telephone records (in lieu of a third party subpoena to the service provider), while reserving the right to argue that defendant has legal liability for calls plaintiffs allege were placed, but which might not appear on the redacted telephone records.  The Court agrees that in this TCPA case calls to and from uninvolved parties such as doctors, lawyers, family or friends would be irrelevant. However, at oral argument, plaintiffs’ counsel indicated that plaintiffs may seek to hold defendant liable for calls made to plaintiffs that do not appear on plaintiffs’ telephone records. Under these circumstances, plaintiffs’ relevancy objection is overruled. Defendant is entitled to complete and unredacted telephone records to determine whether or not the calls plaintiffs ascribe to NCO appear in telephone records. To the extent that any privacy right exists over these records, defendant’s need for the records in presenting a defense in this action outweighs any privacy right possessed by plaintiffs. See Mintz v. Mark Bartelstein & Associates, Inc., 885 F.Supp.2d 987, 1001 (C.D.Cal.2012) ( “[T]he disclosure of telephone numbers, as well as the date, time, and duration of calls does not represent a significant intrusion of Plaintiff’s privacy.”) (citing cases). Further, the protective order in this case should protect plaintiffs’ privacy rights.