TCPA lawsuit requires massive amount of financial information

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Imagine you are a TCPA corporate defendant who is required to provide an HUGE amount of information regarding your company’s financial affairs to the other party, very early in the case – none of which is likely commensurate with the needs of the party. ‘affair.

Well, in Powell v. H&R AccountsInc No. 7:22-cv-1052-TMC, 2022 WL 16859774 (DSC November 10, 2022), the court found that the defendant had failed to meet its burden of establishing that a protective order was appropriate here – leaving the defendant company — H&R — to testify on the following matters:

  • Defendant’s sharing of resources, facilities or employees with Meduit, or the extent to which Defendant and Meduit have, or have had, common resources, facilities or employees.

  • Contracts or agreements between Defendant and Meduit regarding Defendant’s appeals practices, including any amendments or addenda.

  • Each transfer or exchange of cash from defendant to Meduit or a bank account associated with Meduit.

  • Each transfer or exchange of cash from Meduit to Defendant or to a bank account associated with Defendant.

  • The total amount of cash transferred from Meduit to Defendant – or a bank account associated with Defendant.

  • The total amount of cash transferred from the defendant to Meduit or a bank account associated with Meduit.

  • Whether the cash transfers identified in Topics 52 and 53 were (1) transferred for the payment of shared expenses; (2) transferred for the payment of a debt; or (3) transfer of retained earnings or profit sharing.

YIKES!

Going back to how Defendant got here: Plaintiff Powell filed a TCPA class action lawsuit against Defendant H&R Accounts, Inc. and later amended its complaint to Meduit Group, LLC, alleging that Meduit is the parent company of H&R . Powell claims that Meduit was vicariously liable for the calls at issue made by H&R. (Interesting choice on the part of H&R not to oppose the motion to amend the complaint).

Powell served notice of deposition under Rule 30(b)(6) on H&R including 54 topics — and the above 11 topics that relate to Meduit. FRCP Rules 30(b)(6) allow a party to see a company’s filing, but the notice must describe in reasonable detail the matters to be considered. The company “must then designate one or more officers, directors or management agents, or designate other persons who consent to testify on its behalf; and may set out the issues on which each named person will testify. Fed. A. Civil. P.30(b)(6). Additionally, Rule 30(b)(6) states that the person designated by the company “shall testify to information known or reasonably available to the organization.” The intent and nature of this rule is to designate a corporate witness who will take reasonable steps to acquire and testify to corporate information.

H&R initially objected to having its 30(b)(6) Designated Person testify to information held by Meduit and subpoenaed to the authority suggesting “discovery requests to a subsidiary about its company mother [company] are inappropriate because the subsidiary does not control the parent company. The Powell court quickly dismissed that argument and noted that the authority H&R relied on involved a situation in which the subsidiary did not have control of the information sought, but its parent company did. H&R did not state that it did not have access to or control over the information sought and noted that H&R’s designee only had to testify regarding “information known or reasonably available to the organization”,

Next, H&R argued that Meduit’s deposition topics were not commensurate with Powell’s litigation needs. H&R argued that because it intends to file a motion to dismiss the Amended Meduit Complaint for failure to report, the notice to Mediuit is not commensurate with what is in dispute. The court cut short of this argument, deeming it premature and speculative. (Again, why didn’t H&R object to the motion before the court granted Powell leave to amend?).

Finally, H&R argued that the following subjects of Meduit’s deposition were “not even minimally relevant” and did not relate to the establishment of Meduit’s control over H&R for purposes of vicarious liability:

In response, Powell argued that vicarious liability under the TCPA is governed by the federal common law of mandate and that these subjects are seeking information under H&R’s control regarding the relationship between H&R and Meduit, regarding H&R’s calling practices.

Agreeing with Powell, the court held that the subjects in question were looking for relevant information that is reasonably calculated lead to the discovery of admissible evidence.

Therefore, H&R is obliged to provide information as massively overbroadly requested above regarding its financial dealings with Meduit.

As all defense attorneys at the TCPA group know, one of the plaintiff bar’s most common tactics is to serve boilerplate demands that are too broad to pressure defendants into settling. That’s why it’s so important to take discovery requests seriously and craft appropriate non-standard objections that specifically address each topic’s appeal.

The Powell case is another reminder that practicing strategic movement and asserting well-worded objections is A MUST in defeating TCPA class actions and that poor defense strategy can derail the course of litigation.

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