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Debt Collector NAFS Ordered to Turn Over Information and Fined $5,000

A federal district court ordered debt collector National Action Finance Services to turn over information regarding in telephone collections practices, and sanctioned the collection agency $5,000, for not having done it sooner. Kane v. National Action Finance Service, 2012 U.S. Dist. LEXIS 66219 (E.D. MI 2012). While the Michigan decision is not controlling on a California federal court, it is persuasive to federal courts within California.

Michael Kane, a consumer, filed a class action against National Action Finance Services, Inc. (NAFS), for allegedly violating the Fair Debt Collection Practices Act by engaging in conduct the natural consequence which is to harass and abuse (15 U.S.C. 1692d), and violating the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq., when it his cell phone "several hundred" times. Apparently, NAFS was attempting to contact the unrelated Ms. Seana Barlett to collect a debt she owed to Blockbuster Video.

The consumer filed a motion to have the court compel NAFS to answer certain discovery requests it refused to answer. The Court provided this summary of the interrogatories and Request for Production of Documents that Plaintiff stated NAFS failed to answer.

• Interrogatory #1-1 seeks information about any phone numbers NAFS may have removed from its collection calling system because the phone number had no relationship to the person from whom NAFS was attempting to collect the debt.

• Interrogatory #1-2 generally asks NAFS to identify those individuals who have knowledge or facts or opinions about the events or allegations related to the lawsuit.

• Interrogatory #1-3 requests NAFS to identify the origin of the documents NAFS will produce and the means by which NAFS produced the document. The interrogatory also requests NAFS to identify the system administrator responsible for maintaining the document storage systems and those persons who retrieved the documents.

• Interrogatory #1-4 asks NAFS to identify manuals, memoranda, bulletins, and publications that NAFS used to formulate, maintain, or enforce NAFS's policies, procedures, and practices concerning TCPA compliance.

• Interrogatory #1-5 asks NAFS to identify any lawsuits, judgments, and settlements that it has been involved in regarding violations of the TCPA and/or the Michigan Consumer Protection Act.

• Interrogatory #1-6 asks NAFS to identify any third parties to which it may have outsourced services relating to the telephone system, artificial recording, or pre recorded messaging services NAFS used.

• Interrogatory #1-7 asks NAFS to describe the business rules it used to initiate calls from its autodialer system.

• Interrogatory #1-8 asks NAFS to identify each person responsible for formulating, supervising, or enforcing NAFS's policies, procedures, and practices concerning TCPA compliance.

• Interrogatory #2-1 asks NAFS to identify and describe each and every communication from it to Plaintiff.

• Interrogatory #2-2 requests more information regarding NAFS's contact with Plaintiff.

• Interrogatory #2-3 requests the source of information about Plaintiff's phone number.

• Interrogatory #2-4 asks NAFS to identify informationabout the underlying account holder about which Plaintiff was contacted and the information about the original creditor for the account.

• Plaintiff's first Request for Production of Documents (RPD) generally request: information about NAFS's TCPA related policies, phone calling programs and systems, and any former law suits, settlements, or complaints related to TCPA violations.

• Plaintiff's second RPD generally request information related to Plaintiff, his account, and the circumstances surrounding the calls made to Plaintiff's cell phone. The second RPD also seek policies and manuals related to the circumstances of the complaint, and information generally related to the FDCPA and any violation thereof.

The Court disagreed with NAFS and its position in several respects. The Court first found that there was no reason why NAFS could not have answered the interrogatories or objected to them. On that failure alone, the court said, it based its decision to grant the motions to compel and award costs and fees. The court also stated, "NAFS should have objected to the requests and then should have moved for a protective order pursuant to Rule 26. NAFS's failure to do so has delayed this litigation and was improper. Even if NAFS felt as if it could not have responded to the discovery requests without violating law, NAFS should have stated so and then moved for a protective order. Instead, NAFS did nothing. The Court will not condone such inactivity."

Finally, the court held: "NAFS did not answer the discovery requests, did not make any objections to the discovery requests, and did not file a motion for a protective order. A party cannot just sit and wait. The Court therefore awards Plaintiff $2,500.00 for each motion—$5,000.00 total. Payment should be made within 10 days."