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Consumer Financial Protection Bureau v. Source for Public Data, LP

United States District Court, N.D. Texas, Dallas Division

June 6, 2017

CONSUMER FINANCIAL PROTECTION BUREAU, Petitioner,
v.
THE SOURCE FOR PUBLIC DATA, LP, Respondent.

          MEMORANDUM OPINION AND ORDER

          DAVID L. HORAN UNITED STATES MAGISTRATE JUDGE.

         The Consumer Financial Protection Bureau has filed a Petition to Enforce Civil Investigative Demand. See Dkt. No. 1. Senior United States District Judge A. Joe Fish referred this petition to the undersigned United States magistrate judge for determination under 28 U.S.C. § 636(b). See Dkt. No. 5.

         As the petition explains,

[o]n January 5, 2017, the Consumer Financial Protection Bureau (Bureau) issued a civil investigative demand (CID) to The Source for Public Data, L.P. (Public Data). The CID was issued as part of a nonpublic investigation to determine whether consumer reporting agencies, persons using consumer reports, or other persons have engaged or are engaging in unlawful acts and practices in connection with the provision or use of public records information in violation of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq., Regulation V, 12 C.F.R. Part 1022, or any other federal consumer financial law. The CID required Public Data to produce documents and provide answers to interrogatories and a written report by February 16, 2017.
On January 25, 2017, pursuant to the Bureau's rules, Public Data filed a petition to set aside or modify its CID. The Bureau denied the petition on February 14, 2017, and the Bureau served the order on Public Data on February 16, 2017. That order directed Public Data to comply with the CID within 10 calendar days. The order also invited Public Data to engage in further discussions with Bureau staff about modifying the CID.
Public Data has not complied with the CID. Accordingly, the Bureau petitions this Court for an order requiring Public Data to comply with its CID.

Dkt. 1 at 1-2. More specifically, the Bureau's petition asks the Court to enter “[a]n order directing Public Data to show cause why it should not be required to comply with the CID” and, “[a]fter Public Data's response to the order to show cause, an order directing Public Data to comply with the CID within ten days of the order or at a later date as may be established by the Court or the Bureau.” Id. at 3; see also Dkt. No. 2 at 5-6.

         “In support of this petition, the Bureau has filed a memorandum of law with exhibits [Dkt. No. 2], including the Declaration of Erin Mary Kelly, ” who is “an Enforcement Attorney in the Consumer Financial Protection Bureau's (Bureau) Office of Enforcement” and “the lead attorney on an investigation to determine whether consumer reporting agencies, persons using consumer reports, or other persons have engaged or are engaging in unlawful acts and practices in connection with the provision or use of public records information in violation of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq., Regulation V, 12 C.F.R. Part 1022, or any other ‘Federal consumer financial law' as defined by 12 U.S.C. § 5481(14).” Dkt. No. 2-1 at 1.

         The Court issued an Order to Show Cause, and Public Data filed a response, see Dkt. No. 15, and a notice of supplemental authority in support of its opposition to the petition, see Dkt. No. 17, and the Bureau has filed a reply, see Dkt. No. 16.

         The Court held a show cause hearing on April 26, 2017, at which the Bureau's counsel and Public Data's counsel appeared. See Dkt. Nos. 20, 24.

         After the hearing, the Bureau filed a Notice of Supplemental Authority. See Dkt. No. 21. Public Data filed a response, see Dkt. No. 22, and the Bureau filed a reply, see Dkt. No. 23. The Bureau subsequently filed a Second Notice of Supplemental Authority. See Dkt. No. 25.

         For the reasons and to the extent explained below, the Court GRANTS the Bureau's Petition to Enforce Civil Investigative Demand [Dkt. No. 1].

         Background

         The Bureau's petition explains that

[o]n January 5, 2017, the Bureau issued a CID to Public Data, a company that purchases or obtains public records from governmental entities and provides its users with access to these records via an internet website for a fee. The Bureau issued the CID as part of its investigation into possible violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., Regulation V, 12 C.F.R. Part 1022, or any other federal consumer-financial laws. The CID requires Public Data to respond to fifteen document requests, fourteen interrogatories, and one written-report request.
On January 25, 2017, Public Data petitioned the Bureau to set aside the CID (Petition). The Bureau denied the Petition on February 14, 2017, issuing an order that directed Public Data to produce “all responsive documents, items, and information within its possession, custody, or control that are covered by the CID” within 10 days. The order also invited Public Data to engage in further discussions with Bureau staff about modifying the CID. The Bureau served the order on Public Data on February 16, 2017.
Public Data has not responded to any of the CID requests. On March 6, 2017, Bureau counsel conferred with counsel for Public Data, Keith Barnett of Troutman Sanders, LLP. Counsel stated that Public Data did not intend to comply with the Bureau's CID. As of March 6, 2017, Public Data has not complied with the CID. ....
The law is well-settled that administrative agencies should be given wide latitude in exercising their power to investigate by subpoena, including investigating by CID. It is also well-settled that the requirements for judicial enforcement are minimal. As a general rule, courts will enforce an administrative subpoena if (1) the subpoena is within the statutory authority of the agency, (2) the information sought is reasonably relevant, and (3) the demand is not unreasonably broad or burdensome. These three criteria are readily met here.

Dkt. No. 2 at 2, 3 (footnotes omitted).

         The Bureau asserts that

[t]he Consumer Financial Protection Act of 2010 (CFPA) gives the Bureau authority to issue CIDs and to enforce them in federal district court. CIDs are a type of investigative, administrative subpoena. The Bureau may initiate a proceeding to enforce a CID by filing a petition to the federal district court where the CID recipient “resides, is found, or transacts business” for an order to enforce the CID. Because the Bureau has authority to issue the CID, and the Court has authority to enforce it, the Bureau respectfully requests that this Court order Public Data to show cause as to why it should not be required to comply with the CID and, thereafter, enter an order requiring compliance.
....
[T]he CID falls squarely within the Bureau's authority. The CFPA broadly authorizes the Bureau to investigate violations of federal consumer-financial laws, including the Fair Credit Reporting Act and Regulation V, and to issue a CID to “any person” the Bureau “has reason to believe ... may be in possession, custody, or control of ... any information, relevant to a violation.” Here, the Bureau followed all applicable procedural requirements for the issuance of a CID. The CID was issued by a Deputy Assistant Director of the Office of Enforcement and included a Notification of Purpose advising Public Data of the nature of the conduct being investigated. The CID was served by a Bureau investigator on Public Data's registered agent via certified U.S. Mail, return receipt requested. The CID seeks information to determine whether consumer reporting agencies, persons using consumer reports, or other persons have engaged or are engaging in unlawful acts and practices in connection with the provision or use of public records information in violation of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq., Regulation V, 12 C.F.R. Part 1022, or any other federal consumer financial law. Such an investigation is plainly an acceptable use of the Bureau's authority under the CFPA. Moreover, it is well-settled that “agencies should remain free to determine, in the first instance, the scope of their own jurisdiction when issuing investigative subpoenas.” An agency such as the Bureau “has a power of inquisition ... [and] can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.”
Second, the information the Bureau seeks is relevant and material to its investigation. Courts traditionally give wide latitude in determining relevance in the context of an administrative subpoena, which must be enforced if the information sought could be pertinent to a legitimate agency inquiry. An agency request is relevant as long as it is “not plainly incompetent or irrelevant to any lawful purpose” of the agency. Here, the Bureau seeks materials as part of its investigation into whether the FCRA, Regulation V, and other federal consumer-financial laws have been violated in connection with the provision or use of public records information. Each request in the CID relates to Public Data's role in use or provision of public records. The information the Bureau seeks is relevant and material to the Bureau's inquiry into whether the laws the Bureau enforces have been violated in connection with the provision or use of public records information. Among other information, the Bureau has requested information about Public Data's: operations and structure; the products and services it offers; form contracts with its users; policies and procedures; data collection relating to the use or provision of public records information; databases and systems used in the provision of public records information; and information regarding consumer disputes about public records information.
Finally, the CID is not overly broad or unduly burdensome. The Bureau met with Public Data on January 17, 2017 for a meet-and-confer to discuss any possible modifications to the CID. Public Data did not make any specific requests to modify the requests, nor did it claim that the CID was overly burdensome. The Bureau fashioned the requests specifically to determine whether consumer reporting agencies, persons using consumer reports, or other persons may have violated the FCRA or other federal consumer-financial laws. The Bureau focused the requests on materials that should be readily producible and Public Data does not contend otherwise. Further, when the Bureau Director denied Public Data's Petition to Modify the CID, the order ...

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