Court faults both sides for discovery stall in consumer case

LOS ANGELES -- Discovery in a case where a law firm is accused of defrauding consumers has stalled, and the federal magistrate judge presiding over the case faults both sides.

In a hearing Tuesday, U.S. Magistrate Judge John E. McDermott gave counsel a week to file supplemental briefs regarding a pending defense motion for a protective order.

Vincent D. Howard, whom the Consumer Financial Protection Bureau has accused along with other attorneys at Howard Law PC of collecting millions of dollars of unlawful fees from consumers in a debt relief scheme, filed a motion for a protective order in July predicated on his inability to access emails requested by opposing counsel. Consumer Financial Protection Bureau v. Vincent Howard et al., 17-cv-00161 (C.D. Cal., filed Jan. 30, 2017).

In June, the court ordered the emails from Howard and six other attorneys from the firm be produced by July 13.

According to Enforcement Attorney Jan Singelmann, representing the bureau, since then fewer than 100 emails from two of the attorneys named as defendants have been produced, preventing the plaintiff from conducting depositions because of a lack of context.

But McDermott said both parties missed opportunities to move the needle.

"I would have expected Mr. Howard to file a motion for relief from the June 21 order. I would have expected the bureau to file a motion to compel or a motion for sanctions," McDermott said. "Instead I'm left adrift here without a clear path forward."

In his motion, Howard, who is representing himself in the suit, claims he and his attorneys hired consultants to determine the "precise parameters and approximate expenses" for producing the emails ordered due by the July 7 deadline. Those consultants, according to the brief, offered a declaration that the search and production of the emails would be "cost-prohibitive and unaffordable by defendants" because they are inactive and stored on remote backup media.

Howard told the court on Tuesday he felt the motion for a protective order shifting costs to the plaintiff would provide the same signal as a motion for relief from the June order, but McDermott refuted him saying, "No reasonable lawyer would let that deadline slip without filing a motion for relief."

Singelmann has insisted in his opposition brief and in court the emails are accessible and the defendants have always been aware of their costs.

"The bureau is not a source of unlimited funds at the end of the day either," Singelmann told the magistrate judge. "These are taxpayer funds that would be paying for Mr. Howard's defense."

But the issue of accessibility wasn't of interest to McDermott, who said the point would be moot if the defendant did not have the means to produce them. He suggested Singelmann conduct additional discovery, such as finding its own expert who can attest to the accessibility of the documents, rather than relying on case law to persuade the court to deny the motion.

"Is the record fully developed for court to make an intelligent and informed decision?" the judge pressed the attorney. "I'm giving you an opportunity to backstop your claims in your opposition brief."

McDermott told the sides to meet and confer before filing their supplemental briefs. He suggested they discuss the most direct way through the "log jam," which would entail Howard handing over the physical backup media and having the government "do the work."

"I can put all kinds of restrictions on the files if you turn them over," McDermott told Howard, explaining how Singelmann would be under judicial order to return anything that appears to be protected by attorney-client privilege and restricted as to how the emails, if he is able to access them, would be used.

"If we do reach a point where there's an order outstanding and you maintain that you're not going to turn the stuff over, you're going to expose yourself and all defendants to potentially lethal sanctions, and I'll be entirely in a position to impose them," McDermott warned.

Howard, who put himself in a corner by stating just moments earlier that he has "nothing to hide" in his emails and he "would love to turn them over," said he'd be open to hearing how the bureau would go about protecting privileged emails and what safeguards they would employ.

Singelmann said the bureau is open to the court's suggestion and that the bureau has handled similar orders in other litigation, though he did not personally know the full details of how information was safeguarded.