Consumer Finance Litigation

Claims under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, et seq., which prohibits, among other things, companies from calling an individual's cell phone without prior consent, often involve discovery requests for call logs and call reports. Recently, a California federal court held that a defendant may be required to produce this information even in the pre-certification stages of a class action suit. In a recent case, Knutson v. Schwan's Home Service, Inc., No. 12-cv-964-GPC, 2013 WL 1222116 (S.D. Cal. Mar. 25, 2013), the parties filed a document entitled "Joint Motion for Determination of Discovery Dispute," to determine whether certain Requests for Production and Interrogatories were proper at the pre-certification stages. Prior to class certification, plaintiffs are entitled to discovery that could reasonably lead to information regarding the number of potential class members, the existence of common questions, typicality of claims, and the representative's ability to represent the class. However, defendants are often reluctant to undertake the substantial costs of discovery in the preliminary stages of class action. The plaintiffs in Knutson argued that the defendant should be compelled to produce its outbound dial lists and call reports for the dial lists. The defendant responded that such discovery is irrelevant in the pre-certification stage of a class action, and that it would be unduly burdensome to produce the requested information. The Court held in favor of the plaintiffs, finding that the dial lists and reports "will illuminate issues such as the number and ascertainability of potential class members, typicality of their claims, and whether common questions of law or fact exist." The Court explained that access to call logs may be helpful to plaintiffs in preparing their motion for class certification. Clients who face TCPA class actions should not take lightly the potential expenses that they may now be required to undertake in the early stages of class action suits. In Knutson, the plaintiffs requested information on about four million phone calls, many of which were made to landlines. The plaintiffs stated that they have a consulting group that would review the dial lists and determine the number of calls that are actionable. The cost and length of this review process was not provided. On top of the requests for call lists and reports, the plaintiffs requested information substantiating the defendant's defense of "prior express consent." In response, the defendant informed the Court that its almost four million customers consented to receiving phone calls in numerous ways, including email and phone calls, its website, and verbally to its door-to-door sales representatives, and that compiling this information would be extremely burdensome and unnecessary at the pre-certification stages of a class action suit. The court acknowledged that producing such a large volume of information requested is burdensome, but still required the defendant to produce its electronic recordings of each customer's manner of consenting to prerecorded phone calls. With respect to records kept prior to the defendant's implementation of an electronic recording system, the Court required the defendant to allow plaintiffs to use a sampling procedure that would provide sufficient information for the plaintiffs' class certification memo. In conclusion, the Court reasoned that the likely benefit of production outweighs the burden of producing the material. Unfortunately for companies who face TCPA class action suits, this holding may lead to substantial discovery expenses in the preliminary stages of litigation. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.