Fed. Trade Comm'n v. AMG Servs., Inc.
| Decision Date | 28 January 2014 |
| Docket Number | 2:12-cv-00536-GMN-VCF |
| Parties | FEDERAL TRADE COMMISSION, Plaintiff, v. AMG SERVICES, INC., et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
(Defendants' Rule 56(c) Objections (#498);
Motion to Exclude Evidence #502))
The Federal Trade Commission commenced this civil enforcement action regarding the offer and sale of "high-fee, short-term payday loans." Before the court are the Lending Defendants' Rule 56(c)(2) objections (#498) and motion to exclude untimely disclosed witnesses (#502). Defendant Troy L. LittleAxe filed joinders (#496, #504). The Federal Trade Commission filed an opposition (#517); and the Lending Defendants replied (#527). For the reasons discussed below, Defendants motions are granted in part and denied in part.
This action is predicated on "thousands"2 of complaints by short-term borrowers and former employees of the short-term lenders. The complaints were submitted to the Federal Trade Commission, the Better Business Bureau, and various state-run consumer protection agencies. (See Pl.'s Opp'n (#517) at 15:13-14). The Federal Trade Commission ("FTC") initiated an investigation and filed suit on April 2, 2012 against ten Indian-chartered loan companies and their affiliates. . In pertinent part, the FTC's complaint alleges that Defendants violated the Federal Trade Commission Act, 15U.S.C. § 45(a), and the Truth in Lending Act, 15 U.S.C. § 1601, by misrepresenting the terms on which credit was extended to "millions" of short-term borrowers. .
Discovery is now closed. On December 3, 2013, the parties moved for summary judgment. ; . The FTC's motion for summary judgment relies heavily on some of the statements contained in the "thousands" of complaints. (See, e.g., Pl.'s Mot. (#456) at 19). In the motions before the court, Defendants contend that the statements in the complaints were (1) disclosed in violation of Federal Rule of Civil Procedure 26(a) and (2) contain hearsay evidence in violation of Federal Rule of Evidence 802. (See Def.'s Objections (#498) at 1:2); (Def.'s Mot. to Exclude (#502) at 1:1); (Def.'s Joinder (#504) at 2:8-9). Because of these alleged violations, Defendants ask the court to exclude the complaints from its analysis of the FTC's motion for summary judgment. (Id. at 2:17).
For purposes of Defendants' motions, the relevant facts include: (1) the FTC's complaint and motion for a preliminary injunction; (2) the FTC's initial disclosures; (3) Defendants' depositions of three of its former employees identified in the FTC's initial disclosures; (4) Defendants' depositions of four consumer-witness declarants identified in the FTC's initial disclosures; and (5) the FTC's motion for summary judgment. Each set of facts is discussed below.
On April 2, 2012, the FTC filed suit and moved for a preliminary injunction. ; . In support of the FTC's complaint and its motion for preliminary injunction, the FTC relied on various declarations by consumer-witness declarants.
For instance, the FTC's original and operative complaints state: "Defendants told a consumer who borrowed $300 from Defendants on or about September 7, 2010 that her loan would be due on September 24, 2010, her finance charge would be $90, her APR would be 684.38%, and her "Total ofPayments" would be $390." (Compl. (#1) at ¶ 35); (repeating the allegation). The complaints further allege that, in this instance, the actual cost of the loan amounted to $975. (Compl. (#1) at ¶ 39); .
Declarations filed in support of the FTC's motion for a preliminary injunction contain the same allegations. For instance, one declaration reads: "After filing out a loan application online, I received an email from [Defendants] saying I had been approved for a loan of $400 with a total payback of $520." (Vanderhoof Decl. (#493-23) at ¶ 3). The declaration further alleges that the actual cost of the loan amounted to $1,295 (Id. at ¶ 14). The FTC's motion for a preliminary injunction cited approximately twenty three similar declarations by consumer witnesses. .
Between April 2, 2012 and December 27, 2012, the parties filed multiple orders to extend or stay the briefing schedule on the FTC's motion for a preliminary injunction. (See, e.g., Mot. to Extend #51), (Joint Mot. to Stay #273). The FTC continued to rely on the consumer-witness declarations to support its allegations throughout this time. (See, e.g., Pl.'s Reply (#285) at 5).
On December 20, 2012, the parties entered a stipulation regarding the preliminary injunction, which the Honorable Gloria M. Navarro, Chief U.S. District Court Judge, entered the same day. .
While the parties litigated the FTC's motion for a preliminary injunction, discovery began. On July 19, 2012, the FTC served initial disclosures on Defendants. (See Pl.'s Initial Disclosures (#493-97) at 1-6). Pursuant to Federal Rule of Civil Procedure 26(a)(1)(A)(i), the FTC identified the name and address of nine former employees of the Defendants, who the FTC intended to use as witnesses to support its complaint. (Id. at 2-3).
Also, pursuant to Rule 26(a)(1)(A)(i), the FTC disclosed the name and address of nineteen consumer-witness declarants who the FTC intended to use to support its claims. (See id. at 1-2). The nineteen consumer-witness declarants that the FTC identified in its initial disclosure were taken from the twenty three consumer-witness declarants on whom the FTC predicated its motion for a preliminary injunction. (See id.); .
Additionally, pursuant to Rule 26(a)(1)(A)(ii), the FTC disclosed "a description" of documents it intended to use to support its claims. (See id. at 4:14-17). In pertinent part, the FTC stated that it intended to use "Consumer complaints regarding Defendants." (Id. at 4:24).
On February 14, 2013, the FTC produced all "consumer complaints regarding Defendants" that the FTC identified in its initial disclosure. (Singhvi Decl. (#517-1) at ¶ 1) (citing Singhvi Email (#517-2) at 1). The consumer complaints were produced in a searchable and sortable spreadsheet format, which included the consumers' names, addresses, phone numbers, and emails. (Id.) There were "thousands" of consumer complaints.3
On February 15, 2013, Defendants subpoenaed the nineteen consumer-witness declarants that the FTC used in its complaint and identified in its motion for a preliminary injunction and initial disclosure. (Def.'s Objections (#498) at 3:12-15) (citing Notice of Subpoenas (#493-86, #493-87)). In response to Defendants' subpoenas, the FTC emailed Defendants on February 19, 2013. (See Def.'s Objections (#498) at 3:14-16) (citing Singhvi Email (#493-92) at 2). In pertinent part, the FTC stated:
[T]he FTC has no intention of using all of its initial 19 or so consumer declarants going forward. That being the case, [Defense Counsel] and I discussed the possibility that the number of subpoenas and their scope might be significantly reduced once the FTC identifies the narrower universe of consumer witnesses (perhaps 5 or 6) upon which it will rely, forsaking all other declarations for all purposes.
(Singhvi Email (#493-92) at 2).
On February 21, 2013, the FTC sent Defendants a corrected version of the database containing the thousands of consumer complaints. (Singhvi Decl. (#517-1) at ¶ 2) (citing Singhvi Email (#517-3) at 1).
On March 7, 2013, the FTC served its third amended initial disclosures. . In pertinent part, the third amended disclosures increased the number of former employees, whom the FTC intended to use as witnesses, to twelve. (Id. at 2-3).
The third amended disclosures also eliminated fourteen of the original nineteen consumer-witness declarants who the FTC intended to use as witnesses to support its claims. (See id. at 1-2). However, the third amended initial disclosures still listed "Consumer complaints regarding Defendants" under the heading of "Documents" that the FTC intended to use to support its claims. (See id. at 4:20).
On June 25, 2013, the FTC answered Defendants first and second set of interrogatories. (Pl.'s Resp. (#93-49) at 1-35). In response to Defendants' first interrogatory, which asked the FTC to identify "each material fact" supporting the FTC's allegation that Defendants "misrepresented" their loan terms, the FTC objected to the question and identified statements from Defendants' website and the loan note and disclosure, but not statements in the consumer-complaint database. (See id. at 5-9).
On August 6, 2013, the FTC served its fifth amended initial disclosures. . In pertinent part, the fifth amended disclosures decreased the number of former employees, whom the FTC intended to use as witnesses, to eleven. (Id. at 2-3).
The fifth amended disclosures also eliminated fifteen of the original nineteen consumer-witness declarants who the FTC intended to use to support its claims. (See id. at 1-2). As a result of this amendment, the FTC's fifth amended initial disclosures—which is the operative disclosure document—state that the FTC will rely on four consumer-witness declarants to support its claims: (1) Kellye Sliger, (2) Angela Vanderhoof, (3) Walter Archer, and (4) Eric Barboza. (Id.)
The fifth amended initial disclosures still lists "Consumer complaints regarding Defendants" under the heading of "Documents" that the FTC intended to use to support its claims. (See id. at 4:20). Like the FTC's previous amended initial disclosures, the FTC's...
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