Lichter v. Bureau Of Accounts Control, Inc.

Background

Joseph Lichter brought a proposed class action against Bureau of Accounts Control, Inc. ("BAC Inc.") under the Fair Debt Collection Practices Act. The court previously granted Lichter summary judgment, finding that the defendant violated that law by mailing him a collection letter for a debt he did not owe. On November 2, 2021, the court ordered the defendant to pay Lichter $35,392.50 in attorneys’ fees, $750 in statutory damages, and $530 in costs.

After negotiations to resolve the judgment failed, Lichter served BAC Inc. with a subpoena seeking documents and a subpoena requiring a deposition. The defendant did not produce the documents, and P. Susan Perrotty did not appear for the deposition. On April 19, 2022, the court ordered the defendant to appear for the deposition and produce the requested documents. Lichter then served subpoenas that had been approved by the court.

For the first time in the litigation, BAC Inc.’s attorney asserted that BAC Inc. had been dissolved in 2015 and that the current company was BAC Services, Inc., doing business as Bureau of Account Control, Inc. Perrotty later stated that she was the principal member of BAC Services, LLC and had mistakenly believed that Lichter had sued that company. She also stated that BAC Services, LLC could not produce BAC Inc.’s records because BAC Inc. was not under its control and the records did not exist.

Legal standard and analysis

Under Federal Rule of Civil Procedure 45(g), a court may hold a person in contempt for failing, without an adequate excuse, to obey a subpoena or an order related to it. To obtain a contempt order, the moving party must show by clear and convincing evidence that the order was clear and unambiguous, that the alleged violation occurred, and that the alleged contemnor did not make a diligent effort to comply. The violation need not be willful.

The court found that its order was clear and unambiguous and that the defendant’s failure to produce any documents or provide a corporate representative for deposition established noncompliance by clear and convincing evidence. The court rejected the asserted inability to comply because Perrotty had not denied that her company sent the collection letter, and the defendant had repeatedly admitted during the litigation that it was Bureau of Accounts Control, Inc. and that it had sent the letter.

The court applied judicial estoppel, an equitable doctrine that can prevent a party from taking a position clearly inconsistent with an earlier position on which the court and opposing party relied. It found that the defendant’s new claim that it had been defunct for eight years conflicted with its repeated prior admissions and representations that it was a debt-collection business and the entity that sent the letter. The court concluded that the defendant could be held responsible for the violation and that it could grant Lichter’s contempt motion.

Disposition

The court denied Lichter’s motion for contempt without prejudice to renew. It did not impose contempt sanctions at that time because it found that the defendant appeared to have been under the mistaken impression that it could not comply. Instead, the court directed the defendant, doing business as Bureau of Accounts Control, Inc., and P. Susan Perrotty, identified as the defendant’s sole shareholder, to comply with the court-ordered subpoenas by April 21, 2023. Lichter could renew his motion for sanctions if they failed to comply, and no pre-motion letter would be required. The court also declined at that time to impose sanctions under its inherent powers or 28 U.S.C. § 1927.