1681m:Class Action: Price v. United Guaranty Residential

David A. Szwak

1681m:Class Action: Price v. United Guaranty Residential

Postby David A. Szwak » Sun Dec 11, 2005 2:14 pm

Not Reported in F.Supp.2d, 2005 WL 265164 (N.D.Tex.)


United States District Court,
N.D. Texas, Dallas Division.
Greg PRICE, Plaintiff,
v.
UNITED GUARANTY RESIDENTIAL INSURANCE COMPANY, Defendant.
No. Civ.A.3:03-CV-2643-G.
Feb. 2, 2005.


MEMORANDUM ORDER

FISH, Chief J.
*1 Before the court are the objections of the plaintiff Greg Price ("Price"), filed on November 17, 2004, to (1) the order of the United States Magistrate Judge dated November 2, 2004 granting the motion of the defendant United Guaranty Residential Insurance Company ("United Guaranty") to strike Price's class action allegations and (2) the order of the United States Magistrate Judge dated November 2, 2004 denying Price's motion to compel and request for extension of time. For the reasons stated below, Price's objections are overruled.

I. BACKGROUND
This case involves a putative nationwide class action. Price alleges that United Guaranty, a mortgage guaranty insurer, failed to comply with the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681, et seq. On April 21, 2003, Price purchased a home in Denton, Texas and obtained a loan to finance the purchase from Countrywide Home Loans ("Countrywide"), a mortgage lender. See Complaint ¶¶ 16-17; Plaintiff's Responses and Objections to Defendant's First Set of Interrogatories ¶ 1, attached to Appendix to United Guaranty's Opposition to Plaintiff's Motion to Compel and Request for Extension of Time ("Appendix to United Guaranty's Opposition") at 189-196. Countrywide obtained mortgage guaranty insurance on the loan from United Guaranty to insure Countrywide against Price's possible default on the loan. Complaint ¶¶ 15, 19. Price alleges that Countrywide has required him to pay the premiums, that United Guaranty set those premiums based on information contained in a consumer report about Price, and that the premium Price paid was not the lowest for similar insurance offered from United Guaranty. Id. ¶¶ 18, 19, 20. Price contends that United Guaranty took "adverse action" against him but failed to provide him with an "adverse action" notice under the FCRA. Id. ¶¶ 41-54.
Price filed this case as a putative class action. The proposed class includes all persons for whom United Guaranty "made underwriting decisions for private mortgage insurance, based in whole or in part upon information contained in a consumer report on a consumer" who paid for mortgage insurance "at less than the best available rate," and who did not receive an adverse action notice from United Guaranty. Id. ¶ 28.
At the heart of the November 2 rulings by the magistrate judge is a discovery dispute which arose from the following events. On March 8, 2004, the court issued an initial scheduling order setting various case-related deadlines. See Scheduling Order, attached to Appendix to United Guaranty's Opposition at 197- 207. In response, the parties agreed to jointly propose that discovery in the case be split into two phases--a Phase I, limited to class certification requirements and discovery about Price's claims, and a Phase II, to concern the merits of the FCRA claim. See Affidavit of Thomas M. Hefferon, Esq. ("Hefferon Affidavit") ¶¶ 4-5, attached to Appendix to United Guaranty's Opposition at 187-88. On April 6, 2004, the parties filed a joint status report stating that "whether this case meets the requirements for class certification is a threshold issue that should be decided at the outset of the litigation, as it will promote settlement discussions and help the parties and the Court manage the litigation most efficiently." Joint Status Report and Motion to Modify Scheduling Order ("Joint Motion") at 3, attached to Appendix to United Guaranty's Opposition at 208-12. The court adopted the modified scheduling order on April 16, 2004. See generally Modified Scheduling Order, attached to Appendix to United Guaranty's Opposition at 184-86. The court agreed to bifurcate discovery, leaving the merits of the FCRA claim to be the subject of discovery after the class certification motion was decided. Id. The court accepted the proposed deadlines and set the class discovery deadline for July 16, 2004 and the deadline for filing a class certification motion for July 30, 2004. Id.
*2 After discovery commenced, United Guaranty filed objections to Price's discovery requests on various grounds. United Guaranty's Opposition to Plaintiff's Motion to Compel and Request for Extension of Time ("United Guaranty's Opposition") at 9. The parties eventually reached an impasse concerning certain discovery issues on July 13, 2004. See Letter from Kathleen Clark Knight to Joseph F. Yenouskas dated July 13, 2004 ("Knight Letter"), attached to Appendix to Plaintiff's Motion to Compel and Request For Extension of Time and Incorporated Memorandum of Law ("Plaintiff's Appendix") at 144-45. Price waited until July 23, 2004 before moving to compel discovery and extend the class certification deadline. See generally Plaintiff's Motion to Compel and Request for Extension of Time and Incorporated Memorandum of Law ("Price's Motion"). The class certification deadline passed without Price taking any action beyond filing the motion for an extension of time.
This motion was automatically referred, pursuant to 28 U.S.C. § 636(b), to United States Magistrate Judge Paul D. Stickney ("Judge Stickney"). Scheduling Order ¶ 4, attached to Appendix to United Guaranty's Opposition at 197-207; Order Regarding Judge Buchmeyer's Scheduling Order (March 9, 2004). Judge Stickney granted United Guaranty's motion to strike class action allegations and denied Price's motion to compel. Order Granting Motion to Strike ("Order I") (November 2, 2004); Order Denying Motion to Compel ("Order II") (November 2, 2004). On November 17, 2004, Price timely filed his objections. See generally Plaintiff's Objections to Magistrate's Orders Pursuant to Federal Rule of Civil Procedure 72(a) ("Price's Objections").

II. ANALYSIS
A. Standard of Review
A district court judge may designate a magistrate judge, pursuant to 28 U.S.C. § 636(b)(1)(A), to hear and determine nondispositive pretrial matters pending before the court. Castillo v. Frank, 70 F.3d 382, 385 and n. 6 (5th Cir.1995); Smith v. Smith, 154 F.R.D. 661, 665 (N.D.Tex.1994). The standard of review for a decision of a magistrate judge in a nondispositive matter is governed by Federal Rule of Civil Procedure 72(a), which provides that the district judge "shall modify or set aside any portion of the magistrate judge's order found to be clearly erroneous or contrary to law." Fed. R. Civ. P. 72(a).
"The 'clearly erroneous' standard applies to the factual components of the magistrate judge's decision." Lahr v. Fulbright & Jaworski, L.L.P., 164 F.R.D. 204, 208 (N.D.Tex.1996) (quoting Smith, 154 F.R.D. at 665). "[T]he district court may not disturb a factual finding of the magistrate judge 'unless, although there is evidence to support it, the reviewing court is left with the definite and firm conviction that a mistake has been committed." ' Id. (quoting Smith, 154 F.R.D. at 665; Resolution Trust Corporation v. Sands, 151 F.R.D. 616, 619 (N.D.Tex.1993) (citing Anderson v. City Bessemer City, N.C., 470 U.S. 564, 573 (1985)). "If a magistrate judge's 'account of the evidence is plausible in light of the record viewed in its entirety,' a district judge may not reverse it." Id. (quoting Smith, 154 F.R.D. at 665; Sands, 151 F.R.D. at 619)).

B. Motion to Strike Class Action Allegations
1. Price's Failure to Comply With The Court's Deadline
*3 Price objects to the fact that Judge Stickney enforced the court's deadline requiring him to file his class certification motion by July 30, 2004. Price's Objections at 6. Judge Stickney refused to extend the deadline for Price to file his class certification motion and, because the motion was never filed, Judge Stickney ultimately granted United Guaranty's request that the class allegations be stricken on November 2, 2004.
The court has the power to establish reasonable times for the filing of documents. See Grandson v. University of Minnesota, 272 F.3d 568, 574 (8th Cir.2001), cert. denied, 535 U.S. 1054 (2002); Parker v. Columbia Pictures Industries, 204 F.3d 326, 340 (2d Cir.2000); see also Borges v. Our Lady of the Sea Corporation, 935 F.2d 436, 442-43 (1st Cir.1991); Flaminio v. Honda Motor Company, Ltd., 733 F.2d 463, 472 (7th Cir.1984) ("[I]n this era of crowded district court dockets federal district judges not only may but must exercise strict control over the length of trials, and are therefore entirely within their rights in setting reasonable deadlines in advance and holding the parties to them...."). The consequence for failing to meet a deadline falls upon the party who missed the deadline. A party takes a significant risk when it seeks an extension of a deadline close to the actual deadline. Such risks include: (1) that the motion will be denied so that the party will have little or no time to meet the deadline; or (2) that the party will not receive timely notice of a decision and thus will be unable to meet the deadline. The filing of a request for an extension does not act as an automatic stay of the deadline, nor does it constitute good cause for an extension of the deadline. To the contrary, it is merely an invocation of the court's discretion.
Here, Price clearly failed to comply with the court's deadline for filing the motion for class certification and, as a result, he is now precluded from moving for class certification. See Grandson, 272 F.3d at 574; McCarthy v. Kleindienst, 741 F.2d 1406, 1411-12 (D.C.Cir.1984); Burkhalter v. Montgomery Ward and Company, Inc., 676 F.2d 291, 294 (8th Cir.1982) (holding that the failure to file motion for class certification by the time set by the court justified striking of class allegations); Walton v. Eaton Corporation, 563 F.2d 66, 75 n. 11 (3d Cir.1977) (finding that it was not an abuse of discretion to deny a motion for class certification that was untimely under the local rules); Wilson v. Seven Seventeenth HB Philadelphia Corporation No. 2, No. Civ. A. 99-1729, 2001 WL 484193, at *3-5 (E.D.Pa. Mar. 7, 2001) (denying class certification where plaintiffs violated court order setting a filing deadline); Nicholas v. Deposit Guaranty National Bank, 182 F.R.D. 226, 235 (S.D.Miss.1998); Joshlin v. Gannett River States Publishing Corporation, 152 F.R.D. 577, 579 (E.D.Ark.1993).

2. Price Has Not Shown Good Cause for an Extension of Time
*4 In the modified scheduling order in this case, Price's deadline to file his motion for class certification was July 30, 2004. Deadlines in such orders "shall not be modified except upon a showing of good cause." Fed. R. Civ. P. 16(b). "The 'good cause' standard focuses on the diligence of the party seeking a modification of the scheduling order." Dallas Area Rapid Transit v. Foster, No. 3-00-CV-1080-BD, 2002 WL 31433295, at *1 (N.D.Tex. Oct. 28, 2002) (citing American Tourmaline Fields v. International Paper Company, No. Civ. A. 3:96-CV-3363-D, 1998 WL 874825, at *1 (N.D.Tex. Dec. 7, 1998)). Mere inadvertence on the part of the movant and the absence of prejudice to the non-movant are insufficient to establish "good cause." Geiserman v. MacDonald, 893 F.2d 787, 791 (5th Cir.1990). Instead, the movant must show that "despite his diligence, he could not have reasonably met the scheduling deadline." Dallas Area Rapid Transit, 2002 WL 31433295, at *1 (quoting American Tourmaline Fields, 1998 WL 874825, at *1 (citing 6A C. Wright & A. Miller, Federal Practice and Procedure § 1522.1 at 231 (2d ed.1990)).
Price asserts that his class action deadline should have been extended and his Rule 23 allegations should not have been stricken because "[h]e has pursued his claims diligently." Price's Objections at 6. Nevertheless, the court finds that Judge Stickney correctly concluded that Price did not met the aforementioned standard. In fact, Price's inaction, in and of itself, provided ample ground for Judge Stickney to find that Price had not demonstrated "good cause" to modify the scheduling order.
A review of the events in this case provides further support for the conclusion that there was no good cause to extend the deadline. When Price first filed this case on October 20, 2003, he was required by Local Rule 23.2 to file any motion for class certification by January 20, 2004. See N.D. TEX. L.R. 23.2. At the instance of Price, United Guaranty agreed to an open-ended extension of this deadline until the parties held a case management conference. See Agreed Motion for Extension of Time to File Motion for Class Certification (January 21, 2004) ("Agreed Motion for Extension of Time"); United Guaranty's Response to Plaintiff's Objections to Magistrate's Orders ("United Guaranty's Response to Objections") at 4. On April 6, 2004, the parties filed a joint status report proposing to bifurcate discovery, so as to "best address the need for an early determination of the class action issue." Joint Motion at 4, attached to Appendix to United Guaranty's Opposition at 208-12. In Phase I of discovery, "the parties would pursue discovery about the individual claims of Plaintiff Price and the class action requirements of Rule 23." Id . Phase II of the discovery would thereafter address the merits "if the Court decides to certify the case for class treatment." Id. According to the modified scheduling order adopted by the court on April 16, 2004, Phase I of discovery ended on July 16, 2004, and Price was required to file his motion for class certification by July 30, 2004. Modified Scheduling Order at 2, attached to Appendix to United Guaranty's Opposition at 184-85. On July 13, 2004, correspondence between the parties indicated that they had reached an impasse over discovery issues. See Knight Letter, attached to Plaintiff's Appendix at 144-45. Price, however, did not move to compel discovery until the discovery deadline had already passed and did not move to extend the impending deadline to move for class certification until the week before it expired. See generally Price's Motion.
*5 Furthermore, Price did not request expedited or emergency consideration of his motion; as a result, the deadline for filing a class certification motion passed. Although Price may have supposed that he could obtain an extension of the deadline merely by making the request, the fact remains that the deadline for filing a class certification motion passed. Price could have taken more prudent steps, such as filing the motion for class certification on July 30, 2004 to preserve his rights and later withdrawing the motion if he learned that the court was inclined to grant an extension of time. In any event, Price's explanation does not justify his failure to comply with the deadline. Price clearly had the opportunity and the time to file his motion, but he deliberately chose to ignore the deadline. Having made this choice, Price must now live with the results. See Buckley v. Donohue Industries, Inc., 100 Fed. Appx. 275, 278 (5th Cir.2004) (denying motion to extend where the party did not seek an extension of time until after the scheduling deadline had passed); S & W Enterprises, L.L.C. v. SouthTrust Bank of Alabama, NA, 315 F.3d 533, 535-37 (5th Cir.2003) (affirming denial of order refusing to allow plaintiff to amend complaint after deadline due to lack of diligence on the part of the plaintiff); Reliance Insurance Company v. Louisiana Land and Exploration Company, 110 F.3d 253, 257-58 (5th Cir.1997) (affirming district court's decision to deny party's request to supplement its expert report after the discovery cut-off date and finding that district judges have the power to control their dockets by refusing to give ineffective litigants a second chance to develop their case).
Price also argues that he could not file his class certification motion because of an alleged lack of discovery. Price's Objections at 5-6. Specifically, Price maintains that he was prevented from conducting discovery with respect to Rule 23 requirements on numerosity. Price's Objections at 5-6. Despite these claims, it is telling that Price conducted the deposition of United Guaranty's corporate representative on July 15, 2004 after designating class size as a deposition topic. United Guaranty's Response at 9-10; United Guaranty's Opposition at 10-11. Since Price failed to ask any questions at the deposition about class size when he had the opportunity to do so, his claim that he had no chance to conduct discovery on numerosity seems disingenuous at best. Moreover, the existence of a discovery dispute between the parties did not excuse Price from ignoring the deadline to move for class certification. See Geiserman, 893 F.2d at 792 (finding that regardless of plaintiff's intentions, or inattention, which led to the flouting of discovery deadlines, such delays are "a particularly abhorrent feature of today's trial practice" because they increase the costs of litigation); Sitkoff v. BMW of North America, No. 93-3804, 1995 WL 420033, at *6, 8 (E.D.Pa. July 14, 1995) (denying motion for extension where the party did not pursue discovery in a diligent fashion and finding that the existence of a discovery dispute was no ground to extend deadlines), aff'd, 92 F.3d 1172 (3d Cir.1996) (table), cert. denied, 519 U.S. 1110 (1997).
*6 In sum, under the circumstances of this case, it was not clearly erroneous for Judge Stickney to refuse to change the court's scheduling order because there was no showing of good cause to do so.

C. Motion to Compel
Price also objects to Judge Stickney's order denying his motion to compel. See Price's Objections at 5. During the discovery in this case, Price sought information about United Guaranty's relationship with its trade association and various law firms, responses to a 1998 FTC informal staff letter, and compliance with the FCRA. United Guaranty, however, asserted that this discovery suffered from the following defects: (1) the requests were substantially overbroad as to time; (2) the requests were unrelated to the issue in the case; (3) the requests were substantially overbroad in scope; and (4) the requests were consistently vague. [FN1] See United Guaranty's Opposition at 16-18.


FN1. Price also claimed he was entitled to the production of privileged documents. In response, United Guaranty asserted multiple privileges for each of the documents at issue. See generally United Guaranty's Brief Concerning Privileged Documents (Oct. 27, 2004).


Price contends that he sought this discovery to demonstrate that United Guaranty acted willfully in violating the FCRA. Price's Motion at 7. Nevertheless, the discovery sought by Price is relevant, if at all, to the merits of the lawsuit and not to the class issues. It is undisputed that the plaintiff and United Guaranty specifically agreed that discovery as to willfulness would be deferred to Phase II of the case. See Joint Motion at 3, attached to Appendix to United Guaranty's Opposition at 208-12; Modified Scheduling Order, attached to Appendix to United Guaranty's Opposition at 184- 86; Hefferon Affidavit ¶ 5, attached to Appendix to United Guaranty's Opposition at 188; see also United Guaranty's Opposition at 24-30. Based on the materials before Judge Stickney, the discovery sought was plainly improper; Price has not shown that Judge Stickney's denial of his motion to compel was clearly erroneous or contrary to law. [FN2]


FN2. Throughout his brief, Price suggests that Judge Stickney's orders should not stand because Judge Stickney did not articulate his reasoning in deciding the matters before him. Price's Objections at 1. Price fails, however, to provide the court with any authority to support this argument. Nor does Price carry his burden under Rule 72(a), F.R. CIV. P., of showing that Judge Stickney's order was clearly erroneous or contrary to law.


Price further asserts that Judge Stickney's orders are "inconsistent." See Price's Objections at 6. As explained in this memorandum order, Price's
lack of diligence in discovery and failure to timely file a class motion warranted the striking of his class action allegations. The problems infecting his discovery requests--such as overbreadth, scope, and vagueness problems--also justified denial of his motion to compel.



III. CONCLUSION
For the reason discussed above, the objections of Price to the orders of the United States Magistrate Judge dated November 2, 2004 are OVERRULED.
SO ORDERED.
N.D.Tex.,2005.
Price v. United Guar. Residential Ins. Co.
Not Reported in F.Supp.2d, 2005 WL 265164 (N.D.Tex.)

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