Currently pending before the court are cross-motions related to the issue of pretrial discovery, including electronically stored information (“ESI”). Plaintiff, who has already had the benefit of considerable discovery concerning his claim, seeks extensive discovery some of which involves sweeping searches of ESI using suggested search terms, and requests an order compelling defendants' compliance with his discovery demands. Defendant Capital One Services estimates the expense of responding to plaintiff's demands at as much as $5 million. NCO, while not quantifying the expense of production, also claims that compliance with plaintiff's demands would entail considerable burden. Both defendants therefore oppose plaintiff's application and have lodged mirror motions requesting the issuance of protective orders pursuant to Rule 26(c) of the Federal Rules of Civil Procedure, invoking the rule of proportionality set forth in Rule 26(b)(2)(C)(iii).

For the reasons set forth below, I find that given the discovery that has already occurred any additional, minimally relevant information to be developed through the discovery now sought is far outweighed by the burden associated with the requested search and production, and therefore, with one narrow exception, will not order defendants to comply with plaintiff's discovery demands unless he agrees to bear the expense associated with meeting those demands.

I. BACKGROUND[2]

On December 31, 2007, plaintiff opened an account with Capital One Bank. Capital One Services, however, has provided all of the necessary support for the servicing of plaintiff's account since its inception, pursuant to an agreement between the two entities and continues to do so even though the account has been charged off.[3] NCO did not at any time service plaintiff's account, although it has supplied debt collection services with regard to the account.

By October of 2009 the plaintiff's account became significantly delinquent with a balance owed of $1731.35.[4] As a result of the delinquency a Pre–Legal Notice, dated October 8, 2009, was generated. The notice was created using a template developed by Capital One Services, and the expense of printing and mailing it were underwritten by Capital One Services.[5] Despite being dated earlier, the Pre–Legal Notice was not delivered to the United States Postal Service until October 12, 2009 and was received by Wood on October 15, 2009.

*2 The Pre–Legal Notice sent to Wood identified the creditor as Capital One Bank, listed Capital One Services as servicing the account, and is signed by that defendant. The letter recited the potential consequences associated with a lawsuit, but stated that “[n]o decision has been made to sue you yet, so you still have options....” The letter advised that those options could be explored or payment arranged by calling a telephone number listed on the notice, or by visiting www.capitalone.com/solutions. Had plaintiff called the telephone number listed on the Pre–Legal Notice he would have first received an automated message welcoming him to Capital One and requesting that he enter his account number. Once the account number was entered his call would have been automatically routed to NCO. After receiving the letter plaintiff did not call the telephone number listed on the letter, although his attorney later did on November 6, 2009, at which time his call was in fact forwarded to NCO.

Plaintiff's account was referred by Capital One Services to NCO for debt collection assistance on October 9, 2009. NCO thereafter sent Wood a letter on October 10, 2009 advising of its involvement and making a series of disclosures pursuant to the FDCPA. The NCO letter was received prior to October 15, 2009, when the Capital One Services Pre–Legal Notice was delivered.

II. PROCEDURAL HISTORY

Plaintiff commenced this action on December 29, 2009. Plaintiff's complaint named Capital One Services, NCO and Capital One Bank as defendants and asserted claims under the FDCPA and GBL § 349, as well as for common law fraud.

In response to plaintiff's complaint the Capital One defendants moved seeking its dismissal on a variety of grounds. As a result of that motion, Senior District Judge Neal P. McCurn issued a decision on June 18, 2010 ordering dismissal of all claims by plaintiff against Capital One Bank, noting the withdrawal of plaintiff's common law fraud claim, and denying the remaining portions of defendants' motion. Dkt. No. 28. In his decision, Judge McCurn identified the question whether Capital One Services is a debt collector within the meaning of the FDCPA as one issue to be resolved in the case, holding that plaintiff's complaint sufficiently alleged that it qualifies as a debt collector by asserting that its principal business is debt collection and that the inapplicability of the “affiliate” exception under the Act was adequately pleaded. Judge McCurn also observed that a claim under GBL § 349 was adequately stated as against Capital One Services, concluding that the Pre–Legal Notice in issue is potentially misleading in that it routes callers to a telephone number that connects them to NCO without any mention of that third party's involvement.

On March 8, 2011, with permission from the court, plaintiff filed a letter motion to compel discovery, and both defendants moved for protective orders shielding them from the requirements of plaintiff's discovery demands. Dkt. Nos. 47, 48, 49. Those motions have now been fully briefed and were argued before the court on March 29, 2011, at which time decision was reserved.

III. DISCUSSION

*3 Absent a court order expanding it further, the scope of discovery in a civil action is governed by Rule 26(b) of the Federal Rules of Civil Procedure which provides, in pertinent part, that “[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party[.]” Fed.R.Civ.P. 26(b)(1). Under this provision the bounds of permissible discovery in a civil action are generally regarded as expansive, although they are not without limits. Fears v. Wilhelmina Model Agency, Inc., No. 02 Civ. 4911, 2004 WL 719185, at *1 (S.D.N.Y. Apr. 1, 2004); Innomed Labs, LLC v. Alza Corp., No. 01 CIV. 8095, 2002 WL 31012165, at *1 (S.D.N.Y. Sept. 6, 2002). As one court has observed, “broad discovery is a cornerstone of the litigation process contemplated by the Federal Rules of Civil Procedure.” Zubulake v. UBS Warburg LL C, 217 F.R.D. 309, 311 (S.D.N.Y.2003).

Despite the generous breadth of discovery permitted under Rule 26(b)(1), the rules recognize certain specific, potentially overriding considerations that can effectively circumscribe the required production of otherwise pertinent discovery. Of relevance to the pending dispute, Rule 26(b)(2) authorizes a court to restrict discovery sought by a party if the information requested “is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive”. See Saylavee LLC v. Hockler, No. Civ.3:04CV1344, 2005 WL 1398653, at *1–*2 (D. Conn. June 14, 2005); see also Fed.R.Civ.P. 26(b)(2)(B) (setting forth a comparable limitation relating to ESI).

Federal Rule of Civil Procedure 26(c) permits the court to issue an order “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense[.]” Fed.R.Civ.P. 26(c); see Saylavee, 2005 WL 1398653, at *1–*2. Ordinarily, a party seeking a protective order excusing it from complying with a request for relevant information bears the burden of establishing a basis for the entry of such an order. Dove v. Atlantic Capital Corp., 963 F.2d 15, 19 (2d Cir.1992). “In determining whether a discovery request is burdensome the court must weigh the burden to the producing party against the need of the party seeking the information.” Cook v. United States, 109 F.R .D. 81, 85 (E.D.N.Y.1985).

The defendants in this case, while not necessarily conceding the relevance of all of plaintiff's demands, seek refuge in Rule 26(b) (2)(C)(iii), which, in essence, articulates a rule or principle of proportionality. That section permits a court to limit discovery where

Fed.R.Civ.P. 26(b)(2)(C)(iii); see Dongguk University v. Yale University, 270 F.R.D. 70, 73 (D.Conn.2010). The rule of proportionality serves to protect a party against having to produce voluminous documents of questionable relevance. Legg v. Conklin, No. 04–CV–6549T, 2008 WL 2704348, at *1 (W.D.N.Y. July 2, 2008). The rule applies in appropriate circumstances with respect to cases arising under the FDCPA. See Araiza v. Mecham, No. CV 10–0188 PHX DGC, 2011 WL 304868, at *2 (D.Ariz. Jan. 28, 2011).

*4 The vast majority of plaintiff's requests implicate the search and production of ESI. Generally speaking, “[e]lectronic documents are no less subject to disclosure than paper records.” Rowe Entertainment v. William Morris Agency, Inc., 205 F.R.D. 421, 428 (S.D.N.Y.2002). “This is true not only of electronic documents that are currently in use, but also of documents that may have been deleted and now reside only on backup disks.” Zubulake, 217 F.R.D. at 317. The rule of proportionality applies with equal force in a case involving requests for the production of ESI. PSEG Power New York, Inc. v. Alberici Constructors, Inc., No. 1:05–CV657, 2000 WL 2687670, at *10 (N.D.N.Y. Sept. 7, 2007) (Treece, M.J.) (citing Zubulake, 217 F.R.D. at 316); Tamburo v.. Dworkin, No. 04C3317, 2010 WL 4867346, at *3 (N.D.Ill.2010); F.T.C. v. Church & Dwight Co., Inc., No. 10–149, 2010 WL 4283998 (D.D.C. Oct. 29, 2010).

Ordinarily the presumption is that the party whose ESI is being sought during discovery must bear the expense of complying with the discovery request, just as is the case with regard to any other more traditional discovery. PSEG Power New York, Inc., 2000 WL 2687670, at *10. In some cases, however, it is appropriate to shift all or some costs of producing discovery to the requesting party when compliance with demands would impose undue burden or expense on a responding party. Zubulake, 217 F.R.D. at 317; PSEG Power New York, Inc.,2007 WL 2687670, at *10–11. The decision of whether to invoke cost-shifting is informed by several relevant factors, including

Zubulake, 217 F.R.D. at 322. Of these, the first two factors, comprising the marginal utility test, are the most important. Zubulake, 217 F.R.D. at 323.

Derived from Judge Scheindlin's opinion in Zubulake and the court's earlier decision in Rowe Entertainment, the rules drafters have suggested the following considerations for aiding in determining who should bear the expense of e-discovery:

*5 Fed.R.Civ.P. 26, Advisory Comm. Notes 2006 Amend.; see PSEG Power New York, Inc., 2007 WL 2687670, at *11 and n. 6.

B. Underlying Legal Claims And Defenses

As can be seen, the scope of discovery is defined in the first instance by relevance to the claims and defenses in a case. Accordingly, before turning to the specifics of the discovery that has occurred to date and evaluating plaintiff's demands, it is important to lay out as a backdrop the claims and defenses that have been raised in this action.

Plaintiff's complaint asserts causes of action under both the FDCPA and GBL § 349. Generally speaking, the FDCPA prohibits a debt collector from employing any false, deceptive or misleading representation or means when collecting a debt. 15 U.S.C. § 1692e. The Act also specifically prohibits the use of a threat to take action which cannot legally be taken, or is not intended. Id. Under the FDCPA the term “debt collector” is defined, in relevant part, to mean

15 U.S.C. § 1692a(6). The FDCPA authorizes commencement of a civil suit by an aggrieved debtor and, absent class certification, provides for an award of actual damages plus such additional damages as the court allows up to $1,000, as well as payment of costs, including a reasonable attorney's fee. 15 U.S.C. § 1692k(a).

GBL § 349 provides, in pertinent part, that “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful.” N.Y. Gen. Bus. Law § 349. A claim under GBL § 349 is stated when a plaintiff alleges that the defendant engaged in a materially misleading consumer-oriented act resulting in injury to the plaintiff. See Spagnoli v. Chubb Corp., 574 F.3d 64, 74 (2d Cir.2009) (citing Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir.2000) (per curiam). As relief, a plaintiff establishing a violation of GBL § 349 can recover actual damages and may be entitled to injunctive relief as well as an award of attorney's fees .[6] See Cardiocall, Inc. v. Serling, 492 F.Supp.2d 139, 155 (E.D.N.Y.2007); see also McDonald v. North Shore Yacht Sales, Inc ., 134 Misc.2d 910 (Sup.Ct. Nassau Co.1987).

In his complaint, Wood asserts that the Pre–Legal Notice he received was deceptive in that it misled him into believing that legal action was imminent when, in fact, there was no present intention on the part of the defendants to initiate suit. Plaintiff also maintains that the letter, though initiated by Capital One Services, was sent on behalf of NCO, and failed to disclose that it was an initial communication from a debt collector, and misled him into believing that it came from Capital One Services and that the telephone number listed was for that defendant, rather than NCO. Plaintiff further asserts that the letter failed to provide the required protective notifications, including of the right to receive information to verify the debt and the right to dispute it.

*6 In defense of plaintiff's claims, Capital One Services argues that it is not a debt collector within the meaning of the Act and that the letter was not materially misleading. Capital One Services additionally contends that in any event the plaintiff did not suffer any actual injuries as a result of receiving the letter, and any recovery will therefore be limited to the statutory damages provided under the FDCPA. For its part, defendant NCO asserts that it had no involvement in sending the initial letter and therefore cannot be held accountable for any non-compliance with the FDCPA or violation of GBL § 349 related to that communication.

C. Discovery To Date

Prior to the filing of the pending motions, the parties engaged in a considerable amount of discovery in the action. To date, plaintiff has served twenty-five interrogatories and forty-three document demands on defendant Capital One Services. In response, defendant Capital One Services has answered plaintiff's interrogatories, twice supplementing those answers, and has produced approximately fifteen hundred pages of documents. In addition, Capital One Services has submitted to two days of a Rule 30(b)(6) deposition, covering not only the merits of the action but also the methods employed to respond to plaintiff's discovery demands.

Defendant NCO has similarly responded to written discovery demands, producing in excess of four hundred pages of e-mails concerning plaintiff's account. The e-mails produced include all non-privileged communications discovered through a search using some, though not all, of plaintiff's proposed search terms of active e-mail boxes of agreed-upon NCO employees.[7] In addition, NCO has produced a Rule 30(b)(6) witness to address that defendant's search for responsive documents.

D. Specifics Of Plaintiff's Discovery Demands

Plaintiff's requests for discovery to NCO for discovery fall into four categories. First, plaintiff seeks production of all e-mails related to the Pre–Legal Notices and Pre–Legal Program at Capital One Services. Plaintiff makes that request in order to probe an affirmative defense under which NCO asserts that

See Plaintiff's Letter Motion (Dkt. No. 49) Exh. 2 (Defendant NCO's First Supplemental Objections and Responses to Plaintiff's First Set of Interrogatories). In support of that request, plaintiff notes that a search of archived e-mails was conducted by NCO, utilizing plaintiff's proposed search terms, yielding 12,071 matches, but that the e-mails recovered pursuant to that search have not been produced. Plaintiff also requests similar searches with regard to additional NCO employees.

Plaintiff's second request concerns images from NCO hard drives that relate to the Pre–Legal Notice. While some drafts of that document were attached to e-mails produced to the plaintiff, plaintiff notes that hard drives were not searched for additional draft templates of the Pre–Legal Notice in NCO's possession.

*7 The third request made by the plaintiff is for copies of recordings of calls from Capital One consumers related to the Pre–Legal Program. The purpose of that request is to probe whether NCO identifies itself, when speaking with callers, and provides requisite FDCPA-mandated disclosures.

Plaintiff's fourth request relates to the date upon which each potential class member's account was transferred by Capital One Services to NCO, claiming that the information is “directly relevant to Plaitniff's [sic] claims.” Dkt. No. 49.

2. Capital One Services

Implicated in this motion are plaintiff's requests to defendant Capital One Services falling into six distinct categories. First, plaintiff seeks a search of e-mail accounts of some forty-one employees, utilizing plaintiff's suggested search terms. The second request in issue involves images of hard drives and searches of two specified drives to probe the Pre–Legal Notice and relationship with NCO. Thirdly, plaintiff seeks a variety of far-reaching financial and corporate documents, including profit and loss statements, various financial and management reports, and board meeting minutes for Capital One Services. The purpose of that request is purportedly to explore whether Capital One Services is primarily engaged in debt collection. Toward that end plaintiff also seeks, as a fourth category, a Capital One organizational chart. The last two categories of documents requested by plaintiff from Capital One Services concern the decision to pursue legal action against the plaintiff and the dates on which his account and those of potential class members were transferred to NCO.

E. Analysis

In weighing the competing arguments of the parties I have applied the rule of proportionality and considered the factors set out in Rule 26(b)(2)(C)(iii) as bearing upon whether that rule should be invoked. I have also taken into account the fact that courts are generally more likely to invoke the rule and limit discovery when faced with a request for “voluminous records of questionable relevance.” See Legg, 2008 WL 2704348, at *1.

Two of the factors recited in Rule 26(b)(2)(C)(iii) weigh in plaintiff's favor. Plainly, Capital One Services and NCO, as large corporations, have resources available to finance the effort that would be required to meet plaintiff's sweeping discovery demands. Similarly, the court recognizes that strong public policy considerations which led to enactment of the FDCPA. See Fentner v. Tempest Recovery Services, Inc.,No. 07–CV–561A, 2008 WL 4147346, at * 3 (W.D.N.Y. Sept. 2, 2008) (recognizing “the remedial nature of the FDCPA ‘and the broad public policy which it serves ....”) (quoting Leatherwood v. Universal Business Co., 115 F.R.D. 48, 50 (W.D.N.Y.1987) (internal quotations omitted).

The other relevant factors, however, do not favor the plaintiff. The amount in controversy in this action, absent class certification, is exceedingly modest. Plaintiff essentially has acknowledged that he did not suffer any actual damages as a result of the alleged violations, and thus his recovery in all likelihood will be limited to $1,000 plus costs and attorneys' fees. As will be seen, the relevance of the specific discovery sought is marginal, and the information sought is not likely to play an important role in resolving the material issues in the case.

1. E-mail Searches

*8 The primary thrust of plaintiff's discovery effort with respect to defendant Capital One Services is to obtain e-mail communications relating to the preparation of the Pre–Legal Notice form sent to the plaintiff. Plaintiff's initial search request regarding e-mails sought searches of ten e-mail accounts using the following search terms: “pre-legal”, “pre legal”, “legal”, “legal letter”, “legal letters”, “pre legal letter”, “pre-legal letter”, “letterhead”, “pre-legal rollout”, “cash and legal”, “cash letter”, “cash letters”, “Q2 initiatives”, “bkt 6”, “B5 accounts”, “B6 accounts”, “pre-legal notification”, “call forwarding” and “routing”. Plaintiff has since requested similar searches for six additional Capital One Services employees, identified by Ramon Valdepenas as forming a team “responsible for customer contact strategies” and involved in the creation of the Pre–Legal Notice, as well as the search of the mailboxes of Brad Mason, Niki Howard, Paul Ayres, Esq., John Reece, Esq., and Jeffrey Hansen.[8] According to Capital One Services, the likely volume to be generated by the requested searches, after elimination of duplicates, is as high as 1,753,537 documents, costing in excess of $5,000,000 to process, review, and produce.

Addressing NCO, plaintiff has requested a search of e-mail archive accounts for eleven NCO employees using the following search terms: “pre-legal”, “pre legal”, “legal letter”, “legal letters”, “pre legal letter”, “pre-legal letter”, “pre-legal rollout”, “bkt 6”, “B5 accounts”, “B6 accounts”, “pre-legal notification”, “call forwarding”, and “routing”. NCO has refused to carry out the required searches, although it did conduct a modified search using terms deemed relevant, which yielded 12,071 matches estimated to involve 60,000 pages of documents, but has declined to turn those over to plaintiff citing the expense associated with reviewing those e-mails for relevance and privilege.

Neither plaintiff's submissions in support of his motion to compel and in opposition to defendants' protective order motions, nor his oral presentation during the recent hearing shed significant light on the potential relevance of the documents sought. The uncontroverted facts show that the plaintiff received a letter authored and sent by Capital One Services, and the letter speaks for itself. Plaintiff argues that the letter was actually sent on behalf of NCO. Capital One Services has argued that in the end it is likely it will be found exempt from the Act on the grounds that it is not a debt collector, and makes a strong case in arguing that position.[9] Thus, even assuming that the notice came from Capital One Services, plaintiff has cited no case suggesting that an entity that is not a debt collector must still comply with the requirements of the FDCPA. The relevance of the information now sought is therefore not readily apparent; at a minimum, the importance of the discovery sought in resolving the issues in the case is greatly diminished by this fact.

*9 Plaintiff argues that the import of the Pre–Legal Notice was that suit was imminent at the time it was sent, and a least sophisticated consumer would draw that conclusion from reading the letter. While the language of the Pre–Legal Notice sent by Capital One Services does not state that legal action will be commenced if the debt is not paid, and indeed affirmatively states that no decision regarding suit has yet been made, plaintiff is correct that construed from the standpoint of the “least sophisticated consumer” it could potentially regarded as stating an intention to sue. Intent to sue therefore could be potentially relevant, provided Capital One is subject to the FDCPA.[10] Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 24 (2d Cir.1989); Bentley V. Great Lakes Collection Bureau, 6 F.3d 60, 62–63 (2d Cir.1993).

Assuming minimal relevance, however, defendants have clearly identified an inordinate burden associated with responding to the request. Applying the seven factors found in Zubulake to inform the decision of whether cost shifting should be applied, I note that plaintiff's request is anything but specifically tailored to discover the necessary information, the sources of the information sought and relevant to plaintiff's claims is available through other means, including by way of deposition, and the cost of production exponentially exceeds the amount in controversy. And, because of the likelihood that Capital One Services is not properly regarded as a debt collector, the importance of the discovery sought and the benefits to plaintiff of obtaining the information all militate against requiring the requested discovery at the expense of Capital One Services.

A similar analysis applies with regard to NCO. While the volume of e-discovery implicated by plaintiff's request to NCO is far less then in the case of Capital One Services, the information sought is no more relevant to issues in the case. There is no evidence currently in the record to suggest that NCO sent the letters in issue or should for some reason be held accountable for their contents. I therefore similarly find that the rule of proportionality should be applied to plaintiff's ESI demands to NCO.

In sum, for the reasons set forth above I will deny plaintiff's request for the ESI searches referenced in his motion, without prejudice to his right to renew the motion to compel in the event he is willing to underwrite the expense associated with any such search. See PSEG Power New York, Inc., 2000 WL 2687670, at *11.

2. Hard Drive Searches

In his motion to compel plaintiff requests the production of three[11] files identified on Capital One Services' Knowledge Links Hard Drive, including

1) “collection folder re modification to Letter 478”;

See Dkt. No. 49. That request is not addressed either in defendant Capital One Services' response to the motion or in its separate motion for a protective order. Accordingly, the request will be granted, and defendant Capital One Services will be required to provide that information.

*10 Plaintiff also requests that NCO be directed to produce drafts of the Pre–Legal Notice preserved on hard drives of NCO employees. Because defendant NCO maintains that all such drafts have been produced, this request will be denied.

3. Documents Related To Decision To Pursue Legal Action

Without specifying more detail, plaintiff requests an order compelling Capital One Services to produce documents related to its decision whether to take legal action against debtors generally. Capital One Services has developed guidelines for taking legal action. In his motion, plaintiff asserts that during her deposition Heather Bryden, from Capital One Services, expressed uncertainty as to whether those guidelines had been produced. From testimony given later in her deposition, however, it appears that the information was provided. See Dkt. No. 51 at p. 7: see also Defendants Capital One Services' Exhibits (Dkt. No. 58) Exh. 17. In addition, during the deposition of Capital One Services other Rule 30(b)(6) designee, Ramon Valdepenas, this witness testified regarding the process utilized by Capital One Services when determining whether to file suit. I therefore agree with defendant Capital One Services' assessment that, particularly given the amorphous nature of plaintiff's request, any further discovery regarding this issue would be cumulative and unduly burdensome.

4. Recordings of NCO Calls

Plaintiff has requested copies of “all recordings of calls from Capital One consumers related to the Pre–Legal Program.” According to the plaintiff, those recordings “will show whether NCO identifies itself when speaking with consumers and provides other disclosures mandated by the FDCPA.”

The purpose of this request is unclear. Plaintiff argues that the records could show what he would have been told had he called the number listed on the Pre–Legal Notice, and NCO could have violated the FDCPA depending on what NCO would have stated. However, plaintiff never called the number listed and therefore never spoke with a represented at NCO. The question of what an NCO representative would potentially have said to the plaintiff had he called is therefore legally irrelevant, and plaintiff's request should be denied on this basis. Schwab v. Philip Morris USA, Inc., No. 04–CV–1945, 2006 WL 721308, at *4 (E.D.N.Y.2006) (“Discovery regarding a matter that will not be useful in considering the issues before the court is in appropriate.”) (citations omitted).

Moreover, the request now being made appears to be exceedingly broad. It does not, for example, place any limits, either geographically or temporally, on the information sought. Given the potential burden associated with compliance when compared to the questionable relevance of the information sought, I will deny this request, without prejudice to renewal in the event of class certification.

5. Records Related to Dates of Account Transfers

Plaintiff next requests information that would demonstrate when each potential class member's account was transferred by Capital One Services to NCO. Defendant has provided this information with regard to the plaintiff's account, but pending class certification asserts that the information is not relevant to any issue in the case including in connection with the class certification decision.

*11 Since the argument on the pending motion plaintiff has moved for class certification. It thus appears that plaintiff has been provided with the number of cardholders who would have received letters like the one sent to the plaintiff, thereby supplying the information necessary to establish the requisite numerosity; as a result, it seems plaintiff has determined that the requested information is not required for purposes of the class certification motion. Accordingly, I will deny this request without prejudice pending a decision on the class certification motion.

6. Capital One Services Financial Documents

In his discovery demands plaintiff seeks a host of information concerning the finances and corporate intricacies of Capital One Services. There are two potential claims of relevance associated with this information. The first relates to whether, in the event of class certification, damages would be capped under the FDCPA to one percent of defendants' net worth or $500,000, whichever is less. The second involves a determination of whether debt collection is or is not the principal business of Capital One Services.

Addressing the first, Capital One has stipulated that its net worth exceeds $50,000,000. There is therefore no need for additional discovery concerning this issue.

The second issue raised requires closer examination. Without question, the extent of financial resources of Capital One Services devoted to debt collection would potentially be relevant to the issue of whether it is a debt collector within the meaning of section 1692a(6), assuming the inapplicability of the exception under section 1692a(6)(F)(iii) or the corporate affiliate exception of section 1692a(6)(B). See, e.g., Pavone v. City Corp Credit Servs. Inc., 60 F.Supp.2d 1040, 1046–47 (S.D.Cal.1997), aff'd, 172 F.3d 876 (9th Cir.1999) (defendant found not to fall within the definition of debt collector where no more than 22% of defendants' total expenses were devoted to debt collection operations); see also Backuswalcott, 104 F.Supp.2d at 367 (S.D .N.Y.2000) (citing Pavone and Meads, and noting others cases applying section 1692a(6) without “resorting to quantification”). Compare with Carter v. Countrywide Home Loans, Inc., No. 3:07CV651, 2009 WL 2742560 (E.D.Va. Aug. 25, 2009) (Citing a Third Circuit decision finding that “if the volume of a person's debt collection services is great enough, it is irrelevant that these services only amount to a small fraction of [the entity's] total business activity.”) (citing Oppong v. First Union Mortgage Corp, 215 F. App'x 114, 119–20 (2d Cir.2007)) (internal quotations omitted) (alteration in original).

Plaintiff's request for financial and corporate information to probe this issue implicates ten separate document demands, requesting the following information, generally for the period of 2005 to the present:

It is readily apparent from the scope of these requests that they are exceedingly broad, would require considerable effort and burden to produce, and would yield documents the vast majority of which would be irrelevant to this action and which could contain potentially sensitive and proprietary information. During oral argument on the pending cross-motions, when asked, plaintiff's counsel was unable to articulate what information contained within the documents requested such as, for example, corporate financial statements, would shed light on the issue of whether or not Capital One Services' principal business was debt collection.

During the discovery that has occurred to date, Capital One Services has produced considerable information concerning its employees, including their job titles and corresponding assigned departments. In addition, Capital One Services has provided an overall organizational chart showing the basic structure of its business and an agreement between Capital One Bank and Capital One Services detailing the services which the latter has agreed to provide on behalf of the former. Given these facts, I am convinced that plaintiff's requests represent no more than a fishing expedition primarily calculated to cause the defendants to incur considerable litigation expense in responding to the discovery requests and, only secondarily, to uncover potentially relevant information.

Based upon my finding that defendant Capital One Services has sustained its burden of demonstrating that the expense of production far outweighs any potential, minimal relevance, and given plaintiff's inability to articulate how relevant information could be extracted from the many documents requested, I will deny the portion of plaintiff's motion related to financial documents and grant defendants' motion for a protective order addressing that issue.

7. Capital One Services Organizational Information

In discovery defendant Capital One Services estimated to the plaintiff that approximately 18% of its workforce is engaged in debt collection. To probe that allegation plaintiff seeks a detailed organizational chart that would show where each Capital One Services employee falls within the organization.

Defendant Capital One Services responds by noting that it has produced an organizational chart showing the different departments within the company and indicating where collection and recovery functions fall within the organization. In addition, Capital One has produced a full list of its more than 8,000 employees as of October 8, 2009, with a corresponding listing of each worker's job title and assigned department.

*13 In this instance, as I noted earlier, Capital One Services appears able to establish that it has serviced the plaintiff's account from the outset and at the relevant times was engaged in collecting its own debt, therefore qualifying for an exemption under the Act. This notwithstanding, even assuming the need to avail itself of the affiliate exception, which would render relevant the extent to which Capital One Services is engaged in debt collection, I nonetheless find it appropriate to invoke the rule proportionality .[12] Clearly, Capital One Services possesses the requested information, and it does not argue otherwise. In order to provide meaningful information regarding the reporting structure of the corporation, however, Capital One Services has stated that it is necessary to perform individual computer searches, clicking on each of the 8,000 employees' names, which would then yield the reporting structure for that particular employee. I find defendant Capital One Services has adequately established that this burden far outweighs any minimal likely relevance of the information sought, particularly in view of what information has already been produced regarding the employees of Capital One Services, Inc.

IV. SUMMARY AND CONCLUSION

Plaintiff has demanded from the defendants large volumes of information, including ESI, some of which defendants acknowledge has at least some small modicum of relevance to the claims and defenses in this case. I am convinced, however, that the marginal relevance associated with plaintiff's requests is far outweighed by the burden of responding, and that the relevant factors to be considered, including the amount at stake, and the importance of the discovery sought to resolution of the issues involved, warrant application of the rule of proportionality to deny the bulk of plaintiff's requests.

Finding that defendants have sustained their burden of demonstrating that the effort and expense associated with searching for and producing the requested information far outweighs any potential relevance, I conclude that absent an agreement by the plaintiff to bear the expense of production, his request should be denied, with one exception and subject to renewal in the event of class certification.

Based upon the foregoing it is hereby

ORDERED as follows:

1) Within thirty days of the date of this order defendant Capital One Services shall produce to plaintiff three files identified on Capital One Services Knowledge Links Hard Drive, including a) “collection folder re modification to Letter 478”; b) CGS folder re third party legal letters”; and c) “NCO contracts”;

2) With that exception, plaintiff's motion to compel discovery (Dkt. No. 49) is DENIED, and defendants' motions for a protective order (Dkt.Nos.47, 48) are GRANTED.

3) These determinations are without prejudice to plaintiff's right to re-apply to the court for all or some of the relief now sought in the event of class certification, and provided plaintiff reasonably believes that class certification renders all or some of the information sought in any renewed application relevant and that the relevance outweighs the burden of production.

*14 4) No costs or attorneys' fees are awarded to any party in connection with these cross-motions.

Plaintiff's complaint additionally named Capital One Bank (USA), N.A. (“Capital One Bank”), as a defendant, and also asserted a pendent common law fraud cause of action. Defendant Capital One Bank has since been dismissed from the suit, and plaintiff has withdrawn his fraud claim.

The following background information is derived from plaintiff's complaint, as augmented by the results of discovery conducted to date by the parties.

A servicing and management agreement dated March 31, 2005 between Capital One Bank and Capital One Services was provided to the plaintiff during discovery.

During his deposition Wood admitted the validity of the debt.

Prior to it being deployed, Capital One sent a sample of the form Pre–Legal Notice template to NCO and its other debt collection suppliers. The purpose of doing so was to inform those business partners that the letters would be sent and to show the content of the letter, with the expectation that there would be an increase in call volume resulting from sending the notices. The extent of that review and input by NCO and the other collection agencies is hotly contested and is central to the pending discovery dispute.

GBL § 349(h) creates a private right of action for any person injured by reason of any violation of that section to

In an effort to satisfy the plaintiff, defendant also produced all non-privileged archived e-mails of Jay King and Wally Funk for the months of April and August of 2009, noting that those two were the senior-most NCO employees working directly on the Pre–Legal Program, and apparently the e-mails exchanged between Capital One Services and NCO regarding the Pre–Legal Notice and program occurred during those months.

In addition, plaintiff seeks an order compelling Capital One to search the C and U drives of several employees using the search terms identified as “Sergei's Search Terms,” which plaintiff states Capital One Services has failed to perform.

Defendant Capital One Services convincingly argues that it cannot be properly considered as a debt collector within the meaning of the Act. “Section 1692a(6)(F)(iii) ‘exempts from the definition of debt collector any person collecting or attempting to collect any debt owed or due or asserted to be owed or due to another to the extent such activity ... (iii) concerns a debt which was not in default at the time it was obtained by such person. Franceschi v. Mautner–Click Corp., 22 F.Supp.2d 250, 253 (S.D.N.Y.1998) (quoting 15 U.S.C. § 1692a(6)(F)) (emphasis supplied). The Act therefore does not apply to collection efforts by those who obtained the right to payment on a debt before a default. The courts “have applied the exemption found in Section 1692a(6)(F)(iii) not only to those who have actually purchased a debt prior to default, but also to those who had responsibility prior to default for collecting the debt owed to another. Id. at 254; see also Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.1985) (mortgage servicing company not a debt collector); Jones v. Intuition, Inc., 12 F.Supp.2d 775, 778–79 (W.D.Tenn.1998) (exemption applied to company servicing student loan); Edler v. Student Loan Marketing Ass'n, No. CIV. A. 92–1619, 1993 WL 625570, at *2 (D.C. Dec. 13, 1993) (student loan servicing company); Coppola v. Connecticut Student Loan Foundation, No. Civ. A. 87–398, 1989 WL 47419, at *2 (D.Conn. Mar. 22, 1989) (same). Since the evidence in this case reflects, without contradiction, that plaintiff's loan from Capital One Bank was serviced from the outset by Capital One Services, this exemption applies to that defendant.

During argument Capital One Services admitted that its intent regarding suit when sending the Pre–Legal Notice could also be potentially relevant to the question of whether punitive damages should be awarded under GBL § 349.

Although plaintiff states that it seeks production of four files, it only specifically identifies three. See Dkt. No. 49 at pp. 9–10.

Neither in his written submission nor during oral argument was plaintiff able to articulate or cite to a case that establishes a bright-line test for determining whether a party's principal business is the collection of debts.