*1 This matter comes before the Court on the Plaintiff's Motion to Compel and for an Order Imposing Sanctions, Dkt. [170]. The motion was referred to the Undersigned for ruling and, for the reasons that follow, is hereby GRANTED IN PART and DENIED IN PART.

I. Background[1]

Plaintiff, Demona Freeman, holds a mortgage loan owned by Defendant Bank of New York Mellon (“BONY”). (Dkt. 84 at 2). The loan is serviced by Defendant Ocwen Loan Servicing, LLC (“Ocwen”). (Id.). BONY filed a foreclosure action against Plaintiff in April 2009, and in April 2012 Plaintiff filed for bankruptcy. (Id. at 10). Plaintiff alleges that she obtained a copy of the loan mortgage transactional history for the Loan which showed substantial misconduct regarding the servicing of her loan. (Dkt. 84 at 15-18). Further, she alleges that because of this misconduct, Ocwen erroneously initiated a second foreclosure proceeding, which was ultimately dismissed. (Dkt. 84 at 15-32). Plaintiff originally alleged violations of several statutes, but after the Court's ruling on the Defendants’ Motion to Dismiss, only three claims remain: (1) breach of contract against BONY for its failure to accept Plaintiff's timely and adequate mortgage payments as contractually obligation, failure to credit and apply Plaintiff's payments as contractually obligated, and assessment of unauthorized late fees, legal fees, costs, and property inspection fees; (2) violations of the Real Estate Settlement Procedures Act (“RESPA”) error resolution procedures, to the extent that claim is not based on Section 2609; and (3) violations of the Fair Debt Collection Practices Act (“FDCPA”), to the extent it is based on conduct that occurred after December 6, 2017. (Dkt. 133). On January 11, 2021, the Plaintiff filed a motion to reconsider the Court's ruling on the Defendant's Motion to Dismiss. (Dkt. 140).

During the discovery process in this action, Plaintiff has requested that Ocwen produce various spreadsheets called “Risk Convergence Reports,” (RCRs”) that allegedly track Ocwen's regulatory violations, risk areas, and other failures. (Dkt. 171 at 1-2). The parties met and conferred regarding the issue and discussed it with the Court during the telephonic discovery conferences conducted on January 15, 2021 and January 25, 2021. With the Court's permission, the Plaintiff filed the present Motion to Compel and for an Order Imposing Sanctions on March 18, 2021. (Dkt. 170). The Defendant filed a response on April 15, 2021, and the Plaintiff filed a reply on April 22, 2021. (Dkts. 174, 175). All discovery in the case was then stayed pending the Court's ruling on the Plaintiff's Motion for Reconsideration of the Court's Order on the Defendants’ Motion to Dismiss, which was issued on November 4, 2021. (Dkts. 140, 194). Defendant filed a surreply to the Plaintiff's Motion to Compel on January 28, 2022. (Dkt. 206).

II. Legal Standard

*2 Discovery is a mechanism to avoid surprise, disclose the nature of the controversy, narrow the contested issues, and provide the parties a means by which to prepare for trial. 8 Wright & Miller, Federal Practice and Procedure § 2001, at 44-45 (2d ed. 1994). To effectuate these purposes, the federal discovery rules are liberally construed. Spier v. Home Ins. Co., 404 F.2d 896 (7th Cir. 1968). See also 8 Wright & Miller, Federal Practice and Procedure § 2001, at 44 (2d ed. 1994).

Rule 26 of the Federal Rules of Civil Procedure permits the discovery of nonprivileged matter “that is relevant” to a party's claim or defense and “proportional” to the needs of a case, considering the importance of the issues at stake, the importance of the discovery in resolving those issues, the amount in controversy, and the weighing of burdens and benefits. See Rule 26(b)(1). “Discovery must hew closely to matters specifically described in the complaint lest discovery, because of its burden and expense, become the centerpiece of litigation strategy.” McCartor v. Rolls-Royce Corp., No. 1:08-cv-00133-WTL-DML, 2013 WL 5348536, at *7 (S.D. Ind. Sept. 24, 2013).

A party may seek an order to compel discovery when an opposing party fails to respond to discovery requests or provides evasive or incomplete responses. Fed. R. Civ. P. 37(a)(2)-(3). The party opposing a motion to compel has the burden to show the discovery requests are improper and to explain precisely why its objections are proper given the broad and liberal construction of the federal discovery rules. In re Aircrash Disaster Near Roselawn, Inc. Oct. 31, 1994, 172 F.R.D. 295, 307 (N.D. Ill. 1997); Cunningham v. Smithkline Beecham, 255 F.R.D 474, 478 (N.D. Ind. 2009).

Rule 26(b)(2)(C) requires the Court to limit the extent of discovery if it finds that “the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; ... or ... is outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C)(i)-(iii). Federal Rule 26(b), describing the scope and limits of discovery, was amended effective December 1, 2015, to once again protect against over-discovery and to emphasize judicial management of the discovery process. United States ex rel. Conroy v. Select Med. Corp., 307 F. Supp. 3d 896 (S.D. Ind. 2018). Magistrate judges enjoy extremely broad discretion in controlling discovery. Jones v. City of Elkhart, Ind., 737 F.3d 1107, 1115 (7th Cir. 2013).

III. Discussion

Plaintiff seeks an order compelling Defendant Ocwen to produce copies of Risk Convergence Reports (“RCRs”) and an award of reasonable attorneys’ fees and costs for having to bring the present motion. (Dkt. 170).

Plaintiff asserts that Defendant Ocwen used a software-based servicing system, called REALServicing, that was subject to various failings. (Dkt. 170 at 1). Plaintiff argues that in the normal course of business, Ocwen maintains spreadsheets, called “Risk Convergence Reports,” that track regulatory violations, potential areas for risk, and other failures with the REALServicing platform. (Dkt. 170 at 2). In her Third Request for Production, Plaintiff sought these RCRs because they allegedly contain information relevant to: (1) establishing that “Ocwen failed to conduct reasonable investigations in response to [Plaintiff's] notices of error and has engaged in a ‘pattern and practice’ of servicing misconduct;” (2) assessing statutory damages under § 1692k under the Fair Debt Collections Practices Act; and (3) evaluating Ocwen's affirmative defenses, including the “bona fide error” defense. (Dkt. 171 at 7-9; Dkt. 171-1 at 2). Plaintiff also contends that the request for RCRs is proportional to the needs of the case and does not cause an undue burden. (Dkt. 171 at 9-12). Defendant maintains in response that the discovery request is overly broad, not relevant to the claims or defenses in this matter, seeks information protected by the self-critical analysis privilege, and seeks information protected by the work-product doctrine. (Dkt. 174). Plaintiff reasserts in reply that the discovery request is relevant, proportional, not unduly burdensome, and not protected by any privilege. (Dkt. 175). Because it is the Defendant's burden to prove the Plaintiff's discovery request improper, the Court will address each of the Defendant's objections to production in turn.

*3 First, Ocwen asserts that the RCRs are not relevant to Plaintiff's RESPA or FDCPA claims or to its own affirmative defenses, because the last RCR was created over two years before Plaintiff ever sent a Notice of Error to Ocwen and the RCRs contain no loan specific information. (Dkt. 174 at 8-11). Plaintiff maintains that the RCRs are pivotal to establishing Ocwen's prior knowledge of systemic deficiencies associated with its loan handling and, thus, entirely relevant to demonstrating Ocwen's pattern and practice of failings. (Dkt. 171 at 7-9; Dkt. 175 at 3). Establishing Ocwen's knowledge of systemic failings, Plaintiff contends, would allow her to satisfy elements of RESPA and FDCPA, and to rebut several of Ocwen's affirmative defenses. (Id.).

The Court's order on the Defendants’ Motions to Dismiss significantly limited the scope of this case, resulting in only two statutory claims. As to the RESPA claim, Plaintiff asserts that the RCRs are relevant to demonstrating that Ocwen failed to conduct reasonable investigations in response to her notices of error and has engaged in a “pattern and practice” of servicing misconduct. (Dkt. 171 at 7). Moreover, Plaintiff argues that the RCRs will show Ocwen's knowledge of the specific items and issues raised by Plaintiff in her notices of error, which will help Plaintiff establish the “reasonableness” of Ocwen's investigative duties under RESPA and whether its failings constitute a “pattern or practice” or “standard or routine way of operating.” (Dkt. 175 at 3, emphasis original). In response, Defendant maintains that the RCRs are not relevant to Plaintiff's RESPA claim because they were created over two and a half years before Plaintiff's first notice of error, the alleged servicing errors that were the subject of Plaintiff's notices of error are not relevant to a “pattern and practice” claim under RESPA,” and the RCRs do not contain any loan-specific information. (Dkt. 174 at 9). This issue presents a close call, but given that relevance is interpreted broadly, the Court is satisfied that Plaintiff has met her burden of demonstrating the relevance of the RCRs with respect to her RESPA claim.

As to the FCDPA claim, Plaintiff maintains that the RCRs will demonstrate that Ocwen made knowingly false representations about the debt and fees owed by Plaintiff, despite its knowledge of the REALServicing platform's inability to properly apply payments. (Dkt. 171 at 8). Ocwen contends that “[l]iability under the FDCPA does not turn on whether Ocwen had knowledge of prior errors similar to those alleged by Plaintiff” but on whether “Ocwen made ‘false statements or misrepresentations that would materially mislead or confuse an unsophisticated consumer.’ ” (Dkt. 174 at 11). Moreover, Defendant argues, the RCRs do not contain any account-specific information, so they would be unlikely to provide relevant information on whether particular collection efforts were misleading or improper. (Id.). The Court is inclined to agree with Defendant. RCRs that contain no loan-specific information are not likely to assist Plaintiff in proving that Ocwen misled her about the status of her loan or others about the status of their loans.

As to Ocwen's “bona fide error” defense, Plaintiff asserts that if Ocwen was tracking its ongoing failures to comply with the FDCPA and those failures continued on the RCRs would be probative of the absence of bona fide error and reasonable policies and procedures. (Dkt. 171 at 8). Ocwen contends that the RCRs are not relevant to the bona fide error defense because the only policies that matter are those that existed at the time of the alleged violation, not the policies in place at the time the RCRs were created. (Dkt. 174 at 12). What is missing from either party's brief, however, is an explanation of whether the policies and procedures that existed at the time the RCRs were created are the same or different from the policies and procedures that existed at the time the alleged violations occurred. Without that information, the Court must conclude that the RCRs could contain evidence relevant to Ocwen's bona fide error defense.

*4 For these reasons, the Court finds that Plaintiff's request for the RCRs is relevant to Plaintiff's RESPA claim and Ocwen's bona fide error defense. In its response brief, Ocwen requests that, if found to be relevant, the RCRs should be limited to certain subjects that relate to this litigation. (Dkt. 174 at 7). This contention is well-taken. Accordingly, Plaintiff will be required to submit a list of relevant RCR categories to Defendant on or before March 11, 2022. Defendant will be required to produce the relevant RCR categories on or before March 18, 2022.

Next, Ocwen asserts that the Plaintiff's request for RCRs is disproportional to the needs of this case and unduly burdensome. (Dkt. 174 at 14-19). Specifically, Ocwen argues that the RCRs are not instructive for determining compensatory damages, not proportional to a case where RESPA damages are capped at $2,000, and would be overly burdensome to produce. (Id.). Plaintiff maintains that the request for RCRs is proportional to the needs of the case and not unduly burdensome, especially considering the relevant factors. (Dkt. 171 at 9-12; Dkt. 175 at 3-6).

Under Rule 26, the discovery sought must not only be relevant, but it must be “proportional” to the needs of the case, “considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Motorola Sols., Inc. v. Hytera Commc'ns Corp., 365 F. Supp. 3d 916, 924 (N.D. Ill. 2019). Proportionality, like other concepts, requires a common sense and experiential assessment. See, e.g., BankDirect Capital Fin., LLC v. Capital Premium Fin., Inc., 326 F.R.D. 171, 175 (N.D. Ill. 2018) (“Chief Justice Roberts’ 2015 Year-End Report on the Federal Judiciary indicates that the addition of proportionality to Rule 26(b) ‘crystalizes the concept of reasonable limits on discovery through increased reliance on the common-sense concept of proportionality.’ ”).

As to the importance of the issues at stake in this case, Plaintiff contends that the issues of “systematic mortgage servicing abuse and wrongful foreclosure ... could hardly be of greater importance.” (Dkt. 171 at 10). The Defendant does not address this factor in its brief.

As to the amount in controversy, Plaintiff argues that the amount of her settlement demand and the compensatory damages award of $582,000 in a similar case indicate that the amount in controversy is high. Ocwen maintains that potential compensatory damages have no bearing on the proportionality of the RCRs (Dkt. 174 at 14), and also asks the Undersigned to conclude that Plaintiff's RESPA damages are capped at $2,000. (Id. at 15-17). Because RESPA damages should be capped at $2,000, Ocwen maintains that discovery of the RCRs is unduly burdensome. (Id. at 17). First, the Undersigned declines to decide whether RESPA damages are capped at $2,000 in this case – this issue is not well suited for determination in the setting of a Motion to Compel, especially where the parties have not fully briefed the issue. Second, it should be noted that Plaintiff's case encompasses more than just her RESPA claim. The damages in this case are certainly more limited than at the time Plaintiff originally submitted her demand, in light of the Court's Order dismissing many of Plaintiff's claims, but the amount in controversy is disputed at this time. This factor is neutral.

*5 As to the parties’ relative access to relevant information and the parties’ resources, Ocwen is the sole owner of the RCRs, and the information contained in those reports is not available to the Plaintiff by any other means. In the same vein, Plaintiff is one individual, while the Defendant is a publicly traded corporation. Both issues weigh in favor of the Plaintiff.

As to the importance of the requested discovery in resolving the issues of the case, neither party addresses this point and, thus, it is neutral.

Finally, the Court must consider whether the burden or expense of the proposed discovery outweighs its likely benefit. Ocwen argues that production of the RCRs would be unduly burdensome because they include 1,259 pages and would require significant redactions; moreover, Ocwen contends that production of the RCRs would require Ocwen to prepare for and defend depositions that would discuss the RCRs. (Dkt. 174 at 17-19). First, the Court notes that 1,259 pages is not an unreasonable or unduly burdensome number of pages to produce, especially since those same pages were already produced, with the aforementioned redactions, in Todd v. Ocwen Loan Servicing, Inc., No. 2:19-cv-00085-JMS-DLP, 2020 WL 1328640 (S.D. Ind. Jan. 30, 2020).[2] Second, Ocwen has provided no legal support for its contention that the Court should consider potential future discovery when weighing the burden of production of the RCRs.

Ocwen only discussed two of the relevant factors in its briefing, and failed to convince the Court as to either factor. Thus, Ocwen has not carried its burden of supporting its objection that the Plaintiff's request for RCRs is disproportional to the needs of the case.

Next, Defendant argues that the RCRs are protected from disclosure by the self-critical analysis privilege. (Dkt. 174 at 19-21). Defendant contends that, although the Seventh Circuit and this Court have previously declined to apply the self-critical analysis privilege, the Undersigned should apply it here “because the spirit and purpose of the self-critical analysis privilege are implicated, and the relevant factors satisfied ....” (Id. at 21). Plaintiff maintains that the self-critical analysis privilege is not recognized in this District or in the Seventh Circuit and thus should not be applied to this case. (Dkt. 171 at 12-13; Dkt. 175 at 6).

The self-critical analysis privilege protects internal and confidential performance evaluations, internal investigations records, and other documents containing an organization's self-critical analyses. Lund v. City of Rockford, No. 17 CV 50035, 2017 WL 5891186, at *4 (N.D. Ill. Nov. 29, 2017). The rationale behind this privilege is that disclosing these documents will deter or suppress socially useful investigations and evaluations or compliance with the law, and that individuals and organizations will not candidly evaluate their compliance with regulatory or legal requirements out of fear of creating evidence that may be used against them. Id.

Defendant contends that the Seventh Circuit has not affirmatively recognized the availability of the privilege, but that it has also not specifically addressed the question of whether to adopt it. (Dkt. 174 at 20-21). Defendant is correct. The Seventh Circuit has not recognized the self-critical analysis privilege, nor has it explicitly stated whether the privilege even exists. This Court has previously addressed the self-critical analysis privilege in Todd, 2020 WL 1328640. The following passage from Todd is instructive:

Id. at *7. No relevant case in this Circuit has addressed the self-critical analysis privilege since the issuance of Todd and, thus, the analysis has not changed. Accordingly, the Undersigned concludes that the self-critical analysis privilege does not apply.

Finally, Ocwen argues that the RCRs are protected from disclosure by the work-product doctrine. (Dkt. 174 at 21-22). Defendant maintains that the RCRs were created after Ocwen's Consent Judgment with the Consumer Financial protection Bureau “in anticipation of potential litigation in the future.” (Id.). Plaintiff asserts that the Defendant only presented a threadbare conclusory statement that the RCRs were created in anticipation of litigation, with no real facts or information to support said statement. (Dkt. 171 at 13-14).

First announced in Hickman v. Taylor, 329 U.S. 495 (1947), the work-product doctrine protects otherwise discoverable documents as follows:

Fed. R. Civ. P. 26(B)(3). To come within the qualified protection from discovery created by Rule 26(b)(3), a party claiming protection must show that the materials sought are: (1) documents and tangible things; (2) prepared in anticipation of litigation or for trial; and (3) by or for a party or by or for a party's representative. Greenbank v. Great Am. Assurance Co., No. 3:18-cv-00239-SEB-MPB, 2019 WL 6522885, at *9 (S.D. Ind. Dec. 4, 2019) (citing Caremark, Inc. v. Affiliated Computer Servs., Inc., 195 F.R.D. 610, 613–14 (N.D. Ill. 2000)).

“According to the Seventh Circuit, a dual purpose document, one prepared in anticipation of litigation and for another purpose as well, is work product only if the primary motivating purpose behind [its] creation is to aid in possible future litigation.” Smith-Brown v. Ulta Beauty, Inc., No. 18 C 610, 2019 WL 2644243, at *1 (N.D. Ill. June 27, 2019) (citing Binks Mfg. Co. v. Nat'l Presto Indus., Inc., 709 F.2d 1109, 1119 (7th Cir. 1983)). “Materials created in the ordinary course of business which may have the incidental effect of being helpful in litigation are not privileged under the work product doctrine.” Lynk Labs, Inc. v. Juno Lighting LLC, No. 15 C 4833, 2016 WL 6135711, at *2 (N.D. Ill. Oct. 21, 2016) (quotation omitted); Long v. Anderson Univ., 204 F.R.D. 129, 136 (S.D. Ind. 2001) (“[D]ocuments created as a result of the discovery opponent's ordinary course of business that would have been created irrespective of litigation are not under the protection of the work product doctrine.”) (quotation omitted).

*7 Ocwen summarily argues that “it is objectively clear that the [RCRs]” came into existence only because of the Consent Judgment in the D.C. District Court and were thus developed following the conclusion of a regulatory action in anticipation of potential litigation. (Dkt. 174 at 22). Ocwen, however, provides no support beyond this conclusory statement. Perhaps more importantly, as Plaintiff points out, “[n]ot all documents generated from an internal investigation are protected by the work product doctrine ‘simply because a company's internal investigation is coexistent with a present or anticipated lawsuit that is the same subject matter of the litigation.’ ” Long v. Anderson Univ., 204 F.R.D. 129, 136 (S.D. Ind. 2001) (citing Caremark, 195 F.R.D. at 614-15). Indeed, “the mere fact that litigation does eventually ensue does not, by itself, cloak materials prepared by an attorney with the protection of the work product privilege.” Id. (citing Binks, 709 F.2d 1109, 1118). Based on the limited information Ocwen provided to the Court, it is clear that the RCRs were created in response to the Consent Judgment, but it is not at all clear whether the “primary motivating purpose” behind their creation was to aid in future litigation. As such, the Undersigned concludes that the RCRs are not protected by the work-product privilege.

Accordingly, the Court finds that the Plaintiff's discovery request for the RCRs is relevant, proportional, not protected by any self-critical analysis privilege, and not protected by the work-product doctrine.

Plaintiff asserts that her numerous written correspondences, meet and confers, and participation in discovery conferences before the Undersigned demonstrate her exhaustive good faith attempts to resolve this discovery dispute, (Dkt. 170), and that Ocwen should “be sanctioned for its wholly unjustified noncompliance ....” (Dkt. 171 at 14). Specifically, Plaintiff seeks sanctions not only as a result of her successful Motion to Compel but also for Ocwen's certification of its unjustifiable boilerplate discovery responses. (Id. at 14-16). Ocwen maintains that its position was substantially justified, rendering sanctions inappropriate. (Dkt. 174 at 22-24).

Under Federal Rule of Civil Procedure 37, if a motion to compel is granted “the Court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion ... to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees ... [unless] the opposing party's nondisclosure, response, or objection was substantially justified” or “other circumstances make an award of expenses unjust.”

The Court concludes that Ocwen's position was substantially justified on all aspects of its refusal to produce the RCRs and objections to the same and, thus does not find sanctions to be appropriate at this time. Therefore, Plaintiff's request for sanctions is DENIED.

IV. Conclusion

Accordingly, the Plaintiff's Motion to Compel and for an Order Imposing Sanctions, Dkt. [170], is GRANTED IN PART and DENIED IN PART. The request for Risk Convergence Reports is GRANTED IN PART. Plaintiff will be required to submit a list of relevant RCR categories to Defendant on or before March 11, 2022. Defendant will be required to produce the relevant RCR categories on or before March 18, 2022. Plaintiff's request for sanctions is DENIED.

So ORDERED.

Date: 3/3/2022

Distribution:

All ECF-registered counsel of record via email

The facts were laid out in complete detail in the Court's Order on Defendants’ Motion to Dismiss. (Dkt. 133). As such, the Undersigned will reference only those facts necessary to render this opinion.

As the parties are well aware, the Undersigned previously addressed the RCRs in Todd v. Ocwen Loan Servicing, Inc., No. 2:19-cv-00085-JMS-DLP, 2020 WL 1328640 (S.D. Ind. Jan. 30, 2020), which is a similar case.