Court Denies CFPB Motion to Challenge Servicer’s Confidentiality Designations

A federal magistrate judge in Florida recently denied the CFPB’s motion to make public certain business information about a large mortgage servicer that had been designated as confidential because it contained trade secrets.

In the underlying enforcement action, the CFPB alleges the servicer violated numerous federal consumer financial protection laws relating to servicing, including improperly calculating loan balances, misapplying borrower payments, failing to correctly process escrow and insurance payments, and failing to properly investigate and make corrections in response to consumer complaints.

Prior to discovery, the CPFB and the servicer entered into a stipulated protective order, “a confidentiality and protective order which sets forth the procedures to be followed by the parties in regards to the potential disclosure of certain confidential materials during the course of discovery.”  Under the protective order, the parties agreed to seal information in four categories:  (1) Competitively Sensitive Information; (2) Confidential Commercial and Financial Information; (3) Sensitive Personal Information; and (4) Confidential Investigative Information.

After the servicer produced documents in response to discovery requests, the CFPB served interrogatories on the servicer.  The servicer responded to the interrogatories with a number of narrative answers and excel spreadsheets, both of which included information that the servicer designated as confidential.  The CFPB filed a motion challenging the confidentiality designations, arguing that the servicer was “one of the largest non-bank mortgage servicers in the United States” and that its request for confidentiality was “significantly outweighed by the substantial public interest in [the] government enforcement action.”

On June 25, 2018, the U.S. District Court for the Southern District of Florida denied the CFPB’s motion.  The court found that the servicer’s responses contained trade secrets, as the responses included confidential operational and financial information central to the servicer’s business.  The court determined that there was no common law right of access to the discovery at this stage in the case, but once the case progressed to trial, the confidential designations could be revisited by the Court.

The ORDER denying Plaintiff’s Motion to Challenge Defendants’ Confidential Designations, Consumer Fin. Prot. Bureau v. Ocwen Fin. Corp., No. 9:17-cv-80495 (S.D. Fla. Jun. 25, 2018), is available here.