Ex-CFPB Official Resists 'Fishing Expedition' Deposition in Student Loan Suit
Seth Frotman, the CFPB's former student loan ombudsman, said the deposition would set a “bad precedent” that would deter people from taking government posts.
December 05, 2018 at 08:01 AM
5 minute read
A prominent former Consumer Financial Protection Bureau official is resisting a deposition by Navient Corp. in a student loan lawsuit, arguing that the questioning would require him to discuss confidential information and amount to an “open-ended fishing expedition.”
Seth Frotman, the CFPB's former student loan ombudsman, filed papers in Pennsylvania federal court late Tuesday to block a subpoena issued by Delaware-based Navient, one of the country's largest student loan servicing companies. Frotman resigned from the bureau in August in protest of its Trump-appointed leadership.
Frotman's lawyer, former CFPB attorney Deepak Gupta of Washington's Gupta Wessler, said Navient is pressing to question Frotman “on a breathtakingly broad array of topics,” including privileged communications about the investigation and the “plainly irrelevant” circumstances of his resignation.
The subpoena challenge comes amid a bitter, yearlong discovery dispute between the CFPB and Navient, which has accused the agency of withholding thousands of documents. The agency sued Navient in January 2017, alleging the company misled borrowers and made mistakes that added billions of dollars to repayment bills.
The CFPB has pressed its case against Navient while otherwise pulling back on enforcement under the tenure of acting director Mick Mulvaney, who last year declared an end to the days of the agency “pushing the envelope.” Since taking control of the agency in November 2017, Mulvaney and his top aides have dropped pending cases, dramatically slowed new enforcement actions and weakened the office of fair lending.
Lawyers for Navient, represented by Wilmer Cutler Pickering Hale and Dorr, did not immediately comment.
Frotman ascended to the student loan ombudsman role in 2015, succeeding Rohit Chopra, who has since become a Democratic member of the Federal Trade Commission. Last week, Frotman launched his next step: the Student Borrower Protection Center, a Washington-based nonprofit that will focus on working with state and local officials to help borrowers.
Gupta argued that questioning a former high-ranking official about their government service is allowed only under “extraordinary circumstances” and that the questioning would address information Frotman is prohibited from discussing—either because of attorney-client privilege or other doctrines disallowing the disclosure of certain work at the agency.
“Absent intervention by this court, Navient's subpoena puts Mr. Frotman in an untenable situation: a choice between two incompatible legal commands,” Gupta wrote in Tuesday's filing. “On the one hand, the subpoena commands Mr. Frotman to appear for Navient's open-ended fishing expedition. On the other hand, even if he wanted to spill the beans about privileged and confidential matters arising from his government service, as things stand Mr. Frotman is legally barred from testifying.”
In 2017, the CFPB resisted an Ohio law firm's attempt to depose the agency's former director, Richard Cordray. In early December 2017, just weeks after Cordray stepped down as the agency's director, a federal judge denied the agency's request for a protective order preventing his deposition. Cordray would be deposed later that month in the Columbus, Ohio, office of Jones Day. The law firm Weltman, Weinberg & Reis Co. went on to prevail against the CFPB, beating claims that it misled debtors about the role lawyers played in collecting consumer debts.
Mulvaney had taken steps to weaken Frotman's former office, pushing it out of the agency's enforcement division into the section devoted to consumer education. In his resignation letter, Frotman accused Mulvaney of using the CFPB “to serve the wishes of the most powerful financial companies in America.”
In a declaration included among Tuesday's filings, Frotman said the deposition would set a “bad precedent” that would deter people from taking government posts.
“I fear that it would be a green light to litigants nationwide that they can drag me and other former high-level officials into the very large number of court cases over student-loan-servicing and other consumer-finance practices, which would be very burdensome,” Frotman wrote. “In addition to inappropriately pulling back the curtain on high-level policymaking, and chilling the frank exchange necessary to a good deliberative process, I also worry that this would discourage people from future public service.”
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