Anderson v. Credit One Bank, N.A.

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

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In re Orinn S. Anderson, Chapter 7

Debtor. Case No.: 14-22147 (JPM)

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Orinn S. Anderson, on behalf of himself and all

others similarly situated,

Adv. Pro. No. 15-8214 (JPM)

Plaintiffs,

– v –

Credit One Bank, N.A.,

Defendant.

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MEMORANDUM OPINION & ORDER

A P E A R A N C E S:

BOIES SCHILLER FLEXNER LLP

Counsel for Orinn S. Anderson

30 South Pearl Street, 11th Floor

Albany, New York 12207

By: George F. Carpinello

Adam R. Shaw

Jeffrey S. Shelly

CHARLES JUNTIKKA & ASSOCIATES LLP

Counsel for Orinn S. Anderson

1250 Broadway, 24th Floor

New York, New York 10001

By: Charles W. Juntikka

WHITE & CASE LLP

Counsel for Credit One, N.A.

1221 Avenue of the Americas

New York, New York 10020

By: Robert J. Basil

David A. Cohen

JOHN P. MASTANDO III

UNITED STATES BANKRUPTCY JUDGE1

This is an adversary proceeding arising in the bankruptcy case In re: Orinn S. Anderson,

Case No. 14-22147 (January 31, 2014). Before the Court is Defendant’s Motion to Decertify the

Damages Class and Subclass found at [Doc. 214] and [Doc. 215] (collectively, the

“Decertification Motion”) filed by the Defendant in this case, Credit One Bank, N.A.

(“Defendant” or “Credit One”). The Decertification Motion seeks the decertification of the

contempt class certified by this Court on June 3, 2022 (the Court’s Corrected Memorandum of

Decision on Motions for Sanctions and Class Certification, [Doc. 176], the “Certification

Decision”), following the Second Circuit’s decision in Bruce v. Citigroup Inc., 75 F.4th 297 (2d

Cir. 2023), cert. denied, 144 S. Ct. 565 (2024).

Filed in response to the Decertification Motion is the Memorandum of Law in Opposition

to Defendant’s Motion to Decertify the Class filed by the Plaintiff and Debtor in this case, Orinn

S. Anderson (the “Plaintiff”). [See Doc. 220] (the “Decertification Opposition”). Plaintiff

argues generally that “[t]he Second Circuit’s decision in Bruce does not in any way restrict this

Court’s ability to entertain a class for declaratory judgment relief.” [Id. at pp. 13–17] (“[N]othing

in Bruce limits this Court’s ability to issue a declaration on a class-wide basis that [Defendant’s]

conduct violated §§ 727(b) and 524(a).”).

1 Unless otherwise specified, references to “[Doc. __]” are to filings entered in the adversary proceeding Orinn

S. Anderson, on behalf of himself and all others similarly situated v. Credit One Bank., N.A., Case No. 15-8214

(January 30, 2015). References to “[Ch. 7 Dkt., Doc. ] are to filings entered in the bankruptcy case In re: Orinn S.

Anderson, Case No. 14-22147 (January 31, 2014).

References to “Bankruptcy Code § __ or Code § __” are to Title 11 of the United States Code. References to

“Bankruptcy Rule __” are to the Federal Rules of Bankruptcy Procedure. References to “Local Rule __” are to the

Local Bankruptcy Rules for the Southern District of New York.

Also before the Court is Plaintiff’s Motion to Amend the Complaint [Doc. 221] and the

supporting Memorandum of Law [Doc. 222] (collectively with [Doc. 221], Plaintiff’s “Motion to

Amend”). The Motion to Amend seeks leave to amend the complaint [Doc. 1] (the “Complaint”)

to “modify the scope of the class consistent with Bruce v. Citigroup, Inc., 75 F.4th 297 (2d Cir.

2023).” [Motion to Amend, Doc. 222, p. 5]. Defendant has opposed the Motion to Amend. [See

Defendant’s Memorandum of Law in Opposition to Plaintiff’s Motion for Leave to Amend the

Complaint, Doc. 232] (the “Amendment Opposition”).

Finally, before the Court is Plaintiff’s Motion to Declare Certain Documents Not

Privileged [Doc. 199] (the “Privilege Motion”), filed under seal on August 5, 2022. The Privilege

Motion argues, inter alia, that certain communications relied upon by Defendant’s former counsel,

Michael D Slodov, in his Motion to Intervene for Limited Purpose and Motion for Leave to Submit

Evidence for In Camera Inspection Only or in the Alternative, for Leave to File Under Seal [Doc.

190] (the “Slodov Motion”) are subject to the crime-fraud exception to attorney-client privilege

(the communications at issue shall be hereinafter referred to as the “Slodov Documents”). [See

Privilege Motion, Doc. 199, p. 1]. On August 31, 2022, Defendant filed under seal its Opposition

to Plaintiff’s Motion to Declare Certain Documents Not Privileged [Doc. 205] (hereinafter, the

“Privilege Opposition”), which asserts that the communications contained in the Slodov

Documents do not rise to the level of the crime-fraud exception. [Doc. 205, p. 23]. Plaintiff filed

under seal a Reply Brief in Further Support of Plaintiff’s Motion to Declare Certain Documents

Not Privileged [Doc. 207] (the “Privilege Reply”), responding to Defendant’s arguments and

further emphasizing that the Slodov Documents should be deemed non-privileged. [See generally

Doc. 207].

After careful consideration, and for the reasons set forth below in this Court’s opinion (the

“Opinion”):

(1) The Motion to Decertify found at Docket. No. 214 and 215 is DENIED.

(2) The Motion to Amend found at Docket No. 221 and 222 is GRANTED IN PART and

DENIED IN PART.

(3) The Privilege Motion filed under seal at Docket No. 199 is GRANTED IN PART and

DENIED IN PART.

I. BACKGROUND

A. PLAINTIFF’S BANKRUPTCY

Plaintiff is a former Chapter 7 debtor from Mount Vernon, New York. [See Ch. 7 Dkt.,

Doc. 1] (hereinafter the “Petition”). Defendant is a “banking association existing under the laws

of the United States with a place of business in Las Vegas, Nevada.” [Defendant’s Answer and

Affirmative Defenses, Doc. 17, p. 2] (the “Answer”).

Plaintiff filed for Chapter 7 relief on January 31, 2014. [Petition, p. 2]; [see also id. at pp.

16–18] (Plaintiff’s petition disclosing a number of unsecured, non-priority debts held by a variety

of creditors, including Defendant). On May 5, 2014, Plaintiff received a Discharge of Debtor

Order of Final Decree (the “Discharge Order”) providing, inter alia, that:

1. The Debtor is released from all dischargeable debts.

2. Any judgment not obtained in this court is null and void as to the personal

liability of the Debtor(s) regarding the following:

(a) debts dischargeable under 11 U.S.C. § 523(a);

(b) debts alleged to be excepted from discharge under 11 U.S.C. § 523(a)(2),

(4), (6) or (15) unless determined by this court to be nondischargeable;

(c) debts determined by this court to be discharged.

3. All creditors whose debts are discharged by this order or whose judgments are

declared null and void in 2 above, are enjoined from instituting or continuing any

action, employing any process or engaging in any act to collect such debts as

personal liabilities of the Debtor(s).

[Ch. 11 Dkt., Doc. 9, p. 1] (emphasis added).2 Plaintiff’s bankruptcy case was thereafter closed.

[Id.].

The Discharge Order was issued pursuant to a standard practice in Chapter 7 cases in which

a debtor obtains a discharge, whereby a discharge order is issued that functions as an injunction

against collection of discharged debts under Section 524(a)(2) of the Bankruptcy Code. [See

Certification Decision, Doc. 176, p. 50] (hereinafter the “Section 524(a)(2) Injunction”). Section

524(a) states in relevant part:

(a) A discharge in a case under this title—

(1) voids any judgment at any time obtained, to the extent that such

judgment is a determination of the personal liability of the debtor with respect to

any debt discharged under section 727, 944, 1141, 1192, 1228, or 1328 of this title,

whether or not discharge of such debt is waived;

(2) operates as an injunction against the commencement or continuation of

an action, the employment of process, or an act, to collect, recover or offset any

such debt as a personal liability of the debtor, whether or not discharge of such debt

is waived . . .

11 U.S.C. § 524(a)(1)–(2). On October 17, 2014, Plaintiff filed a Motion to Reopen Chapter 7

Case Due to the Violation of the Discharge Injunction. [See Ch. 11 Dkt., Doc. 11] (hereinafter

“Motion to Reopen”). As relevant here, the Motion to Reopen alleged:

On or about 8/23/14, subsequent to the granting and mailing of the Notice of

Discharge to [Defendant], [Plaintiff] acting with the assistance of counsel,

requested copies of his credit reports from Trans Union Equifax to ensure that the

credit reports would be correct after receiving his discharge. In response to

[Plaintiff’s] request for his credit reports, the Credit Reporting Agencies sent copies

of the credit reports to [Plaintiff]. Credit One reported [Plaintiff’s] account as

2 The Court entered an Amended Discharge of Debtor Order of Final Decree on September 14, 2017, that

“amended [the Discharge Order] nunc pro tunc to comply with the Bankruptcy Code in effect at the time the

[D]ischarge [O]rder was entered” in accordance with the provisions of the Bankruptcy Abuse Prevention and

Consumer Protection Act of 2005. [See Ch. 11 Dkt., Doc. 81, p. 1] (noting that the Discharge Order “was not in

compliance with The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 due to a clerical error”).

"charged-off" on the Trans Union and Equifax credit reports. These notations

indicate that the debt is still due and owing . . . Upon information and belief, Credit

One uses the threat of negative credit reporting as a tool to collect debts prior to the

filing of bankruptcy. Credit card companies generally use the threat of ruining

debtors' credit reports to pressure them into paying overdue debts. Credit One has

continued its collection efforts by falsely reporting the debt as due and owing on

the Debtor's credit reports even after the debt was discharged in the Debtor's

bankruptcy proceeding.

[Id. at pp. 2–43]; [see also id. at p. 5] (alleging further that Defendant “has a deliberate policy of

refusing to correct credit reports . . . when asked to do so by debtors and the aforesaid policy

constitutes a reckless and willful disregard of the bankruptcy laws, including the discharge

injunction issued by this Court”). The Court granted the Motion to Reopen on December 12, 2014.

[Ch. 11 Dkt., Doc. 26].

B. COMMENCEMENT OF THE ADVERSARY PROCEEDING

Plaintiff initiated the instant adversary proceeding on January 30, 2015. [See generally

Complaint, Doc. 1]. Plaintiff’s Complaint named Defendant and its affiliate as defendants and

made allegations similar to those made in the Motion to Reopen. Compare [Ch. 11 Dkt., Doc. 11,

pp. 2–5] with [Doc. 1, pp. 3–4] (claiming that Defendant maintains a “policy of refusing to update

the bankruptcy status of discharged accounts [that] constitutes willful acts to collect discharged

debts”). The Complaint also asserted a single cause of action for contempt3 for Defendant’s failure

to abide by the Section 524(a)(2) Injunction and sought certification of the following putative

class:

All individuals who, after May 3, 2007, have had a consumer credit report relating

to them prepared by any of the credit reporting agencies in which one or more of

their tradeline accounts or debts with Defendants was not reported as discharged

despite the fact that such debts had been discharged as a result of their bankruptcy

under Chapter 7 of the Bankruptcy Code.

3 The Court acknowledges that Plaintiff now argues that he always asserted a declaratory judgment claim as

well. [See Motion to Amend, Doc. 222, pp. 2–3].

[Complaint, Doc. 1, pp. 15, 17]4; [see also id. at p. 17] (“Both pursuant to its inherent authority

and pursuant to § 105 of the Bankruptcy Code, this Court may award appropriate declaratory and

injunctive relief and award compensatory and punitive damages, attorney’s fees and costs . . .”).

On February 27, 2015, Sessions, Fishman, Nathan & Israel, LLC (the “Sessions Firm”)

filed a letter regarding discovery and noting that it was counsel to Defendant. [See Doc. 6].

C. DEFENDANT’S MOTIONS TO COMPEL ARBITRATION, STRIKE CLASS

ALLEGATIONS, OR DISMISS/STAY

On March 3, 2015, Defendant filed the Motions to Compel Arbitration, to Strike Class

Allegations, to Dismiss or Stay [Doc. 7] (the “March Motion”). The March Motion made three

principal arguments with respect to Plaintiff’s claim for contempt:

(i) first, Defendant argued that Plaintiff must be compelled to “arbitrate all claims

asserted [] in the Complaint, as the parties to this action entered into an agreement

that claims related to collection or credit reporting would be resolved in binding

arbitration on an individual basis,” [id. at pp. 10, 18–19] (“The Federal Arbitration

Act authorizes the Court to compel arbitration” because, inter alia, Plaintiff’s

claims “are not based on provisions of the Bankruptcy Code that are remotely in

conflict with the Arbitration Act, [and] it [therefore] cannot be said that arbitration

of the Plaintiff’s claim would ‘necessarily jeopardize’ the objectives of the

Bankruptcy Code.”);

(ii) second, Defendant maintained that “[a]n order striking the class allegations is

required” because Plaintiff “waived the right to proceed with any claims against

Defendants on other than an individual basis; and because the claims are time

barred pursuant to 28 U.S.C. § 1658(a),” [id. at p. 1]; and

4 A tradeline is a description of a debtor’s credit status prepared by a creditor and provided by that creditor to

credit reporting agencies. See Bruce v. Citigroup Inc., 75 F.4th 297, 300 (2d Cir. 2023), cert. denied, 144 S. Ct. 565

(2024).

(iii) third, Defendant argued that dismissal pursuant to Rules 12(b)(1), 12(b)(6), and 21

was appropriate because, inter alia, “28 U.S.C. § 1334(c) prohibits any court other

than the district court in which [a bankruptcy] case under Title 11 is commenced or

pending . . . from exercising jurisdiction over property of the estate,” and because

“there is no private right of action for an alleged violation of the discharge

injunction,” id. at pp. 1–2.5

The Court largely denied6 the March Motion for reasons explained at a hearing held on

May 5, 2015. [See generally Doc. 16] (the transcript from the May 21, 2015 hearing, hereinafter

the “Dismissal Tr.”); [Doc. 15] (the Order resulting from the Court’s ruling with respect to the

March Motion, hereinafter the “Dismissal Order”). With respect to Defendant’s request for

arbitration, the Court held that the Federal Arbitration Act did not mandate the arbitration of

Plaintiff’s contempt claim, reasoning:

[Plaintiff’s claim] is [] fundamentally core. There's nothing more fundamental than

the discharge, as every court that has considered this issue has ruled . . . [and] [a]s

far as congressional intent is concerned, I have to believe that Congress still thinks

that debtors who have actually earned the discharge, the honest but unfortunate

debtor, should not be put to having to come up with the cost to initiate an arbitration

in front of non-judges, which as I said in an aside in [a prior decision] is completely

contradictory to the Supreme Court's case law . . . [Defendant is] not going to win

on this one . . . Section 105 . . . by its own terms, provides for enforcement of

individual provisions of the Bankruptcy Code, which are --clearly include Section

524 and 527 . . . [I]t's hard for me to believe that Congress, where there was an

allegation that the discharge is being violated, would so jeopardize the fresh start

as to require the debtor to shell out the cost of an arbitration and leave it up to the

arbitrator and/or the good graces of the credit card company . . . .

5 With respect to its third argument, Defendant also argued that dismissal pursuant to Rules 12(b)(1), 12(b)(6),

and 21 was appropriate because the Court “lacks subject matter jurisdiction to entertain non-core class action claims

involving the bankrupt estates of other debtors and debtor estates beyond the territorial boundaries of the Southern

District of New York,” and because “ the relief sought in this action in the form of declaratory and injunctive relief is

not available.” [March Motion, Doc. 7, pp. 1–2].

6 In addition to the arguments enumerated above, the March Motion argued that Defendant’s affiliate, which

was named as a defendant in Plaintiff’s Complaint, should be dismissed from this adversary proceeding because

“Plaintiff’s motion to reopen as well as the Court’s order granting leave to file an adversary complaint made no

mention of Plaintiff’s claim against [that affiliate].” [March Motion, Doc. 7, p. 34]. The Court agreed with that

argument. [See Dismissal Tr., Doc. 16, p. 67] (“[This bankruptcy] wasn’t reopened to permit suit of [the affiliate], so

that aspect of the [March] [M]otion’s granted.”).

[Dismissal Tr., Doc. 16, pp. 48–50]. Defendant appealed the Dismissal Order decision as to the

arbitration issue to the United States District Court for the Southern District of New York (the

“District Court”) on May 21, 2015. [See generally Doc. 19] (Defendant’s Notice of Appeal).7

The District Court affirmed the Dismissal Order on appeal. [See generally Doc. 72]

(hereinafter “District Court Decision”). Relying primarily on the Second Circuit’s decision in

MBNA America Bank, N.A. v. Hill, 436 F.3d 104 (2d Cir. 2006), the District Court reasoned:

[A]rbitrating Plaintiffs-Appellees' § 524 claims would necessarily jeopardize the

objectives of the Bankruptcy Code. . . [because, inter alia,] [t]he Bankruptcy Code

stems from “Congress's determination, rooted in Article 1, Section 8 of the

Constitution, that debtors should be able to discharge their debts and creditors

should have the benefit of uniform bankruptcy laws premised on that ultimate quid

pro quo.” Accordingly, “Congress made it a central purpose of the [B]ankruptcy

[C]ode to give debtors a fresh start in life and a clear field for future effort

unburdened by the existence of old debts.” The effectiveness of a bankruptcy

proceeding therefore relies exclusively on a functioning discharge. In order words,

only through enforcement of the discharge order can the discharge provided by the

Bankruptcy Court provide the debtor with a “fresh start,” a central objective to the

bankruptcy laws . . .

[District Court Decision, Doc. 72, pp. 10–11]. The District Court further explained:

[Additionally], uniform application of the Bankruptcy Code is furthered by federal,

class action litigation . . . Here, a number of debtors assert claims under virtually

identical agreements with one creditor—Credit One. Given that each individual

claim would be subject to separate arbitration, this could create wildly inconsistent

results . . . It is certainly plausible, if not probable, that . . . inconsistent decisions[]

would manifest in the instant case if the disputes were to be sent to separate

arbitrations. Thus, multiple violations of a discharge injunction by one creditor are

more efficiently and uniformly decided by federal litigation.

7 Although Defendant’s Notice of Appeal designated several issues for review, [see generally Doc. 19], insofar

as the Dismissal Order was concerned, the only issue raised by Defendant before the District Court was the argument

regarding arbitration. See In Re: Orrin S. Anderson, Case No. 15-cv-04227 (Southern District of New York, June 2,

2015) [Doc. 33, p. 1] (describing the “Statement of Issues” as being “[w]hether the Bankruptcy Court erred by deny

Credit One’s Motion to Compel Arbitration”).

[District Court Decision, Doc. 72, pp. 16–17]. For these reasons, the District Court concluded that

that this Court “had discretion to refuse to compel arbitration . . . and th[ere] [was] no clear error

in that aspect of th[is] [] Court’s decision.” Id. at pp. 17–18.

D. ANDERSON I

Defendant appealed the District Court Decision on July 13, 2016. See In re Anderson, Case

No. 15-cv-4227 (Southern District of New York, 2015) [Doc. 52]. On appeal, the Second Circuit

affirmed the District Court Decision. See generally In re Anderson, 884 F.3d 382 (2d Cir. 2018),

cert. denied, 139 S.Ct. 144 (2018) (“Anderson I”). The Second Circuit found that this Court “did

not abuse its discretion by denying [Defendant’s] motion to compel arbitration in this case,”

reasoning:

It is well established that the discharge is the foundation upon which all other

portions of the Bankruptcy Code are built. We have observed that “[b]ankruptcy

allows honest but unfortunate debtors an opportunity to reorder their financial

affairs and get a fresh start. This is accomplished through the statutory discharge

of preexisting debts” . . . . Th[is] “fresh start” is only possible if the discharge

injunction crafted by Congress and issued by the bankruptcy court is fully heeded

by creditors and prevents their further collection efforts. Violations of the

injunction damage the foundation on which the debtor's fresh start is built.

Following the logic of [prior cases], we find that arbitration of a claim based on an

alleged violation of Section 524(a)(2) would “seriously jeopardize a particular core

bankruptcy proceeding.” We come to this conclusion because 1) the discharge

injunction is integral to the bankruptcy court's ability to provide debtors with the

fresh start that is the very purpose of the Code; 2) the claim regards an ongoing

bankruptcy matter that requires continuing court supervision; and 3) the equitable

powers of the bankruptcy court to enforce its own injunctions are central to the

structure of the Code. The fact that [Plaintiff’s] claim comes in the form of a

putative class action does not undermine this conclusion . . . Accordingly . . . [w]e

hold that the bankruptcy court did not abuse its discretion by denying [Defendant’s]

motion to compel arbitration in this case.

Id. at 388–392.

E. THE CERTIFICATION DECISION

i. Discovery Proceedings

On May 21, 2015 (prior to the Second Circuit’s decision in Anderson I), Defendant filed the

Answer. [See generally Answer, Doc. 17]. The Answer generally denied the Complaint’s factual

allegations and raised, inter alia, the following affirmative defenses:

(i) that “Plaintiff’s claims are subject to mandatory arbitration,” [id. at p. 7];

(ii) that “[a]ll right, title and interest in Plaintiff’s account and the receivable with

[Defendant] was sold in May, 2012 . . . [and] [f]ollowing [the] charge off of the

Plaintiff’s account on March 27, 2012, [Defendant] retained no economic rights

associated with Plaintiff’s account or the receivable,” [id.];

(iii) that this Court “lacks subject matter jurisdiction to entertain this putative

nationwide class action premised on either the alleged violation of bankruptcy

discharge orders entered by other courts, the alleged violation of 11 U.S.C. § 524(a)

occurring outside this district, and over non-core claims of putative class members,”

[id. at p. 8]; and

(iv) that “[t]he appearance of ‘charge off’ on a zero balance sold account tradeline on a

bankrupt debtor’s post-discharge credit report does not constitute an ‘act, to collect,

recover or offset any such debt as a personal liability of the debtor’” within the

meaning of Section 524 of the Bankruptcy Code, [id. at p. 10].

The parties thereafter engaged in a contentious discovery process.8 As relevant here, both

Plaintiff and the United States Trustee sought discovery regarding Defendant’s relationship with

the purported third parties that purchased the discharged debt of the class, including, as this Court

later described:

the underlying buy/sell documents, whether and how [Defendant] retained any

remaining agency or economic interest or credit reporting role after its sale of the

debt, the degree of affiliation between buyer and seller, as well as any policies or

procedures of [Defendant] or communications between it and its debt buyers,

including its affiliates, and/or credit reporting agencies pertaining to credit

reporting of discharged debt -- all of which would illuminate the strength or

8 Following a meet-and-confer, the parties filed a Rule 26(f) Joint Report on April 30, 2015 that, inter alia, set

forth a number of deadlines for fact discovery primarily with respect to the merits of Plaintiff’s contempt claim. [See

Doc. 14, pp. 5–6] (providing that “[f]act discovery shall be completed by December 31, 2015”).

weakness of [Defendant’s] third through fifth defenses discussed above. [] [S]uch

discovery [was intended to] shed light on the meaningfulness of [Defendant’s]

“charge off” of the debt: a systematic policy of transferring distressed debt,

especially to an affiliate, [which would] at least suggest[] that the owners of

[Defendant] and its affiliated transferee(s) may have believed the debt to be

collectible notwithstanding [Defendant’s] accounting write off, at least opening the

door to the temptation to improperly pressure obligors to pay by refusing to correct

their credit reports after they received a bankruptcy discharge.

[Certification Decision, Doc. 176, pp. 24–25]. As discussed below, Defendant did not comply

with discovery on these issues. [See id. at p. 22] (“[Defendant] consistently thwarted [] discovery

on those issues -- including in the face of the Court’s orders directing it to provide such discovery

. . . .”).

On May 29, 2014, Plaintiff filed a letter with the Court that read:

[F]ollowing [the Dismissal Order], Plaintiff served a deposition notice on

[Defendant] under Federal Rule of Civil Procedure 30(b)(6). The proposed []

deposition is directed at the discovery of information regarding [Defendant’s]

organizational structure and the identification of the existence, location and format

of discoverable documents and information and is intended to assist Plaintiffs in

making its future discovery efforts more focused and efficient . . .

On May 21, 2015, [Defendant] served a 25-page response to the deposition notice

that objected to essentially every topic raised by Plaintiffs. The parties met and

conferred on May 26, 2015 with regard to [Defendant’s] objections to the

deposition notice. While [Defendant] has raised objections to the scope, location

and topics of the 30(b)(6) deposition notice, the fundamental disagreement between

the parties relates to the timing of the deposition. [Defendant] has taken the position

that it will not offer a witness for the deposition until the District Court has ruled

on its appeal of this Court's ruling that, inter alia, denied [Defendant’s] motion for

a stay [pending its appeal of the Dismissal Order].

Plaintiff contends that [Defendant’s] position is improper and in direct

contravention of the rulings of this Court.

[Doc. 24]. That same day, Defendant filed a Motion for Protective Order [Doc. 23] (the

“Protective Motion”) arguing, inter alia, that:

no discovery should proceed . . . [and that Defendant] should not have to provide

discovery that was “irrelevant” based on (a) its arbitration arguments, (b) its

argument that most, and perhaps all, of Plaintiff’s claims were time-barred, (c) its

argument that a report of “charged off, zero balance” allegedly “reflect[s] the fact

that the consumer is no longer liable for the discharged debt,” and (d) its argument

that in any event it sold the debt at issue before the discharge . . . .

[See Certification Decision, Doc. 176, p. 27] 9 (noting that “the first three points [were] denied by

the [Dismissal Order] and the last [was] clearly a fair subject for discovery”).

The Court held a hearing with respect to the Protective Motion on June 15, 2015. [See

generally Doc. 34] (the transcript from that proceeding). The Court denied nearly every request

made in the Protective Motion.10 Noting that many of the arguments made in the Protective

Motion had already been addressed—and denied—in the Dismissal Order, the Court thereafter

engaged in the following colloquy with then-counsel for Defendant, Michael Slodov:

There will be no -- no, let me be absolutely clear on this. This is in capital letters,

N-O, withholding of documents on the basis of a position that's contrary to any

ruling I have given in this case that permits this case to go forward. You are on

notice right now that if you do that, you'll be subject to Rule 11. The arrogance is

outrageous . . . [and] you need to be reasonable on this going forward. [] [I]t is

crystal clear that [Defendant’s] practices and policies dealing with the sale of debt

that's subsequently discharged and credit reporting are front and center in this

discovery [process] . . . There could be nothing more front and center than that

topic.

9 The Protective Motion also argued that:

(i) Plaintiff’s 30(b)(6) deposition of Defendant in New York “would result in [an] undue burden” because

Defendant’s principal place of business was in Las Vegas, Nevada, [Doc. 23, pp. 7–8];

(ii) the “scope of [Plaintiff’s] inquiry is so broad[] that ‘the burden or expense of the proposed discovery

outweighs its likely benefit,’” [id. at p. 18];

(iii) Plaintiff’s discovery requests were “not relevant and the scope of inquiry [was] overbroad” because

Plaintiff’s individual contempt claim was meritless, [id. at pp. 11–14]; and, relatedly,

(iv) Plaintiff “lack[ed] standing to pursue discovery on behalf of a class” because, inter alia, Plaintiff

“contractually waived the right to pursue a class against [Defendant],” [id. at pp. 15–17].

10 The Court granted the Protective Motion to the extent it requested that the 30(b)(6) deposition be held in Las

Vegas. [Doc. 34, 40:10–41:2].

[Doc. 34, 45:25–46:6, 46:10–14, 47:1–2]. The Court also advised Mr. Slodov that, if Defendant

continued to object to discovery requests on the basis of arguments that were rejected by the

Dismissal Order, “it will not be pleasant.” [Id. at 47:8–9].

Despite the Court’s admonishment, the parties subsequently exchanged a number of letters

regarding Defendant’s objections to Plaintiff’s discovery requests—objections that were largely

premised on arguments that the Court had already rejected.11 Notably, many of these letters were

attached to a letter to the Court filed by Defendant on November 25, 2015, which stated

unequivocally that “there are no ‘withheld’ documents or other documents the Court could order

[Defendant] to produce . . . .” [See generally Doc. 41]; [see also id. at p. 10] (“In response [to

Plaintiff’s request for additional documents], [Defendant] advised that it has no additional

responsive documents to any of these documents [sic] requests . . . [Defendant] cannot be

compelled to create documents it does not have, or produce documents it does not possess.”).

At the request of Plaintiff’s counsel, the Court held a discovery conference on December

9, 2015. [See generally Doc. 45] (transcript from that proceeding). Plaintiff’s counsel represented

that Defendant had failed to produce any documents regarding its “refusal to change credit reports

or update credit reports when someone’s debt has been discharged in bankruptcy.” [Doc. 45, p.

10]. The Court then engaged in the following discussion with Mr. Slodov:

The Court: Is there any other responsive –

11 See, e.g., [Doc. 41-1, a letter from Plaintiff’s counsel dated September 11, 2015] (“In no uncertain terms, [the

Court] said there i[s] absolutely no basis to withhold ‘documents based on issues you've already lost on’ . . . [but]

[Defendant] now withholds the very documents the Court ordered be produced . . . [Defendant’s] objections fly

directly in the face of [the Court’s] ruling.”); [Doc. 41-2, letter from then-counsel for Defendant dated September 18,

2015] (“[Defendant’s] defenses . . . are not foreclosed by any prior ruling by the Court . . . and nothing previously

filed or addressed by [the Court] forecloses [Defendant’s] objections . . . .”); [Doc. 41-3, letter from Plaintiff’s counsel

dated September 28, 2015] (“[V]irtually every one of Plaintiffs Document Requests relate to [Defendant’s] policies

and procedures concerning its treatment of consumer tradelines. In response, [Defendant] has produced just the

contracts for the sale or transfer of such tradelines, and compliance and reporting manuals for [Defendant’s] overall

business.”); [Doc. 41-4, letter from then-counsel to Defendant dated October 1, 2015] (“[Defendant] is not in

possession, custody or control over the documents of these entities, [Defendant] has no right, authority, or practical

ability to obtain the documents you seek, and therefore declines your [discovery] request.”).

Mr. Slodov: There’s no other documents.

The Court: There’s no other responsive documents?

Mr. Slodov: That’s what I’ve been told, Your Honor.

The Court: No, no. I want that under oath from the person responding to the

production. That needs to be -- it’s implicit, but I think I need it . . . And, of course,

obviously if there is any later introduction of any sort of policy, then there will be

hell to pay. So that just needs to be done. . . It’s implicit in every document

production that it’s completely responsive. All right? But from your answer to me,

I got the impression that you thought it wasn’t, so I want it under oath that [you]

have diligently pursued [discovery] with [your] client and they are prepared and

they will state under oath that they have no responsive documents.

Mr. Slodov: You want me to sign the declaration –

The Court: No, no, no. I want you to get that from them.

Mr. Slodov: Okay . . . [but] [Plaintiff’s] question[s] [are] the wrong question[s] in

this case . . .

The Court: [Y]ou are not allowed to pick and choose what you think the issues are

. . I’ve had enough . . . [Y]ou’ve heard it twice now. If you do this one more time,

if you pick and choose what you are free to respond to on discovery based on your

sense of what the merits are, I will rule against your company. I will draw an

adverse interest right then, right there and then. This is an absolute disgrace, that

position . . . Are we clear?

Mr. Slodov: Yes, Your Honor. . . .

[Id. at pp. 13:17–14:14, 16:9–17:11]; [see also id. at 17] (“The Court: I know what the issue is in

this case, and so do you, and you will respond, and you’ll do it through your client under oath, and

if they don’t have the documents, fine, we’ll move on. If it turns out they did, there will be hell to

pay.”).

On January 18, 2016, Defendant executed a verification under penalty of perjury through

its Senior Vice President of Risk Management and Rule 30(b)(6) witness, Helen Lanham (“Ms.

Lanham”). [Doc. 78-12] (the “Lanham Affidavit”). The Lanham Affidavit read in pertinent

part:

A. To the best of my information, knowledge, and belief, Credit One Bank N.A.’s

responses to Plaintiff Orin Anderson’s first request for production of documents are

true and correct.

B. The documents included among the 2,203 pages of materials produced are the

only documents responsive to the requests that have been located.

C. I am not aware of any other responsive documents in the possession, custody, or

control of Credit One Bank N.A., which have not been produced.

[Id. at p. 3]. The position taken by the Lanham Affidavit—that Defendant had provided Plaintiff

with every responsive document in Defendant’s “possession, custody, or control”—was reiterated

repeatedly to the Court, both by Mr. Slodov and Ms. Lanham.12

However, following the submission of the Lanham Affidavit, Plaintiff’s counsel conducted

further depositions, “in which Credit One employees stated that their documents had not been

searched and identified documents that had not been produced or listed on the privilege log.”

[Certification Decision, Doc. 176, p. 33]. On August 8, 2016, Plaintiff filed a Motion to Compel

and for Sanctions (the “Sanctions Motion”), asserting that “[d]espite repeated warnings from this

Court, Credit One continues to disregard the requirements of the Federal Rules of Civil Procedure

and this Court’s explicit orders, and refuses to produce responsive documents and a knowledgeable

corporate designee for deposition.” [See Doc. 78, p. 1]. The Court held a hearing on the Sanctions

Motion on September 22, 2016. [See Doc. 89] (the transcript from that hearing). At the September

12 [See, e.g., Doc. 81-18, pp. 15–17] (where, at a hearing held February 22, 2016, Mr. Slodov states that “I think

it’s disingenuous for [P]laintiff’s counsel to say that they’ve gotten next to nothing from [Defendant]. [Defendant]

has produced what it has”); [Doc. 76-1] (where, in another declaration filed under penalty of perjury, Ms. Lanham

details the “steps [] undertaken to locate responsive documents and records”); [Doc. 76] (where, in a letter to the Court

dated July 18, 2016, Mr. Slodov states that Defendant “has produced all documents responsive to Plaintiff’s July 2015

document requests”); [Doc. 85, p. 32] (where Mr. Slodov reiterates that “CREDIT ONE HAS PRODUCED ALL

RESPONSIVE DOCUMENTS”) (emphasis in original).

22, 2016 hearing, Defendant’s counsel admitted that Defendant had not actually conducted a

complete search for responsive documents, even though Defendant had previously represented

under oath that Defendant had:

Mr. Slodov: My understanding, Your Honor, after going through the process of securing

the amended verification, [is] that Credit One did not do any email searches.

The Court: None.

Mr. Slodov: None.

The Court: No email searches.

Mr. Slodov: ‘None.

The Court: Even though the amended verification says -- refers to email, the central email?

Mr. Slodov: It refers to it, but it doesn’t say it was searched.

The Court: Well, I’m glad we’re hearing that now two hours into this hearing. I’m

astonished. What’s the reason for that?

Mr. Slodov: It had to do with in-house counsel, who is no longer at Credit One Bank, who

dropped the ball on that.

The Court: And when did you learn this?

Mr. Slodov: It would have been in March.

The Court: In March?

Mr. Slodov: Yep.

The Court: And I just learned of it now. . . .

[Certification Decision, Doc. 176, p. 38]. Following that hearing on the Sanctions Motion, on

October 12, 2016, Mr. Slodov and the Sessions firm (collectively “Debtor’s Prior Counsel”)

moved to withdraw from their representation of Defendant. [See Doc. 90] (Defendant’s Motion to

Substitute Attorney White & Case LLP for Sessions, Fishman, Nathan & Israel, LLC, dated

October 12, 2016, the “Counsel Substitution Motion”). The Court granted the Counsel

Substitution Motion by order entered October 18, 2016. [See Doc. 95].

ii. Sanctions and Class Certification

Plaintiff thereafter filed his Motion for Class Certification and to Appoint Class Counsel

[Doc. 109] (the “Class Motion”) on April 27, 2017. The Class Motion was heard at a hearing held

on October 12, 2017. [See generally Doc. 150] (the “October 12, 2017 Hr’g Tr.,” and said

hearing hereinafter the “October 12, 2017 Hearing”). While the Class Motion was pending,

Plaintiff and Defendant attempted to settle the dispute; however such settlement negotiations were

unsuccessful. [See Doc. 158]. The parties then attempted mediation, which was also unsuccessful.

[See Doc. 161].

The Court ultimately granted both the Sanctions Motion and the Class Motion in the

Certification Decision issued June 3, 2022. [See generally Certification Decision, Doc. 176]. With

respect to the Class Motion, after engaging in a “rigorous analysis” under Federal Rule of Civil

Procedure 23 [see id. p. 66], the Court certified a class (the “Main Class”) comprised of:

all individuals who after May 3, 2007, have had a consumer credit report relating

to them prepared by any of the credit reporting agencies in which one or more of

their tradeline accounts or debts with [Defendant] was not reported by [Defendant]

as “discharged” or “included in bankruptcy” but, rather, as “charged off” or “-$0-

balance” notwithstanding the fact that such debt(s) had been discharged as a

result of their bankruptcy under chapter 7 of the Bankruptcy Code; provided, that

such debt(s) shall have been (i) unsecured and (ii) not the subject of a valid and

enforceable reaffirmation agreement . . . .

[Id. at p. 81]. The Court also certified a subclass (the “Sub-Class”) “compris[ed] of the [] people

who . . . paid any of such debt(s), with the members of such sub-class to be entitled to repayment

of such debt payments in addition to [] sanctions . . . if such repayment is shown to have been

proximately caused by [Defendant’s] credit reporting policy.” [Id. at pp. 81–82].

With respect to the Sanctions Motion, the Court found that the imposition of a default

judgment was appropriate given Defendant’s prolonged, willful misconduct throughout the course

of discovery.13 As a result, Defendant was deemed to have admitted “all [the] well-pleaded factual

allegations in [Plaintiff’s] [C]omplaint, except for those relating to damages.”14 [Id. at p. 48]. The

Court thereafter found that Defendant was in contempt of both Plaintiff’s individual discharge

injunction and the injunctions of the class.15 [Id. at p. 46]. For this reason, the Court awarded the

Class two forms of monetary recovery:

(i) “[attorneys’] fees and expenses,” a sanction the Court found “appropriate” given

Defendant’s “systematic violation of [each plaintiff’s] discharge injunction,” [id. at p.

60, 62]; and

13 [See Certification Order, Doc. 176, p. 4] (“[T]he Court will enter a default judgment on liability and a partial

judgment on sanctions against [Defendant] in favor of Plaintiff under Fed. R. Civ. P. 37(b)(2)(A)(vi), incorporated by

Fed. R. Bankr. P. 7037”); [see also id at p. 41] (“[Defendant’s] conduct violated the Court’s July 15, 2015, December

9, 2015, and February 22, 2016 bench orders on discovery, which were clear and which [Defendant’s] counsel

acknowledged he understood. Those orders were accompanied by warnings of severe consequences to [Defendant] if

they were not complied with.”); [id. at pp. 41–42] (“[Defendant] falsely stated to the Court nine different times . . .

that it had provided a complete response to Plaintiff’s document requests. The falsity of these representations was

neither minor nor a matter of excusable neglect; indeed, [Defendant] has not offered any excuse for its knowing

failures.”)

14 [See id. at p. 48] (“The consequence of that default judgment is the deemed admission of all well-pleaded

factual allegations in the complaint, except for those relating to damages.”) (emphasis added); [see also id. at p. 66]

(“[W]hile as a general principle the factual allegations in a complaint are deemed admitted upon the defendant’s

default, Fed. R. Civ. P. 23(c), incorporated by Fed. R. Bankr. P. 7026, imposes an independent duty to satisfy the

requirements for class certification after employing the ‘rigorous analysis’ required by that Rule.”).

15 Notably, the Court also observed that:

[Defendant’s] failure to provide a legitimate reason, notwithstanding repeated opportunities to do

so, for its policy not to correct its tradelines to reflect the bankruptcy discharge, coupled with its

extraordinary efforts to thwart discovery designed to test its asserted defenses, as well as the dribs

and drabs that, despite those efforts, emerged during discovery to show the falsity of those defenses,

makes it hard to see how [Defendant] would ever defeat Plaintiff’s claim that its policy violated the

discharge [injunction].

[Certification Order, Doc. 176, p. 46].

(ii) a “mild uniform non-compensatory civil sanction” given that Defendant—a

“sophisticated financial institution”—had engaged in a “systematic, willful [and]

egregious” violation of the discharge injunctions of more than 200,000 plaintiffs, [see

id. at p. 63] (“The failure to recognize such a sanction would leave discharged debtors

to endure in derogation of the statute until they experience an added consequence of

the violation, and encourage others to engage in similar acts until caught.”).

Notably, the Court awarded the attorneys’ fees as sanctions in the Certification Decision

“jointly and severally between client and counsel”—that is, jointly and severally among the

Defendant and Mr. Slodov and his firm. [Certification Decision, Doc. 176, p. 44] (discussing

Defendant’s independent misconduct and observing that “[n]ot only is [Defendant] a sophisticated

financial institution with experience in conducting discovery, its Rule 30(b)(6) witness signed two

false verifications, was unprepared and unresponsive in her Rule 30(b)(6) deposition, and, as

represented by both that witness and Mr. Slodov, [its] woefully inadequate response to Plaintiff’s

discovery requests was led by its in-house counsel”) (emphasis added).

F. THE SLODOV MOTION AND PRIVILEGE MOTION

Less than one month after the issuance of the Certification Decision (but six years

following his withdrawal), Mr. Slodov filed the Slodov Motion, which requested intervention for

the “limited purpose” of:

(a) submitting evidence relating to apportionment of monetary sanctions to

be awarded in connection with [the Certification Decision]; (b) []

demonstrate[ing] that [Mr. Slodov] did not advise [Defendant] to take

any of the actions resulting in sanctions; and (c) [demonstrating that] it

would be unjust to award sanctions against [Mr. Slodov] personally and

in that regard, and that the [C]ourt take into consideration [his] ability

to pay.

[See Slodov Motion, Doc. 190, at pp. 1–2] (moving in the alternative for “leave to submit [certain

privileged documents] for in camera inspection by the Court only, or alternatively, [potentially]

[]that the same be filed under seal”). Attached in support of the Slodov Motion were, inter alia,

potentially privileged communications between Defendant, Mr. Slodov and his firm that—

allegedly—indicate that Mr. Slodov “proceeded in good faith in attempting to conform [his]

conduct to the [C]ourt’s directives . . . .” [Id. at p. 7] (“[A]nd if I did make any statement that the

[C]ourt believes was knowingly false, it was not owing to any bad faith or willfulness . . . .”); [see

also id. at p. 15] (claiming that Defendant “was fully aware of and directed” Mr. Slodov’s conduct

“throughout the entire duration of this litigation”) (the attached communications referred to

hereinafter as the “Slodov Documents”). Those communications were redacted to protect

attorney-client privilege.

Nevertheless, on August 5, 2022, Plaintiff filed the Privilege Motion [Doc. 199], followed

shortly thereafter by Defendant’s Privilege Opposition [Doc. 205], both of which are discussed in

more detail below. Before any decision was rendered regarding the Privilege Motion or privilege

as to the Slodov Documents, the Second Circuit issued a decision in an almost identical case that

directly impacts the case here.

G. BRUCE V. CITIGROUP INC.

Before the Privilege Motion was decided, on August 2, 2023, the Second Circuit decided

Bruce v. Citigroup Inc., 75 F.4th 297 (2d Cir. 2023), cert. denied, 144 S.Ct. 565 (2024)

(“Bruce”).16 There, the Second Circuit considered a case including the following facts and

allegations:

(i) the named plaintiff was a former Chapter 7 debtor whose credit card debt had been

discharged at the close of her bankruptcy, id. at 300;

(ii) the defendant—the plaintiff’s former credit card company—had, post-discharge,

refused to update her credit report to reflect the fact that her debt had been

discharged, [id.];

16 Bruce was the second time the Second Circuit considered an appeal from the underlying adversary

proceeding. See generally In re Belton v. GE Capital Retail Bank, 961 F.3d 612 (2d Cir. 2020) (citing, inter alia,

Anderson I and finding that “the [Bankruptcy] Code is in ‘inherent conflict’ with arbitration . . . [and] under

[applicable] precedent, that is enough to displace the Arbitration Act”).

(iii) the named plaintiff thereafter reopened her bankruptcy to file an adversary

proceeding against the defendant, alleging that the defendant had, inter alia,

engaged in a “contempt of the statutory injunction set forth in § 524(a)(2),” [id.];

and

(iv) the named plaintiff’s complaint sought to “certify a nationwide class of former

debtors on the ground that [the defendant] similarly refused numerous post-

discharge requests to correct erroneous tradelines,” [id.].

In the bankruptcy court, the defendant in Bruce, prior to answering the plaintiff’s

complaint, originally moved to dismiss the case or alternatively, to strike the plaintiff’s class

allegations. Id. at 301. Specifically, the defendant argued in its motion to dismiss that the class

allegations were not permissible because the court did not have jurisdiction in a putative class

action to hold parties in contempt of other courts’ discharge injunctions. [Bruce Dkt, Doc. 48, p.

16].17 The bankruptcy court, however, denied the motion, “ground[ing] [its] authority in § 105 of

the Bankruptcy Code, which provides that a bankruptcy court ‘may issue any order, process, or

judgment that is necessary or appropriate to carry out’ the Code.” Id. The defendant subsequently

appealed, and “the district court certified the bankruptcy court's order for direct appeal.” Bruce, 75

F.4th at 301.

The Second Circuit found in favor of the defendant, ruling that the Bankruptcy Code does

not authorize a bankruptcy court to hold a party in contempt for violating another bankruptcy

court's Section 524(a)(2) Injunction. Id. at 302. Bruce reasoned as follows:

The class-wide relief sought by plaintiff raises a fundamental question: does the

Bankruptcy Code authorize one bankruptcy court to employ its contempt power on

behalf of other bankruptcy courts in a nationwide class action to enforce those

bankruptcy courts’ discharge orders? . . . [However,] as has long been the case

outside of the bankruptcy context, a particular bankruptcy court's civil contempt

authority does not extend beyond the enforcement of its own orders . . . [and]

17 References to “[Bruce Dkt., Doc. __]” are to filings entered in the adversary proceeding Kimberly Bruce, Debtor

and Plaintiff on behalf of herself and all others similarly situated v. Citigroup Inc., Citbank, N.A., and Citibank (South

Dakota), N.A, Case No. 14-8224 (April 30, 2014), which is part of the lead bankruptcy case filed in the United States

Bankruptcy Court for the Southern District of New York, In re: Kimberly Bruce, Case No. 13-22088 (January 24,

2013).

[p]laintiff fails to offer a single example of one court exercising its civil contempt

authority on behalf of another court's injunction. Nor are we aware of any. As

telling as that gap is, it's of no surprise. The civil contempt power is, at its core,

uniquely personal to each court; by providing a mechanism to mandate compliance

when a court is confronted with disobedience, it is a necessary corollary to a court's

authority to issue binding orders . . . [and] a court's broad authority to identify,

prosecute, adjudicate, and sanction contumacious conduct makes for a “potent

weapon” . . . .

At bottom, plaintiff seeks a bankruptcy-specific expansion of the civil contempt

power beyond its longstanding limits at equity. Congress is capable of intervening

to guide the exercise of a bankruptcy court's civil contempt power. But “a major

departure from the long tradition of equity practice should not be lightly implied” .

. . [C]ourts must take statutes as they find them, and, as written, the Code leaves

intact the longstanding equitable principles regarding the enforcement of

injunctions. A bankruptcy court's civil contempt authority does not extend to other

bankruptcy courts’ discharge orders in a nationwide class action. The class-wide

relief sought by plaintiff is therefore unavailable . . . .

Id. at 302–306 (citing, inter alia, Taggart v. Lorenzen, 587 U.S. 554 (2019)) (internal citations

omitted).18

Importantly, however, the Bruce plaintiff had argued that applicable Supreme Court

precedent “does not speak at all to whether she (and her proposed fellow class members) are

entitled to declaratory relief and damages.” Bruce, 75 F.4th at 306 n.9. The Second Circuit—

finding that the plaintiff “ha[d] [not] asserted separate and distinct claims for declaratory relief and

damages”—declined to answer that question, and instead limited its decision to the contempt

claim. See id. at 299, 306 n.9. Indeed, the Second Circuit stated: “[w]hether and to what extent

relief short of contempt sanctions is available in the case of a discharge violation for which a fair

ground of doubt remains is a question for another day.”) Id. at 306 n.9 (emphasis added).

18 Regarding the Second Circuit’s observation that “[p]laintiff fails to offer a single example of one court

exercising its civil contempt authority on behalf of another court's injunction,” Bruce also noted that “the cases

[plaintiff] cites concern statutory grants of power which in specific, limited cases broaden a court's power to protect

or provide relief from orders entered by other courts.” Bruce, 75 F.4th at 303.

II. THE INSTANT MOTIONS

A. THE DECERTIFICATION MOTION AND MOTION TO AMEND

Defendant filed its Decertification Motion on October 23, 2023, following the Second

Circuit’s ruling in Bruce. [See generally Decertification Motion, Doc. 215]. The Decertification

Motion makes two primary arguments:

(i) first, that Bruce “requires decertification of the Main [] Class and the [] Subclass”

because “this Court [] lacks [] the authority to adjudicate claims that [Defendant]

has violated the discharge injunctions of other courts,” [see id. at pp. 17–18]; and

(ii) second, that the Main Class “must also be decertified for the second, independent

reason that [Bruce] confirms that a bankruptcy court’s contempt power is not

greater than the contempt power of a district court and therefore precludes the

punitive damages award that was the foundation for the Main [] Class,” [id. at p.

19].

Plaintiff filed his Decertification Opposition on December 15, 2023. [Decertification

Opposition, Doc. 220]. Plaintiff asserts that:

(i) Bruce “only affects the contempt remedies sought in this action . . . [and] does not

give [Defendant] a pass on liability,” [id. at p. 8];

(ii) accordingly, Bruce permits the certification of a “declaratory judgment class,” a

vehicle that would allow the Court to “declare the actions of [Defendant] to be

violative of § 524 without addressing any issue of contempt of the individual

discharge orders rendered in each class member’s [] bankruptcy,” [id.]; and

(iii) alternatively or additionally, Bruce does not preclude the Court from “award[ing]

Rule 37 sanctions on a class-wide basis to the class proximately caused by

[Defendant’s] ‘repeated, lengthy and willful discovery failures,’ and its ‘prolonged,

extraordinary, wrongful efforts to prevent the exploration of its defenses to the

complaint’s allegations,’” [id.] (internal citations omitted); and, finally,

(iv) Bruce does not otherwise preclude the Court from “order[ing] [the] restitution of

all funds paid by class members on discharged debts caused by [Defendant’s]

illegal collection practices without a finding of contempt,” [id.].19

In connection with his Decertification Opposition, Plaintiff filed the Motion to Amend on

December 15, 2023. [See generally Motion to Amend, Doc. 222]. The Motion to Amend first

notes that, in Bruce, the Second Circuit “constru[ed] a complaint asserting similar causes of action

to the Complaint filed herein . . . [to not] request [] declaratory relief, even though the first

paragraph of th[at] complaint sought such relief and declaratory relief was expressly requested in

a ‘wherefore’ clause at the end of the complaint.” See id. at pp. 5, 7 (“Plaintiff [] only move[s] to

amend his Complaint now out of an abundance of caution to conform to the holding of the Second

Circuit Court of Appeals in Bruce [II], [which] constru[ed] a virtually identical complaint as

lacking a claim for declaratory judgment.”).

Accordingly, Plaintiff seeks leave to amend the current Complaint to, inter alia, expressly

request relief under the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. [See Doc. 223-1, p.

18] Plaintiff’s Proposed Amended Complaint, hereinafter “Proposed Amended Complaint,” p.

19 Plaintiff also argues that, in any event, “Plaintiff’s counsel are entitled to full payment of their attorneys’

fees.” [Decertification Opposition, Doc. 220, p. 9]. Defendant does not contest this position, [see Doc. 229,

Defendant’s Reply Memorandum of Law in Support of Defendant’s Motin to Decertify the Damages Class and

Subclass, hereinafter “Def. Reply”], but maintains that “attorneys’ fees alone cannot serve as the sole basis for

certifying a damages class,” id. at p. 18.

18].20 Although the proposed class definition remains the same,21 Plaintiff also seeks to divide

that class based upon the relief that is allegedly available to each member under Bruce. [See id. at

p. 16] (“Plaintiff seeks certification of a national class for declaratory, injunctive, monetary, and

restitutionary relief (‘National Class’) and a class limited to the Southern District of New York for

relief for contempt for violation of § 524 and th[ose] class members’ individual discharge orders

(‘Southern District Class’).”) (emphasis added).

Defendant filed its Amendment Opposition on February 7, 2024. [See generally

Amendment Opposition, Doc. 232]. The Amendment Opposition contains five primary

arguments:

(i) first, Defendant argues that Bruce precludes the assertion of a class-wide

declaratory judgment claim because “there is no meaningful difference between a

finding of contempt and a binding ‘declaration’ that a party has violated a

[discharge injunction],” [id. at p. 7];

20 Plaintiff’s Proposed Amended Complaint also includes several other amendments, including:

(i) the removal of references to Defendant’s affiliate, [see generally Doc. 223-1, Proposed Amended

Complaint];

(ii) a paragraph referencing Defendant’s “persistent, willful and contumacious disregard for the rules of

discovery in this action and by its willful misrepresentations to this Court and its willful violations of

Court orders,” id. at p. 17; and

(iii) the removal of Plaintiff’s original request for “declaratory and injunctive relief and [] compensatory and

punitive damages, attorney’s [sic] fees and costs for Defendant[‘s] violation of § 524(a)(2),” id. at p. 19.

21 Plaintiff’s Proposed class definition includes:

All individuals who, after May 3, 2007, have had a consumer credit report relating to them prepared

by any of the credit reporting agencies in which one or more of their Tradeline accounts or debts

with Defendant was not reported as discharged despite the fact that such debts had been discharged

as a result of their bankruptcy under Chapter 7 of the Bankruptcy Code.

[Proposed Amended Complaint, Doc. 223-2, p. 16]. This definition is virtually identical to the Main Class

provided in the Certification Order, although the Court’s definition excluded former debtors with secured

debts and those whose debts were subject to a valid reaffirmation agreement. [See Certification Order, Doc.

176, p. 81] (conditioning class membership upon “such debt(s) [] hav[ing] been (i) unsecured and (ii) not the

subject of a valid and enforceable reaffirmation agreement . . . .”).

(ii) second, even if Bruce permitted class-wide declaratory relief, the Court should not

allow the Complaint to be amended as this would severely prejudice Credit One,

[id. at p. 12];

(iii) third, Plaintiff should not be allowed to amend the contempt class definition to

assert a class limited to the Southern District of New York [id. at p. 17];

(iv) fourth, Plaintiff should not be permitted to amend the Complaint to “add additional

allegations related to discovery,” [id. at p. 19]; and

(v) finally, “if Plaintiff is permitted to amend the Complaint, the default judgment must

be vacated.” [id. at p. 20].

B. THE PRIVILEGE MOTION

Also pending is the Plaintiff’s Privilege Motion, which spans the procedural history of this

case pre-Bruce and post-Bruce, having been filed in August of 2022 and argued at the hearing on

July 24, 2024. Plaintiff asserts in the Privilege Motion that, based on the Slodov Motion and

Slodov Documents, “Credit One and its counsel engaged in a fraud on the Court that eliminates its

claim of privilege over the documents at issue.” [Privilege Motion, Doc. 199, p. 9]. Plaintiff

further argues that these documents are relevant to a subsequent damages determination for

Plaintiff and the classes as “the ‘egregiousness’ of the misconduct is a factor in determining the

amount of damages to assess.” [Id. at p. 6] (citing BMW of N. Am., Inc. v. Gore, 517 U.S. 559,

582 (1996)). In addition to the Slodov Documents, Plaintiff asserts that Defendant’s new counsel,

White & Case (hereinafter, “Defendant’s New Counsel”), have “continued the fraud on the

Court,” by “falsely placing all the blame on Mr. Slodov” and “failing to disclose facts that Mr.

Slodov believed the attorneys had an ethical duty to disclose.” [Id. at pp. 12–13].

In the Privilege Opposition, Defendant argues that neither the communications between

Defendant and Defendant’s Prior Counsel nor the communications between Defendant and

Defendant’s New Counsel should be subject to the crime-fraud exception. [Privilege Opposition,

Doc. 205, p. 20]. Defendant further argues that anything contained in the Slodov Documents is

not relevant to any of the outstanding issues in the case because the Certification Decision “was

clear that the sanction for the discovery violations was the default judgment.” [Id. at p.31]

(emphasis in the original).

C. THE JULY 24, 2024 HEARING

On July 24, 2024, the Court held a hearing (the “July 24 Hearing”) on the Decertification

Motion, the Motion to Amend, the Privilege Motion, and all related filings. See generally [Notice

of Hearing, filed at Doc. 235]; [Doc. 237] (Transcript regarding Hearing Held on 07/24/24,

hereinafter the “July 24 Hr’g Tr.”).

DISCUSSION

III. JURISDICTION

Judge Drain established in the Certification Decision that the Court has jurisdiction over

this core proceeding as it relates to the enforcement of the Chapter 7 discharge, which is “the

foundation upon which all other portions of the Bankruptcy Code are built.” [Certification

Decision, Doc. 176, p. 5] (quoting Anderson v. Credit One, 884 F.3d at 889). Judge Drain further

stated:

Jurisdiction flowing from those sections of the Bankruptcy Code and 28 U.S.C. §§

157(a)-(b) and 1334(b) therefore can be exercised to determine whether, in

recognition of the power conferred by Bankruptcy Rule 7023, the Court should

certify a nationwide class of debtors whose identical discharge orders were

allegedly breached by implementation of the same, uniformly applied policy, the

issue presently before this Court.

[Certification Decision, Doc. 176, p. 9]. Accordingly, the Court continues to have jurisdiction

over this adversary proceeding under 28 U.S.C. §§ 157(a)-(b) and 1334(b) and the Amended

General Order of Reference, dated January 31, 2012 (Preska, C.J.).

IV. ANALYSIS

This case raises a significant and developing issue of bankruptcy law—namely, what relief

is available to former Chapter 7 debtors who have suffered a violation of their bankruptcy

discharge. The Second Circuit’s Bruce decision (and the Supreme Court’s subsequent denial of

certiorari) does not establish with finality that a plaintiff’s only remedy for a violation of the

Section 524(a)(2) Injunction is an individual contempt claim in the original court that issued the

injunction. Rather, the Bruce decision left open whether certain relief could be granted to such

plaintiffs, and clearly ruled out one possibility, i.e., a class-wide contempt claim.

The Court finds that certain of the issues are—as the parties conceded at the July 24

Hearing—too “wrapped up and intertwined” for the Court to simply break its analysis down

motion by motion. [See July 24 Hr’g Tr., Doc. 237, p. 4]. The Court believes thus that resolution

of this matter is best achieved by addressing a series of related legal questions presented.

The Court will accordingly address five overarching issues (some with additional sub-

issues):

(A) Does Bruce prohibit any class actions based on violations of the Section 524(a)(2)

Injunction?

(B) Has Plaintiff satisfied the applicable standard to amend the Complaint?

(C) How would the Proposed Amended Complaint affect the ruling in the Certification

Decision?

(D) Are the Slodov Documents relevant to a subsequent damages award?

(E) Does the crime-fraud exception to the attorney-client privilege apply to the Slodov

Documents?

The Court begins with the basic question that has brought this decade-old dispute back here in the

first place.

A. BRUCE DOES NOT PROHIBIT CLASS ACTIONS BASED ON VIOLATIONS OF

SECTIONS 524 AND 727 OF THE BANKRUPTCY CODE.

First, the Court finds that the Second Circuit’s decision in Bruce does not necessarily

prohibit a class action claim for a violation of the Section 524(a)(2) Injunction based on a claim

other than contempt.

In the Decertification Motion, Defendant essentially asks the Court to undo every ruling

Judge Drain made in the Certification Decision with respect to class certification. [See generally

Decertification Motion, Doc. 215]. Defendant specifically quotes the Second Circuit’s statement

in Bruce that “[w]e disagree that a bankruptcy court has the authority to hear and adjudicate a

class-wide contempt proceeding. That leaves only plaintiff’s individual claim against Citi.” [Id.

at p. 1] (quoting Bruce, 75 F.4th at 299). In its explanation of the relevant legal standard,

Defendant argues that (i) courts must continue to reassess class rulings throughout a case

[Decertification Motion, Doc. 215, p. 12]; (ii) courts should decertify a class if it appears that Rule

23 is no longer met [id.]; and (iii) an “intervening change of controlling law” is a reason to decertify

a class [id. at p. 13] (citing Gulino v. Bd. of Educ. of the City Sch. Dist. of N.Y., 907 F. Supp. 2d

492, 504 (S.D.N.Y. 2012)). Accordingly, Defendant asserts that Bruce constitutes one such

intervening change of controlling law: namely that “under the Second Circuit’s clear holding in

Bruce, in this virtually identical case, this Court also lacks [] the authority to hear and adjudicate

a class-wide contempt proceeding against Credit One or otherwise to adjudicate claims that Credit

One has violated the discharge injunctions of other bankruptcy courts.” [Decertification Motion,

Doc. 15, p. 14].

However, as Plaintiff argues, “[t]he Court in Bruce made it very clear that its holding was

limited to contempt, and it specifically held that it was not precluding other remedies short of

contempt that a plaintiff or a class may have to redress violations of § 524(a).” [Decertification

Opposition, Doc. 220, p. 9]. Indeed, in Bruce, the Second Circuit stated:

as has long been the case outside of the bankruptcy context, a particular bankruptcy

court's civil contempt authority does not extend beyond the enforcement of its own

orders . . . At bottom, plaintiff seeks a bankruptcy-specific expansion of the civil

contempt power beyond its longstanding limits at equity . . . A bankruptcy court's

civil contempt authority does not extend to other bankruptcy courts’ discharge

orders in a nationwide class action. The class-wide relief sought by plaintiff is

therefore unavailable . . .

Bruce, 75 F.4th at 302–06 (emphasis added). The Second Circuit further explained that “whether

and to what extent relief short of contempt sanctions is available in the case of a discharge violation

for which a fair ground of doubt remains is a question for another day.” Id. at 306 n.9.

Plaintiff further asserts in the Decertification Opposition that “[t]he Bruce panel carefully

avoided rendering any decision with regard to the viability of a declaratory judgment class, in

which the Court could declare the actions of a creditor to be violative of § 524 without addressing

any issue of contempt of the individual discharge orders rendered in each class member’s

individual bankruptcy.” [Decertification Opposition, Doc. 220, p. 2]. Plaintiff further asserts that

a declaratory judgment “does not seek a determination of contempt, but merely seeks a legal ruling

that Credit One’s uniform conduct that it applied to the class constituted an attempt to collect on

discharged debts . . . [S]eeking a declaratory judgment does not require the Court to fashion a

contempt sanction.” [Id. at p. 9].

Indeed, the Second Circuit in Bruce discussed whether a declaratory judgment claim had

been asserted and whether such a claim could be maintained on a class-wide basis. See Bruce, 75

F.4th at 299; see also id. at 306 n.9. At the outset of the opinion, the court stated that “as an initial

matter, we reject plaintiff’s suggestion that she has asserted separate and distinct claims for

declaratory relief and damages.” Id. at 299. Subsequently, in the same footnote discussed above,

the Second Circuit went on to say:

Seeking to chart a path to relief in the event that her contempt claim fails, plaintiff

argues that Taggart’s “fair ground of doubt” standard “does not speak at all” to

whether she (and her proposed fellow class members) are entitled to declaratory

relief and damages. That is an issue we need not decide given that plaintiff has

cleared Taggart’s high bar.

Bruce, 75 F. 4th at 306 n.9.

The Court thus finds that in Bruce: (i) the class-action relief sought was denied solely with

respect to a contempt claim; and (ii) the Bruce court did not foreclose the possibility of relief

(including a declaratory judgment) for violation of the Section 524(a)(2) Injunction outside of a

claim for contempt. The Second Circuit stated the viability of “relief short of contempt sanctions

. . . in the case of a discharge violation for which a fair ground of doubt remains is a question for

another day.” Bruce, 75 F. 4th at 306 n.9. The Court will now address whether a class-wide

declaratory judgment claim is a viable claim for violation of the Section 524(a)(2) Injunction.

B. PLAINTIFF HAS SATISFIED THE STANDARD FOR AMENDING THE

COMPLAINT.

Given the Court’s finding that Bruce leaves open the possibility of a class action for

violation of the Section 524(a)(2) Injunction on a theory other than contempt, the Court will now

consider Plaintiff’s Complaint in this case. Plaintiff has admitted that the Complaint, as it stands,

is “functionally identical” to the complaint in Bruce [see July 24 Hr’g Tr., Doc. 237, p. 33:23–24],

which the Second Circuit determined did not properly allege a claim for declaratory relief [Motion

to Amend, Doc. 222, p. 1]. For this reason, Plaintiff seeks to amend the Complaint to “expressly

allege such a cause of action” for declaratory judgment. [Id.].

As Plaintiff states in the Motion to Amend, pursuant to Federal Rule of Civil Procedure

15(a)(2), incorporated into the Bankruptcy Rules by Rule 7015, “a party may move to amend its

pleading outside the time period provided by Fed. R. Civ. P. 15(a)(1) by obtaining the opposing

party’s written consent or by leave of the court.” [Motion to Amend, Doc. 222, p. 1] (emphasis

added).

The parties generally agree on the standard in this Circuit for allowing a plaintiff to amend

a complaint by leave of the Court. [See Motion to Amend, Doc. 222, pp. 1–2]; [Amendment

Opposition, Doc. 232, p. 7]. Leave to amend a complaint should be “freely given” unless there is

(i) bad faith, (ii) undue prejudice to the opposing party, (iii) undue delay, or (iv) futility of the

amendment. See Foman v. Davis, 371 U.S. 178, 182 (1962) (“In the absence of . . . undue delay,

bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by

amendments previously allowed, undue prejudice to the opposing party ..., etc.—the leave sought

should, as the rules require, be ‘freely given.’”); State Teachers Retirement Board v. Fluor Corp.,

654 F.2d 843, 856 (2d Cir. 1981) (“Reasons for a proper denial of leave to amend include undue

delay, bad faith, futility of the amendment, and perhaps most important, the resulting prejudice to

the opposing party.”).

Defendant does not assert “bad faith” as a reason to deny Plaintiff leave to amend the

Complaint. [See generally Def. Reply, Doc. 229; Amendment Opposition, Doc. 232]. Thus, the

Court will consider undue prejudice, undue delay, and futility.

i. Granting the Motion to Amend will not unduly prejudice Defendant.

As Plaintiff correctly asserts, the “general rule” in the Second Circuit is that the non-

moving party must demonstrate that prejudice occurred. [Motion to Amend, Doc. 222, p. 2] (citing

Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993) (“The rule in this Circuit has been

to allow a party to amend its pleadings in the absence of a showing by the nonmovant of prejudice

. . .”)).

In Block, to determine whether there would be prejudice to the non-moving party, the

Second Circuit considered whether the amended pleading would:

(i) require the opponent to expend significant additional resources to conduct

discovery and prepare for trial;

(ii) significantly delay the resolution of the dispute; or

(iii) prevent the non-moving party from bringing a timely action in another jurisdiction.

Block, 988 F.2d at 350. The Court notes that while Plaintiff lists these factors in the Motion to

Amend, Plaintiff does not provide an application of those factors to his case. [Doc. 222, p. 2].

Nevertheless, the Court finds an analysis of the first factor useful here in the context of Defendant’s

arguments.

Regarding the need for “significant additional resources to conduct discovery and prepare

for trial,” Block, 988 F.2d at 350, Defendant argues that “Plaintiff’s amended complaint would

prejudice Credit One because it would substantially change the theory of the case nine years after

the filing of the Complaint and require the parties to relitigate a multitude of issues,” [Amendment

Opposition, Doc. 232, p. 13]. The Court finds that this argument misconstrues the procedural

history of this case and misunderstands the proposed amended complaint. First, the parties never

had the opportunity to fully litigate the underlying issues due to Defendant’s failure to comply

with discovery. See generally [Certification Decision, Doc. 176]. As discussed in detail in Section

(I) above, Defendant simply delayed all response to discovery requests, until counsel ultimately

acknowledged its misconduct. See supra, Section (I)(E)(i). Subsequently, Judge Drain granted a

default judgment. See supra, Section (I)(E)(ii). It is clear from the record that Plaintiff was

prevented from litigating and arguing the merits of its claim as Defendant’s discovery violations

resulted in the default judgment. [Certification Decision, Doc. 176, p. 13].

Furthermore, in State Teachers Retirement Board v. Fluor Corporation, cited by Plaintiff

in the Motion to Amend, the Second Circuit stated that, where “the amendment will not involve a

great deal of additional discovery,” such delay “will not unduly prejudice the defendant.” State

Teachers Retirement Board, 654 F.2d at 856. [See also Motion to Amend, Doc. 222, p. 2]. Here,

Plaintiff argues that amending the Complaint “will not prejudice Credit One, nor is it the result of

undue delay, because . . . the Court has already found that such conduct occurred and that Credit

One should be sanctioned for it. The Complaint is being amended simply to conform to what the

evidence has already established.” [Motion to Amend, Doc. 222, p. 3]. Thus, given the default

judgment in the Certification Decision, and the elements of the declaratory judgment claim, there

will be no further discovery necessary. Moreover, the amendment will not involve a “great deal

of additional discovery” because the elements of the declaratory judgment claim have already been

established. See infra Section (IV)(B)(iii)(a). Thus, factor (i) from Block weighs in favor of

allowing the amendment.

The Court therefore finds that Defendant has failed to meet its burden to demonstrate that

an amendment would be unduly prejudicial. Indeed, the Court finds that not allowing an

amendment to the Complaint would be prejudicial to Plaintiff, as it would reward Defendant for

its misconduct throughout discovery.

ii. Plaintiff has not unduly delayed seeking the amendment.

In arguing that Plaintiff unduly delayed seeking to amend the Complaint, Defendant cites

cases that hold that where “a considerable period of time has passed between the filing of the

complaint and the motion to amend, the burden is upon the movant to show some valid reason for

the movant’s neglect and delay.” [See Amendment Opposition, Doc. 232, pp. 12–13] (quoting

Bymoen v. Herzog, Heine, Geduld, Inc., No. 88 CIV. 1796 (KMW), 1991 U.S. Dist. LEXIS 7169,

at *2–3 (S.D.N.Y. May 24, 1991)). See also Beare v. Millington, No. 07-CV-3391 (TLM), 2014

WL 12833989, at *2 (E.D.N.Y. Feb. 24, 2014) (“When a delay in bringing the motion to amend

poses a risk of prejudice, [t]he burden is on the party who wishes to amend to provide a satisfactory

explanation for the delay.”) (citations omitted).

Defendant argues that “Plaintiff provides no meaningful justification for his delay in

seeking to amend his Complaint, stating only that ‘Credit One has been on notice that Plaintiff

seeks declaratory relief since the inception of this adversary proceeding.’” [Amendment

Opposition, Doc. 232, p. 13] (quoting Motion to Amend, Doc. 222, at p. 2) (emphasis added).

First, the Court agrees with Plaintiff that Credit One has been on notice of Plaintiff’s

declaratory judgment claim (or a potential claim), as the very first page of the original Complaint

explicitly states that “Plaintiff . . . brings this Complaint . . . for declaratory judgment.” [Complaint,

Doc. 1, p. 1]. Furthermore, Plaintiff cites case law that supports allowing an amendment “simply

to conform to what the evidence has already established.” [Motion to Amend, Doc. 222, p. 3]

(citing Stillman v. InService Am., Inc., 455 F. App’x 48, 51 (2d Cir. 2012) (holding district court

did not abuse its discretion in allowing amendment to the complaint because defendants “were on

notice that [Plaintiff] intended to pursue” the claim in question and defendants were also in

possession of all evidence “relevant to rebutting” the additional claim); Pure Power Boot Camp,

Inc. v. Warrior Fitness Boot Camp, LLC, 813 F. Supp. 2d 489, 529 (S.D.N.Y. 2011) (allowing

plaintiff to amend complaint nunc pro tunc to “conform to the evidence at trial . . . because the

same set of facts involved in deciding [the additional] claim also ar[o]se” in the original claims).

Plaintiff asserts that he “has only moved to amend [the] Complaint now out of an

abundance of caution to conform to the holding of the Second Circuit Court of Appeals in Bruce.”

[Motion to Amend, Doc. 222, p. 3]. In this Circuit, courts regularly allow parties to amend their

pleadings when there has been an intervening change in governing law during the pendency of the

litigation. See e.g., McGuire v. Warren, 207 F.App’x. 34, 36–37 (2d Cir. 2006) (remanding case

to district court to allow plaintiff to amend pleadings to include “specific allegations” that were

newly available following United States Supreme Court decision issued after the district court had

rendered its decision); Elsevier Inc. v. Grossman, 12cv5121 (KPF), 2017 WL 1843298, at *9

(S.D.N.Y. May 8, 2017) (allowing plaintiffs leave to amend their complaint five years into the

case and after a decision had been issued by the court due to an intervening “change in RICO law”

under a United States Supreme Court decision).

Here, Plaintiff likewise seeks to amend the Complaint to include relief that conforms with

the change in law (i.e., the prohibition of a class-wide contempt action for a violation of the Section

524(a)(2) Injunction). After the Bruce decision was issued, Plaintiff promptly filed the Motion to

Amend four months later.22 The Court finds that the intervening change in law constitutes a “valid

reason” to seek an amendment per the Bymoen standard. See Bymoen, 1991 U.S. Dist. LEXIS

7169 at *2–3.

Defendant also asserts that Plaintiff should not be allowed to amend the Complaint because

“where a claim could have been raised earlier, a plaintiff’s attempt to prevent an adverse ruling by

seeking to amend is a basis to deny the motion.” [Amendment Opposition, Doc. 232, p. 16].

However, the circumstances in each of the cases on which Defendant relies arose from a lack of

22 [See Motion to Amend, Doc. 222, p. 5] (motion dated December 15, 2023).

due diligence on the part of the plaintiffs and are thus clearly distinguishable.23 Here, Plaintiff is

amending the Complaint due to an external intervening change of law.

Finally, Defendant asserts that Plaintiff’s delay “circumvent[ed] Credit One’s procedural

defenses, including Credit One’s motion to compel arbitration and Credit One’s statute of

limitations defense, issues which were heavily briefed and argued before the Bankruptcy Court,

the District Court, and the Court of Appeals for the Second Circuit.” [Amendment Opposition,

Doc. 232, p. 14]. At the July 24 Hearing, Defendant stated that “we would, of course, seek to

revisit all of those defenses that the plaintiff circumvented by arguing that this was a pure contempt

claim, including the statute of limitations defense, and, most critically, arbitration, where the

plaintiff repeatedly said this is a contempt-only class that an arbitrator cannot hear.” [July 24 Hr’g

Tr., Doc. 237, 14:12–17].

With regard to the statute of limitations, Plaintiff’s counsel asserted:

There's no statute of limitations defense here because the conduct continued after

the complaint was filed. The conduct continued until March of 2017, when Credit

One, after Judge Drain said he was going to hold them in contempt and default

them, entered into a consent order ending the conduct. The conduct did not end

until March of 2017. This complaint was brought in 2014. There's not a viable

statute of limitations defense.

23 The string of cases Defendant cites point to situations in which the plaintiffs sought to amend their complaints

based on circumstances that arose within their own litigation. See, e.g. Berman v. Parco, 986 F. Supp. 195, 218

(S.D.N.Y. Feb. 6, 1997) (denying plaintiffs leave to add a negligence claim to their complaint due to new information

discovered during a deposition as plaintiffs could have alleged such claim in the alternative at the outset); Bymoen,

1991 U.S. Dist. LEXIS 7169, at *1 (holding that the retention of new counsel who did not draft previous complaint

was not a sufficient basis to amend the complaint in response to an anticipated adverse ruling on summary judgment);

Wansdown Props. Corp. N.V. v. 29 Beekman Corp. (In re Wansdown Props. Corp. N.V.), No. 22-19-13223 (DSJ),

2023 Bankr. LEXIS 877, at *82–83 (Bankr. S.D.N.Y. Mar. 31, 2023) (finding that motion to amend complaint was

merely an attempt to reargue matters that were already decided in a prior suit, and thus denying the motion due to

plaintiff’s bad faith and dilatory conduct).

In contrast to these cases cited by Defendant, Plaintiff does not seek to amend the Complaint based on new

information obtained through discovery, a likelihood of losing on the merits of the claim already asserted, or bad faith.

Rather, Plaintiff asks to modify his previously successful cause of action as the change in law has rendered that cause

of action (which will still proceed on an individual basis) impermissible on a class basis.

[Id. at 67:20–68:2]. As for arbitration, Plaintiff’s counsel argued that “Mr. Anderson had a claim

for contempt, and he still has a claim for contempt. That's why the Second Circuit held it should

not go to arbitration.” [Id. at 68:4–6]. Furthermore, the Second Circuit in Anderson I explained:

We find that arbitration of a claim based on an alleged violation of Section

524(a)(2) would “seriously jeopardize a particular core bankruptcy proceeding.”

We come to this conclusion because 1) the discharge injunction is integral to the

bankruptcy court's ability to provide debtors with the fresh start that is the very

purpose of the Code; 2) the claim regards an ongoing bankruptcy matter that

requires continuing court supervision; and 3) the equitable powers of the

bankruptcy court to enforce its own injunctions are central to the structure of the

Code.

Anderson I, 884 F.3d at 389–390. The Anderson I court referred to “a claim based on an alleged

violation of Section 524(a)(2),” not only to a contempt claim specifically. Id. (emphasis added).

Thus, this Court interprets Anderson I as finding that any claim for violation of the discharge

injunction would not be arbitrable and instead must be heard by the bankruptcy court, and that

would include a declaratory judgment claim such as the one asserted here. Accordingly, because

the alleged defenses are not viable or have already been decided, the Court finds that Defendant’s

asserted need to reargue defenses it already raised would not prejudice Defendant, and such

potential defenses are not a reason to disallow the Complaint amendment at this stage.

Accordingly, the Court finds that Plaintiff has not unduly delayed seeking the amendment.

iii. Amending the Complaint would not be futile.

Finally, in the Amendment Opposition, Defendant further objects to the amendment on the

grounds of “futility,” another of the four factors that courts consider in the amendment analysis

under Rule 15. [Amendment Opposition, Doc. 232, p. 7] (citing Health-Chem Corp. v. Baker, 915

F.2d 805, 810 (2d Cir. 1990) (finding that if there is “no merit to the proposed amendments, leave

to amend should be denied”)). In the original Complaint, Plaintiff asserted a single count for

“Failure to Abide By the Injunction Contained In § 524(a)(2),” asking the Court to grant

“appropriate declaratory and injunctive relief and award compensatory and punitive damages,

attorney’s fees and costs for Defendants’ violation of § 524(a)(2).” [Complaint, Doc. 1, p. 17].

Plaintiff’s Proposed Amended Complaint essentially seeks three new forms of relief:

(iv) “a declaration pursuant to 28 U.S.C. §§ [2201] and [2202] that Defendant is in

violation of § 524 by attempting to collect on a discharged debt” with respect to

Plaintiff and a national class [First Cause of Action, Proposed Amended Complaint,

Doc. 223-1, p. 19];

(v) “certification of . . . a class limited to the Southern District of New York for relief

for contempt for violation of § 524 and the class members’ individual discharge

orders” [Second Cause of Action, Proposed Amended Complaint, Doc. 223-1 at p.

16];

(vi) a ruling that “Defendant be ordered to pay to all National Class Members sanctions

pursuant to Rule 37 of the Federal Rules of Civil Procedure for their contumacious

conduct before the Court.” [Id.].

a. Declaratory judgment pursuant to 28 U.S.C. §§ 2201 and 2202.

Plaintiff asserts that he filed the Motion to Amend in response to Bruce, in which the

Second Circuit held that the plaintiff’s essentially identical complaint had not properly alleged a

declaratory judgment claim. [Motion to Amend, Doc. 222, p. 1]. Plaintiff asserts in the Proposed

Amended Complaint that the claims are brought “pursuant to 28 U.S.C §§ 2201 and 2202”

[Proposed Amended Complaint, Doc. 223-1, p. 19].24 References to 28 U.S.C §§ 2201 and 2202

were not included in the original Complaint in this case, nor in the complaint in Bruce [see

generally Doc. 1 and Bruce Dkt, Doc. 39, hereinafter the “Bruce Complaint”].

24 28 U.S.C § 2201(a) states in relevant part: “(a) In a case of actual controversy within its jurisdiction, . . . any

court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations

of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such

declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

§ 2202 provides: “Further necessary or proper relief based on a declaratory judgment or decree may be

granted, after reasonable notice and hearing, against any adverse party whose rights have been determined by such

judgment.”

In response to Plaintiff’s assertion of a declaratory judgment claim alleging that

Defendant’s conduct violated the Section 524(a)(2) Injunction of Plaintiff and the class, Defendant

asserts that such claim would be futile because it would be “fundamentally the same as the existing

claim.” [Amendment Opposition, Doc. 232, p. 13]. Specifically, Defendant states that “[i]n so

arguing, Plaintiff asks this Court to ignore the substance of the Second Circuit’s clear, careful

articulation of the limits of a bankruptcy court’s power in a case of first impression, and instead to

treat the Bruce decision as identifying a mere technical pleading deficiency that can be cured with

a superficial amendment to the [C]omplaint.” [Amendment Opposition, Doc. 232, p. 1].

Plaintiff argues that “if the [C]ourt determined there was class-wide harm (which it did in

its June 3, 2022 decision), it would be appropriate for the Court to bifurcate liability and damages,

to notify class members, and to allow class members of a nationwide class to bring individual

claims to their home districts if they wish to claim actual damages.” [Decertification Opposition,

Doc. 220, p. 10].

The Court agrees with Plaintiff’s argument. The finding of liability for the contempt claim

and the proposed declaratory judgment is essentially the same. The claims differ in the

redressability of the violation (i.e., damages). Indeed, the District Court in Gulino explained that

a declaratory judgment for a class allows the court to bifurcate the issues of liability and redress in

a class action in a way that a contempt claim does not:

certifying a [declaratory judgment] class claiming that Defendant is liable for

[misconduct] comports with the reasoning of Wal–Mart in that resolution of that

claim will not involve individual determinations, but rather involves a claim

common to the class, the resolution of which will streamline later proceedings for

damages and other individual relief.

Gulino, 907 F. Supp. 2d at 506. Plaintiff also provides case law that supports bifurcation of

liability and damages specifically in the class action context. [Decertification Opposition, Doc.

220, p. 10].25

Here, the finding of liability for either the contempt claim or the proposed declaratory

judgment is the same: namely, a finding that Credit One’s actions violated Section 524 of the

Bankruptcy Code. Where the contempt and declaratory judgment claims differ is in the

redressability of the violation. The factual findings regarding liability are the same for the

proposed class members, and the violation of the Bankruptcy Code for which the Plaintiff and

class members seek relief remains the same; it is the form of such relief that is modified by the

proposed amendment—a modification which the Court finds to be more than just “superficial”

(as Defendant Claims). [Amendment Opposition, Doc. 232, p. 1].

The Bruce court itself made just such a distinction: “whether and to what extent relief short

of contempt sanctions is available in the case of a discharge violation for which a fair ground of

doubt remains is a question for another day.” Bruce, 75 F.4th at 306 n.9. The Bruce court refers

to a singular liability (i.e., the “case of a discharge violation”) while it alludes to relief therefor that

may vary from the redress for a contempt sanction.

Defendant previously agreed that bifurcation of liability and redress was permissible. [See

Defendant’s Supplemental Brief in Further Opposition to Plaintiff’s Motion for Class

Certification, Doc. 152, p. 1] (the “Supplemental Certification Opposition”) (“it is legally

permissible under Rule 7023 for a court to certify a class as to liability, but not damages.”). At the

25 Plaintiff cites two cases in which the court allowed certification of a class for liability, while requiring an

individualized damages determination where plaintiffs are “aggrieved by a single policy of defendants.” See In re

Nassau Cnty. Strip Search Cases, 461 F.3d 219 (2d Cir. 2006) (“[t]here are a number of management tools available

to a district court to address any individualized damages issues, such as bifurcation”); Nnebe v. Daus, 2022

WL615039, at *5 (S.D.N.Y. Mar. 1, 2022) (“Common issues – such as liability – may be certified, consistent with

Rule 23, even where other issues – such as damages – do not lend themselves to classwide proof.”).

October 12, 2017 Hearing, Judge Drain asked the parties to “address the following possibility – or

issue, which is certifying the class under (b)(3) as to liability and attorneys' fees, and as to those

who made payments, but leaving the individual damage determinations as to anyone else, that they

can just bring that on their own.” [October 12, 2017 Hr’g Tr., Doc. 150, 100:9–13]. In the

Supplemental Certification Opposition, filed following the October 12, 2017 Hearing, Defendant

specifically stated that “while Credit One opposes certification of any class, certification as to

liability only is the proper procedural mechanism where the existence and quantity of damages

varies from person to person and cannot be measured on a class-wide basis, through the use of

subclasses or otherwise.” [Decertification Opposition, 220, pp. 10–11] (quoting Supplemental

Certification Opposition, Doc. 152, p. 4).

Having reached the conclusion that bifurcation of liability and the resulting remedy is

permissible, the Court turns to the merits of the proposed declaratory judgment claim. The leading

authority on redress for violations of the Section 524(a)(2) Injunction is Taggart. In that case, the

Supreme Court explained the underpinning of the contempt framework it set out for violations of

Section 524:

Our conclusion rests on a longstanding interpretive principle: when a statutory term

is “‘obviously transplanted from another legal source,’” it “‘brings the old soil with

it.’” . . . Here, the statutes specifying that a discharge order “operates as an

injunction,” § 524(a)(2), and that a court may issue any “order” or “judgment” that

is “necessary or appropriate” to “carry out” other bankruptcy provisions, § 105(a),

bring with them the “old soil” that has long governed how courts enforce

injunctions. That “old soil” includes the “potent weapon” of civil contempt.

Taggart, 587 U.S. at 560 (citations omitted). Applying the “old soil” analysis from Taggart,

federal courts have often used a declaratory judgment as a remedy for violation of a federal statute

in the class-action context. See, e.g., Gulino, 907 F. Supp. 2d at 506–07 (S.D.N.Y. 2012) (denying

in part defendant’s motion to decertify class based on intervening change in law, thereby allowing

class seeking a declaratory judgment that defendant violated Title VII to be maintained); Clark v.

Astrue, 274 F.R.D. 462, 472–73 (S.D.N.Y. 2011) (certifying class of claimants seeking declaratory

relief related to benefits under the Social Security Act); Charron v. Pinnacle Grp. N.Y. LLC, 269

F.R.D. 221, 236, 244 (S.D.N.Y. 2010) (certifying class of plaintiffs who sought “a declaratory

judgment that Defendants' alleged practices of, inter alia, fraudulently inflating regulated rents,

baselessly challenging tenants' succession rights and commencing unfounded eviction

proceedings” violated RICO).

Based on such cases, the “old soil” also brings with it (in addition to civil contempt) a claim

for declaratory judgment for violation of a statute on a class-wide basis. The Court thus finds that

a claim seeking a declaratory judgment for a violation of the Bankruptcy Code, and specifically in

this case Section 524, would not be futile, and the Court will grant Plaintiff leave to modify the

Complaint to assert this claim.

b. The Southern District of New York Contempt Class.

Plaintiff also proposes to assert a class consisting of all debtors who received their Chapter

7 discharge in the United States Bankruptcy Court for the Southern District of New York,

regardless of which judge in this District issued the order. [Motion to Amend, Doc. 222, p. 4].

Plaintiff argues that this would be allowed under existing law and cites to two cases to support this

argument. [See id.]. The first is a criminal proceeding in which the Fifth Circuit held that “each

judge of a multi-district court” has the “power and authority” to enforce another judge’s injunction.

United States v. Corn, 836 F.2d 889, 892 (5th Cir. 1988). In the other case, a bankruptcy court in

the Southern District of Ohio held that the Court had “jurisdiction over [a] [d]istrict-wide [c]lass

because [the class] only include[d] discharge orders entered by judges in the same district as [that]

Court. In re Beiter, 554 B.R. 433, 439 (Bankr. S.D. Ohio 2016).

Defendant responds to this argument by asserting that in Bruce, “the Second Circuit

explicitly prohibited certification of any class (district-wide or otherwise).” [Amendment

Opposition, Doc. 232, p. 17]. Defendant refers specifically to the following language from the

Bruce decision: “We disagree that a bankruptcy court has the authority to hear and adjudicate a

classwide contempt proceeding. That leaves only plaintiff’s individual claim . . .” [Id.] (quoting

Bruce, 75 F.4th at 299); [See also Amendment Opposition, Doc. 232, p. 18 n.7] (“civil contempt

proceedings leave the offended judge solely responsible for identifying, prosecuting, adjudicating,

and sanctioning the contumacious conduct”) (quoting Bruce, 75 F.4th at 303) (emphasis in the

original).

On this issue, the Court agrees with Defendant. The Second Circuit in Bruce referred to a

“class-wide contempt proceeding” without regard to the scope or size of the class. See Bruce, 75

F.4th at 299. The court in Beiter denied a motion to strike district-wide class allegations on a claim

for contempt for violating the Section 524(a)(2) Injunction. See In re Beiter, 554 B.R. 433, 439–

40 (Bankr. S.D. Ohio 2016). However, that case was decided in 2016, and in this Circuit Bruce is

controlling. Furthermore, the motion to certify the class in Beiter was never decided as the parties

reached a settlement, and thus Beiter does not address whether the Court should actually certify a

class on a district-wide basis.26

Corn involved one judge finding criminal contempt for violation of an injunction issued

by a different judge within the same district. See Corn, 836 F.2d at 892. That case does not involve

civil class actions, and therefore does not speak to whether a district-wide class should be certified

26 In Beiter, the plaintiff filed a “Motion to Certify Class” on July 12, 2018. See Motion to Certify Class, Beiter v.

Chace Home Finance LLC, et al., No. 15-2195 (Bankr. S.D. Ohio 2018), ECF No. 167. However, before the court

decided whether to certify the district-wide class, the parties stipulated to dismissal of the case with prejudice. Id. at

ECF No. 204.

here. Accordingly, this Court finds that a district-specific class action for a contempt claim against

Defendant for violation of the Section 524(a)(2) Injunction is not permissible under Bruce, and

therefore that claim would be futile and cannot be included in the amended complaint.

c. Rule 37 Sanctions.

It also appears that Plaintiff seeks to incorporate the Rule 37 sanctions granted by Judge

Drain in the original Certification Decision into the Proposed Amended Complaint by seeking to

certify a Rule 37 sanctions class:

Because the class as a whole was harmed by Credit One’s attempt to cover up its

violations by its contumacious conduct during this case, this Court should certify a

national class composed of all 288,000 members whose tradelines continued to be

adversely affected and award an appropriate non-compensatory monetary sanction

to each class member.

[Decertification Opposition, Doc. 220, pp. 16–17]. Plaintiff incorporates such relief into the

Proposed Amended Complaint in two places:

(1) In the last paragraph under “FIRST CAUSE OF ACTION,” Plaintiff asserts: that

“Pursuant to its statutory and inherent authority, this Court may award appropriate

injunctive, monetary and restitutionary relief and attorney’s fees and costs for

Defendant’s violation of § 524(a)(2), their collection on discharged debts and their

contumacious conduct before this Court.” [Proposed Amended Complaint, Doc. 223-

1, p. 19]; and

(2) In the list of relief that Plaintiff seeks, Plaintiff asks that “Defendant be ordered to pay

to all National Class Members sanctions pursuant to Rule 37 of the Federal Rules of

Civil Procedure for their contumacious conduct before the Court.” [Id. at pp. 19–20].

Plaintiff further asserts:

Section 105(a) would redress the harm caused to the class by Credit One’s conduct

in this Court, and not Credit One’s initial violation of other courts’ discharge orders

. . . While each class member has the right to return to the court that issued their

initial discharge order, this Court clearly has the power to award nominal damages

to each class member for Credit One’s contumacious conduct before [this] Court.

[Decertification Opposition, Doc. 220, pp. 16–17] (emphasis in original). In response, Defendant

asserts that:

As a threshold matter, Plaintiff’s request is procedurally improper. Plaintiff has

never proposed, and [] Judge Drain never certified, a “discovery violations” class.

. . . Indeed, a class based on Rule 37 would fail to satisfy Rule 23(a) on its face,

which requires that the ‘claims or defenses’ of the class representative is typical of

those of the class. See Fed. R. Civ. P. 23(a)(3). Rule 37 is a procedural rule

governing discovery and does not provide an independent cause of action and

cannot form the basis of the class’s “claims or defenses.”

[Def. Reply, Doc. 229, p. 14] (citing George & Co. LLC v. Spin Master Corp., No. 19 Civ. 4391,

2020 U.S. Dist. LEXIS 120715, at *25 (E.D.N.Y. July 7, 2020) (“[Plaintiff]’s spoilation claim is

futile. The proposed claim is brought pursuant to Rule 37(e). Rule 37(e) is a procedural rule

governing discovery and preservation of electronic evidence and permits the entry of sanction[s];

it does not provide George & Co. with a cause of action.”).

The court in George & Co relied on cases that held that the Federal Rules of Civil

Procedure (the “FRCP”) do not create a private cause of action based on the Rules Enabling Act,

which provides in relevant part that the FRCP “shall not abridge, enlarge or modify any substantive

right.” The Rules Enabling Act, 28 U.S.C. § 2072(b) (emphasis added); see also George & Co.,

2020 U.S. Dist. LEXIS 120715, at *25 (citing Digene Corp. v. Ventana Med. Sys., Inc., 476 F.

Supp. 2d 444 (D. Del. 2007) (granting motion to dismiss conspiracy claim that alleged “conspiracy

to evade [] discovery obligations” because “evasion of discovery obligations under the Federal

Rules of Civil Procedure cannot create a private cause of action and, therefore, [plaintiff] fails to

state a viable claim”); Carmax Auto Superstores, Inc. v. Sibley, 194 F. Supp. 3d 392, 402 (D. Md.

2016), aff'd, 730 F. App'x 174 (4th Cir. 2018) (dismissing counterclaim based on FRCP 5.2

because “courts have uniformly interpreted [28 U.S.C. § 2072(b)] to mean that a failure to comply

with the Federal Rules cannot create a private right of action.”) (citations omitted)).

Thus, Rule 37(e) does not create a cause of action, which, as Defendant argues, would be

necessary to satisfy Rule 23(a). [Def. Reply, Doc. 229, p. 14]. See also Federal Rule of Civil

Procedure 23(a)(3) (“One or more members of a class may sue or be sued as representative parties

on behalf of all members only if . . . (3) the claims or defenses of the representative parties are

typical of the claims or defenses of the class) (emphasis added).

Moreover, Judge Drain made it clear in the Certification Decision that the Rule 37 sanction

was the default judgment itself: “a default judgment should be issued under Fed. R. Civ. P. 37

against Credit One based on, as discussed above, Credit One’s prolonged, willful, bad faith

discovery misconduct. The consequence of that default judgment is the deemed admission of all

well-pleaded factual allegations in the complaint, except for those relating to damages.”

[Certification Decision, Doc. 176, pp. 47–48] (emphasis added). The monetary, punitive sanctions

Judge Drain imposed on Defendant were purely based on a finding of contempt for violating the

Section 524(a)(2) Injunction: “[s]uch civil non-compensatory sanctions are warranted in the light

of Credit One’s repeated, serial, systematic violation of discharges around the nation and the

continuing violation of them, after notice, in Anderson’s case.” [Id. at p. 63]. Judge Drain did not

mention the discovery violations as a reason for imposing such sanctions, and the Court does not

find the Plaintiff has provided any viable legal arguments for why such additional monetary

sanctions should be imposed now.

Based on all of the above, Plaintiff is permitted to amend the Complaint only to clarify the

inclusion of a Declaratory Judgment claim on a nationwide class basis pursuant to 28 U.S.C. §§

2201 & 2202.

C. GRANTING THE MOTION TO AMEND DOES NOT AFFECT JUDGE DRAIN’S

RULING IN THE CERTIFICATION DECISION BEYOND DAMAGES FOR THE

MAIN CLASS.

At this juncture, the Court has now found that (A) a class claim for a declaratory judgment

for violation of the Section 524(a)(2) Injunction may be asserted post-Bruce, and (B) Plaintiff can

amend the Complaint in good faith to assert such a claim without undue prejudice to Defendant

and without causing undue delay. The next question the Court faces is how the proposed

amendment would affect the existing relief granted in the Certification Decision.

i. A Declaratory Judgment class has not already been certified nor granted relief.

Plaintiff argues that Judge Drain did in fact already certify a declaratory judgment class.

[July 2024 Hr’g Tr., Doc. 237, 19:1–19]. In support of this assertion, Plaintiff refers to language

in the order accompanying the Certification Decision [see Doc. 179, hereinafter the “Certification

Order”], specifically:

ORDERED, ADJUDGED AND DECREED that without limiting the foregoing,

the Defendant is declared to have violated the discharge and the discharge

injunction under sections 727(b) and 524(a)(2) of the Bankruptcy Code of the

Plaintiff and each member of the class certified hereby who does not timely opt out

of such class.

[Certification Order, Doc. 179, p. 2] (emphasis added). At the July 2024 Hearing, Plaintiff’s

counsel urged that “[w]e have always alleged a declaratory judgment class. We have always

alleged a declaratory judgment claim. That's because the beginning of our complaint, the very first

paragraph of our complaint asks for a declaratory judgment.” [July 24 Hr’g Tr., Doc. 237, 19:22–

20:1; Doc. 1, p. 1]. The Court does not find, however, that a declaratory judgment class was

previously certified.

As with the original Complaint here, the Bruce Complaint also had the words “declaratory

judgment” in the first paragraph. [Bruce Complaint, Bruce Dkt, Doc. 39, p. 1]. Plaintiff has

conceded that the two complaints are almost exactly the same [supra, Section (IV)(B)]. As noted

supra Section (IV)(B)(iii)(a), the Second Circuit in Bruce said that such nearly identical language

in Bruce did not rise to the level of alleging “separate and distinct claims for declaratory relief and

damages.” Bruce, 75 F.4th at 299. Thus, the Court finds that the original Complaint here did not

properly allege a claim for a declaratory judgment, and Judge Drain’s use of the word “declared”

in the Certification Decision is not sufficient to constitute a declaratory judgment. Accordingly,

the Court finds that the Certification Decision did not already certify a declaratory judgment class.

ii. A Declaratory Judgment Claim can be substituted for the contempt ruling as part

of the Default Judgment.

Nevertheless, as already established, Plaintiff’s briefs and oral arguments also seek leave

for Plaintiff to amend the Complaint to more clearly include a declaratory judgment class claim.

The Court has already granted leave to amend (see supra, Section (IV)(B)(iii)(c)), and so the Court

will analyze how such amendment affects the Certification Decision.

Plaintiff argues that “[a]lthough this Court cannot find Credit One in contempt of other

courts’ discharge orders, all the reasons why this Court should award class-wide relief of a

declaratory nature still remain.” [Decertification Opposition, Doc. 220, p. 11]. The Court agrees.

As described in Section (I), Judge Drain found Defendant liable for two distinct types of

misconduct, and granted Plaintiff two distinct forms of relief:

(1) first, Judge Drain found Defendant liable for discovery violations pursuant to Rule

7037, and the relief he granted for such liability was the default judgment on Plaintiff’s

claim [Certification Decision, Doc. 176, p. 47–48];

(2) second, Judge Drain found Defendant liable for violating the Section 524(a)(2)

Injunction of the class members pursuant to the default judgment, and the relief for that

liability was to be $50-1,000 for each Plaintiff in the class, which amount was left to

be decided at a later date.

See generally supra, Section (I)(E)(ii); [see also Certification Decision, Doc. 176, pp. 65–66]. As

the Court explained in Section (IV)(B)(iii)(a) supra, regarding both a contempt claim and a

declaratory judgment claim, the finding of liability for a violation of the Section 524(a)(2)

Injunction will be exactly the same. See supra, Section (IV)(B)(iii)(a). The claims only differ in

the specific relief granted as a result of the finding of liability. Here, that means the only portion

of the Certification Decision that would be altered by the Proposed Amended Complaint would be

the damages available to Plaintiff. In any event, Judge Drain did not decide that issue on a final

basis (stating only that there would be an award of $50-$1,000 to each class member, to be decided

later based on factors such as the size of the class and opt-outs). [Certification Decision, Doc. 176,

pp. 65–66]. The Court finds that a modification of the Complaint to substitute Declaratory

Judgment relief in lieu of contempt sanctions for the national class will actually have no material

effect on Judge Drain’s decision, other than to vacate the determination that each plaintiff in the

national class would receive $50–$1,000.

iii. The Class does not need to be recertified.

The Court must also analyze whether the class must be recertified. Defendant states in the

Decertification Motion that Judge Drain certified “a nationwide class of individuals who had credit

reports issued in which Credit One reported their discharged debt as ‘charged off’ or ‘$0 balance”’

[Decertification Motion, Doc. 215, p. 7]. Defendant argues specifically that decertification is

proper as “[u]nder the Second Circuit’s clear holding in Bruce, in this virtually identical case, this

Court also lacks [] the authority to hear and adjudicate a class-wide contempt proceeding against

Credit One or otherwise to adjudicate claims that Credit One has violated the discharge injunctions

of other bankruptcy courts.” [Id. at 14].

Plaintiff in response argues that “the Bruce decision only affects the contempt remedies

sought in this action. It does not give Credit One a pass on liability.” [Decertification Opposition,

Doc. 220, p.2]. As set forth supra Section (IV)(B)(iii)(a), the Court agrees with Plaintiff. Indeed,

as Plaintiff further states:

Although this Court cannot find Credit One in contempt of other courts’ discharge

orders, all the reasons why this Court should award class-wide relief of a

declaratory nature still remain. Credit One’s conduct was common to the class;

indeed, Credit One had a uniform policy that it applied to all class members and all

class members were deprived of their “fresh start” as a result of such conduct.

[Decertification Opposition, Doc. 220, p. 11].

The Court will review the analysis in the Certification Decision regarding class

certification to demonstrate that the reasoning for certification of a declaratory judgment class is

the same. As to standing, Judge Drain found injury in fact in the pressure to pay discharged debts,

which is meant to be relieved by the discharge [Doc. 176, pp. 68–69]; an obvious nexus with Credit

One’s “refusal to correct” the tradelines [Doc. 176, p. 69]; and finally, the redressability factor was

damages, wherein Judge Drain found “[i]ndeed, even nominal damages would satisfy the ‘redress’

factor” [Doc. 176, p. 70] (citing Uzuegbunam v. Preczewski, 141 S.Ct. 792, 798-802 (2021)). As

for injunctive relief, Judge Drain noted this issue had been mooted by the time his decision was

rendered based on the “Stipulation and Order” pursuant to which Defendant had agreed to delete

the tradelines, and “Plaintiff [did] not raise any questions as to any loose ends that the Stipulation

and Order leaves open.” [Certification Decision, Doc. 176, p. 71]; [see also Doc. 104] (Stipulation

and Order).

As to the analysis under Rule 23, Judge Drain considered the four elements necessary to

certify a national contempt class as follows:

(1) Numerosity: this was satisfied by the “287,980 Accounts that Credit One reported as

‘charged off’ that were subsequently discharged under Chapter 7 of the Bankruptcy

Code between May 1, 2007 and April 2017, excluding any accounts that were reported

as charged off after December 2016.” [Id. at p. 72];

(2) Commonality: Judge Drain explained that this factor was met because “all the claims

arise from Credit One’s systematic policy not to correct its tradelines to reflect the

discharge; in addition, as discussed above, since 2007, the inception of the class period,

the law on the class’s underlying claims, discussed above, has been substantially the

same throughout the country.” [Id. at p. 73];

(3) Typicality: after explaining the distinction between commonality—which focuses on

the definition of who fits the class—and typicality, which analyzes the similarity of the

claims among class members, Judge Drain stated that “[o]nce again in the light of

Credit One’s systematic practice serving as the basis for Anderson’s claims as well as

those of the other class members, the ‘typicality’ requirement is satisfied here.” [Id. at

p. 74];

(4) Adequacy: finally, when considering whether Mr. Anderson would fairly and

adequately protect the interests of the class, Judge Drain found that “Anderson has

vigorously pursued the underlying claims for himself and the class, having been

deposed twice; serious concerns regarding his credibility do not exist; and his counsel

clearly are qualified and experienced and to date have conducted this litigation ably,

including in the face of Credit One’s extraordinary misconduct.” [Id. at p. 75].

Thus, with regard to the four Rule 23(a) factors, the analysis would not differ in any way

for the previous contempt claim and the now-sought declaratory judgment claim.

The Court also notes the two other aspects of class certification that Judge Drain addressed

in the Certification Decision. The first is the additional requirement of “ascertainability,” which

requires that the class definition be finite enough that it is “administratively feasible for the court

to determine whether a particular individual is a member.” [Certification Decision, Doc. 176, p.

77] (quoting de Lacour v. Colgate- Palmolive Co., 338 F.R.D. 324, 339 (N.D.N.Y. 2021). Here,

just as Judge Drain said, “the proposed class can be definitionally ascertained from Credit One’s

own tradeline records, the three main credit reporting agencies’ credit reports on the people that

appear on Credit One’s tradeline records, and electronic case filing discharge records kept by the

bankruptcy courts.” [Certification Decision, Doc. 176, p. 77]. The shift from a contempt claim to

a declaratory judgment does not affect this.

Finally, regarding the Rule 23(b)(3) finding of “predominance,” Judge Drain explained (in

the context of the contempt claim):

Given the Plaintiff’s limitation on the damages that he seeks for the class, as

discussed above, to exclude individualized damages, as well as the Court’s

determinations regarding Credit One’s systematic conduct, the proposed class is

sufficiently cohesive, as the legal and factual questions that qualify each class

member’s case can be determined through generalized proof, and these issues are

more substantial than the potential damages issues that may be subject to

individualized proof.

[Certification Decision, Doc. 176, p. 79]. The declaratory judgment claim would, as described

supra Section (IV)(B)(iii)(a), reduce “the potential damages issues that may be subject to

individualized proof.” [Id.]. Specifically, as Plaintiff argues, “[e]ach class member could then

proceed in the court that issued [the] discharge order for contempt and damages or any other

contempt relief. Such a declaration would greatly assist the class members in pursuing remedies

for their own individual contempt claims.” [Decertification Opposition. Doc. 220, pp. 9–10].

Plaintiff’s proposal would place the ability to grant damages for contempt back in the hands of

each individual judge who entered each discharge order (as required by Bruce). Those judges

would be able to craft individualized damage determinations if and when an individual plaintiff

uses the declaratory judgment as grounds to bring a contempt claim in his or her “home court.”

Thus, certification of a class on a declaratory judgment claim does not require new or

different analysis, nor does anything about the class or facts relevant thereto change from the prior

determination. This is because, as this Court has already explained, the analysis applied in finding

liability for a Section 524 violation is the same for a contempt claim and a declaratory judgment

claim. Accordingly, the Main Class will remain certified with respect to liability on a declaratory

judgment claim.

As for whether the Sub-Class for restitution damages should be decertified, Plaintiff asserts

that the Court “has the power to order restitution of all funds paid by class members on discharged

debts” and that “Judge Drain has already certified this restitution sub-class.” [Decertification

Opposition, Doc. 220, p. 2]. Defendant makes the same argument for decertification of the Sub-

Class as it made for decertification of the main class, namely that such class falls within the

contempt claim and is thus prohibited by Bruce. [See Decertification Motion, Doc. 215, pp. 13–

14]. As Plaintiff argues, such compensatory damages can be granted as “appropriate monetary

relief” pursuant to Plaintiff’ proposed declaratory judgment claim. [Decertification Opposition,

Doc. 220, p. 11]. The Court agrees with Plaintiff, and thus “Judge Drain’s order of restitution and

designation of [the Sub-Class] [is] re-affirmed.” [Id. at p. 14].

The Court will now turn to the issue of damages.

iv. Damages

Plaintiff argues that he still maintains his individual claim for contempt. [July 24 Hr’g Tr.,

Doc. 237, 68:4–6]. Plaintiff further assets that “Judge Drain has already determined that Plaintiff’s

counsel are entitled to attorneys’ fees for their efforts, on Plaintiff’s behalf, to enforce his personal

discharge order.” [Decertification Opposition, Doc. 220, p. 18]. [See also Certification Decision,

Doc. 176, p. 62] (“Accordingly, Anderson shall have judgment for the reasonable attorneys’ fees

and expenses of his counsel, as well as his own reasonable costs, in enforcing his discharge.”).

The Court agrees and will thus determine damages and attorneys’ fees for Plaintiff’s individual

contempt claim using the procedure laid out in the Certification Decision. [Certification Decision,

Doc. 176, p. 62] (“[C]ounsel shall file a fee application with supporting time and expense records

within 60 days of this Memorandum of Decision, and serve it on Credit One, which shall have 30

days to file and serve an objection to the reasonableness of such fees and expenses.”)

Plaintiff also urges the Court to grant the members of the Main Class nominal damages

ancillary to the declaratory judgment. At the July 24 Hearing, Plaintiff’s counsel stated: “I'll refer

to . . . Preczewski, 592 U.S. 279, it's well settled, said the court, that a plaintiff can always recover

nominal damages.” [July 24 Hr’g Tr., Doc. 237, p. 29]. In Preszewski, the United States Supreme

Court stated: “[w]e hold only that, for the purpose of Article III standing, nominal damages provide

the necessary redress for a completed violation of a legal right.” Preczewski, 592 U.S. 279, 293

(2021).

Furthermore, Plaintiff cites other Second Circuit precedent in which the Court granted

“monetary relief” in declaratory judgment actions. [Decertification Opposition, Doc. 220, pp. 11–

12]. (citing Starter Corp. v. Converse, Inc., 170 F.3d 286, 289 (2d Cir. 1999); Fred Ahlert Music

Grp. v. Warner/Chappell Music, Inc., 155 F.3d 17, 25 (2d Cir. 1998); Beacon Constr. Co., Inc. v.

Matco Elec. Co., Inc., 521 F.2d 392, 399–400 (2d Cir. 1975); Edward B. Marks Music Corp. v.

Charles K. Harris Music Publ’g Co., 255 F.2d 518, 522 (2d Cir. 1958)). In Beacon Constr. Co.

Inc. in particular, the Second Circuit stated:

Under the Declaratory Judgment Act, ‘Further necessary or proper relief based on

a declaratory judgment or decree may be granted, after reasonable notice and

hearing, against any adverse party whose rights have been determined by such

judgment.’ It is well settled that “further relief” may include an award for damages.

. . In deciding whether to award damages or require the parties to engage in further

litigation the determinative factor is which solution will result in the most

expeditious and just conclusion of the controversy.

Beacon Const. Co., 521 F.2d at 399–400. Here, the Court agrees with Plaintiff that the Main Class

might be entitled to nominal damages. Just as Judge Drain did not make a final determination on

damages in the Certification Decision, the Court also finds that “further litigation” on the amount

that should be awarded in nominal damages would be the most “just conclusion of the

controversy.” Id.; [see also Certification Decision, Doc. 176, p. 66]. As Plaintiff believes the

Slodov Documents will be relevant to such future damages analysis, the Court will now consider

the issues related to the Privilege Motion.

D. THE SLODOV DOCUMENTS ARE RELEVANT TO A DAMAGES

DETERMINATION.

The Court first notes that both the Privilege Motion and the Privilege Opposition were filed

under seal, and therefore the Court will attempt to avoid disclosing any potentially privileged

information in the context of this ruling. [See Doc. 199; Doc. 205].

The Privilege Motion, unlike the Decertification Motion and Motion to Amend, was filed

prior to the issuance of the Bruce decision and was based on the understanding that this Court

could award class-wide contempt sanctions:

These documents are relevant to the issues before the Court because they relate to

the sanction that is yet to be determined by this Court. In its [Certification

Decision], the court stated that its award of between $50 and $1000 to each class

member is dependent, not only on Credit One’s intentional refusal to correct the

class members’ credit reports, but also on the fact that Credit One “engaged in

prolonged extraordinary wrongful efforts to prevent the exploration of its defenses

to the complaint’s allegations” and “lied not only about its discovery efforts but

also misrepresented to the Court and obfuscated in discovery” . . . It is clear from

the redacted papers alone that the [u]nredacted [i]ntervention [p]apers will provide

new, key details concerning the extent of Credit One’s fraud, and therefore assist

the Court in determining the appropriate amount for a sanction.

[Privilege Motion, Doc. 199, p. 16]. As Plaintiff can still proceed on a contempt theory for himself

an individual basis, any arguments in the original Motion related to a finding of contempt still

stand with regard to Plaintiff. Moreover, as for the proposed declaratory judgment class, Plaintiff’s

counsel argued at the July 24 Hearing that Plaintiff still seeks a determination that the documents

are no longer privileged for the purpose of determining relief pursuant to the declaratory judgment

claim:

Obviously, Judge Drain, when he awarded sanctions both for the contempt in

violating the discharge orders and the contempt in front of him, said, I'm going to

impose a range of $50 to $1,000. We acknowledge that Your Honor has no

authority to impose contempt sanctions for what happened with regard to other

discharge orders, although we do argue that you can still impose nominal damages.

But in determining what sanction you should impose that harmed the class, that

[Judge Drain] said harmed the class, their conduct during the case harmed the class,

you should allow us to brief the issue and you should review those documents and

allow us to review the documents and file a brief after those documents are unsealed

that could go to the merits of what the appropriate sanction is here.

[July 24 Hr’g Tr., 74:8–21.]. The Court agrees with Plaintiff. As described above, in considering

a declaratory judgment claim the Court can bifurcate the finding of liability and the relief granted

as a result. See supra, Section (IV)(B)(iii)(a). Case law in this Circuit allows Plaintiff’s request

to present new evidence related to the determination of damages. For instance, in Edward B.

Marks Music Corp. v. Charles K. Harris Music Publ’g Co., upon which Plaintiff relies [see

Decertification Opposition, Doc. 220, p. 12], the Second Circuit stated:

the further relief sought—here monetary recompense—need not have been

demanded, or even proved, in the original action for declaratory relief. [28 U.S.C.

§ 2202] authorizes further or new relief based on the declaratory judgment, and any

additional facts which might be necessary to support such relief can be proved on

the hearing provided in the section or in an ancillary proceeding if that is necessary.

Edward B. Marks Music Corp., 255 F.2d at 522. Plaintiff also states that “Judge Drain made it

very clear that Credit One’s extraordinarily wrongful conduct is directly relevant to the monetary

sanction that should be imposed on Credit One,” and further adds that, “as Judge Drain noted, the

egregiousness of conduct is a central component in determining the appropriate monetary award.”

[Privilege Reply, Doc. 207, pp. 2–3]. Indeed, Judge Drain granted a default judgment as to liability

but not with respect to a damages/relief determination: “I don't believe that -- I think the law is

clear on this, that that default should extend to the class certification point -- and certainly not the

damages. I haven't established damages.” [Doc. 101, 5:13–16] (the “November 10, 2016 Hr’g

Tr.”)

At the July 24 Hearing, Defendant argued that the Slodov Documents are not relevant to

determining damages because Judge Drain did not consider them in reaching the default judgment,

referring to statements made by Judge Drain at the October 12, 2017 Hearing:

Judge Drain expressly confirmed that White & Case should suspend its backward-

looking inquiry into the discovery issues leading up to that hearing because

whatever happened, happened. They had their default judgment . . . three times

during that colloquy, Judge Drain made very clear that he was indifferent to the

underlying state of mind of the client because it was no longer relevant to any issue

before the Court.

[July 24 Hr’g Tr., Doc. 237, 79:25–80:4, 82:5–8]. In the Privilege Opposition, Defendant further

states that “[h]aving determined to issue the most severe sanction he was considering (a default

judgment against Credit One on the merits), the Court expressed its disinterest in any backward-

looking examination of those failings and denied Plaintiff’s counsel’s request for all attorney-client

communications.” [Privilege Opposition, Doc. 205, p. 6].

Defendant seems to interpret these statements by Judge Drain to mean that Plaintiff is

precluded from seeking production of the documents that Defendant had originally refused to

produce. However, while it was clear that Judge Drain did not consider the communications in

question pertinent when issuing his Rule 37 default judgment, nowhere in the Certification

Decision nor at the November 10, 2016 Hearing did Judge Drain say that any such documents

should be precluded from subsequent discovery on the issue of damages: “[s]o I think the parties

should be focusing on discovery related to the class, and if you want to bifurcate it still, you can,

or discovery can also at that point deal with damages.” [November 10, 2016 Hr’g Tr., Doc. 101,

p. 5:19–22] (emphasis added); [see generally Certification Decision, Doc. 176].

As explained in Section (IV)(C)(ii) supra, the portion of the Certification Decision

awarding $50-$1,000 to the Main Class is no longer applicable (except as to Plaintiff individually),

and the parties will be permitted to explore what specific remedy, such as nominal damages, should

be awarded to the Main Class pursuant to the declaratory judgment claim. Such proceedings

would, as Judge Drain had directed at the November 10, 2016 Hearing, merit their own discovery.

As Plaintiff stated at the July 24 Hearing, “[the Court] should allow us to brief the issue, and [the

Court] should review those documents and allow us to review the documents and file a brief after

those documents are unsealed that could go to the merits of what the appropriate sanction is here.”

[July 24 Hr’g Tr., Doc. 237, 74:17–21].

The Court thus finds that the Slodov Documents are relevant for damages discovery and to

determine what nominal damages, if any, should be awarded. Now that the Court has determined

the Slodov Documents to be relevant, it must determine whether they are privileged.

E. THE CRIME FRAUD EXCEPTION.

The parties disagree as to whether the communications contained in the Slodov Documents

satisfy the crime-fraud exception. [Privilege Motion, Doc. 199, p. 9; Privilege Opposition, Doc.

205, p. 2]. Plaintiff specifically seeks:

a ruling that all of the documents Mr. Slodov previously filed with the Court, those

that have been retained by the clerk’s office, and any additional documents in Mr.

Slodov’s possession relating to his representation of Credit One, as well as his

communications with his former firm and with Credit One, and all documents

relating to this action in the possession of Credit One are not privileged because

they furthered a fraud on the Court.

[Privilege Motion, Doc. 199, p. 5]. Plaintiff urges that “[no] privilege applies to the documents at

issue because they furthered a fraud on the Court and therefore the privilege is eliminated under

the crime-fraud exception.” [Id.].

Defendant, on the other hand, argues that “even the facts as alleged by Plaintiff would not

support Plaintiff’s incredibly expansive view of what amounts to fraud on the court.” [Privilege

Opposition, Doc. 205, p. 2]. With regard to communications between Defendant and Defendant’s

New Counsel27 specifically, Defendant asserts that “at bottom, Plaintiff seeks to uncover

27 Defendant’s New Counsel, White & Case, moved to be substituted in as counsel for Defendant concurrently

with the Sessions Firm’s withdrawal. [See Counsel Substitution Motion, Doc. 90, pp. 1–2].

privileged material because of his assertion that such material could provide evidence that Plaintiff

‘continued’ a ‘fraud on the court’ after the September 2016 sanctions hearing.” [Id. at p. 3].

i. The Crime-Fraud Exception Standard

Plaintiff argues that the attorney-client privilege does not “protect communications made

in furtherance of a crime or fraud,” and that the “crime-fraud exception is not limited to technical

crimes.” [Privilege Motion, Doc. 199, pp. 6–7] (citing Amusement Industry Inc. v. Stern, 293

F.R.D. 420, 425 (S.D.N.Y. 2013); In re Grand Jury Subpoena Duces Tecum, 731 F.2d 1032, 1038

(2d Cir. 1984)). Plaintiff further states that “the crime-fraud exception applies where there is a

fraud upon the court” and “probable cause to believe that the particular communication with

counsel or attorney work product was intended in some way to facilitate or conceal the fraudulent

activity.” [Privilege Motion, Doc. 199, p. 7]. (citing In re Richard Roe, Inc., 68 F.3d 38, 39 (2d

Cir. 1995); In re St. Johnsbury Trucking Co., Inc., 184 B.R. 446, 456 (Bankr. D. Vt. 1995)). Such

probable cause, as Plaintiff argues, is present where “a ‘prudent person’ [would] have a ‘reasonable

basis’ for believing that the objective of the client’s communication with the attorney was to further

a fraudulent scheme.” [Id.] (citing Amusement Industry, Inc., 293 F.R.D. at 426–27).

Plaintiff further asserts that fraud on the court occurs “‘when a party lies to the court and

his adversary intentionally, repeatedly, and about issues that are central to the truth-finding

process.’” [Privilege Motion, Doc. 199, p. 8] (quoting Passlogix, Inc. v. 2FA Tech, LLC et al. 708

F. Supp. 2d 378, 393 (S.D.N.Y. 2010)). In the context of discovery, plaintiff claims that fraud on

the court occurs when “attorneys, as officers of the court, deliberately and intentionally fail to

disclose evidence in an attempt to deceive” the court. [Id.].

Defendant argues that “[a] fraud on this court occurs when it is established by clear and

convincing evidence that a party committed ‘the most egregious conduct involving a corruption of

the judicial process itself.’” [Privilege Opposition, Doc. 205, p. 18] (quoting Esposito v. New York,

2012 U.S. Dist. LEXIS 162308, at *10 (S.D.N.Y. 2012). Defendant further asserts that “discovery

misconduct” in civil cases can only be deemed fraud on the court when there was “calculated and

purposeful litigation misconduct.” [Privilege Opposition, Doc. 205, p. 19] (quoting In re Gen.

Motors LLC Ignition Switch Litig., 2015 U.S. Dist. LEXIS 159721, at *140–142). Defendant

presents the two-part test that “the Second Circuit has articulated” and which requires that the party

asserting the crime-fraud exception demonstrate that:

(i) the client communication or attorney work product in question was itself a

furtherance of the crime or fraud; and

(ii) probable cause to believe that the particular communication with counsel or

attorney work product was intended in some way to facilitate or to conceal the

criminal activity.

[Privilege Opposition, Doc. 205, p. 16] (quoting United States v. Richard Roe, Inc., 168 F.3d 69,

71 (2d Cir. 1999) (hereinafter “Richard Roe”) (emphasis in the original)). Further, Defendant adds

that “the crime-fraud exception is ‘limited to fraud which seriously affects the integrity of the

normal process of adjudication.’” [Privilege Opposition, Doc. 205, p. 18] (quoting King v. First

Am. Investigations, Inc., 287 F.3d 91, 95 (2d Cir. 2002)).

ii. Standard for In Camera Review

As Plaintiff notes, “a lesser evidentiary showing is needed to trigger in camera review than

is required ultimately to overcome the privilege.” [Privilege Motion, Doc. 199, p. 17] (quoting

U.S. v. Zolin, 491 U.S. 554, 572 (1989)). Specifically, in camera review only requires a “showing

of factual basis adequate to support a good faith belief by a reasonable person that in camera

review of materials may reveal evidence to establish the claim that the crime-fraud exception

applies . . . Once that showing is made, the decision whether to engage in in camera review rests

in the sound discretion of the district court.” [Id.].

iii. Analysis of Privilege for the Slodov Documents

The Court agrees with Plaintiff to the extent that the communications between Defendant

and Defendant’s Prior Counsel have met the standard for an in camera review to determine if they

potentially implicate a fraud on the Court. As for communications with Defendant’s New Counsel,

the Court agrees with Defendant that there has not been a sufficient showing that these materials

will reveal any intended furtherance of a fraud on this Court.

a. Communications with Defendant’s Prior Counsel

The Court applies the two-prong test laid out in Richard Roe, cited in Defendant’s Privilege

Opposition and discussed above (supra, Section (IV)(E)(i)), to determine the applicability of the

crime-fraud exception to the Slodov Documents. See Richard Roe, 168 F.3d at 71. See also

[Privilege Opposition, Doc. 205, p. 16]. The first prong of the test requires the movant to show

that “the client communication or attorney work product in question was itself in furtherance of

the crime or fraud.” Richard Roe, 168 F.3d at 71 (emphasis in the original). Defendant argues that

“Plaintiff has made no showing whatsoever that the privileged communications he seeks

themselves furthered an alleged fraud on the Court, and the Motion instead appears to be premised

on the idea that the requested privileged communications may provide evidence of the alleged

fraud on the court.” [Privilege Opposition, Doc. 205, p. 27]. The Court disagrees.

In the Privilege Motion, Plaintiff asserts that the Slodov Documents will prove: “that Credit

One may have destroyed documents—despite a litigation hold” [p. 10]; that Credit One and its

Prior Counsel were both aware that the declaration submitted to the Court in March 2016 (the

“March Declaration”) was blatantly false [p. 11]; that Credit One “was fully aware of, and

directed, Slodov’s actions throughout the entire duration of [the] litigation” [p. 11]; that Mr.

Slodov’s superiors at his firm “were fully aware they would lose a sanctions motion because of

this conduct” [p. 12]; and that Defendant’s New Counsel made “false representations to the Court”

at the October 12, 2017 Hearing, by stating that “the client did not intend to mislead this Court”

[p. 13]. [Privilege Motion, Doc. 199, pp. 10–13].

Plaintiff argues that such facts would indicate that Defendant and its Prior Counsel

committed fraud on the Court because they “signed false declarations and made numerous false

representations to Plaintiff and the Court asserting that discovery was complete and that

[Defendant] had produced all relevant documents, when, in fact, [Defendant] possessed many

more relevant documents that it knowingly attempted to conceal.” [Privilege Motion, Doc. 199,

p. 9].

Here, the Court agrees with Plaintiff. If, for instance, Defendant and Defendant’s Prior

Counsel knew the March Declaration was false, and Defendant and Defendant’s Prior Counsel

worked together to prepare the March Declaration, then it may well be determined that the

communications between Defendant and Prior Counsel regarding the March Declaration furthered

their submission of a false declaration, i.e. committed fraud on the Court.

Defendant further argues that Plaintiff has not met second prong, the requirement that there

be “probable cause to believe that the particular communication with counsel or attorney work

product was intended in some way to facilitate or to conceal the criminal activity. Richard Roe,

168 F.3d at 71 (emphasis in the original); [Privilege Opposition, Doc. 205, p. 30]. The only

argument Defendant presents with respect to this second prong however, is that Plaintiff “cannot

satisfy the second requirement that there is ‘probable cause to believe that the particular

communication with counsel or attorney work product was intended in some way to facilitate or

to conceal the criminal activity.’” [Privilege Opposition, Doc. 205, p. 30]. This is merely a

conclusory statement without any supporting facts or reasoning. Accordingly, the Court must

reject such an argument.

In any event, Plaintiff has presented an argument satisfying the intent requirement. As

Plaintiff states, “Judge Drain found that Credit One intentionally deceived the Court by submitting

false affidavits and intentionally obstructing discovery.” [Privilege Reply, Doc. 207, p. 1]

(emphasis added). Signing false declarations and making false representations regarding

production of relevant documents certainly constitutes, as Defendant puts it, “calculated and

purposeful litigation misconduct,” which, based on Judge Drain’s ruling, was so egregious it

ultimately resulted in Rule 37 sanctions and a default judgment. [quoting Privilege Opposition,

Doc. 205, p. 19]; [see also Certification Decision, Doc. 176, pp. 4–48]. As Plaintiff argues in the

Privilege Reply, “lying to the Court, submitting false declarations, intentionally withholding

documents, and destroying documents clearly constitute fraud on the Court and there are many

cases that so hold.” [Privilege Reply, Doc. 207, p. 5]. 28

Defendant also argues that even if “Defendant improperly withheld documents after Judge

Drain announced that he would be issuing a default judgment (and it did not), those alleged actions

would not rise to the level of a fraud on the court.” [Privilege Opposition, Doc. 205, p. 23].

Defendant asserts rather that its actions “at most . . . are discovery violations, the remedy for which

is provided in Rule 37.” [Privilege Opposition, Doc, 205, p. 23]. Defendant contends that “the

28 At a hearing on June 27, 2022 following the filing of the Slodov Motion, Judge Drain stated on the record:

[Plaintiff] can make a motion and say that there was a fraud on the court and that’s an exception to

the attorney-client privilege . . . all you need to do is file a motion that says that . . . it’s not privileged

anymore and gives the Court authority for it to Credit One, and follow, you know a procedure for

doing it in a way that doesn’t blow the issue before the Court decides it.

[Privilege Reply, Doc. 207, pp. 4–5] (quoting transcript of the June 27, 2022 hearing at 24:4–7, 24:15–18). Judge

Drain clearly referenced the possibility of the Slodov Documents being subject to the crime-fraud exception.

parties and the Court have addressed and

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