Case: Consumer Financial Protection Bureau v. Nexus Services, Inc.

5:21-cv-00016 | U.S. District Court for the Western District of Virginia

Filed Date: Feb. 22, 2021

Case Ongoing

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Case Summary

This case relates to Nexus Services, Inc.'s predatory consumer practices towards detainees in United States custody through one of its subsidiaries, Libre by Nexus (collectively "Nexus"). On February 22, 2021, The Consumer Financial Protection Bureau ("CFPB"), along with Virginia, Massachusetts, and New York (collectively "the States," and together with the CFPB, "the Plaintiffs"), filed this lawsuit in United States District Court for the Western District of Virginia. It was assigned to District Judge Elizabeth K. Dillon. The CFPB sued Nexus and its executives under §§ 1031, 1036, and 1054 of the Consumer Financial Protection Act ("CFPA") and 12 U.S.C. §§ 5531, 5536, 5564. The States sued under § 1042 of the CFPA, 12 U.S.C. § 5552, which authorizes state attorneys general to bring civil actions to enforce provisions of the CFPA. The States also sued Nexus under their respective state laws. Represented by CFPB staff attorneys and the States' Attorneys General, the Plaintiffs sought injunctive relief, payments for damages and restitution, disgorgement, civil money penalties, and attorney's fees.

Nexus provides an intermediary service between detainees and the parties involved in their release from U.S. custody. In essence, Nexus contracts with detainees and their families and then instructs a bond agent to post their bond. In exchange for this service, Nexus requires detainees to pay an upfront fee, make monthly payments, and wear G.P.S. tracking devices for the duration of their contract. The Plaintiffs allege that, in conducting its service, Nexus engages in several predatory consumer practices, including (1) creating the false impression that it directly pays cash for immigrations bond, thus establishing a debtor-debtee relationship, (2) deceptively threatening detainees and their families, (3) abusively using English in their contracts, (4) falsely claiming to offer free legal services, (5) fraudulently charging for services they are unable to provide, and (6) neglecting to return collateral funds to clients.

Nexus filed a motion to dismiss for lack of subject matter jurisdiction on March 1, 2021 and a motion to stay on March 31, 2021. Nexus withdrew the motion to stay later that year, on June 22. The motion to dismiss was denied on March 22, 2022. 2022 WL 848065. In the order, the court found that the court had federal question jurisdiction because the plaintiffs brought the claim under a federal law, the CFPA. The defendants argued that the CFPB could not enforce the CFPA against them based on multiple statutory exceptions, but the court held that this issue did not implicate its subject matter jurisdiction. The court also chose to exercise supplemental jurisdiction over the state law claims. On June 6, 2022, the Plaintiffs filed an oral motion for attorney's fees, but the court denied the motion as premature on June 8, 2022.

On July 19, 2022, the Plaintiffs moved for a contempt order, arguing that the Defendants had failed to obey a discovery order. They recommended that the court order the Defendants to pay a $5,000 fine per day until they complied with the discovery order, and requested reasonable expenses, including attorney's fees. On February 7, 2023, the court ordered that the Defendants show cause to why they should not be held in contempt. The magistrate judge recommended that the Defendants Nexus Services and Libre by Nexus pay a fine of $1,000 per day upon further noncompliance and that various individual defendants pay a $500 daily fine for noncompliance. The magistrate judge also recommended that the court grant the Plaintiffs’ request for attorney's fees and costs.

On May 1, 2023, the Defendants moved for judgment on the pleadings. This motion was later mooted by the May 11, 2023 default judgment against the Defendants wherein the court found each defendant in civil contempt of court. 2023 WL 3375596. On May 24, 2023, the Defendants submitted a request for reconsideration of that default judgment or in the alternative, a request for amendment of the May 11 order to certify two legal issues for interlocutory appeal. The following month, on June 23, the Plaintiffs asked the court to impose evidentiary sanctions on the Defendants and grant injunctive and monetary relief.

The Defendants’ reconsideration request was denied in an August 7, 2023 order. 2023 WL 5019529. In that order, the court discussed the Defendants’ contempt of court, inability to retain counsel, and other forms of general obfuscation as reasons to deny the reconsideration. Further, the court discussed that the Defendants’ motion for reconsideration was not filed timely. The court additionally denied the Defendants’ motion for an interlocutory appeal, stating that the May 11th order did not rule on any of the issues that the Defendants asked to appeal.

On August 10, 2023, the Defendants appealed the August 7, 2023 order to the U.S. Court of Appeals for the Fourth Circuit. Later that month, on August 15, the Fourth Circuit denied the Defendants’ motion for a stay or an injunction while the appeal was pending.

	Document
5:21-cv-00016	Docket (PACER) Consumer Financial Protection Bureau et al v. Nexus Services, Inc.	Sept. 17, 2021	Sept. 17, 2021 Docket
1 5:21-cv-00016	Complaint	Feb. 22, 2021	Feb. 22, 2021 Complaint
108 5:21-cv-00016	Memorandum Opinion	March 22, 2022	March 22, 2022 Order/Opinion 2022 WL 848065
129 5:21-cv-00016	Order on Motion for Attorney Fees	June 8, 2022	June 8, 2022 Order/Opinion
181 5:21-cv-00016	Order on Motion to Show Cause AND Order on Motion for Sanctions	Feb. 7, 2023	Feb. 7, 2023 Order/Opinion
201 5:21-cv-00016	Memorandum Opinion	May 11, 2023	May 11, 2023 Order/Opinion 2023 WL 3375596
226 5:21-cv-00016	Order on Motion for Certificate of Appealability AND Order on Motion for Reconsideration	Aug. 7, 2023	Aug. 7, 2023 Order/Opinion 2023 WL 5019529

ECF Number	Description	Date	Link Date / Link
1	COMPLAINT against Evan Ajin, Micheal Donovan, Libre by Nexus, Inc., Richard Moore, Nexus Services, Inc., filed by Consumer Financial Protection Bureau, The People of the State of New York, Commonwealth of Virginia, Commonwealth of Massachusetts. (Attachments: # 1 Civil Cover Sheet, # 2 Attachment to CCS)(jv) 1 Civil Cover Sheet View on RECAP 2 Attachment to CCS View on PACER	Feb. 22, 2021	Feb. 22, 2021 Clearinghouse
2	MOTION for Jon Burke to Appear Pro Hac Vice. Filing fee $ 100, receipt number AVAWDC-3633401. by Commonwealth of Virginia. (Attachments: # 1 Text of Proposed Order In Support of Motion For Admission Pro Hac Vice)(Sovinsky, Stephen)	Feb. 22, 2021	Feb. 22, 2021 PACER
3	MOTION for Jane Azia to Appear Pro Hac Vice. Filing fee $ 100, receipt number AVAWDC-3633412. by Commonwealth of Virginia. (Attachments: # 1 Text of Proposed Order In Support of Motion For Admission Pro Hac Vice)(Sovinsky, Stephen)	Feb. 22, 2021	Feb. 22, 2021 PACER
4	MOTION for Stewart Dearing to Appear Pro Hac Vice. Filing fee $ 100, receipt number AVAWDC-3633418. by Commonwealth of Virginia. (Attachments: # 1 Text of Proposed Order In Support of Motion For Admission Pro Hac Vice)(Sovinsky, Stephen)	Feb. 22, 2021	Feb. 22, 2021 PACER
5	MOTION for Joseph Mueller to Appear Pro Hac Vice. Filing fee $ 100, receipt number AVAWDC-3633424. by Commonwealth of Virginia. (Attachments: # 1 Text of Proposed Order In Support of Motion For Admission Pro Hac Vice)(Sovinsky, Stephen)	Feb. 22, 2021	Feb. 22, 2021 PACER
6	MOTION for Laura Levine to Appear Pro Hac Vice. Filing fee $ 100, receipt number AVAWDC-3633425. by Commonwealth of Virginia. (Attachments: # 1 Text of Proposed Order In Support of Motion For Admission Pro Hac Vice)(Sovinsky, Stephen)	Feb. 22, 2021	Feb. 22, 2021 PACER
	Erin Boyd Ashwell, in accordance with Section B.9. of the Administrative Procedures for Filing, Signing and Verifying Pleadings and Papers by Electronic Means, a registered user is responsible for ensuring their mailing address, primary email address, and telephone number are kept up-to-date with this court by updating the information in their PACER account. To update your information, log into PACER.gov and click the Maintenance tab to Update this information with this court. (jv)	Feb. 22, 2021	Feb. 22, 2021 PACER
7	ORDER granting 2 MOTION to Appear Pro Hac Vice; Attorney Jon Burke. Signed by Judge Elizabeth K. Dillon on 2/22/2021. (jv)	Feb. 22, 2021	Feb. 22, 2021 PACER
8	ORDER granting 3 MOTION to Appear Pro Hac Vice; Attorney Jane Azia. Signed by Judge Elizabeth K. Dillon on 2/22/2021. (jv)	Feb. 22, 2021	Feb. 22, 2021 PACER
9	ORDER granting 4 MOTION to Appear Pro Hac Vice; Attorney Stewart Dearing. Signed by Judge Elizabeth K. Dillon on 2/22/2021. (jv)	Feb. 22, 2021	Feb. 22, 2021 PACER
10	ORDER granting 5 MOTION to Appear Pro Hac Vice; Attorney Joseph Mueller. Signed by Judge Elizabeth K. Dillon on 2/22/2021. (jv)	Feb. 22, 2021	Feb. 22, 2021 PACER
11	ORDER granting 6 MOTION to Appear Pro Hac Vice; Attorney Laura Levine. Signed by Judge Elizabeth K. Dillon on 2/22/2021. (jv)	Feb. 22, 2021	Feb. 22, 2021 PACER
	Attorney - Updating Contact Information	Feb. 22, 2021	Feb. 22, 2021 PACER
12	NOTICE of Appearance by Stewart Dearing on behalf of The People of the State of New York (Dearing, Stewart)	Feb. 23, 2021	Feb. 23, 2021 PACER
13	NOTICE of Appearance by Joseph Pirc Mueller on behalf of The People of the State of New York (Mueller, Joseph)	Feb. 23, 2021	Feb. 23, 2021 PACER
14	NOTICE of Appearance by Jane Melissa Azia on behalf of The People of the State of New York (Azia, Jane)	Feb. 23, 2021	Feb. 23, 2021 PACER
15	NOTICE of Appearance by Jonathan T. Burke on behalf of Commonwealth of Massachusetts (Burke, Jonathan)	Feb. 23, 2021	Feb. 23, 2021 PACER
16	NOTICE of Appearance by Laura Levine on behalf of The People of the State of New York (Levine, Laura)	Feb. 24, 2021	Feb. 24, 2021 PACER
17	NOTICE of Appearance by Mario Bernard Williams on behalf of Evan Ajin, Micheal Donovan, Libre by Nexus, Inc., Richard Moore, Nexus Services, Inc. (Williams, Mario)	March 1, 2021	March 1, 2021 PACER
18	MOTION to Dismiss for Lack of Subject Matter Jurisdiction by Evan Ajin, Micheal Donovan, Libre by Nexus, Inc., Richard Moore, Nexus Services, Inc.. (Attachments: # 1 Exhibit Arbitration Award 1, # 2 Exhibit Arbitration Award 2, # 3 Exhibit Arbitration Award 3, # 4 Exhibit California BOI Agreement, # 5 Exhibit Virginia Settlement Order, # 6 Exhibit Virginia Complaint, # 7 Exhibit Affidavit)(Williams, Mario) 1 Exhibit Arbitration Award 1 View on PACER 2 Exhibit Arbitration Award 2 View on PACER 3 Exhibit Arbitration Award 3 View on PACER 4 Exhibit California BOI Agreement View on PACER 5 Exhibit Virginia Settlement Order View on PACER 6 Exhibit Virginia Complaint View on PACER 7 Exhibit Affidavit View on PACER	March 1, 2021	March 1, 2021 RECAP
19	Magistrate Consent Notice to Parties. Click here to access the Consent Form (jv)	March 2, 2021	March 2, 2021 PACER
20	Notice of Filing Requirement to Libre by Nexus, Inc., Nexus Services, Inc. - Pursuant to Standing Order dated May 15, 2000, and the adoption of Rule 7.1 of the Federal Rules of Civil Procedures, effective December 1, 2002, nongovernmental corporate parties are directed to file a Corporate Disclosure Statement with their first appearance, pleading, motion or response. Click here to access the Corporate Disclosure Statement Form. This form should be electronically filed in this matter as ordered. (jv)	March 2, 2021	March 2, 2021 PACER
21	Positive Corporate Disclosure Statement by Libre by Nexus, Inc., Nexus Services, Inc. identifying Corporate Parent Nexus Services, Inc. for Libre by Nexus, Inc., Nexus Services, Inc.. (Williams, Mario)	March 2, 2021	March 2, 2021 RECAP
	E-Magistrate Consent Notice to Parties	March 2, 2021	March 2, 2021 PACER
	Notice of Requirement - Corporate Disclosure Statement	March 2, 2021	March 2, 2021 PACER
22	RESPONSE in Opposition re 18 MOTION to Dismiss for Lack of Subject Matter Jurisdiction . filed by Commonwealth of Massachusetts, Consumer Financial Protection Bureau, The People of the State of New York. (Nguyen, Hai Binh)	March 15, 2021	March 15, 2021 PACER
23	RESPONSE in Opposition re 18 MOTION to Dismiss for Lack of Subject Matter Jurisdiction . filed by Commonwealth of Virginia. (Sovinsky, Stephen)	March 15, 2021	March 15, 2021 PACER
24	Scheduling Letter (bwd)	March 18, 2021	March 18, 2021 PACER
	Erin Ashwell, in accordance with Section B.9. of the Administrative Procedures for Filing, Signing and Verifying Pleadings and Papers by Electronic Means, a registered user is responsible for ensuring their mailing address, primary email address, and telephone number are kept up-to-date with this court by updating the information in their PACER account. To update your information, log into PACER.gov and click the Maintenance tab to Update this information with this court. (kld)	March 22, 2021	March 22, 2021 PACER
25	Consent MOTION for Extension of Time to File Response/Reply by Evan Ajin, Micheal Donovan, Libre by Nexus, Inc., Richard Moore, Nexus Services, Inc.. (Attachments: # 1 Text of Proposed Order)(Williams, Mario)	March 22, 2021	March 22, 2021 PACER
	Attorney - Updating Contact Information	March 22, 2021	March 22, 2021 PACER
26	Oral ORDER granting 25 Motion for Extension of Time to File Response/Reply, Responses due by 3/26/2021. Entered by Judge Elizabeth K. Dillon on March 23, 2021. This Notice of Electronic Filing is the Official ORDER for this entry. No document is attached.(mf)	March 23, 2021	March 23, 2021 PACER
	Order on Motion for Extension of Time to File Response/Reply	March 23, 2021	March 23, 2021 PACER
27	WAIVER OF SERVICE Returned Executed by Consumer Financial Protection Bureau. Evan Ajin waiver sent on 2/23/2021, answer due 4/26/2021; Micheal Donovan waiver sent on 2/23/2021, answer due 4/26/2021; Libre by Nexus, Inc. waiver sent on 2/23/2021, answer due 4/26/2021; Richard Moore waiver sent on 2/23/2021, answer due 4/26/2021; Nexus Services, Inc. waiver sent on 2/23/2021, answer due 4/26/2021.(Nguyen, Hai Binh)	March 26, 2021	March 26, 2021 PACER
28	REPLY to Response to Motion re 18 MOTION to Dismiss for Lack of Subject Matter Jurisdiction . filed by Evan Ajin, Micheal Donovan, Libre by Nexus, Inc., Richard Moore, Nexus Services, Inc.. (Williams, Mario)	March 26, 2021	March 26, 2021 PACER
29	MOTION for John M. Shoreman to Appear Pro Hac Vice. Filing fee $ 100, receipt number AVAWDC-3663376. by Evan Ajin, Micheal Donovan, Libre by Nexus, Inc., Richard Moore, Nexus Services, Inc.. (Attachments: # 1 Text of Proposed Order)(Williams, Mario)	March 29, 2021	March 29, 2021 PACER
30	NOTICE of Hearing: (N) (No Interpreter requested) Rule 16 Status Conference set for May 24, 2021 at 1:00 PM by telephone conference call before Judge Elizabeth K. Dillon. (Chambers sent the dial-in information to the parties by email.)(mf)	March 30, 2021	March 30, 2021 PACER
	Notice of Hearing	March 30, 2021	March 30, 2021 PACER
31	Withdrawn on 6/22/2021 per Oral Order at doc# 44 MOTION to Stay by Evan Ajin, Micheal Donovan, Libre by Nexus, Inc., Richard Moore, Nexus Services, Inc.. (Attachments: # 1 Text of Proposed Order)(Williams, Mario) Modified on 6/22/2021 (jv).	March 31, 2021	March 31, 2021 PACER
32	RESPONSE in Opposition re 31 MOTION to Stay . filed by Commonwealth of Massachusetts, Commonwealth of Virginia, Consumer Financial Protection Bureau, The People of the State of New York. (Gordon, Donald)	April 8, 2021	April 8, 2021 PACER

Case: Consumer Financial Protection Bureau v. Nexus Services, Inc.

5:21-cv-00016 | U.S. District Court for the Western District of Virginia

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