Stekly v. I.Q. Data International

Background

Faith Stekly filed suit against I.Q. Data International, Inc. (a debt collection agency) and Liberty Mutual Insurance Company, alleging violations of the Fair Debt Collection Practices Act (FDCPA) and the Minnesota Collection Agencies Act. Specifically, she alleged that I.Q. Data made illegal collection calls to third parties, wrongly reported disputed debt, and wrongly charged interest on a disputed debt.

During pretrial discovery, Stekly filed a motion for a protective order to block a subpoena I.Q. Data had issued for her employment records. In filing its response to that motion, I.Q. Data's counsel filed two exhibits on the public docket without any privacy restriction: (1) Stekly's responses to I.Q. Data's interrogatories (written discovery questions answered under oath), which contained her full date of birth and other personally identifiable information; and (2) documents Stekly had produced in response to requests for production, which included approximately 200 pages she had marked "Confidential Subject to Protective Order" — among them her full credit reports and other sensitive financial data. A protective order had already been entered in the case based on the parties' stipulation.

Events Following the Filing

The exhibits were filed at approximately 5:07 p.m. on September 17, 2025, while the court clerk's office was closed. About two hours later, Stekly's counsel notified I.Q. Data's counsel of the improper filing. I.Q. Data's counsel acknowledged the error as inadvertent and pledged to correct it, and that same evening sent an email alerting the court. The following morning, when the Electronic Case Filing (ECF) help desk opened, I.Q. Data's counsel restricted public access to both exhibits. The exhibits were subsequently refiled: the interrogatory responses in redacted form, and the production documents without the confidential materials.

Meanwhile, approximately an hour after the parties' counsel spoke, and about three hours after the original filing, Stekly's counsel filed the instant motion for sanctions at 8:06 p.m. on September 17, 2025 — before any remedial measures had been implemented. Stekly's meet-and-confer statement indicated that her counsel's expressed intent had been to "immediately" file the motion.

Stekly's Motion

Stekly sought sanctions under two legal authorities:

1. Federal Rule of Civil Procedure 37(b)(2) — which authorizes sanctions for violations of discovery orders, including protective orders. 2. The court's inherent authority — which allows courts to discipline litigants for conduct that abuses the judicial process.

She also invoked Federal Rule of Civil Procedure 5.2 (which restricts public filing of personally identifiable information) and District of Minnesota Local Rule 5.6 (protocols for sealed filings).

The specific sanctions requested were: (1) sealing and striking the improperly filed exhibits from the public docket; (2) payment of Stekly's attorney's fees and expenses; (3) barring I.Q. Data from using the improperly filed documents in the subpoena dispute; (4) admonishment or a contempt finding; and (5) other appropriate relief.

Court's Analysis

Sanctions Under Rule 37 and Inherent Authority

Judge Micko acknowledged that I.Q. Data did violate the court's protective order and Rule 5.2 by publicly filing the confidential materials. The court accepted I.Q. Data's representation that the filing was inadvertent but characterized it as "inexcusable" — noting that I.Q. Data's privacy obligations were clearly set out in a straightforward rule and a simple protective order, not in some technical or obscure requirement.

Nevertheless, the court identified several mitigating factors weighing against imposing sanctions:

- The violation was inadvertent, not willful. - It appeared to be an isolated incident rather than a pattern of misconduct. - Steps to correct the error were taken within hours; access was restricted by the next business morning. - I.Q. Data's counsel represented that additional internal controls had been put in place to prevent recurrence.

The court emphasized its broad discretion in ruling on sanctions motions, and that the severity of appropriate sanctions scales with the seriousness of the misconduct. Here, though the court stated it would have been within its discretion to impose sanctions, it concluded that restraint was the better course given the isolated and limited nature of the violation. No sanctions were imposed under either Rule 37 or the court's inherent authority.

Attorney's Fees

Rule 37(b)(2)(C) ordinarily requires the offending party to pay the opposing party's reasonable expenses, including attorney's fees, unless such an award would be unjust. Stekly requested fees for bringing the motion.

Judge Micko declined to award fees. The court found it significant that Stekly's counsel filed the motion the same evening — approximately an hour after speaking with opposing counsel and before defense counsel or the court had any opportunity to take corrective action. Given that I.Q. Data was already planning to fix the problem and that the clerk's office was closed, the court concluded that the motion was not actually necessary. The court stated it would not "reward a race to the courthouse for an unnecessarily quick, after-hours filing," and found that awarding fees under these circumstances would be unjust.

Disposition

Plaintiff's Motion for Sanctions and to Seal Improperly Filed Documents (Doc. 95) was denied in its entirety. The court also noted that the sealing issue was effectively moot, as the documents had already been refiled with appropriate protections by the time the motion was resolved.