Consumer Financia
Protection Bureau

1 rOO G Street ~ W .. Washington, DC /0~::>/

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IN THE MATTER OF WESTGATE RESORTS, LTD. )
2015-MISC-WESTGATE RESORTS, LTD-0001
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DECISION AND ORDER ON PETITION BY WESTGATE RESORTS, LTD.,
TO MODIFY OR SET ASIDE CIVIL INVESTIGATIVE DEMAND
Westgate Resorts, Ltd. , received a civil investigative demand (CID) from the
Consumer Financial Protection Bureau ' s Office of Enforcement, and has petitioned for an
order to set aside or modify that CID. Westgate 's petition is denied for the reasons set forth
below.

FACTUAL BACKGROUND
The Bureau issued its CID to Westgate on September 29,2015. The CJD's
"Notification of Purpose" advised Westgate that the Bureau was investigating "to determine
whether persons involved in the sale and financing oftimeshares have engaged in, or are
engaging in, acts or practices in violation of Sections 1031 and 1036 of the [Consumer
Financial Protection Act] , 12 U.S.C. §§ 5531 and 5536, the Fair Debt Collection Practices
Act, 15 U.S.C. §§ 1692, et seq., the Electronic Funds Transfer Act, 15 U.S .C. § 1693 et seq.,
the Fair Credit Billing Act (FCBA), 15 U.S .C. § 1666 et seq. , their implementing regulations,
or any other Federal consumer financial law." The CID also sought "to determine whether
Bureau action to obtain legal or equitable relief would be in the public interest." The CID
included 27 interrogatories and nine requests for documents.
The Bureau ' s enforcement staff held a meet-and-confer conference call with counsel
for Westgate on October 8, 2015 , to discuss the CID. As a result, the Bureau narrowed the
scope of several interrogatories and one document request. The Bureau also held portions of
one interrogatory and one document request in abeyance. Westgate has partially complied
with the CID. However, as to Document Request 9 (which, as modified, requested certain
consumer complaints that related to the offering or sale oftimeshares), Westgate withheld
those consumer complaints that it deemed to be unrelated to its financing of timeshares.
Westgate also failed to comply in full with Interrogatory 25 . That interrogatory, as modified,
requested the identities of anyone who worked for Westgate, on or after September 1, 2012,
unless that person worked solely as a " greeter." Westgate prov~ded the identities of those
employees who processed mortgage applications, but withheld the identities of its sales
employees who engaged in the offering and sales of the timeshare properties.
Westgate served its Petition to Modify or Set Aside the CID on October 19, 2015.

 LEGAL DETERMINATION
Westgate served its Petition prior to the completion of the meet-and-confer process.
Because that process narrowed the scope of the CID, and because Westgate has partially
complied, some of the arguments raised in the Petition are no longer relevant. However,
there are five arguments that relate to Westgate 's failure to comply in full with Document
Request 9 and Interrogatory 25. None of those arguments merits modifying or setting aside
Westgate's obligations under those provisions.
First, Westgate argues that the Bureau is unconstitutional and thus has no authority to
investigate its conduct. See Petition at 6-11. Two district courts have rejected challenges to
the Bureau's constitutionality that are similar to the arguments raised by Westgate. See
CFPB v. Morgan Drexen, Inc., 60 F. Supp. 3d 1082 (C.D. Cal. 2014); CFPB v. ITT Educ.
Servs., Inc., No. 1:14-cv-00292-SEB-TAB, 2015 WL 1013508 (S.D. Ind. Mar. 6, 20 15).
However, Westgate' s constitutional challenge is not properly raised in an administrative
proceeding challenging compulsory process because "government agencies may not entertain
a constitutional challenge to authorizing statutes." United Space All., LLC v. Solis, 824 F.
Supp. 2d 68, 97 n.lO (D.D.C. 2011) (quoting Lepre v. Dep 't of Labor, 275 F.3d 59, 75 (D.C.
Cir. 2001) (Silberman, 1. concurring)); see Buckeye Indus., Inc. v. Sec 'y ofLabor,
Occupational Safety & Health Review Comm 'n, 587 F.2d 231 , 235 (5th Cir. 1979) ("[n]o
administrative tribunal of the United States has the authority to declare unconstitutional the
Act which it is called upon to administer"); Robinson v. United States, 7 18 F.2d 336, 338
(lOth Cir. 1983) (same). Accordingly, Westgate' s constitutional arguments provide no basis
for modifying or setting aside any provision of the CID.
Second, Westgate contends that the CID 's Notification of Purpose fails to advise it
"of the nature of the conduct constituting the alleged violation that is under investigation,"
citing both the Bureau's regulations and the CFPA. Petition at 11-14. The Notification of
Purpose in Westgate's CID explains that the Bureau seeks to determine whether "persons
involved in the sale and financing of timeshares have engaged in, or are engaging in, acts or
practices" that violate the CFPA, the Fair Debt Collection Practices Act, the E lectronic Funds
Transfer Act, the Fair Credit Billing Act, the regulations that implement those laws, or any
other federal consumer financial law. The Bureau need not provide a detailed narrative when
it issues aCID. Rather, aCID need only state "the nature of the conduct constituting the
alleged violation which is under investigation and the provision of law applicable to such
violation." 12 U.S.C. § 5562; see also 12 C.F.R. § 1080.5. The Notification ofPurpose in
Westgate's CID fulfill s this requirement. The Bureau is not required to go further in
specifying the provisions it may be investigating, as it is "well settled that the boundaries of
an [agency] investigation may be drawn 'quite generally,' in large part because at the
investigative stage of a proceeding, the [agency] need only have a 'suspicion that the law is
being violated in some way.'" FTC v. 0 'Connell Associates, Inc., 828 F. Supp. 165, 171
(E.D.N.Y. 1993) (emphasis added by the court) (quoting FTC v. Invention Submission Corp. ,
965 F.2d 1086, 1090 (D.C. Cir. 1992)). Where, as here, the Notification of Purpose in aCID
identifies the conduct under investigation and the relevant provisions of law, the CID
satisfies statutory and regulatory requirements. See In re Accrediting Council for Indep.

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 Colleges and Schools, 2015-MISC-ACICS-0001, at 3 (Oct. 8, 2015) (and other orders cited
therein). 1
Third, Westgate complains that the material it has withheld is not relevant. See
Petition at 15, 17. The crucial issue with respect to relevance is whether the material sought
by the agency's compulsory process is reasonably relevant to the purpose of the
investigation. See United States v. Morton Salt Co., 338 U.S. 632, 652-53 (1950). This "test
is satisfied if the documents sought are ' not plainly irrelevant' to the investigative purpose."
FTC v. Carter, 636 F.2d 781, 788 (D.C. Cir. 1980). The information withheld by Westgate is
not plainly irrelevant to the Bureau's investigation. The information relates to Westgate 's
sales of timeshares. Although Westgate argues that its marketing and sales activities occur
prior to its financing of timeshares, Westgate has not shown that the sales process is
completely separate from the financing of the timeshares. To the contrary, Westgate
concedes that its sales oftimeshares "are coupled with consumer financial products or
services." Petition at 24. And consumer complaints that the Bureau has obtained suggest
that sales representatives made statements directly relating to financing. Thus, Westgate 's
arguments about relevance do not justify modifying or setting aside the CID provisions with
which it has failed to comply.
Fourth, Westgate argues that the CID is overbroad: it contends that the Bureau's
enforcement authority and investigative authority are coextensive, and that it cannot be
required to disclose information that, in its view, involves matters outside the Bureau's
enforcement authority. See Petition at 22; see also id. at 16, 17, 24-25. In particular, it
claims that its marketing and sale oftimeshares are outside the Bureau's enforcement
authority pursuant to§§ 1027(a), (b) of the CFPA, 12 U.S.C. §§ 5517(a), (b), see Petition at
22, and that, as a result, it cannot be required to disclose information about those activities.
But this argument ignores that the CFPA authorizes the Bureau to issue CIDs to "any person"
who may have information "relevant to a violation." 12 U.S.C. § 5562(c)( l). As the Bureau
has previously explained, an entity's fact-based arguments about whether its conduct is
subject to the substantive provisions ofthe CFPA are not a defense to the enforcement of a
CID. See In reAccrediting Council for lndep. Colleges and Schools, at 2. Courts have
agreed with federal agencies that have reached the same conclusion in similar circumstances.
See SEC v. Savage, 513 F.2d 188, 189 (7th Cir. 1975) (SEC not required to establish that
company's commodity future contracts were "securities" within the meaning of the
Securities Act before subpoena would be enforced); Casey v. FTC, 578 F2d 793, 797-98 (9th
Cir. 1978) (provision ofthe FTC Act authorizing the FTC to subpoena "witnesses" extends
the FTC 's subpoena power to those who are exempt from its enforcement authority).
Moreover, although section I 027 of the CFPA imposes limits on the Bureau's enforcement
authority, section 1027(n)(2) provides that even those who are excluded from the Bureau's
enforcement authority by, inter alia, sections I 027(a) and (b) " may be subject to requests
from, or requirements imposed by, the Bureau regarding information in order to carry out the
responsibilities and functions of the Bureau in accordance with section ... I 052 [which

1

A vail able at http://www.consumertinance.gov/ f/20 1510_ cfpb_ decision-on-petition-by-selling-ACICSto-set-aside-civil-investigati ve.pdf.

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 authorizes issuance ofCIDs]." 12 U.S.C. § 5517(n)(2). Thus, the limits imposed by
sections1027(a), (b) do not justify Westgate' s failure to comply.
Finally, Westgate claims that it would be "unduly burdensome" for it to supply the
material that it withheld. Petition at 33. Yet a party served with aCID must expect some
burden, and it is only when the burden is undue that it justifies a petition to set aside or
modify the CID. FTC v. Texaco, Inc. , 555 F.2d 862, 882 (D.C. Cir. 1997) (en bane).
Westgate bears the burden of demonstrating that supplying the material it has withheld would
cause it an undue burden, and it can only meet that burden if it shows that complying would
"unduly disrupt" or "seriously hinder" the normal operations of its business. I d.; see In re
PHH Corp., 2012-MISC-PHH Corp-0001, at 6-7 (September 20, 2012). 2 Westgate has not
made such a showing. Much of Westgate ' s argument about burden is based on its belief that
the CID is overbroad. See, e.g., Petition at I , 20. As explained above, that argument is
meritless. Westgate's only "showing" related to burden is its general statement that
" [c]ompliance with the CID will be very expensive and disrupt Westgate's normal business
operations," and that this will preclude "many of its management team, officers, and
employees . .. from working on their day-to-day activities." Petition at 20. But this sort of
general statement is not enough. Instead, Westgate would have to demonstrate that
supplying the information it has withheld would unduly hinder its day-to-day operations.
Westgate would also have to support this showing with evidence, such as sworn declarations,
yet Westgate has made no such showing.

CONCLUSION
For the foregoing reasons, Westgate's Petition to Modify or Set Aside the Civil
Investigative Demand is denied. Within 21 calendar days of this Decision and Order,
Westgate is directed to produce all the documents, items, and information that it has withheld
in response to Interrogatory 25 and Document Request 9.

March 1L 2016

2

Available at http://www.consumerfinance.gov/f/20 1209_ cfpb_ setaside_phhcorp_ OOOl.pdf.

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