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Searcy v. Funds Corp.

January 20, 2010


The opinion of the court was delivered by: Charles P. Kocoras United States District Judge

CHARLES P. KOCORAS, District Judge


This case comes before the Court on Plaintiff Gladys Searcy's motion for class certification pursuant to Fed. R. Civ. P. 23, her Motion to Strike Portions of Tonya Weber's Declaration, and Defendants' Motion To Strike Declaration of Gladys Searcy. For the reasons stated below, Searcy's motion for class certification is granted in part and denied in part and her motion to strike is denied as moot. Defendants' motion is denied.


Defendants eFunds Corp. and Deposit Payment Protection Services, Inc. ("Defendants") are check verification companies. Defendants contract with a number of retailers to operate a service called the Shared Check Authorization Network, or SCAN. SCAN is essentially an electronic "bad check" list. Defendants collect a list of driver's license and checking account numbers ("consumer identifiers") associated with bounced checks and bank accounts closed under adverse circumstances. SCAN then compiles these identifiers into a database and distributes it to their customers to help them determine whether to accept a consumer's check. When a retailer becomes a SCAN member, Defendants electronically send the retailer an initial file containing a negative database containing a list of consumer identifiers associated with bad checks or adversely closed bank accounts. Each day thereafter Defendants send the retailer an update file with a list of consumer identifiers associated with new adverse transactions to add to the negative database and corrected information about accounts to delete from the database.

Defendants also operate a service called SCAN OnLine that allows retailers to access Defendants' database through the Internet instead of having to store and constantly update the database on their own computers. Defendants have stored all consumer check transactions processed through SCAN OnLine since its creation in 1998, including the date of transaction, consumer identifiers entered by merchants, and whether the particular check was approved or denied.

As a consumer reporting agency, Defendants are required by the Fair Credit Reporting Act ("FCRA") to provide individuals with a Consumer File Disclosure Report upon their request. 15 U.S.C. § 1681g. The FCRA also mandates that consumer reporting agencies include certain types of content in the report, specifically: (1) all information in the consumer's file at the time of the request; (2) the sources of the information; and (3) the identities of all businesses who procured a consumer report from the consumer reporting agency during the preceding twelve-month period. 15 U.S.C. § 1681g(a)(1)-(3). From June 2005 to July 2008, SCAN issued its Disclosure Reports using a standardized format. The report provided two types of information:

(1) any current bounced checks or bank accounts closed under adverse circumstances; and (2) any cleared items, or previously reported bounced checks or closed bank accounts that had been reported resolved.

Searcy made two requests for Disclosure Reports that were issued pursuant to this standardized formula.*fn1 Around September 13, 2005, Searcy presented a check from a recently opened bank account to a SCAN member-retailer. After the retailer declined the check, Searcy provided her driver's license number and some bank account numbers to SCAN and requested a report. She received it in the mail a few days later. Searcy requested another report from SCAN in October 2006. The report indicated that in February 2006 Searcy had written checks that were returned unpaid and therefore her identifiers had been placed in the list Defendants distribute to SCAN member-retailers.

On February 15, 2008, Searcy filed suit against Defendants, alleging that their Disclosure Reports failed to include certain information required by the FCRA in three areas: first, failing to include information associated with her identifiers from the SCAN OnLine database (and the retailer sources of that information); second, neglecting to incorporate a list of all retailers who possessed SCAN's database containing her identifiers during the twelve months prior to her request; and third, failing to identify all SCAN retailers to which Searcy presented a check during the year prior to her request. In addition to presenting her individual claims, Searcy wishes to represent the interests of four classes. She initially seeks to represent a class made up of all persons who requested a Disclosure Report from June 18, 2005, to July 20, 2008. She also proposes to represent a class of persons whose SCAN disclosures did not include SCAN OnLine transactions on file in Defendants' records at the time of the request. She further asks to represent a class of persons whose consumer identifiers were in the SCAN database sent to merchants during the 1-year period preceding the prospective class member's request for a report. Finally, Searcy asks to represent a class of persons who presented checks to SCAN merchants during the 1-year period preceding their report request.*fn2 Searcy now moves to certify these classes.


To be certified as a class action, a claim must first satisfy four criteria: numerosity, commonality, typicality, and adequacy. Fed. R. Civ. P. 23(a). The first two focus on the characteristics of the class as a whole: the number of potential class members must be so large that joinder would be impracticable, and legal or factual questions presented in the putative class action must be common to all class members. Fed. R. Civ. P. 23(a)(1)(2). The third and fourth criteria concentrate on the attributes of the parties seeking to represent the class: the claims or defenses of those representatives must be of the same type as those of the class they seek to represent, and the representatives must be able to protect the interests of the class fairly and adequately. Fed. R. Civ. P. 23(a)(3)(4).

If an action shows each of these four attributes, the inquiry shifts to examine whether "the action is maintainable under Rule 23(b)(1), (2), or (3)." Amchem Products, Inc. v. Windsor, 521 U.S. 591, 614 (1997). Rule 23(b)(3) specifies that a class can be certified if the common factual or legal questions identified for purposes of Rule 23(a)(2) predominate over issues that pertain only to individual class members and if adjudicating the controversy as a class action would be superior to other possible methods. The party who seeks class certification bears the burden of showing that the Rule 23 requirements are satisfied. Amchem, 521 U.S. at 614.


Before assessing the question of class certification, we must address Defendants' motion to strike Searcy's declaration filed in support of class certification. According to Defendants, the relief is warranted because, in their opinion, Searcy's declaration contradicts statements she made in her earlier deposition. Courts may strike a witness' sworn statement if it contradicts her prior deposition testimony. See Patton v. MFS/Sun Life Fin. Distribs., 480 F.3d 478, 488 (7th Cir. 2007). During her deposition, Defendants' counsel asked Searcy whether a check written on October 15, 2005, was the first check she wrote from a particular bank account. Searcy replied that she could not recall. Her declaration states that she opened the account on September 12, 2005, and wrote a check from that account that night or the next morning at a SCAN retailer who declined to honor the check. Contrary to Defendants' assertions, these statements are not inherently inconsistent such that both cannot be true. The deposition testimony and the declaration relate to two entirely distinct events and Searcy's inability to recall an asserted fact at her deposition is not tantamount to an affirmative misstatement. Because Searcy's deposition and her declaration are not contradictory, there is no basis to strike the declaration.

I. Motion To Certify

Searcy seeks certification of four classes. The first consists of all individuals who received a Disclosure Report from Defendants from June 18, 2005, until July 20, 2008.

The second is comprised of individuals whose Disclosure Reports did not include SCAN OnLine Transactions ("SCAN OnLine Claims"). The third consists of individuals whose identifiers appeared in the SCAN database ("Bad Check List Claims"). The fourth class contains individuals who presented checks to SCAN retailers ("Check Presenter Claims"). We discuss each class in turn.

A. All Recipients of SCAN Disclosure Reports

Before a court can consider the Rule 23 criteria, a party seeking certification must first demonstrate that the proposed class is sufficiently definite to warrant certification. See Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006). An overbroad putative class definition should be rejected in favor of a narrower one. See Kohen v. Pac. Inv. Mgmt. Co., LLC, 571 F.3d 672, 677 (7th Cir. 2009)."A class should not be certified if it is apparent that it contains a great many persons who have suffered no injury at the hands of the defendant." Id.

Membership in Searcy's first proposed class only requires receipt of a SCAN Disclosure Report during a three-year period. This definition presumes that every report issued during this time provided incomplete information. However, Defendants have demonstrated that this is not the case. For example, consumers with no previous interactions with SCAN have requested Disclosure Reports because they were concerned with identity theft. In those circumstances, Defendants provided these consumers with blank, albeit complete, reports. In this situation, there can be no legal argument that the report provided violated the provisions of the FCRA relied upon by Searcy. These persons would have no claim akin to that of other class ...

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