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Searcy v. eFunds Corp.

March 31, 2010

GLADYS SEARCY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
EFUNDS CORPORATION, ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

This case comes before the Court on Defendants' Motion to Reconsider Our Order Granting Class Certification, Defendants' Motion to Clarify, Plaintiff's Motion to Amend, and Plaintiff's Motion to Strike the Declaration of Scott Sandlin. For the reasons stated below, Defendants' Motion to Reconsider is granted, Defendants' Motion to Clarify is granted, Plaintiff's Motion to Amend is granted, and Plaintiff's Motion to Strike is denied as moot.

BACKGROUND*fn1

This case involves alleged violations of the Fair Credit Reporting Act ("FCRA") by Defendants, one of whom, Deposit Payment Protection Services, Inc. ("DPPS"), operates a service called the Shared Check Authorization Network ("SCAN"). On September 14, 2009, Plaintiff Gladys Searcy ("Searcy") filed a motion for class certification. In opposing Searcy's motion for certification, Defendants argued that Searcy suffered from credibility problems that rendered her an inadequate class representative. Defendants contended that some of Searcy's sworn statements provided in support of the certification motion were implausible and contradicted her prior deposition testimony. In particular, Defendants questioned the plausibility of Searcy's statements that she opened a checking account at Washington Mutual Bank on September 12, received a book of checks on that date, authored a check at a SCAN retailer (who declined the check) that evening or the next morning, and then requested a Disclosure Report from SCAN.

On January 20, 2010, we granted in part and denied in part Searcy's motion for class certification, certifying two classes and rejecting other proposed classes. We denied certification of the SCAN OnLine Class*fn2 on adequacy grounds because Searcy had no SCAN OnLine claim and did not suffer the same legal injury as the members of the putative class she sought to represent. In certifying the two classes, we did not credit Defendants' argument that Searcy suffered from credibility problems that made her an inadequate class representative. We observed, however, that we would reconsider the effect of Searcy's credibility on the adequacy question if a stronger showing of credibility issues could be made.

On January 29, 2010, Searcy filed a motion to amend her complaint. Searcy seeks to join an additional plaintiff, Elizabeth Krech. In October 2005, Krech presented a check to a SCAN retailer who declined Krech based on information contained in the SCAN electronic bad check list. Krech subsequently requested a report from DPPS which she alleges violated the FCRA because it did not include the names of retailers who used SCAN and another services, SCAN OnLine, in processing a check of Krech's during the year preceding the request. Based on these facts, Searcy asserts that Krech can adequately represent the SCAN OnLine class. Searcy also seeks to substitute Krech for Searcy as the named plaintiff of the Check Presenter class action. Five days later, on February 3, 2010, Defendants filed a motion to reconsider our class certification ruling proffering new evidence they argue demonstrates that Searcy suffers from credibility problems that render her an inadequate representative for either of the certified classes.

I. Motion to Clarify

Defendants first ask that we revise our prior opinion deciding Plaintiff's Motion for Certification to reflect that we have not made a factual finding that Defendant eFunds Corporation ("eFunds") is a consumer reporting agency subject to the Fair Credit Reporting Act ("FCRA"). In our view, such a revision is unnecessary, but we grant Defendants' motion and make explicit what was implicit in our previous ruling, namely, that we have not made any findings regarding the status of eFunds under the FCRA.

II Motion to Amend

Searcy has filed a Motion to Amend to add Elizabeth Krech ("Krech") as a named plaintiff to represent the putative SCAN OnLine class and to substitute Krech for Searcy as the named plaintiff of the Check Presenter class.*fn3

A. Legal Standard

Fed. R. Civ. P. 15(a) provides that leave to amend a complaint shall be freely granted when justice so requires. Whether to grant a motion to amend is within the sound discretion of the district court. Kleinhans v. Lisle Sav. Profit Sharing Trust, 810 F.2d 618, 625 (7th Cir. 1987). Leave to amend may be denied for 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 by virtue of amendment, or futility of amendment. Continental Bank, N.A. v. Meyer, 10 F.3d 1293, 1298 (7th Cir. 1993).

B. Discussion

Before we examine the propriety of the amendment joining Krech to the action to represent a putative SCAN OnLine class we must determine whether Searcy may substitute Krech as representative of the Check Presenter class. Once a class has been certified, substitution of unnamed class members for named plaintiffs who fall out of the case for various reasons is a routine part of class action litigation. Phillips v. Ford Motor Co., 435 F.3d 785, 787 (7th Cir. 2006); Walters v. Edgar, 163 F.3d 430, 432 (7th Cir. 1998). Searcy does not contest Defendants' assertions that the presence of credibility issues (discussed in further detail below) render her an ...


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