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Searcy v. eFunds Corp.

September 30, 2010

GLADYS SEARCY, INDIVIDUALLY, AND ELIZABETH KRECH AND RUSSELL HORNBECK, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
EFUNDS CORPORATION, ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

CHARLES P. KOCORAS, District Judge

This case comes before the court on two motions filed by Defendants eFunds Corporation and Deposit Payment Protection Services, Inc. The first is a motion for summary judgment on all claims asserted by Plaintiff Gladys Searcy pursuant to Fed. R. Civ. P. 56. The second is a motion for sanctions against Searcy, her lead counsel, and her lead counsel's law firm.*fn1 For the reasons set forth below, the motion for summary judgment is denied and the motion for sanctions is granted in part and denied in part.

BACKGROUND

Defendant Deposit Payment Protection Services, Inc. ("DPPS") provides a service called the Shared Check Authorization Network, or SCAN, to a number of retailers throughout the United States. SCAN is designed to assist retailers in deciding whether or not to accept a personal check from a customer. To provide this service, DPPS collects information about individuals who have presented bad checks, compiles the information into a data file, and then distributes that file electronically to each of its merchant-subscribers. Retailers could then run a search for a particular consumer's information in the file and accept or decline a check from that consumer based on the results of that search.

The SCAN data file contains a list of driver's license numbers and bank account numbers. These numbers are associated with individuals who have either presented checks that have been returned unpaid or have had their bank accounts closed for cause. Upon initiating its subscription to SCAN, a merchant receives an initial SCAN file with the most current list of numerical identifiers linked to unpaid, returned checks and closed bank accounts. Each day thereafter, DPPS disseminates an updated list that reflects the addition of numbers belonging to persons who recently passed bad checks and the deletion of identifiers associated with persons who have made good on their unpaid checks.

On February 6, 2006, DPPS first incorporated a bank account number associated with Plaintiff Gladys Searcy into the SCAN file sent to all of its retailer customers. On that day and for each subsequent day, every retailer that subscribed to SCAN received the SCAN file containing Searcy's bank account number. Sometime in October 2006, Searcy requested that DPPS provide her with a report disclosing whether DPPS possessed any of her financial information and, if so, how the company used that information. DPPS, as a consumer reporting agency subject to the Fair Credit Reporting Act ("FCRA"), was obligated to provide Searcy with such a report upon her request.*fn2 15 U.S.C. § 1681g(a). The FCRA also required that the report contain certain information including the identity of each person that "procured a consumer report [about the person requesting the disclosure]. . . during the 1-year period preceding the date on which the request [for the report] is made." 15 U.S.C. § 1681g(a)(3)(A)(ii). Sometime after Searcy made her request, DPPS mailed her a consumer file disclosure report. The report did not include the names of retailers who had received the SCAN data file containing her bank account number.

On February 15, 2008, Searcy filed suit against DPPS and eFunds Corporation, asserting multiple claims under the FCRA. After a substantial amount of discovery and class certification litigation, Searcy amended her complaint to assert only one claim against Defendants. In her only cause of action, she alleges that Defendants wilfully violated 15 U.S.C. § 1681g(a)(3)(A)(ii) by failing to include in her consumer file disclosure report the names of the retailers who received the SCAN data file containing her bank account number. Defendants now move for summary judgment as to Searcy's remaining claim. Defendants also request we impose sanctions against Searcy, her lead counsel, and her lead counsel's law firm in connection with the submission of a declaration during an earlier stage of the case.

LEGAL STANDARD

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to summary judgment as a matter of law." Fed. R. Civ. P. 56(c). A genuine issue of material fact exists when the evidence is such that a reasonable jury could find for the non-movant. Buscaglia v. United States, 25 F.3d 530, 534 (7th Cir. 1994). The movant in a motion for summary judgment bears the burden of demonstrating the absence of a genuine issue of material fact by specific citation to the record; if the party succeeds in doing so, the burden shifts to the non-movant to set forth specific facts showing that there is a genuine issue of fact for trial. Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In considering motions for summary judgment, a court construes all facts and draws all inferences from the record in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). With these principles in mind, we turn to Defendants' motion.

DISCUSSION

We will discuss the merits of Defendants' motion for summary judgment first before turning our attention to Defendants' motion for sanctions.

I. Defendants' Motion For Summary Judgment

Defendants argue that they are entitled to summary judgment on Searcy's claim because (1) DPPS did not violate 15 U.S.C. ยง 1681g(a)(3)(A)(ii); or, in the alternative (2) DPPS did not violate the FCRA ...


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