United States District Court, W.D. Missouri, Central Division
RIA SCHUMACHER, Individually and on Behalf of All Others Plaintiffs,
SC DATA CENTER, INC. d/b/a COLONY BRANDS, INC., Defendant.
NANETTE K. LAUGHREY United States District Judge.
S.C. Data Center, Inc. moves under Federal Rule of Civil
Procedure 12(b)(1) to dismiss this Fair Credit Reporting Act
case in its entirety for lack of subject matter jurisdiction,
based on the United States Supreme Court's recent
decision in Spokeo v. Robins, 136 S.Ct. 1540');">136 S.Ct. 1540 (2016).
[Doc. 16]. At oral argument on this motion and in her
supplemental briefing, Plaintiff Ria Schumacher requested
that the Court enforce the parties' May 12, 2016
settlement agreement. [Doc. 51]. For the following reasons,
the Court grants Schumacher's request to enforce the
settlement and denies S.C. Data's motion to dismiss.
behalf of a class, Plaintiff Ria Schumacher brings three
claims under the Fair Credit Reporting Act arising out of her
employment application with Defendant S.C. Data Center, Inc.
In August of 2015, Schumacher applied online for employment
with S.C. Data. In Count I, titled “Adverse Action
Violation, ” Schumacher alleges that S.C. Data violated
15 U.S.C. § 1681b(b)(3)(A) of the FCRA by failing to
provide her with pre-adverse action notice. Specifically, she
alleges that S.C. Data did not provide her with a copy of her
consumer report and a reasonable time to cure or explain any
inaccuracy in the consumer report prior to rescinding her
employment offer. [Doc. 1-1, p. 7, 12].
II concerns improper disclosure. Schumacher alleges S.C. Data
violated § 1681b(b)(2)(A)(i) of the FCRA by using a form
containing extraneous information to procure consumer
reports, even though S.C. Data “knew” its form
should consist solely of the FCRA disclosure. [Doc. 1-1, p.
14]. Also related to S.C. Data's use of this form, Count
III concerns improper authorization. Schumacher alleges that
S.C. Data violated § 1681b(b)(2)(A)(ii) by acting with
deliberate or reckless disregard of its FCRA obligations and
procuring her consumer report without her proper
filed this action on February 3, 2016, in the Circuit Court
of Cole County, Missouri. S.C. Data removed the matter to
this Court on March 4, 2016. On May 12, 2016, the parties
attended mediation with Richard Sher, an experienced mediator
in Saint Louis, Missouri. During this mediation, the parties
reached a settlement. On May 16, 2016, the Supreme Court
decided Spokeo v. Robins, 136 S.Ct. 1540');">136 S.Ct. 1540 (2016),
which addressed Article III standing within the context of
FCRA claims. Then, on July 15, 2016, SC Data filed the
present motion to dismiss, citing Spokeo for the
proposition that Schumacher's FCRA claims lacked
sufficient concreteness to provide standing.
argument on S.C. Data's motion to dismiss, Schumacher
requested that the Court enforce the parties' previous
May 12, 2016 settlement agreement. On August 17, 2016, the
Court invited supplemental briefing on its subject matter
jurisdiction to enforce the settlement, which the parties
filed. [Docs. 51 and 52].
moves for dismissal under Federal Rule of Civil Procedure
12(b)(1) contending that this Court lacks subject matter
jurisdiction over the present action. Specifically, SC Data
argues that Schumacher lacks Article III standing to bring
her claims in light of the United States Supreme Court's
recent decision in Spokeo v. Robins, 136 S.Ct. 1540');">136 S.Ct. 1540
(2016). However, because the parties entered into a
settlement agreement that Schumacher wishes to enforce, the
issue is not whether the Court has subject matter
jurisdiction over her FCRA claims. Instead, the issue is
whether the Court has subject matter jurisdiction to enforce
the parties' settlement agreement.
Third Circuit addressed a similar situation in Ehrheart
v. Verizon Wireless, 609 F.3d 590 (3rd Cir.
2010). Ehrheart involved a class action in which the
plaintiff buyers alleged that the defendant Verizon Wireless
violated the Fair and Accurate Credit Transaction Act.
Id. at 592. Like Schumacher and S.C. Data, the
Ehrheart parties participated in mediation.
Id. Meanwhile, legislation was pending before
Congress that, if passed, would eliminate all of the
plaintiffs' FACTA claims. Id. Following
mediation, the parties agreed to a settlement, which they
submitted to the district court for approval under Federal
Rule of Civil Procedure 23(e). Id. The district
court entered a preliminary order approving the settlement.
Id. Then, the legislation was signed into law,
eliminating all of the plaintiffs' FACTA claims.
Id. Six days later, Verizon moved the district court
to vacate its order granting preliminary approval of the
settlement, which the district court granted. Id.
appeal, the Third Circuit reversed the district court's
vacature of its settlement order. Id. In its
decision, the Third Circuit emphasized three principles, each
of which influenced its holding that a later change in the
law eliminating the plaintiffs' cause of action did not
render the parties' settlement agreement moot or
unenforceable. Id. at 593. First, the Third Circuit
noted the “restricted, tightly focused role . . . for
district courts” prescribed by Rule 23, a role that
“requir[es] them to act as fiduciaries for the absent
class members, but that does not vest them with broad powers
to intrude upon the parties' bargain.” Id.
Second, the court emphasized the strong public policy
favoring settlement of disputes, finality of judgments, and
the termination of litigation-a public policy that is
“particularly muscular in class action suits.”
Id. Finally, the court reflected on
“jurisprudence hold[ing] that changes in the law after
a settlement is reached do not provide ground for rescission
of the settlement.” Id. These principles apply
with equal force to Schumacher's case.
like the settlement agreement in Ehrheart, the
settlement agreement reached by S.C. Data and Schumacher is a
binding enforceable contract under general principals of
contract interpretation. Ehrheart, 609 F.3d at 594
(citing In re Cendant Corp. Litig., 188');">233 F.3d 188,
193 (3d Cir. 2000)). The parties make no allegations of bad
faith or illegality with respect to the formation of this
contract. Further, the parties reached this settlement during
mediation with an experienced mediator, and the agreement was
negotiated and executed by qualified counsel on both sides.
argues the settlement is not an enforceable contract because
Rule 23(e) court approval of the parties' settlement is a
condition precedent, [1" name="FN1" id=
"FN1">1] required as an express term of the
contract. This argument is incorrect. The Third Circuit
dismissed a similar argument in Ehrheart, reasoning
that “if this argument [were to be] accepted . . . the
settlement process would become meaningless since either
party to a class action settlement (or any other type of
settlement that requires court approval) could back out of an
agreement at any time before court approval and avoid any
legal repercussions for breaching the earlier offer and
acceptance.” Ehrheart, 609 F.3d at 594.
Likewise, this Court will not allow S.C. Data to
“replay its hand” by using this argument to back
out of its settlement. Id.
Rule 23 requires the Court to act as a fiduciary for absent
class members, not defendants to a class action. Id.
SC Data attempts to characterize Rule 23 court approval as a
condition precedent protective of S.C. Data, but this
approval requirement is meant to protect absent class
members. Id. By virtue of being a defendant to the
lawsuit and represented by its own counsel, SC Data-unlike
absent class members-is sufficiently equipped to protect its
own interests during settlement negotiations. Id.
(clarifying “that this [Rule 23] fiduciary protection
does not extend to defendants in a class action, who are in a
position to protect their own ...