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Thornburg v. Open Dealer Exchange LLC

United States District Court, W.D. Missouri St. Joseph Division.

July 26, 2018

OPEN DEALER EXCHANGE, LLC, d/b/a 700Credit, Defendant.



         Pending is Open Dealer Exchange, LLC's (“ODE”) Motion to Dismiss Third-party Defendant Trans Union LLC's Third-Party Counterclaims. Doc. #79.

         I. BACKGROUND

         Plaintiff John Thornburg's amended complaint alleges ODE violated the Fair Credit Reporting Act. Doc. #20. Specifically, Thornburg alleges ODE “failed to follow reasonable procedures to assure maximum possible accuracy of the information [which was supplied by ODE, and about Thornburg] concerning the individual [Thornburg] about whom the report relates in violation of the [sic] 15 U.S.C. § 1681b(e) [sic].”[1] Doc. #20, at ¶ 47. Thornburg seeks certification of two classes of individuals related to an allegedly inaccurate “Chg-Off or Repo” code on a consumer report prepared by ODE.

         After answering Thornburg's amended complaint, ODE filed a third-party complaint against third-party Defendant Trans Union LLC. Doc. #42. ODE alleges Trans Union breached the Reseller Service Agreement (“RSA”), which governs the parties' relationship and obligations. If inaccurate information about Thornburg was provided by ODE, ODE alleges Trans Union provided the inaccurate information, and therefore, Trans Union is liable to ODE for breach of contract. In response to ODE's allegations, Trans Union filed a counterclaim against ODE. Doc. #75. Trans Union asserts it did not report a “Chg-Off or Repo” code to ODE, and therefore, ODE breached the RSA and its obligations under the FCRA by adding inaccurate information to the ODE report about Thornburg. ODE's pending motion to dismiss argues Trans Union's counterclaims, which seek indemnification from ODE for Trans Union's defense of Thornburg's claims and any judgment in Thornburg's favor, are barred by the RSA's terms.

         Several portions of the RSA are relevant to the pending motion. First, the agreement is governed by Illinois law. Doc. #70-8, at 8 (filed under seal). Second, with respect to ODE's responsibility, section I.J of the RSA states:

Reseller shall comply with all federal, state and local statutes, regulation and rules applicable to it including, without limitation, the FCRA and all the procedures prescribed by TransUnion in the Policy, to verify the identity of End Users who will obtain Consumer Reports to make certain that such End Users are legitimate businesses, have a permissible purpose for obtaining credit reports, and are not Unauthorized Users, as such term is defined in the Policy. If, as a result of the verifications outlined in the Policy, the prospective End User is found to be an Unauthorized User, or is found to have no permissible purpose to obtain credit reports, Reseller shall not enter into a Service Agreement with such End User (or shall terminate its Service Agreement with such End User, as the case may be). Reseller further warrants that it will require by written contract with its End Users that such End Users comply with the same obligations of compliance with all laws. TransUnion reserves the right to terminate any End User at any time with or without notice.

Doc. #70-8, at 4. Finally, the “Indemnification and Limitation of Liability” section states:

A. Reseller shall indemnify and hold TransUnion harmless from any and all claims, losses and damages, liability, and costs, including attorney's fees, against, or incurred by, Trans Union to the extent such claims, damages, liability and costs result directly or indirectly from either or both of the following: (a) any use of Consumer Reports in violation of applicable law or breach of this Agreement or where such use or receipt was as a result of Reseller or its End User's failure to comply with applicable law or any of term, restriction or obligation set forth herein or in t h e Policy; o r (b) Reseller's breach of its obligations under this Agreement including, but not limited to, any breach which results in the non-permissible use of the Consumer Reports provided to Reseller, End User(s), or both, under this Agreement. Reseller recognizes that TransUnion will suffer irreparable harm, and that monetary damages may be incalculable and/or inadequate in the event that Reseller retains TransUnion data in breach of this Agreement, and therefore, s u c h breach shall be entitled to seek remedy by Injunctive relief, in addition to any and all other relief which may be available at law or at equity.
B. Except in the case of TransUnion's gross negligence, willful misconduct or violation of law applicable to the subject matter hereof, in no event shall TransUnion be liable to Reseller in any manner whatsoever for any loss or injury to Reseller resulting from TransUnion's obtaining or furnishing of consumer reports. In no event shall TransUnion's aggregate liability, if any, to Reseller under this Agreement exceed an amount equal to the charges incurred by Reseller under this Agreement during the twelve (12) month period prior to the occurrence of the first event giving rise to any such claim for liability.

Doc. #70-8, at 4.

         II. STANDARD

         The liberal pleading standard created by the Federal Rules of Civil Procedure requires Aa short and plain statement of the claim showing that the pleader is entitled to relief.@ Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Fed.R.Civ.P. 8(a)(2)). “Specific facts are not necessary; the statement need only 'give the defendant fair notice of what the…claim is and the grounds upon which it rests.'" Id. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In ruling a motion to dismiss, the Court Amust accept as true all of the complaint's factual allegations and view them in the light most favorable to the Plaintiff[ ].” Stodghill v. Wellston Sch. Dist., 512 F.3d 472, 476 (8th Cir. 2008).

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely ...

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