Iraheta v. Equifax Information Services LLC et al

Filing 108

MEMORANDUM ORDER denying 94 Motion to Sever; granting in part and denying in part 101 Motion to Amend/Correct Complaint. Plaintiff may file his proposed third amended complaint, but must remove his claims for violations ofthe Gramm-Leach-Bliley Act and his request for injunctive relief set forth therein. Signed by Magistrate Judge Karen L Hayes on 4/18/2018. (crt,Dauterive, C)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
JOSE IRAHETA

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CIVIL ACTION NO. 17-1363

VERSUS

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ELIZABETH E. FOOTE

EQUIFAX INFORMATION
SERVICES LLC, ET AL.

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MAG. JUDGE KAREN L. HAYES

MEMORANDUM ORDER
Before the undersigned magistrate judge, on reference from the District Court, are two
motions: a motion to sever Plaintiff’s claims against Defendant, Equifax Information Services
LLC (“Equifax”) relating to the data security incident Equifax announced on September 7, 2017
(the “Data Breach”) [doc. # 94] filed by Equifax (the “Motion to Sever”); and Plaintiff’s motion
for leave to file a third amended complaint [doc. # 101] (the “Third Motion to Amend”). For
reasons assigned below, the Motion to Sever is DENIED and the Third Motion to Amend is
GRANTED, in part, and DENIED, in part.1
Background
The already lengthy procedural history of this matter through January 10, 2018, is set out
in the memorandum order filed that date, in which the undersigned granted Plaintiff’s second
motion for leave to amend in part, allowing Plaintiff to amend his existing FCRA claims, to add
claims for negligence and defamation, and to add claims related to the Data Breach, and denied
the motion in part, prohibiting Plaintiff from adding claims for injunctive relief [doc. #82]. That

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As these motions are not excepted in 28 U.S.C. § 636(b)(1)(A), nor dispositive of any
claim on the merits within the meaning of Rule 72 of the Federal Rules of Civil Procedure, this
ruling is issued under the authority thereof, and in accordance with the standing order of this
court. Any appeal must be made to the district judge in accordance with Rule 72(a) and LR
74.1(W).

same date, the undersigned filed a report and recommendation recommending that Experian’s
motion to dismiss be denied as moot [doc. #83]. On January 25, 2018, the District Judge,
adopting the report and recommendation, denied the motion [doc. #90].
On January 30, 2018, Equifax filed its Motion to Sever [doc. #94] (the “Motion to
Sever”), seeking to sever Plaintiff’s claims against it relating to the Data Breach, and pointing out
that it intends to have this case “tagged” as a tag-along case in the Multi-District litigation
pending in the Northern District of Georgia relating to the Data Breach (the “MDL”). Plaintiff
opposed the Motion to Sever [docs. 105 & 106].
On February 9, 2018, Plaintiff filed his Motion for Leave to File Third Amended
Complaint [doc. #101] (the “Third Motion to Amend”), seeking to “(a) cure defects in [his]
Second Amended Complaint; (b) add additional FCRA, negligence, and gross negligence claims
against all named Defendants (to include those related to data breaches at Equifax, Experian, and
Trans Union); [and] (c) seek adequate equitable relief as well as damages from all named
Defendants.” Third Motion to Amend, doc. # 101, p. 1. Defendants oppose [doc. #107], arguing
that the Court should deny as futile both Plaintiff’s request to add new claims relating to various
newly-alleged data security incidents involving Equifax, Experian, and Trans Union (the “New
Privacy Claims”) and additional claims that the Court previously held were futile. Defendants
argue that the New Privacy Claims are not credible, are based on incidents that have been public
knowledge for a long time, and that they would unduly prejudice Defendants if they were added
at this time. Defendants further argue that Plaintiff’s proposed amendments to add claims for
gross negligence and violations of the Gramm-Leach-Bliley Act (“GLBA”), as well as his
proposed request for injunctive relief are duplicative of proposed claims which the court has
already denied as futile.
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I.

Leave to Amend.
A. Legal Standard
Under Federal Rule of Civil Procedure 15(a), a timely-filed leave to amend shall be

“freely [granted] when justice so requires.” FED. R. CIV. P. 15(a)(2). “‘Whether leave to amend
should be granted is entrusted to the sound discretion of the district court . . . .’” Quintanilla v.
Texas Television Inc., 139 F.3d 494, 499 (5th Cir. 1998) (quoted source omitted). Yet, “[i]n the
context of motions to amend pleadings, ‘discretion’ may be misleading, because FED. R. CIV. P.
15(a) ‘evinces a bias in favor of granting leave to amend.’” Martin’s Herend Imp. v. Diamond &
Gem Trading United States of Am. Co., 195 F.3d 765, 770 (5th Cir. 1999) (quoting Dussouy v.
Gulf Coast Inv. Corp., 660 F.2d 594, 597 (5th Cir. 1981)). A district court must have a
“substantial reason” to deny a request for leave to amend. Lyn-Lea Travel Corp. v. Am. Airlines,
Inc., 283 F.3d 282, 286 (5th Cir. 2002) (citation omitted).
The Court considers the following factors in making its decision: (1) undue delay; (2) bad
faith or dilatory motive; (3) repeated failure to cure deficiencies by previous amendments; (4)
undue prejudice to the opposing party; and (5) futility of amendment. Rosenzweig v. Azurix
Corp., 332 F.3d 854, 864 (5th Cir. 2003) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
Absent any of these factors, leave should be granted. Smith v. EMC Corp., 393 F.3d 590, 595
(5th Cir. 2004) (citing, Foman, 371 U.S. at 182).
If the proposed claims are not credible on their face, leave to amend should be denied as
futile. See Adhikari v. Kellogg Brown & Root, Inc., 845 F.3d 184, 214 (5th Cir.), cert. denied,
138 S. Ct. 134, 199 L. Ed. 2d 35 (2017) (“If the allegations are ‘enough to raise a right to relief
above the speculative level and the claim for relief is plausible on its face, . . . amendment would
not have been futile.’” (quoting Thomas v. Chevron U.S.A., Inc., 832 F.3d 586, 593 (5th Cir.
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2016)).
B. New Privacy Claims
Defendants attack the credibility of the New Privacy Claims by asserting that Plaintiff
mined those claims from an internet article titled “4 Credit Bureau Data Breaches that Predate the
2017 Equifax Hack” (the “Web Article”). See Opposition to Amendment, doc. #107, pp. 3-4.
Defendants quote excerpts from and attach the Web Article to support their assertions that
Plaintiff modeled the New Privacy Claims solely on the Web Article. See id. Defendants
highlight passages from the Web Article that they believe cast doubt on whether the alleged data
security incidents affected Plaintiff.
Defendants do not attack the proposed third amended complaint on its face. See
Opposition to Amendment, doc. #107, pp. 3-4. Instead, Defendants seek to undermine the
credibility of the New Privacy Claims by establishing that they were mined from the internet, and
that the plaintiff is not among the persons affected by those breaches, but they do not authenticate
the Web Article or offer anything tending to support the accuracy of the allegations it contains, or
anything to support their claim that the plaintiff is not part of the group affected. Accordingly,
even if the Court were to apply a Rule 56 standard in accordance with Rule 12(d), Defendants
have not submitted admissible evidence to support their argument. Thus, they have not
established that Plaintiff’s adding the New Privacy Claims would be futile.
Defendants also argue that the breaches alleged in the New Privacy Claims are not recent
or new, raising the issue of undue delay in seeking an amendment. See Opposition to
Amendment, doc. #107, p. 5. Generally, there is a presumption of timeliness where, as here,
leave to amend is sought within a deadline for amendment previously set by the court. See e.g.,
Greco v. Nat'l Football League, 116 F. Supp. 3d 744, 755 (N.D. Tex. 2015). Defendants have
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not identified anything to rebut that presumption, nor have they established that granting
Plaintiff’s Motion would cause undue delay.
Defendants argue that the proposed amendment will unduly prejudice them in preparing
discovery in this case. See Opposition to Amendment, doc. #107, pp. 5-6. Defendants assert that
they have been unable to conduct meaningful discovery in this case because of Plaintiff’s
previous amendments. See id. The Court finds that any harm threatened by existing discovery
deadlines could be remedied by an extension or a continuance, which the Court would be
inclined to grant if necessary to avoid undue prejudice. Defendants therefore have not
established that they would be unduly prejudiced by the proposed amendment.
C. Futility of Other Claims.
i.

Gross Negligence & Negligence Per Se.

Defendants assert that Plaintiff failed to allege malice or willful intent with respect to his
claims for gross negligence and negligence per se, as required by the FCRA. See Opposition to
Amendment, doc. #107, pp. 6-7. The undersigned previously reviewed the proposed second
amended complaint and, applying the liberal pleading standard, concluded that Plaintiff
sufficiently pled malice or willful intent to injure. See Memorandum Order, doc. #82, pp. 6-7.
The allegations the Court relied upon to reach that conclusion remain in Plaintiff’s proposed third
amended complaint. Compare Doc. #50-1, ¶¶ 23, 64, and 112(e) with Doc. #101-1, ¶¶ 20, 59,
and 99(e). The Court again concludes these allegations of malice are likely sufficient to avoid
dismissal of Plaintiff’s gross negligence and negligence per se claims for failure to state a claim.
Defendants further argue that at least one of Plaintiff’s gross negligence claims is barred
under the FCRA’s statute of limitations. A proposed amendment to add a time-barred claim
should ordinarily be denied as futile. See Crostley v. Lamar Cty., Texas, 717 F.3d 410, 419 (5th
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Cir. 2013). Claims for violations of the FCRA must be brought within two years of discovery or
five years of the alleged violation, whichever is sooner. 15 U.S.C. § 1681p. Defendants assert
that Plaintiff proposes to add a gross negligence claim based on conduct that occurred “sometime
between March 1 and May 31, 2015.” Opposition to Amendment, doc. #107, p. 7 (quoting
Proposed Third Amended Complaint, doc. #101-1, ¶ 77(c)). However, Plaintiff does not allege
when he first learned of the violation, so the Court cannot conclude based on the face of the
proposed third amended complaint that the proposed claim is time-barred or otherwise is futile.
ii.

Gramm-Leach-Bliley Act and Injunctive Relief

Plaintiff’s proposed third amended complaint contains claims under the Gramm-LeachBliley Act (“GLBA”) and for injunctive relief. See Proposed Third Amended Complaint, Doc.
#101-1, ¶¶ 87-89, ¶ 106. As the Court previously held, “Plaintiff has no private right of action
under the GLBA to seek injunctive, or any other, relief,” and injunctive relief is not available to
Plaintiff under either the FCRA or the GLBA. Memorandum Order, doc. #82, p. 7. Plaintiff has
not asserted any alternative legal basis for seeking injunctive relief. Accordingly, amending the
complaint to add claims for violations of the GLBA or for injunctive relief would, yet again, be
futile. Plaintiff is cautioned that the court has limited patience in dealing with repeated attempts
to bring claims which it has already determined are futile or otherwise improper, that his pro se
status is not a carte blanche to bring legally insufficient claims, and that any additional attempts
to raise claims that this court has already deemed futile will give rise to monetary or other
sanctions.
II.

Motion to Sever.
Equifax asserts that it intends to “tag” this case for inclusion in the MDL, and seeks to

sever Plaintiff’s claims against it related to the Data Breach so that only those claims are
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removed to the MDL. Otherwise, Equifax asserts that it intends to have this entire case removed
to the MDL. Equifax argues that inclusion of Plaintiff’s non-related claims in the MDL will
burden and increase defense costs for Experian and Trans Union.
Plaintiff suggests that his New Privacy Claims against Experian and Trans Union will
have questions of law in common with his claims against Equifax related to the Data Breach.
See Amended Response, doc. #106, ¶ 1. Plaintiff argues that this Court is capable of navigating
the complexity of all of his claims and that judicial economy is best served by all his claims
remaining in one suit. See id. at ¶¶ 2 and 3.
Rule 21 provides that “[t]he court may [] sever any claim against a party.” Fed. R. Civ. P.
21. The district court has broad discretion to sever issues to be tried before it. Brunet v. United
Gas Pipeline Co., 15 F.3d 500, 505 (5th Cir.1994). While the Fifth Circuit has not adopted a
severance test, it has observed that the district courts have settled on the following standard
employed by other circuits:
(1) whether the claims arise out of the same transaction or occurrence; (2) whether
the claims present some common questions of law or fact; (3) whether settlement
of the claims or judicial economy would be facilitated; (4) whether prejudice
would be avoided if severance were granted; and (5) whether different witnesses
and documentary proof are required for the separate claims.
In re Rolls Royce Corp., 775 F.3d 671, 685 n.40 (5th Cir.2014) (citing, inter alia, Paragon Office
Servs., LLC v. UnitedHealthcare Ins. Co., Inc., No. 11-2205-D, 2012 WL 4442368, at *1 (N.D.
Tex. Sept. 26, 2012)).
Although Plaintiff’s Data Breach-related claims do not arise out of the same transaction
or occurrence as, share common questions of fact with, or require similar witness and
documentary evidence as Plaintiff’s other claims, they will share questions of law with Plaintiff’s
New Privacy Claims. See generally Proposed Third Amended Complaint, doc. #101-1. As to
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whether severance would facilitate settlement or judicial economy, Plaintiff’s argument on this
issue is conclusory and Equifax’s is speculative. See Motion to Sever, doc. #94, pp. 3-4;
Amended Response, doc. #106, ¶ 3.
Equifax has failed to establish that granting its motion will prevent prejudice. While
Equifax argues that sending Plaintiff’s claims against Experian and Trans Union to the MDL will
inconvenience Experian and Trans Union, Experian and Trans Union did not take a position on
Equifax’s motion or make that argument on their own behalf. Further, the prejudice Equifax
envisions is highly speculative. Conversely, granting the Motion to Sever at this time is likely to
cause a significant burden on the Plaintiff. Plaintiff is an active member of the military and is
proceeding pro se. The burden of litigating his claims simultaneously in two very different
forums would be quite high. The Court will not grant Equifax’s motion simply to shift
inconvenience from Experian and Trans Union to Plaintiff. Camasso v. Dorado Beach Hotel
Corp., 689 F. Supp. 384, 389 (D. Del. 1988).
Equifax has not persuaded the Court that application of the accepted factors warrants
severance at this time. Accordingly, the Court concludes that Equifax’s motion to sever should
be denied.
Conclusion
For the foregoing reasons,
IT IS ORDERED that the pending motion to sever [doc. # 94]is DENIED.
IT IF FURTHER ORDERED that the pending motion for leave to file third amended
complaint [doc. # 101] is GRANTED in part and DENIED in part. Plaintiff may file his
proposed third amended complaint (doc. #101-1), but must remove his claims for violations of
the Gramm-Leach-Bliley Act and his request for injunctive relief set forth therein.
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In Chambers, at Monroe, Louisiana, this 18th day of April, 2018.

__________________________________
KAREN L. HAYES
UNITED STATES MAGISTRATE JUDGE

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