Harris v. Exel, Inc.

Filing 17

ORDER denying 4 Motion to Dismiss for Lack of Jurisdiction; denying 13 Motion to Stay; granting 16 Motion for Leave to File. Signed by Judge Algenon L. Marbley on 7/24/2015. (cw)

IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
KELVIN HARRIS,
Plaintiff,
vs.
EXEL, INC.,
Defendant.

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Case No. 2:14-CV-1231
JUDGE ALGENON MARBLEY
Magistrate Judge Terrence Kemp

OPINION & ORDER
I. INTRODUCTION
This matter is before the Court on Defendant Exel, Inc. (“Exel”)’s Motion to Dismiss for
Lack of Subject Matter Jurisdiction (Doc. 4), Exel’s Motion to Stay the Proceedings Pending an
Appellate Decision (Doc. 13), and Plaintiff Kelvin Harris (“Harris”)’s accompanying Motion to
File a Surreply (Doc. 16). Harris sues Exel alleging failure to comply with the Fair Credit
Reporting Act (“FCRA”) including failure to obtain Harris’ written consent before obtaining the
consumer report, failure to provide Harris with a copy of his consumer report or a written
summary of his rights under the FCRA, and failure to provide Harris with an opportunity to
dispute the information within his consumer report.
For the reasons that follow, this Court DENIES defendant Exel’s Motion to Dismiss for
Lack of Subject Matter (Doc. 4); GRANTS plaintiff Harris’ Motion to File a Surreply Instanter
(Doc. 16); and DENIES Exel’s Motion to Stay (Doc. 13).
II. BACKGROUND
The following facts are taken from Plaintiffs’ Complaint (Doc. 1). Harris brings this
FCRA action on behalf of himself and all others similarly situated. Exel is a business located in

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Westerville, Ohio. Exel is a logistics provider that places employees in warehouses operated by
retailers and distributers. Harris is a Georgia resident. He applied for a position of forklift driver
at Exel’s Fairburn, Georgia office in August 2013. Exel interviewed Harris and extended a
conditional offer of employment. Exel obtained a consumer report about Harris through a thirdparty agency. Exel never provided a clear disclosure to Harris that it would obtain a consumer
report about him for employment purposes. After obtaining the report, one of Exel’s hiring
managers told Harris that he would not be eligible for employment because of “something in
your background report.” (Doc. 1, at ¶ 13).
Harris asserts that it is a regular practice of Exel to obtain consumer reports for applicants
without obtaining their permission or providing the reports to the applicants. He also contends
that Exel regularly fails to provide the pre-action notice mandated under the FCRA. Harris seeks
class certification; maximum statutory damages of $2,000; costs and attorney’s fees; and
punitive damages, which are uncapped under the FCRA because Harris alleged willful
violations.
After Harris filed his complaint, Exel made a settlement offer of reasonable attorney’s
fees plus $12,000: $2,000 for the two statutory violations and $10,000 for punitive damages.
Harris did not accept the settlement offer, and Exel brings this Motion to Dismiss because it
argues that its settlement offer mooted Harris’ claims.
III. STANDARD OF REVIEW
A federal district court’s basis for subject matter jurisdiction over a dispute may be
challenged by filing a motion under Federal Rules of Civil Procedure 12(b)(1). See Rogers v.
Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986). Subject matter jurisdiction may be
challenged at any time by any party, and the court itself may dismiss a case where it decides that

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it lacks subject matter jurisdiction. Ogle v. Church of God, 153 F. App’x 371, 374 (6th Cir.
2005) (“The existence of subject matter jurisdiction may be raised at any time, by any party, or
even sua sponte by the court itself.”). When a defendant offers a settlement that satisfies
plaintiff’s entire demand, the case becomes moot and the court no longer has subject matter
jurisdiction. See O'Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567, 574 (6th Cir. 2009).
IV. LAW AND ANALYSIS
Exel argues that this Court no longer has subject matter jurisdiction because Exel made a
settlement offer that satisfied Plaintiff’s entire demand, which mooted Harris’ claims. Harris
contends that Exel’s offer did satisfy the entire demand because Harris also seeks punitive
damages, which are uncapped under the FCRA.
A.

Motion to Dismiss

“[A]n offer of judgment that satisfies a plaintiff's entire demand moots the case” and the
action then shall be dismissed for lack of subject matter jurisdiction. O'Brien, 575 F.3d at 574.
The threshold issue when considering such a motion to dismiss is whether the settlement offer
satisfied a plaintiff’s entire demand. Hrivnak v. NCO Portfolio Mgmt., Inc., 719 F.3d 564, 567
(6th Cir. 2013) (“[t]o moot a case or controversy between opposing parties, an offer of judgment
must give the plaintiff everything he has asked for as an individual”). Under the FCRA, punitive
damages are uncapped when a defendant’s violation was willful. See 15 U.S.C. § 1681n(a)(2) (a
person who willfully fails to comply is liable for “such amount of punitive damages as the court
may allow”); see also Bach v. First Union Nat. Bank, 486 F.3d 150, 154 (6th Cir. 2007) (“the
FCRA does not include a limit on damages for civil actions brought under the statute by private
citizens”).
Whether a settlement offer can moot a plaintiff’s claim that includes uncapped punitive

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damages is an issue of first impression for this Court. A sister court held that when a Plaintiff
seeks punitive damages that are uncapped, “the court and the parties cannot say what, if any, the
full measure of those damages might eventually be. Thus, practically speaking, the defendants
cannot unilaterally make an offer of judgment that moots the plaintiff's claims by giving her
complete relief.” Beaudry v. Telecheck Servs., Inc., 2010 WL 2901781, at *4 (M.D. Tenn.
2010). Another court held that when a Plaintiff seeks punitive damages that are uncapped, the
claim will not be mooted by a $9,000 settlement offer for punitive damages even when “it may
be unlikely that Plaintiff will recover an amount of punitive damages in excess of $9,000.”
Smith v. Res-Care, Inc., 2013 WL 4546042, at *5 (S.D.W. Va. 2013) (where the Plaintiff’s claim
was for willful infringement of the FCRA). The court reasoned that quantifying punitive
damages would be inappropriate prior to discovery. Id.
But another court disagreed with that reasoning and found that a defendant satisfied the
plaintiff’s entire demand when defendant offered $10,000 in punitive damages for a single
FCRA violation. See Sanchez v. Verified Pers., Inc., 2012 WL 1856477, at *1 (W.D. Tenn.
2012), vacated (2012) (where the settlement offer totaled $25,000, including $1,000 in statutory
damages, $10,000 in punitive damages, and $14,000 for attorney’s fees). The court reasoned
that it would be unlikely for punitive damages to exceed 10 times statutory damages. Id.
This Court agrees with the Beaudry and Smith courts and finds that the settlement offer
did not satisfy Harris’ entire demand. Harris alleged that Exel willfully violated the FCRA, so
punitive damages will be uncapped if Harris discovers evidence to support the claim. Thus
punitive damages could exceed the current settlement offer. At this early stage of the
proceedings, no meaningful discovery has taken place, and it would be inappropriate for the
Court to determine the proper amount of punitive damages. Exel’s offer did satisfy Harris’ entire

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demand, so the Court retains subject matter jurisdiction. Exel’s Motion to Dismiss for Lack of
Subject Matter Jurisdiction is DISMISSED.
B.

Motion to Stay

Exel also moves to stay the case pending the Sixth Circuit determination on whether
mooting a named Plaintiff’s claims allows for a dismissal of the entire case including all class
members. Harris argues that such a determination does not matter because Exel did not satisfy
his entire demand. The Court agrees. Harris’ Motion to File a Surreply Instanter is GRANTED
because good cause was shown, and Exel’s Motion to Stay is DENIED because the issue is not
determinative in the case sub judice.
V. CONCLUSION
For the foregoing reasons, this Court DENIES defendant Exel’s Motion to Dismiss for
Lack of Subject Matter (Doc. 4). The Court GRANTS plaintiff Harris’ Motion to File a
Surreply Instanter (Doc. 16) and DENIES Exel’s Motion to Stay (Doc. 13).
IT IS SO ORDERED.
s/ Algenon L. Marbley
ALGENON L. MARBLEY
UNITED STATES DISTRICT JUDGE
DATED: July 24, 2015

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