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Irvin-Jones v. Equifax Information Services LLC

United States District Court, S.D. Texas, Houston Division

September 13, 2019




         This is a Fair Credit Reporting Act ("FCR") action brought by plaintiff Louise Irvin-Jones ("Plaintiff") against defendants Equifax Information Services LLC; Experian Information Solutions, Inc.; Wells Fargo Bank, N.A.; Bank of America, N.A.; and Trans Union LLC ("Defendants"). Pending before the court is movant Mark Sanders' Plaintiff's Motion to Substitute Party ("Sanders' Motion") (Docket Entry No. 59). For the reasons explained below, Sanders' Motion will be granted in part and denied in part.

         I. Factual and Procedural Background

          Plaintiff filed her Complaint under the Fair Credit Reporting Act against Defendants on September 11, 2018.[1] The Complaint seeks actual and punitive damages from Defendants for alleged violations of the FCRA.[2] Plaintiff died on June 21, 2019.[3] Plaintiff's son, Mark Sanders ("Sanders"), moved to substitute himself as the plaintiff under Federal Rule of Civil Procedure 25(a) (1) .[4] To support his motion, Sanders submitted evidence that Plaintiff's Will named him executor of the estate and that he is trustee of the trust that is the estate's principal devisee.[5] Defendants filed a joint response opposing Sanders' Motion, contending that Sanders is not a "proper party" for substitution under Rule 25(a) (1) and that Plaintiff's claims for punitive damages under the FCRA do not survive her death.[6]

         II. Analysis

         Under Rule 25 "[i] f a party dies and the claim is not extinguished, the court may order the substitution of the proper party. A motion for substitution may be made by any party or by the decedent's successor or representative." Fed. R. Ci v. P. 25(a) (1) . The parties disagree as to whether Sanders qualifies as a proper party for substitution. Defendants contend that state law determines who qualifies as a proper party and argue that Sanders cannot be a successor or representative of the Plaintiff absent evidence a Texas court has appointed him such or that probate has been opened. Sanders contends that state law does not control determination of proper parties under Rule 25 and, even if it does, Sanders' status as trustee of the trust named as devisee in Plaintiff's Will qualifies him under Texas law. Assuming Sanders can be substituted, the parties also disagree whether Plaintiff's punitive damages claims survived her death.

         A. Proper Party Under Rule 25(a) (1)

         If a party dies, Rule 25 (a) (1) allows the court to order substitution of a proper party but does not specify which parties are proper. Fed.R.Civ.P. 25(a) (1). The rule is procedural, and federal courts must apply federal rules, not state law, to determine proper procedure for substitution following a party's death. In re Baycol Products Litigation, 616 F.3d 778, 785 (8th Cir. 2010). State law may govern the substantive question of who may qualify as a proper party. Id. But Rule 25 intends liberal substitution to be permitted and does not require the plaintiff to invoke state machinery to produce a representative of the estate. McSurely v. McClellan, 753 F.2d 88, 98 (D.C. Cir. 1985). The proper inquiry is whether the party to be substituted could qualify under state law to be the plaintiff's successor or representative, not whether the party has been appointed or recognized by the state. See In re Baycol, 616 F.3d at 787-88 (explaining that state substantive law defines who may be a party's successor, but state procedures do not control in federal court). For instance, a person named executor in a will may be a proper party under Rule 25(a) (1) even if the will has not been probated. Id. at 784.

         Defendants' contention that Sanders cannot be substituted without producing a signed order from a probate court designating him as Plaintiff's representative therefore fails. Federal courts have uniformly held that Rule 25(a) (1) permits substitution without requiring state machinery such as the probating of a will. E.g., In re Baycol, 616 F.3d at 784; McSurely, 753 F.2d at 98; Kilgo v. Bowman Transportation, Inc., 87 F.R.D. 26, 27 (N.D.Ga. 1980). Sanders therefore need not be named Plaintiff's representative by a probate court to be substituted as the proper party in this action. The only relevant question under state law is whether he could be named as representative.

         Under Texas law a person named executor in a decedent's will is qualified with highest priority to serve as the estate's representative. Tex. Est. Code § 304.00l(a)(1). Plaintiff's Will contains a clause appointing Sanders as executor. [7] Texas also permits the principal devisee of the decedent to become the estate's representative. Tex. Est. Code § 304.00l(a) (3). Plaintiff's Will distributes all of the estate's property, with the exception of any S-corporation stock, to a trust of which Sanders is trustee.[8] This evidence establishes that Sanders is entitled to be the representative or successor of Plaintiff under Texas law. Accordingly, Sanders may be substituted as the plaintiff in this lawsuit under Rule 25(a) (1).

         B. Survival of Punitive Damages Claims

         A party may only be substituted under Rule 25(a) (1) for claims not extinguished by the plaintiff's death. Fed.R.Civ.P. 25 (a) (1). Plaintiff's Complaint alleges claims for punitive damages under the FCRA. Defendants contend that the claims for punitive damages are penal and therefore do not survive under federal common law. Sanders responds that the FCRA is a remedial statute, and that claims under the FCRA, including the punitive damages provisions, therefore survive.

         Unless otherwise provided by statute, survival of a federal claim is a matter of federal common law. James v. Home Construction Co. of Mobile, Inc., 621 F.2d 727, 729 (5th Cir. 1980). Because the FCRA is silent as to the survival of the civil claims it creates, the issue must be decided based on federal common law. See 15 U.S.C. §§ 1681n, 16810; James, 621 F.2d at 729. Under federal common law remedial actions survive the death of the plaintiff, while penal actions do not. Wheeler v. City of Santa Clara, 894 F.3d 1046, 1056-57 (9th Cir. 2018); James, 621 F.2d. at 730. "A remedial action is one that compensates an individual for specific harm suffered, while a penal action imposes damages upon the defendant for a general wrong to the public." United States v. NEC Corp., 11 F.3d 136, 137 (11th Cir. 1993).

         Like several other federal statutes, however, the FCR serves both remedial and penal purposes. Aetna Casualty & Surety Co. v. Sunshine Corp.,74 F.3d 685, 688 (6th Cir. 1996). The availability of a civil claim for actual damages for noncompliance with the FCRA has a clear remedial purpose. See 15 U.S.C. §§ 1681n(a) (1) (A), 16810 (a) (1). But the punitive damages available for willful violations under § 1681n serve to punish and deter. See Id. § 1681n(a) (2); Northrop v. Hoffman of Simsbury, Inc., 12 Fed.Appx. 44, 51 (2d Cir. 2001) ("The purpose of punitive damages under FCR . . . is deterrence."). For these reasons, at least one district court has held punitive damages under the FCRA are penal and do not survive a plaintiff's death. Beaudry v. TeleCheck Services, Inc., No. 3:07-0842, 2016 WL 11398115 (M.D. Tenn. Sept. 29, 2016), at *16. Several district courts have held that the remedy of punitive damages or analogous penal damages provisions in other remedial statutes do not survive the plaintiff's death. See, e.g., Fulk v. Norfolk Southern Railway Co., 35 F.Supp.3d 749, 764 (M.D. N.C. 2014) (dismissing the punitive damages portion of an otherwise remedial Federal Railroad Safety Act retaliation claim); E.E.O.C. v. Timeless Investments, Inc.,734 F.Supp.2d 1035, 1056-57 (E.D. Ca. 2010) (dismissing a liquidated damages portion of an otherwise remedial ADEA claim); Kettner v. Compass Group USA, Inc.,570 F.Supp.2d 1121, 1134 (D. Minn. 2008) (dismissing liquidated damages portions of otherwise remedial ADA and Rehabilitation Act claims); Medrano v. MCDR, Inc.,366 F.Supp.2d 625, 635 (W.D. Tenn. ...

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