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Microbilt Corporation v. Fidelity National Information Services

October 15, 2012

MICROBILT CORPORATION PLAINTIFF,
v.
FIDELITY NATIONAL INFORMATION SERVICES, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Pisano, District Judge.

OPINION

Defendants Fidelity National Information Services, Inc. ("FNIS") and Chex Systems, Inc.*fn1 ("Chex" and, together with FNIS, the "Defendants") initiated this action seeking an order withdrawing the reference of adversary proceeding captioned as Adv. Pro. No. 11-02488-MBK (the "Adversary Proceeding"), from the United States District Court for the District of New Jersey to the United States Bankruptcy Court for the District of New Jersey pursuant to 28 U.S.C. § 157(d), Fed. R. Bankr. P. 5011, and D.N.J. LBR 5011-1. Presently before the Court is a motion by MicroBilt Corporation ("MicroBilt") and CL Verify, LLC*fn2 to consolidate this matter with Chex Systems, Inc. v. MicroBilt Corp., Civil Action No. 12-4132 (MAS) and MicroBilt Corp. v. Fidelity National Information Svcs., Inc., Civil Action No. 12-4606 (FLW). This Opinion addresses both motions. For the reasons below, both motions are denied.

I. Background

MicroBilt and Chex are consumer reporting agencies, which is defined by the Fair Credit Reporting Act as "any person which . regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties." 15 U.S.C. § 1681a. MicroBilt is also a reseller of consumer credit information. Both are parties to an Information Resale Agreement ("Resale Agreement") dated August 26, 2009.

On March 18, 2011, MicroBilt filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. In that pending bankruptcy matter, Case No. 11-18143-MBK, with respect to the Resale Agreement, Chex filed a "Motion for an Order (I)(A) Compelling Assumption Or Rejection Of Executory Contract With The Debtor And

(B) Directing Performance And Payment Of Post-Petition Amounts Due Thereunder; or, In The Alternative, (II) Granting Relief From The Automatic Stay," and MicroBilt filed a "Motion . For An Order Pursuant To 11 U.S.C. §§ 105(A) and 365(A) and (B) Authorizing The Debtor To Assume Executory Contract And Cure Pre-Petition Defaults" (the "Assumption motions") Bankruptcy Docket No. 46, 67. The motions were filed April 5, 2011 and April 21, 2011, respectively. An extensive discovery period overseen by the Bankruptcy Judge followed, and culminated in a four-day hearing held on January 26-27 and February 2-3, 2012. A final order on the motions was entered on the motions on May 17, 2012. Bankruptcy Docket No. 431. Certain issues were resolved in MicroBilt's favor, but the Bankruptcy Court found MicroBilt to be in default of the Resale and specified the terms of the cure MicoBilt must provide Chex in order to assume the Resale Agreement. Chex has appealed that order to the District Court, and that appeal is presently pending before Judge Shipp. See Civil Action No. 12-4132 (MAS).

On October 18, 2011, MicroBilt commenced an adversary proceeding (No. 11-2488) against FNIS and Chex. MicroBilt alleges claims of tortious interference, trade libel and disparagement. The claims are based upon allegations that FNIS and Chex accused MicroBilt of "data caching,"*fn3 and as a result allegedly defamed MicroBilt's reputation in the industry and tortiously interfered with MicroBilt's business endeavors, including allegedly preventing a potential investor from investing in MicroBilt. On November 18, 2011, the defendants filed their motion to dismiss the adversary complaint. It appears from the Bankruptcy Court's docket that the motion was denied, at least in part, but Plaintiff was given thirty days to file an amended complaint. An amended complaint was filed and defendants have answered. See Docket Text Entry dated 3/1/12.

On February 16, 2012, MicroBilt and its subsidiary CL Verify commenced an adversary proceeding (12-1167) in which they have asserted claims of tortious interference against FNIS, Chex and Certegy UK Ltd. ("Certegy"). The plaintiff assert that these defendants directed Certegy to stop providing support in the UK under certain agreements between Certegy and CL Verify. The plaintiffs in this adversary action also allege that defendant's conduct violated the automatic stay. Defendants moved to dismiss the complaint, which motion was denied in all material respects. Plaintiffs subsequently filed an amended complaint, and recently obtained leave to file a second amended complaint. See Docket Text Entry dated 9/10/12 (granting motion to file second amended complaint).

II. Motion to Consolidate

Plaintiff seeks consolidation of Civil Action No. 12-3681 (JAP) (seeking to withdraw reference re: Adv. Proc. No. 11-2488), Civil Action No. 12-4606 (FLW) (seeking to withdraw reference re: Adv. Proc. 12-1167), and Civil Action No. 12-4132 (MAS) (bankruptcy appeal). FNIS and Chex oppose the motion.

B. Legal Standard

Federal Rule of Civil Procedure 42(a) provides that "[i]f actions before the court involve a common question of law or fact, the court may . consolidate the actions." Fed. R. Civ. P. 42. However, while a "prerequisite" for consolidation is a "common question of law or fact shared by all of the cases," the mere presence of common issues does not require consolidation. In re Consol. Parlodel Litig., 182 F.R.D. 441, 444 (D.N.J. 1998). Rather, "[t]he decision to consolidate rests in the sound discretion of the district court." Id. "In exercising its discretion, a court should weigh the interests of judicial economy against the potential for new delays, expense, confusion, or prejudice." Id. (internal quotation marks omitted) The burden is on the moving party to of show that consolidation is appropriate. Id.

C. Analysis

The Court agrees with Defendants that the movants have not shown that consolidation is warranted here and declines to exercise its discretion to consolidate the cases. While there is some overlap of parties, none of the three actions appear to arise from the same transaction or involve the same questions of law or fact. The two adversary proceedings, for example, were brought against different parties and arise out of different occurrences. The first adversary proceeding generally arises out of allegations that Chex accused Microbilt of data caching. The second adversary proceeding generally aries out of allegation that FNIS and Chex caused Certegy to stop providing support under certain contracts. While MicroBilt alleges that a common thread, at least between the adversary ...


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