Bethea v. Equifax Information Services, LLC et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CIVIL ACTION NO. 3:25-CV-00684-KDB-SCR
JOTHAM BETHEA,
Plaintiff,
v. MEMORANDUM AND ORDER
EQUIFAX INFORMATION
SERVICES, LLC, ET AL.,
Defendants.
THIS MATTER is before the Court on numerous pending motions including a Motion to
Set Aside Default (Doc. No. 34), Motions to Dismiss (Doc. Nos. 9, 28), a Motion for Default
Judgment (Doc. No. 20) and Motions to Strike (Doc. Nos. 33, 44, 66). The Court has carefully
considered these motions and the parties’ related pleadings, briefs and exhibits. For the reasons
discussed below, the Court will set aside the default against Navy Federal Credit Union, grant the
motions to dismiss without prejudice and deny the remaining motions as moot in light of those
rulings.
I. LEGAL STANDARD
Federal Rule of Civil Procedure 55(c) allows the Court to “set aside an entry of default for
good cause.” Fed. R. Civ. P. 55(c). While “good cause” is not defined in Rule 55(c), “a district
court should consider whether the moving party has a meritorious defense, whether it acts with
reasonable promptness, the personal responsibility of the defaulting party, the prejudice to the
party, whether there is a history of dilatory action, and the availability of sanctions less drastic.”
Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010)
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(quoting Payne ex rel. Estate of Calzada v. Brake, 439 F.3d 198, 204-05 (4th Cir. 2006)). Courts
have “a strong preference that, as a general matter, defaults should be avoided and that claims and
defenses be disposed of on their merits.” Id. (citing Tazco, Inc. v. Director, Office of Workers
Compensation Program, U.S. Dep’t of Labor, 895 F.2d 949, 950 (4th Cir. 1990)); Jones v. Nat’l
Ass’n U.S. Bank Tr. Co., No. 5:23-CV-00203-KDB-DCK, 2024 WL 2870001, at *1 (W.D.N.C.
June 6, 2024).
Under Federal Rule of Civil Procedure 8(a)(2), a Complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
However, “Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket assertion, of entitlement to
relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007). A motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6) for “failure to state a claim upon which relief can be
granted” tests whether the complaint is legally and factually sufficient. See Fed. R. Civ. P. 12(b)(6);
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp., 550 U.S. at 570; Coleman v. Maryland
Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010), aff’d sub nom. Coleman v. Court of Appeals
of Maryland, 566 U.S. 30 (2012). In evaluating whether a claim is stated, “[the] court accepts all
well-pled facts as true and construes these facts in the light most favorable to the plaintiff,” but
does not consider “legal conclusions, elements of a cause of action, ... bare assertions devoid of
further factual enhancement[,] ... unwarranted inferences, unreasonable conclusions, or
arguments.” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir.
2009). Construing the facts in this manner, a complaint must only contain “sufficient factual
matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal
quotations omitted). Thus, a motion to dismiss under Rule 12(b)(6) determines only whether a
claim is stated; “it does not resolve contests surrounding the facts, the merits of a claim, or the
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applicability of defenses.” Republican Party of North Carolina v. Martin, 980 F.2d 943, 952 (4th
Cir. 1992).
II. FACTS AND PROCEDURAL HISTORY
In this action, Plaintiff Jotham Bethea claims that Defendants Equifax Information
Services, LLC (“Equifax”), Navy Federal Credit Union (“Navy Federal”) and Goldman Sachs
Bank USA (“Goldman”)1 violated the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.
(“FCRA”) and the Gramm-Leach-Bliley Act 15 U.S.C. § 6803, et seq. (“GLBA”). Specifically, he
alleges that they included “inaccurate information and unauthorized accounts” in his credit report
and failed to conduct reasonable investigations and remove the information after he disputed its
inclusion. See Doc. No. 1 at 2. The “factual allegations” of the Complaint are generally pled
(comprising only half a page), and accompanied by two exhibits that Plaintiff describes as the
credit report and his written dispute of the report.
Plaintiff filed his Complaint on September 9, 2025, and served the Complaint and
Summons on Navy Federal via the United States Postal Service Certified Mail on September 22,
2025. The mailing was sent to Navy Federal (not to a specific person or office) and it was not
routed to Navy Federal’s Office of General Counsel until September 26, 2025. Navy Federal then
wrongly set its response deadline for October 17, 2025 (rather than October 13, 2025), based on
the date of receipt by the General Counsel. See Doc. No. 35 at 2. On October 15, 2025, Plaintiff
moved for Entry of Default and Default Judgment, and Entry of Default was entered on October
16, 2025. Doc. Nos. 19-20, 25. The next day, October 17, 2025, without knowledge of the Default,
Navy Federal filed its Motion to Dismiss, arguing multiple grounds for dismissal. Doc. No. 28. On
1 Plaintiff also sued OneMain Financial, which was dismissed as a Defendant pursuant to a
Stipulation of Dismissal. See Doc. No. 73.
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October 22, 2025, Plaintiff moved to strike Navy Federal’s Motion to Dismiss (based on the earlier
Entry of Default). Doc. No. 33. Navy Federal then moved to set aside and vacate the Clerk’s Entry
of Default. Doc. No. 34. On November 4, 2025, and November 20, 2025, Plaintiff filed Motions
to Strike, first seeking to strike several of Goldman’s affirmative defenses and, second, asking the
Court to strike Navy Federal’s Notice of No Reply in Support of Motion to Dismiss (again, related
to the timing of the Default and the Motion to Dismiss). Doc. Nos. 44, 66. All motions are ripe for
the Court’s rulings.
III. DISCUSSION
A. Motion to Set Aside Entry of Default
Weighing all of the relevant factors described above, the Court finds that Navy Federal has
made the necessary showing of good cause to set aside entry of default. First, with respect to a
“meritorious defense,” Defendant “should proffer evidence which would permit a finding for the
defaulting party.” Kirbbler v. Zen Enterprises Corp., 1:20-cv-20008-JRR, 2024 WL 361329, at *2
(D. Md. 2024) (citing Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d
808, 812 (4th Cir. 1988)). As discussed more below, Navy Federal’s Motion to Dismiss offers a
number of possible defenses, including a lack of pleading specificity / failure to state a claim. Not
only does the Court find that these arguments could plausibly permit a finding for Defendants, it
concludes they are meritorious.
The Court also finds that, while it bears the responsibility for erroneously calculating the
due date of its response to the Complaint, Navy Federal acted with reasonable promptness in
responding only four days late to the Complaint and quickly moving to set aside the Entry of
Default once it became aware of it. Moreover, the Court finds that Plaintiff has not been prejudiced.
“[D]elay in and of itself does not constitute prejudice to the opposing party.” Pennsylvania Nat’l
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Mut. Cas. Ins. Co. v. Generali-U.S. Branch, No. CV JKB-23-02746, 2024 WL 1194737, at *4 (D.
Md. Mar. 20, 2024). Plaintiff asserts that granting relief “would destroy Plaintiff’s right to rely on
Rule 55” and “allow Defendant to bypass procedural rules and gain advantage from its own
neglect.” Doc. No. 38 at 3. Yet, those are not arguments that Plaintiff has suffered any actual
prejudice – beyond not being able to take advantage of the four day delay to avoid proving his case
on the merits. See Quarles v. Wells Fargo Bank, N.A., Civ., No. GJH-20-3200, 2022 WL 952025,
at *6 (D. Md. Mar. 30, 2022) (“Where there is a brief delay in the adversarial process, courts will
generally find that there is no prejudice to plaintiff.”). Finally, there is no history of dilatory action
by Navy Federal and the Court finds that there is no need for sanctions in this case.
In summary, the Court finds that, when weighing the relevant factors alongside the
preference for litigation to be decided on the merits, Navy Federal has shown good cause sufficient
to set aside the Entry of Default. Therefore, the Motion to Set Aside Entry of Default will be
granted. See Jones v. Nat'l Ass'n U.S. Bank Tr. Co., No. 5:23-CV-00203-KDB-DCK, 2024 WL
2870001, at *1–2 (W.D.N.C. June 6, 2024).
B. Motions to Dismiss
Equifax and Navy Federal have filed motions to dismiss. Doc. Nos. 9, 28.2 Each asserts
numerous grounds in support of their motion, but their initial and primary arguments are that
Plaintiff has failed to plead with specificity the wrongful acts alleged against each Defendant,
which they refer to as an impermissible “shotgun” pleading. See Doc. Nos. 9-1 at 4; 29 at 3.
“Shotgun pleading occurs when a complaint ‘fails to articulate claims with sufficient clarity to
allow the defendant to frame a responsive pleading . . . or if ‘it is virtually impossible to know
2 Goldman filed an Answer to the Complaint in which they asserted Plaintiff’s “failure to state a
claim” as an Affirmative Defense. See Doc. No. 15. By local rule, that is insufficient to
independently bring the issue before the Court for a decision. See W.D.N.C. Local R. 7.1(c)(1).
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which allegations of fact are intended to support which claims[] for relief.’” SunTrust Mortg., Inc.
v. First Residential Mortg. Services Corp., No. 3:12CV162, 2012 WL 7062086, at *18 (E.D. Va.
Sep. 11, 2012) (quoting JPMorgan Chase Bank, N.A. v. Hayhurst Mortg., Inc., No. 10-21501CIV,
2010 WL 2949573, at *2 (S.D. Fla. July 26, 2010)); Dealers Supply Co. v. Cheil Indus., Inc., 348
F. Supp. 2d 579, 589-90 (M.D.N.C. 2004) (“Courts have been quick to reject [complaints] in which
multiple defendants are ‘lumped together[.]’”). In other words, Plaintiff must plead with specificity
the acts alleged as to each defendant because Federal Rule of Civil Procedure 8 requires the
complaint to provide each defendant with fair notice of the claims against it. See Reaves v. Ocwen
Loan Servicing LLC, No. 5:16-CV-186FL, 2016 WL 3248298, at *1-2 (E.D.N.C. June 10, 2016)
(dismissing plaintiff’s complaint as a shotgun pleading).
The Court agrees with Equifax and Navy Federal that the factual allegations in the
Complaint are too conclusory, lump the Defendants together (including one who is now no longer
in the case) and do not provide enough specificity to enable the Court and each Defendant to
determine why and how Plaintiff contends there have been violations of the FCRA.3 For example,
Plaintiff claims that the credit file has “inaccurate information and unauthorized accounts” but the
Complaint fails to specifically describe what was allegedly inaccurate about the information in the
credit file – which is the hallmark of a FCRA claim. Doc. No. 1, at 2; see Hinton v. Trans Union,
LLC 654 F. Supp. 2d 440, 451 (E.D. Va. 2009) (holding that a plaintiff must establish that her
“credit file contains inaccurate or incomplete information” to establish a claim under §§ 1681e(b)
or 1681i). Also, Plaintiff alleges that he “disputed the unauthorized accounts and inaccurate
3 The Court notes that the GLBA does not provide a private right of action. See Harper v. Trans
Union, LLC, No. CV DKC 24-230, 2025 WL 1928021, at *5 (D. Md. July 14, 2025); Lyles v.
Medicredit, Inc., No. 21-CV-0789-TDC, 2021 WL 6501328, at *2 (D. Md. Oct. 12, 2021) (finding
that the plaintiff’s HIPAA and GLBA “claims fail as a matter of law because neither statute creates
a private right of action.”).
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information,” Doc. No. 1 at 2, but does not provide any detail as what is inaccurate and why (other
than an inaccurate address).
However, the Court disagrees with Equifax and Navy Federal that the Plaintiff’s claims
should be dismissed with prejudice. Rather, it would be fair and appropriate to dismiss the claims
against them without prejudice to permit Plaintiff an opportunity to, if he chooses to do so, refile
his Complaint with specific allegations which describe how the information in his credit report is
inaccurate and how each Defendant allegedly violated the FCRA with respect to particular
information.4
C. Motion for Default Judgment and Motions to Strike
In light of the Court’s rulings discussed above, Plaintiff’s Motion for Default Judgment
and Motions to Strike will be denied as moot.5
IV. ORDER
NOW THEREFORE IT IS ORDERED THAT:
1. Navy Federal’s Motion to Set Aside Default (Doc. No. 34) is GRANTED;
2. Equifax and Navy Federal’s Motions to Dismiss (Doc. Nos. 9, 28) are GRANTED
and Plaintiff’s claims against them DISMISSED without prejudice; and
4 Having determined that the claims must be further specified as to each Defendant, the Court need
not and does not reach the other grounds urged by Equifax and Navy Federal as to why particular
Counts of the Complaint fail to state a claim.
5 One of Plaintiff’s Motions to Strike relates to Affirmative Defenses presented by Goldman in
their Answer. Because a new Complaint is likely to be filed as a consequence of this Order, it is
unnecessary to address this motion, the substance of which could in any event be resolved at
Summary Judgment without prejudice to Plaintiff, if Plaintiff’s claims against Goldman proceed
separately.
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3. Plaintiff’s Motion for Default Judgment (Doc. No. 20) and Motions to Strike (Doc.
Nos. 33, 44, 66) are DENIED as moot.
SO ORDERED ADJUDGED AND DECREED.
Signed: December 19, 2025
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