Rosciano v. Experian et al

Filing 39

ORDER that Defendant Midland's Motion to Dismiss Plaintiff's Complaint Under Rule 12(b)(6) (Doc. 23 ) is granted with leave to amend by 01/30/15. If by that date Plaintiff has not filed an amended complaint, Defendant Midland's motion will be granted with prejudice. See order for details. Signed by Judge Neil V. Wake on 1/13/15. (NKS)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Jose Rosciano,

No. CV-14-02102-PHX-NVW
Plaintiff,

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v.

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ORDER

Experian, et al.,

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Defendants.

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Before the Court are Defendant Midland’s Motion to Dismiss Plaintiff’s

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Complaint Under Rule 12(b)(6) (Doc. 23), the Response (Doc. 33) and the Reply (Doc.

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38). For the reasons that follow, the Motion will be granted with leave to amend.

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Plaintiff’s Complaint (Doc. 1) alleges he purchased two T-Mobile phones and

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accompanying service on October 16, 2011, but attempted to rescind his purchases after

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discovering that he could not receive reception at his home. Doc. 1 at 2. Defendant T-

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Mobile USA, Inc. allegedly informed Plaintiff that return of the phones would incur a

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“restocking charge” and that he could not cancel his service unless he also returned the

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phones. Id. at 2-3. When Plaintiff retained the phones without paying for the service,

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“defendants reported same upon his credit derogatively.”

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instituted this action in September 2014, alleging violations of the Fair Credit Reporting

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Act (“FCRA”), 15 U.S.C. § 1681 et seq., by (1) T-Mobile USA, Inc., (2) Experian, a

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“consumer reporting agency as defined in Sec 1681 of” the FCRA, and (3) Midland

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Funding and Midland Credit Management, Inc., “collection agencies” that “are the

Id. at 3.

Plaintiff then

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successors in interest, or assignees of defendant T-Mobile USA, Inc., with respect to the

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debt which is the subject of this action.” Id. at 1-2. According to the Complaint, Plaintiff

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asked “defendant credit reportage services” to correct his credit report and insert a letter

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in his file explaining that he contested the alleged delinquency arising out of failure to

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pay for his phone service. Id. at 3. Despite this request, Plaintiff alleges that “Defendant

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reporting service” continued to issue negative credit reports, “did not disseminate the

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explanatory letter to inquirers of [his] credit,” “did not carry out its duty to verify the

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correctness of the derogatory credit reference,” and “did not verify it with the original

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creditor, T-Mobile.” Id. As a result, Plaintiff’s credit score has allegedly declined,

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forcing him to pay higher interest rates in commercial and personal transactions. Id.

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Defendants Midland Funding, LLC and Midland Credit Management, Inc.

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(together, “Midland”) filed the instant Motion on November 14, 2014, seeking dismissal

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of the Complaint on the grounds that Plaintiff has failed to state a claim against

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Defendant Midland under the FCRA. When considering a motion to dismiss, a court

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evaluates the legal sufficiency of the plaintiff’s pleadings. Dismissal under Rule 12(b)(6)

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of the Federal Rules of Civil Procedure can be based on “the lack of a cognizable legal

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theory” or “the absence of sufficient facts alleged under a cognizable legal theory.”

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Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

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dismissal, a complaint need include “only enough facts to state a claim for relief that is

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plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). On a

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motion to dismiss under Rule 12(b)(6), all allegations of material fact are assumed to be

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true and are construed in the light most favorable to the non-moving party. Cousins v.

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Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, the principle that a court

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accepts as true all of the allegations in a complaint does not apply to legal conclusions or

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conclusory factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

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Here, Plaintiff’s Complaint contains two causes of action.

To avoid

The first charges

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“defendant credit reporting service” with violations of 15 U.S.C. §§ 1681g(a)(1),

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1681i(a), (c). Doc. 1 at 3. The Complaint does not explain to whom “defendant credit

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reporting service” refers, but the Court assumes Plaintiff intends these allegations against

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Defendant Experian, which he earlier describes as a “consumer reporting agency.” Id. at

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2. The first cause of action therefore fails to state a claim against Defendant Midland.

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But even if “defendant credit reporting service” refers to Defendant Midland, Plaintiff’s

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Complaint is still deficient. Section 1681g(a)(1) imposes disclosure requirements on

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“consumer reporting agenc[ies],” which the FCRA defines as “any person which, for

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monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in

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part in the practice of assembling or evaluating consumer credit information or other

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information on consumers for the purpose of furnishing consumer reports to third parties,

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and which uses any means or facility of interstate commerce for the purpose of preparing

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or furnishing consumer reports.” 15 U.S.C. § 1681a(f). As a debt collector, Defendant

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Midland clearly does not fit this description, and Plaintiff has not made any allegation to

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that effect. Likewise, sections 1681i(a) and 1681i(c) describe the obligations only of

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consumer reporting agencies, not of debt collectors.

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Showalter v. Chase Manhattan/Providian, No. C 05-00548 WHA, 2005 U.S. Dist.

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LEXIS 45465, at *8 (N.D. Cal. Aug. 19, 2005) (“Section 1681i(a) pertains only to the

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duties and liabilities of consumer reporting agencies.”). The Complaint’s first cause of

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action therefore does not contain “a cognizable legal theory” as to Defendant Midland.

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Balistreri, 901 F.2d at 699.

See 15 U.S.C. §1681i(a), (c);

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The second cause of action, which accuses “Defendant user” of violating 15

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U.S.C. § 1681d(a)(1), fares no better. That statutory provision forbids “[a] person” to

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“procure or cause to be prepared an investigative consumer report on any consumer”

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without first making certain disclosures. 15 U.S.C. § 1681d(a)(1). Once again, the

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identity of this cause of action’s particular defendant is unclear from the Complaint. But

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even assuming “Defendant user” refers to Defendant Midland, Plaintiff has not stated a

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claim against Defendant Midland, as the Complaint contains no allegation that Defendant

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Midland “procure[d] or cause[d] to be prepared an investigative consumer report” on

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Plaintiff. Instead, the Complaint appears to allege only that Defendant Midland is a

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“furnisher” of credit information, i.e., “one who provides credit information to consumer

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reporting agencies.” Arikat v. JP Morgan Chase & Co., 430 F. Supp. 2d 1013, 1023

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(N.D. Cal. 2006) (citing Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1059-

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60 (9th Cir. 2002)). But a “furnisher is liable under the FCRA only if it does not respond

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to a formal notice of consumer dispute from a consumer reporting agency.” Id. at 1023-

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1060). That is, “[a] private right of action exists under 15 U.S.C. § 1681s-2(b) only if the

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consumer informs a credit reporting agency of incorrect information on the consumer’s

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credit report and then the furnisher of the information, upon receipt of notice from the

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credit reporting agency, fails to conduct a reasonable investigation and report back to the

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credit reporting agency.” Virgen v. Mae, No. CIV S-06-0341 FCD DAD PS, 2007 U.S.

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Dist. LEXIS 37509, at *23-34 (E.D. Cal. May 23, 2007) (emphasis added). Nowhere

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does the Complaint allege that Defendant Midland failed to conduct a reasonable

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investigation of Plaintiff’s debt after being informed of his dispute by Defendant

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Experian.

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Plaintiff seeks to avoid dismissal of his Complaint by claiming that Defendant

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Midland acted “in concert” with Defendant Experian and was therefore a “co-

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conspirator” in Defendant Experian’s alleged violations of the FCRA. Doc. 33 at 3.

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Even assuming this theory was pled in the Complaint,1 Plaintiff has cited—and the Court

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has found—no case law suggesting that FCRA liability may be premised on “principles

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of agency.” Doc. 33 at 4. Indeed, Arikat, Virgen and Nelson make clear that a plaintiff

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may sue a “furnisher” of credit information under the FCRA only in the limited

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circumstances described in those cases, which are not present here.

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Plaintiff’s Complaint fails to state a claim against Defendant Midland.

Accordingly,

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Plaintiff has provided the Court no reason to believe he could state a claim against

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Defendant Midland if allowed to amend his Complaint. Nevertheless, because Plaintiff is

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Paragraph 9 of the Complaint alleges that the “defendants individually or
collectively did cause the events to occur in the State of Arizona which gave rise to
plaintiff’s complaint.” Doc. 1 at 2 (emphasis added).
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proceeding in propria persona, and because he has filed only one complaint to date,

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Plaintiff will be granted leave to file an amended complaint no later than January 30,

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2015.

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IT IS THEREFORE ORDERED that Defendant Midland’s Motion to Dismiss

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Plaintiff’s Complaint Under Rule 12(b)(6) (Doc. 23) is granted with leave to amend by

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January 30, 2015. If by that date Plaintiff has not filed an amended complaint, Defendant

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Midland’s motion will be granted with prejudice.

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Dated this 13th day of January, 2015.

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Neil V. Wake
United States District Judge

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