Hamm v. Equifax Information Services LLC et al
Filing
35
ORDER denying Defendant's 22 Motion to Dismiss. IT IS FURTHER ORDERED that Defendant Trans Union LLC shall file an Answer to Plaintiff's Complaint no later than August 14, 2018. Signed by Judge John J Tuchi on 7/24/2018. (ATD)
1
WO
2
3
4
5
6
IN THE UNITED STATES DISTRICT COURT
7
FOR THE DISTRICT OF ARIZONA
8
9
Tanya Hamm,
Plaintiff,
10
11
ORDER
v.
12
No. CV-17-03821-PHX-JJT
Equifax Information Services LLC, et al.,
13
Defendants.
14
At issue is Defendant Trans Union LLC’s (“Trans Union”) Motion to Dismiss
15
(Doc. 22, Mot.), to which Plaintiff Tanya Hamm filed a Response (Doc. 27, Resp.), and
16
Defendant filed a Reply (Doc. 28, Reply). No party requested oral argument, and the
17
Court finds the Motion appropriate for resolution without such argument. See LRCiv
18
7.2(f). For the reasons that follow, the Court denies Defendant’s Motion.
19
I.
BACKGROUND
20
For some period of time, Plaintiff and her mother jointly held an account with
21
Synchrony Bank (“Synchrony”), which required the payment of monthly fees.1 (Compl.
22
¶ 8.) Despite Plaintiff’s mother’s Chapter 7 Bankruptcy in February 2017, Plaintiff
23
attempted to keep the account open by paying the next month’s fee in a timely fashion.
24
(Compl. ¶ 9.) However, Synchrony refused to accept payment, informing Plaintiff that
25
the bank closed the account. (Compl. ¶ 10.) On August 5, 2017, Plaintiff performed a
26
routine check of her credit report with two credit reporting agencies (“CRA”), including
27
1
28
Plaintiff names Synchrony as a Defendant in her Complaint; however, the parties
have since settled and stipulated to dismissal of the claims against Synchrony. (Docs 25,
34.)
1
Defendant. At that time, Plaintiff discovered—to her shock—that Defendant incorrectly
2
listed the status on her Synchrony trade line as “charged off,” rather than the correct
3
status of “closed.” 2 (Compl. ¶ 11.)
4
Subsequently, Plaintiff mailed a letter to Defendant disputing the status on her
5
credit report and requesting that Defendant correct the mistake. (Compl. ¶¶ 12, 13.)
6
Plaintiff included both a copy of her mother’s bankruptcy petition and an explanation of
7
the pertinent circumstances. (Compl. ¶ 13.) Defendant failed to respond to this letter and
8
did not update the incorrect status on Plaintiff’s credit report. (Compl. ¶¶ 16.)
9
On October 18, 2017, Plaintiff filed suit against Trans Union for its purported
10
violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq. In
11
particular, Plaintiff alleges that Defendant negligently and willfully failed to assure the
12
maximum accuracy of the information it reported and to conduct a reasonable
13
reinvestigation. (Compl. ¶¶ 44-56.) Defendant now moves for dismissal on two bases.
14
First, Defendant contends that Plaintiff fails to allege facts sufficient to establish Article
15
III standing—and thus, this Court’s subject matter jurisdiction. (Mot. at 12–13.) Second,
16
Defendant argues that Plaintiff fails to state a plausible claim upon which relief may be
17
granted for either a negligent or willful violation of the FCRA. (Mot. at 4–11.)
18
II.
LEGAL STANDARD
19
“A motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1)
20
may attack either the allegations of the complaint as insufficient to confer upon the court
21
subject matter jurisdiction, or the existence of subject matter jurisdiction in fact.”
22
Renteria v. United States, 452 F. Supp. 2d 910, 919 (D. Ariz. 2006) (citing Thornhill
23
Publ’g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979)). “Where the
24
jurisdictional issue is separable from the merits of the case, the [court] may consider the
25
evidence presented with respect to the jurisdictional issue and rule on that issue, resolving
26
factual disputes if necessary.” Thornhill, 594 F.2d at 733; see also Autery v. United
27
2
28
Although not explicitly defined by Plaintiff in the Complaint, to “charge off” an
account receivable is “to treat [it] as a loss or expense because payment is unlikely.”
Black’s Law Dictionary 227 (7th ed. 1999).
-2-
1
States, 424 F.3d 944, 956 (9th Cir. 2005) (“With a 12(b)(1) motion, a court may weigh
2
the evidence to determine whether it has jurisdiction.”). The burden of proof is on the
3
party asserting jurisdiction to show that the court has subject matter jurisdiction. See
4
Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990).
5
When analyzing a complaint for failure to state a claim for relief under Rule
6
12(b)(6), the well-pled factual allegations are taken as true and construed in the light most
7
favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir.
8
2009). A plaintiff must allege “enough facts to state a claim to relief that is plausible on its
9
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Legal conclusions couched as
10
factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S.
11
662, 680 (2009), and therefore are insufficient to defeat a motion to dismiss for failure to
12
state a claim. In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010).
13
In ruling upon a motion to dismiss for failure to state claim, a court may consider
14
only the complaint, any exhibits properly included in the complaint, and matters that may
15
be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of
16
Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of
17
U.S., Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal. 1998). The court may take judicial notice
18
of facts “not subject to reasonable dispute” because they are either: “(1) generally known
19
within the territorial jurisdiction of the trial court or (2) capable of accurate and ready
20
determination by resort to sources whose accuracy cannot reasonably be questioned.”
21
Fed. R. Evid. 201; see also Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001)
22
(noting that the court may take judicial notice of undisputed “matters of public record”).
23
The court may disregard allegations in a complaint that are contradicted by matters
24
properly subject to judicial notice. Daniels–Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998
25
(9th Cir. 2010).
26
III.
27
28
ANALYSIS
The Court first addresses the jurisdictional basis of Defendant’s Motion before
moving to its arguments under Rule 12(b)(6).
-3-
1
A.
2
To bring a justiciable lawsuit into federal court, Article III of the Constitution
3
requires that a plaintiff have “the core component of standing.” Lujan v. Defenders of
4
Wildlife, 504 U.S. 555, 560 (1992). To satisfy Article III’s standing requirements, a
5
plaintiff must show that she suffered a “concrete and particularized” injury that is “fairly
6
traceable to the challenged action of the defendant,” and that a favorable decision would
7
likely redress the injury. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,
8
528 U.S. 167, 180–81 (2000). In the complaint, the plaintiff must “alleg[e] specific facts
9
sufficient” to establish standing. Schmier v. U.S. Court of Appeals for Ninth Circuit, 279
10
F.3d 817, 821 (9th Cir. 2002). If the Plaintiff fails to allege such facts, the Court should
11
dismiss the Complaint. See, e.g., Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d
12
1115, 1123 (9th Cir. 2010).
Article III Standing
13
With respect to the FCRA, allegations of a “bare procedural violation, divorced
14
from any concrete harm,” does not satisfy the requirements of Article III standing.
15
Spokeo, Inc. v. Robins (Spokeo II), 136 S. Ct. 1540, 1549–50 (2016). Thus, courts look
16
to the nature of the alleged reporting inaccuracy to “ensure [the inaccuracies] raise a real
17
risk of harm to the concrete interests that the FCRA protects.” Robins v. Spokeo, Inc.
18
(Spokeo III), 867 F.3d 1108, 1116 (9th Cir. 2017) (finding inaccuracies that “may be
19
important to [those] making use of a consumer report” sufficiently “concrete” under
20
Article III).
21
Defendant challenges only the first prong of the Article III inquiry—whether
22
Plaintiff’s alleged injury is sufficiently concrete to confer standing. (Mot. at 12–13.)
23
However, Plaintiff’s allegations are more than sufficient to meet her burden. In particular,
24
Plaintiff alleges that Defendant incorrectly listed an account with Synchrony as “charged
25
off”—i.e. that Synchrony stopped attempting collections on a debt because Plaintiff was
26
unlikely to pay—rather than listing the account as closed. As a result of this inaccuracy,
27
Plaintiff has “refrain[ed] from applying for new credit or more favorable terms on
28
existing credit lines” and has experienced “undue stress and anxiety.” (Compl. ¶ 17.)
-4-
1
Undoubtedly, users of Plaintiff’s credit report may find it important that a lender
2
abandoned attempting to collect a debt from Plaintiff because any attempt was futile. See
3
Spokeo III, 867 F.3d at 1117 (holding that information about the plaintiff’s “age, marital
4
status, educational background, and employment history . . . may be important” to users
5
of a credit report). The Court thus cannot conclude that the alleged accuracy in this case
6
is “too insignificant to present a sincere risk of harm.” Id. Accordingly, Plaintiff’s
7
allegations are sufficient to establish Article III standing.
8
B.
9
In the Complaint, Plaintiff brings two claims against Defendant. First, Plaintiff
10
alleges that Defendant negligently and willfully failed to “maintain and/or follow
11
reasonable procedures” when assuring the accuracy of Plaintiff’s information, in
12
violation of 15 U.S.C. § 1681e(b). (Compl. ¶ 47, 54.) Second, Plaintiff claims Trans
13
Union negligently and willfully failed to “conduct a reasonable reinvestigation” after
14
receiving her letter of dispute, as required by 15 U.S.C. § 1681i. (Compl. ¶ 48, 55.)
15
Defendant moves to dismiss Plaintiff’s claims under both sections of the FCRA.
16
Plaintiff’s FCRA Claims
1.
15 U.S.C. § 1681e
17
Congress enacted the FCRA to ensure fair and accurate credit reporting, to
18
promote efficiency in the banking system, and to protect consumer privacy. Gorman v.
19
Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009). A prerequisite for
20
bringing a claim against a credit reporting agency under either § 1681e or § 1681i is
21
evidence of an inaccuracy in the credit report. See Carvalho v. Equifax Info. Servs., LLC,
22
629 F.3d 876, 890 (9th Cir. 2010); Guimond v. Trans Union Credit Info. Co., 45 F.3d
23
1329, 1333 (9th Cir. 1995) (“To make out a prima facie violation under § 1681e(b), a
24
consumer must present evidence tending to show that a credit reporting agency prepared
25
a report containing inaccurate information.”). An item on a credit report may be
26
inaccurately reported “because it is patently incorrect, or because it is misleading in such
27
a way and to such an extent that it can be expected to adversely affect credit decisions.”
28
Gorman, 584 F.3d at 1163 (quoting Sepulvado v. CSC Credit Servs. Inc., 158 F.3d 890,
-5-
1
895 (5th Cir. 1998)). The FCRA does not impose strict liability on an inaccurate report,
2
and a defendant may avoid liability if it can show that it followed reasonable procedures
3
in preparing a report. Guimond, 45 F.3d at 1333. However, “reasonableness of the
4
procedures and whether the agency followed them will be jury questions in the
5
overwhelming majority of cases.” Id.
6
In its Motion, Defendant first argues that the purported inaccuracy is a legal
7
question rather than the type of factual inaccuracy that can give rise to liability under the
8
FCRA. (Mot. at 4–6.) However, taking Plaintiff’s allegations as true, that is not the case.
9
In the Complaint, Plaintiff specifically alleges that her account with Synchrony was
10
closed, rather than “charged off.” (Compl. ¶¶ 7–16.)3 As plead, Plaintiff contends that her
11
Trans Union credit report contains factual inaccuracies because she contends that her
12
account was not charged off. Accordingly, Plaintiff has met her prima facie burden of
13
demonstrating that her credit report contained an inaccuracy.4
14
Defendant next argues that Plaintiff fails to “allege and prove that the procedures
15
followed by Trans Union were unreasonable.” (Mot. at 6–7.) As this Court—and the
16
Ninth Circuit—have repeated frequently, a plaintiff need only allege that her credit report
17
contained an inaccuracy to make her prima facie case—and survive a motion to
18
dismiss—under § 1681e. See Guimond, 45 F.3d at 1333; Neill v. Experian Info. Sols.,
19
Inc., No. CV-16-04326-PHX-JJT, 2017 WL 3838671, at *2 (D. Ariz. Sept. 1, 2017);
20
Loomis v. U.S. Bank Home Mortg., 912 F. Supp. 2d 848, 855 (D. Ariz. 2012). Although
21
Defendant may well present evidence at summary judgment demonstrating that its
22
3
23
24
To this point, Defendant’s assertion that “Plaintiff” acknowledges that her
account “had an outstanding” balance blatantly misrepresents what Plaintiff alleges in the
in the Complaint. (See Mot. at 4.)
4
25
26
27
28
Although Defendant offers a number of cases which it purports are applicable to
the Motion at hand, each case is easily distinguishable. (See Resp. at 5–6.) For example,
both Deandrade v. Trans Union LLC, 523 F.3d 61 (1st Cir. 2008) and Pagazani v.
Equifax Info. Servs., LLC, 2016 WL 2997586 (S.D. Fla. May 25, 2016) dealt with
motions for summary judgment, and thus are of limited applicability to the standard
necessary to survive a motion to dismiss. Similarly, the Court in Hupfauer v. Citibank,
N.A., 2016 WL 44506798 (N.D. Ill. Aug. 19, 2016) granted a motion to dismiss only after
determining, based on documents properly incorporated into the complaint, that the
CRA’s report was not inaccurate. Id. at *4–5.
-6-
1
procedures were reasonable, that is a question for another day. At this point, Plaintiff’s
2
allegations are sufficient for the Court to infer that Defendant’s procedures were
3
unreasonable.
4
Next, Defendant contends that Plaintiff fails to sufficiently plead that she suffered
5
damages as a result of Defendant’s purported violation. Under the FCRA, a plaintiff may
6
recover for damages incurred as a result of “emotional distress.” Drew v. Equifax Info.
7
Servs., LLC, 690 F.3d 1100, 1109 (9th Cir. 2012); Guimond, 45 F.3d at 1333. Here,
8
Plaintiff has plead that “she has refrain[ed] from applying for new credit” and has
9
“experienced undue stress and anxiety” as a result of Defendants violations. (Compl ¶¶
10
17, 49, 56.) Because the FCRA specifically contemplates the recovery of emotional
11
distress damages, Plaintiff’s allegations are, once more, sufficient to survive Defendant’s
12
Motion.5 See Wheeler v. Trans Union LLC, No. CV-17-03328-PHX-JAT, 2018 WL
13
2431876, at *4 (D. Ariz. May 30, 2018).
14
2.
15 U.S.C. § 1681i
15
Under §1681i of the FCRA, a CRA must conduct a reasonable reinvestigation
16
when a consumer disputes the accuracy of her credit report and she contacts the CRA
17
directly with her dispute. See Acton v. Bank One Corp., 293 F. Supp. 2d 1092, 1097 (D.
18
Ariz. 2003). Specifically, once notified by the consumer of the potential error, the CRA
19
must reinvestigate the claim within 30 days. Id. at 1098. For the purpose of a motion to
20
dismiss, courts have held that a plaintiff states a claim under § 1681i when she alleges:
21
(1) that her credit report contained an inaccuracy; (2) that she notified the CRA of her
22
dispute and requested a reinvestigation; and (3) that the CRA did not remove the
23
inaccuracy. See Neill, 2017 WL 3838671, at *3.
24
As the Court has previously discussed, Plaintiff has sufficiently alleged that her
25
Trans Union credit report contained an inaccuracy. (Compl. ¶ 11.) Plaintiff also alleges
26
both that she notified Defendant of her dispute and that the inaccuracy remained after she
27
28
5
Similarly, the Court rejects Defendant’s argument that Plaintiff’s purported
damages are too speculative to have been caused by Defendant. (See Mot. at 8–9.)
-7-
1
contacted Defendant. (Compl. ¶¶ 12–13, 16.) Accordingly, Plaintiff’s Complaint states a
2
claim under §1681i.
3
3.
Willfulness
4
Finally, Defendant moves to dismiss Plaintiff’s willfulness claims under both §
5
1681e and § 1681i, arguing that Plaintiff’s allegations are conclusory. (Mot. at 10–11.) A
6
company willfully violates the FCRA when it “knowingly or recklessly violate[s]” the
7
statute. Shaw, 891 F.3d at 760 (citing Safeco, 551 U.S. at 57). “A defendant acts in
8
reckless disregard when its action both is ‘a violation under a reasonable reading of the
9
statute’s terms’ and ‘shows that the company ran a risk of violating the law substantially
10
greater than the risk associated with a reading that was merely careless.’” Id. (quoting
11
Safeco, 551 U.S. at 69). Conditions of the mind, such as knowledge, may be alleged
12
generally at the pleading stage. Fed. R. Civ. P. 9(b).
13
In the Complaint, Plaintiff alleges that Defendant “willfully failed to maintain
14
and/or follow reasonable procedures to assure maximum possible accuracy of the
15
information it reported” and “willfully failed to conduct a reasonable reinvestigation.”
16
(Compl. ¶¶ 54-55.) Because Plaintiff may allege conditions of the mind generally,
17
Plaintiff’s allegations are sufficient to survive Defendant’s Motion.
18
IV.
CONCLUSION
19
As recounted above, Plaintiff’s Complaint states a plausible claim for negligent
20
and willful violations of the FCRA under both § 1681e and § 1681i. Similarly, Plaintiff
21
establishes that she has Article III standing to bring her claims. Accordingly,
IT IS THEREFORE ORDERED denying Defendant’s Motion to Dismiss
22
23
(Doc. 22).
24
....
25
....
26
....
27
....
28
....
-8-
1
2
3
IT IS FURTHER ORDERED that Defendant Trans Union LLC shall file an
Answer to Plaintiff’s Complaint no later than August 14, 2018
Dated this 24th day of July, 2018.
4
5
6
Honorable John J. Tuchi
United States District Judge
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-9-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?