Cook v. Mountain America Federal Credit Union et al

Filing 108

ORDER denying plaintiff's 98 Motion for Partial Summary Judgment and defendant's 99 Motion for Summary Judgment. See document for complete details. Signed by Judge H Russel Holland on 8/29/19. (MSA)

WO

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA

Tyler Cook,

)
)
Plaintiff,
)
)
vs.
)
)
Mountain America Federal Credit Union;
)
Experian Information Solutions, Inc.; Equifax )
Information Services, LLC; and TransUnion, )
LLC,
)
)
Defendants.
)
_______________________________________)

No. 2:18-cv-1548-HRH

ORDER
Cross-motions for Summary Judgment
Plaintiff moves for partial summary judgment.1 This motion is opposed,2 and
defendant cross-moves for summary judgment.3 Defendant’s cross-motion is opposed.4 Oral
argument was requested and has been heard.

1

Docket No. 98.

2

Docket No. 101.

3

Docket No. 99.

4

Docket No. 100.
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Facts
Plaintiff is Tyler Cook. Defendant is Mountain America Federal Credit Union.
In 2013, plaintiff purchased a vehicle which was financed by defendant. In 2015,
plaintiff fell behind on his payments and the vehicle was repossessed and sold at auction.
There was a deficiency balance of $13,651.53. In December 2015, defendant turned
plaintiff’s account over to Financial Assistance, Inc. (FAI) for collection.
Both defendant and FAI reported the deficiency balance to credit reporting agencies
(CRAs).5 FAI’s contract with defendant authorized FAI to report an assigned debt after 60
days.6
In October of 2017, plaintiff began applying for rental properties because he and his
wife had recently sold their home. Plaintiff and his wife applied for a rental property with
Lotus Real Estate on October 3, 2017.7 Lotus Real Estate stated that “[b]ased on their
income and other factors, we would have no problem approving them.”8 Plaintiff and his
wife also applied for a rental with Waypoint but did not pursue that application because the
rental agent told plaintiff that “[t]hings that result in a denial are bankruptcies, foreclosures,

5

Defendant reported the debt at $13,651 and FAI reported it as $13,652.

6

30(b)(6) Deposition of Mountain America Credit Union (by Woody Woodruff) at
18:18-25, Exhibit O, Declaration of David A. Chami, which is appended to Plaintiff’s
Motion for Partial Summary Judgment, Docket No. 98-21.
7

Exhibit 4 at MACU 01285, Deposition of Tyler Cook, Exhibit A, Defendant’s
Motion for Summary Judgment, Docket No. 99-1.
8

Id.
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monies owed to properties, felonies, judgments, evictions, repossessions, [and a] large
amount of account[s] in collections.”9
On October 25, 2017, plaintiff’s rental application with Rentals America was declined
based on his credit.10 More specifically, plaintiff’s application was declined because he had
“more than $2500 [in] outstanding debt” and “more than 5 outstanding collections[.]”11
Plaintiff’s FICO score in October 2017 was 527 and his credit report included “9
potentially negative items.”12 Two of these potentially negative items were FAI’s tradeline
and defendant’s tradeline.13 FAI’s tradeline listed the account as a “collection account,” the
status as “In Collections,” and the current balance as $13,652.14 Defendant’s tradeline listed
the account as an “installment account,” the status as “Charged Off,” and the balance as
$13,651.15 There were also four other “charged off” accounts listed and three other “in

9

Exhibit 5 at MACU 01403, Cook Deposition, Exhibit A, Defendant’s Response to
Plaintiff’s Motion for Partial Summary Judgment, Docket No. 101-1.
10

Exhibit J at MACU 01340, Chami Declaration, which is appended to Plaintiff’s
Motion for Partial Summary Judgment, Docket No. 98-16.
11

Exhibit 6 at MACU 01331, Cook Deposition, Exhibit A, Defendant’s Response to
Plaintiff’s Motion for Partial Summary Judgment, Docket No. 101-1.
12

Exhibit K at MACU 01312, Chami Declaration, which is appended to Plaintiff’s
Motion for Partial Summary Judgment, Docket No. 98-17.
13

Id. A credit report tradeline is an industry term to describe a credit account.

14

Id.

15

Id.
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collections” accounts.16 The total past due amount listed on plaintiff’s credit report was
$30,228, which did not include both the $13,651 being reported by defendant and the
$13,652 being reported by FAI.17 Only the $13,652 was included in the total past due
amount. In the credit and collection history portion of his credit report, FAI was listed as a
creditor of a “collection account” that had been originally defendant’s account and there was
a notation that this was a deficiency after a repossession.18 There was also a notation that this
was a “seriously past due” account that had been “assigned to attorney/collection agency or
credit grantor’s internal collection department.”19 Defendant was listed as a creditor of an
“installment account” that had been “charged off” and there was a notation that this was for
an “auto loan” and that the “unpaid balance was reported as a loss by [the] credit grantor[.]”20
On October 26, 2017, plaintiff and his wife signed a one-year lease with Peace
Properties.21 Plaintiff and his family moved out of this property before the lease expired and
moved in his father.

16

Id.

17

Id.

18

Id. at MACU 01314.

19

Id.

20

Id. at MACU 01315-16.

21

Exhibit 7 at MACU 01390, Cook Deposition, Exhibit A, Defendant’s Motion for
Summary Judgment, Docket No. 99-1.
-4-

On October 31, 2017, plaintiff sent letters to TransUnion, Experian, and Equifax,
disputing how the deficiency balance was being reported. Plaintiff testified that he hired a
credit repair agency to assist him with these letters.22 As to the FAI account, plaintiff stated
that “[t]he information [being reported] is minimal; there is no first Delinquency or Date of
Last Activity even reported. I believe the account is being re-aged and needs to be
removed.”23 As to defendant’s account, plaintiff stated that his credit report
shows [this] account was “transferred or sold.” If an account is
SOLD and the creditor no longer owns it, . . . it cannot be
reported as a collectible debt. In addition to the Balance
amount, there are other errors I see in the account reporting,
such as the Date of Last Activity and the Payment History.
Please DELETE any Balance and correct the other issues on the
account immediately or delete it entirely.[24]
On November 30, 2017,25 plaintiff wrote directly to defendant to dispute how the
deficiency balance was being reported. Plaintiff stated that defendant was “reporting that this
account was ‘Sold’” and asked how defendant could be reporting the account if it had been

22

Cook Deposition at 82:23-83:5, Exhibit A, Defendant’s Motion for Summary
Judgment, Docket No. 99-1.
23

Exhibit 9 at Cook000086, Cook000101-102, Cook Deposition, Exhibit A,
Defendant’s Response to Plaintiff’s Motion for Partial Summary Judgment, Docket No. 1011.
24

Id.

25

Plaintiff also apparently sent a letter directly to defendant on January 2, 2018, which
defendant received on January 10, 2018. Exhibit J at 3, Defendant’s Response to Plaintiff’s
Motion for Partial Summary Judgment, Docket No. 101-10. But defendant contends that this
“letter was not signed and had no indication of who sent the letter.” Id.
-5-

sold.26 Plaintiff also requested that defendant provide him with proof that defendant was
accurately reporting his account, in the form of his actual payment history and a copy of his
original loan agreement.27 Plaintiff stated that “[a] reply from you [defendant] simply stating
the account is being reported correctly, without the proof above is NOT sufficient under the
law. Reporting a ‘Sold Account’ with a collectible balance is already non-compliant with
the law.”28 Defendant did not reply to this letter.
Defendant did, however, receive “several Automated Consumer Dispute Verifications
(‘ACDVs’) from the credit bureaus concerning [its] reporting of” plaintiff’s account “via a
web-based system called Online Solution for Complete and Accurate Reporting or ‘eOSCAR[].”29 Defendant provided responses to the ACDVs via e-OSCAR after it had
“thoroughly reviewed the Cook account, and verified that all information transmitted to the
credit bureaus was accurate.”30
On November 30, 2017, plaintiff again sent letters to TransUnion, Experian, and
Equifax, stating that he did not believe that FAI’s and defendant’s tradelines were “being

26

Exhibit N, Chami Declaration, which is appended to Plaintiff’s Motion for Partial
Summary Judgment, Docket No. 98-20.
27

Id.

28

Id.

29

Declaration of Catherine Bates in Support of Motion for Summary Judgment at 4,
¶ 27, Exhibit G, Defendant’s Motion for Summary Judgment, Docket No. 99-7.
30

Id. at 7, ¶ 29.
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reported legally.”31 Plaintiff asked TransUnion and Experian to “explain to me HOW you
conducted your investigation: who you talked to at [FAI and defendant], copies of email[s,]
communications, copies of documents reviewed and any data provided, such as date of the
first delinquency.”32 Because plaintiff had not received a reply from Equifax to his original
letter, he advised Equifax that “[it] must be that the information I disputed was either
inaccurate, or it could not be verified so it needs to be deleted.”33
On January 2, 2018, plaintiff wrote to TransUnion and Equifax again. As to the FAI
account, plaintiff again complained that the “information [being] report[ed] is minimal; there
is no Date of first Delinquency or Date of Last Activity even reported. I believe this account
is being re-aged and needs to be removed.”34 As to defendant’s account, plaintiff stated that
he had not received a response to his November letter and he requested a response in the next
15 days or he would “immediately file a CFPB complaint.”35
On January 2, 2018, plaintiff also wrote to defendant again, requesting that defendant
provide his payment history and a copy of the original loan agreement in order to validate the

31

Exhibit 9 at Cook000133, Cook00002, Cook Deposition, Exhibit A, Defendant’s
Motion for Summary Judgment, Docket No. 99-1.
32

Id.

33

Id. at Cook000092.

34

Id. at Cook000100, Cook000143.

35

Id.
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debt.36 Plaintiff wrote that “[i]f I do not receive absolute proof from you within 15 days, you
must delete this account from my credit file or be prepared to face legal action.”37
On February 12, 2018, plaintiff wrote to Equifax and TransUnion once more, this time
advising them that after he received their responses to his dispute letters, he contacted
defendant directly to ask defendant “to verify the negative listing.”38 Plaintiff advised that
defendant had not responded to his request and that he felt that defendant was violating the
Fair Credit Reporting Act.39
Plaintiff avers that “[d]ue to the duplicative reporting on my credit report, I have been
denied credit for the purchase of a new home.”40 Plaintiff also avers that “[a]s a result of
these denial[s] and our inability to find a home to rent, my wife and I spent considerable time
without a home and were forced to live [with] my father 60 miles from my place of
employment.”41 Plaintiff avers that “[t]his was humiliating to me and my family and caused

36

Exhibit 10 at Cook000147, Cook Deposition, Exhibit A, Defendant’s Motion for
Summary Judgment, Docket No. 99-1.
37

Id.

38

Exhibit 9 at Cook000144, Cook 00010, Cook Deposition, Exhibit A, Defendant’s
Motion for Summary Judgment, Docket No. 99-1.
39

Id.

40

Declaration of Tyler Cook at 3, ¶ 16, which is appended to Plaintiff’s Motion for
Partial Summary Judgment, Docket No. 98.
41

Id. at ¶ 17.
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a great deal of stress in my marriage” and “has caused me to suffer extreme emotional
distress as well as many sleepless nights.”42
Plaintiff commenced this action on May 22, 2018. In his amended complaint, plaintiff
asserts a single cause of action against defendant, a claim that defendant violated Section
1681s-2(b) of the Fair Credit Reporting Act (FCRA). Plaintiff seeks actual, statutory, and
punitive damages.
Plaintiff now moves for summary judgment on the issues of liability and willfulness.
Defendant cross-moves for summary judgment dismissing plaintiff’s FCRA claim.
Discussion
Summary judgment is appropriate when there are no genuine issues of material fact
and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The
initial burden is on the moving party to show that there is an absence of genuine issues of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party meets
its initial burden, then the non-moving party must set forth specific facts showing that there
is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
In deciding a motion for summary judgment, the court views the evidence of the non-movant
in the light most favorable to that party, and all justifiable inferences are also to be drawn in
its favor. Id. at 255. “‘[T]he court’s ultimate inquiry is to determine whether the ‘specific
facts’ set forth by the nonmoving party, coupled with undisputed background or contextual

42

Id. at ¶¶ 18, 20.
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facts, are such that a rational or reasonable jury might return a verdict in its favor based on
that evidence.’” Arandell Corp. v. Centerpoint Energy Services, Inc., 900 F.3d 623, 628–29
(9th Cir. 2018) (quoting T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d
626, 631 (9th Cir. 1987)).
The FCRA was enacted “‘to ensure fair and accurate credit reporting, promote
efficiency in the banking system, and protect consumer privacy.’” Gorman v. Wolpoff &
Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009) (quoting Safeco Ins. Co. of Am. v.
Burr, 551 U.S. 47, 52 (2007)). “[T]he FCRA imposes some duties on the sources that
provide credit information to CRAs, called ‘furnishers’ in the statute.” Id. Defendant is a
furnisher.
“Section 1681s–2 [of the FCRA] sets forth ‘[r]esponsibilities of furnishers of
information to consumer reporting agencies,’ delineating two categories of responsibilities.”
Id. at 1154. Plaintiff’s claim is based on subsection 2(b).
Subsection 1681s–2(b) provides that, after receiving a notice of
dispute from a CRA, the furnisher shall:
“(A) conduct an investigation with respect to the
disputed information;
(B) review all relevant information provided by
the [CRA] pursuant to section 1681i(a)(2) . . . ;
(C) report the results of the investigation to the
[CRA];
(D) if the investigation finds that the information
is incomplete or inaccurate, report those results to
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all other [CRAs] to which the person furnished
the information . . . ; and
(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or
cannot be verified after any reinvestigation under
paragraph (1) . . . (i) modify . . . (ii) delete[or] (iii)
permanently block the reporting of that item of
information [to the CRAs].”
Id. (quoting 15 U.S.C. § 1681s–2(b)(1)). “These duties arise only after the furnisher receives
notice of dispute from a CRA; notice of a dispute received directly from the consumer does
not trigger furnishers’ duties under subsection (b).” Id. “The FCRA expressly creates a
private right of action for willful or negligent noncompliance” with these requirements. Id.
A claim under 15 U.S.C. § 1681s–2(b) requires a plaintiff “to
plead the following four elements to state a claim against a
credit furnisher: (1) a credit reporting inaccuracy existed on
plaintiff’s credit report; (2) plaintiff notified the consumer
reporting agency that plaintiff disputed the reporting as inaccurate; (3) the consumer reporting agency notified the furnisher of
the alleged inaccurate information of the dispute; and (4) the
furnisher failed to investigate the inaccuracies or further failed
to comply with the requirements in 15 U.S.C.
1681s–2(b)(1)(A)–(E).
Heras v. Nelnet, Inc., Case No. CV 16–6388 FMO (PLAx), 2017 WL 4586334, at *5 (C.D.
Cal. April 28, 2017) (quoting Moses v. Experian Info. Sols., Inc., 2016 WL 3670068, *2
(N.D. Cal. 2016)). There is no dispute here as to elements two and three. The dispute here
focuses on elements one and four.
As to the first element, “‘[a]n item on a credit report can be . . . inaccurate . . .
because it is patently incorrect, or because it is misleading in such a way and to such an
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extent that it can be expected to adversely affect credit decisions.’” Drew v. Equifax
Information Services, LLC, 690 F.3d 1100, 1108 (9th Cir. 2012) (quoting Carvalho v.
Equifax Info. Svcs., LLC, 629 F.3d 876, 890 (9th Cir. 2010)). Other circuits have held “that
a § 1681s–2(b) claim requires [a] plaintiff to show actual inaccuracies that a furnisher’s
objectively reasonable investigation would have been able to discover.” Chiang v. Verizon
New England Inc., 595 F.3d 26, 29–30 (1st Cir. 2010) (emphasis added). But, in the Ninth
Circuit, “a consumer report that contains technically accurate information may be deemed
‘inaccurate’ if the statement is presented in such a way that it creates a misleading
impression.” Gorman, 584 F.3d at 1163 (citation omitted).
Defendant argues that its reporting was accurate. As explained by defendant’s expert,
defendant reported plaintiff’s information to the CRAs “using a language called ‘Metro.’
Metro, now Metro-2, is the credit industry standard reporting language.”43 Using the Metro
language and codes, defendant reported the following:
the Account Status field was reported with code “97.” Code 97
indicates the account is charged off. The Portfolio Type field
was reported with code “I.” Code I indicates the account is an
installment account. The Account Type field was reported as
“00.” The 00 code indicates the account is an auto loan. The
Payment History field was reported with code “L.” Code L
indicates the loan was charged off previously. The Special
Comment Code was reported with code “BK.” Code BK
indicates “Involuntary repossession with a balance owing.” The
Date of 1st Delinquency was reported with the date
“04_15_2015.” The ECOA field was reported with code “1.”
43

Expert Report of John Ulzheimer at 12, Exhibit L, Chami Declaration, which is
appended to Plaintiff’s Motion for Partial Summary Judgment, Docket No. 98-18.
-12-

Code 1 indicates the account was an “individual” account,
meaning only the Plaintiff was liable for the debt associated
with the subject MACU loan.[44]
Both defendant’s expert45 and plaintiff’s expert46 have confirmed that this information was
accurate.
But even if defendant’s reporting was technically accurate, which it may have been,
plaintiff argues that it was inaccurate for purposes of the FCRA because it was misleading.
Plaintiff contends that defendant’s reporting was misleading because both defendant and
FAI, at the express direction of defendant, were reporting a balance due. Plaintiff contends
that this double reporting increased the number of derogatory accounts as well as the amount
of total debt on his credit report. Plaintiff argues that this double reporting created the
impression that he had two debts totaling $27,303, rather than a single debt of $13,651.
Plaintiff argues that because most credit decisions are the result of automated processes, both
defendant’s and FAI tradelines would have been interpreted as a negative item on his credit
report, and not as a single negative item.
Plaintiff relies on the testimony of his expert, Thomas Tarter, for support of his
argument that this type of “double reporting” is inaccurate in that it is misleading in such a
way that it could be expected to adversely affect credit decisions. Tarter opined that

44

Id. at 13.

45

Id.

46

Expert Deposition of Thomas Anthony Tarter at 62:10-69:3, Exhibit D, Defendant’s
Response to Plaintiff’s Motion for Partial Summary Judgment, Docket No. 101-4.
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“[e]ffectively duplicate negative reporting results in creating the illusion that a person’s
credit is worse than what it should be such as distorting the amount owed, amplifying the
debt to available credit ratio, and the debt to income ratio.”47 Tarter opined that
that [d]efendants duplicate negative reporting created a ‘double
whammy’ giving the illusion [plaintiff] had two large charge
offs from two different creditors that approximated $13,000. To
me, that is just not fair, reasonable and/or equitable nor is it
consistent with credit industry standards.[48]
Defendant’s expert disagrees. Ulzheimer, defendant’s expert, opines that “it is
common and standard for original creditors, like [defendant], to continue reporting to the
credit reporting agencies even after they have assigned a debt to a 3rd party debt collector.”49
Defendant contends that plaintiff has no authority to support his double reporting theory.50
Defendant acknowledges that Tarter opined that “there is an absolute standard in the credit
reporting industry, ‘One debt, one tradeline.[’] In other words, each debt becomes reported

47

Expert Report by Thomas Tarter at 26, Exhibit D, Chami Declaration, which is
appended to Plaintiff’s Motion for Partial Summary Judgment, Docket No. 98-7.
48

Id. at 27-28.

49

Rebuttal Report of John Ulzheimer at 5, Exhibit C, Defendant’s Response to
Plaintiff’s Motion for Partial Summary Judgment, Docket No. 101-3.
50

Defendant contends that Tarter’s “double reporting” theory was rejected by the court
in Gustafson v. Experian Information Solutions Inc., Case No. 2:14–cv–01453–ODW(Ex),
2015 WL 3477071 (C.D. Cal. June 2, 2015). However, the court did not “flat out” reject
Tarter’s theory as defendant contends. Rather, the court did not consider a declaration by
Tarter because it contained “improper legal conclusions and fail[ed] to specify what
information he relied on in reaching his conclusions.” Id. at *6.
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as its own tradeline on a consumer’s credit record, but double-reporting a single debt as two
distinct tradelines is positively beneath industry standards.”51 But, defendant argues that
Tarter has no support for his contention that this is the industry standard. When asked at his
deposition whether this “absolute standard [had] ever been reduced to writing[,]” Tarter
responded, “I have not seen it.”52
Defendant also argues that this case does not involve “double reporting” as that term
is understood in the credit reporting industry. In his expert report, Ulzheimer states that
“[t]he ‘duplicate account’ moniker, as it pertains to credit reporting is appropriate only when
the furnisher of information . . . furnishes the same account more than one time, thus causing
it to show up more than one time on a consumer’s credit report.”53 Defendant argues that if
there had been “double reporting” in this case, then there would have been two MACU
tradelines on plaintiff’s credit report, which there is not.
Defendant insists that there is nothing misleading about both FAI and it reporting the
deficiency balance. Defendant’s expert opined that the FAI “reporting clearly indicates that
they are collecting a debt on behalf of [defendant] as a result of a deficiency balance from

51

Tarter Deposition at 46:14-20, Exhibit D, Defendant’s Response to Plaintiff’s
Motion for Partial Summary Judgment, Docket No. 101-4.
52

Id. at 46:21-25.

53

Ulzheimer Expert Report at 14, Exhibit B, Defendant’s Motion for Summary
Judgment, Docket No. 99-2.
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[p]laintiff’s repossession.”54 Thus, defendant argues that these two tradelines would not be
interpreted as two separate debts, as plaintiff contends.
This is not a case of double reporting by a furnisher, but because the two tradelines
reported a different balance for a different reason with a different account number, it is
possible that someone reviewing plaintiff’s credit report would interpret the two tradelines
as reporting different debts. This is partly due to the fact that while the FAI tradeline
indicates that it is collecting a debt for defendant, it does not indicate that it is collecting the
debt, i.e., the deficiency balance. And, while defendant’s expert opined that “no competent
lender would be misled by [defendant’s] credit reporting as being an incremental debt or that
[p]laintiff is somehow liable for the same debt twice,”55 it is not always “competent lenders”
who are making credit decisions.
Defendant relies on the answers to emails it received from the Metro 2 Task Force in
support of its argument that its reporting was compliant with industry standards and thereby
could not be considered misleading. This reliance is misplaced. Defendant
asked the CDIA’s[56] Metro 2 Task Force, “if an account is sent

54

Ulzheimer Expert Report at 14, Exhibit L, Chami Declaration, which is appended
to Plaintiff’s Motion for Partial Summary Judgment, Docket No. 98-18.
55

Id.

56

The CDIA is the Consumer Data Industry Association, which “is the trade
association of the credit reporting industry. They are also responsible for maintaining the
credit reporting industry standards, the Metro 2 credit reporting language, and making
changes to the reporting standards and Metro 2 if warranted.” Ulzheimer Rebuttal Expert
(continued...)
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to a 3rd party collection agency, but the balance remains due to
our (MACU) financial institution, is it appropriate for us to
report the account to the CRA’s alongside the 3rd party collector? Currently we are reporting account status 93 when we send
(an account) to a 3rd party for collections. However, we have
received complaints that the collection agency is reporting the
balance as well, which results in the same balance being
reported twice on the consumer’s credit.”57
Status 93 is “Account seriously past due/Account assigned to attorney, collection agency or
credit grantor’s internal collection department[.]”
The response from the CDIA was, “It is appropriate to continue
reporting Account Status 93 on accounts that are being worked
by a 3rd party collection agency. While this may appear as
double reporting to the consumer, you have an obligation as the
data furnisher to accurately report the account standing with
your organization. You should not stop reporting on your
account.”[58]
After receiving this response, defendant asked the CDIA Metro Task Force a follow-up
question: “if the account is sent to a 3rd party collection agency, but the balance remains due
to our financial institution, and we continue to report to the CRA’s along with the 3rd party
collector, should our tradeline show that the current balance and amount past due is zero?”59

56

(...continued)
Report at 6, Exhibit P, Chami Declaration, which is appended to Plaintiff’s Motion for Partial
Summary Judgment, Docket No. 98-22.
57

Id. at 5-6.

58

Id. at 6.

59

Exhibit E at 5, Defendant’s Response to Plaintiff’s Motion for Partial Summary
Judgment, Docket No. 101-5.
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The CDIA responded that “[y]ou should continue reporting the Current Balance and as funds
are collected on your behalf report the declining balance. If you report the balance as zero,
it would appear the consumer no longer has an obligation to make payments to you.
Additionally reporting Account Status 93 with a zero Current Balance and Amount Past Due
would be illogical.”60
In these emails, defendant was asking about reporting balances as “Status 93” when
plaintiff’s deficiency balance was being reported by defendant as “Status 97.” Thus, these
emails have nothing to do with whether defendant’s reporting of plaintiff’s debt complied
with industry standards.
Similarly, plaintiff’s reliance on FAQ No. 46 is misplaced. FAQ No. 46 asks: “How
should accounts that have been transferred be reported?”61 In response, two options for
reporting transferred accounts were given, one of which “results in two tradelines on a
consumer’s file: the first as transferred and the second for the ongoing account.”62 But, FAQ
No. 46 explained that under this option, the current balance for the “transferred account”
should be zero.63 However, FAQ No. 46 states that these two options are “for reporting

60

Id. at 1.

61

Exhibit C at MACU 00568, Chami Declaration, which is appended to Plaintiff’s
Motion for Partial Summary Judgment, Docket No. 98-5.
62

Id.

63

Id.
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accounts that are being transferred internally or to a servicer[.]”64 Here, defendant “did not
transfer [p]laintiff’s loan internally to another department within MACU” nor did it “transfer
[p]laintiff’s loan to a loan servicer. [Rather, it] assigned [p]laintiff’s debt to a 3rd party debt
collect[or].”65 FAQ No. 46 has no application here.
Defendant argues that even if it were not industry standard for both FAI and defendant
to report the deficiency balance, its reporting could not be considered misleading because its
reporting could not have been “expected to have an adverse effect” on any credit decision.
First, defendant argues that the two balances being reported by defendant and FAI would not
create an impression that plaintiff owed more than he did because “[t]he balances of 3rd party
collections are not considered in FICO® credit scoring systems.”66 Ulzheimer opined that
“any value residing in the balance field of a 3rd party collection account is immaterial to a
consumer’s credit score” which means that “the balance associated” with FAI’s “credit
reporting had no impact on [p]laintiff’s credit scores because it is not a scored value.”67
But, plaintiff’s expert opined that the “severity and amount of delinquencies are
significant factors in the computation of credit scores” and that “[i]n this case, the duplicate

64

Id.

65

Ulzheimer Rebuttal Report at 7, Exhibit C, Defendant’s Response to Plaintiff’s
Motion for Partial Summary Judgment, Docket No. 101-3.
66

Ulzheimer Expert Report at 18, Exhibit B, Defendant’s Motion for Summary
Judgment, Docket No. 99-2.
67

Id. at 19.
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negative reporting increased the amount of delinquency and the number of derogatory
accounts thereby magnifying negative data reported to CRAs and later to authorized
inquirers.”68 And, as discussed above, competent lenders are not the only ones who make
credit decisions based on an individual’s credit report. It is possible that someone without
sufficient training or background would have read plaintiff’s credit report to mean that he
owed more than he did because there were discrepancies between FAI’s and defendant’s
reporting of plaintiff’s account.
Second, defendant argues that plaintiff has not come forward with any evidence that
its reporting actually caused any adverse credit decisions. But this argument goes to
causation and damages, not to whether a report is misleading for purposes of the FCRA. A
report is misleading for purposes of the FCRA if “it can be expected to adversely affect credit
decisions[.]’” Drew, 690 F.3d at 1108 (quoting Carvalho, 629 F.3d at 890) (emphasis
added).
In sum, there are material questions of fact as to whether defendant’s reporting was
misleading for purposes of the FCRA.
But even if there are questions of material fact as to element one of plaintiff’s FCRA
claim, which there are, defendant argues that it is still entitled to summary judgment because
its investigation of plaintiff’s dispute was reasonable. “[A] furnisher’s obligation to conduct
a reasonable investigation under § 1681s–2(b)(1)(A) arises when it receives a notice of
68

Tarter Expert Report at 24, Exhibit D, Plaintiff’s Motion for Partial Summary
Judgment, Docket No. 98-7.
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dispute from a CRA.” Gorman, 584 F.3d at 1157. “The pertinent question is . . . whether
the furnisher’s procedures were reasonable in light of what it learned about the nature of the
dispute from the description in the CRA’s notice of dispute.” Id.
Defendant argues that the investigation it did after receiving notice of the disputes
from the CRAs was reasonable. Catherine Bates, one of defendant’s employees, avers that
she
performed the following steps [to investigate plaintiff’s dispute]:
First, I confirmed the member’s (Tyler Cook) information,
including name, address, and social security number. Second,
I reviewed [the] Loan ID to confirm the date the account was
opened, the loan amount and the current status of the account.
Third, I read through the entire collection package to verify the
dates that the account became delinquent, confirmed the balance
owing, and also confirmed the collection actions. Fourth, I
verified in the comments of the collection package the date that
the obligation was internally charged off and sent to a thirdparty collector for collection. Fifth, I verified the reporting
dates to confirm that they matched to what MACU was reporting. Finally, if I had discovered discrepancies I would have
made appropriate changes. However, concerning my review of
the Cook account as outlined above, I did not discover any
discrepancies.[69]
Defendant argues that in light of the information that plaintiff provided in his dispute letters,
this investigation was reasonable. This was confirmed by defendant’s expert. Ulzheimer
opined that “[t]he dispute resolution process performed by MACU was normal and
reasonable and it resulted in continued accurate credit reporting of [p]laintiff’s

69

Bates Declaration at 7, ¶ 30, Exhibit G, Defendant’s Motion for Summary Judgment,
Docket No. 99-7.
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repossession.”70 Defendant argues that this is especially true here because nothing in
plaintiff’s written disputes said anything about “double reporting.” For example, in the
October 31, 2017 letters to the CRAs, plaintiff complained about errors in the payment
history and that if defendant had sold his account, it should not be reporting a balance due.
But, plaintiff did not expressly state that he thought both FAI and defendant were reporting
the same debt.
However, at her Rule 30(b)(6) deposition, Bates was questioned about plaintiff’s
November 30, 2017 dispute letter:
Q:

A:
Q:

A:
Q:

A:
Q:

A.
Q:

So if you take a look at Exhibit 13 – that’s Mr. Cook’s
dispute – you see he lists both [the] Financial Assistance
account and then below that he lists the Mountain
America account, what he’s disputing. Do you see that?
Yes, I do.
You would have been aware, then, when you received
that dispute that Financial Assistance was who was
collecting on behalf of Mountain America, would you
not?
I do.
Okay. And you see that . . . under the Mountain America
section of his dispute Mr. Cook is actually saying, Hey,
they’re reporting this as transferred or sold, and therefore
they should delete the balance. Do you see that’s what
he’s asking for?
I do see that.
Okay. Would you have, as part of your investigation,
confirmed whether or not Financial Assistance was
actually collecting on the account?
I would.
And would you have known at that time that they were

70

Ulzheimer Expert Report at 14, Exhibit B, Defendant’s Motion for Summary
Judgment, Docket No. 99-2.
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A:
Q:

A.

also reporting the debt as well?
I would.
Okay. And you were aware, then, that what Mr. Cook
was asking was that basically both of you shouldn’t be
reporting that balance and that . . . Mountain America
should delete it; right?
I am, yes.[71]

This evidence shows that defendant was aware that the nature of plaintiff’s dispute was the
double reporting of his deficiency balance. Yet, all Bates did was look at the computer
screen to confirm that the balance being reported was correct, “that the payment history [was]
correct” and “the last date of payment. . . .”72 “By its ordinary meaning, an ‘investigation’
requires an inquiry likely to turn up information about the underlying facts and positions of
the parties, not a cursory or sloppy review of the dispute.” Gorman, 584 F.3d at 1155. A
reasonable fact finder could conclude that defendant’s investigation was cursory and thus not
reasonable because it did not address plaintiff’s claim that his account balance should not be
reported by both FAI and defendant.
Nonetheless, defendant argues that its investigation could not be considered
unreasonable because there was nothing it could have done about the alleged double
reporting. Defendant contends that the whole point of requiring a furnisher to conduct a
reasonable investigation is so that it can correct any inaccurate or incorrect information.
71

Rule 30(b)(6) Deposition of Catherine Bates at 20:5-21:9, Exhibit S, Chami
Declaration, Plaintiff’s Motion for Partial Summary Judgment, Docket No. 98-25.
72

Deposition of Catherine Bates at 18:8-19:25, Exhibit A, Plaintiff’s Memorandum
of Points and Authorities in Opposition to Defendant Mountina America Federal Credit
Union’s Motion for Summary Judgment, Docket No. 100.
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Section 1681s-2(b) provides that if there is inaccurate information, a furnisher shall “(i)
modify . . . (ii) delete[or] (iii) permanently block the reporting of that item of information [to
the CRAs].” 15 U.S.C. § 1681s-2(b)(1)(E). Defendant argues that deleting its tradeline
would be inaccurate because plaintiff does, in fact, still owe defendant money. Defendant
also argues that it could not permanently block the reporting of this information because it
still owns the debt and plaintiff still owes it money. And, defendant contends that plaintiff
has not explained how defendant could have modified the way in which it was reporting
plaintiff’s debt.
There may have been at least one way in which defendant could have modified the
information it was reporting. As discussed above, in the emails defendant sent to the Metro
2 Task Force, it indicated that it generally reported debts that had been assigned to a debt
collector as “Status 93.” But, defendant was reporting plaintiff’s debt as a “Status 97.” This
may have made a difference in how the information appeared on plaintiff’s credit report.
In sum, there are material questions of fact as to the reasonableness of defendant’s
investigation.
Defendant next argues that it is entitled to summary judgment on plaintiff’s FCRA
claim because plaintiff cannot prove any actual damages. Actual damages are available
under FCRA for negligent violations. Syed v. M-I, LLC, 853 F.3d 492, 505 (9th Cir. 2017).
Defendant contends that the only evidence suggesting that plaintiff suffered any harm as a
result of defendant’s reporting was the Rentals America letter denying plaintiff’s application.

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Plaintiff’s application was denied because he had “more than $2500 [in] outstanding debt”
and “more than 5 outstanding collections[,]”73 which he would have had even if defendant
had not been reporting the deficiency balance. But more important, the credit history that
Rentals America was relying on did not show the FAI account. It only showed defendant’s
account as a collection account.74 And, the evidence shows that plaintiff and his wife signed
a long-term lease the day after Rentals America denied plaintiff’s rental application.
However, “a denial of credit is” not “a prerequisite to recovery under the FCRA.”
Guimond v. TransUnion Credit Information Co., 45 F.3d 1329, 1333 (9th Cir. 1995). Actual
damages “include recovery for emotional distress and humiliation.” Id.
Plaintiff testified at his deposition that defendant’s credit reporting caused him
emotional distress and that
[i]t’s all I think about. I can’t sleep. The stress, it’s always on
my mind. I can’t sleep. I’m always on edge. I just don’t know
what to do. I’m trying to take care of my family of five kids. I
was like stuck, didn’t know what to do. I had a plan of paying
off my debts to help fix my credit, and that just really threw a
wrench in it.[75]
There is at least a question of fact as to whether plaintiff suffered emotional distress because
of defendant’s reporting.

73

Exhibit 9 at MACU 01331, Cook Deposition, Exhibit A, Defendant’s Motion for
Summary Judgment, Docket No. 99-1.
74

Id. at MACU 01332-01335.

75

Cook Deposition at 113:10-16, Exhibit U, Chami Deposition, which is appended to
Plaintiff’s Motion for Partial Summary Judgment, Docket No. 98-27.
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Plaintiff argues that he is also entitled to statutory and punitive damages. Statutory
and punitive damages under the FCRA require a showing of willfulness. Syed, 853 F.3d at
505. “Under the FCRA, a plaintiff may demonstrate willfulness by showing a reckless
disregard of statutory duty.” Taylor v. First Advantage Background Services Corp. 207 F.
Supp. 3d 1095, 1101 (N.D. Cal. 2016). “A defendant’s conduct is reckless only if it was
‘objectively unreasonable’ in light of ‘legal rules that were clearly established at the time.’”
Banga v. First USA, NA, 29 F. Supp. 3d 1270, 1278 (N.D. Cal. 2014) (quoting Safeco Insur.
Co., 551 U.S. at 69-70).
Plaintiff has not shown that he is entitled to statutory and punitive damages. No
reasonable fact finder could conclude that defendant’s conduct was willful.
Conclusion
Based on the foregoing, plaintiff’s motion for partial summary judgment76 is denied
as is defendant’s motion for summary judgment.77
DATED at Anchorage, Alaska, this 29th day of August, 2019.
/s/ H. Russel Holland
United States District Judge

76

Docket No. 98.

77

Docket No. 99.
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