Ewing v. Wells Fargo Bank NA et al
Filing
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ORDER granting 24 Defendants' Motion to Dismiss Second Amended Complaint with prejudice. This case is dismissed in its entirety. Signed by Judge James A Teilborg on 10/2/12.(DMT)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Plaintiff,
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No. CV 11-8194-PCT-JAT
Marilynn J. Ewing,
ORDER
v.
Wells Fargo Bank and Wells Fargo
Financial Agency Co.,
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Defendants.
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Currently pending before the Court is Defendants’ Motion to Dismiss Second
Amended Complaint (Doc. 24). The Court now rules on the Motion.
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I.
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The Court assumes the facts alleged in the Second Amended Complaint (the
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“SAC”) are true for purposes of deciding the pending Motion to Dismiss. On August 14,
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2009, Plaintiff Marilynn Ewing applied for a home equity line of credit from Wells Fargo
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Bank, N.A. (“Wells Fargo”) to consolidate credit card debt. She was pre-approved for
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the home equity line of credit by Wells Fargo on August 14, but was denied later the
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same day.
BACKGROUND
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On August 21, 2009, Wells Fargo made a credit report inquiry on Plaintiff. On
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that same day, Wells Fargo reported to Transunion a second denial of a loan request, but
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Plaintiff did not make a second loan request. Wells Fargo allegedly made over 40 credit
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report inquiries on Plaintiff in less than a year.
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Plaintiff notified Wells Fargo in writing of the impermissible credit report inquiry
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and of the erroneous report of a denial of credit. Plaintiff also notified Transunion that
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Wells Fargo’s credit report to Transunion was in error and that she had never made a
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second loan application. Plaintiff filed a police report for identity theft regarding the
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alleged application for credit on or around August 21, 2009.
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Plaintiff filed a complaint in state court on August 15, 2011, alleging claims under
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the Fair Credit Reporting Act (the “FCRA”). (Doc. 1-1.) Defendants removed to this
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Court on December 8, 2011. (Doc. 1.) Defendants filed a Motion to Dismiss Plaintiff’s
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Complaint on December 15, 2011. (Doc. 4.)
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Plaintiff filed both a Response to the Motion to Dismiss (Doc. 11) and an
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Amended Complaint (Doc. 12) on January 26, 2012.
Plaintiff filed her Amended
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Complaint without leave of Court, but because Defendants consented, the Court treated
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the Amended Complaint as the operative pleading in this case. The Court therefore
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denied the original Motion to Dismiss (Doc. 4) as moot because it did not respond to the
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operative pleading.
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Defendants filed a Motion to Dismiss Amended Complaint (Doc. 14) pursuant to
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Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. When Plaintiff did
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not respond to that Motion within the allotted time, Defendants filed a Motion for
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Summary Disposition (Doc. 15) on March 8, 2012. Plaintiff filed an untimely Response
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to the Motion to Dismiss on March 27, 2012. (Doc. 16.) Because Defendants filed a
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Reply to the Response without objection, the Court treated Plaintiff’s Response as timely
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and denied the Motion for Summary Disposition as moot.
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The Court granted Defendants’ Motion to Dismiss Amended Complaint on May
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21, 2012. (Doc. 18.) The Court found that Plaintiff failed to sufficiently allege a claim
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for false reporting or for an improper credit inquiry under the FCRA. But the Court sua
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sponte gave Plaintiff leave to file a Second Amended Complaint. The Court cautioned
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Plaintiff that she would not get another bite at the apple. The Court need not allow a
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party to amend its pleading if the party repeatedly has failed to cure the deficiencies in
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the pleading. McGlinchy v. Shell Chem. Co., 845 F.2d 802, 809-810 (9th Cir. 1988).
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Plaintiff filed the SAC on July 2, 2012. (Doc. 23.) Plaintiff added allegations to
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her previous FCRA claims for false reporting and improper credit inquiry. Defendants
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filed the pending Motion to Dismiss Second Amended Complaint on July 19, 2012,
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arguing that the additional allegations do not cure the deficiencies of Plaintiff’s claims.
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(Doc. 24.)
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Plaintiff filed her Response to the Motion to Dismiss Second Amended Complaint
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on July 31, 2012. (Doc. 25.) Along with the Response, Plaintiff filed an Affidavit
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containing additional facts. (Doc. 26.) The Court will not consider Plaintiff’s Affidavit
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because the Court does not review matters outside the pleadings when deciding a Rule
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12(b)(6) motion to dismiss for failure to state a claim. Huynh v. Chase Manhattan Bank,
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465 F.3d 992, 1003-04 (9th Cir. 2006) (Review of a 12(b)(6) motion is limited to the
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complaint).
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II.
LEGAL STANDARD
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The Court may dismiss a complaint for failure to state a claim under Federal Rule
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of Civil Procedure 12(b)(6) for two reasons: 1) lack of a cognizable legal theory and 2)
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insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police
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Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).
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To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet
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the requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a
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“short and plaint statement of the claim showing that the pleader is entitled to relief,” so
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that the defendant has “fair notice of what the . . . claim is and the grounds upon which it
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rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v.
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Gibson, 355 U.S. 41, 47 (1957)).
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Although a complaint attacked for failure to state a claim does not need detailed
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factual allegations, the pleader’s obligation to provide the grounds for relief requires
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“more than labels and conclusions, and a formulaic recitation of the elements of a cause
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of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). The factual
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allegations of the complaint must be sufficient to raise a right to relief above a
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speculative level. Id. Rule 8(a)(2) “requires a ‘showing,’ rather than a blanket assertion,
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of entitlement to relief. Without some factual allegation in the complaint, it is hard to see
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how a claimant could satisfy the requirement of providing not only ‘fair notice’ of the
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nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing 5 C. Wright
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& A. Miller, Federal Practice and Procedure §1202, pp. 94-95 (3d ed. 2004)).
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Rule 8’s pleading standard demands more than “an unadorned, the defendant-
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unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citing
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Twombly, 550 U.S. at 555). A complaint that offers nothing more than naked assertions
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will not suffice. To survive a motion to dismiss, a complaint must contain sufficient
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factual matter, which, if accepted as true, states a claim to relief that is “plausible on its
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face.” Iqbal, 556 U.S. at 678. Facial plausibility exists if the pleader pleads factual
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content that allows the court to draw the reasonable inference that the defendant is liable
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for the misconduct alleged. Id. Plausibility does not equal “probability,” but plausibility
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requires more than a sheer possibility that a defendant acted unlawfully. Id. “Where a
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complaint pleads facts that are ‘merely consistent’ with a defendant’s liability, it ‘stops
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short of the line between possibility and plausibility of entitlement to relief.’” Id. (citing
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Twombly, 550 U.S. at 557).
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In deciding a motion to dismiss under Rule 12(b)(6), a court must construe the
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facts alleged in the complaint in the light most favorable to the drafter of the complaint
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and the court must accept all well-pleaded factual allegations as true. See Shwarz v.
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United States, 234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, courts do not have to
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accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478
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U.S. 265, 286 (1986).
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III.
ANALYSIS AND CONCLUSION
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Defendants argue that even with the SAC’s additional allegations, Plaintiff still
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has not stated a claim under the FCRA for false reporting or for improper credit inquiry.
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The Court agrees.
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A. False Reporting
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Congress enacted the FCRA to ensure fair and accurate credit reporting, to
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promote efficiency in the banking system, and to protect consumer privacy. Gorman v.
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Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009). To ensure accurate
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credit reporting, the FCRA imposes some duties on the sources that provide information
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to credit reporting agencies or “furnishers,” as they are called in the statute. Id. Section
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1681s-2 prescribes two categories of responsibility for furnishers of information to credit
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reporting agencies. Id. at 1564.
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Subsection (a) outlines the furnishers’ duty to provide accurate information to
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credit reporting agencies. Id; 15 U.S.C. §1681s-2(a). Subsection (b) imposes certain
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obligations, including duties to investigate, that are triggered when a furnisher receives
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notice from a credit reporting agency that the consumer disputes the information provided
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by the furnisher. Id.; 15 U.S.C. §1681s-2(b). Subsection (b) duties arise only after the
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furnisher receives notice of a dispute from a credit reporting agency; notice of a dispute
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sent to the furnisher directly from the consumer does not trigger the duties. Gorman, 584
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F.3d at 1154.
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The FCRA expressly creates a private right of action for willful or negligent
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noncompliance. Id. (citing 15 U.S.C. §§1681n & o). But section 1681s-2 limits this
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private right of action to claims arising under subsection (b), the duties triggered upon
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notice of a dispute from a credit reporting agency. 15 U.S.C. §1681s-2(c). Duties
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imposed on furnishers under subsection (a) are enforceable only by government agencies.
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Gorman, 584 F.3d at 1154.
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Plaintiff alleges that Defendant Wells Fargo, who is a furnisher under the FCRA,
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inaccurately reported to Transunion, a credit reporting agency, that Wells Fargo had
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denied a second loan request from Plaintiff. Plaintiff alleges she never filled out a second
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loan application. Plaintiff further alleges that she notified Wells Fargo of the erroneous
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report of a denial of credit. In the SAC, Plaintiff alleges that she also notified Transunion
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that Wells Fargo wrongfully reported the second loan denial. But Plaintiff again fails to
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allege that Transunion notified Wells Fargo of her dispute or that Wells Fargo failed to
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properly investigate the dispute after receiving notice from Transunion.
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Consumers have a private right of action under the FCRA against a furnisher for
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false reporting only for violations of 15 U.S.C. §1681s-2(b).
And a furnisher’s
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subsection (b) duties are triggered only when the furnisher receives notice of a consumer
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dispute from a credit reporting agency. Gorman, 584 F.3d at 1564; 15 U.S.C. §1681s-
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2(b) (emphasis added). Because Plaintiff has not alleged that Transunion sent notice of
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her consumer dispute to Wells Fargo, thereby triggering Wells Fargo’s duty to
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investigate, her claim for false reporting against Defendants necessarily fails. The Court
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therefore will grant Defendants’ Motion to Dismiss Second Amended Complaint with
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respect to the false reporting claim.
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B.
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Defendants argue that Plaintiff again has failed to state a claim for an improper
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credit inquiry because she has not alleged plausible factual allegations that Wells Fargo
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obtained a credit report with no permissible purpose.
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allegations in the SAC are consistent with Wells Fargo having permissible purposes for a
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credit inquiry.
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Improper Credit Report Inquiry
Defendants contend that the
The FCRA provides that a consumer reporting agency may furnish a consumer
report under the following circumstances:
(3) To a person to which it has reason to believe –
(A) intends to use the information in connection with a
credit transaction involving the consumer on whom the
information is to be furnished and involving the extension of
credit to, or review or collection of an account of, the
consumer; or
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(F) otherwise has a legitimate business need for the
information –
(i) in connection with a business transaction that
is initiated by the consumer; or
(ii) to review an account to determine whether
the consumer continues to meet the terms of the account.
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15 U.S.C. §1681b(a)(3)(A),(F)(i)(ii). A consumer whose credit report is obtained for
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reasons other than those allowed in the statute may recover actual and punitive damages
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and attorneys’ fees and costs from the user of such information. Mone v. Dranow, 945
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F.2d 306, 307-08 (9th Cir. 1991) (citing 15 U.S.C. §1681n).
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Plaintiff alleges that, on August 21, 2009, after Wells Fargo had denied her a loan,
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Wells Fargo reported an additional credit report inquiry even though it “had no
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permissible purpose for obtaining a credit report.” (SAC, Doc. 23, ¶9.) In the SAC,
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Plaintiff further alleges that Wells Fargo made “over 40 credit report inquiries in a span
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of less than a year’s time.” (Doc. 23 ¶15.) Viewing these allegations in the light most
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favorable to Plaintiff, Plaintiff alleges that because Wells Fargo had already denied her
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loan application and because she did not make a second loan application, Wells Fargo no
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longer had a permissible purpose for making a credit inquiry regarding the loan
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application.
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But, as the Court pointed out in its May 21 Order granting the Motion to Dismiss,
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there could have been many other permissible reasons for Wells Fargo to have made
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credit inquiries regarding Plaintiff. For instance, Wells Fargo could have made credit
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inquiries on Plaintiff in order to review an account she had with Defendants.
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The Court does not have to presume Plaintiff’s legal conclusion that Wells Fargo
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“had no permissible purpose for obtaining a credit report” is true.
And the Court
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explained to Plaintiff in its May 21 Order that she must do more than simply make that
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bald allegation to survive a motion to dismiss. The Court instructed Plaintiff to make
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plausible factual allegations, not legal conclusions, in her SAC demonstrating that Wells
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Fargo did not have a permissible purpose for making the credit inquiries.
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In the SAC, Plaintiff does not allege that she had no open accounts with
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Defendants or that Defendants did not have any of the other permissible purposes listed
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in 15 U.S.C. §1681b(a)(3) for requesting her credit report. She did add an allegation in
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the SAC that Defendants made over 40 credit inquiries on her in less than a year. But if
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Defendants had permissible purposes for making the credit inquiries, it does not matter
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how many credit inquiries they made. The FCRA does not place a limit on the number of
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credit reports a reporting agency can furnish on a consumer, the Act just limits the
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purposes for which the reporting agencies can furnish credit reports.
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Because, despite the Court’s instruction in its prior Order, Plaintiff still has not
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done more than make a bald allegation that Defendants had no permissible purpose for
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making their multiple credit inquiries, she has again failed to state a claim that
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Defendants made improper credit inquiries. The Court therefore will grant Defendants’
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Motion to Dismiss Second Amended Complaint with regard to Plaintiff’s impermissible
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credit inquiry claim as well.
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In its May 21 Order dismissing the Amended Complaint, the Court sua sponte
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gave Plaintiff leave to amend. In allowing Plaintiff leave to amend, the Court cited Ninth
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Circuit Court of Appeals case law instructing district courts to grant leave to amend, sua
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sponte, when dismissing a case for failure to state a claim, unless the court determines
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that the pleading could not possibly be cured by the allegation of other facts. Lopez v.
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Smith, 203 F.3d 1122, 1127 (9th Cir. 2000)(quoting Doe v. United States, 58 F.3d 494,
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497 (9th Cir. 1995)). The Court may have granted leave to amend unnecessarily because
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a recent decision by the Ninth Circuit possibly calls into question prior precedent
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requiring district courts to grant sua sponte leave to amend when granting a motion to
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dismiss. Lacey v. Maricopa County, __F.3d __, 2012 WL 3711591 *19 (9th Cir. August
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29, 2012) (citing prior precedent that courts must grant leave to amend sua sponte unless
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a pleading could not possibly be cured by the allegation of other facts and that, under the
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old version of Federal Rule of Civil Procedure 15, parties had leave to amend as of right
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even upon dismissal prior to the filing of an answer, then noting that under the current
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version of Rule 15 “parties have 21 days from both responsive pleadings and motions to
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dismiss to amend as of right, so the situation has changed.”) (internal citations omitted).
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Regardless, the Court cautioned Plaintiff that the SAC would be her last bite at the
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apple. The Court can deny leave to amend when a party repeatedly fails to cure the
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deficiencies of her pleading. McGlinchy, 845 F.2d at 809-810. Plaintiff has not sought
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leave to amend the SAC and the Court will not grant her leave to amend because she
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repeatedly has failed to cure the deficiencies in her pleading.
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Accordingly,
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IT IS ORDERED GRANTING Defendants’ Motion to Dismiss Second Amended
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Complaint (Doc. 24) with prejudice. This case is dismissed in its entirety.
Dated this 2nd day of October, 2012.
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