Grantham v. Bank of America, National Association
Filing
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ORDER by Judge Maria-Elena James granting in part and denying in part 15 Motion for Judgment on the Pleadings (cdnS, COURT STAFF) (Filed on 11/26/2012)
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UNITED STATES DISTRICT COURT
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Northern District of California
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SHIRLEY GRANTHAM,
No. CV12-1960 MEJ
Plaintiff,
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v.
ORDER GRANTING IN PART AND
DENYING IN PART MOTION FOR
JUDGMENT ON THE PLEADINGS
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BANK OF AMERICA, N.A.,
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Defendant.
_____________________________________/
Re: Docket No. 15
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For the Northern District of California
UNITED STATES DISTRICT COURT
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Plaintiff Shirley Grantham has sued Bank of America, N.A. (BofA) for allegedly failing to
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remove past due payment notations that were reported after she filed a petition for bankruptcy, and
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for failing to report that Grantham disputed the account information. Grantham alleges nine causes
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of action under (1) the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681s–2(b); (2) the
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California Song–Beverly Credit Card Act of 1971, Cal. Civ. Code § 1747; (3) the California
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Consumer Credit Reporting Agencies Act (CCRAA), Cal. Civ. Code § 1785.25(a); (4) California’s
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Unfair Competition Law (UCL), Bus. & Prof. Code § 17200; (5) libel, Cal. Civ. Code § 45; (6)
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intentional infliction of emotional distress; (7) negligent infliction of emotional distress; (8) deceit,
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Cal. Civ. Code § 1710; and (9) constructive fraud, Cal. Civ. Code § 1573. BofA moves for
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judgment on the pleadings pursuant to Federal Rule of Civil Procedure (Rule) 12(c). Dkt. No. 15.
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Pursuant to Civil Local Rule 7-1(b), the Court finds a hearing unnecessary and VACATES the
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December 13, 2012 hearing. After consideration of the parties’ papers, relevant legal authority, and
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good cause appearing, the Court hereby GRANTS IN PART and DENIES IN PART BofA’s motion
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for the reasons set forth below.
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BACKGROUND
On September 17, 2010, Grantham filed for bankruptcy, including the debt related to her two
BofA credit card accounts ending in numbers 9098 and 1051, in the amounts of $5,987.00 and
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$941.00, respectively. Compl. ¶¶ 12, 14, 16, Not. of Rem., Ex. A., Dkt. No. 1. On January 4, 2011,
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Grantham received a discharge of all dischargeable debts, including the BofA Accounts. Id. ¶ 15.
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In February 2011, Grantham sent a dispute letter to Experian requesting an investigation of
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the 1051 Account, disputing the alleged delinquencies reported in her credit report while her
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bankruptcy petition was pending.1 Id. ¶ 16. On February 28, 2011, Grantham received a credit
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report from Experian which showed that the delinquencies had been removed. Id. ¶ 17, Ex. C; Pl.’s
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Opp’n, Ex. A, Dkt. No. 16. The Experian report for the 1051 Account reports that it was
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“Discharged through Bankruptcy Chapter 7,” and “Debt included in Chapter 7 Bankruptcy.”
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Compl., Ex. C; Pl.’s Opp’n, Ex. A. It also reports the 1051 Account with a $0 balance as of October
account as 30 days late in November 2010 and reported the account as “charged-off” as of
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For the Northern District of California
2010. Compl., Ex. C; Pl.’s Opp’n, Ex. A. However, the report indicates that BofA reported the
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UNITED STATES DISTRICT COURT
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December 2010. Compl., Ex. C; Pl.’s Opp’n, Ex. A.
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On March 26, 2012, Grantham filed this action in San Mateo County Superior Court. BofA
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subsequently removed the case to this Court on April 19, 2012. Dkt. No. 1. BofA filed the present
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Motion on October 25, 2012. Dkt. No. 15. Grantham filed her Opposition on November 8, 2012
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(Dkt. No. 16), and BofA filed its Reply on November 15, 2012 (Dkt. No. 19).
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DISCUSSION
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In its Motion, BofA moves to dismiss Grantham’s first and third causes of action on the
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grounds that: (1) the credit reporting information in her credit reports establishes that BofA
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furnished only accurate information regarding her bankruptcy and the payment history of the BofA
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accounts; and (2) a credit furnisher is not precluded from reporting information to credit bureaus
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regarding delinquencies that occurred prior to the discharge of the underlying debt in bankruptcy.
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Mot. at 1. BofA moves to dismiss Grantham’s second and fourth through ninth causes of action on
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the grounds that they are preempted by the FCRA. Id.
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BofA also moves to dismiss Grantham’s fourth cause of action for violation of the UCL
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Although Grantham’s Complaint refers to a dispute for both BofA accounts, she states in
her Opposition that the account ending in 9098 is not at issue. Opp’n at 9.
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because she lacks standing to assert a UCL claim and her predicate claims fail. Id. at 2. BofA
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further argues that Grantham’s sixth cause of action, for intentional infliction of emotional distress,
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fails on the ground that she does not allege conduct sufficiently extreme or outrageous to permit
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recovery under this theory. Id. BofA also moves to dismiss Grantham’s seventh cause of action, for
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negligent infliction of emotional distress, on the ground that California does not recognize such a
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cause of action. Id. And finally, BofA moves to dismiss Grantham’s ninth cause of action for
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constructive fraud on the grounds that she has failed to allege a fiduciary relationship between
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herself and BofA, and she has failed to plead the claim with the requisite particularity. Id.
information reported during her bankruptcy: (1) BofA reported overdue payments to Experian while
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at the same time reporting that she made timely payments during this period; and (2) BofA labeled
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For the Northern District of California
In response, Grantham argues that she has identified two factual inaccuracies with the
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UNITED STATES DISTRICT COURT
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the account as charged off after she filed for bankruptcy, which she contends is inaccurate because it
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indicates that BofA wrote off the account at the time of bankruptcy when it had not done so. Opp’n
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at 8.
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A.
Legal Standard
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Rule 12(c) provides that “[a]fter the pleadings are closed—but early enough not to delay
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trial—a party may move for judgment on the pleadings.” The legal standard applied under Rule
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12(c) is “virtually identical to the standard for a motion to dismiss under Rule 12(b)(6).” Costa v.
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Travelers Commercial Ins. Co., 2012 WL 3670653 (N.D. Cal. Aug. 24, 2012) (citing Dworkin v.
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Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)).
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A complaint must contain a “short and plain statement of the claim showing that the pleader
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is entitled to relief.” Fed. R. Civ. P. 8(a). On a motion under Rule 12(b)(6) for failure to state a
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claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a
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legally cognizable claim and the grounds on which it rests. Bell Atl. Corp. v. Twombly, 550 U.S.
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544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the Court will
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take all material allegations as true and construe them in the light most favorable to the plaintiff. NL
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Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). However, this principle is inapplicable to
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legal conclusions; “threadbare recitals of the elements of a cause of action, supported by mere
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conclusory statements,” are not taken as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
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Twombly, 550 U.S. at 555).
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Although the Court is generally confined to consideration of the allegations in the pleadings,
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when the complaint is accompanied by attached documents, such documents are deemed part of the
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complaint and may be considered in evaluating the merits of a Rule 12(b)(6) motion. Durning v.
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First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987).
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When granting a motion to dismiss, the Court is generally required to grant the plaintiff leave
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).
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In determining whether amendment would be futile, the court examines whether the complaint could
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For the Northern District of California
to amend, even if no request to amend the pleading was made, unless amendment would be futile.
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UNITED STATES DISTRICT COURT
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be amended to cure the defect requiring dismissal “without contradicting any of the allegations of
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[the] original complaint.” Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).
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B.
Application to the Case at Bar
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1.
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Grantham’s first cause of action is for violation of the FCRA. Congress enacted the FCRA,
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15 U.S.C. §§ 1681 et seq., in 1970 “to ensure fair and accurate credit reporting, promote efficiency
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in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47
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(2007). To ensure that credit reports are accurate, the FCRA imposes certain duties on the
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furnishers that provide credit information to credit reporting agencies. Gorman v. Wolpoff &
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Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009).
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Fair Credit Reporting Act
Section 1681s-2(a) describes the “[d]uty of furnishers to provide accurate information,” and
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subsection (b) establishes the duties of furnishers after receiving notice of a dispute. 15 U.S.C. §
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1681s-2. Among other responsibilities, subsection (a) prohibits furnishers from reporting
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information with actual knowledge of errors and requires furnishers to correct and update
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information, and provide notice of disputes and closed accounts. 15 U.S.C. § 1681s–2(a)(1)(A), (2),
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(3). Subsection (b) provides that the furnisher shall, after receiving notice of a dispute from the
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credit reporting agency, conduct an investigation of the disputed information; review all relevant
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information provided by the agency; report the results of the investigation to the agency; and, if the
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investigation reveals that the information is incomplete or inaccurate, report those results to all other
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credit reporting agencies to which the person furnished the information. 15 U.S.C. § 1681s-2(b)(1);
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Gorman, 584 F.3d at 1154.
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While the “[d]uties imposed on furnishers under subsection (a) are enforceable only by
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federal or state agencies,” §§ 1681n and 1681o provide a limited private right of action that applies
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to § 1681s-2(b)’s requirement to investigate disputes and report inaccuracies. Gorman, 584 F.3d at
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1154 (citing 15 U.S.C. §§ 1681s–2(c) and (d)).
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Here, there appears to be inaccurate reporting in that Grantham’s report from Experian
provides that her 1051 account is 30 days overdue in November 2010, while at the same time
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For the Northern District of California
UNITED STATES DISTRICT COURT
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reporting a $0 balance for October and November 2010. Pl.’s Opp’n, Ex. A. BofA attempts to
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circumvent this apparent inconsistency by arguing that the $0 balance reported in October and
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November 2010 is “favorable credit information – not adverse information – so it cannot not [sic] be
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the basis for any damages based on credit reporting claims under the FCRA or any other credit
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reporting statute.” Mot. at 6. BofA’s argument misplaced. Grantham is not arguing that the $0
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balance reporting is adverse information; rather, she argues that her report is inaccurate because it
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lists an overdue payment while also reporting the balance of zero. Opp’n at 12-13. BofA also
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appears to go beyond the pleadings and argues that “there is no inconsistency here because even
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before Bank of America zeroed out Plaintiff’s Account balance, Plaintiff was in default because she
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had not been making payments on the account, notwithstanding a reported ‘0’ balance.” Mot. at 6.
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However, at this stage in the pleadings, the Court is required to take all material allegations as true
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and construe them in the light most favorable to Grantham. Clearly, a reported overdue payment is
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adverse information. Thus, while BofA is free to raise this argument in a motion for summary
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judgment after further discovery into Grantham’s allegations, the Court DENIES its motion at this
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stage.
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2.
California Consumer Credit Reporting Agencies Act
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Grantham alleges a CCRAA claim under section 1785.25(a), which states, “A person shall
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not furnish information on a specific transaction or experience to any consumer credit reporting
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agency if the person knows or should know the information is incomplete or inaccurate.” Grantham
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alleges that BofA “intentionally and knowingly reported inaccurate and false information regarding
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delinquency in payment to credit reporting agencies and date of discharge in violation of California
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Civil Code § 1785.25.” Compl. ¶ 48. Unlike the FCRA, the CCRAA includes a private right of
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action to enforce the prohibition against supplying incomplete or inaccurate consumer credit
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information. Cal. Civ. Code § 1785.25(g) (“A person who furnishes information to a consumer
establishes by a preponderance of the evidence that, at the time of the failure to comply with this
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For the Northern District of California
credit reporting agency is liable for failure to comply with this section, unless the furnisher
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UNITED STATES DISTRICT COURT
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section, the furnisher maintained reasonable procedures to comply with those provisions.”).
As discussed above, there appears to be inaccurate reporting in that Grantham’s report from
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Experian provides that her 1051 account is 30 days overdue in November 2010, while at the same
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time reporting a $0 balance for October and November 2010. Pl.’s Opp’n, Ex. A. Accordingly,
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taking all material allegations as true and construing them in the light most favorable to Grantham,
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the Court finds that she has stated a valid claim for relief. The Court therefore DENIES BofA’s
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motion at this stage in the proceedings.
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Whether Grantham’s Second and Fourth Through Ninth Causes of Action are
Preempted
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As to Grantham’s remaining claims, BofA argues that these allegations all derive from issues
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that are governed solely by the FCRA: BofA’s allegedly inaccurate reporting of information to
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credit
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bureaus and Bofa’s allegedly inadequate investigation in response to Grantham’s dispute regarding
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the reporting of her Account. Mot. at 9-10. Except for her fourth cause of action under the
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California Unfair Competition Law, Grantham’s Opposition does not address her remaining state
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law claims.
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“Through the FCRA, Congress has established a scheme of uniform requirements regulating
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the use, collection and sharing of consumer credit information.” Roybal v. Equifax, 405 F. Supp. 2d
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1177, 1178 (E.D. Cal. 2005). “In order to maintain this uniformity, Congress included express
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preemption clauses in the FCRA relating to various aspects of consumer credit reporting.” Id.
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Among the claims expressly preempted are any state law claims regulating credit information
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furnishers which relate to activity governed by section 1681s-2 of the FCRA.2 15 U.S.C. §
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1681t(b)(1)(F). Specifically, section 1681t(b)(1)(F)(ii) states: “No requirement or prohibition may
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be imposed under the laws of any State . . . with respect to any subject matter regulated under . . .
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section 1681s-2, relating to the responsibilities of persons who furnish information to
furnishers’ “reporting [of] information with actual knowledge of errors” and their investigatory
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For the Northern District of California
consumer reporting agencies[.]” 15 U.S.C. § 1681t(b)(1)(F). Section 1681s-2 governs credit
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UNITED STATES DISTRICT COURT
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duties upon receiving notice of a dispute from a credit bureau. 15 U.S.C. § 1681b-2(a)-(b).
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Here, Grantham’s state law claims are all based upon the allegation that BofA furnished
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inaccurate credit information about her accounts. As these allegations all derive from issues that are
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governed solely by the FCRA, they are preempted by the FCRA. See El-Aheidab v. Citibank (South
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Dakota), N.A., 2012 WL 506473, at *7-8 (N.D. Cal. Feb. 15, 2012) (“The only circuit courts to have
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considered the question have adopted the total preemption approach, ruling that § 1681t(b)(1)(F)
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preempts both state statutory and common law causes of action.”). Accordingly, the Court
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GRANTS BofA’s Motion as to the following causes of action: (2) the California Song–Beverly
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Credit Card Act of 1971, Cal. Civ. Code § 1747; (5) libel, Cal. Civ. Code § 45; (6) intentional
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infliction of emotional distress; (7) negligent infliction of emotional distress; (8) deceit, Cal. Civ.
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Code § 1710; and (9) constructive fraud, Cal. Civ. Code § 1573.
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However, as to Grantham’s fourth cause of action under the UCL, she alleges that BofA’s
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acts “were unlawful under the California Civil Code § 1785.25(a) and therefore constitute
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misleading and unfair practices within the meaning of Business and Professions Code § 17200.”
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Section 1681s-2(a) of the FCRA “imposes a duty on ‘furnishers of information’ to provide
accurate information to consumer reporting agencies.” 15 U.S.C. § 1681s-2(a).
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Compl. ¶ 62. In El–Aheidab, another judge in this district ruled that, to the extent the plaintiff based
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his UCL claim solely on violations of section 1785.25(a), such a claim is not preempted by the
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FCRA because it does not impose any additional substantive duties on the defendant and is merely
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an additional procedural vehicle for enforcement. 2012 WL 506473, at *6; see also Mortimer v. JP
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Morgan Chase Bank, Nat. Ass’n, 2012 WL 3155563, at *6 (N.D. Cal. Aug. 2, 2012) (“[T]he fact that
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the UCL provides for a cause of action does not demonstrate that the law itself imposes an additional
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requirement. Thus, Mortimer’s UCL claim is not preempted.”). Thus, because Grantham bases her
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UCL claim on violations of section 1785.25(a), it is not preempted by the FCRA and BofA’s Motion
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as to this cause of action must be DENIED.
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Based on the analysis above, the Court GRANTS IN PART and DENIES IN PART BofA’s
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For the Northern District of California
UNITED STATES DISTRICT COURT
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CONCLUSION
Motion. BofA’s Motion is GRANTED as to the following causes of action: (2) the California
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Song–Beverly Credit Card Act of 1971, Cal. Civ. Code § 1747; (5) libel, Cal. Civ. Code § 45; (6)
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intentional infliction of emotional distress; (7) negligent infliction of emotional distress; (8) deceit,
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Cal. Civ. Code § 1710; and (9) constructive fraud, Cal. Civ. Code § 1573. Because amendment
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would be futile, leave to amend is DENIED.
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BofA’s Motion is DENIED as to the following causes of action: (1) the Fair Credit Reporting
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Act, 15 U.S.C. § 1681s–2(b); (3) the California Consumer Credit Reporting Agencies Act, Cal. Civ.
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Code § 1785.25(a); and (4) California’s Unfair Competition Law, Bus. & Prof. Code § 17200.
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IT IS SO ORDERED.
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Dated: November 26, 2012
_______________________________
Maria-Elena James
Chief United States Magistrate Judge
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