Fair v. Experian Information Solutions, Inc. et al

Filing 98

ORDER ON MOTIONS TO DISMISS by Judge Claudia Wilken RE 70 Motion to Dismiss and 74 Motion to Dismiss. (dtmS, COURT STAFF) (Filed on 7/20/2017)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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JEREMY FAIR,

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Plaintiff,

United States District Court
For the Northern District of California

16-05712
16-05714
16-06367
17-00418

CW (lead)
CW
CW
CW

v.
EXPERIAN INFORMATION SOLUTIONS,
INC., et al.,

ORDER ON MOTIONS TO DISMISS
(Docket Nos. 70 & 74)

Defendants.

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Case No. C
C
C
C

_______________________________/

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Before the Court are two motions to dismiss filed by

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Defendant Experian Information Solutions, Inc.1

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the parties’ papers and oral argument and for the reasons set

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forth below, the Court GRANTS the motions.

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Having considered

BACKGROUND
The Court has discussed the factual background relevant to

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Marino’s allegations in a previous order (Docket No. 62) and his

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factual allegations are substantially the same and in large part

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identical in Plaintiffs’ combined First Amended Complaint (1AC).

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Marino adds detail to his allegations concerning his mortgage.

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Heath previously filed a separate complaint and now joins

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Dahlen and Marino in the consolidated 1AC.

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that follows is taken from Heath’s portion of the 1AC.

The factual background
On July 2,

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Dahlen has settled with Experian and has stipulated to
dismiss his claims against Wells Fargo, leaving as a Defendant
only Equifax, Inc. Heath has dismissed his claims against USCB,
Inc. with prejudice, leaving as a Defendant only Experian.

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2012, Heath filed for Chapter 13 bankruptcy.

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he obtained a credit report from CIN Legal Data Services that was

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based on information that CIN gathered from the three major credit

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reporting agencies (CRAs), including Experian.2

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confirmed on November 8, 2012.

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“three bureau report” from Experian.

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He found nine “trade lines” in the report that were reporting

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information he believed to be inaccurate, and on August 5, 2016 he

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disputed those trade lines by letter to Experian and the other two

On August 10, 2012,

Heath’s plan was

On April 11, 2016, Heath ordered a
Docket No. 65, 1AC ¶ 132.

United States District Court
For the Northern District of California

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major CRAs, noting “that Plaintiff had filed for bankruptcy and

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the account was not reporting the bankruptcy accurately or worse

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not at all.”

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dispute letter and notified each furnisher,3 and later alleges in

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the alternative that each CRA did not do so.

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Id. ¶ 135.

Heath alleges that each CRA received his

On November 15, 2016, Heath obtained a second credit report

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from Experian and the other major CRAs.

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second report contained a number of inaccuracies, discussed below,

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related to his bankruptcy.

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Heath alleges that the

LEGAL STANDARD
A complaint must contain a “short and plain statement of the

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claim showing that the pleader is entitled to relief.”

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Civ. P. 8(a).

Fed. R.

On a motion under Rule 12(b)(6) for failure to

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Heath alleges inconsistently that he obtained this credit
report prior to filing for bankruptcy. The difference is not
material for the purposes of this Order.
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Sources that provide credit information to CRAs are
referred to as “furnishers” under the FCRA. Gorman v. Wolpoff &
Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009) (citation
omitted).
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state a claim, dismissal is appropriate only when the complaint

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does not give the defendant fair notice of a legally cognizable

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claim and the grounds on which it rests.

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Twombly, 550 U.S. 544, 555 (2007).

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complaint is sufficient to state a claim, the court will take all

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material allegations as true and construe them in the light most

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favorable to the plaintiff.

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896, 898 (9th Cir. 1986).

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to legal conclusions; “[t]hreadbare recitals of the elements of a

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United States District Court
For the Northern District of California

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cause of action, supported by mere conclusory statements,” are not

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taken as true.

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(citing Twombly, 550 U.S. at 555).

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Bell Atl. Corp. v.

In considering whether the

NL Indus., Inc. v. Kaplan, 792 F.2d

However, this principle is inapplicable

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

When granting a motion to dismiss, the court is generally

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required to grant the plaintiff leave to amend, even if no request

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to amend the pleading was made, unless amendment would be futile.

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Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

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F.2d 242, 247 (9th Cir. 1990).

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would be futile, the court examines whether the complaint could be

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amended to cure the defect requiring dismissal "without

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contradicting any of the allegations of [the] original complaint."

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Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).

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The court may deny leave to amend for “repeated failure to cure

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deficiencies by amendments previously allowed.”

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Shell Chem. Co., 845 F.2d 802, 809-10 (9th Cir. 1988).

In determining whether amendment

McGlinchy v.

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DISCUSSION

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In their 1AC, Plaintiffs bring two causes of action, one

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under the federal Fair Credit Reporting Act (FCRA), and one under

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California’s Consumer Credit Reporting Agencies Act (CCRAA).

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bring only the FCRA claim against Experian.

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They

The FCRA creates a private right of action only for willful

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or negligent noncompliance with its requirements.

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§§ 1681n4 (willful), o (negligent); Gorman, 584 F.3d at 1154.

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plaintiff may recover actual or statutory damages, as well as

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punitive damages and attorneys’ fees, for willful noncompliance,

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§ 1681n, but only actual damages for negligent noncompliance,

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§ 1681o.

United States District Court
For the Northern District of California

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15 U.S.C.
A

In its Order dismissing Dahlen’s and Marino’s original

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complaints, the Court found that neither Plaintiff plead

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“sufficient facts to support an inference that Experian did fail

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to notify furnishers of Plaintiffs’ disputes.”

Docket No. 62,

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Order on Mots. to Dismiss (March 29 Order) 10.

It dismissed those

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Plaintiffs’ willful noncompliance claims against Experian on that

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basis, with leave to amend.

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deficiency as to any Plaintiff.

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of willful noncompliance must be dismissed.

The 1AC does not remedy this
Accordingly, Plaintiffs’ claims

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The FCRA requires CRAs, in response to a dispute by a

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consumer, to “conduct a reasonable reinvestigation to determine

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whether the disputed information is inaccurate and record the

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current status of the disputed information, or delete the item

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from the file” within thirty days of receiving notice of the

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consumer’s dispute.

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requires that, within five days of receiving notice of the

§ 1681i(a)(1)(A).

Section 1681i also

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All references to the United States Code are to Title 15
unless otherwise stated.
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consumer’s dispute, CRAs must “provide notification of the dispute

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to any person who provided any item of information in dispute.”

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§ 1681i(a)(2).

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violation of section 1681i, a plaintiff must establish that: 1)

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his credit files contained inaccurate or incomplete information;

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2) he directly notified the defendant of the inaccuracy; 3) the

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defendant failed to respond to the dispute; and 4) the defendant's

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failure to reinvestigate caused the plaintiff to suffer actual

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damages.

Thus, in order to state a claim for negligent

See Taylor v. First Advantage Background Servs. Corp.,

United States District Court
For the Northern District of California

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2016 WL 4762268, at *5 (N.D. Cal.); see also Carvalho v. Equifax

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Info. Servs., LLC, 629 F.3d 876, 891 (9th Cir. 2010); Gorman, 584

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F.3d at 1156.

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a claim against a CRA under § 1681i, a plaintiff must identify an

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actual inaccuracy in the credit report.

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890; Dennis v. BEH-1, LLC, 520 F.3d 1066, 1069 (9th Cir. 2008).

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Plaintiffs’ 1AC does not allege sufficiently that Experian

The Ninth Circuit has held that, in order to state

Carvalho, 629 F.3d at

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failed to respond to their dispute letters.

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complaints, Dahlen and Marino alleged that “the most basic

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investigation required each CRA to send all relevant information

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via an ACDV to the furnishers which they did not do.”

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62, March 29 Order 17 (quoting complaints).

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Order, the Court found this alternative pleading conclusory and

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noted that neither Plaintiff plead “any facts from which to infer

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that Experian failed to notify furnishers” nor identified “what

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relevant information from their dispute letters Experian allegedly

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failed to transmit.”

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again, “The most basic investigation required each CRA to send all

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relevant information via an ACDV to the furnishers which they did

Id.

In their original

Docket No.

In its March 29

In the 1AC, Plaintiffs jointly allege

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not do.”

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other defects.

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dismissed as to Experian.

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Docket No. 65, 1AC ¶ 169.

Nor do Plaintiffs remedy the

Accordingly, Plaintiffs’ FCRA claims must be

The allegations in the 1AC are insufficient for reasons
specific to Marino and Heath as well.
1. Marino

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Marino alleges that his second credit report contained one

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inaccuracy, namely, that Defendant RoundPoint was reporting his

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account “with failure to pay listed in the 24 month payment

United States District Court
For the Northern District of California

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history.

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that since he filed for bankruptcy in June 2014 he “has made all

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of his regularly scheduled monthly payments to Roundpoint on

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time.”

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Specifically in July of 2016.”

Id. ¶ 108.

He alleges

Id. ¶ 100.

But Marino again has not alleged that his dispute letter put

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Experian on notice of this alleged inaccuracy.

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Order, the Court dismissed Marino’s claim regarding this

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inaccuracy because he did “not allege that his dispute letter

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stated that he was current on his debt to RoundPoint.”

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March 29 Order 16-17.

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letter “specifically put each Creditor on notice that Plaintiff

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had filed for bankruptcy and there should not be any late payments

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reported in the payment history,” Docket No. 65, 1AC ¶ 104, but no

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more.

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Experian on notice of the inaccuracy he alleges and his FCRA claim

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against Experian must fail.

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In the March 29

Docket 62,

In the 1AC, Marino alleges that his dispute

Thus, he still has not alleged that his dispute letter put

2. Heath
Heath alleges that his second credit report contained four
inaccuracies, which he alleges create an “entirely misleading
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picture” of his creditworthiness.

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First, Defendant “USCB was reporting Plaintiff’s account . . . as

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seriously past due and in active collection status.”

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65, 1AC ¶ 139.

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majority of the decisions issued by judges in this district, has

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rejected the theory that it constitutes an actionable inaccuracy

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under the FCRA to report a debtor’s pre-bankruptcy delinquencies

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during the pendency of a bankruptcy proceeding prior to discharge.

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Docket No. 62, March 29 Order 6-7; Mortimer v. JP Morgan Chase

Docket No. 65, 1AC ¶ 148.

Docket No.

This Court, in keeping with the overwhelming

United States District Court
For the Northern District of California

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Bank, Nat. Ass'n, No. C 12-1936 CW, 2012 WL 3155563, at *3 (N.D.

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Cal. Aug. 2, 2012).

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Second, Heath alleges that “USCB has never updated the CII to

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D to illustrate to lenders that this account is in fact not

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collectable and Plaintiff’s wages cannot be garnished by USCB for

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any amount whatsoever.”5

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that had this indicator been updated his account would reflect a

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Chapter 13 Wage Earner Plan (WEP), which “alerts any potential

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lender that the account is no longer in a collectable status but

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is being handled by a Chapter 13 trustee.”

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and others in this district have found that it is not “inherently

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inaccurate under the FCRA” to violate credit reporting industry

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standards.

Docket No. 65, 1AC ¶ 140.

He alleges

Id. ¶ 60.

This Court

Docket No. 62, March 29 Order 7; see also Mensah v.

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“The Metro 2 format was developed by the [Consumer Data
Industry Association] in an effort to universally report debts in
a particular manner.” Docket No. 65, 1AC ¶ 39. “The Consumer
Information Indicator (CII) is a critical field in the Metro 2
Format that indicates a special condition that applies to a
specific consumer.” Id. ¶ 56. “CII Metro 2 Code ‘D’ indicates
that a Chapter 13 petition has been filed, is active, but no
discharge entered.” Id. ¶ 60.
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Experian Info. Sols., Inc., No. 16-CV-05689-WHO, 2017 WL 1246892,

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at *8 (N.D. Cal. Apr. 5, 2017); Mamisay v. Experian Info. Sols.,

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Inc., 2017 WL 1065170, No. 16-CV-05684-YGR, at *6 (N.D. Cal. Mar.

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21, 2017); Basconcello v. Experian Info. Sols., Inc., No. 16-CV-

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06307-PJH, 2017 WL 1046969, at *7 (N.D. Cal. Mar. 20, 2017);

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Mestayer v. Experian Info. Sols., Inc, 2016 WL 3383961, No. 15-CV-

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03645-EMC, at *2 (N.D. Cal. June 20, 2016).

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An item in a credit report “can be ‘incomplete or inaccurate’
within the meaning of the FCRA ‘because it is patently incorrect,

United States District Court
For the Northern District of California

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or because it is misleading in such a way and to such an extent

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that it can be expected to adversely affect credit decisions.’”

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Gorman, 584 F.3d at 1163 (citation omitted).

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something more than the mere fact of noncompliance with an

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industry standard, although noncompliance may be relevant to

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whether reporting is ‘misleading.’”

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at *7.

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notice of the bankruptcy filing in other places then it is less

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likely that the absence of an indicator on one account would be

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misleading.

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report did not include any notice of his bankruptcy filing.

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does he explain how the absence of the CII “D” code in and of

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itself renders his credit report meaningfully misleading, apart

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from the effect he alleges it would have on how his past

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delinquencies would be reported.

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alleged sufficient facts to show that USCB’s alleged failure to

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report the CII “D” indicator for his account rendered it

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materially misleading.

“This requires

Basconcello, 2017 WL 1046969,

For example, if a plaintiff’s credit report includes

Id.

Heath does not allege that his second credit
Nor

Accordingly, Heath has not

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Third, “Defendant also continues to report failures to pay in

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the 24 month payment history despite Plaintiff being prohibited by

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law from making direct payments to Defendant.

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starting in July 2013 through May of 2014 Defendant reported a

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failure to pay each month,” as well as from July 2014 through

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October 2016.

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bankruptcy in July 2012 and his plan was confirmed in November of

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that year.

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creditors’ rights to collect on their claims.

Docket No. 65, 1AC ¶¶ 143-44.

Specifically

Heath filed for

A confirmed Chapter 13 bankruptcy plan may modify
See 11 U.S.C.

United States District Court
For the Northern District of California

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§ 1322(b)(2); Jaras v. Experian Info. Sols., Inc., 2016 WL

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7337540, at *4 (N.D. Cal.).

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to report failures to pay on pre-filing debts after a debtor’s

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bankruptcy plan has been confirmed and payments are being made by

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the trustee, at least so long as the debtor makes payments to the

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trustee according to the plan.

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that he has made all payments under his Chapter 13 plan nor that

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the trustee made all scheduled payments to USCB.

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Thus, it may be materially inaccurate

However, Heath does not allege

Fourth, Heath alleges, “Defendant has also failed to mark the

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account as disputed.”

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simple “failure to report that a debt is disputed” is insufficient

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to establish liability; rather, “[t]he consumer must still

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convince the finder of fact that the omission of the dispute was”

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patently incorrect or materially misleading.

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1163.

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sufficiently plead the three alleged inaccuracies discussed in the

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preceding paragraphs.

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Docket No. 65, 1AC ¶ 147.

However, the

Gorman, 584 F.3d at

Heath has not established this because he has not

Id.

Accordingly, Heath has not adequately plead that his second
credit report contained an actual inaccuracy.
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Heath pleads the following concerning the notification he
provided to Experian:
Plaintiff’s dispute letter specifically put each Creditor on
notice that Plaintiff had filed for bankruptcy and the
account was not reporting the bankruptcy accurately or worse
not at all. Plaintiff specifically requested each Creditor
investigate the proper way to report Plaintiff’s bankruptcy
in accordance with credit reporting guidelines. Last,
Plaintiff noted the accounts should be reported disputed if
the Creditor disagreed with Plaintiff’s dispute.

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Docket 65, 1AC ¶ 135.

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represented that Heath’s dispute letter identified each creditor’s

At the hearing, Heath’s attorney

United States District Court
For the Northern District of California

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account that he alleged was reporting inaccurately.

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No. 62, March 29 Order 16; see also Mensah, 2017 WL 1246892, at

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*8.

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the alleged inaccuracies discussed above.

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March 29 Order 16.

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sufficiently alleged facts to substantiate those inaccuracies in

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his complaint, nor has he alleged that his dispute letter did so.

However, Heath does not clearly allege that Experian reported
See Docket No. 62,

Furthermore, as discussed, Heath has not

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See Docket

CONCLUSION
For the foregoing reasons, Experian’s Motions to Dismiss are

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GRANTED (Docket Nos. 70 & 74).

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prejudice because he has had a previous opportunity to amend his

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complaint and the Court concludes that further amendment would be

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futile.

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with this Order within twenty-one days.

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that follows will be decided on the papers.

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Dismissal as to Marino is with

Dismissal as to Heath is with leave to amend consistently
Any motion to dismiss

IT IS SO ORDERED.
Dated: July 20, 2017
CLAUDIA WILKEN
United States District Judge

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