Green-Browning v. Experian Information Solutions, Inc. et al

Filing 97

ORDER GRANTING IN PART AND DENYING IN PART 94 TD BANK'S MOTION TO DISMISS SECOND AMENDED COMPLAINT WITHOUT LEAVE TO AMEND; AND VACATING OCTOBER 5, 2017 HEARING. Signed by Judge Beth Labson Freeman on 9/29/2017. (blflc1S, COURT STAFF) (Filed on 9/29/2017)

1

UNITED STATES DISTRICT COURT

2

NORTHERN DISTRICT OF CALIFORNIA

3

SAN JOSE DIVISION

4
TINY GREEN-BROWNING,

5

Plaintiff,

6
v.

7
8

EXPERIAN INFORMATION SOLUTIONS,
INC., et al.,

9

Defendants.
10

Case No. 16-cv-04638-BLF
ORDER GRANTING IN PART AND
DENYING IN PART TD BANK’S
MOTION TO DISMISS SECOND
AMENDED COMPLAINT WITHOUT
LEAVE TO AMEND; AND VACATING
OCTOBER 5, 2017 HEARING
[RE: ECF 94]

United States District Court
Northern District of California

11
12

Plaintiff Tiny Green-Browning sues Defendants Experian Information Solutions, Inc. and

13

TD Bank USA, N.A. for violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681

14

et seq., and the California Consumer Credit Reporting Agencies Act (“CCRAA”), California Civil

15

Code § 1785.25(a).
Experian has answered the operative second amended complaint (“SAC”). This order

16
17

addresses TD Bank’s motion to dismiss the SAC under Federal Rule of Civil Procedure 12(b)(6).

18

The motion is SUBMITTED for disposition without oral argument and the hearing set for October

19

5, 2017 is VACATED. See Civ. L.R. 7-1(b). For the reasons discussed below, TD Bank’s

20

motion is GRANTED WITHOUT LEAVE TO AMEND as to Green-Browning’s FCRA claim

21

and DENIED as to her CCRAA claim.

22

I.

23

BACKGROUND1
Green-Browning filed for Chapter 13 bankruptcy protection on December 31, 2013, and

24

her plan was confirmed on February 14, 2014. SAC ¶¶ 72, 76. On March 19, 2016, Plaintiff

25

ordered a three bureau report from Experian which contained four inaccurate trade lines (“March

26
27
28

1

Green-Browning’s well-pled factual allegations are accepted as true for purposes of the motion
to dismiss. See Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011).

1

2016 Credit Report”). Id. ¶¶ 77-78. One of the four trade lines reflected that TD Bank was

2

reporting both a balance of $0.00 and a past due balance of $1,221 with respect to account

3

#4352XXX. Id. ¶ 80. The report stated that the account was included in Green-Browning’s

4

bankruptcy. Id. Green-Browning nonetheless believed the report was “inaccurate and

5

misleading” because “it is facially impossible to owe $0.00 and be past due at the same time.” Id.

6

Green-Browning disputed the four inaccurate trade lines, including the trade line regarding the TD

7

Bank account, via certified mail sent on May 4, 2016 to three different credit reporting agencies

8

(“CRAs”), Experian, Equifax, Inc., and TransUnion, LLC. Id. ¶ 81. Each CRA received the

9

dispute letter and in turn notified the entities that had furnished the disputed information. Id. ¶ 85.
TD Bank responded to the notification of dispute by updating the trade line to remove the

11
United States District Court
Northern District of California

10

bankruptcy notation and change the account status to “in collections and charged off.” SAC ¶ 88.

12

Green-Browning discovered TD Bank’s update to the trade line when she ordered a second credit

13

report from Experian on June 8, 2016 (“June 2016 Credit Report”). Id. ¶ 86. Green-Browning did

14

not dispute the updated trade line after obtaining the June 2016 Credit Report. Instead she filed

15

the present action on August 12, 2016, asserting violations of the FCRA and CCRAA against

16

multiple CRAs and furnishers. Compl., ECF 1. She filed a first amended complaint (“FAC”) as

17

of right on October 3, 2016. Am’d Compl., ECF 36. Following dismissal of the FAC with leave

18

to amend, Green-Browning filed the operative SAC against only Experian and TD Bank. SAC,

19

ECF 90. Experian has answered, and TD Bank now moves to dismiss the SAC.

20
21

II.

LEGAL STANDARD
“A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a

22

claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation

23

Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d

24

729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts

25

as true all well-pled factual allegations and construes them in the light most favorable to the

26

plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the

27

Court need not “accept as true allegations that contradict matters properly subject to judicial

28

notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or
2

1

unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008)

2

(internal quotation marks and citations omitted). While a complaint need not contain detailed

3

factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to

4

relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.

5

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the

6

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

7
8
9

III.

DISCUSSION
The SAC contains two claims, one for violation of the FCRA (Claim 1) and the other for

violation of the CCRAA (Claim 2). TD Bank seeks dismissal of both claims under Rule 12(b)(6).
A.

11
United States District Court
Northern District of California

10

FCRA (Claim 1)

The FCRA creates a private right of action against furnishers for noncompliance with

12

duties imposed under 15 U.S.C. § 1681s-2(b). Gorman v. Wolpoff & Abramson, LLP, 584 F.3d

13

1147, 1154 (9th Cir. 2009). Section 1681s-2(b) imposes certain obligations on a furnisher, such as

14

a duty to conduct an investigation, when the furnisher receives notice from a CRA that a consumer

15

disputes information reported by the furnisher. Id. A plaintiff is required to plead and prove four

16

elements to prevail on an FCRA claim against a credit furnisher: “(1) a credit reporting

17

inaccuracy existed on plaintiff’s credit report; (2) plaintiff notified the consumer reporting agency

18

that plaintiff disputed the reporting as inaccurate; (3) the consumer reporting agency notified the

19

furnisher of the alleged inaccurate information of the dispute; and (4) the furnisher failed to

20

investigate the inaccuracies or further failed to comply with the requirements in 15 U.S.C. 1681s-

21

2(b) (1)(A)-(E).” Denison v. Citifinancial Servicing LLC, No. C 16-00432 WHA, 2016 WL

22

1718220, at *2 (N.D. Cal. Apr. 29, 2016). A furnisher’s duties under § 1681s-2(b) of the FCRA

23

arise “only after the furnisher receives notice of dispute from a CRA.” Gorman, 584 F.3d at 1154.

24

The Court previously granted TD Bank’s motion to dismiss Green-Browning’s FCRA

25

claim, as framed in the FAC, after concluding that Green-Browning had not alleged a credit

26

reporting inaccuracy as required under the first element listed above. Order Granting Motions to

27

Dismiss FAC, ECF 88. In particular, the Court noted that although Green-Browning complained

28

about “multiple trade lines” in the March 2016 Credit Report, she did not provide any specifics
3

1

regarding the contents of those trade lines. Id. at 6. Moreover, the Court rejected Green-

2

Browning’s argument that an inaccuracy exists whenever a pre-confirmation debt or delinquency

3

is reported after plan confirmation. Id. at 7-10. However, the Court granted leave to amend based

4

on its view that “Plaintiff might be able to allege the existence of an inaccuracy based on TD

5

Bank’s reporting of specific debt amounts or delinquencies after confirmation of Plaintiff’s

6

Chapter 13 plan if the reporting contained no mention of Plaintiff’s bankruptcy.” Id. at 16

7

(emphasis added).

8
9

In the SAC, Green-Browning alleges that the TD Bank trade line in the March 2016 Credit
Report reflected both a $0.00 balance and a past due balance of $1,221, and that the trade line
showed the account was included in her bankruptcy. SAC ¶ 80. While these allegations cure the

11
United States District Court
Northern District of California

10

lack of specificity noted in the prior order, the Court is not persuaded that they establish the

12

existence of a reporting inaccuracy. Green-Browning alleges that the trade line was “inaccurate

13

and misleading” because “it is facially impossible to owe $0.00 and be past due at the same time.”

14

SAC ¶ 80. However, that discrepancy arguably is explained by the information that the account

15

was included in Green-Browning’s bankruptcy. It may be that the pre-confirmation past-due

16

balance was $1,221 but that under the Chapter 13 plan Green-Browning was to pay $0.00.

17

Even assuming that the trade line was inaccurate, Green-Browning has not alleged that TD

18

Bank failed to investigate the notification of dispute. To the contrary, she alleges that TD Bank

19

responded to the notification of dispute by removing the bankruptcy notation and changing the

20

account status to “in collections and charged off.” SAC ¶ 88. Green-Browning’s real complaint is

21

that she does not like the manner in which TD Bank responded. She alleges that “[b]y removing

22

the bankruptcy notation TD Bank has now alerted the lending world that Plaintiff is not addressing

23

her outstanding debts. This is simply not true.” Id. ¶ 93. As pointed out by TD Bank in its

24

motion, however, Green-Browning does not allege that she disputed the trade line in the June

25

2016 Credit Report which omitted mention of her bankruptcy and stated that her account was in

26

collections and charged off. As discussed above, a furnisher’s duties under the FCRA arise only

27

after the furnisher receives notice of a particular dispute from a CRA. Gorman, 584 F.3d at 1154.

28

Green-Browning argues that she is entitled to bring an FCRA claim based on the TD Bank
4

1

trade line in the June 2016 Credit Report even though she never disputed that trade line, because

2

her earlier dispute letter regarding the March 2016 report put TD Bank “on notice that Plaintiff

3

had filed for bankruptcy and to investigate the proper way to report an account once a bankruptcy

4

has been filed,” and “noted issues regarding the past due balances and also noted that the accounts

5

should not be listed as in collections or charged off.” SAC ¶¶ 82-83. As TD Bank points out,

6

Green-Browning cites no authority for the proposition that a consumer who preemptively notifies

7

CRAs of an anticipated dispute thereafter may dispense with the legal requirement that she

8

provide CRAs with notice once the actual dispute manifests.
Green-Browning’s reliance on Robinson and Conrad is misplaced. In Robinson, the

10

district court held that a plaintiff may assert an FCRA claim based on allegations that the furnisher

11
United States District Court
Northern District of California

9

failed to investigate after being notified that the plaintiff disputed the characterization of an

12

account as “in collections.” Robinson v. Transunion, LLC, No. 5:16-CV-03346-EJD, 2016 WL

13

5339807, at *4 (N.D. Cal. Sept. 23, 2016). In Conrad, the court held that a plaintiff may assert an

14

FCRA claim based on the failure to mention his bankruptcy in credit reporting. Conrad v.

15

Experian Info. Sols., Inc., No. 16-CV-04660 NC, 2017 WL 1739167, at *6 (N.D. Cal. May 4,

16

2017). This Court agrees that reporting inaccuracies such as those described in Robinson and

17

Conrad may give rise to an FCRA claim where the plaintiff alleges the required elements of

18

notification of the dispute and failure to investigate. Green-Browning does not allege that she

19

notified CRAs of a dispute with respect to the TD Bank trade line in the June 2016 Credit Report,

20

or that CRAs in turn notified TD Bank of such dispute. She therefore does not allege facts

21

sufficient to show that TD Bank’s investigation obligation was triggered with respect to the June

22

2016 Credit Report.

23

Accordingly, TD Bank’s motion to dismiss the FCRA claim is GRANTED.

24

B.

25

The CCRAA provides in relevant part that: “A person shall not furnish information on a

CCRAA (Claim 2)

26

specific transaction or experience to any consumer credit reporting agency if the person knows or

27

should know the information is incomplete or inaccurate.” Cal. Civ. Code § 1785.25(a). The

28

plaintiff need only allege facts showing that the furnisher knew or should have known of the
5

1

inaccuracy – there is no requirement under § 1785.25(a) of the CCRAA that a notice of dispute be

2

transmitted from the plaintiff to a CRA and then from a CRA to the furnisher. See Herrera v.

3

AllianceOne Receivable Mgmt., Inc., 170 F. Supp. 3d 1282, 1287 (S.D. Cal. 2016) (CCRAA claim

4

adequate where plaintiffs alleged that they attempted to notify the defendant furnisher to explain

5

that a demand order referenced a different person); Vartanian v. Portfolio Recovery Assocs., LLC,

6

No. 2:12-CV-08358-ODW, 2013 WL 877863, at *5 (C.D. Cal. Mar. 7, 2013) (CCRAA claim

7

adequate where plaintiff alleged that he sent dispute letters directly to furnisher).

8
9

Green-Browning alleges that TD Bank “intentionally and knowingly reported misleading
and inaccurate account information to the CRAs that did not comport with well-established
industry standards.” SAC ¶ 144. More particularly, she alleges that TD Bank knew the

11
United States District Court
Northern District of California

10

information it reported to the CRAs was misleading and inaccurate based on “the bankruptcy

12

notices, disputes [sic] letters from all three credit reporting agencies, the consumer data industry

13

resource guide, and results of its investigation.” Id. ¶ 148. Green-Browning also states that TD

14

Bank was given notice “of the plan confirmation and proof of claim forms sent by the U.S.

15

Bankruptcy Court.” Id.

16

The Court previously declined to address the merits of Green-Browning’s CCRAA claim

17

against TD Bank, stating that unless and until Green-Browning alleged a viable federal claim, the

18

Court would decline to exercise supplemental jurisdiction over her state law CCRAA claim.

19

Order Granting Motions to Dismiss FAC, ECF 88. As noted above, Experian has answered the

20

SAC, specifically, the FCRA claim. Experian’s Answer, ECF 93. Accordingly, the Court now

21

finds it appropriate to address the merits of Green-Browning’s CCRAA claim.

22

TD Bank argues that Green-Browning’s CCRAA claim is subject to dismissal on the same

23

grounds as her FCRA claim. However, the FCRA claim is subject to dismissal based on Green-

24

Browning’s failure to allege that she notified CRAs that she disputed the TD Bank trade line in the

25

June 2016 Credit Report, that a CRA in turn notified TD Bank of the dispute, and that TD Bank

26

failed to investigate such dispute. These pleading deficiencies are fatal to her FCRA claim

27

because a furnisher’s duties under § 1681s-2(b) of the FCRA arise “only after the furnisher

28

receives notice of dispute from a CRA.” Gorman, 584 F.3d at 1154. In contrast, “Section
6

1

1785.25(a) lacks § 1681s–2(b)’s CRA-dispute-notification trigger.” Vartanian, 2013 WL 877863,

2

at *5. TD Bank’s reliance on Carvalho for the general proposition that judicial interpretation of

3

the FCRA is “entitled to substantial weight when interpreting” the CCRAA does not advance its

4

position under these circumstances. Carvalho v. Equifax Info. Servs. LLC, 629 F.3d 876, 889 (9th

5

Cir. 2010) (internal quotation marks and citation omitted).
TD Bank has not challenged Green-Browning’s allegations that it knew or should have

6
7

known that it was reporting inaccurate information to CRAs, or asserted any other pleading

8

deficiency. Accordingly, the motion to dismiss the CCRAA claim is DENIED.

9
10

IV.

LEAVE TO AMEND
Having concluded that TD Bank is entitled to dismissal of Green-Browning’s FCRA claim,

United States District Court
Northern District of California

11

the Court must determine whether leave to amend is warranted. In making that determination, the

12

Court must consider the factors set forth by the Supreme Court in Foman v. Davis, 371 U.S. 178

13

(1962), and discussed at length by the Ninth Circuit in Eminence Capital, LLC v. Aspeon, Inc.,

14

316 F.3d 1048 (9th Cir. 2003). A district court ordinarily must grant leave to amend unless one or

15

more of the Foman factors is present: (1) undue delay, (2) bad faith or dilatory motive, (3)

16

repeated failure to cure deficiencies by amendment, (4) undue prejudice to the opposing party, and

17

(5) futility of amendment. Eminence Capital, 316 F.3d at 1052. “[I]t is the consideration of

18

prejudice to the opposing party that carries the greatest weight.” Id. However a strong showing

19

with respect to one of the other factors may warrant denial of leave to amend. Id.

20

The first factor (undue delay), second factor (bad faith), and fourth factor (undue

21

prejudice) do not weigh against granting leave to amend. However, the third factor (failure to cure

22

deficiencies) and the fifth factor (futility of amendment) weigh heavily against granting leave.

23

The SAC is Green-Browning’s third attempt to allege a viable FCRA claim against TD Bank. She

24

has clarified that her FCRA claim is grounded in the TD Bank trade line in the June 2016 Credit

25

Report. There is no indication that she could amend her pleading to allege that she sent CRAs

26

dispute letters regarding the June 2016 Credit Report, or that such dispute was forwarded to TD

27

Bank. Absent such allegations, she cannot allege a viable claim against TD Bank under the

28

FCRA. Leave to amend therefore is not warranted.
7

1

V.

ORDER

2

TD Bank’s motion to dismiss the SAC is

3

(1)

GRANTED WITHOUT LEAVE TO AMEND as to the FCRA claim; and

4

(2)

DENIED as to the CCRAA claim.

5
6
7
8

Dated: September 29, 2017
______________________________________
BETH LABSON FREEMAN
United States District Judge

9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
8