Sanchez v. Department Stores National Bank

Filing 11

ORDER Denying 7 Motion to Dismiss. Signed by Judge Dana M. Sabraw on 11/6/2017. (aef)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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ORDER DENYING MOTION TO
DISMISS

Plaintiff,

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Case No. 17-cv-1675 DMS (MDD)

HORDELICIA SANCHEZ,

v.
DEPARTMENT STORES
NATIONAL BANK and EQUIFAX
INFORMATION SERVICES, LLC,
Defendants.

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Pending before the Court is Defendant Equifax Information Services, LLC’s

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(“Equifax”) motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

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Plaintiff Hordelicia Sanchez filed an opposition, and Defendant filed a reply. For

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the reasons set forth below, the motion is denied.

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I.

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BACKGROUND

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Plaintiff alleges she had an outstanding balance on her Chase credit card

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account, which has been discharged when Department Stores National Bank

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(“DSNB”) issued a Form 1099-C, “Cancellation of Debt,” on October 7, 2013.

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(Compl. ¶ 13.) Nevertheless, when Plaintiff obtained a consumer report from

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Equifax on September 25, 2016, she discovered that DSNB had been inaccurately
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reporting a balance due on her credit card account. (Id. ¶ 21.) On January 5, 2017,

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Plaintiff sent a letter to Equifax, disputing the accuracy of the outstanding debt. (Id.

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¶ 22.) Equifax, however, failed to conduct a reasonable reinvestigation regarding

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the disputed information and continued to report false information on her consumer

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report. (Id. ¶ 24.) On July 18, 2017, Plaintiff brought suit against Equifax and

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DSNB, alleging violations of the Fair Credit Reporting Act (“FCRA”) and the

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California Consumer Credit Reporting Agencies Act (“CCCRAA”). Equifax filed

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the present motion in response to the Complaint.

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II.

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DISCUSSION

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A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests

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the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6);

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Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). In deciding a motion to

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dismiss, all material factual allegations of the complaint are accepted as true, as well

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as all reasonable inferences to be drawn from them. Cahill v. Liberty Mut. Ins. Co.,

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80 F.3d 336, 338 (9th Cir. 1996). However, a court need not accept all conclusory

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allegations as true. Rather, it must “examine whether conclusory allegations follow

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from the description of facts as alleged by the plaintiff.” Holden v. Hagopian, 978

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F.2d 1115, 1121 (9th Cir. 1992) (citation omitted); see Benson v. Ariz. St. Bd. of

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Dental Exam’rs, 673 F.2d 272, 275–76 (9th Cir. 1982) (court need not accept

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conclusory legal assertions). A motion to dismiss should be granted if a plaintiff’s

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complaint fails to contain “enough facts to state a claim to relief that is plausible on

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its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial

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plausibility when the plaintiff pleads factual content that allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.”

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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).

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Defendant moves to dismiss Plaintiff’s FCRA claim under 15 U.S.C. § 1681e,

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arguing Plaintiff has failed to allege Defendant prepared a consumer report to a third
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party, which is a requisite element of the claim. Specifically, Defendant contends

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the consumer credit disclosure Plaintiff obtained from Defendant solely for her own

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review was not a “consumer report” within the meaning of the statute, which requires

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delivery to a third party. However, Plaintiff has alleged Defendant communicated

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inaccurate information in her consumer report to third parties. Specifically, Plaintiff

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has stated “Defendant Equifax willfully failed to maintain and/or follow reasonable

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procedures to assure maximum accuracy of the information it reported to one or

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more third parties pertaining to the Account, in violation of 15 U.S.C. § 1681e.”

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(Compl. ¶ 34.)

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In any event, under Ninth Circuit case law, transmission of a consumer report

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to a third party is not a prerequisite to establishing liability under § 1681e(b).

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Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995); see

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Ottiano v. Credit Data Sw., Inc., 54 F. App’x 640 (9th Cir. 2003) (“neither the

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transmission of the report to third parties, nor a denial of credit, is a prerequisite to

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recovery under the FCRA”) (citing Guimond, 45 F.3d at 1333); see also Neill v.

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Experian Info. Sols., Inc., No. CV-16-04326-PHX-JJT, 2017 WL 3838671, at *3 (D.

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Ariz. Sept. 1, 2017) (“the statute does not explicitly require delivery to a third party

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in order to be a ‘consumer report.’”); Larson v. Trans Union, LLC, No. 12-CV-

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05726-WHO, 2013 WL 5665629, at *4 n.7 (N.D. Cal. Oct. 15, 2013) (“transmission

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of a credit report to a third party is not a prerequisite to recovery under the FCRA.”);

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Baker v. Trans Union LLC, No. CV-10-8038-PCT-NVW, 2010 WL 2104622, at *4

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(D. Ariz. May 25, 2010) (“transmission of the report to third parties is not a

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prerequisite to establishing liability under § 1681e(b).”).

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“Liability under § 1681e(b) is predicated on the reasonableness of the credit

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reporting agency’s procedures in obtaining credit information.” Guimond, 45 F.3d

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at 1333 (citing Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th

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Cir. 1991)). Therefore, to state a claim under § 1681e(b), a plaintiff must allege “a

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credit reporting agency prepared a report containing inaccurate information.” Id.
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(citing Cahlin, 936 F.2d at 1156). Here, Plaintiff’s allegation that Equifax prepared

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a consumer report that included incorrect information regarding the balance due on

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her credit card account is sufficient to state a prima facie claim under § 1681e(b) at

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this stage of the proceeding. Defendant’s motion is therefore denied.

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III.

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CONCLUSION

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For the foregoing reasons, Defendant’s motion to dismiss is denied.

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IT IS SO ORDERED.

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Dated: November 6, 2017

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