Katz et al v. American Express Company

Filing 49

ORDER (1) GRANTING EXPERIAN INFORMATION SOLUTIONS, INC.'S MOTION TO DISMISS AMENDED COMPLAINT (FILED MARCH 19, 2014), DOC. NO. 9 ; AND (2) GRANTING TRANS UNION LLC'S SUBSTANTIVE JOINDER, DOC. NO. 21 . Signed by JUDGE J. MICHAEL SEABRIGHT on 6/16/2014. Excerpts from the Conclusion: "[T]he court...DISMISSES the Amended Complaint as to all CRA [credit report agency] Defendants. Because AMEX [American Express Company] has recently filed its own Motion to D ismiss, the court will set a deadline for Plaintiffs to file a second amended complaint after it rules on AMEX's Motion with leave to amend." [WRITTEN ORDER follows hearing held June 16, 2014 on motions 9 , 21 . Minutes of hearing: do cket entry no. 48 ] (afc)CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

NORMAN KATZ AND ROSEANN ) CIV. NO. 14-00084 JMS-RLP
MANNING (FORMERLY KATZ) )
TOGETHER (KATZ),
) ORDER (1) GRANTING EXPERIAN
) INFORMATION SOLUTIONS, INC.’S
Plaintiffs,
) MOTION TO DISMISS AMENDED
) COMPLAINT (FILED MARCH 19,
vs.
) 2014), DOC. NO. 9; AND
) (2) GRANTING TRANS UNION LLC’S
AMERICAN EXPRESS COMPANY, ) SUBSTANTIVE JOINDER,
EXPERIAN CORP.,
) DOC. NO. 21
EQUIFAX, INC., and
)
TRANS UNION CORP.
)
)
Defendants.
)
_____________________________ )
ORDER (1) GRANTING EXPERIAN INFORMATION SOLUTIONS, INC.’S
MOTION TO DISMISS AMENDED COMPLAINT (FILED MARCH 19,
2014), DOC. NO. 9; AND (2) GRANTING TRANS UNION LLC’S
SUBSTANTIVE JOINDER, DOC. NO. 21
I. INTRODUCTION
Plaintiffs Norman Katz and Roseann Manning (collectively
“Plaintiffs”) allege that American Express Company (“AMEX”), Experian
Corp. (“Experian”), Equifax, Inc. (“Equifax”), and Trans Union Corp. (“Trans
Union”) (collectively “Defendants”) violated the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681 et. seq., when they failed to correct Plaintiffs’

individual credit reports to indicate the timely payments Plaintiffs made on their
corporate AMEX credit card.
Currently before the court is Experian’s Motion to Dismiss Plaintiffs’
Amended Complaint, which Trans Union substantively joins, Doc. Nos. 9 and 21.
Experian and Trans Union argue that the Amended Complaint includes only vague
references to the credit reporting agency Defendants (collectively “CRA
Defendants”) and therefore fails to allege a plausible claim for relief against them.
Based on the following, the court GRANTS Experian’s Motion to Dismiss and
Trans Union’s Substantive Joinder, with leave for Plaintiffs to amend.
II. BACKGROUND
A.

Factual Background
As alleged in the Amended Complaint, in 1994 Plaintiffs obtained a

corporate credit card through AMEX for their business, Second Equity Concepts,
Ltd. (“SECL”). Doc. No. 7, Am. Compl. at 2. From 1994 through 2010, Plaintiffs
made almost all of their personal purchases on this credit card, and timely made
payments using their personal joint checking account. Id. at 3.
In 2010, Plaintiffs applied for a mortgage and discovered that their
credit bureau reports did not reflect any of their timely AMEX credit card
payments. Id. AMEX never advised Plaintiffs that their personal payments on
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their corporate credit card would not be counted as a positive credit on their
personal credit reports. Id. In addition to the credit reports not reflecting the
timely credit card payments, AMEX reported to unspecified CRA Defendants that
Roseann Katz owed a debt of $6,441.25 to AMEX as a personal liability. Id. at 4.
AMEX refused to correct Plaintiffs’ credit reports despite Norman Katz’s requests.
Id. at 3-4.
As to CRA Defendants, the Amended Complaint alleges that:
1) AMEX’s counsel informed Plaintiffs that CRA Defendants have a “policy of not
retroactively correcting the credit record of a creditor even if requested to do so by
the reporting creditor,” and 2) CRA Defendants “failed to respond to certified mail
return receipt requested correspondence regarding the subject matter of this
complaint.” Id. at 1-2.
Plaintiffs assert that as a result of Defendants’ actions (1) they
suffered a credit score that is “much lower than it otherwise would have been had
[AMEX] reported personal payments on the SECL credit card properly;”
(2) Roseann Katz is unable to buy a new “automobile even though she otherwise
would qualify with the Hawaii State Credit Union;” and (3) Roseann Katz must
pay $200 more per month to buy a new car. Id. at 4. Plaintiffs assert that
Defendants’ actions violate and FCRA, and seek monetary damages and restitution

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in the form of corrected credit reports that reflect the timely made credit card
payments. Id. at 8.
B.

Procedural Background
Plaintiffs filed this action against AMEX on February 19, 2014, Doc.

No. 1, and filed an Amended Complaint adding CRA Defendants on March 19,
2014. Doc. No. 7. Experian filed a Motion to Dismiss on April 23, 2014, Doc.
No. 9, and Trans Union filed a Substantive Joinder on April 30, 2014. Doc. No.
21. Plaintiffs filed an Opposition on May 20, 2014, Doc. No. 33, and Experian
filed a Reply on May 27, 2014. Doc. No. 43. A hearing was held on June 16,
2014.
III. STANDARD OF REVIEW
Plaintiff is proceeding pro se; consequently, the court liberally
construes his pleadings. See Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir.
1987) (“The Supreme Court has instructed the federal courts to liberally construe
the ‘inartful pleading’ of pro se litigants.” (citing Boag v. MacDougall, 454 U.S.
364, 365 (1982) (per curiam))). The court also recognizes that “[u]nless it is
absolutely clear that no amendment can cure the defect . . . a pro se litigant is
entitled to notice of the complaint’s deficiencies and an opportunity to amend prior
to dismissal of the action.” Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir.

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1995); see also Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012). The court
should not, however, advise a litigant how to cure defects. This type of advice
“would undermine district judges’ role as impartial decisionmakers.” Pliler v.
Ford, 542 U.S. 225, 231 (2004).
Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss
a claim for “failure to state a claim upon which relief can be granted[.]”
“To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)); see also Weber v. Dep’t of Veterans Affairs,
521 F.3d 1061, 1065 (9th Cir. 2008). This tenet -- that the court must accept as
true all of the allegations contained in the complaint -- “is inapplicable to legal
conclusions.” Iqbal, 556 U.S. at 678. Accordingly, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. (citing Twombly, 550 U.S. at 555); see also Starr v. Baca, 652 F.3d
1202, 1216 (9th Cir. 2011) (“[A]llegations in a complaint or counterclaim may not
simply recite the elements of a cause of action, but must contain sufficient
allegations of underlying facts to give fair notice and to enable the opposing party
to defend itself effectively.”).

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Rather, “[a] claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing
Twombly, 550 U.S. at 556). In other words, “the factual allegations that are taken
as true must plausibly suggest an entitlement to relief, such that it is not unfair to
require the opposing party to be subjected to the expense of discovery and
continued litigation.” Starr, 652 F.3d at 1216. Factual allegations that only permit
the court to infer “the mere possibility of misconduct” do not show that the pleader
is entitled to relief as required by Rule 8. Iqbal, 556 U.S. at 679.
IV. ANALYSIS
The only allegations in the Amended Complaint as to CRA
Defendants are that (1) AMEX’s counsel informed Plaintiffs that CRA Defendants
have a “policy of not retroactively correcting the credit record of a creditor even if
requested to do so by the reporting creditor,” and (2) CRA Defendants “failed to
respond to certified mail return receipt requested correspondence regarding the
subject matter of this complaint.” Doc. No. 7, Am. Compl. at 1-2. CRA
Defendants argue that these allegations, apparently directed to asserting a FCRA
violation, fail to state a plausible claim upon which relief can be granted. The
court agrees.
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Plaintiffs’ amended complaint cites 15 U.S.C. § 1681 generally, and
construing the amended complaint liberally, the court assumes Plaintiffs are
claiming a violation of 15 U.S.C. § 1681i(a)(1)(A), which provides in relevant
part:
[I]f the completeness or accuracy of any item of
information contained in a consumer’s file at a consumer
reporting agency is disputed by the consumer and the
consumer notifies the agency directly, or indirectly
through a reseller, of such dispute, the agency shall, free
of charge, conduct a reasonable reinvestigation to
determine whether the disputed information is inaccurate
and record the current status of the disputed information,
or delete the item from the file in accordance . . . before
the end of the 30-day period beginning on the date on
which the agency receives the notice of the dispute from
the consumer or reseller.
A § 1681i(a)(1)(A) claim include the following elements:
(i) the plaintiff’s credit report contains inaccurate or
incomplete information; (ii) the plaintiff notified the
consumer reporting agency directly of the inaccurate or
incomplete information; (iii) the plaintiff’s dispute is not
frivolous or irrelevant; (iv) the consumer reporting
agency failed to respond to the plaintiff’s dispute; (v) the
failure to reinvestigate caused the consumer to suffer
damages; and (vi) actual damages resulted to the
plaintiff. Actual damages may include damages for
humiliation, mental distress, and injury to reputation and
creditworthiness, even if the plaintiff has suffered no outof-pocket losses.

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Thomas v. Trans Union, LLC, 197 F. Supp. 2d 1233, 1236 (D. Or. 2002); see also
Darrin v. Bank of Am., N.A., 2014 WL 1922819, at *7 (E.D. Cal. May 14, 2014);
Baker v. Trans Union LLC, 2008 WL 4838714, at *6 (D. Ariz. Nov. 6, 2008);
Saenz v. Trans Union, LLC, 621 F. Supp. 2d 1074, 1082 (D. Or. 2007); Acton v.
Bank One Corp., 293 F. Supp. 3d 1092, 1098 (D. Ariz. 2003).
The Amended Complaint fails to allege basic elements of a § 1681i
claim, much less sufficient facts that would allow the court to draw the reasonable
inference that CRA Defendants are liable for the misconduct alleged. As an initial
matter, Plaintiffs grouped together all CRA Defendants, making it unclear what
specific actions each CRA Defendant did that violated § 1681i. Further, to the
extent Plaintiffs base their claim on the assertion that CRA Defendants have a
“policy of not retroactively correcting the credit record of a creditor even if
requested to do so by the reporting creditor,” Plaintiffs fail to allege (1) whether
AMEX requested any particular CRA Defendant to correct any information with
respect to Plaintiffs, (2) what that CRA Defendant’s response was, and (3) when
such events occurred. And to the extent that Plaintiffs base their claim on CRA
Defendants “failing to respond to certified mail return receipt requested
correspondence regarding the subject matter of this complaint,” the Amended
Complaint fails to allege (1) when the Plaintiffs sent the alleged correspondence,
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(2) to which CRA Defendants it was sent, (3) what the correspondence requested,
(4) whether CRA Defendants responded, (5) whether CRA Defendants investigated
Plaintiffs’ complaint, and (6) what any investigation revealed. Without these basic
allegations explaining the basis of this claim, the court is unable to draw the
reasonable inference that CRA Defendants are liable for any particular misconduct.
In opposition, Plaintiffs assert that they “are not required to present
their case in the [Amended Complaint] but to merely put the Defendant on notice as
to what the case entails.” Doc. No. 33, Pls.’ Opp’n at 7. Plaintiffs misunderstand
their obligations -- Plaintiffs must set forth sufficient facts to assert a plausible
claim for relief, see Iqbal, 556 U.S. at 678, and as explained above, they have failed
to do so. Stated differently, regardless of whether a CRA Defendant can guess as to
the basis of Plaintiffs’ claims, Plaintiffs must still describe their claims in sufficient
detail to give both CRA Defendants and the court notice of this basis.
Although not entirely clear, Plaintiffs also appear to argue that they
need not name the credit reporting agencies as Defendants and/or include factual
allegations about them because they have included CRA Defendants in this action
to ensure that Plaintiffs will be afforded full relief by having their credit reports
fixed. See Doc. No. 33, Pls.’ Opp’n at 2 (arguing that “it is clear from the Law at
hand that the Congress placed the burden of keeping information accurate first on
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the profit making reporting agencies”). The court rejects this argument. Plaintiffs
must still assert a claim against these Defendants for them to remain in this action.
The court therefore GRANTS Experian’s Motion to Dismiss and Trans
Union’s Substantive Joinder, with leave to amend.1 That is, because Plaintiffs are
proceeding pro se, the court will grant Plaintiffs leave to amend to attempt to cure
deficiencies in their Amended Complaint.
Accordingly, the court DISMISSES Plaintiffs’ FCRA claim against
CRA Defendants with leave to amend.
V. CONCLUSION
For the foregoing reasons, the court GRANTS the Motion to Dismiss
and Substantive Joinder, and DISMISSES the Amended Complaint as to all CRA
Defendants. Because AMEX has recently filed its own Motion to Dismiss, the
court will set a deadline for Plaintiffs to file a second amended complaint after it
rules on AMEX’s Motion.

1

Although Equifax has not appeared, Experian’s and Trans Union’s arguments apply
equally to Equifax such that the court sua sponte dismisses the claims against Equifax for the
same reasons set forth by Experian and Trans Union. See Abagninin v. AMVAC Chem. Corp.,
545 F.3d 733, 742-43 (9th Cir. 2008) (upholding dismissal in favor of a party which had not
appeared, on the basis of facts presented by other defendants which had moved to dismiss)
(citations omitted).
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If Plaintiffs elect to file an second amended complaint, it must contain
short, plain statements explaining how CRA Defendants violated the FCRA in light
of the court’s discussion above. The second amended complaint must designate
that it is the “Second Amended Complaint,” and must be retyped or rewritten in its
entirety -- it may not incorporate any part of the original Complaint or First
Amended Complaint by reference. Ferdik v. Bonzelet, 963 F.2d 1258 (9th Cir.
1992).
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 16, 2014.

/s/ J. Michael Seabright
J. Michael Seabright
United States District Judge

Katz et al. v. Am. Express Co. et al., Civ. No. 14-00084 JMS-RLP, Order (1) Granting Experian
Information Solutions, Inc.’s Motion to Dismiss Amended Complaint (Filed March 19, 2014),
Doc. No. 9; and (2) Granting Trans Union LLC’s Substantive Joinder, Doc. No. 21

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