Soyinka v. Equifax Information Services, LLC
Filing
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MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 9/15/2020.Mailed notice.(jlj, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
OLAMIDE SOYINKA,
Plaintiff,
vs.
EQUIFAX INFORMATION SERVICES, LLC,
Defendant.
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20 C 1773
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
Olamide Soyinka sues Equifax Information Services, LLC under the Fair Credit
Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., alleging that it failed to reinvestigate and
remove inaccurate debt information on her credit report. Doc. 1. Equifax moves under Civil
Rule 12(b)(6) to dismiss the complaint. Doc. 16. The motion is granted.
Background
In resolving a Rule 12(b)(6) motion, the court assumes the truth of the complaint’s wellpleaded factual allegations, though not its legal conclusions. See Zahn v. N. Am. Power & Gas,
LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider “documents attached to
the complaint, documents that are critical to the complaint and referred to in it, and information
that is subject to proper judicial notice,” along with additional facts set forth in Soyinka’s brief
opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Phillips
v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019-20 (7th Cir. 2013). The facts are set forth as
favorably to Soyinka as those materials allow. See Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th
Cir. 2016). In setting forth the facts at the pleading stage, the court does not vouch for their
accuracy. See Goldberg v. United States, 881 F.3d 529, 531 (7th Cir. 2018).
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The disputed debt arises from a credit card account that Soyinka opened with Credit One
Bank. Doc. 1 at ¶ 6; Doc. 25 at 2. At some point, LVNV Funding claimed that it had purchased
the account and began sending Soyinka dunning letters. Doc. 1 at ¶ 7. Soyinka replied to LVNV
in a letter dated June 12, 2019, stating that she was insolvent and that the debt amount LVNV
asserted was inaccurate. Doc. 1-1 at 4. LVNV did not respond. Doc. 1 at ¶ 10. In a second
letter to LVNV dated October 22, 2019, Soyinka again stated that she was insolvent and that the
asserted debt amount was incorrect. She also explained that she had “never opened an account
with your company” and asked for “a copy of the purchase and sale agreement giving your
company the right to collect this debt.” Doc. 1-1 at 7. LVNV did not respond with any
documents confirming its purchase of Soyinka’s debt. Doc. 1 at ¶¶ 12-13. Throughout that time,
LVNV had been reporting the details of Soyinka’s credit card account to Equifax as a debt owed
to LVNV. Doc. 1 at ¶¶ 8, 11, 13.
Before proceeding, a brief word about terminology under the FCRA. Soyinka is a
“consumer.” 15 U.S.C. § 1681a(c). Equifax is a “consumer reporting agency” that generates
“consumer reports,” the more familiar term being “credit report.” Id. § 1681a(d), (f). A credit
report compiles information provided by “furnishers,” 12 C.F.R. § 1022.41(c), which typically
are the consumer’s creditors (here, LVNV). The industry calls individual entries on a credit
report “tradelines.” Rhone v. Med. Bus. Bureau, LLC, 915 F.3d 438, 440 (7th Cir. 2019).
Soyinka wrote to Equifax on November 21, 2019 to dispute the LVNV tradeline on her
credit report, claiming that Equifax was “reporting inaccurate information” concerning the debt
and asking Equifax to remove it from the report. Doc. 1-1 at 2; Doc. 1 at ¶ 14. Soyinka
explained that she had twice written to LVNV that “the debt they are reporting is not accurate,”
but that LVNV had continued to report it without noting any dispute. Doc. 1-1 at 2. Soyinka
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stated that LVNV’s failure to note a dispute violated “various state and federal statutes” and
warned Equifax not to “rely on information provided by furnishers who violate federal and state
law.” Ibid.
Upon receiving Soyinka’s dispute, Equifax notified LVNV, which sent back confirmation
of the tradeline via “ACDV.” Doc. 1 at ¶¶ 32-34. The complaint does not define that acronym,
but the court takes notice that it refers to “automated consumer dispute verification,” an
electronic system that allows reporting agencies quickly to verify information with furnishers.
See Consumer Fin. Prot. Bureau, Key Dimensions and Processes in the U.S. Credit Reporting
System 32 (Dec. 2012), https://files.consumerfinance.gov/f/201212_cfpb_credit-reporting-whitepaper.pdf; Denan v. Trans Union LLC, 959 F.3d 290, 294 n.3 (7th Cir. 2020) (taking judicial
notice of that CFPB report). Equifax has retained the tradeline in Soyinka’s credit report without
noting any dispute. Doc. 1 at ¶ 36.
Soyinka filed this suit in March 2020. Doc. 1. She alleges that “the debt is not owed,”
which the court construes in her favor as an allegation that LVNV does not own the debt. Id. at
¶ 26. Soyinka’s sole claim is that Equifax undertook an “unreasonable reinvestigation” into the
tradeline under two sections of the FCRA, §§ 1681e(b) and 1681i(a). Id. at ¶¶ 39-49.
Discussion
Sections 1681e(b) and 1681i(a) require consumer reporting agencies to adopt processes
to ensure that the information they report is accurate. Section 1681e(b) directs agencies to
“follow reasonable procedures to assure maximum possible accuracy of the information” they
include in credit reports. 15 U.S.C. § 1681e(b). If a consumer notifies an agency of a dispute
concerning a tradeline, § 1681i(a) requires the agency to “conduct a reasonable reinvestigation to
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determine whether the disputed information is inaccurate” and specifies procedures for the
agency to notify the furnisher, conduct a reinvestigation, and resolve the dispute. Id. § 1681i(a).
The Seventh Circuit recently addressed in Denan v. Trans Union, supra, what
§§ 1681e(b) and 1681i(a) require of consumer reporting agencies. Joining several other circuits,
the Seventh Circuit held that the terms “accuracy” and “inaccurate” in those provisions refer only
to factual errors, not to legal defenses to the debt. Denan, 959 F.3d at 296 (citing DeAndrade v.
Trans Union LLC, 523 F.3d 61, 68 (1st Cir. 2008); Carvalho v. Equifax Info. Servs., LLC, 629
F.3d 876, 892 (9th Cir. 2010); and Wright v. Experian Info. Sols., Inc., 805 F.3d 1232, 1244
(10th Cir. 2015)). Thus, while § 1681e(b) requires agencies to adopt “‘reasonable procedures’ to
ensure accuracy,” it does not require them to evaluate “non-adjudicated legal defenses to
[consumers’] debts.” Id. at 295. Likewise, while § 1681i(a) “requires consumer reporting
agencies to ‘conduct a reasonable reinvestigation to determine whether the disputed information
is inaccurate,’” they are “neither qualified nor obligated to resolve legal issues.” Id. at 296. The
consumers in Denan had taken out payday loans that, they argued, violated state usury laws, such
that the tradelines on their credit reports were “legally inaccurate.” Id. at 292-93. The Seventh
Circuit affirmed judgment on the pleadings for the reporting agency because the consumers did
not allege that their credit report “contained inaccurate information” within the meaning of
§§ 1681e(b) and 1681i(a). Id. at 298. As discussed in detail below, Denan restricts the terms
“accuracy” and “inaccurate” in those provisions to factual issues because consumer reporting
agencies are neither competent nor obligated to resolve legal disputes: “Only a court can fully
and finally resolve the legal question of a loan’s validity.” Id. at 295.
Soyinka alleges that LVNV does not own her credit card debt. Doc. 1 at ¶ 26. The
parties agree that the central question here is whether that allegation, if true, would result in her
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Equifax credit report being inaccurate within the meaning of the FCRA. Doc. 16 at 6; Doc. 25 at
3. If Soyinka’s argument about who owns her credit card debt raises a legal dispute, then Denan
dictates dismissal. Several decisions in this District have cited Denan in dismissing materially
identical lawsuits on the ground that questions regarding the ownership of debts present only
legal issues. See Juarez v. Experian Info. Sols., Inc., 2020 WL 5201798 (N.D. Ill. Aug. 31,
2020); Molina v. Experian Info. Sols., Inc., 2020 WL 4748149 (N.D. Ill. Aug. 17, 2020); Hoyos
v. Experian Info. Sols., Inc., 2020 WL 4748142 (N.D. Ill. Aug. 17, 2020); Rodas v. Experian
Info. Sols., Inc., 2020 WL 4226669 (N.D. Ill. July 23, 2020); Chuluunbat v. Cavalry Portfolio
Servs., LLC, 2020 WL 4208106 (N.D. Ill. July 22, 2020).
Soyinka maintains that those cases were wrongly decided because they overlook or
discount Seventh Circuit decisions—Chemetall GMBH v. ZR Energy, Inc., 320 F.3d 714 (7th
Cir. 2003), and In re Meyer, 151 F.3d 1033, 1998 WL 538160 (7th Cir. 1998) (unpub.)—holding
that the assignment and ownership of debts are questions of fact, not law. Doc. 25 at 4-6. Meyer
was an unpublished order issued before January 1, 2007, so the court will not discuss it further.
See 7th Cir. R. 32.1(d) (“No order of this court issued before January 1, 2007, may be cited
except to support a claim of preclusion … or to establish the law of the case … .”). In
Chemetall, an Illinois contract case brought under the diversity jurisdiction, the Seventh Circuit
held that the assignment of a right depends on the parties’ intent, and that intent is a “question of
fact to be derived not only from the instrument executed by the parties, but also from the
surrounding circumstances.” Id. at 720-21 (citation omitted).
At first glance, that passage from Chemetall lends support to Soyinka’s view that whether
Credit One assigned to LVNV its interest in her debt is a question of fact. But that appearance is
deceiving, as the contours of the law-fact distinction vary depending on context. In a habeas
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case, the Supreme Court explained that drawing the law-fact line calls for a practical judgment
specific to the matter in question:
Perhaps much of the difficulty in this area stems from the practical truth that
the decision to label an issue a “question of law,” a “question of fact,” or a
“mixed question of law and fact” is sometimes as much a matter of allocation
as it is of analysis. At least in those instances in which Congress has not
spoken and in which the issue falls somewhere between a pristine legal
standard and a simple historical fact, the fact/law distinction at times has
turned on a determination that, as a matter of the sound administration of
justice, one judicial actor is better positioned than another to decide the issue
in question.
Miller v. Fenton, 474 U.S. 104, 113-14 (1985) (citing Henry P. Monaghan, Constitutional Fact
Review, 85 Colum. L. Rev. 229, 237 (1985)). The Seventh Circuit has expressed similar
sentiments. See Ward v. Sternes, 334 F.3d 696, 701 (7th Cir. 2003) (observing that “many
square issues [do] not fit neatly into the round holes of pure fact or pure law”); Ind. Harbor Belt
R. Co. v. Am. Cyanamid Co., 916 F.2d 1174, 1182 (7th Cir. 1990) (“[T]rials are to determine
facts, not law. More precisely—for there is no sharp line between ‘law’ and ‘fact’—trials are to
determine adjudicative facts rather than legislative facts.”); Weidner v. Thieret, 866 F.2d 958,
961 (7th Cir. 1989) (“It is nowhere written that the law-fact distinction must be treated the same
in 28 U.S.C. § 2254(d) and in Fed. R. Civ. P. 52(a). ‘Law’ and ‘fact’ do not in legal discourse
denote pre-existing things; they express policy-grounded legal conclusions.”).
For purposes of this case, the court need not fix as an abstract and general proposition
whether ownership of a debt is “legal” or “factual.” The correct—and more limited—question is
whether, within the meaning of the FCRA, the complaint alleges a factual issue regarding the
“accuracy” of the pertinent tradeline in Equifax’s credit report. The First Circuit in DeAndrade
was the first appeals court to recognize the distinction between factual inaccuracies and legal
defenses in this context. See DeAndrade, 523 F.3d at 68-69. Shortly after DeAndrade issued, a
district court in the First Circuit observed that “classifying a dispute over a debt as ‘factual’ or
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‘legal’ will usually prove a frustrating exercise.” Cornock v. Trans Union LLC, 638 F. Supp. 2d
158, 163 (D.N.H. 2009).
The consumer in Cornock claimed that “he did not sign the credit card application as a
matter of fact,” but the reporting agency retorted that he meant that “he therefore had no liability
as a matter of law.” Ibid. As the Cornock court observed, that dispute has “both a factual
component … and a legal component.” Id. at 164. The same is true here: Soyinka states that
LVNV lacks the correct paperwork establishing its ownership of her debt as a matter of fact, and
LVNV claims that it owns her debt as a matter of law. The Cornock court solved this puzzle by
recognizing that the law-fact divide in the FCRA context turns on the institutional competence of
consumer reporting agencies: “DeAndrade teaches that the FCRA imposes no obligation on
consumer reporting agencies to resolve ‘questions that can only be resolved by a court of law.’”
Id. at 165 (quoting DeAndrade, 523 F.3d at 68); see also Juarez, 2020 WL 5201798, at *4
(“[T]he Court must look to whether [the agency] ‘could have uncovered the inaccuracy if it had
reasonably’ investigated the issue.”) (quoting DeAndrade, 523 F.3d at 68).
Cornock correctly holds that the key criterion in distinguishing fact from law in the
FCRA context is the consumer reporting agency’s capacity to resolve a given dispute. Denan
repeatedly emphasized that reporting agencies have no ability to resolve legal disputes between
consumers and creditors, such as the consumer’s submission there that the reported debts arose
from loans that violated state usury laws. 959 F.3d at 293. Denan explained that the FCRA
“imposes duties on consumer reporting agencies and furnishers in a manner consistent with their
respective roles in the credit reporting market.” Id. at 294. Denan added that the FCRA’s
implementing regulations require only furnishers, not reporting agencies, to ensure that debt
information “correctly [r]eflects … liability for the account.” Id. at 295 (citing 12 C.F.R.
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§ 1022.41(a)). And Denan made clear that reporting agencies are not “tribunals,” so “[t]he
power to resolve these legal issues exceeds [their] competencies,” as “[o]nly a court can fully
and finally resolve the legal question of a loan’s validity.” Ibid. (citing DeAndrade, 523 F.3d at
68). In sum, Denan concluded: “Because no formal adjudication discharged plaintiffs’ debts, no
reasonable procedures could have uncovered an inaccuracy in plaintiffs’ credit reports.” Id. at
296. Thus, for purposes of the FCRA, a reporting agency’s competence to resolve the dispute at
issue is what divides law from fact. Cf. Miller, 474 U.S. at 114 (holding that the law-fact
distinction depends on which actor is “better positioned … to decide the issue in question”).
A dispute that would be primarily “factual” in court may still exceed the capacities of a
consumer reporting agency, and thus pose a legal question under the FCRA. Brill v. TransUnion
LLC, 838 F.3d 919 (7th Cir. 2016), though predating Denan, provides a good example. Alleging
that a reporting agency violated § 1681i(a), the plaintiff there claimed that his ex-girlfriend had
forged his signature on an automobile lease and then missed lease payments, negatively affecting
his credit report. Id. at 920. If the plaintiff had sued the ex-girlfriend rather than the reporting
agency, then the question whether she forged the lease would present a question of fact for the
factfinder. Yet the district court dismissed the suit, reasoning that “whether [the plaintiff’s]
signature on the 2013 lease extension is a forgery is a legal question that [the reporting agency]
could not resolve through reinvestigation.” Brill v. Trans Union LLC, 2015 WL 9095103, at *4
(W.D. Wis. Dec. 16, 2015). And the Seventh Circuit affirmed, holding that the agency was not
obliged to resolve that question, rejecting the plaintiff’s attempt to “shift the burden of proof to”
the agency by “invok[ing] the statutory duty of reinvestigation.” Brill, 838 F.3d at 921.
Conversely, some defenses to debts that might be deemed “legal” in other contexts fall
within a consumer reporting agency’s competence, and thus pose factual questions under the
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FCRA. In Henson v. CSC Credit Services, 29 F.3d 280 (7th Cir. 1994), an Indiana consumer
alleged that two consumer reporting agencies erroneously listed a money judgment against him.
Id. at 282-83. The Seventh Circuit examined the relevant state court documents and concluded
that, “[u]nder Indiana law,” no money judgment had been “officially entered,” though one had
been “erroneously noted.” Id. at 285. Although such fine-grained interpretation of court
documents might seem quintessentially legal, the Seventh Circuit held that the reporting agencies
could be liable under § 1681i(a) because “a credit reporting agency may be required, in certain
circumstances, to verify the accuracy of its initial source of information.” Id. at 287. Similarly,
in Dennis v. BEH-1, LLC, 520 F.3d 1066 (9th Cir. 2008), the Ninth Circuit reversed a grant of
summary judgment to a reporting agency on §§ 1681e(b) and 1681i(a) claims where the
reporting agency had misinterpreted state court documents. Id. at 1069-70. As an Indiana
district court recognized, Dennis implies “some duty” on the part of reporting agencies “to train
their employees to understand[] the legal significance and effect of the documents they rely
upon.” Edwards v. Equifax Info. Servs., LLC, 2018 WL 1748132, at *10 (S.D. Ind. Mar. 13,
2018), report and recommendation adopted, 2018 WL 1745965 (S.D. Ind. Apr. 11, 2018).
Applying those principles here, Soyinka has no viable claim against Equifax. At most,
§§ 1681e(b) and 1681i(a) obligate consumer reporting agencies to investigate and resolve
straightforward disputes, such as the contents of a document, the existence and easily ascertained
meaning of court orders, or some other truly objective matter. See Denan, 959 F.3d at 297
(describing “the inaccuracy challenged in Henson (whether a judgment was issued against the
consumer)” as “straightforward” and “fact-based”); Rodas, 2020 WL 4226669, at *2 (observing
that a consumer’s allegations of “inaccurate amounts, tradeline items not immediately removed
once vacated, and inaccurately updated loan terms” would raise factual disputes, not legal
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disputes). To avoid dismissal, then, a consumer must identify a straightforward dispute that the
reporting agency failed to resolve or investigate. See Denan, 959 F.3d at 297 (affirming
dismissal where complaint “pleaded only speculative legal inaccuracies”).
Soyinka has not done that here. She argues, at a high level of generality, that LVNV does
not own the debt in question. Doc. 1 at ¶ 26; Doc. 25 at 3. She does not point to a discrete issue
that Equifax, rather than a legal tribunal, could be expected to resolve. Her case thus falls
squarely under the Seventh Circuit’s holding in Denan that consumers must take to courts, not to
consumer reporting agencies, such legal defenses to their debts.
Conclusion
Equifax’s motion to dismiss is granted. The dismissal is with prejudice, as the court can
discern no amendment that would cure the flaw in Soyinka’s claims, and Soyinka herself does
not request leave to amend in the event of dismissal. See Haywood v. Massage Envy
Franchising, LLC, 887 F.3d 329, 335 (7th Cir. 2018) (“Nothing in Rule 15, nor in any of our
cases, suggests that a district court must give leave to amend a complaint where a party does not
request it or suggest to the court the ways in which it might cure the defects. To the contrary, we
have held that courts are within their discretion to dismiss with prejudice where a party does not
make such a request or showing.”); Gonzalez-Koeneke v. West, 791 F.3d 801, 808 (7th Cir.
2015) (“A district court acts within its discretion in … dismissing a complaint with prejudice
… when the plaintiff fails to demonstrate how [an] amendment would cure the deficiencies in the
prior complaint.”).
September 15, 2020
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United States District Judge
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