Kaenel v. TransUnion, LLC et al
ORDER Signed by the Honorable John J. Tharp, Jr on 8/1/2022: For the reasons set forth in the Statement below, Defendant Capital One's motion to dismiss 25 is denied. On its own motion, the Court grants the parties limited discovery on the iss ue of whether Capital One received notice of her dispute from TransUnion pursuant to Federal Rule of Civil Procedure 56(d). The parties are directed to confer and file a status report with a proposed schedule for limited discovery on the subject of notice by August 10, 2022. (For further details see order)Mailed notice(air, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
SOLUTIONS, INC.; SYNCHRONY
BANK; CAPITAL ONE BANK (USA),
No. 22 C 02290
Judge John J. Tharp, Jr.
For the reasons set forth in the Statement below, Defendant Capital One’s motion to
dismiss  is denied. On its own motion, the Court grants the parties limited discovery on the
issue of whether Capital One received notice of her dispute from TransUnion pursuant to Federal
Rule of Civil Procedure 56(d). The parties are directed to confer and file a status report with a
proposed schedule for limited discovery on the subject of notice by August 10, 2022.
Anita Kaenel filed a complaint that alleges, in part, that TransUnion issued a credit report
that inaccurately reported an account she had with Capital One Bank as “120 days past due.”
Compl. ¶ 51, ECF No. 1. Ms. Kaenel alleges that she notified TransUnion and that “[i]t is believed
and therefore averred that Transunion notified Defendant Capital One of the Plaintiff’s dispute.”
Id. at ¶ 56. Capital One filed its motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
arguing that Ms. Kaenel failed to state a claim that it violated its duties under 15 U.S.C. § 1681s–
2(b) because she did not adequately allege that Capital One received notice of the dispute.
A plaintiff must “state a claim to relief that is plausible on its face” to survive a motion to
dismiss pursuant to Rule 12(b)(6). Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim
is plausible where a plaintiff ‘pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.’” Bilek v. Fed. Ins. Co., 8 F.4th
581, 586 (7th Cir. 2021) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). When deciding a
motion to dismiss, the Court treats the facts alleged in the complaint as true and draws all
reasonable inferences in her favor. Id. at 584. At the pleading stage, the plaintiff does not have to
support her factual allegations with evidence. Wheeler v. Piazza, 364 F. Supp. 3d 870, 880 (N.D.
Ill. 2019). Courts do not consider extrinsic evidence without converting the motion to a motion for
summary judgment unless the evidence “is referenced in the complaint and central to plaintiff’s
claims.” Totty v. Anderson Funeral Home, Ltd., 448 F. Supp. 3d 928, 934 n.4 (N.D. Ill. 2020).
When a consumer disputes information included in their credit report, the Fair Credit
Reporting Act, (“FCRA”), 15 U.S.C. § 1681i(a)(2), requires the credit reporting agency to provide
prompt notice to the furnisher of the disputed information. That notice triggers the furnisher of
information’s various duties to the consumers, including a duty to investigate and review relevant
information to the disputed information reported to the credit reporting agency. 15 U.S.C. § 1681s–
2(b). Ms. Kaenel alleges that Capital One received notice and failed to fulfill its duties to her in
violation of section 1681s–2(b). Capital One challenges her allegation that it received notice.
Ms. Kaenel contends that she does not need to allege notice, relying on Lang v. TCF Nat’l
Bank, 249 F. App’x 464 (7th Cir. 2007). In Lang, the Seventh Circuit held in a nonprecedential
opinion that plaintiffs do not have to specifically allege notice to state a claim under section
§ 1681s–2(b). 249 F. App’x at 466-67. The Seventh Circuit held that the plaintiff stated a plausible
claim for relief by alleging “that he told ChexSystems (a CRA) that TCF furnished false
information, that TCF refused to investigate or correct the false report even after learning of the
asserted error, and that it thereby violated the FCRA.” Id. at 466. As the opinion is nonprecedential,
however, many courts in this district have disagreed with the Seventh Circuit’s holding and held
that plaintiffs must allege that a furnisher of credit information had notice of the dispute. See, e.g.,
Stewart v. JP Morgan Chase Bank, N.A., No. 18 C 7584, 2020 WL 444248, at *4 (N.D. Ill. Jan.
28, 2020) (holding that plaintiffs are required to allege notice); see also Thompson v. Advoc. S.
Suburban Hosp., No. 15-cv-9184, 2016 WL 4439942, at *2 (N.D. Ill. Aug. 23, 2016) (collecting
The Court does not need to reach the issue of whether a plaintiff must allege notice,
however, because Ms. Kaenel did so. In her complaint, Ms. Kaenel alleges that TransUnion
notified Capital One of her dispute. That is a factual allegation and all she needed to allege to
survive this motion to dismiss. Souvigny v. Wells Fargo Home Mortg., Inc., No. 15 C 07465, 2016
U.S. Dist. LEXIS 99875, at *11 (N.D. Ill. Apr. 15, 2016) (“Although Wells Fargo characterizes
these notice allegations as conclusory, . . . this is not so because the Souvignys specifically allege
how Wells Fargo received notice—from Equifax.”). She does not need to plead the basis for her
belief that TransUnion notified Capital One.
Capital One argues that Ms. Kaenel needed to plead more than that she “believed” that
TransUnion notified Capital One. It contends that she could have obtained a formal description of
TransUnion’s procedure under 15 U.S.C. § 1681i(a)(6)(B)(iii), including whether TransUnion
notified Capital One. Nothing in the statute or Federal Rules, however, requires that a plaintiff
receive a formal description pursuant to 15 U.S.C. § 1681i(a)(6)(B)(iii) before filing suit. Freedom
v. Citifinancial, LLC, No. 15 C 10135, 2016 WL 4060510, at *5 (N.D. Ill. July 25, 2016) (holding
that a section 1681i(a)(6)(B)(iii) inquiry is not a prerequisite to filing suit). At least one court in
this district has disagreed with this position. In Densmore v. General Motors Acceptance
Corporation, another district court held that it was “improper for [the plaintiff] to drag [a furnisher
of credit information] into court without conducting a concrete investigation into whether its duties
under the FCRA were ever triggered.” No. 03 C 1866, 2003 WL 22220177, at *2 (N.D. Ill. Sept.
25, 2003). The district court held that alleging notice based on “information and belief” was not
sufficient to state a claim. Id.
This Court declines to follow the holding in Densmore that a plaintiff needs to conduct a
“concrete investigation” and request a formal description before filing suit. Since the decision in
Densmore, the Supreme Court has clarified the pleading standards and held that a plaintiff must
“state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. Capital One directs
the Court to Neiman v. Chase Bank, USA, N.A., No. 13 C 8944, 2014 WL 3705345 (N.D. Ill. July
25, 2014), a more recent case that cites Densmore. In Neiman, however, the plaintiffs never alleged
that the furnisher of credit information received notice. Id. at *6. Ms. Kaenel did allege that Capital
One received notice. Plaintiffs can properly make allegations based on belief in federal court.
Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 442 (7th
Cir. 2011) (“When a plaintiff sets out allegations on information and belief, he is representing that
he has a good-faith reason for believing what he is saying, but acknowledging that his allegations
are based on secondhand information that he believes to be true.”) (cleaned up). Absent a
heightened pleading standard, this Court concludes that it would be improper to question the basis
of Ms. Kaenel’s belief and her factual allegations at the motion to dismiss phase. 1 Taking her
allegations as true for purposes of this motion (as it must), Ms. Kaenel’s claim is plausible, and
that is sufficient to survive Capital One’s motion to dismiss.
Acknowledging as much, Capital One concedes in reply that its motion challenges not the
sufficiency of the complaint’s allegations of notice but rather the truth of those allegations. Def.
Reply 1, ECF No. 36 ( “the issue is not the quality of Plaintiff’s allegation, but that the allegation
is wrong. Transunion did not, in fact, provide the required notice.”). The Court declines to consider
the attached declaration to the defendant’s memorandum at this stage and will not convert this
motion to a motion for summary judgment. Capital One may file a motion for summary judgment
at any time. Ms. Kaenel, however, is entitled to discovery on the issue of whether Capital One
received notice from TransUnion pursuant to Rule 56(d). After discovery on this limited issue,
Capital One may file a motion for summary judgment that complies with Local Rule 56.1.
Dated: August 1, 2022
John J. Tharp, Jr.
United States District Judge
As other courts in this district have noted, Capital One may move for sanctions under
Rule 11 if it is correct that the plaintiff filed this complaint with no basis for this allegation.
Freedom, 2016 WL 4060510, at *5 n.4. At this time, the Court does not offer any opinion as to
whether a motion for sanctions is warranted.
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