Gibson v. Experian Information Solutions, Inc.
MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that Defendants motion to dismiss is DENIED. ECF No. 10 . Signed by District Judge Audrey G. Fleissig on 10/13/20. (KJS)
Case: 4:20-cv-00393-AGF Doc. #: 38 Filed: 10/13/20 Page: 1 of 7 PageID #: 233
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
Case No. 4:20-cv-00393-AGF
MEMORANDUM AND ORDER
This matter is before the Court on the motion (ECF No. 10) of Defendant Experian
Information Solutions, Inc. (“Experian”) to dismiss Plaintiff Janet Gibson’s complaint for
failure to state a claim. Plaintiff claims that Experian violated the Fair Credit Reporting
Act (FCRA), 15 U.S.C. § 1681e(b). For the reasons set forth below, the Court will deny
Taken as true for the purpose of this motion, Plaintiff alleges the following facts.
Plaintiff filed for bankruptcy under Chapter 7 of Title 11 of the bankruptcy code on July
15, 2019. ECF No. 1 at 2. Plaintiff complied with the bankruptcy and was discharged on
October 9, 2019. Id. On December 18, 2019, Plaintiff obtained a credit report from
Experian to ensure it contained correct information with respect to her bankruptcy filings.
Id. at 3. In spite of showing that Plaintiff’s bankruptcy was discharged, Experian still
reported a debt from Missouri Payday Loans as past due. Id. Plaintiff believes that, as
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this account was listed “in the Schedule F of Plaintiff’s bankruptcy as a nonpriority
unsecured claim,” Experian should have known to report it as discharged or otherwise
show a zero balance. Id. Further, two other dominant credit reporting agencies, Equifax
and TransUnion, did not report the Missouri Payday Loans account. Id. Plaintiff alleges
a variety of damages, including emotional and mental pain, stress and anxiety, and both
being denied credit and denied more favorable rates of credit. Id. at 4.
Plaintiff filed suit on March 12, 2020, asserting a single claim under 15 U.S.C. §
1681n for willful violation of § 1681e(b), or in the alternative, under § 1681o for
negligent violation of § 1681e(b).
Experian seeks dismissal of the complaint for failure to state a claim. Experian
contends that Plaintiff has not pled sufficient facts to plausibly infer that Experian failed
to follow reasonable procedures as required by § 1681e(b). Experian further contends
that § 1681e(b) requires a plaintiff to alert a defendant of the discrepancy in her credit
report and give the defendant time to investigate the report, and that Plaintiff did not
provide such notice.
Plaintiff opposes the motion to dismiss and argues that she has pled sufficient facts
that Experian failed to implement or follow reasonable procedures to ensure maximum
accuracy of Experian’s credit report regarding Plaintiff. ECF No. 12. Plaintiff further
notes in her opposition brief a class action settlement in White v. Experian Information
Solutions, Inc., CV 05-1070 DOC (MLGx) (C.D. Cal. Complaint filed Nov. 2, 2005)
(“White Settlement”) in which Experian agreed to a set of reasonable procedures for
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systematically correcting certain information pertaining to Chapter 7 bankruptcies. 1
Plaintiff additionally rejects Experian’s contention that § 1681e(b) requires notice from a
consumer before a complaint may be brought. Additional briefs were submitted by both
parties, including recent supplemental authority provided by Plaintiff, reiterating and
reinforcing the existing arguments.
To survive a motion to dismiss, a plaintiff’s claims must contain sufficient factual
matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). The reviewing court accepts the plaintiff’s
factual allegations as true and draws all reasonable inferences in favor of the nonmoving
party. Torti v. Hoag, 868 F.3d 666, 671 (8th Cir. 2017). But “[c]ourts are not bound to
accept as true a legal conclusion couched as a factual allegation, and factual allegations
must be enough to raise a right to relief above the speculative level.” Id.
The FCRA, 15 U.S.C. § 1681 et seq., establishes standards and requirements for
the behavior of consumer reporting agencies (“CRAs”) such as Experian, and provides
civil remedies for willful noncompliance with the Act, § 1681n, and negligent
noncompliance with the Act, § 1681o. Section 1681e(b) requires that “[w]henever a
Experian contends in its reply brief that inclusion of this settlement is an
“improper amending of the pleadings.” ECF. No. 15 at 1. However, on a motion to
dismiss, the court may consider the pleadings themselves, materials embraced by the
pleadings, exhibits attached to the pleadings, and matters of public record.” Humphrey v.
Eureka Gardens Pub. Facility Bd., 891 F.3d 1079, 1081 (8th Cir. 2018) (citation
omitted). The White settlement is as a matter of public record that may be considered by
the Court on this motion.
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consumer reporting agency prepares a consumer report it shall follow reasonable
procedures to assure maximum possible accuracy of the information concerning the
individual about whom the report relates.”
To state a claim alleging violations of § 1681e(b), a plaintiff must show that “(1)
his [or her] report was inaccurate in some way and (2) the inaccuracy was due to the
CRA’s failure to follow reasonable procedures.” Desautel v. Experian Info. Sols., LLC,
No. 19-CV-2836 PJS/LIB, 2020 WL 2215736, at *2 (D. Minn. May 7, 2020) (citing
Dalton v. Capital Associated Indus., 257 F.3d 409, 415 (4th Cir. 2001)). Experian only
challenges the sufficiency of the complaint regarding the second element.
“The reasonableness of the procedures and whether the agency followed them will
be jury questions in the overwhelming majority of cases.” Guimond v. Trans Union
Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995) (citing Cahlin v. Gen. Motors
Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991)). Nevertheless, “the Act does
not render consumer reporting agencies strictly liable for inaccuracies in a report.”
Hauser v. Equifax, Inc., 602 F.2d 811, 814 (8th Cir. 1979). “There must be a showing
that the inaccuracy resulted from the agency’s failure to follow reasonable procedures to
assure maximum possible accuracy.” Id. at 814–15.
Federal courts have generally held that § 1681e(b) “does not hold a reporting
agency responsible where an item of information, received from a source that it
reasonably believes is reputable, turns out to be inaccurate unless the agency receives
notice of systemic problems with its procedures.” Sarver v. Experian Info. Sols., 390
F.3d 969, 972 (7th Cir. 2004); see also Murphy v. Midland Credit Mgmt., Inc., 456 F.
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Supp. 2d 1082, 1089 (E.D. Mo. 2006) (citing Sarver). However, this notice may be
constructive; section 1681e(b) does not require a consumer to notify the CRA of an error.
See Alsibai v. Experian Info. Sols., Inc., No. 20-CV-0963 (ECT/DTS), 2020 WL
5652477, at *5 (D. Minn. Sept. 23, 2020) (“The provision of the FCRA at issue here,
§ 1681e, does not require a consumer to report inaccurate information to an agency
before filing a lawsuit.”). 2 For example, “[c]ourts have held CRAs must look beyond
information furnished to them when it is inconsistent with the CRAs’ own records,
contains a facial inaccuracy, or comes from an unreliable source.” Wright v. Experian
Info. Sols., Inc., 805 F.3d 1232, 1239 (10th Cir. 2015) (collecting cases).
Experian may well be correct that the inaccuracy here was an isolated incident
rather than the result of unreasonable procedures, but that question is better suited for
resolution at a later stage, on a more complete record. At this early stage, the Court is
persuaded by multiple district court determinations that notice of a Chapter 7 bankruptcy,
as evidenced by a CRA’s own reporting of such a bankruptcy, makes it plausible to allege
that continued reporting of a prior unsecured debt is unreasonable. See, e.g., Alsibai,
2020 WL 5652477, at *5 (holding that the plaintiff plausibly alleged the CRA acted
unreasonably under § 1681e by alleging that the agency “had reason to know that its
reporting of the Citibank Account was inaccurate because it was also reporting his
bankruptcy as discharged and all his other bankruptcy debts as discharged”) (cleaned up);
Johnson v. Experian Info. Sols., Inc., No. 0:20-cv-00717-PJS-HB (D. Minn. July 13,
The FCRA contains other provisions governing situations when consumers notify
CRAs of an inaccuracy. See 15 U.S.C. § 1681i.
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2020) (“[T]here’s a plausible claim that it’s not reasonable for a CRA to follow
procedures that assume that [debts related to a Chapter 7 bankruptcy] are not discharged
unless the CRA gets information that they were.”). 3 Indeed, as one district court recently
recognized when addressing a similar argument by Experian: “the White settlement
makes clear [that] the CRAs knew that unsecured consumer debts . . . are typically
discharged in Chapter 7 proceedings. Moreover, the White settlement itself provides
notice that not updating such accounts after a Chapter 7 bankruptcy may fail to comport
with § 1681e(b).” Morris v. Experian Info. Sols., Inc., No. 20-CV-0604 (PJS/HB), 2020
WL 4703900, at *3 (D. Minn. Aug. 13, 2020) (denying Experian’s motion to dismiss).
Although the White settlement is not binding on this Court, it lends plausibility to
Plaintiff’s allegation that Experian was on notice of a systemic problem. 4 Lending
further plausibility to Plaintiff’s allegation that Experian failed to follow reasonable
procedures is the fact that neither of the other dominant CRAs reported the inaccuracy.
See Gadomski v. Equifax Info. Servs., LLC, No. 2:17-CV-00670-TLN-AC, 2020 WL
3841041, at *5 (E.D. Cal. July 8, 2020) (“Plaintiff’s allegation that Experian and
Plaintiff submitted the hearing transcript from Johnson, in which the judge
denied Experian’s motion to dismiss from the bench. ECF No. 27.
In its reply brief, Experian states that the reporting of the Missouri Payday
Loans account here comported with the White settlement’s “automatic scrubbing”
requirement because the “account fell within one of the scrub’s exceptions” under the
settlement. See ECF No. 15. But the Court does not have enough information on the
current record to fairly evaluate this argument.
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TransUnion did not make the same error also leads to a reasonable inference that
Defendant failed to follow reasonable procedures in Plaintiff’s case.”).
The contrary cases cited by Experian primarily address whether there was in fact
an inaccuracy—which Experian does not dispute for the purpose of this motion—and are
in any event factually distinct. See, e.g., Hupfauer v. Citibank, N.A., No. 16 C 475, 2016
WL 4506798, *6-7 (N.D. Ill. Aug. 19, 2016) (“Both the initial credit report and the
investigation report note Plaintiff’s Chapter 13 bankruptcy, accurately reflect the status of
the Citi account prior to the bankruptcy discharge, and accurately reflect the fact that
there was no payment due after the bankruptcy discharge.”). In short, the Court
concludes that Plaintiff has plausibly alleged that Experian did not “follow reasonable
procedures to assure maximum possible accuracy” under § 1681e(b).
IT IS HEREBY ORDERED that Defendant’s motion to dismiss is DENIED.
ECF No. 10.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 13th day of October, 2020.
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