EDWARDS v. EQUABLE ASCENT FNCL, LLC
Filing
11
OPINION. Signed by Judge Claire C. Cecchi on 4/16/2012. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
KEITH EDWARDS,
Civil Action No.: 1 1-cv-2638 (CCC)
Plaintiff,
V.
EQUABLE ASCENT, FNCL, LLC.,
OPINION
Defendant.
CECCHI, District Judge.
This matter comes before the Court on an unopposed motion by Equable Ascent
Financial, LLC, (“Equable”), pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss
Keith Edwards’s (“Plaintiff’) complaint. The Court has considered Equable’s motion made in
support of the instant matter and decides the matter without oral argument. Fed. R. Civ. P. 78.
I.
INTRODUCTION
Plaintiff brings the instant action under the Fair Credit Reporting Act (“FCRA”), alleging
that Equable failed to provide Plaintiff with prior notice and authorization to place a collection
account number on his personal credit file. 15 U.S.C.
§
1681 et. seq. Based on the reasons set
forth below, Equable’s motion to dismiss is granted.
II.
FACTUAL AND PROCEDURAL HISTORY
On April 18, 2011, Plaintiff initiated a cause of action against Equable in the Superior
Court of New Jersey, Law Division, Special Civil Part, Union County alleging breach of contract
for failing to provide him with prior notice and authorization to place a collection account
number on his personal credit file. (Compl. 1, 2.) Plaintiff argues that Equable was obligated to
follow these procedures when reporting outstanding collection debts to credit reporting agencies.
(Compl,
¶
5, 6-8.) Plaintiff contends that Equable’s alleged failure to follow these procedures
has resulted in: (I) a negative credit rating, (2) denial of credit, and (3) subjection to illegal
collection agency harassment. (Compl.
¶ 6, 10-13.) To redress these harms, Plaintiff seeks the
following: (1) a notice that his debt has been closed or discharged, (2) notice to credit bureaus to
remove their inaccurate reporting in relation to Plaintiffs account, (3) $750.00 in damages, and
(4) in the case of a default judgment, attorney’s fees not to exceed $3,000. (Compl. ¶J 7-8, 1-3.)
On November 21, 2011, Equable removed the case to this Court. Equable moved to
dismiss Plaintiffs complaint on the grounds that: (1) Plaintiffs complaint does not allege any
cause of action against Equable, but instead refers to an entity termed “Illinois;” (2) assuming,
arguendo, that Plaintiff intended to state that Equable committed the alleged violations, the
complaint still fails to state a claim for relief; (3) Plaintiffs complaint does not allege Equable’s
offending actions; (4) Plaintiffs complaint fails to set forth the basis for damages and how
Equable’s conduct is related to Plaintiffs alleged harms. (Def. Mot. to Dismiss, 6.) Equable
now moves to have Plaintiffs complaint dismissed with prejudice in its entirety. Id.
III.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 8(a) governs the construction of a complaint mandating
that a claim for relief must contain “a short and plain statement of the claim of the grounds for
the court’s jurisdiction.
.
.
[a] showing that the pleader is entitled to relief.
.
.
[and] a demand for
the relief sought.” Fed. R. Civ, P. 8(a)(l)-(3). Rule 8 governs a complaint’s construction for all
plaintiffs. However, when the plaintiff is proceeding as pro se, the Court construes this rule
liberally.
See US. v. Miller, 197 F.3d 644, 648 (3d. Cir. 1999) (noting the Court’s “time
honored practice of construing pro se plaintiffs’ pleadings liberally.”)
Recognizing the
differences in legal sophistication between a pro se litigant and trained legal counsel, the Court
will hold a pro se plaintiffs complaint to a less exacting standard than its counterpart. See
Haines v. Kerner, 404 U.S. 519 (2007).
The Court now turns to Equable’s motion to dismiss. The Court applies the standard of
review related to requests for dismissal pursuant to Federal Rule of Civil Procedure l2(b)(6).
Under this Rule, the Court may dismiss the complaint for failure to state a claim upon which
relief can be granted. In its application, a motion to dismiss “may be granted only if, accepting
all well pleaded allegations in the complaint as true, and viewing them in the light most
favorable to plaintiff, plaintiff is not entitled to relief.” In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410, 1420 (3d. Cir. 1997) (citing Bartholomew v. Fischl, 782 F.2d 1148, 1152 (3d.
Cir. 1986). Moreover, the Court’s inquiry is “not whether plaintiffs will ultimately prevail in a
trial on the merits, but whether they should be afforded an opportunity to offer evidence in
support of their claims.” In re Rockefeller Ctr. Prop., Inc., 311 F.3d 198, 215 (3d. Cir. 2002).
The Supreme Court refined the Rule 12(b)(6) motion to dismiss standard in both Ashcrofl
v. Iqbal, 129 S.Ct. 1937 (2009) and Bell At!. Corp. v. Twombly, 550 U.S. 544 (2007). Twombly
held that, “factual allegations must be enough to raise a right to relief above the speculative
level.”
550 U.S. at 570, Iqbal further refined the degree of factual pleadings to include facts
“that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct.” Iqbai, 129 S.Ct. at 1949.
When assessing a complaint’s appropriateness, the Court distinguishes factual
contentions that allege actions of the defendant that would satisfy elements of the claim asserted
as distinct from “[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements.” Jqbal, 129 S.Ct. at 1949; Morse v. Lower Merion Sch, Dist,, 132 F.3d.
3
902, 906 (3d. Cir. 1997) (holding that Courts will accept well-pled allegations as true, but will
not credit bald assertions or legal conclusions). Furthermore, the Court is “not bound to accept
as true a legal conclusion couched as a factual allegation
.
.
.
[and] can choose to begin by
identifying pleadings that, because they are no more than conclusions, are not entitled to the
assumption of truth.” Iqbal, 129 S.Ct. at 1950. The Court may also examine the complaint’s
allegations along with any documents attached to or referenced in the complaint along with
matters of the public record. Pittsburgh v. W. Penn Power flo., 147 F.3d 256, 259 (3d. Cir.
1998); In re Burlington, 114 F.3d at 1426.
When the Court dismisses a complaint pursuant to Rule 12(b)(6), the plaintiff may be
given leave to amend and reassert the claim within a set period of time. In re Burlington, 114
F.3d at 1434; Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d. Cir. 2002). Claims may
be dismissed with prejudice, however, if amending the complaint would be futile. Aiston v.
Parker, 363 F.3d 229, 235 (3d Cir. 2004). Here, “futile” essentially means that the complaint
could not be amended to include a legally cognizable claim. In re Burlington, 114 F.3d at 1426
(citing Giassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996)).
IV.
DISCUSSION
A. The Federal Credit Reporting Act
The Federal Credit Reporting Act was enacted by Congress primarily to protect
consumers. See Gelman v. State Farm Mutual Auto Ins. Co., 583 F.3d 187, 191 (3d. Cir 2009)
(quoting Safeco. Ins. C’o. ofAmerica v. Burr,, 551 U.S. 47, 52 (“Congress enacted [the] FCRA in
1970 to ensure fair and accurate credit reporting. promote effIciency in the banking system, and
protect consumer privacy.”)). Its stated purpose is to “require that consumer reporting agencies
adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel,
4
insurance, and other information in a manner which is fair and equitable to the consumer, with
regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.”
15 U.S.C.
1681(b). Simply stated, Congress enacted the FCRA to preserve consumer privacy
in the information collected and stored by consumer reporting agencies.
The statute places duties on two types of entities
—
credit rating agencies and “furnishers
of information.” The latter category generally refers to “any entity that reports information
relevant to a consumer’s credit rating—i.e., payment history, amount of debt, and credit limit—
to credit reporting agencies.” Burreil v, DFS Serv. LLC, 753 F, Supp. 2d 438, 446 (D.NJ. 2010)
(citing H.R. Rep. No. 108-396, at 24 (2003) (Conf. Rep.) (“The most common.
.
.
furnishers of
information are credit card issuers, auto dealers, department and grocery stores, lenders, utilities,
insurers, collection agencies, and government agencies.”)).
B. Plaintiff’s Claims Under
§ 1681s-2(a)
Section 1681 s-2 of the FCRA generally addresses the responsibilities of information
providers to consumer reporting agencies. 15 U.S.C.
§
1 681s-2. Subsection (a) of
168 ls-2
§
places a duty on data furnishers to provide accurate information noting that “a person shall not
furnish any information relating to a consumer to any consumer reporting agency if the person
knows or has reasonable cause to believe that the information is inaccurate.” 15 U.S.C.
§
168 is-
2(a). However, this prohibition does not apply if the data furnisher “clearly and conspicuously”
noted an address where consumers can send complaints related to inaccurate charges. 1 5 U.S.C.
168 ls-2(a)(i)(C). Therefore, the FCRA places the burden of the information’s accuracy on the
consumer.
If the consumer fails to place the data furnisher on notice that their acquired
information contains inaccuracies, the data furnisher can still provide credit agencies with that
inaccurate information Put simply
1681 s-2(a) enables a data furnisher to pros ide information
to a consumer credit agency as long as (1) the furnisher has indicated an address to which
consumers can voice their dispute and (2) the furnisher was not in receipt of a complaint related
to the data at issue.
Subsection (a) of 1681 s-2 does not provide a private right of action. In Huertas v. Galaxy
Asset Mgrnt., 641 F.3d 28, 34 (3d Cir, 2011), the court held that a pro se plaintiff could not bring
an action against a data furnisher for transmitting his credit information to a debt collection
agency because “no private right of action exists under that provision [15 U.S.C.
§
168 is
2a( 13(A)].” Likewise, in Burrell, 753 F. Supp. 2d at 447-48, this Court acknowledged that 15
U.S.C.
§
168 ls-2a(1)(A) contains no provision for bringing a private action. In that case, the
Plaintiff, a victim of identity theft, claimed that after informing his credit card company of his
situation, the company transmitted his information to various credit reporting agencies noting
that the Plaintiff was delinquent in paying his bills. Id. at 439. The Court dismissed Plaintiffs
claim as it related to the FCRA noting that “Mr. Burrell’s claims under subsection (a) of 15
U.S.C.
§
168 ls-2 fail because that portion of the FCRA does not provide a private cause of
action,” Id. at 447.
Similarly, in Lorenzo v. Palisades collection, L.L.c., No. 05-0886, 2006 U.S. Dist. WL
891170, at *2 (D.N.J. Apr. 5. 2006), a pro se Plaintiff alleged that a Defendant collection agency
violated the FCRA by fuiling to report to consumer credit agencies that a dispute over Plaintiffs
debt existed and were deficient in failing to update and correct information related to that debt
pursuant to its obligation under § 1681s-2. The Court dismissed plaintiffs claims related to
§
1681 s-2(a), “because this subsection does not allow for a private cause of action.” Lorenzo,
2006 WL 891170, at
*
2;
see
also Fino v. Key Bank of New York, No, 00-375. 2001 WL 849700,
at *4 (W.D. Pa. July 27, 200l) chiang v. New England Inc., 595 F.3d 26, 35 (1st Cir. 2009)
6
(holding that “Congress expressly limited furnishers’ liability under §168 1 s-2(a) by prohibiting
private suits for violations of that portion of the statute”); Gorman v, Wolpoff& Abramson, 584
F.3d 1147, 1162 (9th Cir. 2009) (“[Plaintiff] has no private right of action under
to proceed against [a data furnisher] for its
that he disputed the.
.
.
.
.
.
§
168 ls-2(a)(3)
failure to notify the [credit reporting agencies]
charges [at issue].”).
Here, Plaintiffs complaint alleges that “Illinois [Equable Ascent Financial LLC] failed to
provide Plaintiff with prior notice and their authorization to place a collection account number
44978 notation on my personal credit file.
Illinois did not comply with the requirements
contained in contract, agreement, law, or regulation. Illinois was legal/v required to follow these
procedures when reporting delinquent collection debts to credit reporting agencies.” (Compl.
¶
5, 7-9) (emphasis added). The Court finds that these allegations implicate Equable’s duties as a
data furnisher under 15 U.S.C.
§
1681s-2. See carney v. Experian Infi. Solutions Inc., 57 F.
Supp. 2d 496, 502 (W.D. Tenn. 1999) (finding that a furnisher of credit information is an entity
that “transmits information concerning a particular debt owed by a particular consumer to
consumer reporting agencies such as Experian, Equifax, MCCA, and Trans Union.”)
Plaintiffs complaint fails, however, to allege facts showing that Equable breached the
FCRA requirements. See Twomblv, 127 S,Ct, at 1974.
Plaintiff does not explicitly cite the
FCRA provisions in his complaint. Plaintiff asks this Court to enforce Equable’s duty to provide
Plaintiff with notice and authorization before placing a notation on his personal credit file
consistent with a legal obligation. Moreover, Plaintiff asserts that he is willing “to dismiss his
complaint” if Equable provides “notice to the credit bureaus to remove their inaccurate reporting
in relations to [his] account.” (Compi.
¶
7, 16-17.) As discussed above, however, 15 U.S.C.
§
1 681s-2(a) does not provide a private right of action to enforce a data furnisher’s duty to report
7
accurate information, Plaintiff’s claim under this subsection is therefore dismissed with
prejudice.
C. Plaintiffs Claims Under 15 U.S.C.
§
1681s-2(b)
Section 1681 s-2(b) applies to a data furnisher’s actions after being placed on notice by a
consumer rating agency of a dispute and the existence of an informational error is confirmed.
Section 168 ls-2(b) is triggered only after a consumer notifies the consumer credit agency of a
dispute.
The consumer credit agency will then notify the data furnisher of the disputed
information within five business days from the time the agency was notified by the consumer.
Section 1681 s-2(b)( 1) provides specific guidelines for how the data furnisher may conduct the
subsequent investigation into remedying the situation. 15 U.S.C.
§
168 is-2b)(l) states:
After receiving notice pursuant to section 1681 i(a)(2) of this title of a dispute with
regard to the completeness or accuracy of any information provided by a person
to a consumer reporting agency, the person shall-(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer reporting agency
pursuant to section 1681 i(a)(2) of this title;
(C) report the results of the investigation to the consumer reporting agency:
(D) if the investigation finds that the information is incomplete or inaccurate,
report those results to all other consumer reporting agencies to which the person
furnished the information and that compile and maintain files on consumers on a
nationwide basis; and
(E) if an item of information disputed by a consumer is found to be inaccurate or
incomplete or cannot be verified after any reinvestigation under paragraph (1),
for purposes of reporting to a consumer reporting agency only, as appropriate,
based on the results of the reinvestigation promptly(i) modify that item of information;
(ii) delete that item of information: or
(iii) permanently block the reporting of that item of information.
A data furnisher’s investigation of its records must be reasonable “to determine whether the
disputed information can be verified,” Kra/ewki v. American Honda Fin, corp.. 557 F. Supp.
2d 596, 609 (E.D. Pa. 2008) (quoting Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 431 (4th
Cir. 2008)). It is important to emphasize that § 168 ls-2(b) does not provide relief for consumers
8
who lodge their dispute directly with their credit card company. See Burreli, 753 F. Supp. 2d at
448. Instead, the consumer is obliged to contact the consumer credit rating agency of the dispute
that then contacts the consumer’s credit card company. See Young, 294 F.3d at 639.
This Court has recognized the existence of a private right of action pursuant to 15 U.S.C.
§
1681s-b(2). See Martinez v. Granite State 1gmt. & Res., No. 08-2769, 2008 U.S. Dist. WL
5046792, at *5 (D.N.J. Nov. 20, 2008)(citing Krajewski, 557 F. Supp. 2d at 608)); Bartley v.
LVNVFundingLLC., No. 09-3884. 2010 U.S. Dist. WL 2629072. at *9 (D.NJ. June 28, 2010).
“[1]n order to state a claim under section 168 ls-2(b), the plaintiff must allege that: (1) she sent
notice of disputed information to a consumer reporting agency, (2) the consumer reporting
agency then notified the defendant furnisher of the dispute, and (3) the furnisher failed to
investigate and modify the inaccurate information,” Rz4J v. America
Servicing Co., No. 07-
0489. 2008 U.S. Dist. WL 1830182, at *4 (W.D. Pa. Apr. 23, 2008); see also, Smith v.
Citimortgage, Inc., No. 08-492, 2009 U.S. Dist. WL 1976513 (S.D. Ms. July 7, 2009); Shulick v.
Experian, No. 11-3809, 2011 U.S. Dist. WL 4346335 (E.D. Pa. Sept 16, 2011).
The existence of a private right of action under subsection (b) hinges on the consumer’s
direct notification of a dispute to the consumer credit agency.
As this Court pointed out in
Burrell, “[a] consumer cannot maintain a claim under subsection (b) of 15 U.S.C.
c,S
1681-s2
based on disputes filed directly with his or her credit card company. Rather the consumer must
communicate such disputes to a credit rating agency which is then obligated to pass them on to
the credit card company.” Burrell, 753 F. Supp. 2d at 448 (citing Young. 294 F.3d at 639).
When a plaintiff alleges contact with a consumer credit agency, Courts in this Circuit have
usually permitted complaints to proceed on the premise that discovery is warranted to ascertain
whether or not a claim actually exists. See Kra/ewski, 557 F. Supp. 2d. at 610; Jaramillo v.
9
Experian Info. Solutions, Inc., 155 F. Supp. 2d. 356, 363 (ED. Pa. 2001); Ruff 2008 WL
1830182, at *4
Here, Plaintiff’s complaint fails to allege that he notified a consumer agency of disputed
information. See Ru/f 2008 WL 1830182, at *4 The complaint argues that “Illinois [Equable
Ascent Financial] failed to provide Plaintiff with prior notice and their authorization to place a
collection account number 44978 notation on [his] personal credit file,” (Compl.
¶ 5, 3-4.) Even
when construed liberally, the Plaintiff’s complaint makes no mention of any attempt on his part
to contact a consumer credit agency regarding his dispute over Equable’s placement of collection
account number 44978 notation on his credit file.
maintain a private right of action under
prongs highlighted in Rtff
Since such an allegation is necessary to
§ 1681 s-2(b), the Court need not reach the other two
Therefore, Plaintiff’s claims under 15 U.S.C.
§
1681s-2(b) are
hereby dismissed. Erikson v. Fardus, 551 U.S. 89 (2007). Plaintiff may, however, submit an
amended complaint to correct any deficiencies in this claim, in accordance with this Opinion.
U. Pre-Eniption of State Law under the FCRA
The FCRA contains two principal provisions that effectively pre-empt most, if not all,
state causes of action. 15 U.S.C.
§
168 ih(e) states:
Except as provided in sections 168 in and 16810 of this title, no consumer may bring any
action or proceeding in the nature of defamation, invasion of privacy, or negligence with
respect to the reporting of information against any consumer reporting agency, any user
of information, or any person who furnishes information to a consumer reporting agency.
based on information disclosed pursuant to section 1 681g, 168th, or 168 Im of this title,
or based on information disclosed by a user of a consumer report to or for a consumer
against whom the user has taken adverse action, based in whole or in part on the report
except as to false information furnished with malice or willful intent to injure such
consumer.
The FCRA’s second pre-emption statute, 15 U.S.C.
§
1681 (t)(b)(1 )(F), states that “no
requirement or prohibition may be imposed under the laws of any State
10
-
-
(1) with respect to any
subject matter regulated under
—
(F) section 168 Is-2 of this title, relating to responsibilities of
persons who furnish information to consumer reporting agencies.” Based on the language of the
statute, section 168 l(t)(b)(i)(F) pre-ernpts all state causes of action, while 15 U.S.C
§
168 lh(e)
provides pre-emption exemptions for defamation, invasion of privacy, and negligent actions
involving a data furnisher acting with malice or willful intent.
This Court has adopted a total pre-emption approach. Most notably, Burreil held that
§
168 l(t)(b)(i)(F) “leaves no room for state law claims against furnishers of information
regardless of whether those claims are couched in terms of common law or state statutory
obligations.” Burrell, 753 F. Supp. 2d at 451. Similarly, both Nonnenmacher v, capital One,
2001 WL 1321710 (D.N.J. Mar. 31, 2011) and Hende,on v. Equable Ascent Fin. LLC’., 2011
WL 5429631 (D.N.J. Nov. 4, 2011) adopted the total preemption approach by dismissing a
plaintiffs state statutory and common law claims. See also, Cosmas v. Am. Express Centurion
Bank, 757 F. Supp. 2d 489, 479-501 (D.N.J. 2010); Bartley v. LVNV Funding, LLC’,, 2010 U.S.
Dist. WL 2629072, at *4 (D.N.J. June 28, 2010); DiMedio v. HSBC Bank, Civ. A. 08552l(JBS/KMW), 2009 U.S. Dist. WL 1796072, at *9 (D.N.J. June 22, 2009). Moreover, the
scope of section 168 i(t)(b)(l)(F)’s pre-emptive effect is clear from the text: “[n]o requirement
or prohibition’ relating to the duties of furnishers of information ‘may be imposed under the laws
ofanv State.” 15 U.S.C.
§
1681(t)(b)(1)(F).
This approach is also consistent with the Supreme Court’s holding in Cipollone v. Liggett
Gip. Inc., 505 U.S. 504. 521 (1992), which thund that the statute’s usage of”no requirement or
prohibition” is to he construed broadly, “suggest[ing} no distinction between positive enactments
and common law to the contrary, those words easily encompass obligations that take the form of
common-law rules.”
See Premium Mortg. corp. v. Equifzx,
ii
Inc..
583 F.3d (2d Cir. 2009)
(adopting total preemption approach and reiterating the Supreme Court’s interpretation of
“no
requirement or prohibition”).
Finally’, a total pre-emption approach to
consistent with this statute’s legislative history.
§
1681(t)(b)(1)(F) is
In this regard, “Congress’s main goal in
enacting the statute was establishing uniform regulations for furnishers; this purpose would
be
frustrated by an interpretive approach which leaves state common law claims against furnish
ers
unaffected.”
Henderson,
2011 WL 5429631 at *5 (citing CONG. REC. H8, 122-2 (2003);
Jaramillo, 155 F. Supp. 2d at 361).
Therefore, any of Plaintiff’s breach of contract and negligence claims related to
Equable’s alleged failure to provide the Plaintiff with notice or authorization in placing 44978
a
notation on his personal credit file are pre-empted by
§
168 i(t)(b)(1)(F) of the FCRA, which
prohibits both state statutory and common law causes of action against data furnish
ers of
consumer credit information. Plaintiff’s state common law claims are thereby dismis
sed with
prejudice.
V.
CONCLUSION
For the reasons stated above, Defendant’s motion to dismiss the Complaint is granted
,
To the extent that Plaintiff can amend his Complaint in accordance with this decision, Plainti
ff is
granted twenty-one (21) days in which to file an Amended Complaint that cures the
pleading
deficiencies discussed below, An appropriate form of Order will accompany this Opinio
n.
DATED: April 16, 2012
ç)
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CLAIRE C. CECiT, USJ.J.
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