Bowers v. Experian Information Solutions, Inc. et al

Filing 25

Findings & Recommendation - Trans Union's amended motion 21 to dismiss should be DENIED. Objections to the Findings and Recommendation are due by 7/10/2009. If a party files objections to the Court's findings, another party may file a response to those objections within fourteen days of the filing of the objections. Signed on 6/26/09 by Magistrate Judge John V. Acosta. (peg)

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I N T H E UNITED S T A T E S D I S T R I C T C O U R T F O R THE DISTRICT OF OREGON

K E L S E Y BOWERS, Plaintiff,

CV 08-1436-AC F I N D I N G S AND RECOMMENDATION

v.
E X P E R I A N INFORMATION SOLUTIONS, INC., a foreign corporation, E Q U I F A X I N F O R M A T I O N SERVICES LLC, a foreign corporation, and TRANS UNION LLC, a foreign corporation, Defendants.

ACOSTA, Magistrate Judge:
Introduction

Currently before the court is defendant Trans Union LLC's ("Trans Union") motion to dismiss. Trans Union contends that plaintiff Kelsey Bowers ("Bowers") has pleaded only legal conclusions and no facts which would give rise to liability against Trans Union. Trans Union also P A G E 1 - FINDINGS A N D R E C O M M E N D A n O N

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contends that Bowers cmmot meet the required pleading standard. F o r reasons set forth below, Trans U n i o n ' s motion to dismiss should be denied. Background B o w e r s filed t h i s a c t i o n a g a i n s t c r e d i t r e p o r t i n g a g e n c i e s E x p e r i a n I n f o r m a t i o n S o l u t i o n s , Inc. ("Experian"), Equifax Information Solutions, LLC ("Equifax"), and Trans U n i o n (collectively " D e f e n d a n t s " ) for v i o l a t i o n s o f the F a i r C r e d i t R e p o r t i n g A c t ( " F C R A " ) . I n h e r c o m p l a i n t , B o w e r s a l l e g e s that s h e d i s c o v e r e d that s h e w a s a v i c t i m o f i d e n t i t y t h e f t a n d n o t i f i e d e a c h o f D e f e n d a n t s o f this fact in 2006. (Compl.
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6.) Bowers also alleges that Defendants continued to report false

i n f o r m a t i o n r e s u l t i n g f r o m t h e i d e n t i t y theft. ( C o m p l . ~ 6 . ) F i n a l l y , B o w e r s a l l e g e s t h a t D e f e n d a n t s continued to report false it)formation after she notified them that she disputed false information being reported by Defendants. (Compl. complaint. I Legal Standards
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6.) Trans U n i o n filed this m o t i o n as its response to B o w e r s ' s

A. Local Rule 7 . H a )
When filing a motion w i t h the court, the Local Rules o f this court ("LR") 7. I ( a ) ( I ) ( A ) and (B) r e q u i r e a m o v a n t t o c e r t i f y t h a t " [ t ] h e p a r t i e s m a d e a g o o d f a i t h e f f o r t t h r o u g h p e r s o n a l o r telephone conferences to resolve the dispute and have been unable to do s o " or that "[t]he opposing party willfully refused to confer." T h e obvious purpose o f L R 7.1 is " t o encourage parties to resolve a m i c a b l y d i s p u t e s w h e n p o s s i b l e , p r e s e r v i n g j u d i c i a l r e s o u r c e s for t h o s e m a t t e r s t h a t r e q u i r e t h e c o u r t ' s intervention." Thompson ex reI. ThOlI) Family Charitable Remainder U n i t m s t v. Federico,

I E x p e r i a n a n d E q u i f a x f i l e d a n s w e r s a n d r a i s e d B o w e r s ' s f a i l u r e t o s t a t e a c l a i m as a n affirmative defense, but neither has moved to dismiss. P A G E 2 - FINDINGS A N D R E C O M M E N D A T I O N

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324 F. Supp. 2 d 1152, 1172 (D. Or. 2004). " I f t h e rule is to mean anything at all, at least the spirit o f its substantive requirements must be met." Id. The remedy for a violation o f L R 7.1(a) is denial o fthe motion, and the authority to exercise the remedy lies within the district c o u r t ' s discretion. See L R 7.1 (a)(2). 2. Motion to dismiss Under Federal Rules o f Civil Procedure ("Rule") 12(b)(6), a district court may dismiss a complaint for failure to state a claim upon which r e l i e f can be granted. In ruling on a Rule 12(b)(6) motion, the court must assume that the p l a i n t i f f s allegations are true and m u s t construe said allegations i n the light most favorable to the plaintiff. W. Reserve Oil & Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir. 1985). E v e n i f the face o f the pleadings indicates that the chance ofrecovelY is remote, the court must allow the p1aintiffto offer evidence t o support its claims. See U.S. v. City

o / R e d w o o d City, 640 F.2d 9 6 3 , 9 6 6 (9th Cir. 1981). I n other words, i f the facts alleged, i f true,
would entitle plaintiff to some fmID o f l e g a l remedy, the motion must be denied. Conley v. Gibson, 355 U.S. 4 1 , 4 5 - 4 6 (1957), abrogated by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). The N i n t h Circuit has observed that the Rule 12(b)(6) motion to dismiss for failure to state a claim " i s viewed with disfavor and i s rarely granted." Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). However, mere conclusory allegations couched in factual allegations are n o t sufficient to state a cause o f action. Papasan v. Allain, 478 U.S. 265, 286 (1986). Review on a Rule 12(b)(6) motion is limited to the contents o f t h e complaint. Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994). Thus, a p l a i n t i f f s factual allegations in the complaint "must be enough t o raise a right to relief above the speculative level . . . o n the assumption that all the allegations in the P A G E 3 - FINDINGS A N D R E C O M M E N D A T I O N

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complaint are true (even i f doubtful i n fact)." Twombly, 550 U.S. at 555 (emphasis in original) (citations omitted). The thl'eshold requirement o f Rule 8(a)(2) is that " t h e ' plain statement' possess enough heft to ' s h o [ w ] t h a t the pleader is entitled to relief.' " lei. a t 557 (quotations in original). "[A] formulaic recitation o f the elements o f a cause o f action will not do." l d at 555. I f the court dismisses the complaint, it must t h e n decide whether to grant leave to amend. T h e N i n t h Circuit has "repeatedly held that a district court should grant leave to amend e v e n i f no request to amend the pleading w a s made, unless i t determines that the pleading could not possibly be cured by the allegation o f other facts." Lopez v. Smith, 203 F . 3 d 1122, 1130 (9th Cir. 2000) (citations and internal quotation marks omitted).

DisclIssion A. L R 7 . 1 ( a )
In its original motion, Trans Union certified its compliance with L R 7.1(a) stating that it made a good faith effort to resolve the dispute through email conference. I n replying to B o w e r s ' s opposition brief, Trans Union contends that any purported violation h a s been cured by its filing o f an amended motion to dismiss confirming the p a r t i e s ' subsequent telephone conversation and B o w e r s ' s outright refl1sal to resolve the dispute. Documents presented to the court, including Trans U n i o n ' s certification o n its original motion, indicate that counsel for Trans Union emailed counsel for B o w e r s d i s p u t i n g t h e m e r i t s o f B o w e r s ' s c l a i m a g a i n s t T r a n s U n i o n . A f t e r c o u n s e l for B o w e r s replied to that email, t h e p a r t i e s ' respective attorneys never conferred through telephone o r email to resolve the pleading issue until after the motion was filed o n April 23, 2009. T h e email exchange here did not comply with the letter o r the spirit o f L R 7 . I ( a ) . Trans U n i o n ' s communication addressed its v i e w o f the merits o f B o w e r s ' s claim against it; no meaningfhl

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overture o r invitation was extended to discuss Trans U n i o n ' s assertion that B o w e r s ' s complaint did n o t contain sufficient facts to state a F C R A claim against it. That Trans U n i o n later filed an amended motion to dismiss to cure the deficiency hardly excuses the violation o r redeems the violator, as the effect would be to render the c o u r t ' s local rule meaningless and the conferral obligation perfunctOly. Trans U n i o n ' s conferral especially fell b e l o w L R 7.1 ( a ) ' s requirements given that i t w a s coupled w i t h a reference to Rule I I motion i f Trans U n i o n ' s demands were not met. (See Trans U n i o n ' s Reply Supp. Mot. Dismiss Ex. A at 4.) And, while the court will not enforce L R 7 . I ( a ) where conferral clearly would be futile, it is difficult to k n o w w h a t w o u l d have resulted i f a proper conferral h a d occurred on the question o f t h e sufficiency o f B o w e r s ' s allegations. That neither Experian nor Equifax moved to dismiss for lack o f s u f f i c i e n c y s u g g e s t s t h a t conferral b e t w e e n B o w e r s a n d T r a n s U n i o n m i g h t h a v e p r e e m p t e d t h e i n s t a n t m o t i o n . A t least, a p r o p e r c o n f e r r a l m o s t c e r t a i n l y w o u l d h a v e a v o i d e d t h e p a r t i e s ' e x t e n d e d squabbling in their papers over whether o r not Trans U n i o n met its L R 7.1 (a) obligation. Nevertheless, because this court finds that the motion fails o n the merits, it will p u t aside Trans U n i o n ' s non-compliance with L R 7 .1 (a). However, the court emphasizes that future adherence to the local rule requirements will be expected and enforced in this case. B. M o t i o n to Dismiss I . Conclusory Allegations T r a n s U n i o n c o n t e n d s t h a t B o w e r s h a s p l e a d e d o n l y i m p r o p e r f o r m u l a i c legal c o n c l u s i o n s . A s i d e from Twombly, T r a n s U n i o n c i t e s t o t w o C a l i f o r n i a d i s t r i c t c o u r t h o l d i n g s i n v o l v i n g F C R A claims in support o f its motion to dismiss. First, in Gorman v. Wolpo.ll& Abramson, LLP, 370 F. Supp. 2d 1005, 1010 (N.D. Cal. 2005), ({[f'd in p a r i , r e v ' d in p a r i , 552 F.3d 1008 (9th Cir. 2009),

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the district court dismissed the p l a i n t i f f ' s complaint with leave to amend when it "merely recite[d] the elements necessary to state a P C R A . . . claim, without alleging facts to fill those elements." In

Gorman, the plaint ifI alleged in his complaint that h e notified the defendant credit card issuer that
h e disputed the legitimacy o f "certain charges" posted to his account " i n o r about 2003." ld. at 1007. T h e c o m p l a i n t also a l l e g e d t h a t w h e n t h e p l a i n t i f f d i s c o v e r e d t h a t t h e d e f e n d a n t w a s " f a l s e l y a n d inaccurately reporting" to various credit reporting agencies that he w a s delinquent o n his obligations to t h e defendant without reporting that the debt was "disputed," he requested the defendant to correct the information. ld. at 1008. Ultimately, the Gorman p l a i n t i f f alleged that the defendant "maliciously and willfully failed to take any corrective action and continue[d] to report the debt as delinquent without indicating that the charges [were] disputed . . . . " ld. at 1012. The district court held that the PCRA claims failed because they were based o n non-descriptive phrases and legal conclusions. ld. at 1012. In denying the p l a i n t i f f ' s libel claim o n the same ground, the district court also pointed o u t t h a t the p l a i n t i f f f a i l e d to give notice o f even one particular statement that was false.

ld. at 1010. Second, in Howardv. BIlle Ridge Bank, 371 P. Supp. 2d 1139, 1143 (S.D. Cal. 2005),
t h e C a l i f o r n i a d i s t r i c t c o u r t d i s m i s s e d a c l a i m for w i l l f u l n o n c o m p l i a n c e w i t h the F C R A w h e n p l a i n t i f f ' s o n l y a l l e g a t i o n for t h e c l a i m w a s t h a t t h e d e f e n d a n t s " r e c e i v e d n o t i c e o f p l a i n t i f f ' s d i s p u t e . . . and [willfully] failed to comply w i t h the requirements o f 15 U.S.C. Section 1 6 8 I s - 2 . " The district court found the conclusory allegation to be insufficient and dismissed the claim with leave to amend to allege facts which, i f proven at trial, would support such a claim. ld. T h e c o u r t finds t h a t B o w e r s ' s c o m p l a i n t d o e s n o t m e r e l y r e c i t e e l e m e n t s o f a P C R A c l a i m , but instead alleges facts specific to her claim. This district has found the required elements o f a claim alleging violation 15 U.S.C. Section 1681 i to include the following:

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(i) the p l a i n t i f f s credit report contains inaccurate o r incomplete information, see 15 U.S.C. Section 1 6 8 l i ( a ) ( l ) ; (ii) the p l a i n t i f f notified the consumer reporting agency directly o f the inaccurate o r incomplete information, see ie!; ( i i i ) the p l a i n t i f f s dispute is not frivolous o r irrelevant, see 15 U.S.C. Section 168li(a)(3); and (iv) the consumer reporting agency failed to respond to the p l a i n t i f f s dispute with a reasonable reinvestigation, see 15 U.S.C. Section 1681 i(a)(1), (2), (4), and (6).

Saenz v. Trans Union, L L C , 05-CY-1206-PK, 2007 W L 240175 at *6 (D. Or. August 1 5 , 2 0 0 7 ) .
H e r e , B o w e r s a l l e g e s that s h e d i s c o v e r e d t h a t s h e w a s a v i c t i m o f i d e n t i t y theft a n d n o t i f i e d T r a n s Union and the other defendants o f this fact. This is distinguishable from the complaint in Gorman w h i c h alleged only that the plaintiff disputed the legitimacy o f certain charges and used phrases such as " a dispute arose," "certain charges," and "falsely and inaccurately reporting," providing only the elements o f a cognizable F C R A claim. Similarly, the complaint in Howard did not include facts specific to support a claim for willfhl noncompliance with the FCRA. T h e complaint failed to allege the specifics o r the basis o f the dispute. In contrast, here Bowers does not merely allege that she disputed certain charges o r that Defendants failed to comply with FCRA. Bowers identified the disputed information as those resulting from the identity theft. Thus, unlike defendants in Gorman a n d Howard, T r a n s U n i o n had s u f f i c i e n t n o t i c e o f B o w e r s ' s c l a i m . B o w e r s ' s c o m p l a i n t c o n t a i n s sufficient factual allegations on this point. 2. Facts Which Would Give Rise to Liability Trans U n i o n also contends that Bowers alleges no facts which would give rise to its liability. " W h e n the allegations in a complaint, however true, could not raise a claim o f entitlement to relief, ' t h i s basic deficiency should . . . be exposed at the point o f minimum expenditure o f time and money b y the parties and the c o u r t . ' " lil'ombly, 550 U.S. at 558 (citing 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1216, pp. 233-34 (3d eel. 2004)). In

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Twombly, the Supreme Court found that liability under Section I o f the Sherman Act ("Section I " )
required a "contract, combination, . . . o r conspiracy, in restraint o f trade o r commerce." Id. at 548. T h e S u p r e m e C o u r t h e l d t h a t a S e c t i o n I c o m p l a i n t w h i c h l a c k e d s o m e factual c o n t e x t s u g g e s t i n g agreement could not survive a motion to dismiss. Id. at 548-49. The Supreme Court did not require heightened fact pleading o f specifics, but only enough facts to state a claim to r e l i e f that is plausible o n its face. Id. at 570. Assuming as i t m u s t o n a Rule 12(b)(6) motion to dismiss that B o w e r s ' s allegations are true, the court finds that Bowers has stated a claim that is plausible o n its face. Bowers alleged that she was a victim o f identity theft, that she notified Defendants o f the identity theft, and that Defendants continued to report false information resulting from the identity theft. Bowers has raised h e r right to r e l i e f u n d e r F C R A o n the facts above a speculative level. In its motion, Trans Union acknowledges B o w e r s ' s factual allegations and contends " t h o s e ' f a c t s ' fail to even describe the specific behavior o f w h i c h [Bowers] complains." (Trans Union's Mem. Supp. Mot. Dismiss 2.) However, Trans U n i o n does not discuss why those facts, i f true, could n o t r a i s e a c l a i m a g a i n s t T r a n s Union. T h e c o m p l a i n t i n l i l ' o m b l y f a i l e d b e c a u s e e v e n i f the a l l e g e d parallel conduct were true, such conduct did not suggest an illegal agreement between the defendants as required in a Section I claim. On the other hand, i f B o w e r s ' s factual allegations, described a s "skeletal" in Trans U n i o n ' s motion, were true, such facts suggest Trans U n i o n ' s noncompliance w i t h FCRA. Specifically, 15 U.S.C. Section 1 6 8 I e ( b ) requires credit reporting agencies to f o l l o w reasonable procedures to assure m a x i m u m possible accuracy o f the information concerning the c o n s u m e r a b o u t w h o m t h e r e p o r t relates. Furthermore, o n c e the information contained in a

c o n s u m e r ' s file is disputed by the consumer, 15 U.S.C. Section 1 6 8 l i requires credit reporting

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agencies to conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate. T h e inference can be drawn that Trans Union failed to follow reasonable procedures both before and after B o w e r s ' s reports. Thus, this court finds that B o w e r s ' s complaint contains facts, i f true, that would give rise to Trans U n i o n ' s liability. 3. Required Pleading Standard Trans Union alleges that B o w e r s ' s complaint cannot meet the required pleading standard under Rule 8(a), which requires a plaintiff to set forth " a short and plain statement o f the claim showing that the [plaintiff! is entitled to relief." This liberal notice pleading is satisfied i f the complaint gives defendants "fair notice o f the basis o f [ p l a i n t i f f s ] claims." S l l ' i e l ' k i e l l ' i c z v. SOl'ema
N.A., 534, U.S. 506, 514 (2002).

Evaluating the complaint in the light most favorable to Bowers, the court finds that B o w e r s ' s complaint meets the standard under Rule 8(a). The factual allegations in the complaint set forth statement showing that Bowers is entitled to r e l i e f and gives Trans Union sufficient notice o f B o w e r s ' s FCRA claim with respect to the alleged false information resulting from the identity theft. This court also notes that B o w e r s ' s complaint gave co-defendants Experian and Equifax sufficient notice o f the basis o f her claims allowing them to file their answers although allegations to all three Defendants are identical, further supporting the conclusion that B o w e r s ' s allegations are sufficient to apprise Defendants, and each o f them, o f basis for B o w e r s ' s claims.
Conclusion

Trans U n i o n ' s amended motion (#21) to dismiss should be DENIED.

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Scheduling Order
The above Findings and Recommendation will be referred to a United States District Judge for review. Objections, i f a n y , are due no later than July 1 0 , 2 0 0 9 . I f n o objections are filed, review o f the Findings and Recommendation will go u n d e r advisement on that date. I f o b j e c t i o n s a r e f i l e d a n y p a r t y m a y file a r e s p o n s e w i t h i n f o u r t e e n days a f t e r t h e d a t e t h e objections are filed. Review o f the Findings and Recommendation will go under advisement when the response is due o r filed, whichever date is earlier. D A T E D this 26 1h day o f J u n e , 2009.

(6/C7t---

) JOHN V. A C O S T A United States M a g i s t r a t e J u d g e

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